EXHIBIT 10.25
Dated this 29th day of March 2004
GOVERNMENT OF THE REPUBLIC OF GHANA
AND
GOLDENRAE MINING COMPANY LIMITED
__________________________________________________
PROSPECTING LICENCE
__________________________________________________
SOLICITOR OF THE
SUPREME COURT
TERM: TWO (2) YEARS (RENEWABLE)
COMMENCEMENT: 29-03-2004
EXPIRY DATE: 28-03-2006
FILE NO.: PL. 5/142
LVB 4528/04
THIS AGREEMENT is made the 29th day of March 2004 BETWEEN THE GOVERNMENT OF THE
REPUBLIC OF GHANA (hereinafter called "THE GOVERNMENT") acting by XXX. XXXXXXX
XXXXXXXXX, the Minister of Mines (hereinafter called "THE MINISTER") of the One
Part and GOLDENRAE MINING LIMITED having its registered office at 0 XXXXXX XXXX
XXXX XXXXXXXXXXX, PMB 23, CANTONMENTS - ACCRA, GHANA (hereinafter called "THE
COMPANY") of the Other Part.
WHEREAS:
--------
A. It is Government's policy to take all such steps as it deems appropriate
and effective for prospecting for minerals in the Republic of Ghana and
for producing gold and diamonds hereby ensuring that the maximum possible
benefits accrue to the nation from the exploitation of its mineral
resources;
B. In pursuit of the above policy Government desires to secure the
co-operation of Companies which possess the necessary financial and
managerial qualifications and skills for carrying out mineral operations;
C. The Company, which warrants its financial, technical and managerial
competence for undertaking mineral operations has declared itself willing
to engage in prospecting operations in Ghana on the understanding that it
shall bear the risk and cost of such prospecting operations and on
establishing that there are good prospects for undertaking commercial
mining operations it may apply for and be granted a mining lease subject
to the provisions of the Minerals and Mining Law, 1986 (PNDCL 153);
WITNESSESS AS FOLLOWS:
----------------------
1. The Government hereby grants unto the Company the right and licence to
Prospect for and prove gold and diamonds under or in the area described in
the Schedule hereto and demarcated on the map which forms part of this
AGREEMENT (hereinafter called "the Licence Area") excluding any parts to
be relinquished from time to time for a term of TWO (2) YEARS from the 24
day of March 2004 with a right of extension as hereinafter provided.
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2. RIGHTS OF THE COMPANY:
----------------------
a. The Company shall have the right to conduct such geological and
geophysical investigations in the Licensed Area as it considers
necessary to determine an adequate quantity of geologically proven
and mineable reserve of gold and diamonds.
b. The Company may exercise all or any of the rights and powers granted
hereunder through agents, independent contractors or
sub-contractors.
c. The Company shall not conduct any operations in a sacred area and
shall not without the prior consent of the Minister conduct any
operations:
i. within twenty metres of any building, installations,
reservoir, dam, public road, railway or area appropriated for
a railway; or
ii. in an area occupied by a market, burial ground, cemetery or
within a town or village or an area set apart for, used,
appropriated or dedicated to a public purpose.
d. Nothing contained in this Agreement shall be deemed to permit the
Company to dispense with the necessity of applying for and obtaining
any permit or authority which the Company may be required by law or
regulation to obtain in respect of any works and/or activities to be
carried out hereunder.
3. RIGHTS OF THIRD PARTIES:
------------------------
a. The Government reserves the right to grant licenses to third parties
for prospecting or enter into Agreements for the production of
minerals other than gold and diamonds in the Licensed Area, provided
that any such activity shall not unreasonably interfere with the
rights granted to the Company hereunder.
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b. The Company shall not hinder or prevent members of the local
population from exercising the following customary rights and
privileges in or over the Licensed Area:
i. to xxxx game
ii. to gather firewood for domestic purposes
iii. to collect snails
iv. to till and cultivate farms
v. to observe rites in respect of xxxxxx and other areas held to
be sacred.
Provided always that where the exercise of these customary rights
and privileges unduly interferes with or obstructs the operations of
the Company hereunder, the Company shall make arrangements with
members of the said local population for the limitation or waiver of
such rights and privileges, such arrangements to include the payment
of compensation where necessary. The Government shall furnish such
assistance as is reasonably required in the making of such
arrangements.
