EXHIBIT 10.2
AGREEMENT
MADE BETWEEN
BOGOSO GOLD LIMITED
AND
PRESTEA GOLD RESOURCES LIMITED
DATED
NOVEMBER 16, 2001
TABLE OF CONTENTS
Section 1 - Definitions and Interpretation
2 - Scope and ▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇ - ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇ - ▇▇▇ Representations and Warranties
5 - Closing
6 - Option
7 - Company Management
8 - Other Agreements
9 - Conditions Precedent
10 - General
Schedule A - Infrastructure Mitigation Plan
B - Joint Operating Agreement
C - Lease Area
D - Loan Agreement
E - Management Agreement
F - PGR Liabilities
G - Shareholders' Agreement
H - Working Capital and Spare Parts Requirements
I - Toll Processing Agreement
J - PGR Counsel Opinion
K - PGR Shareholder Approval
AGREEMENT made November 16, 2001 between Bogoso Gold Limited, a company
incorporated under the laws of Ghana ("BGL"), and Prestea Gold Resources
Limited, a company incorporated under the laws of Ghana ("PGR").
RECITALS
A. The parties entered into a Letter Agreement dated May 21, 2001 pursuant to
which, among other things, it was agreed that PGR would surrender a mining
lease held by it and the parties would procure the issue of two new mining
leases covering the same area, of which one would permit underground mining
and the other surface mining for gold and related minerals.
B. Subsequent to such date, PGR surrendered its existing lease, the Government
of Ghana issued the BGL Lease and PGR Lease (as defined below) and GSR
entered into and completed an agreement with Barnex Exploration Limited, all
as provided for in the Letter Agreement.
C. BGL has paid to PGR $500,000 in immediately available funds as the first
installment of the First Option Payment (as defined below).
D. The parties are entering into this definitive agreement, as provided for in
the Letter Agreement.
IN CONSIDERATION OF THE MUTUAL COVENANTS IN THIS AGREEMENT, THE PARTIES AGREE AS
FOLLOWS:
SECTION 1
1. As used in this Agreement:
"APPLICABLE LAW" means all applicable laws of the Republic of Ghana, including,
without limitation, the PNDCL 153;
"BARNEX" means Barnato Exploration Limited, a company incorporated under the
laws of South Africa;
"BARNEX COMPANIES" means, collectively, Barnex, Barnex (Ghana) Limited and
Barnex (Prestea) Limited;
"BARNEX RELEASE" means the Waiver and Release Agreement among the Government,
Prestea Goldfields Limited, SGMC and the Barnex Companies, a copy of which has
been delivered by BGL to PGR;
"BGL LEASE" means the mining lease dated June 29, 2001 issued by the Government
to BGL pursuant to Section 45 of the PNDCL 153 whereby BGL has been granted
exclusive mining rights over the Lease Area to mine for a period of 30 years for
gold and associated mineral
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substances lying and being under the surface to a vertical depth 150.37 metres
below sea level (the "150 Metre Depth") as detailed on Schedule C and includes
all necessary consents and ratifications to perfect BGL's title thereunder;
"BUSINESS DAY" means any day on which the banks are open for the transaction of
business in Ghana;
"CLOSING" means the closing provided for in Section 5;
"CLOSING DATE" means the date by which the closing conditions specified in this
Agreement shall have been satisfied so as to permit the Closing to occur
(anticipated to be on or about November 30, 2001) and which shall, in any event,
be not later than December 31, 2001 unless the parties otherwise agree;
"CLOSING DOCUMENT" means any document delivered at or subsequent to the Closing
or as provided in, or pursuant to, this Agreement;
"COMMON FUND" means the fund so named constituted by PGR employee advances,
whose proceeds have been used by PGR for working capital;
"DAY" means a calendar day;
"DECOMMISSIONING" means closure of the Plant in compliance with the requirements
of Section 7.1(e);
"DOLLARS" or "$" means the currency that is from time to time, legal tender for
the payment of all private and public debts in the United States of America;
"FIRST OPTION PAYMENT" means the amount of $2,100,000 to be paid by BGL to PGR,
or as directed by PGR, in instalments of $500,000 (which amount has already been
paid) and $1,600,000 on the Closing Date;
"GMWU" means the Ghana Mineworkers Union of the TUC (Ghana)
"GOVERNMENT" means the duly constituted government of the Republic of Ghana or
any political subdivision thereof, whether Central, Regional, District or local,
or any judicial body, agency or instrumentality of any such government or
political subdivision (and is deemed to include, for the purposes of any
required approvals to be obtained hereunder, the Bank of Ghana);
"GSR" means Golden Star Resources Ltd., which beneficially owns 90% of BGL;
"INFRASTRUCTURE MITIGATION PLAN" means an infrastructure mitigation plan,
complying with the requirements of Schedule A, designed to set out the broad
understanding of the parties as to how surface infrastructure to be impacted by
the surface mining operations to be conducted by BGL under the BGL Lease will be
mitigated to ensure that there is no significant adverse impact on the
operations of PGR pursuant to their rights under the PGR Lease;
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"JOINT OPERATING AGREEMENT " means the agreement to be entered into between BGL
and PGR on the Closing Date, complying with the requirements of Schedule B;
"LEASE AREA" means the area of approximately 129.05 square kilometres, as more
particularly described in Schedule C;
"LICENCE" means any licence, permit, approval, right, privilege, concession or
franchise issued, granted, conferred or otherwise created by the Government;
"LOAN AGREEMENT" means a loan agreement substantially in the form attached as
Schedule D;
"MINING LEASE", "MINERAL OPERATIONS", "MINING OPERATIONS", "MINERAL RIGHT" and
"MINERALS" shall have the meanings given to such terms in PNDCL 153;
"MINISTER" means the Minister responsible for mines in the Republic of Ghana;
"MANAGEMENT AGREEMENT" means the agreement to be entered into between BGL and
PGR on the Option Closing Date, substantially in the form attached as Schedule
E;
"MINING COMMENCEMENT DATE" means the date as of which BGL commences mining
operations on the BGL Lease in the area marked as "Plant Deposit" on Exhibit A
in Schedule C;
"OPTION" means the option granted by PGR to BGL to acquire shares in PGR, as
provided in Section 6;
"OPTION CLOSING DATE" means the date specified by BGL in a notice exercising the
Option given in accordance with Section 6.1(b);
"OPTION EXERCISE DATE" means the date on which the Option is exercised;
"PERSON" shall be broadly interpreted and includes an individual, body
corporate, partnership, joint venture, trust, association, unincorporated
organization, the Government (including any agency, authority, tribunal or
commission) or any other entity recognized by law;
"PNDCL 153" means the Minerals and Mining Law, 1986 (PNDCL 153) of Ghana, as
amended;
"PGR LEASE" means the mining lease dated June 29, 2001 issued by the Government
to PGR pursuant to Section 45 of the PNDCL 153, whereby PGR has been granted
mineral rights over the Lease Area for a period of 30 years for gold and other
associated mineral substances lying and being under the 150 Metre Depth and
includes all necessary consents and ratifications to perfect PGR's title
thereunder;
"PGR RELEASE" means the Release Agreement among PGR and the Barnex Companies
dated September 28, 2001, a copy of which has been provided to BGL;
"PLANT" means PGR's existing processing plant located on the Lease Area;
"PRESTEA ASSETS" means all assets owned by SGMC which are located on the
property covered by the PGR Lease;
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"PRESTEA MINING AREA" means the area shown on Exhibits A, B and C to Schedule C
and marked as "Prestea Mining Area";
"SHAREHOLDERS' AGREEMENT" means the shareholders' agreement to be entered into
on the Option Closing Date among BGL, GMWU, the Investors, the Trust and the
Government in respect of their relations as shareholders of PGR and the
operation of PGR's business, substantially in the form attached as Schedule G;
"SGMC" means The State Gold Mining Corporation Limited;
"TRUST" means the independent non-profit-making body to be established by BGL
for the benefit of the residents of the Bogoso -- Prestea area whose income
shall be applied (following repayment of the indebtedness to be incurred in
favour of BGL) to undertake work programs directed to infrastructure and
alternative employment and whose affairs shall be administered by a board
consisting of one BGL representative, one GMWU representative, one Government
representative and three community representatives acceptable to BGL.
SECTION 2
SCOPE AND UNDERSTANDINGS
2.1 In order to persuade BGL to enter into this Agreement, PGR has represented
to BGL and GSR that, subject to:
(a) being provided with funds to be used to repay advances made by its
employees;
(b) being provided with additional funds to be used to pay employee
salary arrears for April and May 2001;
(c) being provided with working capital;
(d) restructuring its share ownership; and
(e) rationalizing its management and work force, which PGR undertakes to
use its best efforts to accomplish within five (5) months of the
Closing Date.
it expects to be able to increase its production and reduce its cash costs so as
to become profitable on a gross profit basis within six months of the last in
time of such actions occurring or being taken.
2.2 Based on such representations:
(a) the PGR Release and the Barnex Release were executed and delivered.
(b) the parties are entering into this Agreement to provide for the
basis on which, at a closing to be held on the Closing Date, BGL
will make a further payment of $1,600,000 to PGR, the Infrastructure
Mitigation Plan will be adopted by BGL
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and PGR, the Joint Operating Agreement shall be entered into and the
Option shall become effective;
(c) subsequently, the parties will use their best commercial efforts to
fulfil their respective obligations, so that BGL will be in a
position to exercise the Option by the Option Exercise Date;
SECTION 3
BGL REPRESENTATIONS, WARRANTIES AND AGREEMENTS
BGL represents, warrants and agrees to and with PGR that:
(a) BGL is a company duly incorporated, organized, and validly existing
in good standing under the laws of Ghana. No proceedings have been
taken or authorized by BGL or, to the best of BGL's knowledge, by
any other Person, with respect to the bankruptcy, insolvency,
liquidation, dissolution or winding up of BGL.
(b) BGL has all necessary power and capacity to execute and deliver, and
to observe and perform its covenants and obligations under, the
Agreement and the documents to be delivered hereunder to which it is
or will be a party ("BGL Documents"). BGL has taken all corporate
action necessary to authorize the execution and delivery of, and the
observance and performance of its covenants and obligations under,
the Agreement and the BGL Documents.
(c) This Agreement has been, and each BGL Document will on Closing be,
duly executed and delivered by BGL, and this Agreement constitutes,
and each BGL Document will on Closing constitute, a valid and
binding obligation of BGL enforceable against BGL in accordance with
its terms.
(d) None of the execution and delivery of, or the observance and
performance by BGL of, any covenant or obligation under, the
Agreement and the BGL Documents contravenes or results in (with or
without the giving of notice or lapse of time, or both) or will
contravene or violate in any material respect or result in any
material breach or default of, or acceleration of any obligation
under:
(i) any Applicable Law;
(ii) the Regulations, directors' or shareholders' resolutions
of BGL;
(iii) any agreement, lease, mortgage, security document,
obligation or instrument to which BGL is a party or by
which BGL or its assets is affected or bound.
(e) No consent, approval, authorization, registration or declaration of,
or filing with, the Government is required by BGL in connection with
(i) the Closing; (ii) the execution and delivery by BGL of this
Agreement or any BGL Document, or (iii)
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the observance and performance by BGL of its obligations under this
Agreement or any BGL Documents.
SECTION 4
PGR REPRESENTATIONS, WARRANTIES AND AGREEMENTS
PGR represents, warrants and covenants to and with BGL that:
(a) the first instalment of the First Option Payment was used solely for
the purposes of satisfying employee salary arrears.
(b) PGR is a company duly incorporated, organized, and validly existing
in good standing under the laws of Ghana. No proceedings have been
taken or authorized by PGR or, to the best of PGR's knowledge, by
any other Person, with respect to the bankruptcy, insolvency,
liquidation, dissolution or winding up of PGR.
(c) PGR has all necessary power and capacity to execute and deliver, and
to observe and perform its covenants and obligations under, the
Agreement and the documents to be delivered hereunder ("PGR
Documents"). PGR has taken all corporate action necessary to
authorize the execution and delivery of, and the observance and
performance of its covenants and obligations under, the Agreement
and the PGR Documents.
(d) This Agreement has been, and each PGR Document delivered on the
Closing Date and the Option Closing Date will be, duly executed and
delivered by PGR, and this Agreement constitutes, and each PGR
Document will on Closing constitute, a valid and binding obligation
of PGR enforceable against PGR in accordance with its terms.
(e) None of the execution and delivery of, or the observance and
performance by PGR of, any covenant or obligation under, the
Agreement and the PGR Documents contravenes or results in (with or
without the giving of notice or lapse of time, or both) or will
contravene or violate in any material respect or result in any
material breach or default of, or acceleration of any obligation
under:
(i) any Applicable Law;
(ii) the Regulations, directors' or shareholders' resolutions
of PGR;
(iii) any agreement, lease, mortgage, security document,
obligation or instrument to which PGR is a party or by
which PGR or its assets is affected or bound.
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(f) No consent, approval, authorization, registration or declaration of,
or filing with, the Government is required by PGR in connection with
(i) the Closing; (ii) the execution and delivery by PGR of this
Agreement or any PGR Document, or (iii) the observance and
performance by PGR of its obligations under this Agreement or any
PGR Documents.
(g) PGR has all necessary power and authority to own or lease its assets
and to carry on all activities as it presently carries on. PGR
possesses all licences, permits and authorizations material to the
conduct of all activities as it presently carries on.
(h) The authorized capital of PGR consists of one billion common shares,
of which 200,000 common shares have been validly issued and are
outstanding as fully paid and non-assessable shares, of which
200,000 shares have been issued to GMWU;
(i) No person, other than BGL, has any oral or written agreement,
option, warrant, right, privilege or any other right capable of
becoming any of the foregoing (whether legal, equitable, contractual
or otherwise), for the purchase, subscription or issuance of any
unissued securities of the Company.
