EXHIBIT 4.63
DATED the 6th day of December, 1988
PORGERA JOINT VENTURE
OPERATING AGREEMENT
BETWEEN
PLACER (P.N.G.) PTY. LIMITED
OF THE FIRST PART
AND
HIGHLANDS GOLD PROPERTIES PTY. LIMITED
OF THE SECOND PART
AND
RGC (PAPUA NEW GUINEA) PTY. LIMITED
OF THE THIRD PART
2 NOVEMBER 1988
I N D E X
PORGERA JOINT VENTURE
OPERATING AGREEMENT
Clause Heading Page
------ ------------------------------------------------------------------------- ----
Clause 1. Definitions and Interpretations.......................................... 2
Clause 2. Sub-Committees........................................................... 4
Clause 3. Manager's Responsibilities............................................... 5
Clause 4. Manager's Contracting Powers............................................. 9
Clause 5. Manager's Powers during Construction..................................... 11
Clause 6. Payment for Manager's Services........................................... 12
Clause 7. Manager's and Joint Venturers' Liability................................. 12
Clause 8. Insurance................................................................ 15
Clause 9. Termination of Manager................................................... 16
Clause 10. Termination by Manager................................................... 18
Clause 11. Replacement of Manager................................................... 19
Clause 12. Independent Contractor................................................... 19
Clause 13. Data Ownership........................................................... 19
Clause 14. Conflict with Joint Venture Agreement.................................... 19
Clause 15. Assignment and Delegation................................................ 19
Clause 16. Governing Law............................................................ 20
Clause 17. Just and Faithful........................................................ 20
SCHEDULES
-------------------------------------------------------------------------
"A" EXPLORATION, FEASIBILITY AND CONSTRUCTION PHASES
BASIS FOR REIMBURSEMENT.................................................. 1
1. INTERPRETATION........................................................... 1
2. REIMBURSEMENT OF MANAGER................................................. 1
3. COST ACCOUNTING.......................................................... 4
4. PAYMENT FOR SERVICES AND ADVANCE CALLS................................... 4
i
"B" CONCEPT OF CAPITAL CONTROL PROCEDURES TO BE
INCORPORATED IN THE PROCEDURES MANUALS................................... 1
"C" OPERATING PHASE OPERATING FEE AND BASIS FOR
REIMBURSEMENT............................................................ 1
1. INTERPRETATION........................................................... 1
2. REIMBURSEMENT OF MANAGER................................................. 1
3. COST ACCOUNTING.......................................................... 3
4. PAYMENT FOR SERVICES AND ADVANCE CALLS................................... 3
5. OPERATING FEE............................................................ 5
ii
PORGERA JOINT VENTURE
OPERATING AGREEMENT
THIS OPERATING AGREEMENT (hereinafter referred to as the "Agreement") made the
Sixth day of December, one thousand nine hundred and eight-eight BETWEEN PLACER
(P.N.G.) PTY. LIMITED a company incorporated in Papua New Guinea with its
registered office at c/- Xxxxx Xxxxxx Xxxxxxx, 4th floor, Mogoru Moto Building,
Champion Parade, Port Moresby (hereinafter called "Placer") of the first part
HIGHLANDS GOLD PROPERTIES PTY. LIMITED a company incorporated in Papua New
Guinea with its registered office at c/- Xxxxx Xxxxxx Xxxxxxx, 4th floor, Mogoru
Building, Champion Parade, Port Moresby (hereinafter called "Highlands Gold") of
the second part and RGC (PAPUA NEW GUINEA) PTY. LIMITED a company incorporated
in Papua New Guinea with its registered office at c/- Coopers and Xxxxxxx,
Mogoru Moto Building, Champion Parade, Port Moresby (hereinafter called "RGC")
of the third part, all of which are hereinafter collectively referred to as the
"Joint Venturers".
WHEREAS:
A. The Joint Venturers, or their predecessors in interest, entered into an
agreement dated the 31st day of July, 1979 (the "Joint Venture Agreement")
for the purpose of providing for the future exploration and development of
the Property by way of Joint Venture;
B. The Joint Venture Agreement provided that the management of the Joint
Venture rest exclusively with Placer as Manager subject to the control of
the Management Committee; and
C. The Joint Venturers are now desirous of defining the role of the Manager
and the Manager's relationship with the Management Committee more
precisely.
NOW IT IS HEREBY AGREED as follows:
Clause 1. Definitions and Interpretations
(a) Except where otherwise defined herein or the context otherwise requires,
expressions used in this Agreement (reference to which shall include the
Schedules annexed hereto) shall bear the meaning ascribed to them in the
Joint Venture Agreement as amended from time to time.