4. CONDUCT OF OPERATIONS:
----------------------
a. The Company shall conduct all of its operations hereunder with due
diligence, efficiency and economy to the maximum extent possible
consistent with good mining industry practice and in a proper
workmanlike manner observing sound technical and engineering
principles and practices, using appropriate modern and effective
equipment, machinery, materials and methods and to pay particular
regard to the protection of the environment.
b. The Company shall maintain all equipment in good repair and all pits
and trenches and all excavated areas in safe and good condition and
take all practicable steps:-
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i. to prevent damage to adjoining farms and villages;
ii. to avoid damage to trees, crops, building, structures and
other property in the Licensed Area to the extent however,
that any such damage is unavoidable the Company shall pay fair
and reasonable compensation.
The Company shall provide and maintain in good repair and
condition proper roads, gates, xxxxxx and fences for the
convenient occupation of the surface of the Licensed Area.
c. The Company shall use its best efforts to exercise its rights and
powers granted by this Agreement in such manner as not to cause
interference with or avoidable obstruction or interruption to the
felling of timber by the licensed timber operators within the
Licensed Area and the Government shall furnish assistance to the
Company to make appropriate arrangements with such operators to
permit the prospecting programme to proceed without interference or
delay.
5. WORKING OBLIGATIONS:
--------------------
a. The Company shall with due diligence and by means of modern
geological, geophysical and other methods normally associated with
mineral prospecting and within three months of the date of this
Agreement or at such other time as the Minister may specify,
commence prospecting operations with a view to establishing the
existence of gold and diamonds in economic quantities.
b. The Company, having prior to the commencement of this Agreement
submitted its programme of work to the Government, shall carry out
its operations in accordance with the programme and the Chief
Executive of the Minerals Commission, Chief Inspector of Mines or
any other officer authorized by the Government shall from time to
time inspect the operations to ensure that the Company does so.
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c. The Company shall diligently continue to carry out its operations
hereunder and shall spend as actual direct prospecting expenditure
not less than the minimum amounts specified in its work programme.
d. If on the termination or expiration of this Agreement for any reason
other than force majeure the Company shall not have spent the
amounts specified in the work programme, the difference between the
amount actually expended and the stipulated minimum for the year in
which termination or expiration takes place shall be paid to the
Government within thirty days after the date of such termination or
expiration provided that if the termination shall be occasioned by
force majeure or upon adequate proof, by the Company that gold and
diamonds mineralization does not exist in sufficient quantities in
the area to warrant completion of the work programme, the Company
shall not be liable to pay to the Government any difference on the
stipulated minimum expenditure.
6. NOTIFICATION OF DISCOVERY OF OTHER MINERALS:
--------------------------------------------
The Company shall report forthwith to the Minister, the Chief Inspector of
Mines, the Director of Geological Survey and the Chief Executive of the
Minerals Commission the discovery in the Licensed Area of any other
minerals and the Company shall be given the first option to prospect
further and to work the said minerals subject to satisfactory arrangements
between the Government and the Company.
7. SAMPLES:
--------
a. The Company shall not during the currency of this Agreement destroy,
except in analyses, any cores or samples obtained from the Licensed
Area without the prior written consent of the Director of Ghana
Geological Survey.
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b. The Company shall provide the Director of Ghana Geological Survey
and the Chief Inspector of Mines with such samples from the Licensed
Area as they may from time to time reasonably request.
c. All cores and samples obtained from the Licensed Area shall be
delivered to the Director of Ghana Geological Survey on the
termination of this Agreement and in the event of the Company not
obtaining a mining lease.
8. RECORDS:
--------
a. The Company shall maintain at its registered office copies of the
following:-
i. full and complete records and books of account relating to the
prospecting programme.
ii. the detailed results and analysis of all surveys, boring,
pitting, investigations and other testing conducted pursuant
to the provisions of this Agreement.
b. The records referred to in the foregoing paragraph shall include
copies of all geological, geophysical, geochemical, drilling and
pitting reports relating to the Licensed Area and all maps, drawings
and diagrams pertaining to these reports.
c. The said records, with the exception of proprietary technical
information, shall be made available for inspection at reasonable
times without delaying work on the prospecting programme, by the
Chief Inspector of Mines and the Chief Executive of the Minerals
Commission or their representatives, upon request, and shall be
retained in Ghana, unless removed with Government's consent.
d. Failure to keep such records and to produce them for inspection upon
receipt of reasonable notice shall constitute just cause for the
cancellation of this Licence.
e. Copies of the aforementioned records shall be delivered to the Chief
Executive of the Minerals Commission and the Chief Inspector of
Mines on the termination of this Agreement and in the event of the
Company not obtaining a mining lease in respect of the Licensed
Area.