(j) PGR has conducted and is conducting its activities in compliance
with all Applicable Laws, and not in breach of any Applicable Laws
except for breaches which in the aggregate are not material to PGR.
(k) Except for the matters in respect of which the Barnex Release and
PGR Release were delivered, there is no claim, demand, suit, action,
cause of action, dispute, proceeding, litigation, investigation,
grievance, arbitration, governmental proceeding or other proceeding
including appeals and applications for review, in progress against,
by or relating to PGR nor are any of the same pending or threatened.
PGR is not aware of any state of facts which would provide a valid
basis for any of the foregoing.
(l) PGR has not given nor agreed to give, and is not a party to or bound
by, any guarantee of indebtedness or other obligations of third
parties nor any other commitment by which PGR is, or is
contingently, responsible for such indebtedness or other
obligations.
(m) PGR shall use the proceeds from the second instalment of the First
Option Payment to repay the advances made to the Common Fund and to
acquire the working capital items set out in Schedule G.
SECTION 5
CLOSING
At a closing to be held at the offices of BGL in Accra, Ghana commencing at 2:00
PM on the Closing Date:
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(a) PGR shall have established the Restricted Account, the signatories
of which will be two signatories nominated by PGR and one signatory
nominated by BGL. BGL shall have the right at its sole discretion to
only sign off on disbursements from the Restricted Account when it
has been satisfied that the disbursements from the Restricted
Account are being made for the purpose intended as set out in
Section 4(m);
(b) BGL shall pay $1,600,000 to PGR in immediately available funds to be
deposited into a restricted account (the "Restricted Account") as
the second installment of the First Option Payment;
(c) each party shall confirm to the other that the Infrastructure
Mitigation Plan to be initialled for identification is in form
acceptable to each of them and will remain in force unless and until
amended by further agreement;
(d) the Joint Operating Agreement will be executed and delivered by the
parties;
(e) PGR will acknowledge to BGL that the First Option Payment has been
paid in full;
(f) each of the conditions precedent for BGL's benefit set out in
Section 9 shall be satisfied or waived; and
(g) such other actions shall be taken and documents delivered as the
parties may agree to be necessary or desirable.
SECTION 6
OPTION
6.1 GRANT OF OPTION
PGR hereby irrevocably grants to BGL the option ("Option") to purchase shares of
PGR ("Optioned Shares") constituting 35% of PGR's issued share capital at the
date of issue (after giving effect to the exercise of the Option), on the
following terms and conditions:
(a) the date ("Option Exercise Date") by which the Option must be
exercised, failing which it will lapse and terminate, is the date
which is the latest to occur of (1) the 180th day after the Closing
Date, (2) the date as of which the Plant shall have been demolished
and the Mining Commencement Date have occurred, and (3) the first
anniversary of the Closing Date if the requirement of subclause (2)
shall not have been satisfied by the date specified in such
subclause; provided that PGR shall be entitled to give notice to BGL
at any time following the Closing Date that the Plant is available
for Decommissioning, in which event the Option Exercise Date shall
be the later to occur of (1) the 180th day after the Closing Date
and (2) the 90th day after receipt of such notice.
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(b) the Option shall be exercised by written notice ("Exercise Notice")
to be given not later than 5:00 PM on the Option Exercise Date
specifying a closing date ("Option Closing Date") which shall be not
more than 10 days after the date of the Exercise Notice;
(c) following the delivery of an Exercise Notice, BGL shall be
irrevocably bound to complete its purchase of the Optioned Shares,
subject only to compliance by PGR with its obligations and the
performance by GMWU (as described below), the Trust (as described
below) and the Government of their respective obligations;
(d) for greater certainty, in the event that BGL fails to exercise its
Option prior to the Option Exercise Date, BGL's right to a
shareholding in, and management contract with, PGR shall lapse and
PGR shall be entitled to grant similar rights to other investors;
(e) the purchase price shall of the Optioned Shares shall be $4,000,000,
being the aggregate of the First Option Payment and a further
payment ("Second Option Payment") of $1,900,000, which shall be
payable in immediately available funds to PGR on the Option Closing
Date;
(f) the purchase price shall be credited to PGR's shareholders' capital
account, as to $1,750,000 to the credit of BGL, as to $1,750,000 to
the credit of the GMWU and, as to the balance of $500,000, to the
credit of the Trust;
(g) the amounts so credited to the GMWU and the Trust shall constitute
advances made by BGL to PGR on their behalf, repayable
preferentially out of dividends to GMWU and the Trust in accordance
with the Loan Agreement to be entered into by each of them with BGL
on the Option Closing Date;
(h) the proceeds of the Second Option Payment (following the
satisfaction of all salary arrears and Common Fund claims) will be
used by PGR solely for the purpose of paying terminal benefits to
PGR's workforce, whose employment will be terminated effective no
later than the Option Closing Date, it being understood and agreed
that they will then be selectively rehired to constitute an optimal
workforce whose make-up will be determined by PGR in consultation
with BGL;
(i) in the event the parties determine that the rationalization of PGR's
workforce prior to the Option Closing Date is desirable having
regard to the best interests of the parties, the workforce and the
community as a whole, BGL may, in accordance with an agreement to be
entered into with PGR as to the number of severances and the amount
of benefits, advance by way of loan prior to the Option Date on
account of the Second Option Payment an amount not exceeding
$1,900,000 to fund the rationalization costs, such loan to be
secured by a first charge of the PGR Lease, to be non-interest
bearing until the 180th day after the Second Closing Date and
thereafter to bear interest at LIBOR plus 3% unless and until the
later of repayment on the Option Closing Date or repayment on the
first anniversary of the Closing Date;
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(j) following the Option Exercise Date, selected individual Ghanaian
investors of high repute (the "Investors") acceptable to PGR and the
Shareholders will be offered up to 10% of PGR's shares for an
aggregate subscription price of $500,000, provided that the
Investors undertake to become a party to the Shareholders Agreement;
any of such shares not so subscribed for within three months of the
Option Exercise Date will be subscribed and paid for at the same
price per share equally by BGL and GMWU on the Option Closing Date;
provided that, in the event that either of BGL or GMWU does not
subscribe for any of the shares offered to it, the other party may
subscribe and pay for all the shares not subscribed for by the
Investors;
(k) prior to the Option Exercise Date, PGR shall establish the Trust
and, commencing on the Option Closing Date, BGL shall hold 10% of
the PGR shares for the benefit of the Trust; it being agreed that
BGL shall irrevocably be entitled to exercise all voting rights with
respect to such PGR shares; and
(l) the shareholdings of PGR following the Option Closing Date shall,
assuming the participation of the Investors, be:
BGL - 35%
GMWU - 35%
BGL in Trust - 10%
Investors - 10%
Government - 10%
6.2 OPTION CLOSING
On the Option Closing Date a closing shall occur at the offices of BGL at Accra,
Ghana commencing at 2:00 PM at which:
(a) BGL shall make the Second Option Payment in immediately available
funds;
(b) the Investors and/or BGL/GMWU shall pay an aggregate of $500,000 as
the subscription price for shares constituting 10% of PGR's share
capital;
(c) certificates shall be issued to BGL, GMWU, the Trust, the Investors
and the Government (collectively, the "Shareholders") for the number
of shares to be issued to them in accordance with the foregoing
provisions of this Section 6;
(d) the Shareholders shall enter into the Shareholders' Agreement;
(e) the Shareholders shall appoint a board of directors of PGR complying
with the requirements of the Shareholders' Agreement;
(f) the newly appointed directors shall meet for the purposes of
appointing officers, authorizing the execution of all required
agreements and dealing with all such other business as may be
required such that PGR shall comply in all respects with the
requirement of the Shareholders' Agreement;
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(g) each of the conditions precedent for BGL's benefit set out in
Section 9 shall be satisfied or waived, except to the extent they
were satisfied or waived on the Closing Date; and
(h) all such other documents shall be executed and delivered and actions
taken as may be required to give effect to the foregoing provisions
of this Section 6.
SECTION 7
COMPANY MANAGEMENT
7.1 INFRASTRUCTURE MITIGATION PLAN
The parties recognize the importance of, and need for, the adoption and
implementation of an Infrastructure Mitigation Plan ("Plan") designed to
minimize the impact of surface mining operations to be conducted by BGL under
the BGL Lease. In that regard:
(a) on an interim basis, the parties have adopted the Plan attached as
Schedule A;
(b) PGR hereby grants BGL the right to acquire for $1.00 such of the
Prestea Assets that BGL is required to replace or relocate as a
result of the implementation of the Plan; provided that (i) such
replaced or relocated assets shall become the property of PGR, and
(ii) BGL may acquire title to such replaced or relocated assets by
paying to PGR an amount not in excess of the consideration paid by
PGR to SGMC to acquire them plus reasonable expenses incurred in the
acquisition;
(c) PGR agrees to transfer to BGL, for nominal consideration, such of
the Prestea Assets as are agreed between the parties to be necessary
for BGL's own operations by a transfer agreement in form and
substance satisfactory to the parties;
(d) BGL shall be entitled to realize whatever value possible, directly
or indirectly, from the Prestea Assets acquired by it in accordance
with clause (b) to defray its costs and expenses incurred in
executing the Plan;
(e) with regard to the Plant, BGL will be obligated to make available to
PGR, so as to permit surface mining operations, alternative
processing facilities ("Alternative Facilities") and will use its
best commercial endeavours to provide such Alternative Facilities
prior to Decommissioning. The Alternative Facilities will consist
of, at BGL's option but subject to PGR's approval, not to be
unreasonably withheld, either the relocation of the Plant or the
acquisition and upgrading, with the use of existing plant equipment,
of the processing plant currently used by Prestea Sankofa Gold
Limited, subject to its being available for this purpose. In this
regard:
(i) Decommissioning shall occur on a date to be agreed on
between the parties but, in any event, shall not be more
than two days after ore has ceased to be delivered to the
Plant;
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(ii) immediately following Decommissioning, BGL will have the
right to secure the Plant. PGR employees will be granted
access, on a 24-hour basis, for seven consecutive days
immediately thereafter in order to effect a clean-up of
the Plant and its inventories. During this period, PGR
employees shall have the right to process any gold-bearing
material in order to produce a smelted product ("Gold
Dore"). Only Gold Dore and left-over reagents, inclusive
of loaded carbon, will remain the property of PGR and may
be removed during the aforementioned seven-day period.
After such seven-day clean-up period, any remaining
materials will become the property of BGL; and
(iii) BGL shall have the right to monitor all clean-up
operations conducted by PGR after Decommissioning.
Physical clean-up may be conducted on all machinery and
structures within the Plant boundary, provided such
cleaning actions are non-destructive, and provided no
dismantling or disassembly of any equipment takes place.
No cleaning may take place which, in BGL's opinion, will
physically alter, degrade or render unserviceable any
civil or mechanical structure;
(f) the Alternative Facilities shall be constructed with due regard to
the metallurgical flowsheet, capacity and performance of the Plant
and their designed overall unit cost per tonne shall not be more
than and, recovery shall not be less than, those of the Plant;
(g) the Alternative Facilities shall, until the Mining Commencement
Date, be and remain the property of BGL and shall be made available
to PGR for so long as it needs them without charge; provided that
(i) PGR shall be responsible for maintaining the Alternative
Facilities in good repair and operating condition, and (ii) shall
not be entitled to modify them without BGL's prior consent, not to
be unreasonably withheld;
(h) On the Mining Commencement Date, BGL shall transfer the Alternative
Facilities to PGR for a purchase price equal to the difference
between (i) the cost of the Alternative Facilities, and (ii) the
price paid by PGR or BGL to SGMC for the Plant. The purchase
consideration shall be a non-interest bearing demand loan note
re-payable on December 31, 2999 secured by a fixed charge over the
Alternative Facilities.
(i) for the duration of the period when neither the Plant nor the
Alternative Facilities is available for processing ore, BGL will
treat ore mined by PGR on a toll processing basis under the terms
and conditions set out in Schedule I; and
(j) the parties may agree to continue such toll processing arrangement
in lieu of BGL making the Alternative Facilities available.
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7.2 JOINT OPERATING AGREEMENT
The parties recognize the need for an agreement ("Joint Operating Agreement")
which shall set out the protocols and procedures to be observed by BGL and PGR
in the day-to-day operations of their surface and underground mining operations
on the Lease Area. In that regard:
(a) the provisions of the Joint Operating Agreement shall include, but
not be limited to, safety, communication between the parties,
access, disturbances, mitigation of disturbances, air and water
ingress to the underground mine from the surface excavations,
blasting operations, notification of blasting operations, survey and
notification of underground openings, community relations,
confidentiality, statements to the media, joint emergency response,
security operations,
(b) the contents of Schedule B, the Joint Operating Agreement, shall
form the basis for the parties' discussions and negotiations as to
its terms; and
(c) the parties shall prosecute such discussions and negotiations, so
that the terms of the Joint Operating Agreement shall have been
settled not later than the Second Closing Date.
7.3 MANAGEMENT AGREEMENT
It is further agreed that, so long as BGL is the holder of at least 30% of PGR's
outstanding shares, it will be entitled to provide PGR with management services
under a management agreement ("Management Agreement"). In that regard:
(a) under the Management Agreement, BGL shall be responsible for the
day-to-day management, conduct and control of the operations of PGR,
subject to approved work plans and budgets and the direction of the
board of directors of PGR; BGL shall have the exclusive right and
obligation to execute and carry out all approved work plans and
budgets; BGL shall keep adequate records of accounts and operations
and will keep the board of directors of PGR advised of all
operations by submitting to them monthly progress reports and
quarterly financial reports containing technical, financial,
commercial and legal information concerning the project; BGL shall
ensure that operations are conducted in accordance with (i) the
terms and conditions of any applicable mining title and any
legislative and regulatory requirements applicable to BGL and its
business, and (ii) good mining industry practices, including such
requirements as may be applicable to safety, community relations and
environmental rehabilitation; and
(b) the Management Agreement shall be in substantially the form attached
as Schedule E.
