1
Exhibit 10.31
Translation from Russian
ANNEX No 1
to License HAB 10650 BE
LICENSING AGREEMENT
Under the authority of the joint Order on Reregistration of License HAB #00240
BE issued on October 3, 1997 # 83-r/23.10.97 # 8.10-5012, the Ministry of
Natural Resources of the Russian Federation in the person of First Deputy
Minister Xxxxx X. Xxxxxxxxxx and the Administration of the Khabarovsk Territory
in the person of Deputy Head of the Administration of the Khabarovsk Territory
Xxxxxx X. Xxxxxxxxxx, on the one hand, and Closed Joint Stock Company
"Tas-Yurjah" Mining Company" in the person of its General Director Xxxxxxxx X.
Xxxxxxxx, acting in accordance with the Charter (further on "User of mineral
resources"), on the other hand, and together referred to as "Parties", following
the effective legislation of the Russian Federation and normative acts of the
Khabarovsk Territory, have concluded this Agreement with respect to the
following:
1. SUBJECT OF THE AGREEMENT
1.1. The User of mineral resources is granted a license for the right to use
mineral resources of the Tas-Yurjah deposit with the goal to mine ore gold.
In accordance with Minutes # 423 of the State Committee on Reserves of the
Ministry of Natural Resources of Russia dated March 4, 1997, proven and probable
(C(1) + C(2)) gold reserves on the licensed area are assessed at 10544 kg at
2.2. g/t gold grade, subeconomic reserves - 1231 kg.
1.2. For the period of exploration and mining the transferred area of 61.25 ha
is granted a status of a claim (mining allotment), the preliminary boundaries of
the claim are shown in Annex 3.
The depth is limited to the mineralization depth.
1.3. In accordance with clause 1.2 and clause 22, i. 4 mined out minerals as
well as waste of mining and associate processing shall be considered the
ownership of the User of mineral resources.
1.4. The area within the bounds of the Tas-Yurjah deposit granted by the license
shall not be considered the ownership of the User of mineral resources and
cannot serve as a pledge. The license for the right to use mineral resources, to
which this Agreement is an annex, cannot be transferred to any other legal or
physical person.
2. EFFECTIVE PERIOD
2.1. The effective period of this Agreement coincides with the effective period
of the license for the right to use mineral resources (till December 31, 2004).
2.2. The activities under this Agreement can be terminated, suspended or limited
before the expiry of the Agreement by the bodies that issued the license in
accordance with clause 20 of the Law of the Russian Federation "On Introduction
of Changes and Amendments to the Law of the Russian Federation "On Mineral
Resources", including on the initiative of the User of mineral resources.
2.3. In case the enterprise changes its organizational-legal form or is
reorganized or changes its name the license for the right to use mineral
resources shall be reregistered in accordance with item
2
17-1 of the Law of the Russian Federation "On Introduction of Changes and
Amendments to the Law of the Russian Federation "On Mineral Resources".
2.4. The term of the use of mineral resources on the granted area can be
extended on the initiative of the User of mineral resources provided that this
Agreement is implemented.
3. CONDITIONS OF THE USE OF MINERAL RESOURCES
The User of mineral resources is bound:
3.1. To conduct exploration to determine operating water reserves in the
subfrost level recommended as a source of household-drinking and process
water-supply for the mine, and to study physical and mechanical properties of
the ore and host rocks to substantiate the optimum slope angle of the pit
flanks.
3.2. To conduct metallurgical testing of deep ores on samples representative in
their mineral composition and gold grade with the goal to make the metallurgical
indices of their processing more precise, and to review expediency of heap xxxxx
processing of subeconomic ores within the pit outline.
3.3. In connection with complicated structure of the deposit and rather
irregular distribution of mineralization to ensure outstripping development
exploration during exploitation of reserves.
3.4. Proceeding from 16.3 tons gold reserves registered in the balance sheet for
the deposit as of April 4, 1997, technical and economical indices of the
activities of the enterprise, annual ore production shall be 130,000 tons, gold
production - not less than 2.7 tons starting from 1999.
3.5. During the exploitation of the deposit the User of mineral resources is
bound to observe the norms, standards and rules for protection of surface and
underground waters, air, land, animal and plant world in accordance with the
legislation in force.
3.6. All operations on the license area shall be conducted in accordance with
safety and health protection standards set by the law to minimize the risk or
danger for the workers hired by the User of mineral resources.
3.7. The User of mineral resources shall participate in social and economical
development of the Xxxx-Xxxx region in the Khabarovsk Territory in accordance
with additional agreements with the regional Administration.
3.8. The User of natural resources shall conduct environmental monitoring.
3.9. During organization of geological exploration and mining operations the
User of natural resources shall ensure preferential right for employment to the
residents of the Xxxx-Xxxx region.
