Net Smelter Return Royalty. (a) MPA shall pay DMSL a quarterly production royalty equivalent to the following: 1. 00 % of the net smelter returns (“NSR”) from gold, silver and other minerals produced and sold from the Mining Concessions described in Appendices A and C attached to the Termination and Purchase Agreement, being the San ▇▇▇▇ Concessions and the San ▇▇▇▇▇▇ Group Concessions. 2. 00 % or 3.00 % of the NSR from gold, silver and other minerals produced and sold from the Mining Concessions described on Appendix C attached hereto, being the ▇▇▇▇▇▇ Concessions, depending upon the average spot market gold price, as announced by the London Bullion Houses (Second Fixing), during the relevant calendar quarter according to the following schedule: $499.99 or less 2.00 % $500.00 and above 3.00 % For the purposes of the NSR set out herein, NSR shall be determined by multiplying (A) the gross number of ▇▇▇▇ ounces of gold and silver contained in production (and for minerals other than gold and silver, the gross amount of the particular mineral contained in production) from the applicable Mining Concessions and delivered to the smelter, refiner, processor, purchaser or other recipient of such production during the calendar quarter (B) by the sales price for such gross amount determined in accordance with subsections (b), (c) and (e) below, less, but only to the extent actually incurred and borne by the entity operating the mine or mines on the Mining Concessions (the “Operator”): (i) all actual charges and costs, including insurance, for transportation of gold, silver or other minerals from the Operator’s processing facilities at or near the Mining Concessions to the place of sale, whether transported by the Operator or a third party; (ii) all actual charges, costs, deductions, and penalties for treatment, smelting and refining the gold, silver or other minerals (including any umpire charges) after said gold, silver or other minerals leave the Operator’s processing facility at or near the Mining Concessions. For example, if the Operator produces a gold and/or silver concentrate at its processing facility, it shall be entitled to deduct all charges, costs, deductions, and penalties incurred by it in smelting and refining that concentrate into a final product for sale. If the Operator produces a gold and/or silver dore at its processing facility, which requires further refining, it shall be entitled to deduct all charges, costs, deductions, and penalties incurred by it in such further refining or processing. If gold, silver or other minerals are transported, processed, treated, smelted or refined by the Operator or an affiliate of the Operator, the terms of charges, costs, penalties and deductions thereof used for calculating the NSR shall be no less favorable than those which would be extended to a non-affiliate party in an arms-length transaction for transportation, treatment, smelting, or refining of a like quantity and quality of such gold, silver or other minerals; and (iii) severance, production, ad valorem, sales, net proceeds of mine and any other similar taxes or fees on the production of gold, silver or other minerals from the Mining Concessions. (b) In respect of the sale of gold from the Mining Concessions, the sales price for any calendar quarter shall be calculated using the average of the (spot) market prices of gold during such calendar quarter, as announced by the London Bullion Houses (Second Fixing). (c) In respect of the sale of silver from the Mining Concessions, the sales price for any calendar quarter shall be calculated using the average of the (spot) market prices of silver during such calendar quarter, as announced by the Hardy & Harmon Noon Silver Quotation. (d) In the event the Operator does not sell the gold or silver produced from the Mining Concessions during a quarter of production, a “sale” for the purposes of calculating production payments shall be deemed to have occurred on the day the Operator receives a settlement statement from the refiner, setting forth the number of ▇▇▇▇ ounces of gold and/or silver transferred to the account of the Operator, or an affiliate or agent of the Operator. (e) In respect of the sale of minerals other than gold and silver from the Mining Concessions, the sales price for any calendar quarter shall be equal to the amount of the proceeds actually received by the Operator during the calendar quarter from the sale of such minerals divided by the total number of units of such minerals sold during the calendar quarter. (f) If any gold, silver or other minerals from the Mining Concessions are sold for processing or treatment to a mill, smelter, or other processing facility owned or controlled by the Operator (or any subsidiary or affiliate of the Operator) or taken in kind by the Operator, then the sums paid to the Operator shall be deemed to be no less than the sums the Operator would have received if the sale had been to an independent mill, smelter, or processing facility reasonably available to the Operator at the time of delivery. (g) The parties agree that the Operator and MPA (or Vista) shall have no obligation to account to DMSL for, and DMSL shall have no interest or right of participation in, any profits or proceeds of future contracts, forward sales, hedging or any other similar marketing mechanisms employed by the Operator or MPA (or Vista) or their affiliates, with respect to any gold, silver or other minerals produced from the Mining Concessions. (h) The Operator shall have the right to commingle the gold, silver or other minerals produced from the Mining Concessions with similar ore or minerals from other properties owned, leased, or controlled by the Operator; provided, however, that before commingling the Operator shall calculate from representative samples the average grade of the gold, silver or other minerals from the Mining Concessions and shall either weigh or volumetrically calculate the number of tons of ore from the Mining Concessions to be commingled. As upgraded products (such as dore or concentrates) are produced from the commingled gold, silver or other minerals, the Operator shall