OPTION AGREEMENT
THIS AGREEMENT is made as of the 29 day of January, 2001.
BETWEEN:
AURORA METALS (BVI) LIMITED, a company incorporated under the laws of
the British Virgin Islands, having an office at ▇▇▇▇▇ ▇▇▇, ▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(the "Optionor")
OF THE FIRST PART
AND:
BILLITON UK RESOURCES B.V., a company incorporated under the laws of
The Netherlands, having an office at ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇ ▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
(the "Optionee")
OF THE SECOND PART
WHEREAS:
A. The Optionor has direct or indirect Interests in certain mineral exploration
properties in the Republic of Tunisia (the "Optioned Properties") which are more
particularly described in Schedule "A" attached hereto;
B. The Optionor has agreed to grant an Option to the Optionee to acquire an
Interest in the Optioned Properties on the terms and conditions hereinafter set
forth; and
C. The Optionor has agreed that it will contemporaneously with the execution of
this Agreement enter into a Subscription Agreement in the form set forth as
Schedule "B" hereto.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants contained herein and other good and valuable consideration paid
by the Optionee to the Optionor, the receipt of which is hereby acknowledged,
the parties agreed as follows:
ARTICLE 1 - DEFINITIONS
1.1. For the purposes of this Agreement the following words and phrases shall
have the following meanings, namely:
(a) "AFFILIATE" means a company that is affiliated with another company if
one of them is the subsidiary of the other, or both are subsidiaries
of the same company, or each of them is controlled by the same person,
company, partnership or party. In association with this definition, a
company is a subsidiary of another company if:
(i) it is controlled by:
1.0.a.i.1. that other company;
1.0.a.i.2. that other company and one or more company, each of
which is controlled by that other company, or
1.0.a.i.3. two or more companies, each of which is controlled by
that other company, or
(ii) it is a subsidiary of a subsidiary of that other company.
In association with this definition, a company is controlled by a
person, company, partnership or party if:
(i) shares of the company carrying more than 50% of the
votes for the election of directors are held, other than by way
of security only, by or for the benefit of that person,
corporation, partnership or party, and
(ii) the votes carried by the shares mentioned in paragraph (i) are
sufficient, if exercised, to elect a majority of the directors of
the company.;
(b) "AREA OF INTEREST" means the area lying within the territory of the
Republic of Tunisia which is located within two (2) kilometres of the
perimeter of the Optioned Properties;
(c) "BUSINESS DAY" has the meaning set forth in Section 1.1(g) of the
Subscription Agreement;
(d) "CLOSING" has the meaning set forth in Section 1.1(i) of the
Subscription Agreement;
(e) "COMMENCEMENT OF COMMERCIAL PRODUCTION" means the first day of the
month following which a mine (including any associated processing or
treatment facilities) on any portion of the Optioned Properties has
operated for 30 consecutive days at not less than 70% of its designed
capacity;
-2-
(f) "COMMON SHARE" has the meaning set forth in Section 1.1(l) of the
Subscription Agreement;
(g) "EXPLORATION EXPENDITURES" in respect of the Optioned Properties,
means the sum of (i) all costs of acquisition and maintenance and all
exploration and development expenditures and all other costs and
expenses of whatsoever kind or nature, incurred or chargeable by the
Operator with respect to the exploration or development of the
Optioned Properties and the placing of the Optioned Properties into
commercial production, and (ii) as compensation for general overhead
expenses which the Operator will incur, an amount equal to 10% of all
amounts included in subparagraph (i) above to be calculated and paid
quarterly. For greater certainty, neither the expenditure of Unit
Proceeds nor the expenditure of funds received by the Optionor from
the Optionee on exercise of the Warrants shall be deemed to constitute
Exploration Expenditures for the purposes of this agreement;
(h) "FIRST PROPERTY OPTION" means the option granted by the Optionor to
the Optionee to acquire a 51% Interest in the Optioned Properties as
more particularly set forth in this Agreement;
(i) "HIGH ▇▇▇▇▇ OPTION" has the meaning set forth in Section 1.1(o) of the
Subscription Agreement
(j) "INTEREST" means, without limitation, a legal, beneficial or equitable
interest, in mineral properties, whether direct, indirect, contingent
or otherwise, including, without limitation, options on mineral
properties or on shares of corporations having a legal, beneficial or
equitable interest in mineral properties, whether direct, indirect,
contingent or otherwise;
(k) "LIBOR" means the rate per annum (rounded upwards if necessary to the
nearest whole one-sixteenth of one percent (1/16%)) equal to the
average of the offered rates as of 11:00 a.m. London time appearing on
the display designated as page "LIBO" on the ▇▇▇▇▇▇ Moniter Money
Rates Service for U.S. dollar deposits for the relevant period of
time;
(l) "OPERATOR" shall mean the Optionor unless the Optionee elects, once it
has elected to participate in the First Property Option by commencing
the funding of Exploration Expenditures as contemplated in Section
1.12, to become the Operator of the Optioned Properties in which case
the Optionee will upon such election become the Operator in respect of
the Optioned Properties;
(m) "OPTION" or "OPTIONS" means, collectively, the First Property Option
and, if granted, the Second Property Option;
(n) "OPTIONED PROPERTIES" means those certain mineral exploration
properties more particularly described in Schedule "A" hereto;
-3-
(o) "OPTION PERIOD" means:
(i) with respect to the First Property Option, the period from the
date hereof to and including January 1, 2004 unless the Option is
earlier exercised in accordance with Section 1.12; and
(ii) with respect to the Second Property Option, the period from the
date of exercise of the First Property Option to and including
the date of satisfaction of the requirements set forth in Section
1.19;
(p) "PRIVATE PLACEMENT" means the purchase and sale of the Units as
contemplated in the Subscription Agreement;
(q) "PROGRAM AND BUDGET" has the meaning set forth in Section 1.1(t) of
the Subscription Agreement;
(r) "PROJECT NET REVENUE" means the gross proceeds from the sale of
production from the Optioned Properties less cash operating costs of
production;
(s) "SECOND PROPERTY OPTION" means the option which, upon exercise of the
First Property Option, will be deemed to have been granted by the
Optionor to the Optionee to acquire an additional 19% Interest in the
Optioned Properties as provided in Section 1.17;
(t) "SUBSCRIPTION AGREEMENT" means the subscription agreement dated as of
January 29, 2001 between the Optionor and Billiton E&D 3 B.V., an
affiliate of the Optionee, in the form attached as Schedule "B"
hereto;
(u) "UNIT PROCEEDS" has the meaning set forth in Section 1.1(z) of the
Subscription Agreement;
(v) "UNITS" has the meaning set forth in Section 1.1(aa) of the
Subscription Agreement; and
(w) "WARRANT" has the meaning set forth in Section 1.1(bb) of the
Subscription Agreement.