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9. REPORTS:
--------
a. The Company shall furnish to the Chief Inspector of Mines, the
Director of Ghana Geological Survey and the Chief Executive of the
Minerals Commission, not later than the 15th of each third month, a
report giving a general description of the work done by the Company
in the preceding quarter and containing a description accompanied by
a sketch plan of the areas where any gold and diamonds or any other
minerals were found, particulars of the type of minerals found and
the number and weight of samples taken, if any.
b. The Company shall furnish to the Chief Inspector of Mines, Chief
Executive of the Minerals Commission and the Director of Ghana
Geological Survey not later than sixty days after the end of each
calendar year, an Annual Report in such form as may be prescribed.
c. All records, reports, plans and information which the Company is
required to supply to the Government and its agents pursuant to the
provisions of this Agreement shall be supplied at the expense of the
Company.
d. Any information or material supplied by the Company to the
Government pursuant to the provisions of this Agreement shall be
treated by the Government, its officers and agents as confidential
and shall not be revealed to third parties except with the consent
of the Company (which consent shall not be unreasonably withheld)
for a period of 12 months with respect to technical information and
36 months with respect to financial information from the date of
submission of such information. The Government and persons
authorized by the Government may nevertheless use any such
information received from the Company for the purpose of preparing
and publishing general reports on minerals in Ghana.
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10. FINANCIAL OBLIGATION:
---------------------
a. The Company shall pay to the Government:
i. in consideration of the grant of the right of prospecting for
gold and diamonds in the Licensed Area an amount of
US$15,000.00 (fifteen thousand U.S. Dollars) within 30 days
from the date of this Agreement.
ii. a yearly rent of (cent) 67,000.00 (sixty seven thousand cedis)
b. Payment of the rent specified in the foregoing paragraph shall be
made yearly in advance, the first year's payment having been made
before the execution of this Agreement.
11. ASSIGNMENT, MORTGAGE, ETC:
--------------------------
a. The Company shall not assign, mortgage, sublet or otherwise transfer
any interest in the Licensed Area without the prior written consent
of the Government.
b. The Government may impose such conditions on the giving of such
consent as it thinks fit.
12. SURRENDER OF PART OF LICENSED AREA:
-----------------------------------
a. The Company may surrender at any time and from time to time by
giving not less than three months' notice to the Chief Inspector of
Mines and the Chief Executive of the Minerals Commission, all its
rights hereunder in respect of any part or parts of the Licensed
Area. The Company shall be relieved of all obligations in respect of
the part or parts of the Licensed Area so surrendered except those
obligations which accrued prior to the effective date of surrender.
b. The Company shall leave the part of the Licensed Area surrendered
and everything thereon in a safe condition. The Company shall take
all reasonable measures to restore the surface of such part of the
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Licensed Area surrendered and all structures thereon not the
property of the Company to their original condition. In the event
that the Company fails to do so, the Chief Inspector of Mines shall
make such part and everything thereon safe and in good condition at
the expense of the Company.
13. RENEWAL OF LICENCE:
-------------------
a. If the Company applies in writing to the Government not less than
three months before the expiration of this Agreement for a renewal
of the licence hereof and if the Company shall not be in default at
that time in the performance of any of its obligations hereunder the
Company may, subject to the provisions of the law, be granted a
period not exceeding two years upon such terms and conditions as the
parties may then agree.
b. A further renewal of the licence may be granted in accordance with
the provisions of the Minerals and Mining Law 1986, PNDCL 153.
14. RE-ENTRY BY GOVERNMENT:
-----------------------
If the operations and activities of the Company in accordance with the
prospecting programme shall cease in the Licensed Area before the same
have been completed and if such cessation shall be due entirely to the
fault of the Company, the Government may, upon giving the notice and
following the procedure required in paragraph 15 below, re-enter the
Licensed Area and take possession of all buildings, erections, plants and
materials thereon without compensation to the Company (such right of entry
not to prejudice any additional remedy of the Government), and thereupon
the Agreement shall terminate.
