INVESTMENT AND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the 20th day of February, 1996
AMONG: MINCO MINING AND METALS CORPORATION, a body corporate incorporated under
the laws of British Columbia, with an office at 0000-000 Xxxx Xxxxxxx
Xxxxxx, Xxxxxxxxx, X.X., X0X 0X0 ("Minco")
AND: TECK CORPORATION, a body corporate incorporated under the laws of
Canada, with an office at 700 - 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx
Xxxxxxxx, X0X 0X-0 ("Teck")
AND: COMINCO LTD., a body corporate incorporated under the laws of Canada,
with an office at 000 - 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx,
X0X 0X0 ("Cominco")
WHEREAS:
(A) Pacific Canada Resources Inc. ("PCR") has entered into an investment and
participation agreement dated as of February 19, 1996 (the "Teck-Cominco-PCR
Agreement") with Teck and Cominco under which PCR has granted certain rights to
Teck and Cominco in exchange for them making a private placement in a specified
company which the parties have agreed will be Minco, subject to the Closing of
this Agreement.
(B) PCR has entered into an investment and participation agreement dated as of
February 19, 1996 (the "Minco-PCR Agreement") with Minco which provides, amongst
other things, that for a period of time commencing on the date of this Agreement
and expiring on March 1, 2000, extendable upon agreement of the Parties thereto,
Minco shall have the exclusive right to acquire from PCR, at cost and in the
manner therein 2 2 described, all right, title and interest in and to any new
base or precious metal Property which PCR identifies and in respect to which PCR
has acquired an NCI or in respect to which PCR has a reasonable expectation of
acquiring an NCI.
(C) Under Chinese law a foreigner may acquire an interest in a joint venture or
other recognized Chinese vehicle which in turn holds a mineral property in
China;
(D) Minco intends to acquire indirect interests in mineral properties in China
and the right to exploit mineral properties in China;
(E) This Agreement provides for the manner in which Cominco and Teck may acquire
part of Minco's interest in any NCI or Property (both as defined herein) or any
mineral property that is acquired;
(F) At the same time Minco will require working capital, Teck and Cominco wish
to invest, and Minco has agreed to grant certain rights to Teck and Cominco in
consideration of such investments;
(G) Minco also intends to raise capital by public financing to generate the
funds necessary to advance one or more Properties to the stage of a preliminary
feasibility report;
(H) The parties have agreed that the interest to be acquired by Teck and Cominco
in Minco's interest in an NCI or a Property may be increased in through a good
faith negotiation outside the terms of this Agreement at some future time; and
(I) The parties wish to record their respective rights and obligations.
THEREFORE the Parties agree as follows:
PART 1
CONSTRUCTION
DEFINITIONS
1.1 In this Agreement, except as otherwise expressly provided or as the context
otherwise requires:
ACQUIRED PROPERTY means a Property in respect of which (i) Minco has
entered into a formal joint venture agreement (as such term is understood in
China) with a Chinese entity pursuant to which Minco has the right to acquire an
NCI, and the Chinese entity has applied for approval of the appropriate Chinese
Governmental Authority pursuant to a request by Minco to negotiate a joint
venture contract with Minco; or (ii) Minco receives a New Property Notice as
contemplated in Section 6.3 of the Minco-PCR Agreement.
AFFILIATE of a Party has the meaning ascribed to it in the Securities
Act (British Columbia).
BUSINESS DAY means a day that is not a Saturday, Sunday or a statutory
holiday in British Columbia.
CLOSING means the closing of the purchase and sale of the Purchased
Securities.
CLOSING DATE means the fifth Business Day following the date upon which
Minco receives written notification from the Vancouver Stock Exchange that this
Agreement and the Minco-PCR Agreement have been accepted for filing or such
other date as the Parties may agree upon.
COMMITMENT NOTICE means a notice delivered to Minco by the Investors
pursuant to Section 6.13 or 6.17 that they intend to proceed with programs
contemplated in a Final Feasibility Report and they have commitments from
lenders for the debt portion of the project financing, as evidenced by certified
copies of the lenders' commitment letters to the Investors delivered with the
notice.
COMMON SHARE means a common share, as constituted as at the date of this
Agreement, in the capital of Minco.
COSTS means cash outlays, expenses, obligations and liabilities of
whatever kind or nature, but without duplication.
DESIGNATED INVESTOR means, in the case of a base metal Property,
Cominco, and in all other cases, Teck.
DEVELOPMENT PROPERTY means an Acquired Property that the Investors
determine, pursuant to Section 6.1, should be governed by this Agreement and
categorize as a Development Property pursuant to Section 6.4.
EARN-IN PERIOD means the period of time beginning on the date hereof and
ending on the date the Earn-In Rights terminate in accordance with Section 6.6.
EARN-IN RIGHTS means those rights to earn an Interest in an NCI in
respect of an Acquired Property, more particularly set out in Section 6.8 and
6.14.
ENCUMBRANCE means a security interest, mortgage, pledge, hypothecation,
lien, easement, right-of-way, encroachment, covenant, condition, right of
re-entry, lease, licence, assignment, option, claim or other title defect,
encumbrance or charge whatsoever, whether or not registered or registrable.
EXERCISE NOTICE means, with respect to an Acquired Property, a written
notice delivered by an Investor that it intends to proceed with the preparation
of a Final Feasibility Report under Part 6.
EXPENDITURES means all Costs spent or incurred or deemed incurred
hereunder by a Party in connection with a Property including: (i) monies
expended in maintaining the Property in good standing, including any monies
expended in doing and filing assessment work and any required vendor's or
royalty payments; (ii) monies expended in exploring the Property, including
doing geophysical, geochemical and geological surveys, drilling, assaying and
metallurgical testing; (iii) monies expended in acquiring assets for use on or
in connection with the Property; (iv) monies expended in paying the fees, wages,
salaries and travelling expenses of all employees of a Party or associated
entities engaged in work with respect to and for the benefit of the Property,
together with an amount for fringe benefits usually paid by such Party; (v)
monies expended in paying for the food, lodging and other reasonable needs of
the persons referred to in clause (iv) hereof; (vi) a charge equal to (A) 10%
before the date of a Commitment Notice, and (B) 3% thereafter, for unallocable
overhead and head office expenses and all other expenses relating to supervision
and management of all work done with respect to and for the benefit of the
Property of all Expenditures, other than the charge referred to in this clause
(vi); (vii) monies expended or set aside for environmental remediation and
reclamation; (viii) all Costs related to the preparation of programs and
reporting as to the results thereof; (ix) all Costs related to the preparation
of a Final or Preliminary Feasibility Report and a production program; (x) all
Costs related to construction and development programs up to commercial
production; and (xi) all Costs related to operations after the date of
commencement of commercial production.
EXPLORATION PROPERTY means an Acquired Property that the Investors
determine, pursuant to Section 6.1, should be governed by this Agreement and
which has been categorized as an Exploration Property pursuant to Section 6.4.
FINAL FEASIBILITY REPORT means a detailed report showing the feasibility
of placing a Property or part thereof into commercial production and including
at least the following information: (i) a description of that part of the
Property to be covered by the proposed mine; (ii) the estimated recoverable
reserves of minerals and the estimated composition and content thereof; (iii)
the proposed procedure for development, mining and production; (iv) results of
ore amenability tests (if any); (v) the nature and extent of the facilities
proposed to be acquired or constructed and, if the size, extent and location of
the ore body makes mill facilities feasible, a preliminary design for such mill
facilities; (vi) the total costs, including capital budget, reasonably required
to purchase, construct and install all structures, machinery and equipment
required for the proposed mine, including a schedule of timing of such cost
requirements; (vii) environmental impact studies and costs thereof; (viii) the
period in which it is proposed the Property shall be brought to commercial
production; (ix) such other data and information as are reasonably necessary to
substantiate the existence of a mineral deposit of sufficient size and grade to
justify development of a mine, taking into account all relevant business, tax
and other economic considerations; and (x) working capital requirements for the
initial four months of operation of the Property as a mine or such longer period
as may be reasonably justified in the circumstances.
FIRST RECOVERY DATE means the date on which the first of either Minco or
an Investor recovers its Prior Costs from Net Proceeds.
GOVERNMENTAL AUTHORITY means a federal, state, provincial, regional,
municipal or local government or subdivision thereof including an entity or
person exercising executive, legislative, judicial, regulatory or administrative
functions of, or pertaining to, any such government or subdivision.
INTEREST means an undivided interest in and to an NCI in respect of an
Acquired Property held by Minco or an Investor, as the case may be.