7.4 WORKFORCE
In connection with PGR's workforce, it is agreed that joint consultation and
agreement will be required as to:
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(a) the timing, extent and implementation of any rationalization,
severance or redundancy of the PGR workforce as well as the
calculation of the severance benefits; and
(b) the optimal workforce that will be required following the
rationalization, the employees to be reemployed and the remuneration
benefits of their new engagement, it being understood and agreed
that, in the first instance past employees of PGR will be given
first preference for any new engagements provided that they have the
requisite qualifications, skills, and experience.
7.5 SHAREHOLDERS' AGREEMENT
It is agreed that the relations between the Shareholders as shareholders of PGR
and the management of PGR with effect from the Option Closing Date will be
governed by the Shareholders' Agreement. BGL will, at the appropriate time
having regard to the Option Exercise Date, prepare a draft Shareholders'
Agreement which shall form the basis for the required discussions and
negotiations, such that the Shareholders' Agreement can be executed on the
Option Closing Date.
SECTION 8
OTHER AGREEMENTS
8.1 CONDUCT OF BUSINESS
From the date hereof until the Option Closing Date, PGR shall conduct its
operations (including its mining operations) within the Lease Area in the
ordinary course of business and, without the prior written consent of BGL, shall
not (i) waive, or agree to waive, any right it may have in the Lease Area or the
PGR Lease, (ii) sell, dispose of or otherwise transfer any rights it may have in
the Lease Area or the PGR Lease (iii) incur liabilities or make expenditures,
other than in the ordinary course of business, in an amount individually or in
the aggregate in excess of $10,000, (iv) make, or agree to make, any loan or
advance to its shareholder, or any of its officers, directors, employees,
consultants, agents or other representatives, or make any other loan or advance
of any type whatsoever otherwise than in the ordinary course of business, (v)
grant any person a security interest in, suffered the incurrence of any lien
upon, or otherwise encumber, the Lease Area or the PGR Lease, or (vi) incur or
guarantee any indebtedness for borrowed money or the like and shall notify BGL
within three business days after it has knowledge of any actions or proceedings
of any type whatsoever that, from the date hereof, are threatened or commenced
against PGR or in respect of the Lease Area or the PGR Lease.
8.2 DUE DILIGENCE
Prior to the Option Exercise Date, BGL shall be entitled, through its employees
and authorized representatives, to continue its investigation of the Lease Area
(including any technical information relating to the Lease Area) and the other
assets, properties, business and operations of PGR and to continue its
examination of the books, records and financial condition of PGR,
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and for this purpose shall have the right to enter the Lease Area. Any such
investigation and examination shall be conducted at reasonable times and under
reasonable circumstances and PGR and its directors, officers and employees shall
cooperate fully therein.
8.3 BUESICHEM
From the date hereof until the Closing Date, BGL shall, subject to any required
governmental approvals, have the sole and exclusive working right at its sole
cost and risk to enter on and conduct mining operations, on that portion of the
Property that is known in Ghana as the Buesichem area (the "Buesichem Area"),
the boundaries of which are delineated in red on the plan of the Property
attached hereto as Exhibit B to Schedule C, as BGL in its sole and absolute
discretion may decide. BGL shall have quiet and exclusive possession of the
Buesichem Area from the date of this Agreement until the Closing Date, with,
subject to any required governmental approvals, full power and authority to BGL,
its servants, agents, workers or contractors, to carry on mining operations in
such manner as BGL in its sole and absolute discretion may determine, including
the right to erect, bring and install within the Buesichem Area all buildings,
plant, machinery, equipment, tools, appliances or supplies as BGL shall deem
necessary and proper to prepare the Buesichem Area for mining immediately after
the Closing, and the right to remove from the Buesichem Area reasonable
quantities of rocks, ores and minerals and to transport them for the purposes of
sampling, metallurgical testing and assaying. All mining operations conducted by
BGL shall be in accordance with good exploration, development and mining
practices recognized in Ghana, and in compliance with the terms of the PGR Lease
or any successor or other mineral right then in effect and all applicable laws.
In the event that this agreement is terminated for any reason whatsoever prior
to the Closing Date, BGL's liability to rehabilitate the Buesichem Area shall be
limited to its own activity and any undertakings made in the application for the
required governmental approvals. In the event that the termination was for any
reason other than a default or breach of the agreement by BGL, then BGL shall
make no payment to PGR in respect of any gold mined from the Buesichem area
prior to the Closing Date.
8.4 SIGNPOSTING
PGR shall put up signposts (to be provided by BGL) within the Prestea Mining
Area, to put on notice any third party, that, as provided for by PNDCL 153,
farming and building are not permitted within the Prestea Mining Area, other
than with the permission of the lease holder. PGR shall regularly consult with
BGL on the actions to be taken within the Prestea Mining Area, including the
number and nature of the signposts that are customarily required in Ghana to
prevent squatters and other third parties from invading the Prestea Mining Area.
PGR shall, at the Closing Date, provide BGL with the details of any farming,
building or small scale mining on the Prestea Mining Area, that has been
authorized by PGR during the period from January 1, 1999 through the Closing
Date. From the Closing Date, PGR shall not authorize any further farming,
building or small-scale mining on the Prestea Mining Area, other than as
provided for in the Joint Operating Agreement.
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8.5 SHAREHOLDER APPROVAL
PGR shall submit this Agreement and the transactions contemplated hereby to its
shareholders on terms whereby the board of directors shall recommend to the
shareholders that this Agreement and the transactions contemplated hereby be
approved, pursuant to the laws of Ghana. Notice of the approval of the PGR
shareholders contemplated in this clause shall be communicated to BGL in
writing. PGR shall provide to BGL written evidence of shareholder approval
substantially in the form attached as Schedule K.
8.6 NO SOLICITING
PGR shall not, nor shall it permit, any of its subsidiaries or any officer,
director, employee or any investment banker, attorney, accountant or other agent
retained by PGR or any of its subsidiaries to, initiate or solicit, directly or
indirectly, inquiries or the making of any proposal with respect to, or engage
in negotiations concerning, provide any confidential information or data to, or
have any discussions with, any person relating to, any acquisition, business
combination or purchase of all or any significant portion of the assets
(including the PGR Lease and the Property) of, or any equity interest in, PGR or
its subsidiaries, or otherwise facilitate any effort or attempt to do or seek
any of the foregoing. PGR shall notify BGL immediately if any such inquiries or
proposals are received by, any such information is requested from, or any such
negotiations or discussions are initiated or continued with, PGR.
8.7 COVENANTS
After the Closing Date and until the Option Closing Date, PGR shall not, without
the prior written consent of BGL:
(a) accept any investment in any form whatsoever (including in the form
of stock purchases or loans) by its then employees, directly or
indirectly, in PGR or in the underground mining operations conducted
within the Property;
(b) issue any securities;
(c) sell, transfer, convey or assign any assets having a value of more
than $5,000 on an individual basis or $25,000 in the aggregate;
(d) incur any debts outside of the ordinary course of business or in
excess of $25,000;
(e) give, or become a party to or bound by, any guarantee of
indebtedness or other obligations of third parties or any other
commitment by which PGR may become responsible for such indebtedness
or other obligations;
(f) enter into any new contracts, agreements, leases, obligations, or
commitments which are not terminable on 30 days notice without
penalty.
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8.8 REORGANIZATION
PGR shall use its best commercial efforts to restructure its shareholder
holdings so that BGL will be able to exercise the Option, in accordance with its
terms, not later than the Option Exercise Date.
8.9 SCOPING STUDY
Subject to the Option being exercised in accordance with its terms, PGR shall
prepare and complete the Scoping Study using the $500,000 of funding provided by
the investment by the Investors and/or BGL/GMWU from the subscription for the
10% of the BGL equity, to compile , under BGL's supervision, all the past
underground mining records and plans with respect to the Property as the first
phase prior to a decision to commence a more detailed feasibility study to
assess the longer term potential for a new underground mining development within
the Property.
8.10 PUBLIC RELATIONS
BGL and PGR shall jointly cooperate with Barnex and GMWU to communicate with and
sensitize the local leaders and opinion makers to the benefits to the local
community of the transactions contemplated hereby. BGL and PGR shall jointly
issue a written release to the local press explaining the benefits to the local
community at Prestea of the transactions contemplated hereby.
8.11 PGR BOARD REPRESENTATIVE
For the duration of the period commencing with the Closing Date and ending on
the Option Closing Date, BGL shall be entitled to nominate one member of PGR's
board of directors.
8.12 RIGHT OF SET-OFF
(a) BGL shall have the right to deduct from any monies payable to PGR
pursuant to Section 5 (b) and Section 6.2 (a) and (b) the sum of any
amounts owing to BGL and its affiliates by PGR at the respective
payment dates (unless and to the extent that the parties have agreed
to rescheduled payment dates).
(b) BGL may deliver to PGR at the Closing Date up to $500,000 of working
capital and spare parts items from the list itemized in Schedule J.
The value of the working capital and spare parts delivered shall be
deducted from the monies payable to PGR on the Closing Date pursuant
to Section 5 (b).
SECTION 9
CONDITIONS PRECEDENT
9.1 CONDITIONS PRECEDENT TO BGL'S OBLIGATIONS AT CLOSING
BGL's obligation to enter into and complete the Closing and, to the extent
applicable, complete its exercise of the Option on the Option Closing Date shall
be subject, at its option, to the
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fulfillment of the following conditions (any of which may be waived in whole or
in part by BGL):
(a) all permits and approvals (including, without limitation, the
approval of the Government, the approval of the shareholders of PGR
and any applicable regulatory and stock exchange approvals),
required for the Closing (which term shall be deemed to mean and
refer to the closing provided for on the Closing Date or the closing
provided for on the Option Closing Date as the context requires)
shall have been obtained;
(b) PGR shall have set up the Restricted Account as contemplated in
Section 5(a);
(c) the representations and warranties of PGR contained in this
Agreement being true and correct on the Closing Date (which term
shall be deemed to mean and refer to the Closing Date or the Option
Closing Date as the context requires);
(d) there being no material change in the business, affairs or financial
condition of PGR between the date of this Agreement and the Closing
Date; the understanding of the parties of the total liabilities and
obligations of PGR as at the date of signing of this Agreement being
appended as Schedule F;
(e) receipt of a legal opinion from Ghanaian counsel to PGR dated the
Closing Date, together with any required confirmations by the
Government substantially in the form attached as Schedule J;
(f) all consents, permits and approvals from parties to any contracts or
other agreements with PGR that may be required in connection with
the performance by PGR of its obligations under this Agreement as at
the Closing Date shall have been obtained;
(g) as at the Closing Date, no action, suit, or proceeding involving PGR
shall have been instituted before any court or governmental or
regulatory body, or instituted or threatened by any governmental or
regulatory body, to restrain, modify or prevent the carrying out of
the transactions contemplated hereby, or to seek damages or a
discovery order in connection with such transactions, or that has or
may have a materially adverse effect on the assets, prospects or
financial position of PGR;
(h) all of the covenants and obligations that PGR is required to perform
or to comply with pursuant to this Agreement at or prior to the
Closing Date (considered collectively) and each of these covenants
(considered individually), shall have been performed or complied
with in any and all respects;
(i) BGL and its advisors shall have been provided full access to PGR's
accounting and other records, and its personnel, for the purpose of
completing a due diligence review of PGR's financial situation at
the Closing Date.
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(j) the PGR directors and shareholders shall undertake, prior to the
Option Exercise Date, in accordance with Section 134 of the
Companies Code, to remove its present auditors and to appoint
PricewaterhouseCoopers, or such other international firm of
accountants agreed in writing by the parties, as auditors to PGR in
their place, unless BGL determines, acting reasonably, that PGR's
present auditors are recognized internationally as having equivalent
stature to PricewaterhouseCoopers;
(k) the Government shall have transferred the Prestea Assets for nominal
consideration to PGR;
(l) PGR shall have executed and delivered the transfers and other
documents required to comply with the requirements of clauses (b)
and (c) of Section 7.1;
(m) the Government shall have agreed, in form and substance satisfactory
to BGL in its sole and absolute discretion, to indemnify PGR and its
shareholders from and against any and all liabilities and
obligations incurred on or before the Closing Date with respect to
the Lease Area and any and all pre-existing liabilities and
obligations at the Closing Date, other than operating losses;
(n) the Government shall have agreed, in form and substance satisfactory
to BGL in its sole and absolute discretion, to indemnify PGR and its
shareholders for a period of five years from the Closing Date from
and against any and all liabilities with respect to the Lease Area
that may not currently comply with BGL's and GSR's internal
standards or to the relevant Ghanaian laws and regulations, it being
agreed that, during such period, PGR will endeavour through a
process of continuous improvement to achieve conformance to the
relevant standards, laws and regulations;
(o) The Government shall have granted an Environmental Permit to BGL
approving the commencement of mining activities from the area known
generally as Buesichem, or waived in writing, in form and substance
satisfactory to BGL in its sole and absolute discretion, the
application of any and all environmental assessment requirements of
any applicable environmental law of Ghana.
(p) the Volta River Authority shall confirm the existence of a pending
lawsuit against PGR but shall not have instituted any new lawsuit
for the recovery of outstanding electricity charges and will have
agreed in writing, in form and substance satisfactory to BGL in its
sole and absolute discretion, to relocate at BGL's cost the power
lines located on a portion of the Lease Area known as the
"Plant/North deposit" to a location acceptable to BGL in its sole
and entire discretion;
(q) The Electricity Company of Ghana, the Volta River Authority and/or
the Government shall have agreed, in form and substance satisfactory
to BGL in its sole and absolute discretion, to make the power supply
of any mine located within the Lease Area independent from the power
supply of the town of Prestea;
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(r) PGR shall have perfected, to the satisfaction of BGL at its sole and
absolute discretion, all matters with respect to its formation;
annual returns, reports and filings to Government; audited financial
statements; and shareholder structure; and
(s) BGL and PGR shall have entered into a non-competition agreement
pursuant to which PGR shall agree not to compete with BGL with
respect to the acquisition, directly or indirectly, of any interest
in Prestea Sankofa, or in that certain mining lease granted on May
12, 1994, by the Government to Prestea Sankofa or any other rights
of Prestea Sankofa with respect to the Property.