(b) For the purposes of this Agreement the following terms shall have the
meanings specified below unless the context is inconsistent therewith:
(i) "Commencement of Underground Operations" means the last day of the
first period of 40 consecutive days in which for not less than
thirty (30) days section 1 of the concentrator processed ore
extracted underground from the Property at not less than
seventy-five percent (75%) of the daily rated capacity (as
contemplated by the Approved Proposal for Development) for each of
the said 30 days and the concentrate thereby produced was processed
into dore bullion;
(ii) "Conclusion of the Construction Phase" means the last day of the
first period of sixty (60) consecutive days in which, for not less
than fifty (50) days, the pressure oxidation circuit processed
concentrate produced from ore from the Property at not less than
seventy-five percent (75%) of the daily rated capacity (as
contemplated by the Approved Proposal for Development) for each of
the said fifty (50) days;
(iii) "Proposal for Development" means the proposal for development and
operation of underground and open pit mines on the Property together
with all facilities and infrastructure associated therewith which
proposal is based upon the Feasibility Study and will encompass
environmental, training and localisation, supply and procurement and
other aspects
2
required by or agreed with the Government of Papua New Guinea and is
to be submitted to that Government and which will, when approved by
the Government, become the "Approved Proposal for Development";
(iv) "Project" means the activities comprised within those phases
described in paragraphs (v), (vi), (vii) and (viii) of this
subclause 1(b);
(v) "Exploration Phase" means that period during which Exploration of
the Property is carried out and which terminates on the commencement
of the Feasibility Phase;
(vi) "Feasibility Phase" means that period commencing when the Management
Committee authorises the preparation of the Feasibility Study and
the Proposal for Development arising as a consequence thereof and
terminating with a decision of the Management Committee to commence
the Construction Phase;
(vii) "Construction Phase" means that period commencing when the
Management Committee authorises the commencement of development of
underground and open pit mines on the Property and all facilities
and infrastructure associated therewith in accordance with the
Approved Proposal for Development and terminating on the Conclusion
of the Construction Phase;
(viii) "Operating Phase" means that period commencing on the Commencement
of Underground Operations;
(ix) "Management Committee" means the management committee established
pursuant to subclause 4(b) of the Joint Venture Agreement;
3
(x) "Manager" means Placer, any interim manager appointed pursuant to
Clause 9 and in the event that the manager's position becomes vacant
pursuant to Clause 11 hereof.
(c) It is acknowledged that there can be both a Construction Phase and an
Operating Phase being undertaken by the Manager contemporaneously.
(d) The Clause headings herein are inserted for convenience only and are not
to be construed as part of this Agreement.
Clause 2. Sub-Committees
(a) There is hereby constituted a committee ("the Planning and Information
Committee") consisting of one representative of each of the Joint
Venturers. The appointment by a Joint Venturer of its representative shall
be by notice in writing to the other Joint Venturers and any change in the
identity of a representative shall be similarly notified.
(b) The provision of subclause 4(b) (ii), (iv) and (v) of the Joint Venture
Agreement shall, mutatis mutandis, apply in respect of the Planning and
Information Committee and representatives of the Joint Venturers at
meetings thereof may be accompanied by such advisers as they individually
deem desirable.
(c) The Planning and Information Committee's function shall be:
(i) to assist the Manager in formulating all work programmes and
budgets;
(ii) to assist the Manager in formulating other recommendations
(including, without limitation, recommendations as to the timing of
and the budget and parameters for the Feasibility Study) to the
Management Committee and to ensure that such programmes, budgets and
recommendations are in sufficient detail to enable the Manager to
proceed with the implementation
4
thereof without further reference to the Management Committee once
the Management Committee has reached its decision thereon;
(iii) to meet as required for the purposes of gathering and exchanging
information and data relating to the Project;
(iv) to monitor the implementation of the current work programme and
budget;
(v) to provide input to the agenda for meetings of and advice to the
Management Committee;
(d) Decisions of the Planning and Information Committee shall be carried by
those Joint Venturers representing in the aggregate a majority Percentage
Interest PROVIDING THAT such decisions shall not be binding on the
Manager. The Manager shall, nevertheless, take such decisions into account
in formulating work programmes and budgets for and other recommendations
to the Management Committee.
Clause 3. Manager's Responsibilities
(a) The Manager's responsibilities will include, but not be limited to:
(i) completing the exploration necessary to define the tonnage and grade
of ore so as to categorize as proven ore a sufficient tonnage
thereof to enable the Feasibility Study to proceed;
(ii) gathering all required data for and preparing a Feasibility Study
and all other studies necessary for the compilation and submission
of the proposal for development;
(iii) overseeing and co-coordinating the activities of contractors
utilized by the Manager in the performance of design, procurement
and construction activities required for or in connection with the
mines and processing
5
plans as provided for in the Approved Proposal for Development and
in the performance of its other obligations hereunder;
(iv) preparing, in consultation with the Planning and Information
Committee, strategy plans and policies for all negotiations with the
Papua New Guinea Government and, after approval by the Management
Committee, participating in and unless otherwise instructed by the
Management Committee, leading the negotiations in accordance with
the approved plans and policies;
(v) preparing a procedures manual for the Construction Phase and a
further procedures manual for the Operating Phase, which manuals
shall be prepared and given to the Joint Venturers for their
information prior to the start of the phase to which they relate and
shall include, inter alia, procedures generally following those
contained in Schedule B hereto;
(vi) supervising the commissioning of the mines and plant facilities;
(vii) operating the mines and facilities on behalf of the Joint Venturers
and implementing any work programme adopted from time to time by the
Management Committee;
(viii) compliance with all contractual and statutory obligations owed by
the Joint Venturers jointly and severally to third parties including
the Papua New Guinea Government and any Provincial Authorities as a
result of the Joint Venturers' ownership, development or operation
of the mines or Property except insofar as the Management Committee
has agreed that any specific obligation is of such a nature as to
require discharge by a Joint Venturer in which event compliance with
such specific obligation shall be the responsibility of that Joint
Venturer;
6
(ix) effecting and maintaining all necessary and usual insurance to cover
potential liabilities of the Joint Venturers as directed by the
Management Committee pursuant to Clause 8(a) (i) and 8(a) (iii);
(x) protecting and maintaining Joint Venturers' assets in the Manager's
possession;
(xi) taking all reasonable action as may be necessary or desirable for
the safety of persons employed on the Project; and
(xii) procuring an annual audit of the Joint Venture accounts to be
carried out by an international firm of auditors nominated by the
Management Committee.
