Common use of Exploration Phase Clause in Contracts

Exploration Phase. 6.1 During the Exploration Phase : 1256/AAP/KJW 26/04/2004 6.1.1 Plateau shall spend the following Exploration Expenditure on the JV Area for and on behalf of the Joint Venture, namely : 6.1.1.1 during the first year, [R1 215 000,00 (ONE MILLION TWO HUNDRED AND FIFTEEN THOUSAND RAND)]; 6.1.1.2 during the second year [R1 822 500,00 (ONE MILLION EIGHT HUNDRED AND TWENTY TWO THOUSAND AND FIVE HUNDRED RAND)]; 6.1.1.3 during the third year, [R2 430 000,00 (TWO MILLION FOUR HUNDRED AND THIRTY THOUSAND RAND)]; 6.1.1.4 during the fourth year, [R3 105 000,00 (THREE MILLION ONE HUNDRED AND FIVE THOUSAND RAND)]; 6.1.1.5 during the fifth year, [R3 780 000,00 (THREE MILLION SEVEN HUNDRED AND EIGHTY THOUSAND RAND)]; and shall maintain in force the Plateau Rights; 6.1.2 PPL shall maintain in force the PPL Rights; CIS/AAP/669 Page 38. 1256/AAP/KJW 26/04/2004 6.1.3 Plateau shall maintain in force its prospecting permit in terms of section 6 of the Act in respect of the Plateau Rights for the purposes of this Agreement and PPL shall maintain in force its mining authorisation in terms of section 9 of the Act in respect of, inter alia, the PPL Rights for the purposes of this Agreement; 6.1.4 this Agreement shall lapse at the end of any year of this Agreement if Plateau has not complied with its Exploration Expenditure commitments for any year of this Agreement as set out in clause 6.1.1 above; 6.1.5 in regard to the Exploration Expenditure referred to in clause 6.1.1 : 6.1.5.1 any Exploration Expenditure in excess of the amounts referred to in clause 6.1.1 in any year shall be carried forward as a credit to the following year or years; 6.1.5.2 the amounts in clause 6.1.1 are exclusive of value-added tax; 6.1.5.3 the Exploration Expenditure for year 1 (ONE) is committed by Plateau; CIS/AAP/669 Page 39 1256/AAP/KJW 26/04/2004 6.1.5.4 the Exploration Expenditure for years 2 (TWO), 3 (THREE), 4 (FOUR) and 5 (FIVE) are not committed but are at the discretion of Plateau. If it elects not to proceed to an ensuing year’s Exploration Expenditure, Plateau shall give PPL written notice of such election at least 60 (SIXTY) days prior to the end of the then current year of this Agreement; 6.1.5.5 Plateau shall furnish PPL with quarterly statements detailing Exploration Expenditure for the relevant quarter together with access to all documentation evidencing such expenditure and an annual audit certificate certifying the amount of such expenditure; 6.1.6 the activities of the Joint Venture Project shall be to identify PGM Mining opportunities, prospecting, and a pre-feasibility study leading to a Bankable Feasibility Study; 6.1.7 Plateau shall decide whether the Joint Venture shall proceed to a Bankable Feasibility Study in relation to the JV Area; 6.1.8 the Participants shall convene a meeting after the completion of the Bankable Feasibility Study (“Bankable Feasibility Study Date”), which shall be no later than 3 (THREE) months after the Bankable Feasibility CIS/AAP/669 Page 40. 1256/AAP/KJW 26/04/2004 Study Date, at which meeting the Participants shall resolve whether or not to proceed with Mining in and on the JV Area; 6.1.9 in the event that the Bankable Feasibility Study supports the Decision to Mine; and 6.1.9.1 PPL votes not to proceed with Mining for the minerals in the JV Area at the meeting referred to in 6.1.8, PPL, shall be deemed to have chosen to have a Non-Contributory Participation Interest as set out in 7.5, from the date of the meeting if Plateau wishes to proceed with Mining; and 6.1.9.2 Plateau votes not to proceed with Mining for the minerals in the JV Area at the meeting referred to in 6.1.8 and PPL votes to proceed with Mining then PPL shall have the option to buy out Plateau’s Participation Interest at an aggregate of the net present value of exploiting the Plateau Rights as a stand alone Mining operation by applying an agreed discount rate as determined in the Bankable Feasibility Study and all Exploration Expenditure incurred by Plateau up to the completion of the Bankable Feasibility Study, which option shall be exercised in writing by PPL delivering a CIS/AAP/669 Page 41 1256/AAP/KJW 26/04/2004 declaration of exercise of option to Plateau within 30 (thirty) days of the said meeting; 6.1.10 Plateau and PPL shall together conduct baseline environmental studies at their own cost of the estimated rehabilitation liabilities as at the Signature Date in respect of the Plateau Rights and PPL Rights respectively. Should the Joint Venture terminate prior to the Exploitation Phase, Plateau and PPL shall retain their respective rehabilitation liabilities as at the Signature Date as identified in the said baseline studies. 