9.2 CONDITIONS PRECEDENT TO PGR'S OBLIGATIONS AT CLOSING
PGR's obligation to enter into and complete the Closing and, to the extent
applicable, complete its exercise of the Option on the Option Closing Date shall
be subject, at its option, to the fulfillment of the following conditions (any
of which may be waived in whole or in part by PGR):
(a) All permits and approvals (including, without limitation, the
approval of the Government, the approval of the shareholders of PGR
and any applicable regulatory and stock exchange approvals),
required for the Closing (which term shall be deemed to mean and
refer to the closing provided for on the Closing Date or the closing
provided for on the Option Closing Date as the context requires)
shall have been obtained.
(b) The representations and warranties of BGL contained in this
Agreement being true and correct on the Closing Date (which term
shall be deemed to mean and refer to the Closing Date or the Option
Closing Date as the context requires); and
(c) All of the covenants and obligations that PGR is required to perform
or to comply with pursuant to this Agreement at or prior to the
Closing Date (considered collectively) and each of these covenants
(considered individually), shall have been performed or complied
with in any and all respects.
SECTION 10
GENERAL
10.1 PUBLIC ANNOUNCEMENTS
Except as and to the extent required by applicable law or stock exchange rules
and regulations, without the prior written consent of the other party, neither
party will, and each will direct its representatives not to make, directly or
indirectly, any public comment, statement or communication with respect to, or
otherwise to disclose or to permit the disclosure of the existence of any
discussions regarding, a possible transaction between the parties or any of the
terms, conditions or other aspects of the transactions provided for in this
Agreement. If a party is
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required by applicable law or stock exchange rules and regulations to make any
such disclosure, it must provide the other party the content of the proposed
disclosure, the reasons that such disclosure is required by law, and the time
and place that the disclosure will be made as well as a reasonable opportunity
to comment on such disclosure. It is however understood and agreed by the
parties that, notwithstanding anything to the contrary herein, this transaction
will be material to GSR and therefore in accordance with its stock exchange
rules and regulations will have to be released. GSR will allow BGL and PGR a
reasonable amount of time to review and comment on the content of the release.
10.2 ASSIGNMENT
BGL may assign in whole or in part its rights and obligations under this
Agreement to any of its affiliates that are ultimately controlled by GSR. In
such event, BGL will remain liable for all its obligations under this Agreement
after such assignment as if such assignment had not taken place. Except as
provided herein, neither BGL nor PGR may assign any of their rights or
obligations hereunder without the prior written consent of the other party,
which consent may not be unreasonably withheld.
10.3 APPROVALS
PGR shall use its reasonable commercial efforts to (i) assist BGL in obtaining
the approval of any third party to any of the transactions contemplated in this
agreement, and the consent of the Government to this Agreement, and (ii) cause
the conditions in Section 9 to be satisfied on or before the Closing Date and
the Option Closing Date, respectively.
10.4 PROGRESS UPDATES
The parties shall at all times keep each other informed of all its efforts in
the implementation of its obligations hereunder.
10.5 TERMINATION
This Agreement may be terminated by notice given at or prior to the Closing
Date:
(a) by either party if the other has committed a material breach of any
provision of this Agreement and such breach has not been waived;
(b) by BGL if any of the conditions precedent to its obligation to
complete the Closing has not been satisfied as of the Closing Date
or if satisfaction of such condition is or becomes impossible and
BGL has not waived such condition on or before the Closing Date;
(c) by mutual consent;
(d) by either party, if the other, or its controlling shareholder,
becomes insolvent, bankrupted, files a petition seeking to take
advantage of any other law relating to
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bankruptcy, insolvency, reorganization, or winding-up, makes a
general assignment for the benefits of its creditors, or admits in
writing its inability to pay its debts as they become due;
(e) by either party, if the Closing has not occurred (other than through
the failure of the party seeking to terminate to comply fully with
its obligations) on or before the Closing Date; and
(f) by BGL in the event that the written approvals by PGR's directors
and shareholders, in the form provided for in Schedule K, shall not
have been provided to BGL by 5:00 PM on the fifth business day
following the date of the execution of this Agreement.
10.6 REMEDIES
Each party's right of termination is in addition to any other rights it may have
under this Agreement or otherwise, and the exercise of a right of termination
will not be an election of remedies. If this Agreement is terminated, all
further obligations and liabilities of the parties under this Agreement will
terminate, save and except as may be otherwise specified in this Agreement;
provided, however, that if this Agreement is terminated by a party because of a
breach of the Agreement by the other party or because one or more of the
conditions to the terminating party's obligations under this Agreement is not
satisfied as a result of the other party's failure to comply with this
obligations under this Agreement, the terminating party's right to pursue all
legal remedies will survive such termination unimpaired.
10.7 COSTS
Each party will be responsible for and bear all of its own costs and expenses
(including, without limitation, any broker's or finder's fees and the expenses
of its representatives) incurred at any time in connection with pursuing,
negotiating and consummating the transactions contemplated hereby. Each party
will indemnify, defend and hold harmless the other against the claims of any
brokers or finders claiming by, through or under the indemnifying party.
10.8 PGR INDEMNITY
PGR hereby agrees to indemnify, save and hold harmless BGL, its employees,
agents, representatives and shareholders, from and against any and all losses,
costs, damages, claims and expenses of any kind, including, without limitation,
attorneys' fees and expenses, relating to or arising out of any failure by it to
perform its obligations hereunder. This provision shall survive any termination
of this Agreement.
10.9 NOTICES
All notices and communications which may be or are required to be given by
either party to the other shall be in writing and hand-delivered, sent by fax or
sent by internationally recognized air-courier (such as Federal Express or DHL)
to the parties, at their following respective addresses, and shall be effective
upon receipt:
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(a) If to Bogoso Gold Limited:
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Area,
▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇
▇▇▇▇▇
Fax. ▇▇▇▇ ▇▇ ▇▇▇▇▇▇
Attention: Managing Director
With a copy to:
Golden Star Resources Ltd.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇
Fax. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
(b) If to Prestea Gold Resources Limited:
▇▇ ▇▇▇ ▇▇▇,
▇▇▇▇▇
▇▇▇▇▇
Fax: ▇▇▇ ▇▇▇▇▇▇
Attention: Chairman
10.10 GOVERNING LAW
The formation, interpretation, and performance of this Agreement shall be
governed by the laws of the Republic of Ghana.
Any terms or agreements herein which by their nature may or must be performed or
occur after termination of this Agreement shall survive such termination.
10.11 DISPUTE RESOLUTION
Any dispute, controversy or claim arising under or in connection with this
Agreement, and which cannot be resolved within 60 days of good faith
negotiations between the parties, shall be settled by arbitration in accordance
with this Section.
Matters subject to arbitration shall be settled by arbitration in accordance
with the rules and regulations of the London Court of International Arbitration
in effect on the date of this Agreement, which are hereby incorporated by
reference into this clause. The place of arbitration
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shall be London, England, or such other location agreed upon by the parties. The
language of the arbitration shall be English. The arbitration shall be the sole
and exclusive forum for resolution of the dispute or controversy and the award
shall be final and binding. Any court having jurisdiction may enter judgement
thereon.
A party may demand arbitration by delivering a written notice thereof to the
other party setting forth a complete, concise statement of the issue(s) in
dispute, the amount involved and the remedy requested. The arbitrators shall
render a written decision within six months after having been appointed.
Notwithstanding anything herein, the arbitral panel shall have the power to
decide any dispute ex aequo et ▇▇▇▇, with the objective of deciding such matters
fully in accordance with the intent of the parties as indicated by this
Agreement. The arbitrator(s) shall have the right to award or include in their
award any relief which they deem proper in the circumstances, including, without
limitation, money damages (with interest on unpaid amounts from date due),
specific performance, injunctive relief and legal fees and costs in accordance
with this Section; provided, however, that the arbitrator(s) shall not have the
authority to award exemplary, punitive, consequential or special damages, and
each party shall be limited to the recovery of any actual damages sustained by
it.
The number of arbitrators shall be three. One arbitrator shall be nominated by
each of the parties and shall then agree on the appointment of a third
arbitrator, who shall be disinterested in the dispute and shall have no
connection with any party. All of the arbitrators shall be persons having
experience in the minerals industry. Unless the three arbitrators have been
appointed within 30 days after the date on which either party requests the
settlement of any dispute by arbitration pursuant to this Section, the London
Court of International Arbitration shall appoint the three arbitrators referred
to above. The appointing authority may appoint from among nationals of any
country, whether or not a Party is a national of that country.
10.12 ENTIRE AGREEMENT
This sets forth the entire agreement between the parties and supersedes all
prior understandings and communications between the parties or any of them, oral
or written. This Agreement shall inure to the benefit of and be binding on the
parties and their respective heirs, executors, administrators, successors and
permitted assigns. The parties shall, without further consideration, from time
to time execute and deliver further instruments and assurances as may be
reasonably required to carry out the terms and intent of this Agreement.
10.13 INVALIDITY
In case any one or more of the provisions of this Agreement or any application
thereof shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions of this Agreement and
other application thereof will not in any way be affected or impaired thereby.
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10.14 COUNTERPARTS
This Agreement may be executed in separate counterparts, each of which shall be
deemed to be an original but all of which, taken together, shall constitute one
and the same instruments.
10.15 NO THIRD PARTY BENEFITS
Nothing contained in this Agreement shall confer any rights upon any person who,
or entity which, is not a party or assignee of a party to this Agreement.
In witness whereof the parties have executed this Agreement as of the date first
above written
BOGOSO GOLD LIMITED
By:
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman
By:
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Managing Director
PRESTEA GOLD RESOURCES LIMITED
By:
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Chairman
By:
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Mine Manager
SCHEDULE A
INFRASTRUCTURE MITIGATION PLAN -- INTERIM AGREEMENT
The following list identifies all infrastructure belonging to, used by or to be
acquired by PGR within the initial areas to be subject to surface mining south
of the Ankobra river. These areas include the proposed excavation area and a
surface mining buffer zone (the "Buffer Zone"). For the avoidance of doubt there
is no infrastructure belonging to, used by or to be acquired by PGR north of the
Ankobra River.
Generally, most infrastructure within the area to actually be excavated would
need to be relocated, although it may be possible to mine around some
installations, ie dewatering and ventilation raises.
Generally, most infrastructure within the Buffer Zone would be safe to remain in
place, but this has been considered on a case by case basis. It is proposed that
the majority of mine infrastructure within the Buffer Zone not be relocated
except for buildings for which the main purpose is for accommodation or
recreation. It is proposed that the majority of non-mine infrastructure within
the Buffer Zone be relocated. A significant exception would be the VRA
substation.
PLANT NORTH AREA
--------- -------------------- ----------------------------- -------- --------------------------------
ITEM INFRASTRUCTURE USE ZONE MITIGATION
--------- -------------------- ----------------------------- -------- --------------------------------
1. Ankobra Shaft Downcast & future - Not affected by open pits
dewatering from L6
--------- -------------------- ----------------------------- -------- --------------------------------
2. North Shaft Downcast & future fill * - Current pit design leaves
reclaim from L2-11 shaft intact. Geotechnical
confirmation required.
- Ventilation regime
unaffected through use of
appropriate barricades
- Drainage into u/g to be
controlled through seals
below open pit workings
and a sump on Level 6
--------- -------------------- ----------------------------- -------- --------------------------------
3. Power Compressor Two compressors, need * Relocation agreed -- new site
House replacement identified] and new structure
designed and costed.
Outstanding issue is sizing of
water cooling tanks, and
adequate power supply.
--------- -------------------- ----------------------------- -------- --------------------------------
4. Sankofa Plant-site Active [ ] Not affected by open pits
--------- -------------------- ----------------------------- -------- --------------------------------
5. Sankofa Tailings Active containment dam [ ] Not affected by open pits
Dam
--------- -------------------- ----------------------------- -------- --------------------------------
6. Prestea Tailings Active valley fill [ ] Not affected by open pits. PGR
Dam to acquire pumps to enable PGR
tails to be pumped to an
approved tailings
--------- -------------------- ----------------------------- -------- --------------------------------
-2-
--------- -------------------- ----------------------------- -------- --------------------------------
storage.
--------- -------------------- ----------------------------- -------- --------------------------------
7. Apantoo Shaft. Not in use -- caved in */- Not material to u/g operation.
Will be mined out by open pit.
--------- -------------------- ----------------------------- -------- --------------------------------
8. Plant Mill Active * Investigate further
--------- -------------------- ----------------------------- -------- --------------------------------
9. Prestea Shaft. Not in use -- caved in - Not material to u/g operation.
Currently falls outside of the
pit perimeter
--------- -------------------- ----------------------------- -------- --------------------------------
10. Workshops & Stores Active * Relocation agreed -- suitable
site identified at Central
Shaft, but still discussion
regarding dimensions.
--------- -------------------- ----------------------------- -------- --------------------------------
11. Slime Sub Station Active -Main PGR substation [ ] Not affected by open pits
--------- -------------------- ----------------------------- -------- --------------------------------
12. Club House (Senior Active - Relocation agreed -- potential
Staff) site identified.