INVESTORS means Teck and Cominco and INVESTOR means any one of them.
JOINT VENTURE AGREEMENT means the agreement to be entered into among the
Parties pursuant to Section 6.22 defining the respective rights and obligations
with respect to the joint ownership (directly or indirectly) of, and operation
of activities on, an Exploration Property or Development Property, as the case
may be, once an Investor has earned an Interest.
MINIMUM PERCENTAGE means with respect to the Investors, 50% of that
percentage of the issued common shares of Minco issued to both Investors
pursuant to Section 3.1 as compared to the total issued common shares of Minco
at the Closing Date.
NCI, with respect to a Property, means a direct or indirect interest
therein that is available for a non-Chinese entity or foreigner to acquire under
Chinese law and is held by or available to Minco, including shares, or a
contractual right to acquire shares, in a Chinese company that owns or holds a
direct or indirect interest in the Property.
NET PROCEEDS means that amount which remains after the initial cash
flows available or attributable to the Parties' Interest from sales of product
from the mine have been used to pay operating, marketing and distribution costs;
taxes (other than income taxes) and royalties; any advances which a Party has
made to cover sustaining capital requirements or operating losses during the
"cost recovery" period contemplated in Section 6.23 or Section 6.24; and the
administrative charge contemplated in Section (vi)(B) of the Expenditures
definition on costs incurred from the date of commencement of commercial
production.
PARTIES means two or more of Minco, Teck and Cominco and PARTY means any
one of them. PERSON means an individual, corporation, partnership, joint
venture, association, trust or unincorporated organization or any trustee,
executor, administrator or other legal representative, or government official or
ministry.
PRELIMINARY FEASIBILITY REPORT means an intermediate level report,
prepared in accordance with Canadian industry standards, having as its objective
a determination whether a project justifies a detailed analysis and cost of a
Final Feasibility Report, and identifying aspects of the project that are
critical to its viability and that necessitate in-depth investigations through
functional or support studies and will be expected to include evaluation of
estimated reserves, preliminary mining methods and equipment selections,
preliminary metallurgical analysis, workable flow sheet for a process plant,
support services and facilities, manpower sources and costs, project
implementation schemes, market evaluation, environmental and cultural issues,
and a preliminary financial analysis based on investment costs, production
costs, and market potential.
PRIME RATE means, at any particular time, the annual rate of interest
announced from time to time by Bank of Montreal, main branch, Vancouver, British
Columbia as a reference rate then quoted as being in effect on Canadian dollar
loans made in Canada to its most creditworthy commercial customers and as to
which from time to time a certificate of an officer of such Bank shall be
conclusive.
PRIOR COSTS with respect to a Property means the Expenditures incurred
by Minco or Investor at the time incurred but before the date of commencement of
commercial production, all stated in United States dollars.
PROPERTY means a mineral property in China by whatever instrument it may
be held and any interest, contractual right or other right to acquire an
interest therein and includes an Acquired Property, an Exploration Property and
a Development Property.
PURCHASED SECURITIES means the Units, comprised of common shares and
warrants, to be issued to the Investors pursuant to Section 3.1 hereof.
REQUISITE APPROVALS means the approvals of stock exchanges and other
regulatory authorities having jurisdiction to review and grant approval of the
transactions contemplated by this Agreement.
SECOND RECOVERY DATE means the date on which the last of Minco and the
Investors recovers its Prior Costs from Net Proceeds.
UNDERLYING AGREEMENT means any agreement in existence at the date
hereof, or that comes into existence after the date hereof, entitling Minco to
acquire an NCI in respect of an Acquired Property.
UNIT means one unissued common share of Minco together with one fifth
(1/5) of a share purchase warrant, one full warrant entitling the holder thereof
to purchase one additional common share of Minco pursuant to the terms of the
Subscription Agreement attached hereto as Schedule I.
INTERPRETATION
1.2 For all purposes of this Agreement, except as otherwise expressly provided
or as the context otherwise requires:
(a) "THIS AGREEMENT" means this agreement as from time to time
supplemented or amended by one or more agreements entered into pursuant to the
applicable provisions of this Agreement together with all schedules and other
attachments to it;
(b) the headings are for convenience only and shall not be used to
interpret this Agreement;
(c) the word "INCLUDING", when following any general term or statement,
is not to be construed as limiting the general term or statement to the specific
items or matters set forth or to similar items or matters, but rather as
permitting the general term or statement to refer to all other items or matters
that could reasonably fall within the broadest possible scope of the general
term or statement;
(d) an accounting term not otherwise defined herein has the meaning
assigned to it, and every calculation to be made hereunder is to be made, in
accordance with generally accepted accounting principles in Canada;
(e) except where otherwise stated, all references to currency mean
United States currency;
(f) a reference to a statute includes all regulations made thereunder,
all amendments to the statute or regulations in force from time to time and any
statute or regulation that supplements or supersedes such statute or
regulations;
(g) a reference to a Part means a Part of this Agreement and the symbol
"Section " followed by a number or some combination of numbers and letters
refers to the provision of this Agreement so designated and the symbol "Section"
followed by a letter within a provision refers to a clause within such
provision;
(h) a reference to a person includes a successor to that person;
(i) words importing the masculine gender include the feminine or neuter,
words in the singular include the plural, words importing a corporate entity
include individuals and vice versa;
(j) a reference to "APPROVAL", "AUTHORIZATION"or "CONSENT" means written
approval, authorization or consent; and
(k) references to payments to be made by certified cheque will be deemed
to contemplate payment by certified cheque drawn on, or bank draft issued by, a
Canadian chartered bank, payable at par in Vancouver, British Columbia and
payable to the party entitled to receive payment or its counsel, in trust.
SCHEDULES
1.3 The following schedules are incorporated into this Agreement by
reference:
Schedule Description Reference
--------- ------------------------------------------------ -----------------
A Capital of Minco Acquire Securities Section 2.3(f)
B Right to aquire Interests in NCI's or
Properties of Minco Section 2.3(f)
C Minco's Financial Statements Section 2.3(n)
Schedule Description Reference
--------- ---------------------------------------------- -----------------
D List and Descrrlying Agreements Section 2.3(m)
E Form of Consent and Waiver Section 2.4(c)(ii)
F Minco's Material Liabilities
G Terms of Joint Venture Section 6.20
H Net Smelter Return Royalty Section 6.22
I Purchased SecuSection 3.1 ription Agreement
GOVERNING LAW
1.4 This Agreement shall be construed and governed by the laws in force in the
Province of British Columbia and the courts of said Province shall have
exclusive jurisdiction to hear and determine all disputes arising hereunder.
Each Party irrevocably attorns to the jurisdiction of said courts and consents
to the commencement of proceedings in such courts. This paragraph shall not be
construed to affect the rights of a Party to enforce a judgment or award outside
the said Province, including the right to record or enforce a judgment or award
in any jurisdiction in which the Property is situated.
SEVERABILITY
1.5 If any provision of this Agreement is or shall become illegal, invalid or
unenforceable, in whole or in part, the remaining provisions shall nevertheless
be and remain valid and subsisting and the said remaining provisions shall be
construed as if this Agreement had been executed without the illegal, invalid or
unenforceable portion.
PART 2
REPRESENTATIONS, WARRANTIES AND COVENANTS
REPRESENTATIONS AND WARRANTIES OF TECK
2.1 Teck represents and warrants to Minco, as representations and warranties on
which Minco has relied in entering into this Agreement and which will survive
the execution hereof, that: (a) Teck is a body corporate duly incorporated,
organized and validly subsisting under the laws of its incorporating
jurisdiction and has full power and authority to carry on its business and to
enter into this Agreement and any agreement or instrument referred to or
contemplated by this Agreement; (b) neither the execution and delivery of this
Agreement nor any of the agreements referred to herein or contemplated hereby,
nor the consummation of the transactions hereby or thereby contemplated, violate
or result in the breach of its constating documents; (c) this
Agreement has been duly executed and delivered by, and constitutes a legal,
valid and binding obligation of Teck enforceable against it in accordance with
its terms; and (d) Teck is acquiring the Purchased Securities as principal.
REPRESENTATIONS AND WARRANTIES OF COMINCO
2.2 Cominco represents and warrants to Minco, as representations and warranties
on which Minco has relied in entering into this Agreement and which will survive
the execution hereof, that:
(a) Cominco is a body corporate duly incorporated, organized and validly
subsisting under the laws of its incorporating jurisdiction and has full power
and authority to carry on its business and to enter into this Agreement and any
agreement or instrument referred to or contemplated by this Agreement;
(b) neither the execution and delivery of this Agreement nor any of the
agreements referred to herein or contemplated hereby, nor the consummation of
the transactions hereby or thereby contemplated, violate or result in the breach
of its constating documents;
(c) this Agreement has been duly executed and delivered by, and
constitutes a legal, valid and binding obligation of Cominco enforceable against
it in accordance with its terms; and
(d) Cominco is acquiring the Purchased Securities as principal.