calculate from representative samples the average percent recovery of such upgraded products produced from the commingled gold, silver or other minerals. In obtaining representative samples and calculating the average grade of commingled ores and average percentage of recovery, the Operator may use any procedures generally acceptable in the mining and metallurgical industry that the Operator believes to be accurate and cost effective for the type of mining and processing activity being conducted. In addition, comparable procedures may be used by the Operator to apportion among the commingled gold, silver or other minerals any penalty charges imposed by the refiner on commingled gold, silver or other minerals or concentrates. The records relating to commingled gold, silver or other minerals shall be available for inspection by DMSL, at DMSL’s sole expense, at all reasonable times. (i) All NSR payments owing to DMSL shall be paid by check or wire transfer in US Dollars or its equivalent in Mexican currency. DMSL shall be paid NSR payments quarterly, on or before the 30th day of the month following each calendar quarter that the Operator receives proceeds from the sale of gold, silver or other minerals produced from the Mining Concessions. All NSR payments shall be made to the bank account or address that DMSL specifies in writing to MPA. DMSL may designate a different account or receiving address to MPA by notice in writing. In the event of any future division of ownership interest in the NSR payments, payment to a single address or account shall constitute full satisfaction of MPA’s (or Vista’s) obligation to pay NSR payments, and MPA (or Vista) shall be relieved from any responsibility and liability for the future division of disbursements as among more than one payee of the NSR payments. (j) The Operator shall keep accurate records of gold, silver or other minerals derived and sold from the Mining Concessions and of calculations relative to NSR payments and commingled ore from the Mining Concessions. NSR payments and adjustments shall be accompanied by a statement of NSR payment calculations, deductions, and adjustments. Within 180 days following the end of each calendar year, MPA (or Vista) shall furnish DMSL with an audited year-end statement showing the amount of NSR payments paid to DMSL during the year. All year-end statements shall be conclusively presumed true and correct two years from the date furnished to DMSL, unless within said period DMSL takes written exception. Upon 30 days prior written notice, DMSL shall be entitled to an annual independent audit of the matters covered by the statement, during normal business hours and at DMSL’s expense, provided it selects for the audit an international accounting firm of recognized standing, at least one of whose members is a member of the American Institute of Certified Public Accountants.
Appears in 1 contract
Sources: Purchase Agreement (Vista Gold Corp)
Net Smelter Return Royalty. (a) MPA shall pay DMSL a quarterly production royalty equivalent to the following:
1. 00 % of the net smelter returns (“NSR”) from gold, silver and other minerals produced and sold from the Mining Concessions described in Appendices A and C attached to the Termination and Purchase Agreement, being the San ▇▇▇▇ Concessions and the San ▇▇▇▇▇▇ Group Concessions.
2. 00 % or 3.00 % of the NSR from gold, silver and other minerals produced and sold from the Mining Concessions described on Appendix C attached hereto, being the ▇▇▇▇▇▇ Concessions, depending upon the average spot market gold price, as announced by the London Bullion Houses (Second Fixing), during the relevant calendar quarter according to the following schedule: $$ 499.99 or less 2.00 % $$ 500.00 and above 3.00 % For the purposes of the NSR set out herein, NSR shall be determined by multiplying (A) the gross number of ▇▇▇▇ ounces of gold and silver contained in production (and for minerals other than gold and silver, the gross amount of the particular mineral contained in production) from the applicable Mining Concessions and delivered to the smelter, refiner, processor, purchaser or other recipient of such production during the calendar quarter (B) by the sales price for such gross amount determined in accordance with subsections (b), (c) and (e) below, less, but only to the extent actually incurred and borne by the entity operating the mine or mines on the Mining Concessions (the “Operator”):
(i) all actual charges and costs, including insurance, for transportation of gold, silver or other minerals from the Operator’s processing facilities at or near the Mining Concessions to the place of sale, whether transported by the Operator or a third party;
(ii) all actual charges, costs, deductions, and penalties for treatment, smelting and refining the gold, silver or other minerals (including any umpire charges) after said gold, silver or other minerals leave the Operator’s processing facility at or near the Mining Concessions. For example, if the Operator produces a gold and/or silver concentrate at its processing facility, it shall be entitled to deduct all charges, costs, deductions, and penalties incurred by it in smelting and refining that concentrate into a final product for sale. If the Operator produces a gold and/or silver dore at its processing facility, which requires further refining, it shall be entitled to deduct all charges, costs, deductions, and penalties incurred by it in such further refining or processing. If gold, silver or other minerals are transported, processed, treated, smelted or refined by the Operator or an affiliate of the Operator, the terms of charges, costs, penalties and deductions thereof used for calculating the NSR shall be no less favorable than those which would be extended to a non-affiliate party in an arms-length transaction for transportation, treatment, smelting, or refining of a like quantity and quality of such gold, silver or other minerals; and
(iii) severance, production, ad valorem, sales, net proceeds of mine and any other similar taxes or fees on the production of gold, silver or other minerals from the Mining Concessions.