--------- -------------------- ----------------------------- -------- --------------------------------
13. Transport Yard Vehicle compound and * Relocation agreed
maintenance
--------- -------------------- ----------------------------- -------- --------------------------------
14. Ropeway Hauling Active *- Replace following final
System decision on PGR process plant
--------- -------------------- ----------------------------- -------- --------------------------------
15. Security Barracks Occupied [ ] Not affected by open pits
--------- -------------------- ----------------------------- -------- --------------------------------
16. Mine Office Active - Not affected by open pits
--------- -------------------- ----------------------------- -------- --------------------------------
17. Provision Stores Active [ ] Not affected by open pits
--------- -------------------- ----------------------------- -------- --------------------------------
18. Cold Store Active [ ] Not affected by open pits
--------- -------------------- ----------------------------- -------- --------------------------------
19. Central Shaft Men & material, 2 - Not affected by open pits
compartment, 30ktpm
--------- -------------------- ----------------------------- -------- --------------------------------
20. "Job 600" Sub Power to township & Bondaye - Not affected by open pits
Station
--------- -------------------- ----------------------------- -------- --------------------------------
21. Residential Areas Occupied *-[ ] Some buildings may need
for PGR relocation, others unaffected
by the open pits.
--------- -------------------- ----------------------------- -------- --------------------------------
22. Magazine Active (below ground) [ ] Not affected by open pits
--------- -------------------- ----------------------------- -------- --------------------------------
23. Magazine area Active [ ] Not affected by open pits
substation
--------- -------------------- ----------------------------- -------- --------------------------------
24. Main Bore Hole Process & potable water (3 */- Not affected by open pits
Pump House pumps)
--------- -------------------- ----------------------------- -------- --------------------------------
BETA BOUNDARY AREA
--------- -------------------- ----------------------------- -------- --------------------------------
ITEM INFRASTRUCTURE USE ZONE MITIGATION
--------- -------------------- ----------------------------- -------- --------------------------------
25. South Waste Shaft Upcast (Main) [ ] Not affected by open pits
--------- -------------------- ----------------------------- -------- --------------------------------
26. Alpha Shaft Downcast & future ore - Not affected by open pits
transport
--------- -------------------- ----------------------------- -------- --------------------------------
27. Jnr Staff Occupied [ ] Not affected by open pits
Residential Area
--------- -------------------- ----------------------------- -------- --------------------------------
28. Anfarga township Occupied [ ] Not affected by open pits
--------- -------------------- ----------------------------- -------- --------------------------------
29. Nakaba Township Occupied - Investigate further
--------- -------------------- ----------------------------- -------- --------------------------------
30. Gamma Shaft Not in use, future ore * Investigate further
transport
--------- -------------------- ----------------------------- -------- --------------------------------
31. Beta Shaft Not in use, collapsed * Investigate further
--------- -------------------- ----------------------------- -------- --------------------------------
32. International Active - Investigate further
School
--------- -------------------- ----------------------------- -------- --------------------------------
-3-
--------- -------------------- ----------------------------- -------- --------------------------------
33. Wooden bungalows Occupied - Provide alternative bungalows
--------- -------------------- ----------------------------- -------- --------------------------------
34. Boundary Shaft Downcast * Investigate further
--------- -------------------- ----------------------------- -------- --------------------------------
35. Domestic Pump Township water from river - Replace for goodwill
Houses and sumps
--------- -------------------- ----------------------------- -------- --------------------------------
36. Junior Staff Occupied [ ] Not affected by open pits
Quarters (Abrow
Gari)
--------- -------------------- ----------------------------- -------- --------------------------------
37. Ekotokroo Shaft Upcast (Main) - Investigate further
--------- -------------------- ----------------------------- -------- --------------------------------
38. Magazine Active, below ground [ ] Not affected by open pits
--------- -------------------- ----------------------------- -------- --------------------------------
39. Main Shaft Men & material, 2 [ ] Not affected by open pits
compartment, capacity?
--------- -------------------- ----------------------------- -------- --------------------------------
40. Main Shaft Active [ ] Not affected by open pits
Substation & Stores
--------- -------------------- ----------------------------- -------- --------------------------------
41. Bondaye Occupied [ ] Not affected by open pits
Residential Areas
--------- -------------------- ----------------------------- -------- --------------------------------
42. New Boundary Shaft Not in use [ ] Not affected by open pits
(Prestea)
--------- -------------------- ----------------------------- -------- --------------------------------
43. Tuapim Shaft Not in use, future ore [ ] Not affected by open pits
transport
--------- -------------------- ----------------------------- -------- --------------------------------
44. A.D.C.@ Central Downcast (Main) [ ] Not affected by open pits
Shaft
--------- -------------------- ----------------------------- -------- --------------------------------
45. Bondaye North Shaft Downcast - Not affected by open pits
--------- -------------------- ----------------------------- -------- --------------------------------
46. "A" Compound' Occupied [ ] Not affected by open pits
--------- -------------------- ----------------------------- -------- --------------------------------
NOTES:
"Downcast" means downcast ventilation,
"Upcast" means upcast ventilation.
* Inside Pit
- Inside Buffer Area
[ ] Outside Buffer Area
NON-MINE INFRASTRUCTURE
The following list identifies the non-mine infrastructure that may be impacted
by surface mining activities and sets out BGL's proposed mitigation action. PGR
hereby confirms its agreement with the proposed mitigation measures, and its
irrevocable undertaking to (i) support such measures, and (ii) to assist BGL to
negotiate the mitigation measures with the relevant authorities and companies
and to implement such measures.:
-------- ----------------------- ---------------------------- --------- -----------------------
ITEM INFRASTRUCTURE OWNER ZONE POSSIBLE MITIGATION
-------- ----------------------- ---------------------------- --------- -----------------------
1. VRA High Tension Lines VRA *-[ ] Relocate
-------- ----------------------- ---------------------------- --------- -----------------------
2. Railway Lines Ghana Railways *-[ ] Check future use
-------- ----------------------- ---------------------------- --------- -----------------------
3. V.R.A Substation VRA [ ] Not affected by open
pits but add flyrock
protection
-------- ----------------------- ---------------------------- --------- -----------------------
4. Performance Private company */- Relocate
Laboratories
-------- ----------------------- ---------------------------- --------- -----------------------
5. Filling Station Private company - Relocate
(Shell)
-------- ----------------------- ---------------------------- --------- -----------------------
6. Police Station Ghana police -/[ ] Not affected by open
pits but check
-------- ----------------------- ---------------------------- --------- -----------------------
-4-
-------- ----------------------- ---------------------------- --------- -----------------------
Post Office Ghana Post -/[ ] Not affected by open
7. pits but check
-------- ----------------------- ---------------------------- --------- -----------------------
8. Hospital Government [ ] Not affected by open
pits
-------- ----------------------- ---------------------------- --------- -----------------------
9. Fire Services National Fire Service [ ] Not affected by open
pits
-------- ----------------------- ---------------------------- --------- -----------------------
10. Labour Office Dept of Labour -/[ ] Not affected by open
pits but check
-------- ----------------------- ---------------------------- --------- -----------------------
11. Residential Areas for Government -/[ ] Investigate
Hospital
-------- ----------------------- ---------------------------- --------- -----------------------
12. Residential Area for Private company [ ] Not affected by open
Bank Staffs pits
-------- ----------------------- ---------------------------- --------- -----------------------
13. Court and Nurses Government -/[ ] Investigate
quarters
-------- ----------------------- ---------------------------- --------- -----------------------
14. Anfarga township Public [ ] Not affected by open
pits
-------- ----------------------- ---------------------------- --------- -----------------------
15. Nakaba Township Public -/[ ] Investigate
-------- ----------------------- ---------------------------- --------- -----------------------
In addition to the specific infrastructure items detailed above, the various
roads and services (power, water, sewage, telephone etc) within the surface
mining envelope may be affected to various degrees and may need relocation or
replacement.
SCHEDULE B
JOINT OPERATING AGREEMENT
1. PARTIES
- Bogoso Gold Limited
- Prestea Gold Resources Limited
2. DEFINITION AND INTERPRETATION
"AFFILIATE" means any legal entity, wherever incorporated or constituted, which
directly or indirectly controls, is controlled by, or is under common control
with a Party and, for this purpose, "control" means the ownership of or right to
exercise control of more then fifty percent (50%) of the voting rights at a
general meeting of shareholders or other equivalent constitutional meeting and,
through such ownership or right, to elect at least a majority of the Board or
other persons with substantially equivalent power to manage and direct the
affairs of such legal entity.
"AGREEMENT" means this joint operating agreement and all schedules and
instruments in amendment or confirmation of it; "hereof', "hereto", and
"hereunder" and similar expressions mean and refer to this Agreement and not to
any particular Article, Section, Subsection or other subdivision; "Article",
"Section", "Subsection" or other subdivision of this Agreement followed by a
number means and refers to the specified Article, Section, Subsection or other
subdivision of this Agreement.
"BGL" means Bogoso Gold Limited, registration no. 29,939, a company incorporated
according to the laws of the Republic of Ghana.
"BGL LEASE" means the lease dated June 29, 2001 whereby BGL was granted mineral
rights in the Lease Area for gold and other associated mineral substances lying
and being under the surface to a vertical depth of 150 metres below sea level.
"BUSINESS DAY" means any day other than a Saturday, Sunday or official public
holiday in the city of Accra, Ghana or in the city of Denver, U.S.A.
"CHIEF INSPECTOR OF MINES" means the chief inspector of mines appointed from
time to time by the Minister in accordance with the Minerals and Mining Law,
1986, as amended.
-2-
"Control" means (i) in relation to a Person that is a corporation or company,
the ownership, directly or indirectly, together with Associates and Affiliates,
of Voting Securities of such Person carrying more than 50% of the voting rights
attaching to all Voting Securities of the corporation or company and which are
sufficient, if exercised, to elect a majority of its board of directors; (ii) in
relation to a Person that is a partnership, limited partnership, business trust
or other similar entity, the ownership, directly or indirectly, together with
Associates and Affiliates, of Voting Securities entitling such holders to
exercise control and direction over the activities of such entity; and (iii) in
relation to a Person that is a family trust or other similar entity,
trusteeships or ownership, directly or indirectly, of legal or beneficial
interests entitling the holders thereof to exercise control and direction over
the activities of such Person "Controls" and "Controlled" shall have similar
meanings.
"DOLLARS" OR "$" means the currency which is, from time to time, legal tender
for the payment of all private and public debts in the United States of America.
"EFFECTIVE DATE" means _________ 2001.
"FINANCIAL YEAR" means a period of twelve (12) months ending on December 31 or
such other date as may be determined by the Parties from time to time.
"FORCE MAJEURE" means any cause, whether foreseeable or unforeseeable, beyond a
party's reasonable control, including, without limitation, labour disputes
(however arising and whether or not employee demands are reasonable or within
the power of such party to grant); acts of God; laws, regulations, orders,
proclamations, instructions or requests of any government or governmental
entity; judgments or orders of any court; inability to obtain on reasonably
acceptable terms any public or private license, permit or other authorization;
curtailment or suspension of activities to remedy or avoid an actual or alleged,
present or prospective violation of federal, state or local environmental
standards; acts of war or conditions arising out of or attributable to war,
whether declared or undeclared; riot, civil strife, insurrection or rebellion;
fire, explosion, earthquake, storm, flood, sinkholes, drought or other adverse
weather condition; delay or failure by suppliers or transporters of materials,
parts, supplies, services or equipment; contractor' or subcontractors' shortage
of, or inability to obtain, labour, transportation, materials, machinery,
equipment, supplies, utilities or services; accidents; breakdown of equipment,
machinery or facilities; or any other cause whether similar or dissimilar to the
foregoing.
"GOVERNMENT" means the duly constituted government of the Republic of Ghana or
any political subdivision thereof, as recognized from time to time by the United
States of America, whether federal, state, local or foreign, or any judicial
body, agency or instrumentality of any such government or political subdivision.
-3-
"GMWU" means Ghana Mineworkers Union of the TUC (Ghana).
"LEASE AREA" means the area described in Schedule A with respect to which PGR
has an underground mining lease and BGL has a surface mining lease as provided
in the PGR Lease and the BGL Lease, respectively.
"MANAGEMENT AGREEMENT" means the management agreement between BGL and PGR dated
_____________, 2001.
"MANAGEMENT COMMITTEE" means the management committee as described in Section 4.
"PARTIES" means, collectively, BGL and PGR and "Party" means any one of them.
"PERSON" means an individual, partnership, corporation, trust, unincorporated
association, joint venture, governmental entity or other entity or other entity,
and pronouns have a similarly extended meaning.
"PGR" means Prestea Gold Resources Limited a company incorporated according to
the laws of the Republic of Ghana.
"PGR LEASE" means the lease dated June 29, 2001 whereby PGR was granted mineral
rights in the Lease Area for gold and other associated mineral substances lying
and being under the surface below a vertical depth of 150 metres below sea
level.
"SHAREHOLDERS AGREEMENT" means the shareholders agreement relating to PGR
between BGL, GMWU, the Investors, BGL on behalf of the Trust and Government
dated _______________, 2001.
"THIS AGREEMENT" means this agreement together with the schedules and annexures
hereto.
INTERPRETATION
- Any reference in this Agreement to gender shall include all genders, and
words importing the singular number only shall include the plural and vice
versa.
-4-
- The division of this Agreement into Articles, Sections, Subsections and
other subdivisions and the insertion of headings are for convenience of
reference only and shall not affect or be utilized in the construction or
interpretation of this Agreement.
- Any Article, Section, Subsection or other subdivision of this Agreement or
any other provision of this Agreement which is, or becomes, illegal, invalid
or unenforceable shall be severed from this Agreement and be ineffective
only to the extent of such illegality, invalidity or unenforceability and
shall not affect or impair the remaining provisions hereof.
- This Agreement constitutes the entire agreement between the Parties
pertaining to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of
the Parties.
- This Agreement may only be amended, modified or supplemented by a written
agreement signed by all of the Parties.