6.2 It is recorded that when Plateau converts its prospecting permit over the Plateau Rights to new order rights under MPRDA and converts the mining authorisation held by PPL over the PPL Rights to new order rights under MPRDA it shall do so in the names of all Participants in percentage interests equal to their respective Participation Interests from time to time, subject to the provisions of clause 6.11. Should this not be legally permissible, the Parties shall negotiate amendments to this Agreement by means of pooling and sharing Ore and Concentrate from their respective areas for their respective benefit, and sharing of costs. 6.3 During the Exploration Phase, and until such stage as Plateau has either converted the PPL Rights into rights under MPRDA in terms of 6.2 or 6.11, CIS/AAP/669 Page 42 1256/AAP/KJW 26/04/2004 Plateau is hereby appointed by PPL, as independent contractor, to conduct the prospecting activities contemplated in terms of this Agreement on the area covered by the PPL Rights. 6.4 During the Exploration Phase, Plateau shall indemnify and hold harmless PPL against any claims that may be made against PPL by any third parties for any loss, damage, injury to or death of any persons arising out of the negligent act or omission on the part of Plateau in the course of its activities on the JV Area. PPL shall immediately notify Plateau of any such claim, and Plateau shall be entitled to contest, settle, compromise or otherwise deal therewith subject to it indemnifying PPL in respect of any legal costs. PPL shall not itself settle or deal with such claim save with Plateau’s consent, and shall afford Plateau all reasonable co-operation and assistance in dealing with any such claims. 6.5 Plateau shall before commencing any activities on the area of the PPL Rights in terms of this Agreement, procure the amendment of the EMPR for the area covered, inter alia, by the PPL Rights, to allow for the activities contemplated hereunder on the area covered by the PPL Rights. 6.6 Subject to the provisions of clause 6.1.10, should this Agreement be terminated or lapse, Plateau shall fill in or cover or otherwise render safe all holes and excavations made by it on the JV Area to the extent that it is required to do so CIS/AAP/669 Page 43 1256/AAP/KJW 26/04/2004 pursuant to the approved environmental programmes in respect of the JV Area and in order to obtain “closure certificates” in respect of the JV Area pursuant to section 12 of the Act, subject however to any provisions of law or regulation and/or directives by officials of the Department of Minerals and Energy, and shall (to the extent provided for by law or regulation) be answerable to the landowners for any damage caused by Plateau to any improvements on the JV Area, save where Plateau or PPL continue with prospecting or Mining activities over the JV Area independently of the Joint Venture. 6.7 During the Exploration Phase, should any of the Anglo Platinum Group’s personnel be employed by or seconded to the prospecting project of the Joint Venture contemplated herein, the relevant company within the Anglo Platinum Groups will invoice Plateau for the services rendered by its personnel and Plateau shall reimburse that company therefor at pre-agreed rates. 6.8 Forthwith after the Effective Date PPL and Plateau shall each appoint 2 (TWO) representatives to a prospecting committee which will be formed to oversee the prospecting activities during the Exploration Phase. The rules and procedures of such committee shall be determined by the committee itself. Plateau shall chair the prospecting committee, and in the event of the prospecting committee being deadlocked in respect of an Exploration Expenditure programme, the dispute resolution procedure in 17 shall apply. CIS/AAP/669 Page 44 1256/AAP/KJW 26/04/2004 6.9 The prospecting staff of the Participants shall meet forthwith after the Effective Date to formulate a prospecting programme for the JV Area for approval by the said prospecting committee for the Exploration Phase. The programme will be updated, revised and supplemented as circumstances demand. 