1.2 ENTIRE AGREEMENT
This Agreement, together with any and all agreements, documents and
other instruments to be delivered pursuant hereto or simultaneously herewith
(which, for the purposes of this Section are collectively referred to as the
"Agreement"), constitutes the entire agreement between the Optionee and the
Optionor pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of and between the parties hereto, including, without limitation, the
non-binding letter of intent between Aurora Gold Corporation and Billiton UK
-4-
Resources B.V. dated February 25, 2000, as amended, and there are no
representations, warranties, covenants or other agreements among the parties
hereto in connection with the subject matter hereof except as specifically set
forth in the Agreement. No supplement, modification, waiver or termination of
this Agreement shall be binding unless executed in writing by the party to be
bound thereby. No waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provisions (whether or not
similar) nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
1.3. HEADINGS
The Articles, Sections, subsections and other headings contained
herein are included solely for convenience, are not intended to be full or
accurate descriptions of the context hereof and shall not be considered part of
this Agreement.
1.4. SCHEDULES
The following Schedules attached to this Agreement are an integral
part of this Agreement:
Schedule "A" - Optioned Properties;
Schedule "B" - Subscription Agreement;
Schedule "C" - Summary of Major Joint Venture Agreement Terms; and
Schedule "D" - Net Proceeds Interest.
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF THE OPTIONOR
1.5. The representations and warranties of the Optionor contained in the
Subscription Agreement shall be deemed to be incorporated herein by
reference and the Optionor confirms, agrees and acknowledges that the
Optionee will have the benefit of all of the representations and warranties
provided to or for the benefit of Billiton E&D 3 B.V. under the
Subscription Agreement as if such representations and warranties were made
directly to the Optionee under this Agreement, and the Optionor further
acknowledges that the Optionee has relied on the fact that the
representations and warranties of the Optionor to Billiton E&D 3 B.V. as
contained in the Subscription Agreement are also being provided to or for
the benefit of the Optionee in entering into this Agreement.
1.6. The representations and warranties incorporated by reference in Section 1.5
are provided for the exclusive benefit of the Optionee and a breach of any
one or more thereof may be waived by the Optionee in whole or in part at
any time without prejudice to its rights in respect of any other breach of
the same or any other representation or warranty, and the representations
and warranties incorporated by reference in Section 1.5 shall survive the
execution hereof.
1.7. The representations and warranties incorporated by reference in Section 1.5
shall be deemed to apply to all assignments, transfers, conveyances or
other documents transferring to the Optionee or to any Affiliate of the
Optionee any Interest to be acquired hereunder and there shall not be any
merger of any covenant, representation or warranty in such assignments,
transfers, conveyance or documents, any rule or law, in equity or statute
to the contrary.
-5-
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF THE OPTIONEE
1.8. The Optionee hereby represents and warrants to the Optionor as follows:
(a) the Optionee has been incorporated and duly organized and is validly
existing and in good standing under the laws of The Netherlands;
(b) the Optionee has full power and authority to execute, deliver and
perform this Agreement. This Agreement and each other agreement
entered into by the Optionee in connection with this Agreement
constitute valid and legally binding obligations of the Optionee,
enforceable against the Optionee in accordance with their respective
terms except that: (i) the enforcement thereof may be limited by
applicable bankruptcy, insolvency and other laws affecting the
enforcement of creditors' rights generally, (ii) rights of indemnity,
contribution and waiver of contribution thereunder may be limited
under applicable law and (iii) equitable remedies including, without
limitation, specific performance and injunctive relief, may be granted
only in the discretion of a court of competent jurisdiction;
(c) except as set forth in this Agreement, no authorization, consent,
approval or other order of, declaration to, or filing with, any
governmental agency or body is required for or in connection with the
valid and lawful authorization, execution and delivery by the Optionee
of this Agreement or any other agreements, instruments or documents
entered into by the Optionee pursuant to this Agreement; and
(d) there are no claims for brokerage commissions or finders' fees or
similar compensation in connection with the transactions contemplated
by this Agreement based on any arrangements made by or on behalf of
the Optionee.