(b) For the purposes of fulfilling its obligations hereunder and under the
Joint Venture Agreement, the Manager shall ensure that there is on its
staff or seconded to its staff at all times after the date hereof, one
suitably qualified (having regard to the phase which the Project has
reached at any time) Project Manager, who will be responsible on behalf of
the Manager for the Project on a full time basis, and for the following:
(i) reporting to the Management Committee in accordance with the Joint
Venture Agreement, including at meetings of the Management Committee
which shall be called by the Manager at least once each calendar
quarter unless otherwise agreed to by the Joint Venturers;
(ii) directing the work of the personnel engaged on the Project to
achieve the objectives set by the Management Committee;
(iii) ensuring that adequate and separate accounting systems are
established and maintained with respect to the Construction Phase
and Operating
7
Phase so as to provide the Management Committee with accurate,
detailed and timely records of all expenditures;
(iv) co-ordinating the activities of persons in the field with the
activities of those persons working elsewhere on design,
procurement, and other activities of the Project so as to ensure
that there is a sufficient, timely and accurate flow of information
to carry out these activities; and
(v) such other Project related matters as are usually conducted by the
Joint Venturers but may, from time to time, be delegated to the
Project Manager by the Management Committee.
(c) The Manager will, subject to subclause 4(a) hereof ensure that, at all
times, the Project has an adequate staff of suitable personnel either
directly employed by it or seconded to it by an affiliated company of the
Manager or one of the other Joint Venturers or hired as consultants.
(d) All activities of the Manager on behalf of the Joint Venturers pursuant
hereto and to the Joint Venture Agreement shall be conducted by the
Manager in accordance with policies, work programmes and budgets
established by the Management Committee in accordance with the Joint
Venture Agreement provided that the manner of carrying out such policies,
work programmes and budgets shall be the responsibility of the Manager in
accordance with the provisions of subclause 3(f) hereof.
(e) The Manager shall at all times fulfill its responsibilities in a good and
workmanlike manner and in accordance with generally accepted industry
practices appropriate to the activities undertaken.
8
Clause 4. Manager's Contracting Powers
(a) The Manager may enter into agreement or contracts on normal commercial
terms for the provision of specific services by any party or parties
including, but not limited to, parties associated or affiliated with the
Manager or other Joint Venturers subject to the following limitations:
(i) during the Exploration Phase and Feasibility Phase, within an annual
work programme and budget which has been approved in advance by the
Management Committee but only with the specific approval of the
Management Committee where such agreements or contracts are in
excess of 1,000,000 Kina in aggregate with any one organisation;
(ii) during the Construction Phase within the scope of work defined in
the Feasibility Study, and the budget therefor adopted by the
Management Committee, subject to Clause 5;
(iii) during the Operating Phase within the annual work programme and
budget approved by the Management Committee with respect thereto but
only with the prior consent of the Management Committee for
agreements and contracts with a Joint Venturer or its affiliated
companies.
(iv) during all phases the Manager shall enter into and undertake all
commercial transactions in accordance with financial and accounting
procedures which have been approved by the Management Committee; and
(v) during all phases the Manager shall keep the Planning and
Information Committee informed of all substantial commercial
arrangements made or contemplated for the Project with the intent of
ensuring that the Management Committee is aware of those commercial
arrangements which may be commercially or politically sensitive.
9
(b) The Manager may request that any of the Joint Venturers which is not
affiliated with the Manager provide, from time to time, personnel having
expertise which is required for the Project and each Joint Venturer will
use its best endeavours to comply with any such request.
(c) (i) Subject to the limitations set out in paragraphs (i), (ii) and (iv)
of subclause 4(a) hereof, the Manager may enter into a contract with
Placer Dome Technical Services Limited ("PTS") for the provision of
any services during the Exploration Phase, Feasibility Phase and
Construction Phase of the Project required of the Manager pursuant
to the Joint Venture Agreement and this Agreement.
Such contract shall provide for reimbursement of PTS by the Manager
on the same basis mutatis mutandis as that outlined in Schedule "A"
with the addition of a fee payable by the Manager to PTS (which fee
will be considered as a charge against the Project) during the
Construction Phase in the amount of three percent (3%) of the amount
of all contracts and phase orders placed by PTS, or its affiliated
companies or agents on behalf of the Project and for the purposes of
its construction, with parties other than any of the Joint Venturers
or their affiliated companies.
(ii) During the Exploration Phase, Feasibility Phase and Construction
Phase of the Project, the Manager may also enter into contracts with
any party being or being associated or affiliated with any of the
Joint Venturers to provide the services required by the said
contracts in accordance with the basis for reimbursement outlined in
Schedule "A" mutatis mutandis, all subject to the limitations set
out in paragraphs (i), (ii) and (iv) of subclause 4(a) hereof.
10
(iii) In the two situations described in paragraphs (i) and (ii) of this
subclause 4(c), such contracts shall be deemed to be made on "normal
commercial terms" for the purposes of subclause 4(a).
(iv) Subject to Clause 4(a), during all phases the Manager may, on behalf
of the Project, enter into such contracts with third parties not
being associated or affiliated with any of the Joint Venturers as
may be necessary for the implementation of work programmes approved
by the Management Committee and, the Manager may on entering any
contract, call for advance of funds as the same are required to
enable the Manager to meet its obligations under the contract as
they arise in accordance with procedures set out in Clause 5(b) of
the Joint Venture Agreement.
Clause 5. Manager's Powers during Construction
The management of the Joint Venture shall rest exclusively with the Manager
subject to the control of the Management Committee; however once the decision to
proceed with construction of the mine as defined in the Feasibility Study has
been taken and the budget therefor adopted by the Management Committee, the
Manager will be free to take all action necessary for design, procurement and
construction without further approvals from the Management Committee and as per
agreed procedures in the Procedures Manual referred to in Clause 3(a) (v)
except:
(i) when the Management Committee otherwise determines at the
instigation of any of the Joint Venturers as a result of the
perceived invalidity of any of the fundamental assumptions on which
the Feasibility Study was based; or
(ii) when major changes are required or when proposed expenditure for a
major item is in excess of the budgeted amount of more than ten (10)
percent, any of which shall be submitted to the Management Committee
for its prior approval.
