OPERATING AGREEMENT between KWAGGA GOLD (PROPRIETARY) LIMITED and WITS BASIN PRECIOUS MINERALS INCORPORATED
EXHIBIT
10.2
between
KWAGGA
GOLD (PROPRIETARY) LIMITED
and
WITS
BASIN PRECIOUS MINERALS INCORPORATED
TABLE
OF CONTENTS
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DEFINITIONS
AND INTERPRETATIONS
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1
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1.1
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Definitions.
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1
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1.2
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Number
and Gender
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7
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1.3
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Annexes
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7
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2.
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TITLE
TO ASSETS
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7
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2.1
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Title
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7
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3.
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MANAGER
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8
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3.1
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Appointment
of Manager
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8
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3.2
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Powers
and Duties of Manager
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8
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3.3
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Manager
Not Liable
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11
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3.4
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Conduct
of Operations
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11
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3.5
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Termination
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11
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3.6
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Payments
to Manager
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12
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3.7
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Transaction
with Affiliates
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12
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3.8
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Agent
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12
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3.9
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Operation
Contracts
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12
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4.
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WORK
PROGRAMS AND BUDGETS
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13
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4.1
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Operations
Pursuant to Programs
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13
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4.2
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Presentation
of Programs and Budgets
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13
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4.3
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Feasibility
Studies and Mine Construction Programs
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13
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4.4
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Review
and Approval of Proposed Work Programs and Budgets
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14
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4.5
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Budget
Overruns/Contingency Provision
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15
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4.6
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Emergency
or Unexpected Expenditures.
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15
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5.
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ACCOUNTS
AND SETTLEMENTS
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15
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5.1
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Monthly
Statements
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15
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5.2
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Cash
Calls
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15
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5.3
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Failure
to Pay Invoices
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16
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5.4
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Audits
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16
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5.5
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Manager's
Own Funds
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16
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6.
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OPERATING
PLANS
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16
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6.1
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Obligation
to Pay Operating Costs and Overruns
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16
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6.2
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Operating
Plans
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16
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6.3
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Excess
Operating Costs and Overruns
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17
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6.4
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No
Agreement on Operating Plans
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17
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6.5
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Suspension
of Mining
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17
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6.6
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Shut
Down Plan
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17
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6.7
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Bank
Account
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18
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6.8
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Loans
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18
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7.
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DISTRIBUTIONS
AND MARKETING
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18
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7.1
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Distribution
of Distributable Cash Flow
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18
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i
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7.2
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Appointment
of Manager as Marketing Manager
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19
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7.3
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Power
of Marketing Manager.
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19
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8.
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TERMINATION
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20
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8.1
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Termination
by Expiration or Agreement
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20
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8.2
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Continuing
Obligations
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20
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8.3
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Disposition
of Assets on Termination
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20
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8.4
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Continuing
Authority
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20
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9.
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ACQUISITION,
ABANDONMENT AND SURRENDER OF PROPERTY
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21
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9.1
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Surrender
or Abandonment of Property
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21
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10.
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INDEMNITIES
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21
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10.1
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Indemnification
of Manager
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21
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10.2
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Indemnification
of Kwagga
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21
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10.3
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Limitation
of Liability
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21
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11.
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GENERAL
PROVISIONS
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22
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11.1
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Notices
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22
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11.2
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Time
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22
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11.3
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Force
Majeure
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23
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11.4
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Modification
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23
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11.5
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Waiver
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23
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11.6
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Interpretation
and Severability
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23
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11.7
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Governing
Law
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23
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11.8
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Further
Assurances
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24
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11.9
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Survival
of Terms and Conditions
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24
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11.10
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Enurement
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24
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ii
THIS
AGREEMENT
is made
as of the 12th day of December, 2007
BETWEEN:
KWAGGA
GOLD (PROPRIETARY) LIMITED,
a
company incorporated under the laws of the Republic of South Africa
(Registration Number 98/07520/07)
("Kwagga")
OF
THE
FIRST PART
AND:
WITS
BASIN PRECIOUS MINERALS LIMITED a
company
incorporated under the laws of the
United States of America
("WB")
OF
THE
SECOND PART
WHEREAS:
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A.
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Kwagga
holds rights to a 100% interest in certain mineral properties in
the
Republic of South Africa which are more particularly hereinafter
described;
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B.
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Kwagga
wishes to appoint WB to manage the exploration and evaluation, and
if
feasible, the development and mining of
gold and other metals and minerals
within such properties;
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NOW,
THEREFORE,
this
Agreement witnesses that for good and valuable consideration, the receipt and
sufficiency of which each of the parties acknowledges, the parties hereto agree
as follows:
| 1. |
DEFINITIONS
AND INTERPRETATIONS
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| 1.1 |
Definitions.
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(a) "Account"
means
the account maintained in accordance with the Accounting Procedure showing
the
charges and credits accruing to Kwagga.
(b) "Accounting
Procedure"
means
the procedure set forth in Annex B.
(c) "Affiliate"
means
any person which directly or indirectly controls, is controlled by, or is under
common control with, a Party. For purposes of the preceding sentence, "control"
means possession, directly or indirectly, of the power to direct or cause
direction of management and policies through ownership of voting securities,
contract, voting trust, or otherwise. It is understood and agreed that control
of a company can be exercised by another company or companies if such latter
company or companies owns shares carrying more than 50% of the votes exercisable
at a general meeting (or its equivalent) of the first mentioned company, and
a
particular company is deemed to be indirectly controlled by a company or
companies (the parent company or companies) if a series of companies can be
identified beginning with the parent company or companies and ending with the
particular company so related that each company of the series except the parent
company or companies is directly controlled by one or more of the companies
in
the series.
(d) "Agreement"
means
this Operating Agreement, including all amendments and modifications thereof,
and all annexes which are attached hereto.
(e) "Assets"
means
the following:
(i) the
Property and all plant and facilities located on the Project Area;
(ii) all
equipment used in the Operations; all inventory; all property, tangible and
intangible, obtained or used by the Manager in connection with the conduct
of
Operations, including without limitation all geological, geochemical,
geophysical, mining and metallurgical data, surveys, assays, drill cores, drill
cuttings, samples, sample residues, analyses, Feasibility Studies and other
data
or information acquired in the course of Operations;
(iii) the
rights of Kwagga to and under all licences, leases, and permits relating to
the
Operations and/or the Project Area; and
(iv) all
Products.
(f) "Bankable
Feasibility Study"
means a
comprehensive description of the construction, development, mining, processing,
and marketing plan for a Mine within the Project Area in such form and detail
as
is normally required by a bank
or
other financial institution ("the bank") engaged in mining project finance
for
purposes of determining whether the bank shall finance and/or participate in
the
development of a Mine and Mining Operations in respect of the whole or any
part
of the Project Area.
The
Bankable Feasibility Study shall include the confirmation of the estimated
recoverable reserves of
Minerals
and source material the conduct of detailed drilling works, hydrological and
geotechnical works, geological, mining, metallurgical, economic, legal,
environmental, social and governmental studies, and metallurgical studies.