1.9. The representations and warranties of the Optionee set forth in Section 1.8
are provided for the exclusive benefit of the Optionor and a breach of any
one or more thereof may be waived by the Optionor in whole or in part at
any time without prejudice to its rights in respect of any other breach of
the same or any other representation or warranty, and the representations
and warranties contained in Section 1.8 shall survive the execution hereof.
1.10. The representations and warranties set forth in Section 1.8 shall be
deemed to apply to all assignments, transfers, conveyances or other
documents transferring to the Optionee any Interest to be acquired
hereunder and there shall not be any merger of any covenant, representation
or warranty in such assignments, transfers, conveyance or documents, any
rule or law, in equity or statute to the contrary.
-6-
ARTICLE 4 - GRANT AND EXERCISE OF FIRST PROPERTY OPTION
1.11. The Optionor hereby grants to the Optionee the First Property Option which
constitutes the sole and exclusive right and option to acquire an undivided
51% Interest in and to the Optioned Properties free and clear of all
charges, encumbrances, claims, royalties and net profit interests of
whatsoever nature except as set forth in Schedule "A" attached hereto, it
being agreed and understood that the Optionee shall have the right but not
the obligation to elect by notice in writing to the Optionor within one
year of the Closing to proceed to exercise the First Property Option.
1.12. If the Optionor is the Operator, such First Property Option shall be
exercised without any further act on the part of the Optionee or the
Optionor upon the Optionee advancing to the Operator sufficient funds to
enable the Operator to incur Exploration Expenditures of a minimum of
$500,000 on the Optioned Properties prior to December 1, 2002 and to enable
the Operator to incur cumulative Exploration Expenditures on the Optioned
Properties of $1,000,000 prior to January 1, 2004. It is further agreed
that Exploration Expenditures incurred prior to December 1, 2002 in excess
of $500,000 may be credited towards the subsequent year's funding
requirement.
1.13. In the event that the Optionee elects to become Operator pursuant to
Section 1.27 or the Optionor elects to withdraw as Operator during the
Option Period, the First Property Option shall be exercised without any
further act on the part of the Optionee or the Optionor upon the Optionee
as Operator (i) incurring Exploration Expenditures of a magnitude and
within the time stipulated in Section 1.12 and (ii) in the event the
Optionee elects to become Operator pursuant to Section 1.27, paying to the
Optionor an amount equal to 5% of Exploration Expenditures incurred from
the date of election to become Operator to the date of exercise of the
First Property Option.
1.14. Subject to Article 17, if and when such First Property Option has been
exercised a 51% undivided right, title and/or Interest in and to the
Optioned Properties shall vest in the Optionee or at the sole election of
the Optionee, in a designated Affiliate of the Optionee, free and clear of
all charges, encumbrances, claims, royalties or net profit interests of
whatsoever nature other than as set forth in Schedule "A" attached hereto
and the Optionor shall forthwith thereafter take all such steps and actions
as are necessary to convey such interest to the Optionee or such designated
Affiliate, as the case may be.
ARTICLE 5 - FORMATION OF JOINT VENTURE
1.15. Unless the parties otherwise agree, the parties shall, on the date of
exercise of the First Property Option in accordance with Section 1.12, be
deemed to have entered into a joint venture to pursue the exploration,
development, construction and mining of the Optioned Properties as joint
venturers with the Optionee having an undivided 51% Interest in the joint
-7-
venture and the Optionor having an undivided 49% Interest in the joint
venture. The joint venture, at formation, shall have a deemed expenditure
base of $1,960,784 representing deemed Exploration Expenditures of $960,784
by the Optionor, and $1,000,000 by the Optionee, and with each party having
responsibility for funding its proportionate share of future exploration
and development expenditures, subject to the terms of the Second Property
Option.
1.16. Upon exercise of the First Property Option the parties hereto shall
forthwith negotiate and conclude a joint venture agreement which shall
contain provisions to the effect that:
(a) the Optionor shall be designated as initial Operator of the Optioned
Properties;
(b) work programs covering a maximum period of one year in respect of
further Exploration Expenditures will be prepared and submitted by the
Operator to each of the participants who will then have 60 days to
consider and approve such work program, propose an alternative work
program or decline to participate in such work program;
(c) an election to proceed with a work program prepared and submitted by
the Operator will make a participant liable to pay its proportionate
share of such Exploration Expenditures and any cost overruns in
respect of such work program up to but not exceeding 10% of the
estimated Exploration Expenditures under such work program;
(d) if it appears that Exploration Expenditures will exceed by greater
than 10% those estimated by the Operator in respect of a work program,
the Operator will immediately give written notice to the participants
outlining the nature and extent of such cost overruns. If such cost
overruns are accepted by all of the participants, then each
participant will, on demand, pay to the Operator its proportionate
share of such cost overruns. If any participant does not accept such
cost overruns, all of such cost overruns will be at the Operator's
sole expense and will be deemed not to be Exploration Expenditures
unless the participants otherwise agree;
(e) in the event that either party's Interest is subject to dilution
pursuant to the provisions of the joint venture agreement, such
party's Interest shall be recalculated based upon the proportion which
such party's deemed Exploration Expenditures on the Optioned
Properties represents of the total deemed Exploration Expenditures of
all parties on the Optioned Properties; and
(f) should the Interest of any participant in the joint venture fall below
10%, such participant shall be deemed to have exchanged its Interest
therein for a net proceeds interest of 5%, as calculated in accordance
with Schedule "D" attached hereto.
and shall contain such other terms as are standard in the industry including,
but not limited to, those summarized in Schedule "C" attached hereto.
