MARJAN MINING
JOINT VENTURE AGREEMENT
Joint Venture Agreement dated as of October 28, 2005 (this "Agreement")
among Caucasus Resources Pty Ltd, an Australian Company ("CR"); Global Gold
Mining, LLC, a Delaware, USA limited liability company ("GGM"); and SHA, LLC, an
Armenian limited liability company, which is a subsidiary of GGM ("SHA").
RECITALS
SHA is the licensee of the Marjan Mine property in Armenia ( "Marjan").
The parties desire to develop Marjan through a joint venture and for SHA to
transfer its license and any other rights in Marjan to an American limited
liability company owned jointly by CR and GGM.
AGREEMENT
NOW THEREFORE, the parties hereto hereby agree as follows:
1. LLC Formation.
CR and GGM shall establish a joint venture limited liability company
(the "JV LLC") under the laws of the State of Delaware, USA, with an
operating agreement (the "LLC Agreement"), which CR and GGM are signing
concurrently herewith, and a copy of which is attached hereto.
2. LLC Ownership, Funding.
(a) The respective percentage interests of CR and GGM as members of
the JV LLC shall be as follows:
(i) Initially CR shall have a 40% interest and GGM shall have a
60% interest in the JV LLC. CR shall be responsible for all other
payments of the purchase price and for all exploration, development,
capital, operating and other expenses (subject to clause (b) below)
without further obligation of GGM to contribute funds to maintain its
interest. Each party shall nevertheless pay its own customary staff
and out-of-pocket expenses.
(ii) CR's percentage interest shall increase to 51% and GGM's
percentage interest shall decrease to 49% upon CR's spending $500,000
(U.S), pursuant to a mutually agreed upon budget, for exploration
relating to Marjan within two years from the date hereof.
(iii) CR's percentage interest in the JV LLC shall increase to
80% and GGM's percentage interest shall decrease to 20% upon CR's
successfully bringing Marjan into production.
(iv) CR's percentage interest shall decrease to 40% and GGM's
percentage interest shall increase to 60%, unless within 4 years from
the date hereof, CR shall bring Marjan into successful production or
CR and GGM shall have agreed to a commercially reasonable business
plan for bringing Marjan into production.
(b) Following commencement of production of Marjan, both parties shall
contribute to the JV LLC's production expenditures on a pro rata basis.
(c) The terms of the present joint venture shall likewise apply to the
acquisition and development of mining resources within Armenia which are
within 20 kilometers of Marjan and are in Armenia. Paragraph 3 "Subsequent
Projects" in the Agreement dated August 15, 2005 between CR and GGM
relating primarily to the Lichkvadz-Tei and Terterasar mines shall not
apply to the present joint venture or the activities contemplated in this
agreement.
3. Transfer of Mine.
For full and adequate consideration, the receipt of which SHA hereby
acknowledges, SHA shall transfer its license and other rights in Marjan to
the JV LLC or its wholly owned Armenian subsidiary and shall proceed
promptly and diligently with all necessary formalities to consummate such
transfer.
4. Representations, Indemnification.
(a) CR and GGM understand that their investments in the JV LLC are
illiquid, and involve a high degree of risk, and are only suitable for
parties which can afford to lose their entire investment. They further
understand that such investments have not been registered under the United
States Securities Act of 1933 or the securities laws of any state of the
United States and will be subject to substantial restrictions on
transferability unless and until the securities are registered or an
exemption from registration becomes available.
(b) The parties' decisions to enter the transactions contemplated by
this agreement are based solely on their independent analyses. The parties:
(A) have been given the opportunity to ask questions of, and receive
answers from one another concerning the terms and conditions and other
matters pertaining to their investments, and all such questions have been
answered to the satisfaction of the respective parties; (B) have been given
the opportunity to obtain such additional information necessary to verify
the accuracy of the information or that has been otherwise provided in
order for them to evaluate the merits and risks of their respective
investments; and (C) have been given the opportunity to obtain additional
information from one another. The parties have not been furnished with any
oral representation or warranty in connection with the transactions
contemplated by this agreement, and the parties are not entering this
transaction with a view to the sale or other distribution of their
investments.
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(c) The parties unconditionally agree to indemnify and hold one
another and any of their counsel, advisors and accountants, harmless from
any loss, liability, claim, damage or expense, arising out of the
inaccuracy of any of their respective representations, warranties or
statements or the breach of any of the agreements contained herein.
(d) The parties affirm that they have full power, and authority, and
their signatures establish this agreement as a valid and legally binding
document enforceable as written. The parties agree, however, to make any
necessary amendments to bring this agreement into compliance with any
applicable Australian, Armenian or United States legal requirements.
5. Miscellaneous.
The provisions of Article 16, "Miscellaneous," of the LLC Agreement,
including the governing law and arbitration provisions, are incorporated
herein by reference and made applicable to this Agreement and the parties
hereto. The addresses for notices between the parties shall be those
respectively provided to each other most recently in writing or
electronically.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
CAUCASUS RESOURCES PTY LTD GLOBAL GOLD MINING, LLC
By: ___________________________ By: ___________________________
Xxxxxxx Xxxx Xxx Xxxxxxxxx
Managing Director Manager
SHA, LLC
By: ___________________________
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