(b) In respect of the sale of gold from the Mining Concessions, the sales price for any calendar quarter shall be calculated using the average of the (spot) market prices of gold during such calendar quarter, as announced by the London Bullion Houses (Second Fixing).
(c) In respect of the sale of silver from the Mining Concessions, the sales price for any calendar quarter shall be calculated using the average of the (spot) market prices of silver during such calendar quarter, as announced by the Hardy & Harmon Noon Silver Quotation.
(d) In the event the Operator does not sell the gold or silver produced from the Mining Concessions during a quarter of production, a “sale” for the purposes of calculating production payments shall be deemed to have occurred on the day the Operator receives a settlement statement from the refiner, setting forth the number of ▇▇▇▇ ounces of gold and/or silver transferred to the account of the Operator, or an affiliate or agent of the Operator.
(e) In respect of the sale of minerals other than gold and silver from the Mining Concessions, the sales price for any calendar quarter shall be equal to the amount of the proceeds actually received by the Operator during the calendar quarter from the sale of such minerals divided by the total number of units of such minerals sold during the calendar quarter.
(f) If any gold, silver or other minerals from the Mining Concessions are sold for processing or treatment to a mill, smelter, or other processing facility owned or controlled by the Operator (or any subsidiary or affiliate of the Operator) or taken in kind by the Operator, then the sums paid to the Operator shall be deemed to be no less than the sums the Operator would have received if the sale had been to an independent mill, smelter, or processing facility reasonably available to the Operator at the time of delivery.
(g) The parties agree that the Operator and MPA (or Vista) shall have no obligation to account to DMSL for, and DMSL shall have no interest or right of participation in, any profits or proceeds of future contracts, forward sales, hedging or any other similar marketing mechanisms employed by the Operator or MPA (or Vista) or their affiliates, with respect to any gold, silver or other minerals produced from the Mining Concessions.
(h) The Operator shall have the right to commingle the gold, silver or other minerals produced from the Mining Concessions with similar ore or minerals from other properties owned, leased, or controlled by the Operator; provided, however, that before commingling the Operator shall calculate from representative samples the average grade of the gold, silver or other minerals from the Mining Concessions and shall either weigh or volumetrically calculate the number of tons of ore from the Mining Concessions to be commingled. As upgraded products (such as dore or concentrates) are produced from the commingled gold, silver or other minerals, the Operator shall calculate from representative samples the average percent recovery of such upgraded products produced from the commingled gold, silver or other minerals. In obtaining representative samples and calculating the average grade of commingled ores and average percentage of recovery, the Operator may use any procedures generally acceptable in the mining and metallurgical industry that the Operator believes to be accurate and cost effective for the type of mining and processing activity being conducted. In addition, comparable procedures may be used by the Operator to apportion among the commingled gold, silver or other minerals any penalty charges imposed by the refiner on commingled gold, silver or other minerals or concentrates. The records relating to commingled gold, silver or other minerals shall be available for inspection by DMSL, at DMSL’s sole expense, at all reasonable times.
(i) All NSR payments owing to DMSL shall be paid by check or wire transfer in US Dollars or its equivalent in Mexican currency. DMSL shall be paid NSR payments quarterly, on or before the 30th day of the month following each calendar quarter that the Operator receives proceeds from the sale of gold, silver or other minerals produced from the Mining Concessions. All NSR payments shall be made to the bank account or address that DMSL specifies in writing to MPA. DMSL may designate a different account or receiving address to MPA by notice in writing. In the event of any future division of ownership interest in the NSR payments, payment to a single address or account shall constitute full satisfaction of MPA’s (or Vista’s) obligation to pay NSR payments, and MPA (or Vista) shall be relieved from any responsibility and liability for the future division of disbursements as among more than one payee of the NSR payments.
(j) The Operator shall keep accurate records of gold, silver or other minerals derived and sold from the Mining Concessions and of calculations relative to NSR payments and commingled ore from the Mining Concessions. NSR payments and adjustments shall be accompanied by a statement of NSR payment calculations, deductions, and adjustments. Within 180 days following the end of each calendar year, MPA (or Vista) shall furnish DMSL with an audited year-end statement showing the amount of NSR payments paid to DMSL during the year. All year-end statements shall be conclusively presumed true and correct two years from the date furnished to DMSL, unless within said period DMSL takes written exception. Upon 30 days prior written notice, DMSL shall be entitled to an annual independent audit of the matters covered by the statement, during normal business hours and at DMSL’s expense, provided it selects for the audit an international accounting firm of recognized standing, at least one of whose members is a member of the American Institute of Certified Public Accountants.
Appears in 1 contract
Sources: Termination and Purchase Agreement (Vista Gold Corp)