-8-
ARTICLE 11 - GRANT AND EXERCISE OF SECOND PROPERTY OPTION
1.17. Upon exercise of the First Property Option, the Optionor shall be deemed
to have granted to the Optionee a further, irrevocable, sole and exclusive
right and option to acquire an additional 19% Interest in the Optioned
Properties.
1.18. At any time after exercise of the First Property Option but prior to the
date upon which cumulative Exploration Expenditures on the Optioned
Properties from the date of exercise of the First Property Option exceed
$2,000,000, the Optionee shall have the right to exercise the Second
Property Option.
1.19. The Second Property Option shall be exercised without any further act on
the part of the Optionee or the Optionor upon the Optionee (i) giving
written notice to the Optionor of such exercise, and (ii) committing to
provide the Optionor's pro rata share of project financing to the
Commencement of Commercial Production on the basis that such amount would
bear interest at Libor plus 4.0% and would be repaid by the Optionor to the
Optionee from 90% of the Optionor's share of Project Net Revenue.
1.20. Upon exercise of the Second Property Option by the Optionee, an additional
19% undivided right, title and/or Interest in and to the Optioned
Properties shall vest in the Optionee or at the discretion of the Optionee,
in a designated Affiliate of the Optionee, free and clear of all charges,
encumbrances, claims, royalties or net profit interests of whatsoever
nature other than as set forth in Schedule "A" attached hereto and the
Optionor shall forthwith thereafter take all such steps and actions as are
necessary to convey such interest to the Optionee or such designated
Affiliate, as the case may be. The terms of the joint venture agreement
referred to in Article 5 shall continue to apply, with the interests of the
participants thereunder adjusted to reflect the transfer and assignment to,
and vesting in, the Optionee of such additional 19% undivided right, title
and Interest in and to Optioned Properties.
1.21. Notwithstanding anything contained in this agreement, an election by the
Optionee to exercise the Second Property Option shall not be deemed to
constitute a commitment on behalf of the Optionee to place the Optioned
Properties into commercial production.
ARTICLE 7 - ACTIVITIES OF OPERATOR DURING OPTION PERIOD
1.22. During the Option Period, the Optionor will, subject to the rights of the
Optionee as set forth in Section 1.27 hereof, be Operator of the Optioned
Properties. The Operator shall have full right, power and authority to do
everything necessary or desirable to determine the manner of exploration
and development of such Optioned Properties and, without limiting the
generality of the foregoing, the right, power and authority to:
-9-
(a) regulate access to such Optioned Properties subject only to the right
of representatives of the Optionor and the Optionee to have access to
such Optioned Properties at all reasonable times for the purpose of
inspecting work being done thereon but at their own risk and expense;
(b) employ and engage such employees, agents and independent contractors
as the Operator may consider necessary or advisable to carry out its
duties and obligations hereunder and in connection therewith to
delegate any of its powers and rights to perform its duties and
obligations hereunder to such employees, agents and independent
contractors;
(c) execute all documents, deeds and instruments, do or cause to be done
all such acts and things and give all such assurances as may be
necessary to maintain good and valid title to such Optioned Properties
and each party hereby irrevocably constitutes the Operator its true
and lawful attorney to give effect to the foregoing and hereby agrees
to indemnify and save the Operator harmless from any and all costs,
loss or damage sustained or incurred without gross negligence or bad
faith by the Operator directly or indirectly as a result of the
exercise of its powers; and
(d) conduct such title examination and cure such title defects as may be
advisable in the reasonable judgement of the Operator.
1.23. The Operator shall deliver to each of the Optionee and the Optionor, on or
before July 1 of each year prior to the exercise of the First Property
Option, and thereafter, within 60 days of completion of a Program and
Budget, a report, including up-to-date maps, if any, describing the status
of title of the Optioned Properties, together with the results of the
Program and Budget then completed on the Optioned Properties and reasonable
details of Exploration Expenditures made during such program.
1.24. During the Option Period with respect to the First Property Option and
after the Optionee elects to proceed with the exercise of the First
Property Option pursuant to Section 1.11, if the Optionor is the Operator,
the Operator shall deliver to the Optionee, prior to the commencement of
any further work program on the Optioned Properties and thereafter on or
before April 1, 2002, and on or before April 1st in each subsequent year, a
detailed Program and Budget with respect to the following year's
Exploration Expenditures on the Optioned Properties. The Optionee shall
have 60 days from delivery of such Program and Budget to modify, resubmit
and approve a Program and Budget, and elect to fund the relevant
Exploration Expenditures. When the Optionor is Operator, it shall be the
Optionor's responsibility to make cash calls and ensure that funds are
efficiently expended in a timely fashion and in any event in accordance
with Section 1.12.
1.25. During the Option Period with respect to the First Property Option, if the
Optionee is the Operator, any Program and Budget delivered by the Optionee
shall not require the consent or approval of the Optionor, and submittal of
a Program and Budget by the Optionee shall not constitute a commitment by
the Optionee to incur part or all of the Exploration Expenditures
contemplated by such Program and Budget.