REPRESENTATIONS AND WARRANTIES OF MINCO
2.3 Minco represents and warrants to each of Teck and Cominco, as
representations and warranties upon which Teck and Cominco have relied in
entering into this Agreement, which will be true at the Closing of the purchase
of the Purchased Securities and which will survive the execution hereof, that:
(a) it is a corporation duly organized and validly subsisting under the
laws of British Columbia and has full power and authority to carry on its
business and to enter into this Agreement and any agreement or instrument
referred to in or contemplated by, this Agreement;
(b) neither the execution and delivery of this Agreement nor any of the
agreements referred to herein or contemplated hereby, nor the consummation of
the transactions hereby or thereby contemplated, (i) violate or result in the
breach of its constating documents or (ii) conflict with, result in the breach
of or accelerate the performance required by any agreement to which it is a
party;
(c) no proceedings are pending for and Minco is unaware of any basis for
the institution of any proceedings leading to the dissolution or winding-up of
Minco or the placing of it into bankruptcy or subject to any other laws
governing the affairs of insolvent persons;
(d) Schedule A accurately sets out the authorized and issued capital of
Minco;
(e) this Agreement has been duly executed and delivered by, and
constitutes a legal, valid and binding obligation of Minco enforceable against
it in accordance with its terms;
(f) no person, other than the Investors or as set out in Schedules A and
B, has any right, agreement or option, present or future, contingent or absolute
or any right capable of becoming a right, agreement or option
(i) to require Minco to issue any further or other shares in its
capital or any security or other instrument convertible or exchangeable into
shares in its capital, or to convert or exchange any security or other
instrument into, with or for shares in its capital, (ii) for the issue or
allotment of any of the authorized but unissued shares in its capital, (iii) to
require Minco to create any additional shares in its capital, (iv) to require
Minco to purchase, redeem or otherwise acquire any of the issued and outstanding
shares in its capital, (v) to require Minco to distribute any or all of its
assets, or to declare any dividends, (vi) for the purchase of any assets or the
acquisition of any interest in a Property or an NCI, or (vii) to purchase or
otherwise acquire any securities of Minco;
(g) no finder's fees, commission or financial services fees of any type
whatsoever are payable by Minco in connection with the transactions contemplated
by this Agreement except as will be disclosed to and agreed by the Investors
prior to the Closing Date, such agreement not to be unreasonably withheld, and
not to exceed the regulatory maximum permitted;
(h) the financial statements of Minco as at and for the financial year
ended December 31, 1995 attached as Schedule C present fairly, in all material
respects, the financial position of Minco as at December 31, 1995 and the
results of operations and the changes in financial position for the year then
ended in accordance with Canadian generally accepted accounting principles
applied on a consistent basis and do not omit to state any material fact that is
required by generally accepted accounting principles or by applicable law to be
stated or reflected therein or which is necessary to make the statements
contained therein not misleading and there has been no material adverse change
in the financial affairs of Minco;
(i) since the end of its most recently completed fiscal year, Minco has
carried on its business in the ordinary and normal course of the routine daily
affairs of such business. Since such date, there has been no material change in
the business, operations, affairs or conditions of Minco,
financial or otherwise, including any change arising as a result of any
legislative or regulatory change, modification, revocation or suspension of any
material license or right to do business, fire, explosion, accident, casualty,
labour trouble, flood, drought, riot, storm, expropriation, condemnation, act of
God or otherwise, except changes occurring in the ordinary course of the routine
daily affairs of business, which changes have not materially adversely affected
the organization, business, properties, prospects or financial condition of
Minco;
(j) no order prohibiting the issue and sale or resale of securities by
Minco has been issued and no proceedings for this purpose have been instituted,
are pending, or, to the knowledge of Minco contemplated or threatened;
(k) this Agreement and any statement furnished to Teck and Cominco by or
on behalf of Minco do not contain and will not contain any untrue statement of
material fact or omit or will omit to state a material fact necessary to make
the statements contained herein or therein not misleading;
(l) all taxes, assessments, levies and other amounts, the non-payment of
which could affect Minco's ownership interest or title to an NCI or Acquired
Property, will have been duly paid, withheld or collected before the Closing
Date; provided, however, that none of the foregoing need be paid while the same
is being contested in good faith by appropriate proceedings diligently
conducted;
(m) Schedule D contains a complete list of all Underlying Agreements at
the date hereof;
(n) Minco owns, at the date hereof, the NCI's or has rights to acquire
an NCI in Properties as set out in the Underlying Agreements on Schedule D and
has the right to acquire NCI's in China;
(o) there are no material liabilities, contingent or otherwise, of
Minco which are not disclosed in Schedule "F" attached hereto and Minco has not
guaranteed, or agreed to guarantee, any debt, liability or other obligation of
any person, firm or corporation other than as described in Schedule "F";
(p) no person, other than PCR, or as set out in Schedule "A", has any
right, agreement, or option, present or future, contingent or absolute, or any
right capable of becoming a right, agreement or option:
(i) to require Minco to issue any further or other shares in its
capital or any security or other instrument convertible or exchangeable into
shares in its capital, or to convert or exchange any security or other
instrument into, with or for shares in its capital; (ii) for the issue or
allotment of any of the authorized but unissued shares in its capital; (iii) to
require Minco to create any additional shares in its capital; (iv) to require
Minco to purchase, redeem, or otherwise acquire any of the issued and
outstanding shares in its capital; (v) to require Minco to distribute any or all
of its assets, or to declare any dividends; (vi) for the purchase of any assets
or the acquisition or any interest in a Property, or an NCI; or (vii) to
purchase or otherwise acquire any securities or Minco;
(q) the Purchased Securities to be issued to the Investors pursuant to
the provisions of paragraph 3, when issued, will be validly issued as fully paid
and non-assessable and will be free of all resale restrictions other than the
one-year hold period imposed by the Act;
(r) Minco is not indebted to any affiliate or director or officer of
Minco other than is set out in the financial statements attached hereto as
Schedule "C";
(s) no dividends or other distribution of any shares in the capital of
Minco have been made, declared or authorized;
(t) there is no basis for and there are no actions, suits, judgments,
investigations or proceedings outstanding or pending or to the knowledge of
Minco threatened against or affecting Minco at law or in equity or before or by
any governmental agency or authority having jurisdiction; and
(u) the performance of this Agreement will not be in violation of the
constating documents of Minco or of any agreement to which Minco is a party and
will not give any person or company any right to terminate or cancel any
agreement or any right enjoyed by Minco and will not result in the creation or
imposition of any lien, encumbrance or restriction of any nature whatsoever in
favour of a third party upon or against the assets of Minco.
COVENANTS OF MINCO
2.4 Minco covenants with Teck and Cominco that:
(a) until the Closing, each Investor and its counsel and other advisors
and representatives will be entitled to have full access during normal business
hours to all records relating to Minco, all Affiliates of Minco and their
businesses and Minco will furnish or cause to be furnished to each Investor and
its representatives all data and information concerning the business, finances,
operations and properties of and all Affiliates of Minco that may reasonably be
requested and will provide on a timely basis such written consents as may be
requested by Teck or Cominco for the purpose of due diligence searches;
(b) all representations, warranties, covenants and agreements of Minco
set forth in this Agreement and in any written statements delivered under this
Agreement will be true and correct as at the Closing Date as if made on that
date and all representations and warranties will survive the Closing and the
transactions contemplated hereby and any investigations made at any time with
respect thereto without limitation;
(c) during the Earn-In Period (i) Minco will promptly provide each
Investor with a copy of each Underlying Agreement negotiated or entered into
after the date hereof, (ii) Minco will use its best efforts to cause each
optionor, joint venturer or co-owner under an Underlying Agreement or
co-ownership agreement to which Minco is or may become party to execute the form
of consent and waiver attached hereto as Schedule E and will keep each Investor
informed of its progress in obtaining such consents and waivers, (iii) Minco
will not, without the Designated Investor's prior written consent (such consent
not to be unreasonably withheld), agree to amend any Underlying Agreement in a
manner that may materially adversely affect the Investors, and (iv) Minco will
use its best efforts to secure, as part of any Underlying Agreement entered
into, the right for Minco to provide management and direction of, and to
operate, programs of work on the subject Acquired Property, and (v) Minco will
consult with the Investors with respect to work programs for each Acquired
Property and budgets for each Acquired Property and will provide the Designated
Investor with such information concerning each Acquired Property and the
activities on or in respect thereof and the results of such activities as the
Investors may from time to time reasonably request; and
(d) following the Earn-In Period, Minco will not, with respect to the
Properties on which the Investors have exercised their Earn-In Rights, without
the Designated Investor's prior written consent (such consent not to be
unreasonably withheld), agree to amend any Underlying Agreement in a manner that
may materially adversely affect the Investors.