The
Bankable Feasibility Study shall contain estimates of both capital and operating
costs and shall analyze how to proceed with mining operations to economically
and commercially extract the target mineral(s), identify the optimum structure
for the mining venture, and include reference to relevant financial
aspects.
(g) "Budget"
means
an estimate in reasonable detail of all Costs to be incurred with respect to
a
Work Program (including the Costs of Required Operations, as a line item) and
a
schedule of cash advances to be made in order to conduct Operations under such
Work Program.
2
(h) "Budgetary
Period"
means
the period during which the related Work Program will be completed.
(i) "Costs"
means
"Allowable
Costs"
as
defined in Article 2 of the Accounting Procedures.
(j) "Development"
means
all preparation for the removal and recovery of Products, including the
development of a Mine and construction or installation of a mill or any other
improvements to be used for the mining, handling, milling, processing or other
beneficiation of Products.
(k) "Distributable
Cash Flow"
means
the cash proceeds from the sale of Products after deducting all Costs, including
any taxes imposed on the Operations or Kwagga and all royalties.
(l) "Dollars"
or
"$"
means
United States dollars.
(m) "EMPR"
means
the Environmental Management Program and any amendments thereto from time to
time, as approved by the relevant authority for the Mine in accordance with
the
provisions of the Minerals Act and/or the MPRD Act.
(n) "Encumbrances"
means
mortgages, pledges, liens, charges, encumbrances and security
interests.
(o) "Exploration"
means
all activities directed toward ascertaining the existence, location, quantity,
quality or commercial value of deposits or Products. Exploration may include
all
activities undertaken through to the completion of a Bankable Feasibility Study,
if any, but shall not include construction of milling or processing facilities
or commencement of commercial mining operations on the Project
Area.
(p) "First
Commercial Production"
means
the first day of the month in which Minerals from a Mine have been extracted
and
processed to yield Product for forty-five (45) consecutive days at a rate,
averaged over such 45-day period, of not less than seventy percent (70%) of
the
average daily rate projected in the Bankable Feasibility Study pursuant to
which
such Mine is developed. The
processing or shipping of bulk samples for testing purposes shall not be used
for the purposes of establishing the First Commercial Production.
(q) "First
Funding Report" means
a
comprehensive written report prepared by the Manager at the end of the First
Funding Phase (as defined in the Kwagga Shareholders Agreement) in respect
of
all Exploration conducted to date in, on or under the Project Area, together
with all primary and derived data relating thereto and containing (without
limitation) method statements, operational statistics, reports concerning the
mineral and surface title, drill logs, plans and sections of drill holes, drill
core photographs, analytical results, interpretation and discussion of results,
conclusions and recommendations for the further Exploration, if any, to be
conducted in respect of the Project Area and/or the Development and Mining
of
the Project Area and a pro forma Work Program and Budget in respect
thereof.
3
(r) "Force
Majeure"
means
any cause beyond a Party's reasonable control, whether or not foreseeable,
including but not limited to: law, regulation, instructions, requests, actions
or inaction of any government or governmental, civil or military entity;
interference by aboriginals or individuals claiming ancestral rights or rights
to mine (including artisanal miners) or by groups representing or claiming
to
represent such individuals; interference by environmentalists or other
activists; judgments or orders of any court; inability to obtain on reasonably
acceptable terms any public or private licence, permit, or other authorisation
that may be required to conduct Operations; weather; damage to or destruction
of
mine, plant or facility; fire; explosion; flood; insurrection; acts of war,
whether declared or undeclared; riot, civil strife, insurrection or rebellion;
labour dispute; inability after diligent effort to obtain workmen or material;
delay in transportation; and acts of God.
(s) "Kwagga
Shareholders Agreement"
means
the shareholders agreement between Kwagga Gold (Barbados) Limited and MCI
Resources (Proprietary) Limited (renamed Shanduka Resources (Proprietary)
Limited) respecting Kwagga.
(t) "LIBOR"
means
the London Inter Bank Offered Rate for the 90 day period as quoted on the
Xxxxxx'x Screen LIBO, rounded to the fourth decimal place.
(u) "Licence"
means,
collectively, the "old
order rights"
(as
defined in Schedule II of the MPRD) and "prospecting
rights",
"mining
rights",
"mining
permits"
and
"retention
permits"
(as
such terms are defined in the MPRD) held by or on behalf of Kwagga or the
Manager, from time to time, respecting all or any part of the Project Area
and
in respect of the farms which are listed in Annex A attached to this Agreement,
as amended from time to time.
(v) "Manager"
means
WB or any successor Manager.
(w) "Mine"
means:
(i) any
shaft, drill hole, open pit, tunnel, well or opening, underground or otherwise,
made or constructed after preparation of a Bankable Feasibility Study, and
from
which Minerals have been or may be removed or extracted by any method
whatsoever, whether now known or hereafter developed, in quantities larger
than
those required for purposes of sampling, analysis or evaluation;
(ii) xxxxx
and
other facilities for the extraction, recovery, beneficiation, treatment,
processing and storage of Minerals and disposal of waste, including tailings;
(iii) machinery,
equipment, tools, buildings, facilities and improvements for mining, processing,
handling, and transporting Minerals, waste and materials; and
4
(iv) housing,
offices, roads, airstrips, power lines, power generation facilities, evaporation
and drying facilities, pipelines, railroads, infrastructure, and other
facilities for any of the foregoing purposes.
(x) "Mine
Construction Program"
means a
Work Program and Budget for the excavation, development, construction, erection,
installation, and expansion of a Mine and associated facilities.
(y) "Minerals"
means
all precious stones, precious metals and base and rare metals.
(z) "Minerals
Act"
means
the Minerals
Act, 1991
(Act No.
50 of 1991), as amended from time to time.
(aa) "Mining"
means
the mining, extracting, producing, handling, milling, beneficiation or other
processing of Products and all operations and activities incidental
thereto.
(bb) "MPRD
Act"
means
the Mineral
and Petroleum Resources Development Act, 2002
(Act No.
28 of 2002), as amended from time to time.
(cc) "Operating
Costs"
means,
for any period, all Costs incurred or chargeable, directly or indirectly, by
the
Manager in connection with Operating Programs including, without duplication
and
without limiting the generality of the foregoing, the following:
(i) all
reasonable costs of consulting, legal, accounting, insurance and other
services;
(ii) all
Overruns of Operating Costs permitted or agreed under Section 6.3;
(iii) all
Costs
incurred or to be incurred relating to a temporary or permanent shut-down of
the
facilities on or related to the Project Area, including costs to be incurred
after any shut-down; and
(iv) all
Costs
incurred with respect to Mining;
(v) all
Costs
incurred in respect of the marketing of the Products, including transportation,
commissions and/or discounts;
(vi) all
Costs
relating to capital expenditures relating to the Mine; and
(vii) all
Costs
relating to environmental compliance, pollution control, reclamation and related
matters.
All
Operating Costs shall be determined in accordance with generally accepted
accounting principles (International Accounting Standard) applied consistently
from year to year, provided however that such costs shall not include any amount
in respect of amortization, depletion or depreciation of capital
costs.