-10-
1.26. During the Option Period with respect to the Second Property Option if the
Optionee is the Operator, the Operator shall deliver to the Optionor, for
its review a detailed Program and Budget with respect to a work program on
the Optioned Properties, at least 90 days prior to commencement of such
Program and Budget however, such Program and Budget shall not require the
consent or approval of the Optionor. The Operator shall thereafter commence
the Program and Budget delivered by the Optionee pursuant to this Section
1.26.
1.27. At any time during the Option Period with respect to the First Property
Option but only after electing to proceed with the exercise of the First
Property Option pursuant to Section 1.11 the Optionee shall have the right
on 90 days notice in writing to the Optionor, to become Operator in respect
of the Optioned Properties and shall thereafter be the Operator in respect
of the Optioned Properties.
ARTICLE 15 - OBLIGATIONS OF THE OPERATOR
1.28. During the term of this Agreement the Operator shall, with regard to the
Optioned Properties:
(a) maintain in good standing those mineral claims, concessions, permits
or Interests comprised in the Optioned Properties by the doing and
filing of assessment work or the making of payments in lieu thereof,
and the performance of all other obligations which may be necessary in
that regard and in order to keep such mineral claims, concessions,
permits or Interests free and clear of all liens and other charges
arising from the Operator's activities thereon except those at the
time contested in good faith by the Operator;
(b) subject to Section 1.22, permit the directors, officers, employees and
designated consultants of the parties hereto, at their own risk and
expense, access to the Optioned Properties at all reasonable times for
the purpose of inspecting work being done thereon, and the Operator
agrees to indemnify such parties against and to save the non operator
harmless from all costs, claims, liabilities and expenses that the non
operator may incur or suffer as a result of any injury (including
injury causing death) to any director, officer, employee or designated
consultant of the Operator arising out of or attributable to the gross
negligence or wilful misconduct of the Operator while on the Optioned
Properties;
(c) in addition to the obligations of the Operator under Section 7.2
hereof, permit the parties hereto, at their own expense, reasonable
access to the results of the work done on the Optioned Properties
during the last completed calendar year;
(d) keep the Optioned Properties free and clear of all liens, charges and
encumbrances of every character arising from its operation hereunder
(except for liens for taxes not then due, other inchoate liens and
liens contested in good faith by the Operator) and proceed with all
reasonable diligence to contest or discharge any lien that is filed.
-11-
(e) pay, when due and payable, all wages or salaries for services rendered
in connection with the Optioned Properties and all accounts for
materials supplied on or in respect of any work or operation performed
on the Optioned Properties;
(f) obtain and maintain, and cause any contractor or subcontractor to
obtain and maintain, for the benefit of the Optionor and the Optionee
as named insured parties adequate insurance having terms and coverage
customary in the industry;
(g) do all work on the Optioned Properties in a good and workmanlike
fashion and in accordance with all applicable laws, regulations,
orders and ordinances of any governmental authority; and
(h) indemnify and save the parties hereto harmless in respect of any and
all costs, claims, liabilities and expenses arising out of or
attributable to the gross negligence or wilful misconduct of the
Operator with respect to its activities on the Optioned Properties.
ARTICLE 9 - TERMINATION OF OPTIONS
1.29. The Optionee may, at any time prior to exercise of the First Property
Option, on 90 days' written notice to the Optionor, terminate this
Agreement, and the Optionee shall thereafter have no liability to the
Optionor as a result of such termination other than for its pro rata
portion of Exploration Expenditures already incurred by the Optionor, at
the time of termination in respect of the Program and Budget terms then
applicable.
1.30. If this Agreement is terminated by the Optionee pursuant to Section 1.29
above, the Optionee shall deliver to the Optionor, at no cost to the
Optionor, within 90 days of such termination, copies of all reports, maps,
assay results and other relevant technical data compiled by, prepared at
the direction of, or in the possession of the Optionee with respect to the
Optioned Properties and not theretofore furnished to or otherwise in the
possession of the Optionor.
1.31. Notwithstanding any agreement of the Optionee with respect to the
provision of the Optionor's pro rata share of project financing to the
Commencement of Commercial Production, the Optionee may, at any time after
exercise of the Second Property Option, elect at its sole discretion to
terminate its agreement to provide project financing, provided, however,
the Optionee shall thereafter forthwith assign and transfer to the Optionor
an aggregate 19% undivided right, title and interest in and to the Optioned
Properties. Upon such termination, 50% of all Exploration Expenditures
-12-
funded by the Optionee on the Optioned Properties after the exercise of the
Second Property Option and prior to such termination shall be deemed to
constitute Exploration Expenditures of the Optionee on such property for
the purposes of the joint venture contemplated under Article 5 and the
joint venture shall thereafter continue to operate with Optionee having a
51% undivided Interest and the Optionor having a 49% undivided Interest in
the joint venture and the deemed expenditure base of the Optionee for
purposes of the dilution calculation being recalculated to include 50% of
any Exploration Expenditures and other related expenditures on the Optioned
Properties funded by the Optionee prior to such termination.