11
Clause 6. Payment for Manager's Services
(a) The Manager will during the Exploration Phase, Feasibility Phase and
Construction Phase provide its services in accordance with the basis for
reimbursement set out in Schedule "A" hereto.
(b) The Manager will during the Operating Phase provide its services with
respect thereto in accordance with the basis for reimbursement and in
consideration of the payment by the Joint Venturers of the Operating Fee
set out in Schedule "C" hereto.
(c) As a consequence of the projected overlapping of the Construction Phase
and the Operating Phase the Joint Venturers acknowledge and agree that the
Manager will, during such period, be entitled to reimbursement for
services relating to construction pursuant to Schedule A and services
relating to operations pursuant to Schedule C.
Clause 7. Manager's and Joint Venturers' Liability
(a) The Manager's liability to the Joint Venturers pursuant to both the Joint
Venture Agreement and this Agreement shall be limited and restricted
solely to that set out hereunder.
(b) (i) Liability arising out of the Manager's engineering responsibilities
during the Exploration Phase, Feasibility Phase and Construction
Phase, shall be limited to the Manager re-performing at its own
expense those engineering services which are deficient in any
respect by reason of a breach by the Manager of Clause 3(f) hereof.
The Manager's liability to re-perform those engineering services as
aforesaid pursuant to this subclause shall terminate:
12
(aa) in the case of engineering services related to the
Commencement of Underground Operations, after the expiration
of one year from such commencement; and
(bb) in the case of other engineering services from the earlier of
the Conclusion of the Construction Phase or one year from the
date a facility (being a facility the use of which in
operations is not dependent on the subsequent completion of
another facility) is completed and available for use in
operations, whether or not it is then so used.
(ii) Liability otherwise caused by the Manager's negligence or breach of
the Manager's duty pursuant to Clause 3(f) hereof during the
aforesaid phases, shall be limited in total to the greater of:
(aa) seventy-five percent (75%) of the total fees received by the
Manager during those phases; or
(bb) the proceeds received from insurance coverage plus any
deductible relative to the liability arising under this
subclause;
and the Joint Venturers hereby release the Manager from any liability in
excess thereof.
(iii) Liability caused by the Manager's negligence or breach of the
Manager's duty pursuant to Clause 3(f) hereof during the Operating
Phase shall be limited in total to the greater of:
(aa) Seventy five percent (75%) of the total fees relating to the
Operating Phase received by the Manager during the twelve (12)
months immediately preceding the negligent act or breach of
duty; or
13
(bb) the proceeds received from insurance coverage
plus any deductible relative to the liability
arising under this subclause;
and the Joint Venturers hereby release the Manager from any liability in
excess thereof.
(c) (i) Under no circumstances shall the Manager be liable to the Joint
Venturers for any consequential or incidental damages, including but
not limited to loss of use or loss of profits, notwithstanding
whether caused by negligence, a breach of the Manager's duty
pursuant to Clause 3(f) hereof or otherwise.
(ii) Under no circumstances shall the Manager be liable to the Joint
Venturers for damages that would have been covered by the insurance
recommended to be purchased by the Manager pursuant to Clause 8
(a)(ii) hereof and for which the Management Committee decided not to
purchase insurance and furthermore, the Joint Venturers shall
indemnify the Manager for any loss it suffers or incurs as a result
of third party claims against the Manager that would have been
covered by the said recommended insurance coverage including any
deductible or excess thereto.
(iii) The Joint Venturers agree to indemnify the Manager for all liability
incurred by the Manager to third parties, except that caused by the
negligence of the Manager.
(iv) Any loss or damage suffered by the Joint Venturers arising out of
the Project for which no insurance cover was effected by reason of
the failure of the Manager to promptly implement a direction of the
Management Committee shall be met by the Manager without recourse to
or contribution from the Joint Venturers who shall be indemnified by
the Manager to the extent of such loss or damage.
14
(d) Releases from liability and limitations on liability expressed in this
Agreement shall apply even in the event of the fault, negligence, strict
liability, or otherwise of the Manager and shall extend to the directors,
officers and employees, and related or affiliated companies of the Manager
and their directors, officers and employees.
(e) A reference in this Clause 7 to the Manager shall be deemed to include a
reference to PTS where services are provided by PTS pursuant to Clause 4
(c)(i) hereof.
Clause 8. Insurance
(a) In the name of the Joint Venturers and the Manager for their respective
rights and interest, the Manager shall:
(i) obtain all insurance required by law or statute including, but not
necessarily limited to, both third party motor vehicle insurance and
Workers' Compensation insurance in accordance with the appropriate
statutory requirement;
(ii) use its best efforts to obtain quotes on insurance of the types and
in amounts appropriate to a project of the size and nature of the
Project, including but not limited to directors and officers
insurance and professional liability insurance for employees working
on the Project, and present the same to the Management Committee
annually along with a written recommendation as to what insurance
should be purchased; and
(iii) obtain all available insurance as specifically directed by the
Management Committee.
(b) The cost of all insurance (including any deductible or excess incurred
except in the circumstances referred in Clause 7(b) (ii) .and (iii))
obtained by the Manager
15
pursuant to Clause 8(a) hereof shall be charged to and paid for by the
Joint Venturers in accordance with their Percentage Interest in the Joint
Venture.