5
(dd) "Operating
Program"
means a
Work and Budget Plan for an Operating Year including, inter
alia,
the
following information:
(i) a
written
plan of the proposed Mining Operations for the Operating Year, including any
plans for Exploration or for expansion of the facilities;
(ii) a
detailed estimate of all Operating Costs plus a reasonable allowance (not exceed
ten per cent (10%)) for contingencies, on a monthly basis, including any
proposed cash calls;
(iii) an
estimate of the quantity and quality of the ore to be mined and of the quality
of Products to be produced on a monthly basis;
(iv) a
Rolling
Budget; and
(v) such
other facts as may be reasonably necessary to present the results proposed
to be
achieved during the Operating Year.
(ee) "Operating
Year"
means
the 12 month period commencing on [1
March]
of each
year.
(ff) "Operations"
includes any and every kind work directed toward ascertaining the existence,
location, quantity, and grade of Minerals and the development thereof carried
out under this Agreement on or in respect of the Project Area or the Products
derived therefrom, including, without limitation, Exploration, Development
and
Mining.
(gg) "Party"
or
"Parties"
means
Kwagga and/or WB, or their successors in interest.
(hh) "person"
means
any individual, partnership, limited partnership, corporation, limited liability
company, unincorporated organization or association, trust (including the
trustees thereof, in their capacity as such), government (or agency or political
subdivision thereof) or other entity.
(ii) "Production
Decision"
has the
meaning assigned to it in Section 4.3(c).
(jj) "Products"
means
all ores, Minerals and mineral resources in any form produced from the Project
Area under this Agreement (including without limitation all ore, concentrates
and semi-processed and processed forms thereof).
(kk) "Program
Report"
means a
comprehensive written report prepared by the Manager on completion of any
particular phase (including, for the avoidance of doubt, the First and Second
Funding Phases (as defined in the Kwagga Shareholders Agreement)) of
Exploration, Development and/or Mining, as the case may be, containing such
information relating to and/or in connection with the Project Area and the
conduct of Operations as may be required by Kwagga and including (but not
limited to) the information required to be contained in the First Funding
Report.
6
(ll) "Project
Area"
means
the farms listed and attached as Annex A to this Agreement.
(mm) "Property"
means
all interests, rights, and privileges (whether absolute or conditional, whether
existing or future) in real property, mineral rights, and/or surface lands
falling within the Project Area, including, without limitation, all prospecting
and mining authorisations, licences (including the Licence), permits, leases,
and other entitlements, which are acquired and held subject to this Agreement
whether pursuant to the Licence or otherwise.
(nn) "Required
Operations"
means
all Operations and Costs of any kind required to be carried out and incurred
to
maintain and keep the Assets in good standing and free of default under any
governmental or regulatory laws, rules or regulations and shall include, without
limitation, any financial assurances required to be posted for environmental
clean up purposes by statute or regulation.
(oo) "Rolling
Budget"
means
the detailed budgeted Costs to be incurred in respect of Development and/or
Mining Operations forecast over a three (3) Operating Year period, adjusted
annually in arrears to take account of actual Costs incurred and progress made
during the preceding Operating Year.
(pp) "Work
Program"
means a
description in reasonable detail of proposed Operations to be conducted and
objectives to be accomplished by the Manager within the Project Area for a
year
or any longer period, including the preparation of a Bankable Feasibility
Study.
| 1.2 |
Number
and Gender
|
Words
importing the singular number only shall include the plural and vice versa,
words importing the neuter gender shall include the feminine and masculine
genders and vice versa.
| 1.3 |
Annexes
|
Attached
hereto and forming part of this Agreement are the following
Annexes:
Annex
A – Licence and Project Area
Annex
B – Accounting Procedure
| 2. |
TITLE
TO ASSETS
|
| 2.1 |
Title
|
Title
to
the Assets shall be held in the name of Kwagga or such other person as Kwagga
and the Manager may designate from time to time.
7
| 3. |
MANAGER
|
| 3.1 |
Appointment
of Manager
|
WB
is
hereby appointed as the Manager to manage and carry out Operations on behalf
of
Kwagga. WB hereby agrees to serve as Manager.
| 3.2 |
Powers
and Duties of Manager
|
Subject
to and in accordance with the terms and provisions of this Agreement and the
direction and control of Kwagga (and its board of directors), the Manager shall
manage, supervise and conduct all administrative, financial, technical and
consultative services and other activity for and on behalf of Kwagga in respect
of all Operations and, without limiting the generality of the foregoing, the
Manager shall have the following rights, duties, obligations and
responsibilities:
(a) The
Manager shall manage, direct and control all Operations in accordance with
Work
Programs and Budgets prepared by it and approved by Kwagga.
(b) The
Manager shall promptly advise Kwagga if it lacks sufficient funds to carry
out
its responsibilities under this Agreement and of details of all material events
relating to the Operations and/or the Project Area (including material
results).
(c) The
Manager shall:
(i) purchase
or otherwise acquire all material, supplies, equipment, water, utility and
transportation services required for Operations, such purchases and acquisitions
to be made on the best terms available, taking into account all of the
circumstances;
(ii) obtain
such customary warranties and guarantees as are available in connection with
such purchases and acquisitions; and
(iii) keep
the
Assets free and clear of all Encumbrances, except for those existing at the
time
of, or created concurrent with, the acquisition of such Assets, or liens which
shall be released or discharged in a diligent manner, or Encumbrances
specifically approved by Kwagga or permitted hereby.
(d) The
Manager shall take such action and incur such expenditures as are required
to
examine, cure, and maintain the title and interests of Kwagga in and to the
Assets (including keeping the Licence in good standing), whether or not such
expenditures are the subject of an approved Work Program and
Budget.
(e) The
Manager shall:
(i) make
or
arrange for all payments required by leases, licences, permits, contracts and
other agreements related to the Assets;
8
(ii) pay
all
taxes, assessments and like charges on Operations and Assets when due, except
taxes determined or measured by Kwagga's (sales revenue or) net income. The
Manager shall have the right to contest in the courts or otherwise, the validity
or amount of any taxes, assessments or charges if the Manager deems them to
be
unlawful, unjust, unequal or excessive, or to undertake such other steps or
proceedings as the Manager may deem reasonably necessary to secure a
cancellation, reduction, readjustment or equalization thereof before the Manager
shall be required to pay them, but in no event shall the Manager permit or
allow
title to the Assets to be lost as the result of the non-payment of any taxes,
assessments or like charges; and
(iii) do
all
other acts reasonably necessary to maintain the Assets.
(f) The
Manager shall:
(i) apply
for
and obtain for Kwagga all permits, rights, authorisations, licences and
approvals necessary or appropriate for the Operations (including temporary
and
permanent Mining rights);
(ii) comply
(and require the compliance by all other persons providing services to it in
respect of the Operations to comply) with all applicable laws and regulations
(including the Minerals Act and the MPRD Act, as applicable);
(iii) notify
promptly Kwagga of any allegations of substantial violation thereof;
(iv) prepare
and file all reports or notices required to be filed by or on behalf of Kwagga
in respect of the Operations; and
(v) as
soon
as reasonably possible after the Production Decision shall have been made,
prepare and procure the approval of an EMPR respecting the Mining
Operations.
The
Manager shall not be in breach of this provision if a violation has occurred
in
spite of the Manager's good faith efforts to comply, and the Manager has timely
cured or disposed of such violation through performance, or payment of fines
and
penalties.