ARTICLE 10 - TRANSFERS
1.32. If either the Optionee vor the Optionor should receive a bona fide offer
from an independent third party (the "Offeror Purchaser") dealing at arm's
length to purchase all or a part of such party's Interest in the Optioned
Properties which offer the selling party desires to accept, or if the
Optionee or the Optionor intend to sell or otherwise dispose of all or a
part of its Interest in the Optioned Properties to an independent third
party dealing at arm's length to the selling party ("the Proposed Offeree
Purchaser"):
(a) the selling party shall first offer (the "Offer") such Interest in
writing to the other party upon terms no less favourable than those
offered by the Offeror Purchaser or intended to be offered by the
selling party to the Proposed Offeree Purchaser, as the case may be;
(b) the Offer shall specify the price (with a cash alternative if the
Offer contains a non-cash element), terms and conditions of such
proposed sale and the name of the Offeror Purchaser or the Proposed
Offeree Purchaser, as the case may be;
(c) the other party shall have 20 Business Days from the date of receiving
the Offer to notify the selling party in writing that it accepts the
Offer in which case the selling party shall be bound to sell such
Interest to the other party on the terms and conditions of the Offer;
(d) if the other party fails to notify the selling party before the
expiration of the time limited therefor that it will purchase the
Interest offered, the selling party may sell and transfer such
Interest to the Offeror Purchaser or the Proposed Offeree Purchaser at
the price and on the terms and conditions specified in the Offer for a
period of 60 days, but the terms of this paragraph shall again apply
to such Interest if the sale of the Offeror Purchaser or the Proposed
Offeree Purchaser is not completed within such 60 days;
(e) any sale hereunder shall be conditional upon the Offeror Purchaser or
the Proposed Offeree Purchaser, as the case may be, delivering to the
selling party its agreement related to this Agreement and to the
Optioned Properties containing:
(i) a covenant by the Offeror Purchaser or the Proposed Offeree
Purchaser to perform all the obligations of the selling party to
be performed under this Agreement in respect of the Interest to
be acquired by it from the selling party to the same extent as if
this Agreement had been originally executed by the Offeror
Purchaser or the Proposed Offeree Purchaser; and
-13-
(ii) a provision subjecting any further sale, transfer or other
disposition of such Interest in such property and this Agreement
or any portion thereof to the restrictions contained in this
Section 1.32.
1.33. Notwithstanding the above, the provisions of Section 1.32 shall not apply
in circumstances where a party constitutes a selling party as contemplated
in 1.32 solely as a result of a proposal to undertake a corporate
reorganization or other similar corporate transaction provided such
corporate reorganization or other similar corporate transaction is proposed
solely for bona fide strategic corporate reasons and not, in whole or in
part, to avoid the provisions of Section 1.32 above.
ARTICLE 11 - FORCE MAJEURE
1.34. If any party hereto is at any time either during the Option Period or
thereafter prevented or delayed in complying with any provisions of this
Agreement by reason of strikes, lock-outs, labour shortages, power
shortages, fuel shortages, fires, floods, insurrections, rebellion,
sabotage, wars, acts of God, governmental regulations restricting normal
operations, expropriation or confiscation of facilities, shipping delays or
any other reason or reasons, other than lack of funds, beyond the
reasonable control of such party and which by the exercise of reasonable
diligence such party is unable to prevent, the time limited for the
performance by such party of its obligations hereunder shall be extended by
a period of time equal in length to the period of each such prevention or
delay, but nothing herein shall discharge such party from its obligations
hereunder to maintain the Optioned Properties in respect of which it is the
Operator in good standing.
1.35. Each party shall give prompt notice to the other of each event of force
majeure under Section 1.34 and upon cessation of such event shall furnish
to the other parties notice to that effect together with particulars of the
number of days by which the obligations of the notifying party hereunder
have been extended by virtue of such event of force majeure and all
preceding events of force majeure.
ARTICLE 12 - CONFIDENTIAL INFORMATION
1.36. The parties to this Agreement shall keep confidential all books, records,
files and other information supplied by any party to the other parties or
its employees, agents or representatives in connection with this Agreement
or in respect of the activities carried out on the Optioned Properties by
any party, or related to the sale of minerals, or other products derived
from the Optioned Properties, including all analyses, reports, studies or
other documents prepared by any party or its employees, agents or
representatives, which contain information from, or otherwise reflects such
books, records, files or other information. The parties shall not and shall
-14-
ensure that their employees, agents or representatives do not disclose,
divulge, publish, transcribe, or transfer such information, all or in part,
without the prior written consent of the Optionee or the Optionor, as the
case may be, which consent may not be arbitrarily withheld and which shall
not apply to such information or any part thereof to the extent that:
(a) it is required to be publicly disclosed pursuant to applicable
securities or corporate laws, in which event the party seeking to make
such disclosure shall provide to the non-disclosing party at least one
Business Day prior to making such disclosure, a written copy of such
proposed disclosure, unless mutually agreed otherwise, and shall in
good faith consider any comments the non-disclosing party may have on
such proposed disclosure; or
(b) such information becomes generally disclosed to the public, other than
as a consequence of a breach hereof by one of the parties hereto.
Consent required under this Section 1.36 shall not be unreasonably
withheld by the non-disclosing party.
1.37. The Optionor agrees to provide the text of any proposed news release or
information update related to this Agreement, the Subscription Agreement or
the Optioned Properties to the Optionee at least one Business Day prior to
release of such information to third parties. The Optionee shall review and
comment on the text thereof within One Business Day of receipt of the
proposed release. The Optionor, shall review the comments provided and
shall take reasonable steps to modify the release according to the comments
made by the Optionee.
