Common use of PRODUCTION PROGRAMS Clause in Contracts

PRODUCTION PROGRAMS. 11.1 If the Managing Operator determines that the economic potential of any part of the Property warrants the preparation of a Feasibility Report the Managing Operator will present a Program in accordance with section 10 contemplating the preparation of a Feasibility Report. The Managing Operator will, concurrently with the presentation of such Program, deliver to the Management Committee any internal or draft report on the economics of Commercial Production which it may have prepared or caused to have been prepared. On completion of the Feasibility Report pursuant to such Program the Managing Operator will forthwith deliver to the Management Committee the Feasibility Report and, if the Feasibility Report recommends placing the Property (or a portion thereof) into Commercial Production, a Production Program in respect of the Property or such portion thereof will be prepared by the Managing Operator. 11.2 Within 120 days of the delivery to the Management Committee of a Production Program and Feasibility Report delivered pursuant to subsection 11.1 each Joint Operator will give notice stating whether it elects to contribute its Cost Share of the Production Program. Failure to give such notice within such period will be deemed to be an election not to contribute to such Production Program. If both Joint Operators elect to contribute their respective Cost Shares of the Production Program the Joint Operators will implement the Production Program. If one Joint Operator elects or is deemed to have elected not to contribute to a Production Program, its Interest will thereafter be determined in accordance with sections 4.3 and 4.4. The Joint Operators will not proceed with any Production Program which is not fully subscribed. 11.3 An election to fund a Production Program under subsection 11.2 will make a Joint Operator liable to pay its Cost Share of: (a) all of the Production Program Costs actually incurred under or pursuant to such Production Program, including Production Program Overruns up to but not exceeding 10% of estimated Production Program Costs; (b) Operating Costs and any other costs associated with establishing and operating the Property as a mine at such time as the liability is incurred by either Joint Operator; and (c) any debts, liabilities or obligations arising from operations hereunder, except financing costs incurred by the other Joint Operator in connection with such other Joint Operator's contributions to Production Program Costs, other than as contemplated in subsection 15.4 hereof. 11.4 After having elected to fund a Production Program which is proceeded with, each Joint Operator will, within 30 days, pay such amount of Production Program Costs incurred or to be incurred under or pursuant to such Production Program as may be required, but payment of any funds will not be required more than one month in advance of the period during which the same are to be expended. 11.5 If it appears to one Joint Operator that Production Program Costs will exceed by greater than 10% those estimated under a Production Program, such Joint Operator will immediately give written notice to the other Joint Operator outlining the nature and extent of the Production Program Overruns. If such Production Program Overruns are accepted by both Joint Operators then, within 30 days, each Joint Operator will pay its Cost Share of such Production Program Overruns. If any one Joint Operator does not accept such Production Program Overruns, or fails to pay its Cost Share of such Production Program Overruns (the "Non-Contributing Joint Operator"), the other Joint Operator (the "Contributing Joint Operator") will be entitled to pay the Cost Share of the Non-Contributing Joint Operator. If the Contributing Joint Operator pays such Cost Share it will be entitled to recoup such amount together with interest per annum at a rate equal to the Prime Rate plus 2%, compounded semi- annually, not in advance, on June 30 and December 31 in each year, pursuant to subsection 15.3 and, except in the case where a Joint Operator fails to pay its Cost Share of a Production Program Overrun, such amount will be deemed not to be a contribution to Production Program Costs for purposes of the calculation of each Joint Operator's Interest as set out in subsection 4.3 and 4.4. 11.6 If the Non-Contributing Joint Operator: (a) elects or is deemed to have elected not to contribute its Cost Share of a Production Program pursuant to subsection 11.2; or (b) at any time fails to pay such amount of Production Program Costs in accordance with subsection 11.4; or (c) at any time fails to pay such amount of Production Program Overruns as was accepted by that Joint Operator in accordance with subsection 11.5, the Contributing Joint Operator may give written notice to such Non-Contributing Joint Operator demanding payment, and if such Non-Contributing Joint Operator has not paid such amount within 30 days after receipt of such notice, such Non-Contributing Joint Operator will be deemed to be in default under subsection 11.4 or 11.5 and have lost its right to contribute to the Production Program. The Contributing Joint Operator may contribute all Production Program Costs to be incurred under or pursuant to such Production Program by the Non-Contributing Joint Operator in addition to its own Cost Share, and thereafter the Contributing Joint Operator will proceed with such Production Program. Upon the Production Program Costs being fully committed, the Contributing Joint Operator will proceed with the Production Program and the Joint Operator's respective Interests will thereafter be adjusted in accordance with subsections 4.3 and 4.4. If the Contributing Joint Operator does not elect to contribute all Production Program Costs, then it will curtail or abandon the Production Program.