(g) The
Manager shall prosecute and defend, but shall not initiate without approval
of
Kwagga, all litigation or administrative proceedings arising out of
Operations.
(h) The
Manager shall obtain and maintain appropriate insurance for the benefit of
Kwagga and itself with respect to Operations being managed by it.
(i) The
Manager shall have the right to carry out its responsibilities hereunder through
agents, Affiliates, consultants, sub-contractors or independent contractors.
If
the Manager engages an Affiliate to provide services hereunder, it shall do
so
on terms no less favourable than would be the case with unrelated persons in
arm's-length transactions.
9
(j) The
Manager shall perform or cause to be performed during the term of this Agreement
all work and make all payments required by all laws and regulations in order
to
maintain the Project Area and the Licence in good standing.
(k) The
Manager shall keep and maintain full, complete and accurate accounting and
financial records in accordance with Annex B and in accordance with customary
cost accounting practices in the mining industry.
(l) The
Manager shall keep Kwagga advised of all Operations by submitting in writing
to
Kwagga:
(i) quarterly
progress reports which include statements of expenditures and an update on
Operations and the results thereof;
(ii) a
detailed final Program Report within ninety (90) days after completion of each
Work Program and Budget, which shall include comparisons between actual and
budgeted expenditures and the results of the Work Program;
(iii) the
First
Funding Report not later than the earlier of:
(1) the
end
of the calendar month occurring at least 120 days before the Existing Funding
(as defined in the Kwagga Shareholders Agreement) is anticipated to be fully
expended; or
(2) the
Repayment Date (as defined in the Kwagga Shareholders Agreement);
and
(iv) such
other reports as Kwagga and/or Kwagga Gold (Barbados) Limited may reasonably
request.
At
the
request of Kwagga Gold (Barbados) Limited, the Manager shall deliver all or
any
of the foregoing reports to Wits Basin Precious Minerals Inc.
(m) At
all
reasonable times the Manager shall provide representatives of Kwagga access
to,
and the right to inspect and copy all maps, drill logs, core tests, reports,
surveys, assays, analyses, technical, accounting and financial records, and
other information acquired in Operations.
(n) The
Manager shall allow any representative of Kwagga, at such representative's
sole
risk and expense, and subject to reasonable safety and security regulations,
to
inspect the Assets and Operations at all reasonable times, so long as the
representative does not unreasonably interfere with Operations.
(o) The
Manager shall notify Kwagga of any material information affecting its interest
in the Project Area promptly upon the Manager having learned of such
information.
(p) The
Manager shall perform all Required Operations.
10
(q) The
Manager shall arrange the financing for the funding of the Mine Construction
Program and shall, in its sole discretion, determine in agreement with financial
institutions, the ratio of debt to equity of the project financing for the
completion of the Mine Construction Program.
(r) The
Manager shall procure from third parties professional or technical services
as
may be required for the Operations.
(s) The
Manager shall provide all administrative, financial, technical and consultative
services required to conduct Operations.
(t) The
Manager shall open and maintain local and, where permitted by law, off-shore
bank accounts, in local or, where permitted by law, United States dollar
currencies in the name of Kwagga as approved by Kwagga, invest surplus funds,
arrange for overdraft facilities as are necessary to fund temporary short falls
in cash resources, arrange short-term, medium-term and long-term financing
arrangements and distribute Distributable Cash Flow to Kwagga.
(u) The
Manager shall market, sell and arrange for the refining of the Products.
and
(v) The
Manager may undertake all other activities reasonably necessary to fulfil the
foregoing.
| 3.3 |
Manager
Not Liable
|
The
Manager shall not be in default of any duty under Section 3.2
if its
failure to perform results from the failure of Kwagga to fund Operations in
a
timely manner.
| 3.4 |
Conduct
of Operations
|
The
Manager shall conduct all Operations in accordance with the requirements of
the
Minerals Act and the MPRD Act, as applicable, and in a good, workmanlike and
efficient manner, in accordance with sound Exploration, Development, Mining
and
other applicable southern African industry standards and practices. The Manager
shall not be liable to Kwagga for any act or omission resulting in damages
or
loss, except to the extent caused by or attributable to the Manager's wilful
misconduct or gross negligence.
| 3.5 |
Termination
|
The
Manager may terminate this Agreement upon three (3) months' prior notice to
Kwagga.
This
Agreement shall terminate if:
(a) a
receiver, liquidator, assignee, custodian, trustee, or similar official for
a
substantial part of the Manager's assets is appointed and such appointment
is
neither made ineffective nor discharged within sixty (60) days after the making
thereof, or such appointment is consented to, requested by, or acquiesced in
by
the Manager;
11
(b) the
Manager commences a voluntary case under any applicable bankruptcy, insolvency
or similar law now or hereafter in effect; or consents to the entry of an order
for relief in an involuntary case under any such law or to the appointment
of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
or
other similar official of any substantial part of its assets; or makes a general
assignment for the benefit of creditors; or takes corporate or other action
in
furtherance of any of the foregoing; or
(c) entry
is
made against the Manager of a judgment, decree or order for relief affecting
a
substantial part of its assets by a court of competent jurisdiction in an
involuntary case commenced under any applicable bankruptcy, insolvency or other
similar law of any jurisdiction now or hereafter in effect.
| 3.6 |
Payments
to Manager
|
Kwagga
will compensate the Manager for its services and reimburse the Manager for
its
Costs hereunder in accordance with the Accounting Procedure.
| 3.7 |
Transaction
with Affiliates
|
The
Manager may engage Affiliates to provide services, supplies, equipment or
machinery hereunder, provided that it shall do so on terms no less favourable
than would be the case with unrelated persons in arm's length
transactions.
| 3.8 |
Agent
|
The
Manager shall be the agent of Kwagga for the carrying out of services to be
rendered by it in accordance with this Agreement. Kwagga shall give the Manager
such evidence of authority as may be necessary or desirable, in the opinion
of
the Manager, to perform its obligations hereunder. The Manager shall maintain
complete control over its employees and all of its subcontractors with respect
to performance of the Operations. Nothing contained in this Agreement or any
subcontract awarded by the Manager shall create any contractual relationship
between any subcontractor and Kwagga.
| 3.9 |
Operation
Contracts
|
So
far as
practicable, all Operations shall be performed by the Manager using its staff.
Operations to be conducted by others shall, if possible, be conducted on a
competitive contract basis. The Manager, if it so desires, may employ its own
machinery, tools and equipment in conducting such Operations, and the charges
therefor shall be determined pursuant to the provisions of the Accounting
Procedure. The Manager shall employ its reasonable efforts to provide in each
contract entered into by it that the Parties shall have a right to audit the
books of the other contracting party or parties insofar as they relate to the
subject matter of such contract.
12
| 4. |
WORK
PROGRAMS AND BUDGETS
|
| 4.1 |
Operations
Pursuant to Programs
|
Except
as
otherwise provided in this Article 4,
Operations shall be conducted, Costs shall be incurred and Assets shall be
acquired only pursuant to approved Work Programs and Budgets approved by Kwagga.