COVENANTS OF TECK 2.5 Teck covenants with Minco that:
(a) all representations, warranties, covenants and agreements of Teck
set forth in this Agreement and in any written statement delivered by Teck under
this Agreement will be true and correct as at the Closing Date as if made on
that date and all representations and warranties will survive the Closing and
the transactions contemplated hereby and any investigations made at any time
with respect thereto without limitation;
(b) it will at all times and from time to time cooperate with each other
Party in order to give full effect to this Agreement and in order to assist and
expedite the performance by each Party of all or any of the provisions herein
contained and, in particular, execute under its corporate seal or otherwise and
deliver all such instruments, deeds, mortgages, assignments and other documents
and cause all such corporate acts to be duly, expeditiously and validly done as
the Parties may reasonably require in accordance with the provisions hereof;
(c) subject to Section 2.8, it will use all reasonable efforts to ensure
that the Investors do not collectively own more than 20% of the issued and
outstanding common shares of Minco; and
(d) Teck will give notice to Minco immediately following each sale of
Purchased Securities and upon becoming aware that the Investors shareholding has
fallen below the Minimum Percentage.
COVENANTS OF COMINCO 2.6 Cominco covenants with Minco that:
(a) all representations, warranties, covenants and agreements of Cominco
set forth in this Agreement and in any written statement delivered by Cominco
under this Agreement will be true and correct as at the Closing Date as if made
on that date and all representations and warranties will survive the Closing and
the transactions contemplated hereby and any investigations made at any time
with respect thereto without limitation;
(b) it will at all times and from time to time cooperate with each other
Party in order to give full effect to this Agreement and in order to assist and
expedite the performance by each party of all or any of the provisions herein
contained and, in particular, execute under its corporate seal or otherwise and
deliver all such instruments, deeds, mortgages, assignments and other documents
and cause all such corporate acts to be duly, expeditiously and validly done as
the Parties may reasonably require in accordance with the provisions hereof;
(c) subject to Section 2.8, it will use all reasonable efforts to ensure
that the Investors do not collectively own more than 20% of the issued and
outstanding common shares of Minco; and
(d) Cominco will give notice to Minco immediately following each sale of
Purchased Securities and upon becoming aware that the Investors shareholding has
fallen below the Minimum Percentage.
SURVIVAL
2.7 The representations, warranties, covenants, agreements and conditions
hereinbefore set out are conditions on which the Parties have relied in entering
into this Agreement, shall survive the acquisition by an Investor of any
interest in a Property and related assets hereunder and shall be unaffected by
any due diligence undertaken by and Investor in respect of this Agreement and
each Party will indemnify and save the other harmless from all loss, damage,
costs, actions and suits arising out of or in connection with any breach of any
representation, warranty, covenant, agreement or condition made bv them and
contained in this Agreement (including lawyer's fees and disbursements).
LIMITATION
2.8 The restriction as to investment level set out in Sections 2.5(c) and 2.6(c)
ceases to apply on the earliest to occur of the following events:
(a) a significant change of control of Minco, of which Minco hereby
agrees to give the Investors immediate notice upon becoming aware of the
occurrence of the change, provided that Minco shall give the Investors at least
five clear trading days prior notice of its intention to sell any common shares
or securities convertible into Common Shares which would or are likely to result
in a change of control of Minco, as the case may be;
(b) except where such reduction occurs as a result of dispositions by an
Investor, the combined interests of the Investors and Xxx Xxx (whether directly
or indirectly through PCR and whether by ownership, control of or direction
over) in Common Shares falling below 25%;
(c) any reconstitution of management of Minco that results in Xxx Xxx
not being part of management;
(d) a Person (by itself or together with its Affiliates) or two or more
Persons acting jointly and in concert with each other acquiring more than 10% of
the outstanding shares of Minco;
(e) a takeover bid of which Minco is the offeree; provided that if a
takeover bid or any competing takeover bid is not successful according to its
terms, the restriction set out in Section 2.5(c) and Section 2.6(c) shall
continue to apply; and
(f) Minco offering more than 5% of any particular share offering to a
Person who is engaged in the business of mineral exploration, mining, smelting
or refining.
PART 3 INVESTMENT IN PCR AND GRANT OF RIGHTS ISSUE OF SHARES AND
GRANT OF RIGHTS
3.1 Relying upon the representations contained herein, in consideration of the
investment by the Investors, and subject to the terms and conditions hereof,
Minco hereby:
(a) agrees to issue and deliver to each Investor, upon receipt of
$500,000 Canadian from such Investor, 625,000 Units pursuant to the terms of the
Subscription Agreement attached hereto as Schedule I; and
(b) grants to each Investor, until such time, if any, as the Investors
first cease to collectively own the Minimum Percentage:
(i) the joint right to nominate one individual for election as a
director of Minco,
(ii) the Earn-in Rights and preferential purchase rights more
particularly described in Parts 6 and 7 and the rights contemplated in Section
2.4(c), and
(iii) the right to participate in future financings of Minco, as
set forth in Part 5, provided that, if the grant to the Investors under this
Section 3.1(b) terminates, the Investors rights under Parts 6 and 7 shall not be
affected as they relate to Properties in respect of which the Investors have
exercised their Earn-In Rights; however, the Investors' rights under Parts 6 and
7 shall continue as to any unexercised Earn-In Rights until March 1, 2004
regardless of whether the Acquired Properties are held by Minco. In determining
whether the Investors have ceased to hold the Minimum Percentage, there shall be
excluded from the determination any shares issued as consideration for the
acquisition of Properties after the date on which the Investors first acquire
Common Shares and any shares issued as performance shares, the result of the
exercise of directors' stock or other options or any other shares which are
issued in a manner in which the Investors are unable to exercise their rights
under Part 5.
3.2 Cominco and Teck each agree to execute and deliver to Minco a Subscription
Agreement for the Purchased Securities in the form attached hereto as Schedule I
concurrently with execution of this Agreement. Cominco and Teck furthermore
acknowledge that they may be required to execute and deliver such other
documents as may reasonably be requested by Minco in order to obtain necessary
regulatory approval of the transactions herein contemplated and Cominco and Teck
hereby agree to execute and deliver any and all such documents forthwith at such
request of Minco.
3.3 Subject to Section 5.1 herein, following the execution of this Agreement by
both parties, Minco will submit this Agreement to the Exchange and request the
acceptance for filing hereof. Thereafter, the parties will diligently pursue
obtaining such acceptance for filing and regulatory approval and comply with all
reasonable requests of the Exchange in connection therewith, but neither party
will, in any event, be liable for failure to obtain such acceptance or approval.
Each party will cooperate with the other as reasonably necessary to secure such
acceptance for filing and other required approvals.
3.4 Each of Cominco and Teck acknowledges that the Purchased Securities are to
be allotted and issued to it hereunder pursuant to exemptions from the
registration and prospectus requirements of the Act, and acknowledges, confirms
to and covenants with Minco that:
(a) it will comply with all requirements of applicable securities
legislation in connection with the issuance to it of the Shares and the resale
of the Shares including, without limitation, entering into the Escrow Agreement
if required; and
(b) it is not entering into this Agreement as result of any material
information about the affairs of Minco that, to its knowledge, has not been
publicly disclosed.
PART 4 CLOSING TIME AND PLACE OF CLOSING
4.1 The Closing will take place at 11:00 a.m. (Vancouver time) on the Closing
Date at Teck's offices in Vancouver, British Columbia or such other place and
time as the Parties may agree.
DELIVERIES BY THE INVESTORS
4.2 At the Closing each Investor will, subject to Part 8, deliver to Minco:
(a) a cheque or bank draft for $500,000 Canadian (being the purchase
price for that Investor's Purchased Securities);
(b) an opinion of counsel, acceptable to Minco, as to the matters set
out in Section 4.5;
(c) a certificate of an officer as to the truth and accuracy of the
representations, warranties and covenants of the Investor as at
the Closing; and
(d) such other instruments and documents as are required to be
delivered at Closing by the Investor to Minco pursuant to the
provisions of this Agreement or as are reasonably required to
evidence compliance with the representations, warranties and
covenants of the Investor contained herein.