15. TERMINATION BY THE GOVERNMENT:
------------------------------
a. The Government may, subject to the provisions of this paragraph,
terminate this Agreement if any of the following events shall occur:
i. the Company shall fail to make any of the payments described
in this Agreement on the payment date; or
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ii. the Company shall contravene or fail to comply with any other
condition of this Agreement; or
iii. the Company shall become insolvent or commit any act of
bankruptcy or enter into any agreement or composition with its
creditors or take advantage of any law for the benefit of
debtors or go into liquidation, whether compulsory or
voluntary, except for the purposes of reconstruction or
amalgamation; or
iv. the Company knowingly submits any false statement to the
Government in connection with this Agreement.
b. If and whenever the Government decides to terminate this Agreement
pursuant to clauses (i) and (ii) of the preceding sub-paragraph, the
Government shall give the Company notice specifying the particular
contravention or failure and permit the Company to remedy the same
within twenty-one days of such notice or such longer period as the
Minister may specify in such notice as reasonable in the
circumstances.
c. If the Company shall fail to remedy an event specified in clauses
(i) and (ii) of sub-paragraph (a) of this paragraph within the
stated period, or an event specified in clauses (iii) and (iv) of
the said sub-paragraph shall occur, the Government may by notice to
the Company terminate this Agreement.
d. Upon termination of this Agreement by the Government every right of
the Company hereunder shall cease (save as specifically otherwise
provided hereunder) but subject nevertheless and without prejudice
to any obligation or liability imposed or incurred under this
Agreement or applicable law prior to the effective date of
termination.
e. No delay or omission or course of dealing by the Government shall
impair any of its rights hereunder or be construed to be a waiver of
an event specified in sub-paragraph (a) of this paragraph or
acquiescence therein.
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16. ASSETS ON TERMINATION OR EXPIRATION:
------------------------------------
Upon the termination or expiration of this Agreement, the Company may
within sixty days from the effective date of such termination, remove from
the Licensed Area any structures and installations erected and any
movables placed thereon by the Company. Any structures, installations and
movables not so removed within the said period shall become the property
of the Government without charge.
17. FORCE MAJEURE:
--------------
a. Failure on the part of the Company to comply with any of the terms
and conditions hereof (except the obligations to make payment of
monies to the Government) shall not be grounds for cancellation or
give the Government any claim for damages in so far as such failure
arises from force majeure, the Company having taken all appropriate
precautions, due care and reasonable alternative measures with the
objective of avoiding such failure and of carrying out its
obligations hereunder. The Company shall take all reasonable
measures to remove such inability to fulfill the obligations
hereunder with the minimum of delay.
b. For purposes of this paragraph force majeure includes acts of God,
war, insurrection, earthquake, storm, flood or other adverse weather
condition but shall not include any event caused by the failure to
observe good mining industry practice or by the negligence of the
Company or any of its employees or contractors.
c. The Company shall notify the Minister within twenty-four hours of an
event of force majeure affecting its ability to fulfill the terms
and conditions hereof.
d. The period of this Agreement shall be extended for a period of time
equal to the period or periods during which the company was affected
by any of the conditions set forth in sub-paragraph (b) of this
paragraph, but not to exceed six months in the aggregate.
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18. FOREIGN EXCHANGE:
-----------------
a. Subject to sub-paragraph (b) of this paragraph the Company shall,
during the term of this Agreement and so long as it does not derive
any revenue from its operations hereunder, finance such operations
in the following manner:
i. by converting to Ghana currency through authorized dealers
such amounts of foreign currency as will be sufficient to
cover the Company's operating expenses required to be paid in
Ghana currency including any payments to the Government and
third parties provided that the terms of any loans obtained
abroad shall be in conformity with currency international
commercial and monetary conditions and that prior notice of
such loans and advances shall be furnished to the Bank of
Ghana.
ii. By directly purchasing and/or hiring abroad as is necessary
for conducting the prospecting programme with its foreign
currency funds and importing to and/or using in Ghana freely
and without restrictions such machinery, equipment, materials
and services of any nature whatsoever as will be required by
the Company for its operations hereunder.
b. The Company may be required to pay all its rentals and other
licensing fees to the Government in dollars or other freely
convertible currency, or such currencies as shall be specified by
the Bank of Ghana.
c. All conversions of currency shall be made at the prevailing official
rates of exchange.