PRODUCTION PROGRAMS. 11.1 If the Managing Operator determines that the economic potential of any part of the Property warrants the preparation of a Feasibility Report the Managing Operator will present a Program in accordance with section 10 contemplating the preparation of a Feasibility Report. The Managing Operator will, concurrently with the presentation of such Program, deliver to the Management Committee any internal or draft report on the economics of Commercial Production which it may have prepared or caused to have been prepared. On completion of the Feasibility Report pursuant to such Program the Managing Operator will forthwith deliver to the Management Committee the Feasibility Report and, if the Feasibility Report recommends placing the Property 16.1 Within: (or a portion thereofa) into Commercial Production, a Production Program in respect of the Property or such portion thereof will be prepared by the Managing Operator. 11.2 Within 120 60 days of the delivery to approval by the Management Committee of a Production Program and Feasibility Report delivered pursuant contemplating Costs of $10,000,000 or less; or (b) 120 days of the approval by the Management Committee of a Production Program contemplating Costs of more than $10,000,000; each Participant shall give written notice to subsection 11.1 each Joint the Operator will give notice stating whether it elects to contribute its Cost Share of the Production Program. Failure to give such notice within such six month period will shall be deemed to be an election not to contribute to such Production ProgramProgram and the provisions of subsection 16.5 shall apply. If both Joint Operators Participants elect to contribute their respective Cost Shares of the Production Program the Joint Operators will Operator shall implement the Production Program. If one Joint The Operator elects or is deemed to have elected not to contribute to a Production Program, its Interest will thereafter be determined in accordance with sections 4.3 and 4.4. The Joint Operators will not proceed with any Production Program which is not fully subscribed. 11.3 16.2 An election to fund a Production Program under subsection 11.2 will shall make a Joint Operator Participant liable to pay its Cost Share of: (a) all of the Production Program Costs actually incurred under or pursuant to such Production Program, including Production Program Overruns up to but not exceeding 1015% of estimated Production Program Costs;, (b) Operating Costs and any other costs associated with establishing and operating the Property as a mine at such time as the liability is incurred by either Joint Operatorthe Oprator; and (c) any debts, liabilities or obligations arising from operations hereunder, except financing costs incurred by the other Joint Operator Participant in connection with such other Joint Operator's Participants' contributions to the Production Program Costs, other than as contemplated in subsection 15.4 hereofProgram. 11.4 After 16.3 Commencing 90 days after having elected to fund a Production Program which is proceeded with, each Joint Operator willParticipant shall, within 30 daysdays after being requested in writing to do so by the Operator, pay such amount of Production Program Costs incurred or to be incurred under or pursuant to such Production Program as the Operator may be requiredrequire, but the Operator shall not require payment of any funds will not be required more than one month in advance of the period during which the same are to be expended. 11.5 16.4 If it appears to one Joint Operator that Production Program Costs will exceed by greater than 1015% those estimated under a Production Program, such Joint the Operator will shall immediately give written notice to the other Joint Operator Participants outlining the nature and extent of the Production Program Overruns. If such Production Program Overruns are accepted by both Joint Operators the Participants then, within 30 daysdays after the receipt of a written request from the Operator, each Joint Participant shall pay to the Operator will pay its Cost Share of such Production Program Overruns. If any one Joint Operator Participant does not accept such Production Program Overruns, or fails to pay its Cost Share of such Production Program Overruns (the "Non-Contributing Joint Operator")same, the other Joint Operator (the "Contributing Joint Operator") will Participant shall be entitled to pay the Cost Share of the Non-Contributing Joint Operatorsuch Participant. If the Contributing Joint Operator other Participant pays such Cost Share it will be entitled to recoup such amount together with interest per annum at a rate equal to the Prime Rate plus 2%, compounded semi- annually, not in advance, on June 30 and December 31 in each year, pursuant to subsection 15.3 and, except in the case where a Joint Operator fails to pay its Cost Share of a Production Program OverrunShare, such amount will shall be deemed not to be a contribution to Production Program Costs for purposes of included in the calculation of each Joint Operator's Participants' Interest as set out in under subsection 4.3 and 4.411.6. 11.6 16.5 If the Non-Contributing Joint Operatora Participant: (a) elects or is deemed at any time fails to have elected not to contribute its Cost Share pay such amount of a Production Program pursuant to Costs as is requested by the Operator in accordance with subsection 11.216.3; or (b) at any time fails to pay such amount of Production Program Costs in accordance with subsection 11.4; or (c) at any time fails to pay such amount of Production Program Overruns as was accepted by that Joint Operator such Participant in accordance with subsection 11.516.4, the Contributing Joint Operator may give written notice to such Non-Contributing Joint Operator Participant demanding payment, and if such Non-Contributing Joint Operator Participant has not paid such amount within 30 days after receipt of such notice, such Non-Contributing Joint Operator will Participant shall be deemed to be in default under subsection 11.4 16.3 or 11.5 16.4 and have lost its right to contribute to the Production Program. The Program and the other Participant (the "Contributing Joint Operator may Participant") shall have the right to contribute all Production Program Costs to be incurred under or pursuant to such Production Program by the Non-Contributing Joint Operator in addition to its own Cost Share, and thereafter the Contributing Joint Operator will proceed with such Production Program. Upon the Production Program Costs being fully committed, and the Contributing Joint Operator will proceed with the Production Program and the Joint Operator's Participants' respective Interests will shall thereafter be adjusted in accordance with subsections 4.3 and 4.4. If the Contributing Joint Operator does not elect to contribute all Production Program Costs, then it will curtail or abandon the Production Programsubsection 11.6.