DELIVERIES BY MINCO AT CLOSING
4.3 At the Closing Minco will, subject to Part 8, deliver to each Investor:
(a) a certificate representing the Purchased Securities registered in
the name of the Investor;
(b) an opinion of counsel acceptable to the Investors as to the
matters set out in Section 4.4;
(c) a certificate of an officer as to the truth and accuracy of the
representations, warranties and covenants of Minco as at the
Closing; and
(d) such other instruments and documents as are required to be
delivered at Closing by Minco pursuant to the provisions of this
Agreement or as are reasonably required to evidence compliance
with the representations, warranties and covenants of Minco
contained herein.
OPINIONS
4.4 Minco shall deliver at the Closing an opinion of counsel, addressed to each
Investor and in a form reasonably satisfactory to the Investor, as to:
(a) the matters set out in Section 2.3(a), (d), and (e) and, limited
as set out in Section 4.6, Section 2.3(b) and (f);
(b) the valid allotment and issuance of the Purchased Securities to
the Investor as fully paid and non-assessable; and
(c) such other matters as the Investor shall reasonably request. 4.5
Each Investor shall deliver at the Closing an opinion of counsel,
addressed to PCR and in a form reasonably satisfactory to Minco,
as to: (a) in the case of Teck, the matters set out in Section
2.1(a) and (b); (b) in the case of Cominco, the matters set out
in Section 2.2(a) and (b); and (c) such other matters as Minco
shall reasonably request. 4.6 In giving the opinion regarding
matters set out in Section 2.3(b)(ii) and 2.3(f) counsel may
state that such counsel has no actual knowledge of any such
agreement or right.
PART 5 GRANT OF SUBSCRIPTION RIGHTS TO INVESTORS RIGHT TO
SUBSCRIBE 5.1 Minco hereby grants to each Investor the right to purchase equity
securities of Minco or securities convertible into equity securities of Minco
(such equity securities and securities convertible into equity securities being
referred to as "Securities") from time to time, in the circumstances and manner
set out below. 5.2 If Minco intends to allot any Securities (for any purpose
including raising working capital generally or to cover its share of program
costs in respect of a Property), it shall first offer to sell, free of fees,
brokerage or commissions, such number of the Securities to the Investors to
ensure that the Investors' aggregate percentage ownership of issued and
outstanding Securities of Minco will remain unchanged after giving effect to the
allotment. 5.3 The offer shall be made in writing and shall specify any
conditions to the offer; the price per offered Security; and that if an Investor
does not, within the time stipulated (which shall not be less than 10 days nor
more than 30 days), elect in writing to exercise the option hereunder with
respect to the offered Securities (in whole or in part), that Investor will be
deemed to have elected not to exercise the option as to the offered Securities.
22 - 22 - 5.4 The purchase of Securities hereunder by the Investors shall be
completed contemporaneously with the purchase of Securities by all other
persons. The Investors may determine, as between themselves, to acquire all or
part of the offered Securities. Unless otherwise indicated by the Investors, if
both accept the offer they shall be deemed to be purchasing the offered
Securities in equal proportions. 5.5 After the expiry of the time stipulated in
the offer, or on receipt of written confirmation from both Investors that they
elect not to exercise the option with respect thereto, Minco may for 180 days
thereafter offer the remaining Securities to the persons and in the manner it
thinks most beneficial, but the offer to those persons shall not be at a price
less than, or on terms less favourable to Minco than the offer to the Investors.
5.6 At such time, if any, as the Investors' first cease to collectively own the
Minimum Percentage, the right to purchase securities as set out in this Part 5
will immediately terminate.
PART 6 MATTERS AFFECTING PROPERTIES PROPERTIES TO BE GOVERNED HEREBY 6.1
If, prior to March 1, 2004, Minco identifies an Acquired Property of merit in
respect of which Minco has acquired or may acquire an NCI which it believes may
be of interest to the Investors, Minco, and all persons acting on its behalf,
shall deliver a notice to the Investors, providing reasonable details regarding
the Property, the NCI and the Underlying Agreement and requesting the Investors
to determine whether such Acquired Property is one that should be governed by
this Agreement. The Investors shall notify Minco in writing within 15 days after
receipt of Minco's notice of their determination. The Investors Earn-In Rights
under this Part 6 shall not be limited as to time but may only be exercised on
those Acquired Properties which are held subject to this Agreement on or prior
to March 1, 2004. 6.2 If the Investors determine that such Acquired Property is
not one that should be governed by this Agreement, Minco will be free to deal
with that Acquired Property as it sees fit and that Acquired Property shall
thereafter not be subject to this Agreement. Failure by the Investors to notify
Minco of their determination within the time limit in Section 6.1 will be deemed
to be a determination that the Acquired Property should not be governed by this
Agreement. 6.3 If the Investors determine that the Acquired Property is to be
governed by this Agreement, they shall either sign a separate confidentiality
agreement relating to the particular Property or shall add the Property to the
schedule of properties governed by the current Confidentiality Agreements.
Thereafter Minco will make all data in its 23 - 23 - possession or control
available to the Investors and will, if requested to do so by the Investors and
subject to limits imposed by the relevant Governmental Authority, arrange for
site visits at the earliest reasonable time and within such time periods that
will allow the Investors adequate time for evaluating the Property. The
Investors shall be responsible for their own costs in connection with such site
visits and such other costs as may have been agreed by the Investors in advance
of the site visit.
CATEGORIZATION OF EXPLORATION OR DEVELOPMENT PROPERTY 6.4 On
the earlier of 15 days after receipt of Minco's notice under Section 6.1, if the
Investors have already completed a site visit, or within 30 days of completion
of a site visit as contemplated in Section 6.3, the Investors shall deliver a
notice to Minco indicating whether the Acquired Property should be categorized
as: (a) an Exploration Property, in which case Section 6.5 to Section 6.13 will
govern; or (b) a Development Property, in which case Section 6.14 to Section
6.21 will govern. Failure by the Investors to notify Minco of their election
within the above time limit will be deemed to be an election to categorize the
Acquired Property as an Exploration Property.
THIRD PARTY DEALINGS PRIOR TO EARN-IN 6.5 All dealings by Minco with
respect to an Acquired Property before the Investors have exercised their
Earn-In Rights on two Properties shall be subject to the Investors' Earn-In
Rights and any Person who acquires an Interest in an Acquired Property prior
thereto shall hold that Interest subject to the Investors' Earn-In Rights and,
following such acquisition, this Agreement shall apply mutatis mutandis to that
Person and the Interest which it has acquired so that the Person and Minco shall
enjoy the rights and benefits flowing from the Investors and shall be subject to
the same duties and obligations to the Investors pro rata their respective
Interests.
EARN-IN RIGHTS GENERALLY 6.6 Under the Teck-Cominco-PCR Agreement, the
Investors have the right to earn an Interest in an aggregate of two NCIs held by
PCR or Minco. The Investors' right to earn an Interest (the "Earn-In Rights")
regarding NCI's held by Minco are exercisable in the manner set out either in
Section 6.8 or Section 6.14. Promptly upon the Investors exercising an earn-in
right under the Teck-Cominco-PCR Agreement, the Investors shall give notice to
Minco. After the Investors have exercised their earn-in rights under the Teck-
Cominco-PCR Agreement or their Earn-in Rights under this Agreement as to an
aggregate of two Acquired Properties, the Earn-In Rights will terminate and the
provisions of Section 6.1 through Section 6.21 will cease to apply to the
Parties. 24 - 24
EXPLORATION PROPERTIES GENERALLY 6.7 An Acquired Property that has been
categorized by the Investors as an Exploration Property will form part of the
general assets of Minco, but will remain subject to the terms of this Agreement,
and in particular: (a) all dealings with such Property by Minco before the
production of a Preliminary Feasibility Report relating thereto will be subject
to the Earn-in Rights of the Investors set out more particularly in Section 6.8.
(b) Minco may, but is not obligated to, per-form additional work on the
Property; (c) all Preliminary Feasibility Reports shall be presented and
delivered to the Investors, forthwith upon completion or receipt by Minco, at a
meeting to be held at a mutually convenient time and place and called by Minco
on at least 30 days notice to the Investors; (d) if less than $1,000,000 in
Expenditures have been incurred by Minco in connection with the Exploration
Property, Minco may elect to abandon the Property or allow contractual rights to
expire without the consent of the Investors but will provide notice of such
event to the Investors; and (e) if Minco has incurred Expenditures of $1,000,000
or more and wishes to abandon the Exploration Property or allow contractual
fights to expire, it shall first give 30 days notice to the Investors of such
intent and if the Investors request Minco not to abandon the Property or to
allow the contractual rights to expire, the Investors shall, subject to the
applicable Underlying Agreement and approval of the relevant Governmental
Authority, assume the obligations of Minco with respect to such contractual
rights.