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19. PRODUCTION AGREEMENT:
---------------------
If upon the expiration of this Agreement the Company shall have carried
out its obligations hereunder to the satisfaction of the Government and
shall have successfully established to the Government that the development
of a mine from ore reserves established within the Licensed Area is
economically and financially feasible, then the Government shall grant to
the Company the first option to (i) acquire a lease for the purposes of
mining in the Licensed Area, and (ii) participate in a mining project in
the Licensed Area subject to negotiation with the Government of
satisfactory terms for such licence and participation
20. NOTICE:
-------
Any application, notice, consent, approval, direction, or instruction
hereunder shall be in writing and shall be served by hand or by registered
mail. Delivery by hand shall be deemed to be effective when made, and
delivery by registered mail shall be deemed to be effective at such time
as it would in the ordinary course of registered mail be delivered to the
addressee. Until changed by appropriate notice, the Company's address in
Ghana is its registered office as set forth above and the addresses of the
Government officials are as follows:
i. The Hon. Minister, Ministry of Mines, P.O. Box M.212, Accra.
ii. The Chief Inspector of Mines, Mines Department, P.O. Box 3634, Accra
iii. The Director, Ghana Geological Survey, P.O. Box M.80, Accra
iv. The Chief Executive, Minerals Commission, P.O. Box M.248, Accra
v. The Director, Survey Department, P.O. Box 191, Accra
vi. The Governor, Bank of Ghana, P.O. Box 2674, Accra.
21. ARBITRATION:
------------
Subject to the provisions hereof, if any time during the continuance of
this Agreement or after its termination any question or dispute shall
arise regarding the rights, powers, duties and liabilities of the parties
hereto such question or dispute shall be referred to arbitration in
accordance with the Arbitration Act 1961 (Act 38). In such event, there
shall be two arbitrators, one to be appointed by each party.
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22. GOVERNING LAW:
--------------
This Agreement shall be governed by, construed and interpreted in
accordance with the laws of Ghana.
23. HEADINGS:
---------
The headings given to paragraphs in this Agreement are for convenience
only and shall not affect the construction or interpretation of this
Agreement.
THE SCHEDULE ABOVE REFERRED TO:
-------------------------------
All that piece or parcel of land containing an approximate area of 33.65 square
kilometres lying to the North of Latitudes 6(degree)06'35", 6(degree)07'13" and
6(degree)08'35"; South of Latitudes 6(degree)09145", 6(degree)10'06",
6(degree)11'01", 6(degree)11'05" and 6(degree)11'15"; East of Longitudes
0(degree)34'35", 0(degree)35'04", 0(degree)36'01" and 0(degree)36'22"; West of
Longitudes 0(degree)31'52", 0(degree)32'55", 0(degree)33'19" and 0(degree)33'41"
in the East Akim District of the Eastern Region of the Republic of Ghana which
piece or parcel of land is more particularly delineated on the plan annexed
hereto for the purposes of identification and not of limitation.
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IN WITNESS WHEREOF the parties hereto have executed this Agreement the day and
year first above written.
SIGNED AND SEALED with the SEAL )
of the Ministry of Lands, Forestry & )
Mines and DELIVERED by )
the said XXX. XXXXXXX XXXXXXXXX ) /s/ Xxxxxxx Xxxxxxxxx
Minister of Mines for and on behalf of ) Xxxxxxx Xxxxxxxxx, Minister
the Government of the ) Ministry of Mines
Republic of Ghana in the presence: )
/s/ Xxxxx Xxxx
--------------
Xxxxx Xxxx
Witness
The COMMON SEAL/STAMP of the said )
GOLDENRAE MINING COMPANY LTD. )
was affixed to these presents and the )
same were DELIVERED in the )
presence of: )
/s/ Xxxxxxx Xxxxxx
------------------
Xxxxxxx Xxxxxx
Managing Director
/s/ Xxxxx Xxxxx
---------------
Xxxxx Xxxxx
Secretary
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OATH OF PROOF
-------------
I, Xxxxxx Xxxxxx, of Minerals Commission MAKE OATH and SAY that on the 25th. day
of March, 2004
I was present and saw XXX. XXXXXXX XXXXXXXXX, the Minister of Mines duly execute
the Instrument now produced to me and Marked "A" and that the said XXX. XXXXXXX
XXXXXXXXX can read and write,
Sworn at Accra this...21st... day of April, 2004
Before Me
/s/ /s/ Xxxxxx Xxxxxx
------------------ -----------------
REGISTRAR OF LANDS DEPONENT
This is the Instrument Marked "A" Referred to in the Oath of Xxxxxx Xxxxxx
SWORN before me this 21st... day of April, 2004
/s/
------------------
REGISTRAR OF LANDS
High Court Accra
On the...21st...day of April, 2004 at 12:14 O'clock in the afternoon this
Instrument was proved before me by the Oath of the within-named Xxxxxx Xxxxxx to
have been duly executed by the within-named Xxxxxx Xxxxxx.
/s/
------------------
REGISTRAR OF LANDS
Chief Registrar
High Court Accra
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