Each Work Program shall describe in reasonable detail the full scope, direction
and nature of the proposed Operations, including, where appropriate, but not
limited to: geologic research and reconnaissance to be undertaken; property
and
mineral interest acquisition proposals; proposed engineering studies and mining
and construction plans; a long-range plan for the mining of all mineable
reserves which logically would be mined under good mining practices; the kind
and capacity of any plant or milling facilities to be acquired or constructed;
a
plan for delivery of Product; and the estimated period of time required to
complete the proposed Operations. Each Budget shall include all anticipated
Costs and expenses including, but not limited to: operation and maintenance
expenditures, capital expenditures, a statement of expected cash calls and
the
rentals, filing fees, or other payments required to maintain the Project Area
and the Licence in good standing during the Budgetary Period. Each request
for
funds to acquire capital items shall be delivered in accordance with Section
5.2
and
shall include a description of such items in reasonable detail. Each Work
Program shall be deemed to permit all expenditures required to permit the
Manager to perform its duties hereunder and the incurring and payment of all
Costs in relation thereto.
| 4.2 |
Presentation
of Programs and Budgets
|
Except
as
otherwise provided for herein, proposed Work Programs and Budgets shall be
prepared by the Manager for a period of twelve (12) months or any other
reasonable longer or shorter period determined by the Manager. The first Work
Program and Budget shall be prepared by the Manager at such time as it considers
appropriate. At least sixty (60) days prior to the expiry of each Work Program
(based on its Budgetary Period), a proposed Work Program and Budget for the
succeeding Budgetary Period shall be prepared by the Manager and submitted
to
Kwagga. In the event that, during a Budgetary Period, the Manager determines
that, based upon the results of the current Work Program, it is desirable to
revise such Work Program and the related Budget, the Manager shall have the
right to prepare a revision thereto and submit the same to Kwagga for approval.
In the event that Kwagga does not approve a proposed revision to a Work Program
and Budget, the current Work Program and Budget shall be carried out, without
change.
| 4.3 |
Feasibility
Studies and Mine Construction
Programs
|
(a) If
the
Manager is of the opinion that it is justified to prepare a Bankable Feasibility
Study, it may propose that a Work Program and Budget for a Bankable Feasibility
Study be prepared. Such proposal shall be made in writing to Kwagga and shall
include the data upon which the Manager has based its opinion. Kwagga shall
review the proposal. If such proposal is approved, the Manager shall submit
a
Work Program and Budget for a Bankable Feasibility Study to Kwagga within sixty
(60) days of the approval, which Work Program and Budget shall be reviewed
in
accordance with Section 4.4.
13
(b) Upon
approval by Kwagga, the Manager shall prepare a Bankable Feasibility Study
in
accordance with the approved Work Program and Budget therefor. Upon completion
of the Bankable Feasibility Study, the Manager shall submit the Bankable
Feasibility Study to Kwagga for review in accordance with Section 4.4,
at which
time Kwagga shall decide whether further work is required to complete the
Bankable Feasibility Study or the Bankable Feasibility Study is
complete.
In the
event that the Bankable Feasibility Study recommends the construction of a
Mine,
the Manager shall submit (along with such Bankable Feasibility Study) a Mine
Construction Program to Kwagga for review and approval in accordance with
Section 4.4.
In
the
event that the Bankable Feasibility Study does not recommend the construction
of
a Mine, the Manager shall prepare and submit a proposed Work Program and Budget
for the succeeding Budgetary Period in accordance with Section 4.2.
(c) If
Kwagga
determines that the Bankable Feasibility Study is complete, it shall then decide
whether development of a mine is warranted. If Kwagga makes a positive decision
(a "Production
Decision"),
it
shall then instruct the Manager to prepare an overall Work Program and Budget
consistent with the Bankable Feasibility Study for all Operations through to
the
end of Development. Until Operations have then been completed through to the
end
of Development, each Work Program and Budget approved pursuant to this Article
4
(it
being contemplated that the overall Work Program and Budget will be implemented
through incremental Work Programs and Budgets approved pursuant to this Article
4)
shall
be consistent with the overall Work Programs and Budget.
| 4.4 |
Review
and Approval of Proposed Work Programs and Budgets.
|
Within
thirty
(30) days
after
submission of a proposed Work Program and Budget, or within ninety
(90)
days
after submission of a proposed Mine Construction Program, Kwagga
shall:
(a) approve
the proposed Work Program and Budget;
(b) propose
modifications to the proposed Work Program and Budget;
(c) reject
the proposed Work Program and Budget and
require a new submission from the Manager;
Kwagga
shall provide written notice of its decision to the Manager forthwith after
making the same. In the event that Kwagga approves a Work Program and Budget,
it
shall have irrevocably committed to pay all of the Costs thereof and the Manager
shall not be required to carry out any Operations in any month unless and until
it shall have been paid in full the amount of the applicable invoice submitted
to Kwagga pursuant to Section 5.2.
14
| 4.5 |
Budget
Overruns/Contingency
Provision
|
The
Manager shall immediately notify Kwagga as soon as practicable prior to any
material departure from an approved Work Program and Budget. If the Manager
exceeds the Budget, then the excess up to 10% of the amount of the Budget shall
be for the account of Kwagga unless the overrun is due to the gross negligence
or wilful default of the Manager. The excess to the extent that it is greater
than 10% of the Budget shall also be for the account of Kwagga if the overrun
is
approved by it, which approval may be given retroactively.
| 4.6 |
Emergency
or Unexpected
Expenditures.
|
In
case
of emergency, the Manager may take any reasonable action it deems necessary
to
protect life, limb or property, to protect the Assets or to comply with law
or
government regulation. The Manager may also make reasonable expenditures for
unexpected events which are beyond its reasonable control and which do not
result from a breach by it of its obligations under Section 3.4.
The
Manager shall promptly notify Kwagga of the emergency or unexpected expenditure,
and the Manager shall be reimbursed for all resulting costs by
Kwagga.
| 5. |
ACCOUNTS
AND SETTLEMENTS
|
| 5.1 |
Monthly
Statements
|
The
Manager shall promptly submit to Kwagga monthly statements of account reflecting
in reasonable detail the charges and credits to the Account during the preceding
month under this Agreement.
| 5.2 |
Cash
Calls
|
Prior
to
the last day of each month the Manager shall submit to Kwagga an invoice for
the
estimated Costs for the next month, together with a reconciliation of the Costs
actually incurred during the preceding month against the estimated Costs
contained in the invoice delivered in respect of such preceding month. Within
ten (10) days after receipt of each invoice, Kwagga shall advance to the Manager
such estimated amount, as reconciled. Time is of the essence of payment of
such
invoices. If the amount billed for the estimated Costs was less than the actual
Costs incurred or charged during that month, the Manager may xxxx Kwagga for
the
difference at any time, which Kwagga will pay within ten (10) days following
receipt of the applicable invoice. With the concurrence of Kwagga, the Manager
may establish more frequent billing cycles to minimize account balances. Each
monthly invoice will be accompanied by the Manager's forecast of Costs over
the
succeeding three (3) months, provided that the Manager shall not be bound
thereby.