ARTICLE 13 - MEDIATION
1.38. All disputes arising out of or in connection with this agreement or in
respect of any defined legal relationship associated herewith or derived
hereunder shall, subject to Section 1.39, be referred to a mediator chosen
by mutual agreement of both parties. The mediator shall be a person with
appropriate technical competence to assist the parties to resolve their
dispute. The mediator agreed by the parties shall assist the parties to
resolve their dispute in accordance with the Center for Dispute Resolution
("CEDR") Model Mediation Procedure; which mediation process shall be
non-binding. In the event that the parties are unable to reach agreement on
a choice of mediator or are otherwise unable to resolve their dispute
through the use of such mediator, then either party shall be free to have
the dispute resolved through the Courts of England.
1.39. Nothing contained in this Article shall be interpreted as restricting the
right of the Optionee to seek interim relief (whether legal, equitable or
otherwise) from a court of competent jurisdiction, pending formal
resolution of any dispute between the parties hereto.
-15-
ARTICLE 14 - DEFAULT AND TERMINATION
1.40. If at any time during the Option Period the Optionee fails to perform any
obligation required to be performed by it hereunder or is in breach of a
warranty given by it hereunder, which failure or breach materially
interferes with the implementation of this Agreement, the Optionor may
terminate this Agreement but only if:
(a) the Optionor, shall have first given to the defaulting Optionee a
notice of default containing particulars of the obligation which the
Optionor alleges the Optionee has not performed, or the warranty
breached; and
(b) the defaulting Optionee has not, within 15 Business Days (or such
longer period as may, in the circumstances, reasonably allow for the
default to be cured) following delivery of such notice of default, (i)
cured such default, (ii) commenced proceedings to cure such default by
appropriate payment or performance, the Optionee hereby agreeing that
should it so commence to cure any default it will prosecute the same
to completion without undue delay or (iii) delivered to the Optionor a
notice contesting the notice of default and invoking the provisions of
Article 13 herein, in which case the provisions of this Article 14
will be suspended pending resolution of such dispute in accordance
with Article 13.
1.41. Should the Optionee fail to comply with the provisions of Section ARTICLE
14(b), the Optionor may thereafter terminate this Agreement provided
however any such termination is by notice in writing given in accordance
with Article 18.
1.42. If the Closing does not occur on or prior to February 28, 2001 or such
later date as may be agreed in writing by the parties hereto, this
Agreement shall terminate and be of no further force and effect.
ARTICLE 15 - AREA OF INTEREST
1.43. If the parties hereto or their respective Affiliates during the term of
this Agreement acquire any Interest, or the right to acquire any Interest,
in any mineral claim, mining lease, license, concession or other mineral
property Interest or portion thereof within the Area of Interest ("Area of
Interest Property"), such party shall thereafter promptly notify the other
party hereto of such acquisition and shall set out in such notice a
detailed description of the Area of Interest Property and the acquisition
cost and shall make all information, technical and otherwise, concerning
the Area of Interest Property available for inspection by the other party
thereto. The non-acquiring party may elect within 30 days of receipt of
such notice to have the Area of Interest Property included, at cost as
Exploration Expenditures, as part of the Optioned Properties. If the
non-acquiring party fails to make such election within such 30 day period,
such non-acquiring party shall have no further right or interest in or with
respect to such Area of Interest Property.
-16-
ARTICLE 16 - COVENANT TO REGISTER AGREEMENT
1.44. Forthwith upon the execution of this Agreement, the Optionor shall, if
requested by the Optionee by notice in writing to the Optionor, take such
steps as are necessary to legalize the grant of the Option contemplated by
this Agreement and register the Interest of the Optionee and any transfer
of Interests contemplated hereunder at its own cost with the appropriate
authority or registry office in the Republic of Tunisia to properly
evidence this agreement and protect the rights and Interests of the
Optionee acquired hereunder from adverse claims by third parties.
ARTICLE 17 - ALTERNATIVE ACQUISITION STRUCTURE
1.45. Notwithstanding the proposed direct property interest acquisition by the
Optionee contemplated in Sections 1.14 and 1.20, the Optionee may elect, on
exercise of the First Property Option, to have the Optionor transfer or
cause to be transferred 51%, and on exercise of the Second Property Option
to have the Optionor transfer or cause to be transferred an additional 19%,
of the outstanding voting securities of any company or other entity which
then holds the Optionor's Interest in the Optioned Properties, to the
Optionee or a designated Affiliate of the Optionee, free and clear of all
charges, encumbrances, royalties or Net Proceeds Interests of whatsoever
nature other than as set forth in this Agreement or to incorporate or
otherwise establish a separate entity in the Republic of Tunisia to hold
the Optioned Properties with each of the Optionor and Optionee having
Interests in such entity equal to their respective Interests in the
Optioned Properties and if such alternative structure is adopted, the
parties hereto shall forthwith thereafter take all such steps and actions
as are necessary to convey such interest in such outstanding voting
securities to the Optionee or such designated Affiliate, as the case may
be. Should the Optionee elect to adopt an alternative acquisition structure
as contemplated in this Section 1.45, it hereby agrees that that
alternative acquisition structure shall incorporate a form of shareholders'
agreement reflecting the provisions of Section 1.16 hereof.
