GUARANTEE AGREEMENT BETWEEN GIBRALTAR MINES LTD. AND TASEKO MINES LIMITED IN FAVOUR OF HER MAJESTY THE QUEEN IN RIGHT OF THE PROVINCE OF BRITISH COLUMBIA, REPRESENTED BY THE MINISTER OF ENERGY AND MINES December 30, 2003
BETWEEN
GIBRALTAR MINES LTD.
AND
TASEKO MINES LIMITED
IN FAVOUR OF
HER MAJESTY THE QUEEN IN RIGHT OF THE PROVINCE OF BRITISH
COLUMBIA, REPRESENTED BY THE MINISTER OF ENERGY AND MINES
December 30, 2003
Table of Contents
THIS GUARANTEE AGREEMENT dated December 30 2003,
MADE BY:
GIBRALTAR MINES LTD., a company incorporated under the laws of British Columbia
(“Gibraltar”)
AND:
TASEKO MINES LIMITED, a company incorporated under the laws of British Columbia
(“Taseko”)
IN FAVOUR OF:
HER MAJESTY THE QUEEN IN RIGHT OF THE PROVINCE OF BRITISH COLUMBIA, represented by the Minister of Energy and Mines
(the “Province”)
BACKGROUND:
A. Gibraltar, a wholly-owned subsidiary of Taseko, owns the Gibraltar Mine (this defined term and all other defined terms referenced in these Recitals are defined below in Article 1).
B. Gibraltar is obligated to carry out certain Reclamation Obligations with respect to the Gibraltar Mine.
C. On July 21, 1999, in order to secure the Reclamation Obligations as required by the Province, Gibraltar deposited the Reclamation Security and executed the Reclamation Agreement and Asset Security Agreement in favour of the Province and Taseko and Gibraltar executed the Guarantee Agreement in favour of the Province, pursuant to which Taseko guaranteed the due and punctual payment and performance by Gibraltar of its Reclamation Obligations.
D. The Gibraltar Mine has been closed since 1998 and Gibraltar wishes to restart the mine.
E. In December of 2003, Gibraltar, Gibraltar Reclamation Trust Limited Partnership, HSBC Trust Company (Canada) and the Province agreed to form the Gibraltar Reclamation Trust to constitute a “qualifying environmental trust” within the meaning of the Income Tax Act (Canada) to replace the Reclamation Security as cash security for the Reclamation Obligations, which, in turn, would allow Gibraltar to use the Reclamation Security to fund the restart of the Gibraltar Mine.
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F. The parties have agreed to execute this new guarantee in favour of the Province to replace the Guarantee Agreement and to extend the guarantee to the obligations set out in the Gibraltar Reclamation Trust Indenture.
NOW THEREFORE, Taseko and Gibraltar, in consideration of the sum of $10.00 and other good and valuable consideration, the receipt and sufficiency of which both Gibraltar and Taseko acknowledge, agree with the Province as follows:
ARTICLE 1
DEFINITIONS
| (a) | “Asset Security Agreement”
means the asset security agreement made by Gibraltar in favour of the
Province dated for reference July 21, 1999; |
| (b) | “Chief Inspector” means
the Chief Inspector of Mines for the Province of British Columbia appointed
pursuant to the Mines Act (British Columbia); |
| (c) | “Gibraltar” means Gibraltar
Mines Ltd.; |
| (d) | “Gibraltar Mine” means
the mine located 17 Kilometres Northeast of XxXxxxx Lake, in the Cariboo
Mining Division of British Columbia; |
| (e) | “Gibraltar Reclamation Trust
Indenture” means the Gibraltar reclamation trust indenture dated
December of 2003 among Gibraltar, Gibraltar Reclamation Trust Limited
Partnership, HSBC Trust Company (Canada) and the Province; |
| (f) | “Guaranteed Obligations”
means the reclamation obligations of Gibraltar detailed in Permit M-40,
the Reclamation Agreement and the Asset Security Agreement, the obligations
under the Gibraltar Reclamation Trust Indenture, and any other reclamation
work which Gibraltar is required to carry out by law or agreement with
the Province with respect to the Gibraltar Mine; |
| (g) | “Permit M-40” means
the amended permit M-40 issued by the Chief Inspector to Gibraltar pursuant
to the Mines Act (British Columbia), a copy of which is attached
as Schedule “A” and all amendments thereto; |
| (h) | “Province” means Her
Majesty the Queen in Right of the Province of British Columbia, as represented
by the Minister of Energy and Mines; |
| (i) | “Reclamation Agreement”
means the reclamation agreement dated for reference July 21, 1999 between
the Province and Gibraltar; |
| (j) | “Reclamation Obligations”
means all reclamation obligations set out in Permit M-40 and any other
reclamation work which Gibraltar is required to carry out by law or agreement
with the Province with respect to the Gibraltar Mine, including the reclamation
obligations set out in the Reclamation Agreement; |
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| (k) | “Reclamation Security”
means the amount of $16,500,000 plus any interest earned thereon set aside
by Gibraltar to secure its Reclamation Obligations which has been held
and invested pursuant to the terms and conditions of a Safekeeping Agreement,
as well as certain tangible security, to secure the Reclamation Obligations
as detailed in the Reclamation Agreement and the Asset Security Agreement;
and |
