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Exhibit 3d
COOPERATION AGREEMENT REGARDING
CERTAIN MINERAL DEPOSIT PROPERTIES
AMONG:
PACIFIC CANADA RESOURCES INC.
a corporation incorporated under the laws of Ontario
(referred to herein as "PCR")
AND:
PATRICIAN GOLD MINES LTD.
a corporation incorporated under the laws of Ontario
(referred to herein as "PATRICIAN")
AND:
THE FIRST GEOEXPLORATION BUREAU OF MINISTRY OF METALLURGICAL INDUSTRY
a bureau of the ministry of metallurgical industry of the People's
Republic of China
(referred to herein as "FGEB")
WHEREAS:
1. after extensive discussions and negotiations, the parties to this
co-operation agreement (the "CO-OPERATION AGREEMENT") agreed to form an
equity joint venture (an "EJV") under which the parties will each use
their respective advantages including mineral resources, capital, and
technology, to explore, develop, and produce certain mineral properties
(as such properties are defined below);
2. FGEB and various other levels of government and other legal entities
within China (the "CHINESE ENTITIES") have various kinds and degrees
of interests in certain mineral properties;
3. such Chinese Entities wish to enter into negotiations with PCR and
PATRICIAN (the "CANADIAN ENTITIES") regarding a possible joint venture
agreement (a "JOINT VENTURE CONTRACT") under which both such Chinese
Entities and such Canadian Entities would operate a joint venture (the
"JOINT VENTURE") to explore, develop and produce such properties;
4. the Canadian Entities expressed an interest in visiting such properties
and were invited to visit them by FGEB with a view to determining
whether they were interested in entering into a Co-operation Agreement
under which, among other terms including, without limitation, many of
the terms which will form the basis of a Joint Venture Contract:
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1. FGEB will:
a) facilitate and co-ordinate the activities of all of the Chinese
Entities with a view to creating one entity which would represent
all such Chinese Entities and which would be one of only two
entities which would enter into a Joint Venture Contract;
b) seek approval from the appropriate Chinese authorities to enter
into a Joint Venture Contract regarding such Properties;
c) provide, or assist in obtaining from such other of the Chinese
Entities which have relevant information, all information reasonably
requested by the Canadian Entities to allow them to determine
whether they wish to enter into a Joint Venture Contract;
d) if considered convenient, send several experts to visit the
Canadian Entities ensuring the Chinese Entities that the Canadian
Entities have adequate financial means to invest in the Joint
Venture; and
2. PCR will:
a) facilitate and co-ordinate the activities of all of the Canadian
Entities (or such corporations as are under common control of such
Canadian Entities) with a view to creating one entity which would
represent all such Canadian Entities and which would be one of only
two entities which would enter a Joint Venture Contract;
b) review all information obtained from the Chinese Entities in a
timely fashion or, if considered appropriate, seek additional
information by sending other experts to visit the Properties; and
c) obtain the exclusive right to negotiate and enter into a Joint
Venture Contract with the Chinese Entities with respect to the
Properties.
5. FGEB, PCR and PATRICIAN are willing to enter into this Co-operation
Agreement on the basis of the premises set out above and on the terms
set out below.
NOW THEREFORE, in consideration of the premises set out above, and the mutual
promises set out below FGEB, PCR and PATRICIAN agree as follows:
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1.0 -- INTERPRETATION
1.1 DEFINITION OF "PROPERTIES"
"PROPERTIES" shall mean the following three mineral properties which
are located within the boundaries of Hebei Province, in the People's Republic
of China as more precisely defined using the map which is attached as
Schedule "A" to this Co-operation Agreement:
1. "STONE LAKE" AU-AG POLYMETALLIC PROPERTY of Lingshou County in the
province of Hebei with a core claim area of 20 square kilometers and an area of
interest of 100 square kilometers surrounding such core claim area;
2. "CRYSTAL VALLEY" AU EXPLORATION PROPERTY of Zhangjiakou District of
the province of Hebei with a core claim area of 20 square kilometers and an area
of interest of 100 square kilometers surrounding such core claim area;
3. "EMPEROR'S DELIGHT" AU-AG POLYMETALLIC PROPERTY of Chende District
of the province of Hebei with a core claim area of 20 square kilometers and an
area of interest of 100 square kilometers surrounding such core claim area.
1.2 LANGUAGE
The parties agree that the English and Chinese language versions of
this Co-operation Agreement are of equal validity and effect provided that, if
there is a dispute as to its interpretation or application, the English version
shall be used and having binding effect.
2.0 -- REPRESENTATIONS AND WARRANTIES
2.1 FGEB
FGEB represents and warrants that:
1. it is fully authorized and empowered to enter into this
Co-operation Agreement on these Properties;
2. it has full and unencumbered title to the surface and mineral
rights in the Properties.