In
the
event that the Manager, acting reasonably, determines that Kwagga is required
to
incur Costs which are not part of an approved Work Program and Budget and which
are required to be incurred in respect of Required Operations, the Manager
shall
be entitled to include such costs in the invoice delivered to Kwagga pursuant
to
the preceding paragraph of this Section 5.2,
(as if
such amount was required to be incurred in respect of an approved Work Program
and Budget) or, if Manager is not delivering such an invoice, it shall be
entitled to deliver to Kwagga a separate invoice in respect of such
Costs.
15
| 5.3 |
Failure
to Pay Invoices
|
Any
payments not made when due under Section 5.2
shall
bear interest from the date due at an annual rate equal to LIBOR plus
2%.
| 5.4 |
Audits
|
The
Manager shall order an annual audit of the accounting and financial records
maintained by it in accordance with the Accounting Procedure and will use
reasonable commercial efforts to cause the audit report to be provided within
one hundred and twenty (120) days of the Kwagga's fiscal year-end and will
promptly provide a copy thereof to Kwagga. All written exceptions to and claims
upon the Manager for discrepancies disclosed by such audit shall be made not
more than three (3) months after receipt of the audit report. Failure to make
any such exception or claim within the three (3) month period shall mean the
audit is correct and binding upon Kwagga. The audits shall be conducted by
one
of PricewaterhouseCoopers, Deloitte Touche Tohmatsu International, KPMG
International or Ernst & Young as selected by the Manager, from time to
time, and the costs thereof shall be for the Account.
| 5.5 |
Manager's
Own Funds
|
Nothing
in this Agreement obliges the Manager to utilize its own funds in any Work
Program and it may suspend or cease any Work Program upon the failure or
apprehended failure of Kwagga to make timely payment of any amount for which
it
is liable hereunder without liability to Kwagga.
| 6. |
OPERATING
PLANS
|
| 6.1 |
Obligation
to Pay Operating Costs and
Overruns
|
Kwagga
shall be liable to pay all Operating Costs incurred under Operating Plans,
including (notwithstanding Section 4.5)
Operating Cost Overruns up to but not exceeding ten per cent (10%) of the Costs
budgeted in the Operating Plan. It is acknowledged and agreed that Operating
Cost Overruns shall be determined based upon the Operating Costs incurred during
each Operating Year and upon all budgeted items.
| 6.2 |
Operating
Plans
|
At
least
ninety (90) days prior to the date the Manager anticipates that First Commercial
Production will occur, the Manager will propose and deliver to Kwagga an
Operating Plan for the first Operating Year. Subsequently, at least ninety
(90)
days before the commencement of each Operating Year, the Manager shall propose
an Operating Plan for that Operating Year by delivery thereof to Kwagga. Within
not less than thirty (30) days and not more than forty five (45) days after
delivery of a proposed Operating Plan hereunder, the Manager shall convene
a
meeting of Kwagga to review the same. The proposed plan, as the same may be
amended following Management Council review, shall be the Operating Plan for
the
ensuing Operating Year.
16
| 6.3 |
Excess
Operating Costs and
Overruns
|
Except
as
herein provided, the Manager shall have the power and authority to deviate
from
or make modifications to Operating Plans from time to time, in accordance with
good engineering and mining practices provided that Manager shall not be
entitled to make material deviations or modifications to Operating Plans without
the prior approval of Kwagga. If it appears to the Manager that Operating Costs
will exceed those estimated under an Operating Plan, the Manager shall
immediately give written notice to Kwagga outlining the nature and extent of
the
additional Costs ("Operating
Cost Overruns")
and
the reasons therefor. If Operating Cost Overruns are estimated to exceed by
ten
per cent (10%) the Operating Costs estimated under the Operating Plan, the
notice of the Manager shall contain a notice of a meeting of Kwagga, to be
held
no sooner than ten (10) days after the date of delivery of the notice, together
with a proposed amendment to the Operating Plan. The meeting of Kwagga shall
be
convened to review, amend (if deemed appropriate) and approve same. If Kwagga
fails to approve the amended Operating Plan, the Manager shall curtail
Operations until submission of the Operating Plan for the ensuing Operating
Year.
| 6.4 |
No
Agreement on Operating
Plans
|
If
a
proposed Operating Plan is not approved by Kwagga, then the most recently
approved Operating Plan shall be extended as applicable and implemented by
the
Manager.
| 6.5 |
Suspension
of Mining
|
At
any
time subsequent to the date of First Commercial Production, the Manager, may,
on
at least 45 days notice to Kwagga recommend that Mining Operations be suspended.
The Manager's recommendations will include a shut-down plan for the mine and
a
Budget therefor, in reasonable detail, of the Operations to be performed to
maintain the Assets during the period of suspension and the Costs estimated
to
be incurred, as well as details with respect to the activities required to
recommence Operations and the estimated time and Costs to accomplish the same.
Such plan shall be implemented within 90 days after it is approved, with or
without variation, by Kwagga. Kwagga may direct the Manager to recommence Mining
Operations at any time thereafter.
| 6.6 |
Shut
Down Plan
|
If
for
three (3) successive Operating Years or for such shorter period as Kwagga may
determine, the Operating Plan reflects only the payment of Required Operations
on the Project Area, the Manager shall prepare a shut-down plan for the Mine
and
a Budget therefor which shall be implemented within ninety (90) days after
it is
approved, with or without variation, by Kwagga. Kwagga shall pay or to the
satisfaction of the Manager provide security for the entire Cost of the
shut-down Budget.
17
If
no
Management Council approval is obtained within one hundred and twenty (120)
days
after submission to it of the Manager's proposed shut-down plan, the Manager
shall cause a reputable firm of public accountants (the "Selling
Agent")
to
conduct an offer of sale of the Assets on an all cash, sealed bid basis, and
requiring any bidder to assume, and indemnify the Manager and Kwagga against,
all reclamation and environmental liabilities related to the Project Area and
the Operations. If no offer in accordance with the terms hereof is received
by
the Selling Agent within the time stipulated by it, the Manager shall, unless
otherwise directed by Kwagga, prepare and implement a shut-down plan and Kwagga
shall pay the costs of implementation thereof.
| 6.7 |
Bank
Account
|
Kwagga
agrees that prior to the scheduled date of First Commercial Production, it
shall
deposit in a separate interest bearing bank account in its name the amount
of
the working capital requirements for the initial four (4) months of Mine
Operations or such longer period as may be set out in the applicable Bankable
Feasibility Study. All revenues from the Mine's Operations shall be deposited
in
such bank account. All cheques and other withdrawals from such bank account
shall require the signature of an officer of Kwagga.
| 6.8 |
Loans
|
Subject
to the approval of Kwagga, the Manager may obtain and operate a line of credit
and/or obtain other debt financing with recognized banks or other financial
institutions for the purposes of funding Operations (including the Mine
Construction Program); provided that in the event that any such bank or
financial institution requires any guarantees or other financial assurances
from:
(a) any
of
the direct or indirect shareholders of Kwagga, such operating line or financing
shall not be established unless the affected person consents thereto;
or
(b) Kwagga,
it shall provide the same.