| (l) | “Safekeeping Agreement”
means the safekeeping agreement made March 14, 2003 amongst the Province,
CIBC Wood Gundy and Gibraltar. |
| ARTICLE 2 GUARANTEE |
||
| 2.1 | Taseko hereby irrevocably
and unconditionally guarantees to the Province the due and punctual payment
and performance by Gibraltar of the Guaranteed Obligations and all costs
and expenses incurred in connection therewith or in connection with a
failure to perform such obligations. |
|
| 2.2 | Taseko agrees that the Guaranteed
Obligations: |
|
(a) |
are absolute, present, irrevocable and
unconditional obligations without regard to any substitution, release
or exchange of any other guarantee of or any security for the Guaranteed
Obligations or any of them or to any other circumstances which might otherwise
constitute a legal or equitable discharge of a surety or guarantor;= |
|
(b) |
are in no way conditional upon any attempt
by the Province to enforce performance or compliance by Gibraltar under
the Asset Security Agreement; and |
|
(c) |
are intended to be co-extensive with
the obligations of Gibraltar under the Asset Security Agreement. |
|
| 2.3 | The obligations of Taseko
under this Guarantee Agreement are not affected, reduced, modified or
impaired upon the happening from time to time of any of the following
events, whether or not with notice to or the consent of either of Taseko
and Gibraltar: |
|
(a) |
any defect or deficiency in the due
incorporation, valid existence or corporate capacity of Gibraltar, or
any defect or deficiency in the due authorization, execution and delivery
by Gibraltar of the Asset Security Agreement or of any other agreement
to which Gibraltar is a party; |
|
(b) |
the failure of the Province to give
notice to either of Taseko and Gibraltar of the occurrence of a default
under the terms and provisions of the Asset Security Agreement. |
|
(c) |
the modification or amendment (whether
material or otherwise) of the Asset Security Agreement or of any obligation,
covenant or agreement set forth in the Asset Security Agreement (including
the addition or substitution of any person as an additional party to the
Asset Security Agreement), provided the modification |
|
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or amendment is made in accordance with
the terms of the Asset Security Agreement; |
||
(d) |
any failure, omission, delay by, or
inability on the part of, the Province to assert or exercise any right,
power or remedy conferred on Province in the Asset Security Agreement
or by this Guarantee Agreement; |
|
(e) |
any change in the name of Gibraltar
or in the objects, capital structure or constitution of Gibraltar, or
the sale of the business of Gibraltar or any part thereof or by Gibraltar
being amalgamated or merged with another corporation or otherwise reorganized
or continued into another jurisdiction; |
|
(f) |
the voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or substantially all the
assets of Gibraltar, the marshalling of the assets and liabilities of
Gibraltar, the receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition with creditors,
or readjustment of, or other similar proceedings affecting Taseko or Gibraltar
or any of the assets of either of them; or |
|
(g) |
any other cause or circumstance, foreseen
or unforeseen, whether similar or dissimilar to any of the foregoing, |
|
it being the intent of each
of Taseko and Gibraltar that its obligations hereunder and under the Asset
Security Agreement are not discharged except by performance and discharge
of the Guaranteed Obligations. |
||
| 2.4 | Notwithstanding any law,
including any statute or regulation, or any rule of equity or any practice
or procedure of any jurisdiction under which any cause of action is extinguished
or prescribed or limiting the time for commencing any action or proceeding,
including but not limited to any applicable statute of limitation, Taseko
and Gibraltar waive, and covenant they shall not plead or rely upon, any
defense to a claim made under this Guarantee Agreement to the effect that
the commencement of any action or proceeding against Taseko and Gibraltar
or either one in respect of that claim is time-barred or that the cause
of action against Taseko and Gibraltar or either one in respect of that
claim is extinguished, in either case by the effluxion of time, provided
however that this Section 2.4 does not prevent or restrict Taseko and
Gibraltar or either one from pleading or rely upon any defense to a claim
made under this Guarantee Agreement to the effect that the commencement
of any action or proceeding against each other for any breach of, or default
under, the Guaranteed Obligations is time-barred or that the cause of
action against the other for any breach of, or default under the Guaranteed
Obligations is extinguished, in either case by the effluxion of time. |
|
| ARTICLE 3 SUBORDINATION AND POSTPONEMENT |
||
| 3.1 | Each of Taseko and Gibraltar
covenant and agree that any subrogation rights of either of Taseko and
Gibraltar and rights of either of Taseko and Gibraltar to reimbursement