- No waiver of any of the provisions of this Agreement by any Party shall be
deemed to constitute a waiver of such provision by any other Party or a
waiver by such Party of any other provision, (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided in writing duly executed by the Party to be bound thereby.
- Where the word "including" or "includes" is used in this Agreement it means
"including (or includes) and without limitation".
- Any references herein to any law, by-law, rule, regulation, order or act of
any government, governmental body or other regulatory body shall be
construed as a reference thereto as enacted at the date hereof as such law,
by-law, rule, regulation, order of or act may be amended, re-enacted or
superseded from time to time.
- In this Agreement, unless the context otherwise requires, any reference to a
transfer of securities, Shares or Voting Securities of a Person shall
include any agreement, arrangement or understanding by which legal title to
or beneficial ownership of such securities passes from one Person to another
Person, or to the same Person in a different legal capacity, whether or not
for value, and a transfer shall include any sale, assignment, gift, exchange
or conversion of such securities, or the granting of any security interest,
lien, pledge, mortgage, hypothecation or charge in or to such securities.
3. SCOPE OF AGREEMENT
- This Agreement sets out the protocols and procedures to be observed by BGL
and PGR in the day-to-day operations of the surface and underground mining
operations on the Lease Area. The Agreement shall include, but not be
limited to, safety, communication between the parties, access, disturbances,
mitigation of disturbances, air and water ingress to the underground mine
from the surface excavations, blasting operations, notification of blasting
operations, survey and notification of underground openings, community
relations, confidentiality, statements to the media, joint emergency
response, security operations, etc.
-5-
- The Agreement does not constitute a commercial arrangement between the
Parties and only deals with how the Parties will cooperate to ensure that
their individual operations and activities on the Lease Area will have
minimal impact on the operations and activities of the other Party.
4. CONSULTATION AND COOPERATION
- The Parties will form a Management Committee.
- The Management Committee shall be comprised of an equal number of members,
but no more than ten (10), from BGL and PGR.
- The Chairmanship of the Management Committee shall alternate between BGL and
PGR. BGL shall chair the first meeting, then PGR shall chair the second
meeting and so on.
- The Management Committee shall meet as often as required but at least
monthly.
- The Management Committee will consider and decide on issues that affect the
operations and activities of both BGL and PGR.
- Issues will be decided by mutual agreement between the parties.
- Undecided or unresolved issues will be deferred for further investigation by
the Parties and consideration by the Management Committee.
- Any unresolved issue or disputed issue will be resolved by arbitration as
set out in Clause 8.
- Minutes of all meetings of the Management Committee shall be recorded and
then approved by the Parties at the next meeting of the Management
Committee.
5. MINING PLANS
- The Parties shall provide documented mining plans and schedules for each
Financial Year to the other Party no later than 30 days prior to the
commencement of the Financial Year.
- The Parties shall provide a detailed mining plan and schedule to the other
Party for each Month no later than seven days prior to the commencement of
each Month.
- No Party shall not deviate from any published mining plan or schedule
without first having given the other Party ten days notice of its intentions
to do so.
- No Party shall conduct any mining operations or activities within 20 metres
of the 150 Metre Depth without first having presented a Feasibility Study on
the activity to the other Party and the Chief Inspector of Mines, and
received their written Agreement to do so.
-6-
6. SYSTEMS AND PROCEDURES
- The Parties shall establish systems and procedures to control their
operations and activities.
- The systems and procedures shall deal with blast times, blast monitoring,
sharing of survey information, surface mining near voids, storm water
control, dewatering, surface access and control, development of
infrastructure by the Parties, on the Lease Area, authorisations to third
parties to work or develop infrastructure on the Lease Area.
7. DEFAULT
- A Party shall be in default under this Agreement if, at any time (a) such
Party is in breach of any of its material obligations under this Agreement
and which continues for seven (7) days after notice by the other Party
specifying such breach; (b) bankruptcy, insolvency, etc.
8. DISPUTE RESOLUTION
- Any dispute, controversy or claim arising under or in connection with this
Agreement, and which cannot be resolved within sixty (60) days of attempted
negotiations between the Parties, shall be settled by arbitration in
accordance with this section.
- Matters subject to arbitration shall be settled by arbitration in accordance
with the rules and regulations of the London Court of International
Arbitration in effect on the date of this agreement.
- The place of arbitration shall be London England or such other place as the
parties may agree.
- The language of the arbitration shall be English.
- The arbitration shall be the sole and exclusive forum for resolution of the
dispute or controversy and the award shall be final and binding.
- A Party may demand arbitration by delivering a written notice thereof to the
other Party setting forth a complete, concise statement of the issue(s) in
dispute, the amount involved and the remedy requested.
- The arbitrators shall render a written decision within six months after
having been appointed.
- Notwithstanding anything herein, the arbitral panel shall have the power to
decide any dispute ex aequo et ▇▇▇▇, with the objective of deciding such
matters fully in accordance with the intent of the Parties as indicated by
this Agreement.
-7-
- The arbitrators shall have the right to award or include in their award any
relief which they deem proper in the circumstances, including, without
limitation, money damages (with interest on unpaid amounts from date due),
specific performance, injunctive relief and legal fees and costs in
accordance with this section.
- The arbitrators shall not have the authority to award exemplary, punitive,
consequential or special damages and each Party shall be limited to the
recovery of any actual damages sustained by it.
- The number of arbitrators shall be three. One arbitrator shall be nominated
by each of the Parties and shall then agree on the appointment of a third
arbitrator, who shall be disinterested in the dispute and shall have no
connection with any party.
- All arbitrators shall be persons having relevant experience in the minerals
industry.
- Unless the three arbitrators have been appointed within thirty (30) days
after the date on which either Party requests the settlement of any dispute
by arbitration pursuant to this Section, the London court of International
Arbitration shall appoint the three arbitrators referred to above. The
appointing authority may appoint from among nationals of any country,
whether or not a Party is a national of that country.
9. GENERAL
- The interpretation and performance of the Agreement shall be governed by the
laws of the Republic of Ghana.
- The Party's obligations will be suspended for the duration of a Force
Majeure event.
- The Parties will be obligated to treat in confidence information about the
other's business, assets and affairs disclosed to them for the purposes of
the Agreement, and typical remedies will be included for breach.
- All Notices shall be in writing and may be given by being delivered or sent
by facsimile or mail to the authorized address of the Parties.
10. SHAREHOLDER WARRANTIES
- Each of the Parties represents and warrants to each other that it has the
capacity to enter into and perform this agreement and all the obligations
contemplated herein and that all corporate and other actions required to
authorize it to enter into and perform this Agreement have been properly
taken.
- that all of the foregoing representations and warranties will continue to be
true and correct during the continuance of the Agreement.
SCHEDULE C
LEASE AREA
EXHIBIT A: PRESTEA MAP (Plant/North to Beta/Boundary)
EXHIBIT B: PRESTEA MAP (Buesichem Area)
EXHIBIT C: PRESTEA LEASE AREA (Area is the same for both the PGR Lease and the
BGL Lease)
EXHIBIT D: VERTICAL SECTION SHOWING THE 150 METRE DEPTH
SCHEDULE D
PROFORMA LOAN AGREEMENTS WITH EACH OF GMWU AND THE TRUST
[LETTERHEAD OF BOGOSO GOLD LIMITED]
-, 2001
GMWU/the Trust
Dear Sirs:
Loan Agreement
This letter (the "Loan Agreement") sets out the terms of a US$- loan (the
"Loan") by Bogoso Gold Limited ("BGL") to - (the "Recipient") for the purpose of
funding its shareholder capital contribution to Prestea Gold Resources Limited
("PGR"). The terms of the Loan are as follows:
1. The Loan will disbursed at the Closing of a transaction between PGR
and BGL pursuant to an Agreement dated November __, 2001 whereby BGL
is exercising its option to purchase shares in PGR subject to the
satisfaction of certain conditions precedent for its benefit.
2. The Loan will mature on _____________, 20__.
3. The Loan will bear interest at such rate not in excess of ____% as
BGL shall specify from time to time by notice to the Recipient.
4. The Loan will be repaid preferentially from the first dividends, or
any other proceeds whatsoever, paid to the Recipient by PGR as a
distribution or return of capital on the shares held by the
Recipient, including the Recipient's share of the proceeds from the
winding up or sale of PGR, but will otherwise be non-recourse to the
Recipient.
5. While the Loan is outstanding, the Recipient shall not sell, assign,
promise, mortgage or in anyway encumber its shareholding in PGR.
If the foregoing correctly sets forth our agreement with respect to the subject
matter hereof, please so indicate by executing and returning to the undersigned
an executed copy of this Loan Agreement.
SCHEDULE E
MANAGEMENT AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT made effective as of the ____ day of
_________ 200_ between BOGOSO GOLD LIMITED, a company incorporated under the
laws of Ghana and having its registered office in Accra, Ghana (hereinafter
called "BGL") and PRESTEA GOLD RESOURCES LIMITED, a company incorporated under
the laws of Ghana and having its registered office in Accra, Ghana (hereinafter
called "PGR").
WHEREAS:
A. BGL is a shareholder of PGR which has interests in a mine and mineral
properties located in Ghana, Africa.
B. PGR desires BGL to provide the management services and to formalize an
agreement in writing with BGL with respect to such management services.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants and agreements contained in this agreement, BGL and PGR agree as
follows:
1. DESCRIPTION OF MANAGEMENT SERVICES
During the term of this agreement, BGL shall furnish to PGR the following
services as required and requested by PGR:
(a) general executive services, including without limitation periodic
advice and consultation to the Board of Directors and management of
PGR concerning general management of the affairs of PGR;
(b) business planning and development services, including without
limitation, assistance in the economic and technical evaluation,
acquisition and disposition of assets;
(c) cash management and investment services including without limitation
opening and operating appropriate accounts with banks, brokers and
others providing financial and investment services;
(d) other assistance with accounting and financial services, including
without limitation general accounting assistance, aid in preparation
of financial statements in accordance with Canadian generally
accepted accounting principles, aid in preparation of financial
reports, coordination of external audits, performance of internal
audits, advising on the application of Canadian generally accepted
accounting principles and financial accounting standards and
financial planning and budgeting;
(e) corporate secretary services including without limitation assistance
with and the maintenance of corporate records and minutes of
meetings and assistance in convening meetings of directors and
shareholders;
-2-
(f) governmental relations services including without limitation
assisting in the representation of PGR to governmental and other
regulatory agencies;
(g) risk management services including without limitation risk
assessment, evaluation of insurance coverage, negotiation with
insurance brokers, carriers and underwriters and the processing and
administration of insurance claims and including loss prevention
services, health and safety advisory services and property risk
management and also foreign currency hedging and commodity hedging
including the sale of gold and other precious metals and gold and
other precious metals derivative products in international markets
including negotiating and concluding forward contracts, deferred
delivery contracts and option contracts in respect of gold and other
precious metals;
(h) legal and tax services including without limitation regular and
periodic advice and consultation with respect to legal and corporate
income tax matters related to PGR and the preparation and filing of,
and assistance with respect to, federal, provincial, state and local
income, property, excise and other tax returns and reports to
governmental agencies and regulatory bodies, and negotiation and
review of contracts, leases and other legal documents, the
management of defense and prosecution of litigation and other legal
services furnished by independent counsel and the making of
recommendations with respect thereto (it being understood and agreed
that the fees and expenses of independent counsel shall remain the
expenses of PGR);
(i) technical geological support services including without limitation
research, development and evaluation services pertaining to
equipment, processes and techniques related to mining, extractive
metallurgy, minerals exploration and evaluation, environmental
services (including such services as are necessary or desirable to
assist PGR in complying with all environmental laws and regulations
applicable to mining related matters), and related health and safety
matters, and also including contract negotiation and engineering,
technical and financial control for engineering, design,
construction and operating contracts;
(j) human resource and staffing services including without limitation
advisory and administration services relating to employee hiring,
employee relations, compensation programs, employee benefit programs
and personnel and industrial relations matters;
(k) overseas procurement and logistical services including negotiation
of contracts for the acquisition of equipment, supplies and
services, the administration of commercial agreements including
shipping, invoicing and settlements; and
(l) such other services as may be required by PGR and which BGL is able
and willing to provide including without limitation general
administrative services and facilities for telecommunications,
transportation coordination, data processing and records management.
-3-
2. RECORDS AND COMPENSATION
(a) DETERMINATION OF COSTS. Subject to subsection 2(f), BGL shall keep or cause
to be kept complete and accurate records in accordance with Canadian
generally accepted accounting principles of all costs and expenses incurred
by BGL in the performance of BGL's obligations under this agreement. All
such records shall be kept so as to be readily susceptible to standard
auditing tests. Costs and expenses shall include without limitation all
direct costs and expenses incurred by BGL in the performance of such
obligations and fully allocated indirect costs and expenses, including
salaries and benefits of BGL personnel providing services to BGL under this
agreement, based on such reasonable policies and procedures for allocation
as may be agreed on by BGL and PGR, provided that salaries and benefits of
BGL personnel providing services to PGR under this agreement, other than
management services referred to in subsection 2(f), shall be allocated in
accordance with subsection 5(b) hereof. Without limiting the generality of
the foregoing, it is acknowledged that costs shall include travel and
transportation and telecommunication expenses to and from or within Canada,
the United States and Ghana, third party services referred to in section 5
herein and, with respect to employees of BGL assigned to work in Ghana, the
cost of all benefits paid for or to such employees including overseas
allowances and premiums, home leave and vacation allowances, housing, cost
of living and environmental allowances, insurance and other expenses
incurred by BGL in relation to such employees.