3.10. The User of mineral resources shall keep continuous records and take
charge of mined out in situ and expanded mineral reserves in accordance with
normative documents effective in this respect.
4. PAYMENTS AND TAXES
3
4.1. Within the effective period of this Agreement the User of mineral resources
is covered by the taxation regime established by the legislative authorities of
the Russian Federation, normative acts of the Khabarovsk Territory and local
authorities.
4.2. The User of mineral resources is levied by the following taxes for the
right to use mineral resources of the Tas-Yurjah deposit:
4.2.1. Regular tax for the right to conduct exploration - 3%
4.2.2. Regular tax for the right to mine gold - 3%. In case of above the norm
losses of reserves in mining the tax shall be doubled. For associate mining of
mineral resources performed simultaneously with deposit exploration the tax rate
shall be the same as for the right to mine.
4.2.3. Tax for production of mineral resources - 7.8%
4.3. In addition to these, the Owner of the license shall pay all the taxes,
duties and other payments envisioned by the legislation of the Russian
Federation, including land tax, environment conservation, etc.
5. DOCUMENTATION AND ACCOUNTS
5.1. After receipt of the license its Owner has the right to get the full
geological information available for the area granted under the license.
5.2. The User of mineral resources shall submit reports of prospecting and
mining operations to the Committee of Natural Resources of the Khabarovsk
Territory annually not later than February 1 of the year following the reporting
period in accordance with the Order of the Government of the Russian Federation
# 215 dated February 28, 1996.
5.3. The User of natural resources shall submit long-term and annual programs of
mining operations to the Priamursk Department of Gosgortechnadzor (State
Mining-Technical Supervision) of Russia.
5.4. The geological information gained in the process of commercial development
of the Tas-Yurjah deposit at the expense of the User of natural resources shall
be considered the ownership of the User of natural resources.
5.5. The information mentioned in i. 5.3 of this Agreement shall come in a set
form into the Territorial Geological Fund and into the Russian State Geological
Fund for storage and systematization.
5.6. Geological information obtained at the expense of the User of mineral
resources shall be used only on permit of the User of mineral resources. the
Committee of Natural Resources of the Khabarovsk Territory and the Territorial
Geological Fund ensure confidentiality of the use of the information stored at
the Geological Funds.
5.7. Bodies of state power have the right to use the geological information
obtained at the expense of the User of natural resources for development of
governmental programs.
4
6. RESTITUTION OF LAND
6.1. The User of natural resources shall return the land to the prior user after
reclamation of disturbed areas and bringing them to condition suitable for their
use in the kinds of activities traditional in the region in accordance with the
procedure established by the laws in effect.
6.2. In case of full or partial liquidation or temporary closing down of the
enterprise workings and drill holes shall be brought into condition that ensures
safety of life and health of the population, conservation of the environment,
protection of buildings and structures, and in case of temporary closing down --
also safe keeping of the deposit, workings and drill holes for the whole time of
temporary closing down. Geological, mine surveying and other documentation shall
be filled at the moment of conclusion of work and be submitted for storage in
accordance with the accepted procedure.
7. FORCE MAJEURE CIRCUMSTANCES
7.1. The execution of the obligations by the Parties under this Agreement shall
be suspended and their rights shall be prolonged at the extend in which the
fulfillment of their obligations by the Parties becomes impossible due to
occurrence of force majeure circumstances.
Any extension of the terms specified in this Agreement for fulfillment of the
obligations by the Parties associated with force majeure circumstances shall be
executed on a "day for day" basis, including the time for suspension and
resumption of work.
7.2. Force majeure circumstances in this Agreement include any circumstances
that are beyond control and influence of the Parties that act reasonably and
with due caution, including:
- Acts of God;
- war activities;
- suspension of the production process for more than seven days caused
by circumstances that are beyond control by the User of mineral
resources;
- acts of the Government of the Russian Federation or other bodies of
state power and control that cause suspension of production or
lowering of its volume for a period to 10 days;
- unforeseen geological or metallurgical circumstances that require
review of the work programs or influence in any other way
technical-economical indices of the enterprise.
8. RESPONSIBILITIES OF THE PARTIES
8.1. The Administration of the Khabarovsk Territory and Ministry of Natural
Resources shall execute control over fulfillment of the obligations under this
Agreement by the User of natural resources.
8.2. The Parties shall bear responsibility established by this Agreement and
legislation in force for fulfillment of the provisions of this Agreement.