by the other or any claim by either of Taseko and Gibraltar against the
property of the other |
|
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arising by reason of any
payments made by either of Taseko and Gibraltar under this Guarantee Agreement,
are subordinated and postponed to the performance and discharge of the
Guaranteed Obligations by Taseko and Gibraltar. |
||
| 3.2 | Each of Taseko and Gibraltar
acknowledges and agrees that the subordination and postponement in Section
3.1, are independent of this Guarantee Agreement and remains in full force
and effect until complete performance and discharge of the Guaranteed
Obligations. |
|
| 3.3 | Subject to the subordination
and postponement by Taseko and Gibraltar in this Article 3, upon payment
or discharge in full of the Guaranteed Obligations with respect to any
particular claim under this Guarantee Agreement relating to the Guaranteed
Obligations, each of Taseko and Gibraltar is fully subrogated as to that
claim to the rights of Gibraltar under the Asset Security Agreement. |
|
| ARTICLE 4 WAIVER BY TASEKO AND GIBRALTAR |
||
Each of Taseko and Gibraltar
hereby unconditionally and irrevocably waives notice of: |
||
(a) |
any modification or amendment of the
Asset Security Agreement, provided that such modification or amendment
has been made in accordance with the terms of the Asset Security Agreement; |
|
(b) |
acceptance by Province of and reliance
by Province on the terms of this Guarantee Agreement; and |
|
(c) |
presentment, demand for performance,
notice of non-performance, protest. notice of protest, notice of dishonour,
and notice of acceptance of this Guarantee Agreement. |
|
| ARTICLE 5 REPRESENTATIONS AND WARRANTIES |
||
Each of Taseko and Gibraltar
jointly and severally represent and warrant to Province that: |
||
(a) |
each of Taseko and Gibraltar is a company
duly organized, validly existing and in good standing under the laws of
British Columbia and is qualified to do business in all other jurisdictions
where necessary in light of its business or properties, and has all requisite
power and authority and all material governmental licenses, authorizations,
consents and approvals necessary to conduct its business and to own its
properties; |
|
(b) |
there are no actions or proceedings
now pending or threatened against Gibraltar or Taseko before any court
or administrative agency that could have a materially adverse effect on
the ability of either of them to perform its obligations under this Guarantee
Agreement; |
|
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(c) |
the execution, delivery
and performance by Taseko or Gibraltar of this Guarantee Agreement and
of the Asset Security Agreement do not and will not: |
||
(i) |
require any consent or approval of any
shareholder of Gibraltar or Taseko which has not been duly obtained; |
||
(ii) |
violate any provision of any laws applicable
to either of them; and |
||
(iii) |
result in a breach of, or constitute
a default under, any indenture, agreement, lease or instrument to which
either Taseko or Gibraltar is a party or by which is or its properties
may be bound or affected, including without limitation any loan covenant;
and |
||
(iv) |
result in, or require, the creation
or imposition of any lien upon any of the properties owned by Taseko or
Gibraltar, except in favour of the Province; |
||
(d) |
neither Taseko nor Gibraltar
is in default under any law referred to in clause (ii) or any indenture,
agreement, lease or instrument referred to in clause (iii) which default
or breach could have a materially adverse effect on their respective ability
to perform their respective obligations under this Guarantee Agreement; |
||
(e) |
each of Taseko and Gibraltar
have all necessary corporate power and authority to execute, deliver and
perform their respective obligations under this Guarantee Agreement and
their execution, delivery and performance of this Guarantee Agreement
have been duly authorized by all necessary corporate action of Taseko
and Gibraltar, and this Guarantee Agreement has been duly and validly
executed and delivered by each of them; |
||
(f) |
this Guarantee Agreement
constitutes the legal valid and binding obligation of each of Taseko and
Gibraltar, enforceable against them in accordance with its terms; and |
||
(g) |
all governmental approvals
necessary for the execution, delivery and performance by Taseko and Gibraltar
of their respective obligations under this Guarantee Agreement have been
duly obtained, and are in full force and effect and not subject to appeal
and there is no proceeding pending or threatened against either Taseko
or Gibraltar that seeks to rescind, terminate, modify or suspend any such
governmental approval. |
||
| ARTICLE 6 GENERAL |
|||
6.1 |
Governing Law |
||
| This Guarantee Agreement
will be construed in accordance with the laws of British Columbia and
the laws of Canada applicable therein. |
|||
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6.2 Time
Time is of the essence of this Guarantee Agreement.