(b) ACCESS TO RECORDS. PGR or its duly authorized representative shall have the
right, at its expense, during reasonable business hours during the term of
this agreement and for one year thereafter to inspect the records and
accounts of BGL pertaining hereto and make such audit thereof as PGR may
deem necessary. BGL and PGR may from time to time agree upon accounting
procedures to eliminate unnecessary detailing of indirect and overhead costs
and other matters. BGL shall have the right, at its expense, to free access
during PGR's normal business hours to inspect the records and information of
PGR for the purpose of calculating the compensation payable to BGL pursuant
to this agreement.
(c) PERMANENTLY ASSIGNED PERSONNEL. BGL employees who are permanently assigned
to work on a full-time basis for and under the direction and control of PGR
shall be transferred to PGR's payroll and become employees of PGR if their
employment by PGR is permitted under applicable law. PGR and BGL shall
cooperate to effect any such permitted transfers.
(d) REIMBURSEMENT OF COSTS. Subject as hereinafter provided in subsections 2(e)
and (f) in respect of certain costs and certain personnel, PGR agrees to
reimburse BGL for all of the costs not otherwise reimbursed or compensated
hereunder which BGL incurs in the performance of this agreement.
(e) PART-TIME ASSIGNMENT TO PGR. For the services of BGL employees other than
management personnel referred to in subsection 2(f) that (i) work part-time
on projects or assignments for PGR, or (ii) are assigned full-time on
projects or assignments for PGR that are not intended to be permanent
assignments, PGR shall pay BGL an amount equal
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to 150% of the allocated Salary Costs incurred by BGL in respect of
providing the services of such employees. In addition, BGL will be entitled
to reimbursement of costs, not being Salary Costs, to which it may be
entitled pursuant to subsections 2(a) and 2(d).
(f) SERVICES BY BGL MANAGEMENT PERSONNEL. BGL and PGR acknowledge that it will
not be practicable for the BGL management personnel who will provide
periodic advice and consultation and other general executive services, to
maintain detailed records of the amount of time they devote to PGR's affairs
relative to BGL's affairs. Accordingly, it is agreed that BGL shall not be
obliged to maintain records in respect to such personnel with respect to the
amount of time they devote to PGR's affairs relative to BGL's affairs. For
the services of said personnel and expenses related to such services, PGR
shall pay BGL a fixed management cost/fee of U.S.$15,000 per month during
the term of this agreement.
(g) SERVICE FEE ON PURCHASES. In respect of procurement and logistical services
including negotiation of contracts for the purchase of equipment, goods,
supplies and services (collectively "purchase contracts") made by BGL on
behalf of PGR, at PGR's request, and the administration of such purchase
contracts, PGR shall pay BGL a one-time fee in respect of each such purchase
contract, such fee to be calculated as follows: at each calendar year end,
if the aggregate purchase price paid for purchase contracts entered into in
such calendar year is equal to or less than U.S.$3,000,000, BGL shall
receive a fee equal to 5% of such aggregate purchase price and, if the
aggregate purchase price paid for purchase contracts entered into in such
calendar year is greater than U.S.$3,000,000, BGL shall receive a fee equal
to 5% of U.S.$3,000,000 and 3% of the aggregate purchase price paid for
purchase contracts entered into in such calendar year in excess of
U.S.$3,000,000. For purposes of this subsection, "purchase price paid for
purchase contracts" means the aggregate price or the value of the
consideration payable by the purchaser of the equipment, goods, supplies or
services, as the case may be, pursuant to the purchase contract.
(h) CONTRACT GUARANTEES. If BGL, at PGR's request, provides or has provided at
any time, a financial guarantee in favor of a third party in respect of the
payment by PGR of any financial obligation under any contract with a third
party, BGL shall be entitled to charge a fee for each year or any portion
thereof (on a pro rata basis) that the guarantee remains in effect
calculated at the rate of 3% per annum on the aggregate maximum amount of
the financial obligation in each year. For the purposes of this provision a
year means each consecutive 12-month period during which a financial
obligation is guaranteed commencing on the day that BGL's guarantee becomes
effective.
(i) ANNUAL REVIEW. The provisions of subsections 2(e), (f), (g) and (h),
including as to determinations of compensation criteria and categories and
amounts payable thereunder, shall be subject to review and renegotiation
each year in connection with the preparation of the annual budgets of the
parties and the revision agreed upon between the parties shall be effective
as of the 1st day of January of such year. The purpose of the revision of
this agreement is to ensure that the amounts payable hereunder are neither
insufficient or excessive, as the case may be, for either PGR or BGL.
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(j) BGL will act in good faith in the determination of the costs and fees
charged to PGR under this agreement and shall, among other things, ensure
that there is no duplication of such costs and fees.
3. INVOICES AND PAYMENTS
BGL shall submit a detailed invoice each month for costs to be reimbursed and
fees and other compensation to which it is entitled in accordance with the
preceding provisions of this agreement. Each invoice shall describe in
reasonable detail the costs for which reimbursement is sought and the fees or
other compensation for which payment is sought, all of which shall be expressed
in United States dollars. Payment shall be made by PGR within 30 days after
receipt of the invoice in United States dollars at BGL's offices at Bogoso,
Accra or at such other place as BGL shall designate by notice to PGR. To the
extent it is necessary to secure the consent of any government or governmental
agency to any payment to BGL by PGR in United States dollars, PGR agrees to use
reasonable efforts to secure such consent but in the event the making of any
payment due to BGL in United States dollars is not possible or consent cannot be
obtained on a timely basis then BGL at its option may (i) agree to extend the
time for payment while reserving its rights under the following subclause (ii),
or (ii) take payment in another currency selected by PGR. Upon request of PGR,
BGL will prepare and submit an estimate of the costs and/or fees or other
compensation of any assistance requested by PGR pursuant to this agreement prior
to the rendering thereof.
4. TAXES ON THIS AGREEMENT
PGR shall withhold and pay all registration fees, remittance fees, stamp taxes
and similar taxes and charges, if any, in Ghana that are assessed upon this
agreement or upon payments made hereunder provided however that PGR shall not be
liable for taxes in the nature of income taxes upon the income of BGL in
relation to the payment of compensation to BGL in excess of BGL's costs under
this agreement.
5. PERSONNEL MATTERS
(a) QUALIFIED PERSONNEL. The general executive services described in subsection
1(a) include providing personnel with suitable qualifications and
experience. Subject to subsection 2(d), all such executives provided under
this agreement will remain employees of BGL and will be eligible to
participate in all benefit and bonus plans and programs of BGL. The salaries
and other compensation payable for the services of such personnel and
contractors will, subject to section 6, be paid by BGL, which will be
reimbursed by PGR in accordance with the provisions of sections 2 and 3.
(b) NON-EXCLUSIVE SERVICES. PGR acknowledges that BGL is not required to devote
its personnel and resources exclusively to or for the benefit of PGR and
that there can be no assurance that the services to be provided by BGL will
be available at all times and it is acknowledged that as a result of
services to be performed for BGL, the personnel of PGR
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(who are also employees of BGL) will generally be available to devote only a
portion of their time to the business of PGR.
(c) SPECIALISTS. If BGL needs to send a specialist (hereafter a "Specialist") or
a team of Specialists (hereafter a "Team") to PGR's premises and mines owned
by PGR the following provisions shall apply regardless of whether each such
Specialist is a BGL employee or a third party contractor:
(d) The Specialist or the Team shall use his or its own equipment and/or
materials or such equipment and/or materials that shall have been supplied
by or through BGL, except for any such equipment and/or materials made
available to them by PGR for this purpose, as described hereafter.
(e) It is specifically agreed that BGL will retain, under all circumstances, the
total control and the absolute right of instruction with respect to all work
done by the Specialist or the Team. In this capacity, BGL shall be solely
responsible for defining the Specialist's or the Team's tasks and for making
all necessary decisions in this regard.
(f) BGL shall keep PGR fully informed of the work progress and program of the
Specialist or the Team. PGR, for its part, shall have the right to inform a
BGL representative (hereinafter the "Representative"), in writing, of any
concerns or observations it may have in this regard from time to time,
provided that it shall be understood that BGL will have the sole discretion
to deal with any such concerns or observations as it sees fit.
(g) BGL shall give written notice to PGR of the name of the Representative. The
Representative will be granted authority to make any decisions with respect
to the work progress and program of the Specialist or the Team. The
Specialist or the Team shall be, at all times, under the hierarchical and
disciplinary control of BGL, as represented on-site by the Representative.
PGR shall not, at any time, communicate with the Specialist or the Team
directly with respect to any conduct or situation which may possibly give
rise to disciplinary action except in cases of emergency or for security
reasons.
(h) BGL shall undertake all necessary measures to ensure that the Specialist and
Team observes all of PGR's policies with respect to work hours, internal
policies and procedures, as well as health and safety measures. PGR shall
inform the Representative of any observations on its part of non-compliance
with these policies or discrepancies in the enforcement of these policies.
(i) PGR shall provide the Specialist or the Team with access to offices, a
secretary, a fax, a telephone, and company vehicle.
(j) It is expressly agreed that, subject to any requirements for PGR to directly
pay a third party contractor in accordance with section 6, the Specialist or
the Team will remain on BGL's payroll or be otherwise directly compensated
by BGL, as the case may be, and PGR will reimburse BGL wages and
compensation paid to the Specialist or the Team according to sections 2 and
3.
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6. THIRD PARTY SERVICES
If requested by PGR, BGL may, but will not be obligated to, contract for and pay
for services, which in BGL's reasonable judgment are customarily and more
effectively performed by third parties, such as law firms, engineering firms,
consultants, and independent accountants. BGL may, but need not, contract for
such services on behalf of PGR as agent for PGR and the costs of such services
may be charged directly to and in such case shall be paid by PGR. BGL will
retain total control and absolute right of instruction over such third parties
in connection with services contracted for the purposes of this agreement
regardless of the manner in which their services are contracted. Notwithstanding
the foregoing, nothing herein shall preclude PGR from directly retaining outside
third party contractors for such purposes as PGR deems appropriate. Nothing
herein shall oblige BGL to provide any financial or other guarantees in favor of
third parties in respect of any obligations of PGR to third parties.
7. TERM OF THE AGREEMENT
Subject to section 2 i), this agreement shall be for a term of five years
commencing ________, and ending _______________, provided that this agreement
may be earlier terminated by either party upon giving written notice of
termination to the other party not less than 180 days prior to the termination
date designated in such notice. If such notice is given this agreement shall
terminate on the termination date so designated.
8. AUTHORIZATION
PGR represents that PGR's Board of Directors has approved the terms of this
agreement.
9. LOSSES AND LIABILITIES
Except as herein otherwise provided, neither party (the "first party") shall be
liable to the other party (the "second party") for any losses or liabilities
sustained or incurred by the second party, except such losses and liabilities as
may result from the first party's gross negligence or willful misconduct or from
the willful and intentional breach by the first party of one or more of the
provisions of this agreement, and then only to the extent that such losses and
liabilities are not covered by the second party's insurance.
Under no circumstances shall either party be liable to the other for indirect or
consequential damages. Under no circumstance shall BGL be responsible for any
damages, loss, costs or expenses suffered, incurred or sustained by PGR in
respect of financial contracts including without limitation contracts with
respect to the purchase and/or sale of foreign currency whether losses are the
result of exchange rate fluctuations or otherwise, entered into in good faith by
BGL on behalf of PGR or otherwise for the purposes of this agreement.
Notwithstanding subsection 9(a) but subject to subsection 9(b), PGR hereby
indemnifies and agrees to hold BGL harmless from and against any and all claims,
demands, suits, actions, losses, damages and liability of whatsoever nature
arising directly or indirectly out of the performance
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or purported performance of services or other obligations under this agreement
by BGL or its employees, agents or contractors, except only as and to the extent
the same arise directly from the gross negligence or willful misconduct of or
the willful and intentional breach of this agreement by BGL or its employees or
agents. PGR will indemnify BGL as aforesaid in respect of claims by and
liability to anyone sustained by BGL by reason of anyone relying on information
furnished by or purporting to be furnished by PGR to BGL for the purposes of
this agreement. PGR will also bear all risk and will indemnify BGL as aforesaid
in respect of claims by and liability to anyone sustained by BGL by reason of
BGL, its employees or agents acting or admitting to act on instructions and
authorization of PGR or accepted by BGL in good faith as being made with the
authority of PGR.
10. FORCE MAJEURE
If BGL is unable, wholly or in part, by reason of any occurrence beyond the
reasonable control of BGL, to carry out any obligation under this agreement, the
performance of such obligation, to the extent and during the time that it is so
affected, shall be suspended. BGL shall notify PGR promptly of such
circumstances and exercise due diligence in attempting to perform its
obligations. Fees under this agreement shall be reduced proportionally to
reflect the non-performance of those services suspended under this provision.
BGL shall use its best efforts to reinstate the services suspended under this
provision as soon as practicable and to mitigate the adverse effects on PGR of
such suspension.
11. CONFIDENTIALITY
BGL shall not, without the prior written consent of PGR, disclose to any third
party any information about PGR acquired or developed pursuant to the
performance of this agreement, except as provided in subsection 11(b).
The consent required by subsection 11(a) shall not apply to the following
disclosure, provided that in cases (ii) and (iii) below that BGL shall use its
reasonable best efforts to preserve the confidentiality of such information
against further disclosures:
(a) information disclosed as required by law or the regulations of any
stock exchange on which any shares of BGL are listed or as may be
required by the regulations or policies of any securities commission
or other securities regulatory agency, governmental agency or other
authority of competent jurisdiction and the requirements of any
court (and BGL shall notify PGR of any such disclosure); or
(b) information disclosed as necessary for debt or equity financing
purposes; or
(c) information disclosed that BGL acting reasonably deems to be
necessary to be disclosed for the proper performance of its
obligations under this agreement including without limitation
disclosure of information to consultants and other third parties
engaged by or assisting BGL in accordance with the terms of this
agreement in order to carry out the purposes of this agreement.