EARN-IN RIGHT ON EXPLORATION PROPERTIES 6.8 Subject to existing
requirements under any applicable Underlying Agreement, the Investors will have
a right to earn a 51% Interest in respect of an Exploration Property and will
have the further joint right to become the operator of programs on such
Exploration Property, by (a) completing, at their sole cost as between the
Parties, a Final Feasibility Report with respect to the Exploration Property,
and (b) arranging for, and giving notice as contemplated in Section 6.12 of,
funding (by equity, debt or a combination thereof) of all costs which are
required to be provided by the Parties in respect of the NCI to bring the
Property into commercial production as contemplated in a Final Feasibility
Report. 25 - 25 - 6.9 The Earn-In Rights are exercisable with respect to an
Exploration Property in respect of which the Investors give Minco an Exercise
Notice prior to the 30th day after the date of the meeting contemplated in
Section 6.7(c). Failing delivery of an Exercise Notice within the 30 days
aforesaid, the Investors shall be deemed to have elected that the Exploration
Property be released from their Earn-In Rights and that Property shall
thereafter not be subject to this Agreement.
EARNING AN INTEREST - EXPLORATION PROPERTY 6.10 Where the Investors have
delivered an Exercise Notice as contemplated in Section 6.9, the Investors will
thereafter have the right to design and implement such programs of work to be
conducted on the Exploration Property as, in their sole discretion, they
consider necessary to complete a Final Feasibility Report with respect thereto
and will earn the Interest in accordance with the following provisions. 6.11 The
Investors shall complete the Final Feasibility Report contemplated in Section
6.10 without undue delay and within such time limits as are imposed by the
applicable Underlying Agreement. The Investors shall present and deliver to
Minco a copy of the Final Feasibility Report, forthwith upon completion or
receipt by the Investors, at a meeting to be held at a mutually convenient time
and place and called by the Investors on at least 30 days notice to Minco. At
the meeting or by separate notice the Investors will indicate by notice whether:
(a) they consider the Final Feasibility Report to be positive and bankable and
they intend to seek funding necessary to bring the mine into commercial
production as contemplated in the Final Feasibility Report, in which case
Section 6.12 shall apply; (b) they consider the Final Feasibility Report to be
otherwise positive and bankable, but that it is not prudent to proceed at that
time for reasons or as a result of conditions which they shall itemize at that
time; in which case Section 6.13 shall apply; or (c) they no longer wish to
retain their Earn-In Rights with respect to that Exploration Property, in which
case that Property shall cease to be subject to this Agreement. Notwithstanding
the foregoing, the Investors may, at any time prior to completion of a Final
Feasibility Report, give notice to Minco that they are abandoning the completion
of the Final Feasibility Report and that they no longer wish to retain their
Earn-In Rights with respect to that Exploration Property, in which case that
Property shall cease to be subject to this Agreement. The Investors will,
promptly following the abandonment, provide Minco, on a without-warranty basis,
with copies of all factual information and data held or developed by the
Investors as part of their Final Feasibility 26 - 26 - Report work which the
Investors are not precluded from providing as a result of confidentiality
obligations to third parties. 6.12 If the Investors give notice under Section
6.11(a), the Investors shall have 180 days from the date of delivery of the
notice to Minco under Section 6.11(a) to obtain (by equity and commitments from
a bank or other third party for financing) 100% of the funds necessary for the
program contemplated by the Final Feasibility Report which are required to be
provided by the Parties in respect of the NCI. Upon the delivery of a Commitment
Notice by the Investors to Minco that the required funds are available: (a) the
Investors shall have earned an undivided 51% Interest provided always that if
the applicable Underlying Agreement provides that Minco must complete the
programs before an Interest is earned, the Investors shall earn their Interest
at the same time as Minco; and (b) upon the Interest having been earned, the
Investors shall have exercised an Earn-In Right. 6.13 If the Investors give
notice of deferral under Section 6.11(b), the Investors may, where possible in
accordance with the Underlying Agreement, defer delivery of a Commitment Notice
from time to time until, in their view, the subject Property could be placed
into commercial production and such deferral shall not prejudice the rights of
the Investors hereunder. If the Investors elect to defer commencement of
programs contemplated in the Final Feasibility Report under such circumstances,
they shall update the Final Feasibility Report annually and deliver the results
of such update to Minco together with an indication whether they are continuing
to defer a decision to commence with the programs.
EARN-IN RIGHT ON DEVELOPMENT PROPERTIES 6.14 Subject to existing
requirements under any applicable Underlying Agreement, the Investors will have
a right to earn a 70% Interest in respect of a Development Property and will
have the further joint right to become the operator of programs on such
Development Property, by (a) completing, at their sole cost as between the
Investors, such exploration work or other activities as may be necessary after
its categorization as a Development Property under Section 6.4 and a Final
Feasibility Report with respect to the Development Property, and (b) arranging
for, and giving notice as contemplated in Section 6.17 of, funding (by equity,
debt or a combination thereof) 70% of the costs which are required to be
provided by the Parties in respect of the NCI to bring the mine into commercial
production as contemplated in a Final Feasibility Report (or 70% of such funds
as are required for the programs contemplated under the Final Feasibility Report
27 - 27 - where such programs relate to the expansion of an existing or
currently operating mine).
EARNING AN INTEREST - DEVELOPMENT PROPERTY 6.15 Where under Section
6.4(b) the Investors have categorized the Acquired Property as a Development
Property, the Investors will thereafter have the right to design and implement
such programs of work to be conducted on the Property as, in their sole
discretion, they consider necessary to complete a Final Feasibility Report with
respect thereto and will earn their Interest in accordance with the following
provisions. 6.16 The Investors shall complete the Final Feasibility Report
contemplated in Section 6.15 without undue delay and within such time limits as
are imposed by the applicable Underlying Agreement. The Investors shall present
and deliver to Minco a copy of the Final Feasibility Report, forthwith upon
completion or receipt by the Investors, at a meeting to be held at a mutually
convenient time and place and called by the Investors on at least 30 days notice
to Minco. At the meeting or by separate notice the Investors will indicate by
notice whether: (a) they consider the Final Feasibility Report to be positive
and bankable and they intend to seek funding necessary to bring the mine into
commercial production as contemplated in the Final Feasibility Report, in which
case Section 6.17 shall apply; (b) they consider the Final Feasibility Report to
be otherwise positive and bankable, but that it is not prudent to proceed at
that time for reasons or as a result of conditions which they shall itemize at
that time; in which case Section 6.18 shall apply; or (c) they no longer wish to
retain their Earn-In Rights with respect to that Property, in which case that
Property shall cease to be subject to this Agreement. Notwithstanding the
foregoing, the Investors may, at any time prior to completion of a Final
Feasibility Report, give notice to Minco that they are abandoning the completion
of the Final Feasibility Report and that they no longer wish to retain their
Earn-In Rights with respect to that Property, in which case that Property shall
cease to be subject to this Agreement. The Investors will, promptly following
the abandonment, provide Minco, on a without-warranty basis, with copies of all
factual information and data held or developed by the Investors as part of their
Final Feasibility Report work which the Investors are not precluded from
providing as a result of confidentiality obligations to third parties. 6.17 If
the Investors give notice under Section 6.16(a) or Section 6.18, the Investors
shall have 180 days from the date of delivery of the notice to Minco under
Section 6.16(a) or Section 6.18 to obtain (by equity and commitments from a bank
or other third party for financing) 28 - 28 - 70% of the funds necessary for the
program contemplated by the Final Feasibility Report which are required to be
provided by the Parties in respect of the NCI. Upon delivery of a Commitment
Notice by the Investors to Minco that the required funds are available: (a) the
Investors shall have earned an undivided 70% Interest, provided always that if
the applicable Underlying Agreement provides that Minco must complete the
programs before an Interest is earned, the Investors shall earn their Interest
at the same time as Minco; and (b) upon the Interest having been earned, the
Investors will have exercised an Earn-In Right. 6.18 If the Investors give
notice of deferral under Section 6.16(b), the Investors may, where possible in
accordance with the Underlying Agreement, defer delivery of a Commitment Notice
from time to time until, in their view, the subject Property could be placed
into commercial production and such deferral shall not prejudice the rights of
the Investors hereunder. If the Investors elect to defer commencement of
programs contemplated in the Final Feasibility Report under such circumstances,
they shall update the Final Feasibility Report annually and deliver the results
of such update to Minco together with an indication whether they are continuing
to defer a decision to commence with the programs. The Investors may, at any
time during the deferral, give notice to Minco that conditions upon which the
deferral has been based have been overcome and they consider the Final
Feasibility Report to be positive and bankable and they intend to seek funding
necessary to bring the mine into commercial production as contemplated in the
Final Feasibility Report, in which case Section 6.17 shall apply to the
Investors and Section 6.19 to Section 6.21 will apply to Minco. 6.19 The
Investors will be entitled to include in the terms of any bank or third party
commitment for financing a condition precedent that Minco will provide the
remaining 30% of the funds necessary for the programs of work which are required
to be provided by the Parties in respect of the NCI. 6.20 If Minco is unable,
during the 180-day period referred to in Section 6.17, to deliver a Commitment
Notice for its 30% of the required funds the Investors can either: (a) notify
Minco that the production programs will be postponed; or (b) elect to arrange
for or provide such remaining funds as are necessary for the programs
contemplated by the Final Feasibility Report, in which case Minco's Interest
will be diluted in accordance with the dilution formula set out in the Terms of
Joint Venture annexed as Schedule F hereto. 6.21 If the Investors elect under
Section 6.20 to postpone the production programs, Minco and Investor shall
maintain their respective interests in the Property. The Investors shall update
the Final Feasibility Report annually and may, at any time, elect 29 - 29 - to
proceed with the production program contained therein. In such case, the
Investors will give notice in writing to Minco and Minco will thereafter have
180 days within which to arrange for financing of its share of funds required
for the production programs. If after the expiry of such time Minco cannot
deliver a Financing Notice for its share of funds, the Investors will be
entitled to provide the balance of such funds for the production programs and
the interest of Minco will be diluted in accordance with the dilution formula
set out in the Terms of Joint Venture annexed as Schedule F hereto.