Clause 9. Termination of Manager
(a) In the event that the Management Committee decides that the Manager has
been incompetent, seriously derelict or seriously negligent in performance
of its duties as Manager it may dismiss the Manager in which event, it
shall notify the Manager in writing ("Notice of Dismissal") of its
decision which decision shall take effect immediately upon receipt thereof
by the Manager and the Joint Venturers shall thereupon appoint an interim
manager provided that, notwithstanding its dismissal or termination
pursuant to subclause (g) hereof, the former Manager, in order to ensure
an orderly transition in the management of the Project, shall co-operate
fully with the other Joint Venturers, including by making available to the
interim manager key personnel engaged in the Project for a reasonable time
and on the cost reimbursement and fee basis provided for herein.
(b) The Manager shall have the right within 28 days of receipt of Notice of
Dismissal to dispute the decision referred to in subclause (a) hereof by
giving written notice to the Joint Venturers whereupon the matter shall be
referred immediately to arbitration pursuant to subclause (f) hereof.
(c) If the manager elects not to dispute the Notice of Dismissal within 28
days of receipt as aforesaid, the position of Manager shall become vacant
as of the date of the expiry of the said 28 day period.
(d) If it is determined by arbitration:
(i) that the Manager has not been incompetent, seriously derelict or
seriously negligent in performance of its duties and was therefore
wrongly dismissed then at the Manager's option:
16
(a) the Manager will be reinstated and the other Joint Venturers
will pay to the Manager one hundred and twenty-five percent
(125%) of the fee that the Manager would have been paid for
work performed during the period it was not acting as Manager:
or
(b) the Manager may decline reinstatement and be paid by the other
Joint Venturers one hundred and twenty five percent (125%) of
the fee that the Manager would have been paid for work
performed during the said period.
(ii) that the Manager has been incompetent, seriously derelict or
seriously negligent in performance of its duties as Manager, the
position of Manager shall become vacant as of the date of the
determination.
(e) A dispute referred to in subclause (b) hereof, shall be decided by a board
of three arbitrators (the "Board"), one to be appointed by the Manager,
one jointly by all the Joint Venturers other than the Joint Venturer who
is the Manager, and the third, who will be chairman, to be appointed by
the first two arbitrators or as hereinafter provided. If any of the
parties to the dispute fails to appoint an arbitrator within thirty (30)
days after receiving notification of a referral to arbitration by another
party, then such arbitrator will be appointed by the President of the
international Chamber of Commerce.
Furthermore, if the two arbitrators so appointed do not appoint a third
arbitrator within thirty (30) days from the appointment of the second
arbitrator such third arbitrator will also be appointed by the President
of the International Chamber of Commerce. After the appointment of the
third arbitrator, the Board will convene at a place selected by him and
proceed with the arbitration hearing without delay. After such hearing,
the Board will make its award expeditiously and will deliver a copy of
such award to each of the parties thereto. All costs and expenses of the
17
Board and of the parties in dispute will be paid as the Board will
determine. The Board will determine by majority vote the rules of evidence
and procedure that will apply to the hearing before the Board, provided
that each Joint Venturer and the Manager will be entitled to submit oral
evidence to the hearing. The Manager and the Joint Venturers will be bound
by the majority decision of the Board, whose decision shall be final.
(f) In the event that Placer's Percentage Interest in the Joint Venture is
reduced to less than 20% and a majority in Percentage Interest of the
other Joint Venturers jointly notify the Manager in writing that they do
not wish the Manager to continue as Manager as of a specified date, the
position of Manager shall become vacant on the date specified in the said
notice.
Clause 10. Termination by Manager
(a) The Manager may terminate its position as Manager by giving prior written
notice to the other Joint Venturers to take effect at any of the following
times:
(i) at the end of the Exploration Phase; or
(ii) at the end of the Feasibility Phase; or
(iii) at the end of the Construction Phase; or
(iv) during the Operating Phase by giving the Joint Venturers not less
than twelve (12) months prior written notice; or
(v) at any time if agreed by all the Joint Venturers not holding the
position of Manager.
(b) The Manager shall, in any of the circumstances referred to in sub clause
(a) of this clause, give the Joint Venturers as much prior notice as
possible of its intention
18
and shall cooperate with the Joint Venturers and any new Manager appointed
by them so as to ensure an orderly transition in the management of the
Project.
Clause 11. Replacement of Manager
If the position of Manager becomes vacant pursuant to this Agreement, the
Management Committee shall be empowered to decide on and shall appoint a
replacement therefore.
Clause 12. Independent Contractor
The Manager shall be an independent contractor in the performance of the
services hereunder and shall have a complete charge of the personnel engaged in
the performance of such services.
Clause 13. Data Ownership
The Manager agrees that designs, calculations, drawings, specifications and
other similar material produced or prepared for the Project on behalf of the
Manager, whether complete or not, become the property of the Joint Venture for
the purpose of the Project when they come into existence.
Clause 14. Conflict with Joint Venture Agreement
Where the terms of this Agreement conflict with those of the Joint Venture
Agreement, the terms of this Agreement shall prevail.
Clause 15. Assignment and Delegation
The Manager may not, without prior written consent of the other Joint Venturers,
representing a majority in Percentage Interest of those Joint Venturers assign
or delegate its rights, obligations or duties under this Agreement or the Joint
Venture Agreement except as permitted hereunder or thereunder.
19
Clause 16. Governing Law
This Agreement shall be governed by the laws of New South Wales, Australia and
the parties hereto hereby submit to the jurisdiction of the Supreme Court of
that State.
Clause 17. Just and Faithful
The Manager covenants and agrees with each of the Joint Venturers to be just and
faithful in all its activities and dealings with the said Joint Venturers and
without limiting the generality of the foregoing to be just and faithful in the
discharge of its obligations under this Agreement.