ARTICLE 18 - NOTICES
1.46. Any notice or other writing required or permitted to be given hereunder or
for the purposes hereto to either the Optionor or the Optionee shall be
sufficiently given if delivered personally, or if sent by prepaid
registered mail or if transmitted by facsimile or other form of recorded
communication tested prior to transmission to such party:
-17-
(a) In the case of a notice to the Optionor, at:
Aurora Metals (BVI) Limited
▇▇▇▇▇ ▇▇▇, ▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
-----------
Facsimile No. 011-44-207-581-4445
(b) In the case of a notice to the Optionee, at:
Billiton UK Resources B.V.
c/o Billiton International Development Limited
▇ - ▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
------------------------
Facsimile No. 011-44-207-747-3909
with a copy to:
▇▇▇▇▇▇▇▇ T trault
Barristers and Solicitors
▇.▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ - ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address or addresses as the parties to whom such writing is to
be given shall have last notified the party giving the same in the manner
provided in this Section 1.46. Any notice delivered to the party to whom it is
addressed hereinbefore provided shall be deemed to have been given and received
on the day it is so delivered at such address, provided that if such day is not
a Business Day, then the notice shall be deemed to have been given and received
on the second Business Day next following such day. Any notice transmitted by
facsimile or other form of recorded communication shall be deemed to be given
and received on the first Business Day after its transmission.
-18-
ARTICLE 19 - GENERAL
1.47. No consent or waiver expressed or implied by any party in respect of any
breach or default by any other party in the performance by such other of
its obligations hereunder shall be deemed or construed to be or consent to
or a waiver of any other breach or default.
1.48. No investigation made by or on behalf of the Optionee or the Optionor or
any of their respective advisors or agents at any time shall have the
effect of waiving, diminishing the scope of or otherwise affecting any
representation or warranty made herein by the other party hereto or made
pursuant thereto. No waiver by the Optionee or the Optionor of any
condition, in whole or in part, shall operate as a waiver of any other
condition.
1.49. Notwithstanding any right of either party hereto fully to investigate the
affairs of the other, and notwithstanding any knowledge of facts determined
or determinable by the other party hereto pursuant to such investigation or
right of investigation, each of the Optionee and the Optionor has the right
to rely fully upon the representations, warranties, covenants and
agreements of the other contained in this Agreement and of their
affiliates, officers and agents delivered pursuant to this Agreement.
1.50. All statements contained in any certificate or other instrument delivered
by or on behalf of any party pursuant hereto or in connection with the
transactions contemplated by this Agreement shall be deemed to be made by
such party hereunder.
1.51. The Optionor or the Optionee, as the case may be (hereinafter referred to
as the "Indemnifying Party"), hereby covenants and agrees to indemnify and
save harmless the other (hereinafter referred to as the "Indemnified
Party"), effective as and from the Closing, from and against any claims,
demands, actions, causes of action, damage, loss, costs, liability or
expense, including reasonable legal expenses (hereinafter in this Section
1.51 called "Claims") which may be made or brought against the Indemnified
Party and/or which it may suffer or incur as a result of, in respect of or
arising out of any non-fulfilment of any covenant or agreement on the part
of the Indemnifying Party under this Agreement or any incorrectness in or
breach of any representation or warranty of the Indemnifying Party
contained herein or in any certificate or other document furnished by the
Indemnifying Party pursuant or in relation thereto. The foregoing
obligation of indemnification in respect of such claims shall be subject to
the requirement that the Indemnifying Party shall, in respect of any Claim
made by any third party, be afforded an opportunity at its sole expense to
resist, defend and compromise the same in a timely manner.
1.52. The Optionor covenants that it will, as soon as reasonably practicable,
take all such steps as are necessary to exercise the High ▇▇▇▇▇ Option and
acquire the subject mineral property interest thereunder.
-19-
1.53. Notwithstanding anything to the contrary contained in this Agreement the
rights and obligations hereunder and the Option granted hereby are
assignable by either party hereto in its absolute discretion to an
Affiliate of such party provided that such Affiliate first agrees in
writing to retransfer such Interest to the originally assigning party
immediately before ceasing to be an Affiliate of such party.
1.54. The parties shall promptly execute or cause to be executed all documents,
deed, conveyances and other instruments of further assurance and do such
further and other acts which may be reasonably necessary or advisable to
carry out fully and effectively the intent and purpose of this Agreement or
to record wherever appropriate the respective interest from time to time of
the parties in the Optioned Properties.
1.55. This Agreement shall enure to the benefit of and be binding upon the
parties and their respective successors and permitted assigns.
1.56. This Agreement shall be governed by and construed in accordance with the
laws of England and shall be subject to the approval of all securities
regulatory authorities having jurisdiction, such approvals to be sought in
a timely and diligent manner.
1.57. Time shall be of the essence in this Agreement.
1.58. The preamble and Schedules attached hereto shall be deemed to be
incorporated in, and to form part of, this Agreement.
1.59. Wherever the neuter and singular is used in this Agreement it shall be
deemed to include the plural, masculine and feminine, as the case may be.
1.60. Nothing contained in this Agreement shall be deemed to constitute any
party hereto the partner of the other, nor, except as otherwise herein
expressly provided, to constitute either the Optionor or the Optionee as
the agent or legal representative of the other, nor to create any fiduciary
relationship between them. It is not the intention of the parties hereto to
create, nor shall this Agreement be construed to create, any mining,
commercial or other partnership. Neither the Optionor nor the Optionee
shall have any authority to act for or to assume any obligation or
responsibility on behalf of the other party, except as otherwise expressly
provided herein. The rights, duties, obligations and liabilities of the
parties hereto shall be several and not joint or collective.
1.61. All monetary amounts referred to herein are in United States dollars
unless otherwise specified.
-20-
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the day and year first above written.
AURORA METALS (BVI) LIMITED
By:
-----------------------------------
BILLITON UK RESOURCES B.V.
By:
----------------------------------
-21-