JOINT VENTURE 6.22 As promptly as practicable after the Closing Date,
the Parties shall settle the form of Joint Venture Agreement relating to
Properties, which Joint Venture Agreement shall include at least the terms set
out on Schedule G, including a provision that if Minco's Interest is diluted to
10% its Interest will be converted to a 1% Net Smelter Return Royalty, as
defined in Schedule H, from that share of production from a mine on the Property
which is taken in kind or attributable to the Interests held by the Parties.
Notwithstanding actual Expenditures of Minco, Minco's initial contribution for a
Development Property for the purposes of calculating dilution shall be deemed to
be such amount that is equal to 3/7 of Investors' Costs (see Schedule F) at the
time of Commitment Notice. Each Property for which the Investors have exercised
an Earn-In Right will be governed by its own separate Joint Venture Agreement.
COST RECOVERY - DEVELOPMENT PROPERTY 6.23 With respect to a
Development Property, Net Proceeds shall be distributed as follows: (a) firstly
100% to repay any third party project financing; (b) secondly, 100% to repay any
project financing contributed by the Parties as between the Parties in
proportion to their percentage contribution level to the project financing; (c)
thirdly, to repay any Prior Costs, excluding deemed costs, prior to the date of
the Investors' Commitment Notice; and (d) finally, to the Parties in proportion
to their respective Interests.
COST RECOVERY - EXPLORATION PROPERTY 6.24 With respect to an Exploration
Property, Net Proceeds shall be distributed as follows: (a) firstly 100% to
repay any third party project financing; 30 - 30 - (b) secondly, until the First
Recovery Date, 75% to the Investors in respect of their Prior Costs, excluding
deemed costs (in proportion to their respective Interests as between them) and
25% to Minco in respect of its Prior Costs, excluding deemed costs, plus
interest at Prime Rate plus 2%, calculated in each case from the date on which
the said Prior Costs were paid; (c) thirdly, until the Second Recovery Date,
100% to the Party that has not yet recovered its Prior Costs, excluding deemed
costs, plus interest at the Prime Rate plus 2%, calculated from the date on
which such said Prior Costs were paid; and (d) finally, to the Parties in
proportion to their respective Interests.
MINCO CONSULTING SERVICES 6.25 Where Minco can demonstrate that its
current employees have the required expertise and provided that the contract
price is within the standard range in the industry for arms length engagements,
such Party shall be entitled to offer its consulting services to any other Party
hereto. The Investors may require Minco to render consulting services, so long
as the renumeration for such services is within the standard range in the
industry.
PART 7 ASSIGNMENTS AND PREFERENTIAL RIGHTS OF PURCHASE
ASSIGNMENTS 7.1 No Party may assign any right, benefit or interest in this
Agreement or an NCI in respect of which the Investors have exercised their
rights under Part 6 without the prior written consent of the other Parties and
any purported assignment without such compliance will be void except: (a) such
assignment is permitted if it occurs in accordance with Part 6; (b) an Investor
may, at any time, assign all or any part of its interest to an Affiliate so long
as such Affiliate agrees to be bound by the terms of this Agreement and to
retransfer the interest prior to ceasing to be an Affiliate of such Investor;
(c) Minco may assign all or any part of its interest to a wholly-owned
subsidiary of Minco so long as such entity agrees to be bound by the terms of
this Agreement and to retransfer the interest prior to ceasing to be a
wholly-owned subsidiary; 31 - 31 - (d) Minco may assign all or any part of its
Interest to the Investors or to PCR; (e) the Investors may freely assign
Interests as between them; and (f) such assignment is permitted if it occurs in
accordance with Section 7.2 through 7.6. 7.2 Subject to Section 7.7 and to
existing requirements under any applicable Underlying Agreement, after the
Earn-In Rights contained in Section 6.6 and 6.7 have been exercised (by either
or both Investors) with respect to an aggregate of two Properties, if: (a) Minco
wishes to dispose of all or a portion of its Interest in a Property; or (b)
Minco wishes to accept a legally binding and enforceable offer from a third
party to purchase, earn or acquire an Interest; it shall first offer to the
Investors the same opportunity in the manner hereinafter set out. 7.3 Minco
shall deliver an offer ("Minco's Offer") to the Investors which shall include at
least the following information or documents: (a) a written notice specifying in
reasonable detail the Property which is the subject of Minco's Offer, and the
NCI in relation thereto; (b) all information in Minco's possession or control
relating to the Acquired Property; (c) such preliminary feasibility report (if
any and without obligating Minco to produce one) relating to the Acquired
Property in the possession or control of Minco; (d) the terms and conditions of
Minco's Offer, or a copy of any third party offer contemplated in Section
7.2(b), including the time period for acceptance; and (e) all other information,
analysis and data in Minco's possession or control that the Investors may
reasonably request or which might reasonably be expected to be useful to them in
deciding whether to accept Minco's Offer; and in all cases if the Investors have
not previously executed a confidentiality agreement governing the subject
Property, upon request of Minco before delivery of the information, they shall
do so. 7.4 The Investors shall have 30 days after receipt of Minco's Offer to
accept Minco's Offer. Either or both of the Investors may elect in writing to
accept such offer 32 - 32 - and where both Investors elect to accept, they shall
participate in purchasing, earning or acquiring the Interest in equal
proportions unless otherwise agreed between them. Completion of the transaction
shall occur on a date agreed among the Parties but not earlier than 60 days
after delivery of the acceptance notice. 7.5 If neither Investor accepts Minco's
Offer within the time period provided for acceptance, the Investors shall be
deemed to have declined the offer and Minco may, for a period of 180 days
thereafter, sell or dispose of the Interest to a third party (and where Minco's
Offer relates to a specific third party offer to that third party) on the same,
or financially equivalent, terms and conditions as set out in Minco's Offer;
provided that, with respect to the Properties in which the Investors have
exercised their Earn-In Rights, the third party agrees to be bound by this
Agreement. If Minco does not complete the acquisition or transaction within the
said 180 days, the preferential right of purchase enjoyed by the Investors shall
again apply to any proposed disposition. 7.6 If after making an
election or earning an Interest under Part 6 an Investor wishes to transfer all
of the Interest to a third party other than an Affiliate, it must first offer
the Interest to Minco in accordance with the provisions of Section 7.2 to
Section 7.5 and for these purposes "Minco" shall be read to mean the particular
Investor and "Investors" shall be read to mean Minco. 7.7 This Part 7 shall
cease to apply to Properties, other than the two in respect of which the
Investors have exercised their Earn-In Rights, on the earlier of March 1, 2004
and the third anniversary of the date the Investors have exercised their Earn-In
Rights on two Properties.