2.2 PCR AND PATRICIAN
PCR and PATRICIAN represent and warrant that they are fully authorized
and empowered to enter into this Co-operation Agreement.
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3.0 - UNDERTAKINGS LEADING TOWARDS A JOINT VENTURE CONTRACT
In order to complete the Joint Venture Contract as soon as possible, the
parties agree to undertake the following activities as set out below:
1. FGEB will provide the Canadian Entities with technical reports
and location maps, including regional geological maps, regional
geochemical anomaly maps, regional geophysical anomaly maps,
property topographic and geological maps, and typical
cross-section maps in order to allow the Canadian Entities to
further assess the exploration potential of the Properties and
to make a fully informed investment decision.
1. Upon receiving the information set out above, the Canadian
Entities will assess the exploration and investment potential of
the Properties in a timely fashion and will then confirm to FGEB
the level of their interest in the Properties.
3. As soon as possible after executing this Co-operation Agreement,
FGEB will:
a) seek approval from the appropriate government
authorities to form an equity joint venture in respect
of each of the Properties; and
b) apply to incorporate a corporation in which each of the
Chinese Entities and the Canadian Entities will
subscribe for shares.
The Canadian Entities will provide to FGEB all reasonable
assistance.
4. Upon receiving the approval from the appropriate government
authorities to form an equity joint venture in respect of each
of the Properties, the parties will appoint an independent
evaluator to assess the contributions made by each of the
parties to the proposed equity joint ventures in respect of each
of the Properties, including particularly, but not limited to,
the previous exploration work and data collected and created by
FGEB.
5. After completing the assessment of the contributions as set out
above, the parties will negotiate a full and final Joint Venture
Contract in good faith.
6. Upon entering into a Joint Venture Contract in respect of each
of the Properties, the parties will conduct an exploration,
development, and production program.
4.0 - EXCLUSIVE NEGOTIATION AND INVESTMENT RIGHT
Upon execution of this Co-operation Agreement, FGEB grants the Canadian
Entities an exclusive right to negotiate and enter into a Joint Venture
Contract with the Chinese Entities with respect to the Properties for a
period of eight (8) months. Such period of
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exclusivity may be extended for a reasonable period of time if
the parties agree that such extension is warranted in the
circumstances. From the date on which the parties begin the
negotiations to enter into the Joint Venture Contract, FGEB
shall automatically grant to the Canadian Entities the exclusive
right to continue such negotiations for so long as the parties
continue such negotiations in good faith.
5.0 - CONFIDENTIALITY OBLIGATIONS
5.1 THE CHINESE ENTITIES
The Chinese Entities agree to preserve the confidentiality of
all information obtained pursuant to this Co-operation Agreement
(including, without limitation, any documents evidencing
agreements between the parties) and not to disclose such
information other than in accordance with the terms of this
Co-operation Agreement excluding those Chinese government bodies
which have right to know.
5.2 THE CANADIAN ENTITIES
The Canadian Entities agree to preserve the confidentiality of
all information obtained pursuant to this Co-operation Agreement
(including, without limitation, any documents evidencing
agreements between the parties) and not to disclose such
information other than in accordance with the terms of this
Co-operation Agreement provided that they may disclose such
information to:
1. consultants and other third parties who are retained to
advise the Canadian Entities provided that such third
parties enter into an appropriate form of
confidentiality agreement; and
2. regulatory authorities including, without limitation,
Canadian government bodies, securities commissions and
stock exchanges provided that no disclosure shall be
made to any stock exchange until on or after the date on
which a Joint Venture Contract is fully executed.
6.0 - THE JOINT VENTURE CONTRACT
6.1 TYPE
The parties agree to use the equity joint venture form of
foreign investment enterprises with two shareholders, one
shareholder (the "CHINESE SHAREHOLDER") being a legal entity
formed by the Chinese Entities and the other shareholder (the
"CANADIAN SHAREHOLDER") being a legal entity formed by the
Canadian Entities.
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6.2 TERM
The term of any Joint Venture Contract shall commence on the
date on which it is fully executed and shall continue for a
period of thirty (30) years such period to be extendible upon
mutual agreement between the parties.
6.3 STANDARDS OF OPERATION AND APPLICABLE LAW
The Joint Venture will be operated in accordance with:
1. the "Law of the People's Republic of China on Joint
Ventures Using Chinese and Foreign Investment" (the "EJV
LAW"), effective July 1, 1979;
2. the Regulations for the Implementation of the EJV Law
(the "EJV REGULATIONS"), effective September 20, 1983;
3. other applicable laws of the People's Republic of China;
and
4. generally accepted international practice and standards
for such operations.
6.4 MANAGEMENT
The Joint Venture will be managed by a board of directors which
will possess the highest authority over the operation and
management of the Joint Venture. Each party will appoint a
number of directors in proportion to each party's equity
interest in the Joint Venture.
