TAR SANDS SUPPLY AND MINING AGREEMENT
This Tar Sands Supply and Mining Agreement ("Agreement") is entered into
effective this 15th day of May, 1996, by and between BUENAVENTURA RESOURCES
CORPORATION, a Utah corporation, 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxx Xxxx
Xxxx, Xxxx 00000 ("BVRC"), UINTAH COUNTY, a body politic of the State of Utah,
000 Xxxx Xxxx, Xxxxxx, Xxxx 00000, and WEMBCO, INC., 000 Xxxxxx Xxxxx, #0,
Xxxxxxxx, Xxxxxxxxxx 00000 ("Wembco").
R E C I T A L S
WHEREAS, Uintah County operates an existing mine in the SE1/4 of Section 30 of
Township 4 South, Range 21 East, SLM, to mine and produce tar sands for the
construction and maintenance of its roads;
WHEREAS, BVRC leases and operates an existing mine in the NE1/4 of Section 31
of Township 4 South, Range 21 East, SLM, to mine and produce tar sands for the
construction and maintenance of roads;
WHEREAS, BVRC intends to expand its existing tar sands mine to mine and produce
tar sands and to further process the tar sands for separation of bitumen
therefrom and for the production of other by-products from tar sands;
WHEREAS, Wembco owns the surface and mineral rights of the lands involving the
Uintah County and BVRC tar sands mines, subject to certain rights of Uintah
County and BVRC to conduct their operations as those rights are established and
set forth in documents contained in the records of the Uintah County Recorder;
WHEREAS, Uintah County has expressed a desire to expand its existing mine
operations on lands under lease to BVRC by Wembco, and BVRC has agreed to such
expansion under certain negotiated terms and conditions; and
WHEREAS, Wembco has agreed to the expansion of the Uintah County tar sands mine
within the NE1/4 of Xxxxxxx 00 xx Xxxxxxxx 0 Xxxxx, Xxxxx 00 Xxxx, XXX as set
forth herein.
NOW THEREFORE, for a good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties subscribing hereto,
and in consideration of the mutual covenants contained herein, the parties agree
as follows:
1. There is hereby dedicated to the exclusive use and benefit of Uintah County
for county road purposes, 300,000 tons of tar sands ore on lands owned by Wembco
in the NE1/4 of Section 31 of Township 4 South, Range 21 East, SLM. For purposes
of this Agreement, tar sands ore is defined as tar sands having an oil content
of not less than eight percent (8%) by weight and which is suitable for use in
the construction of county roads, as those roads have been and are being
constructed in Uintah County.
2. As soon as reasonably practicable and upon receiving the necessary
governmental approvals, Uintah County shall expand its tar sands mine by
approximately ten (10) acres on lands within the NE1/4 of Section 31 of Township
4 South, Range 21 East, SLM, more exactly described and depicted on Exhibit "A"
attached hereto, and by this reference incorporated herein.
3. Uintah County shall remove all top soil and overburden from the lands
depicted on Exhibit "A" and stockpile or otherwise utilize the top soil and
overburden as approved by the Utah Division of Oil, Gas and Mining, and BVRC.
4. Uintah County shall have the exclusive right to mine tar sands from the
lands described on Exhibit "A" until such time as it has mined and removed
300,000 tons of tar sands ore, or until BVRC makes its written election to
assume all operations on these lands, whichever first occurs. BVRC's written
election shall be deemed effective two (2) weeks after its delivery to the
offices of the Uintah County Commission.
5. For all tar sands ore mined, removed and delivered to Uintah County for the
lands described in paragraph 1 above, it shall pay a royalty to BVRC of $1.50
per ton; provided, however that Uintah County shall have a credit of $1.00 per
ton of tar sands ore for each $1.00 it reasonably and actually spends on mining
and removing the overburden from these lands. For example, if Uintah County
spends a total of $50,000 for mining and removing the overburden, it shall pay
to BVRC for all tar sands ore mined and removed from the lands a royalty of $.50
for the first 50,000 tons, and thereafter a royalty of $1.50 per ton for all
tons of tar sands ore mined or removed from said lands.
6. Upon BVRC exercising its election to assume operations as set forth in
paragraph 4 above, Uintah County shall be relieved of all reclamation
responsibilities, and BVRC shall assume all reclamation responsibilities for the
lands which are the subject of this Agreement. Further, BVRC shall thereafter
have the exclusive right to mine tar sands from these lands and occupy the same;
provided, however, that it shall deliver mined tar sands ore to Uintah County
until its 300,000 ton entitlement as established under this Agreement has been
satisfied. BVRC shall deliver tar sands ore to Uintah County at the mine site at
a cost equal to its actual mining costs plus fifteen percent (15%) and the
royalties provided for in paragraph 5 above, but not to exceed a total delivery
cost of $5.00 per ton inclusive of royalty (adjusted for inflation on a yearly
basis after the third anniversary date of this Agreement). If, for any reason,
BVRC is unable to deliver tar sands ore to Uintah County at the cost not
exceeding the $5.00 per ton (as adjusted for inflation), Uintah County shall
have the right to reasonably enter upon the land, and use so much thereof as may
be reasonably necessary to mine and remove tar sands ore until it has satisfied
its 300,000 ton entitlement.
7. In conducting any operations on the lands described in paragraph 1 above,
Uintah County shall be responsible for all costs associated with its operations,
and shall not allow any lien to be recorded against the land. Further, Uintah
County shall conduct all of its activities in a workmanlike manner, carry
adequate insurance to pay personal injury or property claims for judgment which
may result from its operations, and shall maintain accurate records of tar sands
ore removed from the land. BVRC and Wembco shall be allowed to review the
records of tar sands ore removal upon providing Uintah County at least five (5)
days advance written notice. The notice shall be deemed effective when delivered
to the offices of the Uintah County Commission.
8. This Agreement shall not create a partnership nor agency relationship among
the parties hereto. At no time shall any party be deemed the contractor,
subcontractor, agent, or employee of the other in exercising its rights and in
performing its obligations hereunder.
9. This Agreement may not be amended or modified except in writing.
10. This Agreement shall not restrict or otherwise limit any rights the
parties, or any of them, have or may have with respect to the lands described
herein, and shall not in any way be construed in derogation of any such rights.
DATED effective the day and year first above written.
UINTAH COUNTY
Dated: By:
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BUENAVENTURA RESOURCES CORPORATION
Dated: By:
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Xxxxxx X. Xxxxxxxx, President
WEMBCO, INC.
Dated: By:
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Xxxxx X. Xxxxxx, Vice President
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