IN WITNESS WHEREOF the parties hereto have caused their Seals to be affixed the
day and year first above written.
THE COMMON SEAL OF PLACER (P.N.G) )
PTY LIMITED was hereunto affixed in the )
presence of: )
_______________________________________ )
_______________________________________ )
)
THE COMMON SEAL OF HIGHLANDS )
GOLD PROPERTIES PTY LIMITED was )
hereunto affixed in the presence of: )
_______________________________________ )
_______________________________________ )
)
20
THE COMMON SEAL OF RGC (PAPUA )
NEW GUINEA) PTY LIMITED was )
hereunto affixed in the presence of: )
_______________________________________
_______________________________________
21
Schedule "A"
EXPLORATION, FEASIBILITY AND CONSTRUCTION PHASES
BASIS FOR REIMBURSEMENT
1. INTERPRETATION
In this Schedule the following terms shall have the meanings set out
below:
(a) "Base Salary" means only the actual standard annual salary paid to any
employee referred to in subparagraphs 2(a) and 2(c) below.
(b) "Standard Working Hours" means the annual number of hours which the
personnel in question are expected to work in accordance with the
Manager's standard employment practices from time to time.
2. REIMBURSEMENT OF MANAGER
For the services requested by the Joint Venturers or required of the Manager
pursuant to this Agreement or the Joint Venturers Agreement (the "Services") and
performed as herein provided, the Joint Venturers shall pay the Manager in
accordance with paragraph 4 hereof an amount of money, equal to all costs and
expenses incurred by the Manager in such performance, including:
(a) In respect of employees of the Manager's affiliated companies not employed
full time on the project during the Exploration Phase and Feasibility
Phase, an amount equal to two and one-half times that proportion of their
Base Salaries which is the same proportion that the hours worked by those
employees on the Project in any month bears to one twelfth of their
Standard Working Hours, plus all employee related costs that are specific
to the Project, including but not limited to the following if applicable:
1. site allowance
2. foreign service allowances
3. overtime
4. premium time
5. penalty time
6. special project allowances
7. living away form home allowances
8. inconvenience allowances
9. special housing allowances
10. relocation allowances
11. schooling allowances for children
12. home travel allowances
13. severance pay
14. any reasonable Project related allowances or charges that may be
agreed to by the Joint Venturers from time to time.
(b) In respect of all other employees of the Manager and its affiliated
companies during the Exploration Phase and Feasibility Phase (including,
but not limited to, contract employees) all actual salary costs,
allowances and benefits including but not limited to the items listed in
items 1 to 14, inclusive of subparagraph 2(a) hereof and
1. superannuation
2. Workers' compensation
3. payroll taxes
4. annual leave premium
5. public holidays if paid
6. sick leave
7. long service leave
8. life insurance
(c) In respect of employees of the Manager's affiliated companies not employed
full time on the Project during the Construction Phase, an amount equal to
two and one-fifth times that proportion of their Base Salaries which is in
the same proportion that the hours worked by those employees on the
Project in any month bear to one twelfth of their Standard Working Hours
plus all employee related
costs that are specific to the Project, including but not limited to the
items listed in items 1 to 14, inclusive, of subparagraph 2(a) hereof.
(d) In respect of all employees of the Manager and its affiliated companies
employed full time on the Project during the Construction Phase
(including, but not limited to, contract employees) all actual salary
costs, allowances and benefits including but not limited to the items
listed in items 1 to 14, inclusive, of subparagraph 2(a) hereof and items
1 to 8, inclusive of subparagraph 2(b).
(e) The costs, expenses and fees in connection with subcontracts entered into
by the Manager with third parties for the performance of such subcontracts
including all payments made to such third parties.
(f) Amounts paid by the Manager to or for the benefit of employees of the
Manager and its affiliated companies for transportation, travelling and
living expenses and other necessary expenses while travelling in the
interest of and for the benefit of the Joint Venturers.
(g) The cost of any materials and supplies used by the Manager in connection
with performance of the Services.
(h) The cost of all long distance communications incurred in performance of
the Services.
(i) All costs incurred by the Manager in connection with the procurement of
any materials, equipment, supplies or services on behalf of or for the
benefit of the Joint Venturers.
(j) All premiums and fees in relation to policies of insurance and/or
contracts of indemnity obtained by the Manager for the benefit of the
Joint Venturers.
(k) A rental fee for equipment of Placer Dome Inc.'s ("P.D.I.") Computer
Centre section used in relation to this Schedule, pursuant to the schedule
of fees charged from time to time by such section to companies associated
with P.D.I., which fee
3
shall not be greater than the rate charged by P.D.I. to companies not
associated with P.D.I.
(l) A rental fee for equipment of P.D.I.'s Laboratory section used in relation
to this Schedule, pursuant to the schedule of fees charged therefor from
time to time by such section to companies associated with P.D.I. which fee
shall not be greater than the rate charged by P.D.I. to companies not
associated with P.D.I.
(m) A fee for assays performed pursuant to this Schedule, in accordance with
the schedule of fees charged therefor from time to time by P.D.I.'s
Laboratory section to companies associated with P.D.I. which fee shall not
be greater than the rate charged by P.D.I. to companies not associated
with P.D.I.
(n) Any and all other costs and expenses incidental to an reasonably necessary
for performance of the Services hereunder.
3. COST ACCOUNTING
The Manager shall keep books and records on the costs and expenses incurred
pursuant to paragraph 2 hereof in accordance with generally accepted accounting
principles and practices. During the term hereof the Manager shall provide
copies of any receipts, invoices, extracts from books or records or other
documents, in the Manager's possession, reasonably required by the Joint
Venturers to substantiate any costs or expenses pursuant to paragraph 2 hereof.