8.3. The obligations of the User of natural resources under this Agreement are
essential conditions of the license to which this Agreement is an Annex. In case
of non-fulfillment or improper fulfillment of the obligations under this
Agreement by the User of natural resources the right to use mineral resources
can be terminated, suspended or limited before the appointed time in accordance
with procedure established by clause 21 of the Law of the Russian Federation "On
introduction of changes and amendments into the Law of the Russian Federation
"On mineral resources". In this
5
case the User of natural resources shall indemnify in full the loss inflicted by
non-fulfillment or improper fulfillment of his obligations under this Agreement.
9. VALIDITY OF THE AGREEMENT
9.1. This Agreement is an integral part of the license for the right to use
mineral resources within the bounds of the area specified in this Agreement.
9.2. This Agreement comes into force simultaneously with the license for the
right to use mineral resources.
9.3. This Agreement shall be terminated simultaneously with termination of the
License for the right to use mineral resources, to which this Agreement is an
Annex.
10. SETTLEMENT OF DISPUTES
10.1. The disputes arising from this Agreement shall be settled by bodies of
state power or arbitration court of respective jurisdiction and in accordance
with the procedure established by the legislation.
Authorized representative Authorized representative
of the Ministry of Natural Resources of the Administration
of the Russian Federation of the Khabarovsk Territory
/s/ Xxxxx X. Yatzkevich Xxxxx X. Yatzkevich /s/ Xxxxxx X. Xxxxxxxxxx Xxxxxx X. Xxxxxxxxxx
----------------------- ------------------------
________ 1998 ________ 1998
Authorized representative of
the Enterprise securing a license
/s/ Xxxxxxxx X. Xxxxxxxx Xxxxxxxx X. Xxxxxxxx
------------------------
May 6, 1998
6
Translation from Russian
Annex # 13
to License HAB 10650 BE
AMMENDMENT
TO THE LICENSING AGREEMENT
The Administration of the Khabarovsk Territory in the person of Deputy Head of
the Administration Xxxxxxx X. Xxxxxxxxxx and Ministry of Natural Resources of
the Russian Federation in the person of First Deputy Minister Xxxxx X.
Xxxxxxxxxx, on the one hand, and CJS Company "Tas-Yurjah" Mining Company" in the
person of its General Director Xxxxxxxx X. Xxxxxxxx, on the other hand, have
concluded this Amendment to the Licensing Agreement with respect to the
following:
Item 3.4. Of the Licensing Agreement shall be set forth in the following
wording:
"Proceeding from 10544 kg C(1) + C(2) (proven + probable) gold reserves
registered in the balance sheet for the deposit as of April 4, 1997 (Minutes of
the State Committee on Reserves # 423 dated April 4, 1997), technical and
economical indices of the activities of the enterprise, annual ore production
shall be 80,000 tons, gold production - not less than 2 tons starting from
December 31, 2001".
Item 4.2.3. shall be set forth in the following wording:
"Tax for production of mineral resources shall be paid at a rate of 7.8% of the
cost of sold gold in the amount of 2090 kg, explored at the expense of state
budget.
Under the authority of clause 44 of the Law of the Russian Federation "On
mineral Resources" the User of natural resources shall be exempted from tax for
production of mineral resources in the portion of gold production explored at
the User's own expense."
Authorized representative Authorized representative
of the Administration of the Ministry of Natural Resources
of the Khabarovsk Territory of the Russian Federation
/s/ X. Xxxxxxxxxx X. Xxxxxxxxxx /s/ X. Xxxxxxxxxx X.Xxxxxxxxxx
------------------ ------------------
____________ 1999 ____________ 1999
Authorized representative of
the Enterprise securing a license
/s/ Xxxxxxxx X. Xxxxxxxx Xxxxxxxx X. Xxxxxxxx
------------------------
January 22, 1999
7
ANNEX #2
to License HAB 10650 BE
- Area of the Tas-Yurjah deposit with 2.1 tons explored gold reserves.
Coordinates of the center of the area: 137(degrees) 29' E; 58(degrees) 42' N.
The coordinates of the corner points of the claim will be determined based on
the plan of reserves calculation.
Scale: 1:200,000
8
THE PIONEER GROUP, INC.
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000-0000
000-000-0000
[PIONEER LOGO]
The undersigned hereby certifies that the translation of Licensing
Agreement regarding License No. HAB 10650 BE dated as of May 6 1998 by and among
the Ministry of Natural Resources of the Russian Federation, the Khabarovsk
Territory, and closed Joint-Stock Company "Tas-Yurjah" Mining Company, as
amended January 22, 1999, to which this certification is attached, is a fair and
accurate translation of the original document executed in Russian.
Dated: May 22, 2000
Xxxxxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxxxxx Xxxxxxx
Title: Vice President and Assistant
General Counsel, The Pioneer Group,
Inc.