For
the
purposes of securing of such indebtedness, the Manager shall have the right
to
grant, as agent on behalf of Kwagga, and Kwagga hereby agrees to grant, to
any
lender providing funding to Kwagga pursuant to Sections 3.2(r)
and/or
6.8,
an
Encumbrance over all or part of the Assets and its interests in this
Agreement.
| 7. |
DISTRIBUTIONS
AND MARKETING
|
| 7.1 |
Distribution
of Distributable Cash Flow
|
After
the
date of First Commercial Production, all Distributable Cash Flow shall be
distributed to Kwagga on a monthly basis within thirty (30) days following
the
end of each month.
18
| 7.2 |
Appointment
of Manager as Marketing
Manager
|
The
Manager shall act as Kwagga's marketing manager with respect to the marketing
and sale of all Products. In that capacity, the Manager shall have the following
powers and duties:
(a) enter
into, manage and administer smelting, refining and sales contracts;
(b) ensure
that the smelting, refining, marketing, sale, and transportation of Products
comply with applicable laws;
(c) perform
or cause to be performed, for the account of Kwagga, all of its obligations
pursuant to smelting, refining, and sales contracts and similar agreements
relating to the sale and marketing of Products;
(d) keep
good
relations with customers, including providing them with information and
notifications related to Products and, upon request, by delivering certificates
of origin;
(e) keep
and
maintain, in accordance with generally accepted accounting principles
(International Accounting Standard), books of accounts and such other records
pertaining to the smelting, refining and other sales and marketing activities;
and
(f) retain
services of experts and consultants as the Manager may deem advisable or
necessary to perform its duties under this Section 7.2.
| 7.3 |
Power
of Marketing Manager.
|
In
performing its duties under Section 7.2,
the
Manager shall have full authority over all marketing activities. Notwithstanding
any provision hereof to the contrary, the Manager shall not be entitled to
engage in forward sales, future trading or commodity options trading or other
price hedging, price protection or other speculative arrangements respecting
any
of the Products, without the prior approval of Kwagga.
| 7.4 |
Final
Structure of Marketing
Arrangements
|
Notwithstanding
the provisions of Sections 7.2
and
7.3,
it is
acknowledged and agreed that at the time when a Production Decision is made,
Kwagga and the Manager shall determine the most effective structure for
marketing and selling the Products, with a view to minimizing taxes and
complying with all then applicable laws and regulations; provided that, in
any
event, the Manager shall have the exclusive right to act as Kwagga's marketing
manager with respect to the marketing and sale of all Products and shall be
compensated for such services regardless of the structure agreed upon as
contemplated in this Section 7.4.
19
| 8. |
TERMINATION
|
| 8.1 |
Termination
by Expiration or Agreement
|
This
Agreement shall terminate as expressly provided in this Agreement, unless
earlier terminated by written agreement.
| 8.2 |
Continuing
Obligations
|
On
termination of this Agreement under Section 3.5
or
8.1,
Kwagga
shall remain liable for continuing obligations hereunder (including contingent
obligations) until final settlement of all accounts and for any liability,
whether it accrues before or after termination, if it arises out of Operations
during the term of the Agreement.
| 8.3 |
Disposition
of Assets on Termination
|
Promptly
after termination under Section 3.5
or
8.1, the
Manager shall take all action necessary to wind up Operations, and all costs
and
expenses incurred in connection with the termination of Operations shall be
expenses chargeable to Kwagga. The Assets shall first be paid, applied, or
distributed in satisfaction of all liabilities of Kwagga to third parties.
Before distributing any funds or Assets to Kwagga, the Manager shall have the
right to segregate amounts which, in the Manager's reasonable judgment, are
necessary to discharge continuing obligations (including contingent obligations
and Required Operations, including decommissioning and long-term monitoring
and
care) or to purchase for the account of Kwagga, bonds or other securities for
the performance of such obligations. Thereafter, any remaining cash and all
other Assets shall be distributed to Kwagga unless otherwise provided herein
or
otherwise agreed.
| 8.4 |
Continuing
Authority
|
On
termination of this Agreement under Section 3.5
or
8.1,
the
Manager shall have the power and authority to do all things on behalf of Kwagga
which are reasonably necessary or convenient to:
(a) wind-up
Operations;
(b) complete
any transaction and satisfy any obligation, unfinished, unsatisfied or
contingent, at the time of such termination or withdrawal; and
(c) undertake
all Required Operations
if
the
transaction or obligation arises out of Operations prior to such termination
or
withdrawal. The Manager shall have the power and authority, to grant or receive
extensions of time or change the method of payment of an already existing
liability or obligation, prosecute and defend actions on behalf of Kwagga,
mortgage Assets, and take any other reasonable action.
20
| 9. |
ACQUISITION,
ABANDONMENT AND SURRENDER OF
PROPERTY
|
In
the
event that the Manager determines that it is necessary or desirable to acquire
public or private land, usage rights and/or mineral interests or rights within
the Area of Interest, it shall acquire the same on behalf of Kwagga, whereupon
the same shall become part of the Licence and the Project Area and Annex A
shall
be amended accordingly. The costs of identifying, negotiating the acquisition
of
and acquiring such lands, interest and rights shall be treated as Allowable
Costs.
| 9.1 |
Surrender
or Abandonment of Property
|
Kwagga
may authorize the Manager to surrender or abandon part or all of the Property,
in a manner consistent with any agreement under which such Property was acquired
and to terminate all or part of the Licence or the Project Area.
| 10. |
INDEMNITIES
|
| 10.1 |
Indemnification
of Manager
|
Kwagga
shall indemnify and hold harmless the Manager and its directors, officers,
employees, agents and representatives from and against all claims, debts,
demands, suits, actions and causes of action whatsoever, and all losses,
damages, fines, penalties, liabilities including without limitation
environmental liabilities, costs and expenses (including legal expenses)
whatsoever, which may be brought, made against, suffered or incurred by any
of
them arising out of or in connection with any act or omission after the date
hereof of Kwagga or of the Manager or any of its subcontractors or the employees
or agents of Kwagga, the Manager or any of its subcontractors, unless such
act
or omission constitutes gross negligence or wilful misconduct on the part of
the
Manager.
| 10.2 |
Indemnification
of Kwagga
|
The
Manager shall indemnify and hold harmless Kwagga and its directors, officers,
employees, agents and representatives from and against all claims, debts,
demands, suits, actions and causes of action whatsoever, and all losses,
damages, costs and expenses (including legal expenses) whatsoever, which may
be
brought, made against, suffered or incurred by any of them arising directly
from
any act or omission after the date hereof of the Manager which constitutes
gross
negligence or wilful misconduct on the part of the Manager.
| 10.3 |
Limitation
of Liability
|
Notwithstanding
anything to the contrary in this Agreement, no Party shall be liable to another
in contract, tort or otherwise for special or consequential damages including,
without limiting the generality of the foregoing, loss of profits.