The Manager shall ensure that any services provided by PTS shall be documented
in such detail as to show to the reasonable satisfaction of the Joint Venturers
the precise basis of the charges made.
4. PAYMENT FOR SERVICES AND ADVANCE CALLS
On, or as soon after as practical, the 1st day of each calendar month
immediately following a calendar month in which Services have been performed:
4
(a) the Manager shall prepare and submit to each Joint Venturer a detailed
invoice (including or supported by particulars of hours worked on the
Project by employees referred to in paragraphs 2(a) and 2(c) of this
Schedule "A") showing that Joint Venturer's proportion, in accordance with
its Percentage Interest, of:
(i) the amount determined in accordance with paragraph 12(a) and 2(c) of
this Schedule "A";
(ii) all other costs and expenses referred to in paragraph 2 of this
Schedule A for such calendar month with supporting documents with
respect to significant costs and expenses attached thereto; and
(iii) the amount forecast by the Manager as being required in the current
month to meet expenditure to be made by it pursuant to the current
budget;
and deducting from the total of those amounts, any payment previously made
to the Manager by that Joint Venturer pursuant to sub-paragraph (iii) of
this paragraph 4(a) and not expended by the Manager.
(b) Within 30 days after the submitting of any such invoice, each Joint
Venturer shall pay to the Manager at its office, as designated by the
Manager, the amount shown to be due, (if any) in kind or in such other
[page 27 of original missing]
5
Schedule "B"
CONCEPT OF CAPITAL CONTROL PROCEDURES
TO BE INCORPORATED IN THE PROCEDURES MANUALS
It is understood and agreed to by the Joint Venturers that the procedures
manuals to be prepared under Clause 3(a)(v) of this Agreement will contain
procedures for control of capital expenditures during the Construction Phase and
Operating Phase generally as follows:
1. Tenders relating to the Construction Phase for all budgeted items with a
tender or purchase price not exceeding five (5) million Kina may be
approved in accordance with the Manager's normal practices which normal
practices will be included in and form part of the procedures manual.
2. Tender summaries and recommendations for individual tenders relating to
the Construction Phase exceeding five (5) million kina will be submitted
to each Joint Venturer along with the budget comparison for their
consideration and approval. If a Joint Venturer does not respond within
three working days after receipt of the tender summaries the Manager may
assume that the Joint Venturer has concurred with the recommendation.
3. Tenders relating to the Operating Phase for all budgeted items with a
tender or purchase price not exceeding two and one half (2.5) million Kina
can be approved according to the Manager's normal practices which normal
practices will be included in and form part of the procedures manual.
4. Tender summaries and recommendations relating to the Operating Phase
exceeding two and one half (2.5) million kina will be submitted to each
Joint Venturer along with the budget comparison for their consideration
and approval. If a Joint Venturer does not respond within three working
days after receipt of the tender summaries the Manager may assume that the
Joint Venturer has concurred with the recommendation.
5. All capital expenditures will be reported to the Joint Venturers by the
Manager on a regular basis but not less than once each month by means of
the budget status report which will show for all items identified in the
approved capital cost budget by a cost code number the following:
Cost to Date
Cost Committed
Estimated Cost to Complete
Total Estimated Cost
Budget Estimate
Variation from Budget
In addition detailed cost reports will be available to the Joint Venturers if
they so desire them.
6. Funds will not be transferred from nor will charges be made against the
contingency fund without approval of the Management Committee.
7. Except in the case of an emergency where human life or Joint Venturers
property is at risk all unbudgeted items in excess of K100,000 are to be
submitted to each Joint Venturer for consideration and approval prior to
any commitment by the Manager to any vendor or supplier. If a Joint
Venturer fails to respond within five working days, the Manager may assume
that the Joint Venturer has concurred with Manger's recommendation, but at
the request of any Joint Venturer notified to the Manager within the said
period of five working days the matter shall be referred to the next
Management Committee meeting for decision.
2
Schedule "C"
OPERATING PHASE
OPERATING FEE AND BASIS FOR REIMBURSEMENT
1. INTERPRETATION
In this Schedule the following terms shall have the meanings set out below:
"Operating Fee" means the fee payable to the Manager as provided in Paragraph 5
hereof.
"Operating Year" means each period of twelve (12) consecutive calendar months
commencing from the commencement of the Operating Phase.
"Consumer Price Index" or "CPI" shall mean the Consumer Price Index for all
consumers published by the Bureau of Labor Statistics of the United States
Department of Labor in its monthly "Consumer Price Index Detailed Report," as it
is calculated from time to time. In this definition, reference to the Consumer
Price Index includes the same index but with a different name, and the same
index adjusted mathematically to take account of a change in an Operating Year
(provided that indices based on the same year are used throughout the
calculation), and the reference to the United States Bureau of Labor Statistics
includes a reference to that Bureau but with a different name, and any
governmental agency in the United States having similar functions. If the
Consumer Price Index is not published for any reason for any month, the Joint
Venturers shall endeavor to agree on a substitute index. If they fail to
unanimously agree within 14 business days commencing from the time a calculation
is to be made, any Joint Venturer may request the President for the time being
of the Institute of Chartered Accountants in Australia to nominate within 5 days
of being so requested an expert to determine a substitute index within 30 days
of being so nominated. The expert shall act as an expert and not as an
arbitrator and his decision shall be final and binding on the Joint Venturers.
The costs of the determination shall be borne by the Joint Venturers in
accordance with the Percentage Interest.