6.10 Should Plateau have completed its expenditure obligations in clause 6.1.1 either at the end of the fifth year of this Agreement or prior thereto, or the Participants have taken a Decision to Mine the Joint Venture shall proceed from the Exploration Phase to the Exploitation Phase. 6.11.1 As soon as feasibly possible after the Signature Date the Parties shall meet with a view to creating a company (“JV Company”) in which the PGM Rights, once converted into rights under MPRDA, will be housed, subject to the necessary Ministerial consents being obtained therefor in terms of MPRDA. 6.11.2 The shareholding of the Parties in the JV Company shall equal their Participation Interests in the Joint Venture at the time of creation of the JV Company; provided that such shareholding shall change by the issue of new shares at par value to accord with their respective participation interests in the joint venture referred to in 6.11.5. CIS/AAP/669 Page 45. 1256/AAP/KJW 26/04/2004 6.11.3 The Parties in creating the JV Company shall adopt a memorandum and articles of association to give effect to the principles of this Agreement. The articles of association shall further create a class of shares in the JV Company styled “HDP Shares” to accommodate the entrance of the HDP Participant and the locking up of such shares forever as HDP Shares to enable the Joint Venture to comply with the Charter. 6.11.4 The Parties shall further negotiate the terms of a shareholders agreement for the JV Company to give effect to the principles set out in this Agreement. 6.11.5 The Parties shall further negotiate the terms of a joint venture agreement by and between the Parties and in terms of which the JV Company shall sub-grant the new order rights obtained under MPRDA in place of the PGM Rights to an unincorporated joint venture between the Parties and the JV Company following substantially the terms and principles of this Agreement; provided that the provisions of 7.1 shall apply, mutatis mutandis once the Exploitation Phase is reached. 6.11.6 In concluding the agreement referred to in 6.11.5, the Parties shall provide, inter alia, for the maximisation of protection of the PGM Rights 1256/AAP/KJW 26/04/2004 under MPRDA and tax benefits to the Parties, without adversely affecting the rights and obligations of the Parties under this Agreement. 6.11.7 Should the Parties have been unable to agree the terms of the memorandum and articles of association and the shareholders agreement of the JV Company, or the joint venture agreement referred to in 6.11.5, within a period of 6 (SIX) months from the Signature Date, either one of the Parties shall be entitled to refer the finalisation of the outstanding items to ▇▇▇▇▇ ▇▇▇▇▇▇ of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP in Vancouver, Canada (“the expert”) for determination of the final terms that shall govern. The expert shall be acting as an expert and not as an arbitrator and in the absence of manifest error the determination of the final terms by the expert shall be final and binding on the Parties and not capable of review or appeal. In determining the final terms the expert shall be instructed to abide by the terms and principles set out in this Agreement including but not limited to this clause 6.11. The expert in making his determination shall be entitled to : 6.11.7.1 instruct financial advisers of the expert’s own choice to assist in making the determination; CIS/AAP/669 Page 47 1256/AAP/KJW 26/04/2004 6.11.7.2 call for an agreed statement of facts from the Parties in respect of any factual matters not apparent from this Agreement. 6.11.8 Once the Parties have agreed the matters referred to in this 6.11 (or the matters have been finally determined in accordance with 6.11.7) the joint venture agreement referred to in 6.11.5 shall substitute this Agreement.