6.5 CONTRIBUTIONS TO THE JOINT VENTURE
6.5.1 THE CHINESE ENTITIES
In consideration for its equity participation, the Chinese
Entities shall contribute to the joint venture the following
assets: (1) the Properties, (2) the exploration and development,
production, production permits, (3) the data which has been
collected or created to date, and (4) future contributions of
capital based upon the proportion of the total equity held the
Chinese Entities in the Joint Venture.
6.5.2 THE CANADIAN ENTITIES
1. TECHNOLOGY AND MANAGEMENT TECHNIQUES
In consideration for its equity participation, the Canadian
Entities shall contribute to the joint venture the following
assets: (1) certain advanced equipment and (2) such amount of
capital as is calculated using the formula more fully described
below.
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2. CAPITAL
a) CONTRIBUTION OF CAPITAL TO EARN INITIAL EQUITY INTEREST
Following the execution of the Joint Venture Contract, and the assessment
of the previous exploration work and research conducted by FGEB, the
Canadian Entities will contribute capital to earn its equity interest
based upon both the total amount of capital expended by the Chinese
Entities as at the date of execution of the Joint Venture Contract and
the proportion of the total equity interest held by the Canadian Entities
in the Joint Venture.
(for example:
if: 1. the Chinese Entities have expended the equivalent of
$400,000 USD; and
2. the Chinese Entities hold a 40% interest in the
Joint Venture;
then: the Canadian Entities must contribute $600,000 USD to
acquire its initial equity interest.
b) CONTRIBUTION OF CAPITAL TO FUND ONGOING JOINT VENTURE ACTIVITIES
Upon contributing the amount of capital required to acquire its initial
equity interest as set out above, the Canadian Entities shall contribute
additional capital to fund the ongoing activities of the Joint Venture,
along with the contributions by the Chinese Entities, in accordance with
the proportion of the total equity interest held by both the Canadian
Entities and the Chinese Entities.
6.6 EQUITY INTERESTS
6.6.1 ESTABLISHING THE INITIAL EQUITY INTERESTS
The entity which will enter into the Joint Venture Contract on behalf of
the Canadian Entities will acquire a controlling interest under the
Joint Venture Contract which is not less than:
fifty-five percent (55%) of the equity specified in such Joint
Venture Contract in respect of those Properties for which approval
has been granted to explore, develop and produce a gold Property; and
sixty percent (60%) of the equity specified in such Joint Venture
Contract in respect of those Properties for which approval has been
granted to explore, develop and produce a base metals Property;
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with the exact percentage to be subject to further negotiation taking
into account all relevant factors including, but not limited to:
1. a valuation of the Properties as established by the assessment set
out in Article 3.0;
2. the total amount of investment made by each of the parties in each of
the Properties at the time of such negotiations; and
3. the existing and expected economic and political conditions.
6.6.2 DILUTION OF EQUITY INTEREST UPON FAILURE TO CONTRIBUTE CAPITAL
If either party fails to contribute capital to the Joint Venture in
accordance with the requirements set out in the Joint Venture Contract,
the equity interest of such defaulting party shall be diluted down in
accordance with a mutually agreeable and generally accepted formula for
such dilution of interest.
7.0 GENERAL
7.1 ASSIGNMENT
FGEB agrees to allow PCR and PATRICIAN to assign this Co-operation
Agreement to a company which is under common control of each respective
company.
7.2 ADDITIONAL INVESTORS
7.2.1 ADDITIONAL NON-CHINESE INVESTORS
PCR and PATRICIAN may invite other companies to invest in the Joint
Venture provided that:
1. such companies are non-Chinese; and
2. such companies invest in the Joint Venture through the Canadian
Shareholder.
7.2.2 FGEB may invite other companies to invest in the Joint Venture provided
that;
1. such companies are Chinese; and
2. such companies invest in the Joint Venture through the Chinese
Shareholder.
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7.3 COUNTERPARTY
The Co-operation Agreement, and any notices or other documents permitted
or required by it, may be executed in counterparts, including copies
which have been executed and then deferred by facsimile transmission.
IN WITNESS WHEREOF the parties have duly executed the English version of this
Co-operation Agreement as of the date indicated beneath each signature below.
PACIFIC CANADA RESOURCES INC.
By: /s/ XXX X. XXX /s/ XXXXXX X. XXXXX
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Xxx X. Xxx Xxxxxx X. Xxxxx
TITLE: Managing Director Vice-President
DATE: Nov. 17, 94 17 Nov. '94
XXXXXXXX XXXX MINES LTD.
By: /s/ XXXXXX XXX
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Xxxxxx Xxx
TITLE: President
DATE: 17 Nov. '94
THE FIRST GEOEXPLORATION BUREAU OF MINISTRY OF METALLURGICAL INDUSTRY
BY: /s/ LEI ZI MIN
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Lei Zi Min
TITLE: Chief Geologist
DATE: 24.11.94
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