2. REIMBURSEMENT OF MANAGER
For the services requested by the Joint Venturers or required of the Manager
pursuant to this Agreement or the Joint Venture Agreement during the Operating
Phase (the
"Services") and performed as herein provided, the Joint Venturers shall pay the
Manager in accordance with paragraph 4 hereof an amount of money, equal to all
costs and expenses incurred by the Manager, in such performance, including:
(a) in respect of employees of the Manager during the Operating Phase
(including, but not limited to, contract employees) all actual salary
costs, allowances and benefits including but not limited to the items 1 to
8, inclusive, of subparagraph 2(b) of Schedule A hereof;
(b) the costs, expenses and fees in connection with subcontracts entered into
by the Manager with third parties for the performance of such subcontracts
including all payments made to such third parties;
(c) amounts paid by the Manager to or for the benefit of its employees for
transportation, travelling and living expenses and other necessary
expenses while travelling in the interest of and for the benefit of the
Joint Venturers;
(d) the cost of any materials and supplies used by the Manager in connection
with performance of the Services;
(e) the cost of all long distance communications incurred in performance of
the Services;
(f) all costs incurred by the Manager in connection with the procurement of
any materials, equipment supplies or services on behalf of or for the
benefit of the Joint Venturers;
(g) all premiums and fees in relation to policies of insurance and/or
contracts of indemnity obtained by the Manager for the benefit of the
Joint Venturers;
(h) any and all other costs and expenses incidental to and reasonably
necessary for performance of the Services hereunder.
2
3. COST ACCOUNTING
The Manager shall keep books and records on the costs and expenses incurred
pursuant to paragraph 2 hereof in accordance with generally accepted accounting
principles and practices. During the term hereof the Manager shall provide
copies of any receipts, invoices, extracts from books or records or other
documents, in the Manager's possession, reasonably required by the Joint
Venturers to substantiate any costs or expenses pursuant to paragraph 2 hereof.
4. PAYMENT FOR SERVICES AND ADVANCE CALLS
On, or as soon after as practical, the 1st day of each calendar month
immediately following a calendar month in which services have been performed;
(a) the Manager shall prepare and submit to each Joint Venturer a detailed
invoice showing that Joint Venturer's proportion, in accordance with its
Percentage Interest, of:
(i) actual salary and on-costs of employees of the Manager calculated in
accordance with sub paragraph 2(a) of this Schedule C;
(ii) all other costs and expenses referred to in paragraph 2 of this
Schedule C for such calendar month with supporting documents with
respect to significant costs and expenses attached thereto; and
(iii) the amount forecast by the Manager as being required in the current
month to meet expenditure to be made by it pursuant to the current
budget;
and deducting from the total of those amounts, any payment previously made to
the Manager by that Joint Venturer pursuant to sub-paragraph (iii) of this
paragraph 4(a) and not expended by the Manager.
(b) within 30 days after the submitting of any such invoices each Joint
Venturer shall pay to the Manager at its office, as designated by the
Manager, the amount shown
3
to be due, (if any) in Kina or in such other currency as the Manager may
require in order to meet liabilities to third parties.
(c) (i) Any Joint Venturer shall have the right to dispute any such invoice
by notice as hereunder provided not later than 180 days after the
close of the financial year of the Manager in which the invoice was
received. If a Joint Venturer does not dispute any invoices within
the aforesaid time, then such invoice shall be deemed to be
undisputed and final.
(ii) If a Joint Venturer disputes any invoices as aforesaid:
(1) the Joint Venturer shall give notice in writing to the Manager
detailing the dispute and shall pay any unpaid and undisputed
portion of the invoice forthwith; and
(2) the dispute shall be submitted to the auditors of the Joint
Venture acting as experts and not as arbitrators, to determine
the amount, if any, payable by the Joint Venturer. In order to
resolve the dispute the auditors shall, as may be necessary,
have access to the books and records of the Manager and may at
their discretion seek independent assistance or advice. The
Joint Venturer shall pay any balance that the auditors
determine as due to the Manager within 7 days of the auditors
notifying the Joint Venturer of such determination. If the
invoice is determined as correct the Joint Venturer shall
further pay interest on the said amount at the rate set out in
Clause 5(b) of the Joint Venture Agreement. The auditors costs
of such determination shall be borne by the Manager if the
balance (if any) certified by the auditors as due is less than
the disputed portion of the invoice and by the Joint Venturer
if the invoice is certified as correct.
4
5. OPERATING FEE
An Operating Fee shall be payable to the Manager for each Operating Year on a
quarterly basis in arrears for Services rendered with respect thereto. The
Operating Fee shall be payable as follows:
(a) (i) For the first Operating Year Nine Hundred Thousand United States
Dollars ($U.S. 900,000.00);
(ii) For each of the second, third and fourth Operating Years Nine
Hundred thousand United States Dollars ($U.S. 900,000.00) PROVIDED
THAT the fee payable shall be adjusted at the commencement of each
said year by reference to the following formula:-
$U.S. 900.000.00 A
---------------- X -
1 B
where A = the C.P.I. most recently published at the conclusion of
the Operating Year immediately preceding each Operating
Year referred to in this sub-paragraph (ii).
B = C.P.I. most recently published at the commencement of
the first Operating Year;
(b) For each of the fifth, sixth, seventh, eighth, ninth and tenth Operating
Years Six Hundred and Seventy-Five Thousand United States Dollars ($U.S.
675,000.00) PROVIDED THAT the fee payable shall be adjusted at the
commencement of each said year by reference to the following formula:
$U.S. 675,000.00 A
---------------- X -
1 B
where the factors "A" and "B" have the same meanings as in the
preceding sub-paragraph (a) of this paragraph 5.
(c) The Joint Venturers shall not less than 6 calendar months before the
conclusion of the tenth Operating Year, negotiate in good faith and
endeavor to reach agreement
5
with the Manager with respect to the Operating Fee for each year of the
period following the conclusion of the tenth Operating Year.
6