6.3 Person, Number and Gender
In this Guarantee Agreement “person” includes a corporation. firm or association and wherever the singular or masculine is used it will be construed as if the plural or the feminine or the neuter, as the case may be, had been used where the context or the parties so require.
6.4 Headings
The headings or captions in this Guarantee Agreement are inserted for convenience only and in no way define, limit, alter or enlarge the scope or meaning of any provision of this Guarantee Agreement.
6.5 No Other Agreements
There is no representation, warranty, guarantee, indemnity, condition or agreement or any condition or agreement applicable to, binding upon or enforceable against one party by the other with respect to the subject matter of this Guarantee Agreement save far those expressed in this Guarantee Agreement, the Reclamation Agreement and the Asset Security Agreement.
6.6 Enurement
This Guarantee Agreement will enure to the benefit of the Province its successors and assigns and be binding upon each of Taseko and Gibraltar and their respective successors and permitted assigns.
6.7 Assignment
Neither Taseko nor Gibraltar may assign this Guarantee Agreement or its obligations hereunder, except with the prior written consent of the Province.
6.8 Severability
The invalidity or unenforceability of any one or more phrases, sentences, clauses or sections contained in this Guarantee Agreement does not affect the validity or enforceability at the remaining portions of this Guarantee Agreement, or any part thereof,
6.9 Waiver
No consent or waiver, expressed or implied by one party to or of any breach or default by another party in the performance by the other party of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach of default by the other party.
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ARTICLE 7
REMEDIES
| 7.1 | Except as provided herein, no remedy herein conferred
upon or reserved to the Province hereunder is intended to be exclusive
of any other available remedy or remedies, but each and every remedy is
cumulative and is in addition to every other remedy given under this Guarantee
Agreement or hereafter existing at law or in equity or by statute. |
| 7.2 | No delay or omission to exercise any right or power
accruing upon any default, omission or failure of performance hereunder
impairs any such right or power or may be construed to be a waiver thereof,
but any such right or power may be exercised from time to time and as
often as may be deemed expedient. In order for the Province to be entitled
to exercise any remedy reserved to it in this Guarantee Agreement, it
is not necessary that it exhaust its recourse against Gibraltar under
the Asset Security Agreement, nor that it gives any prior notice under
this Guarantee Agreement. |
| 7.3 | If any provision of this Guarantee Agreement is breached
by a party and thereafter duly waived by the other party so empowered
to act, that waiver is limited to the particular breach. No waiver, amendment,
release or modification of this Guarantee Agreement may be established
by conduct, custom or course of dealing, but solely by an instrument in
writing duly executed by the party against whom the waiver, amendment,
release or modification is enforced. |
| 7.4 | Taseko and Gibraltar shall reimburse the Province
for reasonable legal fees, disbursements and costs of enforcement incurred
by the Province in obtaining and enforcing against Taseko and Gibraltar
or either one any judgment or order obtained by the Province against Taseko
and Gibraltar or either one in any action or proceeding under or in relation
to this Guarantee Agreement. |
ARTICLE 8
NOTICES
Any notices to either Taseko or Gibraltar required or permitted under this Guarantee Agreement must be in writing and are deemed to be duly given or made when received if delivered by first class, certified or registered mail, by personal delivery, by delivery by recognized overnight delivery service or by facsimile at the following address:
Taseko Mines Limited or Gibraltar Mines Ltd.
# 1020 — 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0
Attention: President
Facsimile No: 604.684.8092
Either Taseko or Gibraltar may change its address for receipt of notice by providing the Province with written notice of the changed address at the address of the Province provided under the Reclamation Agreement.
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ARTICLE 9
RELEASE AND DISCHARGE OF THE GUARANTEE AGREEMENT
| 9.1 | At any time after Gibraltar has re-opened the Gibraltar
Mine and operated the Gibraltar Mine for a continuous period of 24 months
(which will require operation at an average of 65% of rated mill capacity
over monthly periods) following the date of resumption of full production
of the Gibraltar Mine, Taseko may give a written request to the Province
requesting the Province to release and discharge Taseko from its obligations
under this Guarantee Agreement. |
| 9.2 | Following receipt of a request under Section 9.1,
if the Chief Inspector, in the sole discretion of the Chief Inspector
is satisfied that the amount of Reclamation Security in place is adequate,
then the Province will release and discharge Taseko from its obligations
under this Guarantee Agreement. |
IN WITNESS WHEREOF this Guarantee Agreement has been executed by the parties hereto on the date first appearing in this Guarantee Agreement.
| TASEKO MINES LIMITED | GIBRALTAR MINES LTD. | ||
| By: | By: | ||
| Authorized Signatory | Authorized Signatory | ||
| Please Print Name and Title | Please Print Name and Title |
SCHEDULE “A”
PERMIT M-40