PART 8 CONDITIONS CONDITIONS TO THE OBLIGATIONS OF TECK AND
COMINCO 8.1 Except as otherwise specifically set forth herein, all obligations
of Teck and Cominco under this Agreement are subject to the fulfilment, before
or on the Closing Date, of each of the following conditions for the exclusive
joint benefit of the Investors, each of which may be waived in whole or in part
by the Investors, on or before the Closing Date: (a) all representations and
warranties of Minco contained in this Agreement or in any written statement
delivered to Teck or Cominco under this Agreement, are true and correct, when
made and will be true and correct at the Closing Date; and 33 - 33 - (b) each of
the covenants and agreements of, conditions imposed upon and the deliveries set
out herein to be made by Minco to be performed, satisfied or complied with on or
before the Closing Date has been duly performed, satisfied and complied with in
all respects on or before the Closing Date.
CONDITIONS TO THE OBLIGATIONS OF MINCO 8.2 Except as otherwise
specifically set forth herein, all obligations of Minco under this Agreement are
subject to the fulfilment, before or on the Closing Date, of each of the
following conditions for the exclusive benefit of Minco and each of which may be
waived in whole or in part by Minco on or before the Closing Date: (a) receipt
of any Requisite Approvals for the transactions contemplated in this Agreement;
(b) all representations and warranties of Teck and Cominco contained in this
Agreement, or in any written statement delivered to Minco by Teck or Cominco
under this Agreement, are true and correct, when made and will be true and
correct on the Closing Date; and (c) each of the covenants, agreements and
conditions of Teck and Cominco to be performed, satisfied or complied with on or
before the Closing Date pursuant to the terms hereof has been duly performed,
satisfied and complied with in all respects on or before the Closing Date.
PART 9 FORCE MAJEURE FORCE MAJEURE 9.1 Notwithstanding any other
provision of this Agreement, a Party's rights and privileges shall not be
affected and no liabilities hereunder shall result to that Party, except for
monies then due, for any delay in performance or non-performance caused by
circumstances beyond the control of the party affected, including but not
limited to acts of God, earthquake, fire, flood or the elements, perils of the
sea, including any action or threatened action of any nation endangering
transport, malicious mischief, riots, strikes, lockouts, boycotts, picketing,
labour disturbances, war, compliance with any directive, order or regulation of
any governmental authority or representatives thereof acting under claim or
colour of authority, accidents, equipment or operational breakdown, shortage or
inability to obtain fuel, electric power, raw materials or manufactured
products, equipment, containers or transportation, unfavourable economic or
political considerations beyond the control of that Party such as, but not
limited to foreign exchange controls restricting foreign investment or the
return of foreign investment, or 34 - 34 - the currency in which it is payable
and restrictions on the export of production or due to any cause beyond that
Party's reasonable control whether or not similar to the foregoing.
NOTICE 9.2 Upon the occurrence of an event of force majeure, the
affected Party shall notify the other Parties immediately upon such occurrence
and the Parties shall exercise all reasonable efforts and due diligence to
eliminate or remedy any event of force majeure or interrupting proponents
hereunder (provided that nothing herein contained shall be construed as
requiring any party to accede to any demands of workers which it considers
unreasonable or to test constitutionality of any law).
EXTENSION OF TIME 9.3 If an event of force majeure occurs, the time
periods during which a Party must satisfy its obligations hereunder will be
extended for the same length of time as the event of force majeure continues.
PART 10 GENERAL PROVISIONS ENTIRE AGREEMENT 10.1 This Agreement
constitutes the entire agreement among the Parties and supersedes every previous
agreement, communication, expectation, negotiation, representation or
understanding, whether oral or written, express or implied, statutory or
otherwise, between the Parties with respect to the subject matter of this
Agreement other than agreements executed by each of the Parties on or after the
date of this Agreement.
NO OTHER REPRESENTATIONS 10.2 No director, officer, employee or agent of
any Party has any authority to make any representation or warranty not contained
in this Agreement, and each Party agrees that it has executed this Agreement
without reliance upon any such representation or warranty.
WAIVER AND CONSENT 10.3 No consent or waiver, express or implied, by
either Party to or of any breach or default by the other of any or all of its
obligations under this Agreement will (a) be valid unless it is in writing and
stated to be a consent or waiver pursuant to this Section 10.3; 35 - 35 - (b) be
relied on as a consent to or waiver of any other breach or default of the same
or any other obligation; (c) constitute a general waiver under this Agreement;
or (d) eliminate or modify the need for a specific consent or waiver pursuant to
this Section 10.3 in any other or subsequent instance.
AMENDMENTS 10.4 This Agreement may not be amended except by written
document signed by all Parties to this Agreement.
PRESS RELEASES 10.5 Each Party shall consult with the others prior to
issuing any press release or other public statement regarding a Property or the
activities of the Parties with respect thereto: (a) during the Earn-In Period in
respect of all Acquired Properties; and (b) thereafter in respect of Acquired
Properties for which the Investors have exercised the Earn-In Rights. At all
times each Party shall obtain prior approval from the other before issuing any
press release or public statement using the others' names or the name of any of
the others' associated companies or of any of the officers, directors or
employees of the others or their associated companies.
BINDING EFFECT 10.6 This Agreement will enure to the benefit of and be
binding upon the respective legal representatives, successors and permitted
assigns of the Parties.
TIME OF ESSENCE 10.7 Time is of the essence in the performance of each
obligation under this Agreement.
FURTHER ASSURANCES 10.8 Each Party will at all times and from time to
time cooperate with each other Party in order to give full effect to this
Agreement and in order to assist and expedite the performance by each Party of
all or any of the provisions herein contained and, in particular, do all acts
and things and execute under its corporate seal or 36 - 36 - otherwise and
deliver all such instruments, deeds, mortgages, assignments and other documents
and cause all such corporate acts to be duly, expeditiously and validly done as
the Parties may reasonably require in accordance with the provisions hereof.
NOTICE 10.9 Every notice, request, demand or direction (each, for the
purposes of this Section 10.9, a "notice") to be given pursuant to this
Agreement by any Party to another will be in writing and will be delivered or
sent by telecopier or other similar form of instantaneous written communication
on tangible medium, in each case, addressed as applicable as follows: If to
Minco: 1870 - 000 Xxxx Xxxxxxx Xxxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0 Fax:
(000) 000-0000 Attention: Chairman If to Teck at: 000 - 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0 Fax: (000) 000-0000 Attention: Secretary If
to Cominco at: 000 - 000 Xxxxxxx Xxxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0 Fax:
(000) 000-0000 Attention: General Manager, Exploration, International or to such
other address as is specified by the particular Party by notice to the other. 37
- 37 -
DEEMED RECEIPT 10.10 Any notice delivered or sent in accordance with
Section 10.9 will be deemed to have been given and received: (a) if delivered,
on the first Business Day after the day of delivery; and (b) if sent by
telecopier or other similar form of instantaneous written communication, on the
first Business Day after the day of transmittal.
TERMINATION 10.11 This Agreement will terminate: (a) upon mutual
agreement of the Parties; and (b) at the option of the Investors if any of the
events set out in 2.8(b) occurs.
COUNTERPARTS 10.12 This Agreement may be signed by facsimile and in any
number of counterparts and all such counterparts will be taken to comprise a
single agreement.
CONDITIONS PRECEDENT 10.13 This Agreement and the obligations of the
Parties are subject to: (a) the execution of a subscription agreement between
Minco, Teck and Cominco relating to the Teck-Cominco private placement; and 38 -
38 - (b) acceptance for filing of this Agreement by the Vancouver Stock Exchange
on or before March 31, 1996.
IN WITNESS WHEREOF the Parties have executed this Agreement as of the
day and year first above written.
The Common Seal of )
MINCO MINING AND METALS )
CORPORATION )
was affixed in the presence of: )
)
C/S /s/illegible )
--------------------------------- )
Authorized Signatory )
)
/s/illegible )
--------------------------------- )
Authorized Signatory )
The Corporate Seal of )
TECK CORPORATION )
was affixed in the presence of: )
)
C/S /s/illegible )
--------------------------------- )
Authorized Signatory )
)
/s/illegible )
--------------------------------- )
Authorized Signatory )
The Corporate Seal of )
COMINCO LTD. )
was affixed in the presence of: )
)
C/S /s/illegible )
--------------------------------- )
Authorized Signatory )
)
/s/illegible )
--------------------------------- )
Authorized Signatory )