21
| 11. |
GENERAL
PROVISIONS
|
| 11.1 |
Notices
|
All
notices, payments, and other required communications ("Notices")
to the
Parties shall be in writing, and shall be addressed respectively as
follows:
If
to WB:
000
XXX
Xxxxxx, 00 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx,
XX 00000-0000
Attn:
Xxxx X. Xxxxx
Telecopier:
+1 (612).395-5276
If
to
Kwagga:
X/X
Xxxxxx Xxxxxxxx
Xxxxxxxxxx
Xxxxxx Xxxx
00 Xxxxxxxx Xxxxxxxx
Xxxxxxxxx Xxxx
Xxxxxxxxxxxx
Xxxxx Xxxxxx
Attn: Xxxxx XxXxxxxxxx
Telecopier: x00 000 0000
00 Xxxxxxxx Xxxxxxxx
Xxxxxxxxx Xxxx
Xxxxxxxxxxxx
Xxxxx Xxxxxx
Attn: Xxxxx XxXxxxxxxx
Telecopier: x00 000 0000
All
Notices shall be given (1) by personal delivery to the addressee, or (2) by
electronic communication, with a confirmation sent by registered or certified
mail return receipt requested, or (3) by registered or certified mail or
commercial carrier return receipt requested. All Notices shall be effective
and
shall be deemed delivered (1) if by personal delivery on the date of delivery
if
delivered during normal business hours and, if not delivered during normal
business hours, on the next business day following delivery, (2) if by
electronic communication on the next business day following receipt of the
electronic communication, and (3) if solely by mail or commercial carrier on
the
next business day after actual receipt. A Party may change its address by Notice
to the other Parties.
| 11.2 |
Time
|
Time
is
of the essence of this Agreement.
22
| 11.3 |
Force
Majeure
|
Except
for the obligation to make payments when due hereunder, the obligations of
a
Party shall be suspended to the extent and for the period that performance
is
prevented by any Force Majeure. The affected Party shall promptly give notice
to
the other Party of the suspension of performance, stating therein the nature
of
the suspension, the reasons therefor, and the expected duration thereof. The
affected Party shall resume performance as soon as reasonably
possible.
| 11.4 |
Assignment
|
Neither
party may assign its rights and obligations under this Agreement without the
prior written consent of the other party; provided that, either party may assign
its rights and obligations under this Agreement to a controlled subsidiary
of
such party without the prior written consent of the other party. For purposes
of
this Section 11.4, the term “controlled subsidiary” of a party shall include any
entity of which (i) such party possesses, directly or indirectly, fifty percent
(50%) or more of the beneficial ownership or voting power, (ii) such party
possesses, directly or indirectly, twenty-five percent (25%) or more of the
beneficial ownership or voting power and has the ability to control the
composition of the board of directors or other governing body of the entity
or
(iii) such party otherwise has the capacity to dominate the decision-making
in
relation to the financial and operating policies of the entity so that the
entity operates with such party to achieve collective objectives..
| 11.5 |
Modification
|
No
modification of this Agreement shall be valid unless made in writing and duly
executed by the Parties.
| 11.6 |
Waiver
|
The
failure of a Party to insist on the strict performance of any provision of
this
Agreement or to exercise any right, power or remedy upon a breach hereof shall
not constitute a waiver of any provision of this Agreement or limit that Party's
right thereafter to enforce any provision or exercise any right.
| 11.7 |
Interpretation
and Severability.
|
In
the
event that any condition, covenant or other provision of this Agreement is
held
to be invalid or void by any court of competent jurisdiction, the same shall
be
deemed severable from the remainder of this Agreement and shall in no way affect
any other condition, covenant or other provision of this Agreement. If such
condition, covenant or other provision shall be deemed invalid due to its scope
or breadth, such condition, covenant or other provision shall be deemed valid
to
the extent of the scope or breadth permitted by law.
23
| 11.8 |
Confidentiality
|
With
the
exception of disclosures to parent companies or as required by law, both Parties
agree to keep confidential the terms and conditions of this Agreement and any
other information regarding each other’s business which they may learn as a
result of carrying out this contract.
| 11.9 |
Publicity
|
No
announcements of any nature whatsoever will be made by or on behalf of a Party
relating to this Agreement without the prior written consent of the other Party,
save for any announcement or other statement required to be made in terms of
the
provisions of any law (or by the rules of any securities exchange on which
the
shares of either of the Parties may be listed, where applicable), in which
event
the Party obliged to make such statement will first consult with the other
Party
in order to enable them in good faith to attempt to agree the content of such
announcement, which (unless agreed) must go no further than is required in
terms
of such law or rules. This will not apply to a Party wishing to respond to
the
other Party which has made an announcement of some nature in breach of this
clause.
This
Section 11.9 shall not apply to any disclosure made by a Party to its
professional advisors or consultants, provided that they have agreed to the
same
confidentiality undertakings, or to any judicial or arbitral tribunal or
officer, in connection with any matter relating to this Agreement or arising
out
of it.
| 11.10 |
Breach
|
If
a
Party ("Defaulting Party") commits any breach of this Agreement and fails to
remedy such breach within 10 (ten) business days of written notice requiring
the
breach to be remedied, then the Party giving the notice ("Aggrieved Party")
will
be entitled, at its option –
(a) to
claim
immediate specific performance of any of the Defaulting Party's obligations
under this Agreement, with or without claiming damages, whether or not such
obligation has fallen due for performance; or
(b) to
cancel
this Agreement, with or without claiming damages, in which case written notice
of the cancellation shall be given to the Defaulting Party, and the cancellation
shall take effect on the giving of the notice.
(c) The
Aggrieved Party's remedies in terms of this clause 11.10 are without prejudice
to any other remedies to which the Aggrieved Party may be entitled in
law.
| 11.11 |
Dispute
Resolution
|
In
the
event of there being any dispute or difference between the Parties arising
out
of this Agreement, the said dispute or difference shall on written demand by
either Party be submitted to arbitration in Johannesburg in accordance with
the
AFSA rules, which arbitration shall be administered by AFSA.
24
| 11.12 |
Governing
Law
|
This
Agreement shall be governed by and interpreted in accordance with the laws
of
South
Africa.
| 11.13 |
Further
Assurances.
|
Each
of
the Parties agrees that it shall take from time to time such actions and execute
such additional instruments as may be reasonably necessary or convenient to
implement and carry out the intent and purpose of this Agreement.
| 11.14 |
Survival
of Terms and Conditions
|
The
following sections shall survive the termination of this Agreement, to the
full
extent necessary for their enforcement and the protection of the Party in whose
favour they run: Sections 3.3,
3.4,
3.6,
3.8,
5.3,
6.6,
8.3,
8.4,
10.1,
10.2,
10.3
and
11.8.
25
| 11.15 |
Enurement
|
This
Agreement shall be binding upon and inure to the benefit of the Parties and
their respective successors.
IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement as of the date first above
written.
|
Wits
Basin Precious Minerals Incorporated
|
|
|
Per:
|
/s/
X. Xxxxx White
|
|
Name:
X. Xxxxx White
|
|
|
Title:
Chairman
|
|
|
Per:
|
|
|
Name:
|
|
|
Title:
|
|
|
Kwagga
Gold (Proprietary) Limited
|
|
|
Per:
|
/s/
Xxxxxxxxxxx Xxxx Xxxxxx
|
|
Name:
Xxxxxxxxxxx Xxxx Xxxxxx
|
|
|
Title:
Vice President
|
|
|
Per:
|
|
|
Name:
|
|
|
Title:
|
|
26