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12. COMPLIANCE WITH LAW
BGL shall comply, and use its best efforts to ensure compliance by all of its
employees, agents and contractors, with all applicable laws, statutes, rules,
regulations, orders, and permit and license terms and conditions of all federal,
state or provincial, and local governments and governmental agencies, and all
applicable orders of courts and administrative tribunals of competent
jurisdiction, affecting BGL or the business and operations of PGR managed by
BGL.
13. POWER OF PGR
Nothing herein shall affect the overall powers and duties of the Board of
Directors and management of PGR to manage the affairs of PGR.
14. ASSIGNMENT
This agreement shall not be assigned in whole or in part by either party without
the prior written consent of the other party; provided that this section shall
not preclude or restrict BGL from engaging such contractors (subject to the
applicable provisions of this agreement) as it deems necessary or prudent to
perform in whole or in part any of the services required to be provided by BGL
under this agreement.
15. NOTICES
All notices and other communications required or permitted to be given under
this agreement shall be in writing and shall be deemed given when actually
delivered to an officer of the addressee party; or five days after being
deposited in the official mail system of the country of the party giving such
notice or other communication, postage pre-paid for air mail delivery, addressed
to the addressee party as provided below; or when given by facsimile
transmission to the addressee party facsimile number given below and written
confirmation of satisfactorily completed transmission is received. The addresses
of the parties for purposes of this section 15 are as follows, and either party
may change its address or facsimile number by notice given to the other party
pursuant to this section 15:
BGL:
Bogoso Gold Limited
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Area,
▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇
▇▇▇▇▇
Fax. ▇▇▇▇ ▇▇ ▇▇▇▇▇▇
Attention: Managing Director
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PGR:
Prestea Gold Resources Limited
▇▇ ▇▇▇ ▇▇▇,
▇▇▇▇▇
▇▇▇▇▇
Fax: ▇▇▇ ▇▇▇▇▇▇
Attention: Chairman
16. WAIVER
Any delay or omission or failure to exercise any right or remedy provided in
this agreement shall not constitute a waiver of any provision of this agreement
and shall not limit any party's right thereafter to enforce any provision or
exercise any right.
17. GOVERNING LAW
This agreement shall be deemed to have been made in and shall be governed by and
construed in accordance with the laws of Ghana.
18. ASSURANCES
Each of the parties hereto shall sign all documents and do all such things as
may be reasonably necessary or desirable to give full effect to this agreement.
19. COUNTERPARTS
This agreement may be executed in two counterparts, each of which when so
executed shall be deemed to be an original, and such counterparts together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the
date first above written.
BOGOSO GOLD LIMITED
By:
-------------------------------- ------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇ Witness
Managing Director
PRESTEA GOLD RESOURCES LIMITED
By:
-------------------------------- ------------------------------------
▇▇▇▇▇▇ ▇▇▇▇ Witness
Chairman
SCHEDULE F
PGR LIABILITIES
PGR has delivered to BGL a list of liabilities as at 30 September, 2001
aggregating $5,976,845.70. It will be obligated to deliver on the Closing Date a
revised list showing changes, additions and deletions as of the Closing Date.
SCHEDULE G
SHAREHOLDERS AGREEMENT
1. PARTIES
- Bogoso Gold Limited
- GMWU
- Government of Ghana
- Investors
- Prestea Gold Resources Limited
- Trust
2. DEFINITION AND INTERPRETATION
"AFFILIATE" means any legal entity, wherever incorporated or constituted, which
directly or indirectly controls, is controlled by, or is under common control
with a Shareholder and, for this purpose, "control" means the ownership of or
right to exercise control of more then fifty percent (50%) of the voting rights
at a general meeting of shareholders or other equivalent constitutional meeting
and, through such ownership or right, to elect at least a majority of the Board
or other persons with substantially equivalent power to manage and direct the
affairs of such legal entity.
"AGREEMENT" means this shareholders' agreement and all schedules and instruments
in amendment or confirmation of it; "hereof", "hereto", and "hereunder" and
similar expressions mean and refer to this Agreement and not to any particular
Article, Section, Subsection or other subdivision; "Article", "Section",
"Subsection" or other subdivision of this Agreement followed by a number means
and refers to the specified Article, Section, Subsection or other subdivision of
this Agreement.
"BGL" means Bogoso Gold Limited, registration no. 29,939, a company incorporated
according to the laws of the Republic of Ghana.
"BOARD" means the board of directors of the Company constituted in accordance
with the provisions of this Agreement and "DIRECTOR" means any member thereof
who has been elected or appointed to the Board in accordance with the provisions
of this Agreement.
"BUSINESS DAY" means any day other than a Saturday, Sunday or official public
holiday in the city of Accra, Ghana.
"CODE" means the Companies Code 1963 (Act 179).
"COMPANY" means Prestea Gold Resources Limited.
"CONTROL" means (i) in relation to a Person that is a corporation or company,
the ownership, directly or indirectly, together with Associates and Affiliates,
of Voting Securities of such Person carrying more than 50% of the voting rights
attaching to all Voting Securities of the corporation
-2-
or company and which are sufficient, if exercised, to elect a majority of its
board of directors; (ii) in relation to a Person that is a partnership, limited
partnership, business trust or other similar entity, the ownership, directly or
indirectly, together with Associates and Affiliates, of Voting Securities
entitling such holders to exercise control and direction over the activities of
such entity; and (iii) in relation to a Person that is a family trust or other
similar entity, trusteeships or ownership, directly or indirectly, of legal or
beneficial interests entitling the holders thereof to exercise control and
direction over the activities of such Person "Controls" and "Controlled" shall
have similar meanings.
"DOLLARS" OR "$" means the currency which is, from time to time, legal tender
for the payment of all private and public debts in the United States of America.
"EFFECTIVE DATE" means _________ 200__.
"FINANCIAL YEAR" means a period of twelve (12) months ending on December 31 or
such other date as may be determined by the Board from time to time.
"FISCAL YEAR" means the fiscal period of the Company, which initially shall be
the calendar year, as such Fiscal Year may from time to time be changed in
accordance with the provisions this Agreement.
"FORCE MAJEURE" means any cause, whether foreseeable or unforeseeable, beyond a
party's reasonable control, including, without limitation, labour disputes
(however arising and whether or not employee demands are reasonable or within
the power of such party to grant); acts of God; laws, regulations, orders,
proclamations, instructions or requests of any government or governmental
entity; judgments or orders of any court; inability to obtain on reasonably
acceptable terms any public or private license, permit or other authorization;
curtailment or suspension of activities to remedy or avoid an actual or alleged,
present or prospective violation of federal, state or local environmental
standards; acts of war or conditions arising out of or attributable to war,
whether declared or undeclared; riot, civil strife, insurrection or rebellion;
fire, explosion, earthquake, storm, flood, sinkholes, drought or other adverse
weather condition; delay or failure by suppliers or transporters of materials,
parts, supplies, services or equipment; contractor' or subcontractors' shortage
of, or inability to obtain, labour, transportation, materials, machinery,
equipment, supplies, utilities or services; accidents; breakdown of equipment,
machinery or facilities; or any other cause whether similar or dissimilar to the
foregoing.
"GOVERNMENT" means the duly constituted government of the Republic of Ghana or
any political subdivision thereof, whether federal, state, local or foreign, or
any judicial body, agency or instrumentality of any such government or political
subdivision.
"GMWU" means the Ghana Mineworkers Union of TUC (Ghana).
"LEASE AREA" means the area described in Schedule A to the Mining Lease.
"MANAGER" means BGL in its capacity as the manager under the Management
Agreement.
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"MANAGEMENT AGREEMENT" means the management agreement between BGL and the
Company dated _____________, 200__.
"REGULATIONS" means the Regulations of the Company in force at the date hereof,
as such Regulations may from time to time be amended in accordance with the
provisions of this Agreement.
"MINING LEASE" means the lease dated June 29, 2001 whereby the Company was
granted mineral rights in the Lease Area for gold and other associated mineral
substances lying and being under the surface below a vertical depth of 150
metres below sea level.
"PARTIES" means, collectively, the Company and the Shareholders and "Party"
means any one of them.
"PERSON" means an individual, partnership, corporation, trust, unincorporated
association, joint venture, governmental entity or other entity or other entity,
and pronouns have a similarly extended meaning.
"SHAREHOLDERS" means, collectively, BGL, GMWU, the Investors, BGL on behalf of
the Trust, Government and any other Person to whom Shares are transferred in
accordance with the provisions of this Agreement.
"SHARES" means the shares in the capital of the Company, as presently
constituted.
"TRUST" means the independent non-profit making body established by Deed of
Trust dated ________, 200__ that shall be the beneficiary of 10% of the shares
of PGR.
"THIS AGREEMENT" means this agreement together with the schedules and annexures
hereto.
INTERPRETATION
- Any reference in this Agreement to gender shall include all genders, and
words importing the singular number only shall include the plural and vice
versa.
- The division of this Agreement into Articles, Sections, Subsections and
other subdivisions and the insertion of headings are for convenience of
reference only and shall not affect or be utilized in the construction or
interpretation of this Agreement.
- Any Article, Section, Subsection or other subdivision of this Agreement or
any other provision of this Agreement which is, or becomes, illegal, invalid
or unenforceable shall be severed from this Agreement and be ineffective
only to the extent of such illegality, invalidity or unenforceability and
shall not affect or impair the remaining provisions hereof.
- This Agreement constitutes the entire agreement between the Parties
pertaining to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of
the Parties.
- This Agreement may only be amended, modified or supplemented by a written
agreement signed by all of the Parties.
-4-
- No waiver of any of the provisions of this Agreement by any Party shall be
deemed to constitute a waiver of such provision by any other Party or a
waiver by such Party of any other provision, (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided in writing duly executed by the Party to be bound thereby.
- Where the word "including" or "includes" is used in this Agreement it means
"including (or includes) and without limitation".
- Any references herein to any law, by-law, rule, regulation, order or act of
any government, governmental body or other regulatory body shall be
construed as a reference thereto as enacted at the date hereof as such law,
by-law, rule, regulation, order of or act may be amended, re-enacted or
superseded from time to time.
- In this Agreement, unless the context otherwise requires, any reference to a
transfer of securities, Shares or Voting Securities of a Person shall
include any agreement, arrangement or understanding by which legal title to
or beneficial ownership of such securities passes from one Person to another
Person, or to the same Person in a different legal capacity, whether or not
for value, and a transfer shall include any sale, assignment, gift, exchange
or conversion of such securities, or the granting of any security interest,
lien, pledge, mortgage, hypothecation or charge in or to such securities.
3. SHAREHOLDERS' RELATIONSHIP
Effective the date hereof the Shares of the Company are held as follows:
- BGL - Shares
- GMWU - Shares
- BGL in Trust - Shares
- Investors - Shares
- Government - Shares
- Effective the date of this Agreement the relationships among the
Shareholders shall be governed by the provisions of this Agreement and by
the Memorandum and Articles, it being understood and agreed that, in the
event of any inconsistency between the two, the provisions of this Agreement
shall prevail.
- This Agreement represents the entire Agreement between the Shareholders
relating to the subject matter hereof and supercedes all prior agreements
and arrangements between the Shareholders or any of them and their
predecessors.
- The Shareholders hereby agree that: (a) they will so act as Shareholders;
and (b) they will cause their nominees who are Directors to so act as
Directors, as to give effect to the provisions of this Agreement.
- The Trust acknowledges to the other Parties that it has entered into an
instrument whereby BGL is irrevocably and unconditionally authorized to vote
the Shares beneficially owned by the Trust on all matters on which such
shares may be voted.
- This Agreement shall continue in effect so long as there is more than one
Shareholder or until the parties agree otherwise in writing.
- During the continuance of this Agreement, none of the Shareholders shall
deal with any Shares or any interest therein or transfer or agree to
transfer any Shares now or hereafter held
-5-
by such Shareholder except in accordance with this Agreement. A purported
transfer of any Shares in violation of this Agreement shall not be valid and
the Company shall not register, nor permit any transfer agent to register,
any such Shares on the securities register of the Company, nor shall any
voting rights attaching to or relating to such Shares be exercised, nor
shall any purported exercise of such voting rights be valid or effective,
nor shall any dividend or distribution be paid or made on such Shares. Each
Shareholder who purports to make a transfer of any Shares in violation of
this Agreement agrees to donate and hereby donates to the Company all
dividends and distributions paid or made on such Shares during the period of
such prohibited transfer. The provisions of the immediately preceding
sentence are in addition to, and not in lieu of, any other remedies to
enforce the provisions of this Agreement.
4. BUSINESS OF THE COMPANY
The business of the Company shall be the operation of an underground mine in
accordance with the provisions of the Mining Lease, the Joint Operating
Agreement, and Business Plans adopted by the Board from time to time on the
recommendations of the Manager.
5. SHARE CAPITAL
CASH CALLS
- Future exploration, development and mining costs for the Company will be
funded from cash flow from operations.
- The Parties, other than the Government, may have to contribute additional
funds in the form of shareholders loans or additional share subscriptions to
the Company or suffer dilution.
- In the event that the rationalizing of the Company's assets and reducing its
inventory (by consignment stock agreements) does not provide sufficient
working capital: the Shareholders, other than the Government, will support
the Company, by undertaking to provide additional funds in proportion to
their respective shareholdings at the time the new funds are deemed required
by the Board.
- On the basis of an adopted budget, the Company will submit to each
Shareholder, other than the Government, prior to the last day of each month,
a billing for estimated cash requirements for the next month.
- Within 15 days of receipt of each billing, each Shareholder will be required
to advance to the Company its proportionate share, based on its then
shareholding, of the estimated amount.
NON-PAYMENT OF CASH CALLS
- The additional working capital is to be provided as shareholder loans will
bear interest at LIBOR plus 2%.
- In the event that one or more Shareholders are unable to fund their portion
of a cash call made by the Company pursuant to an adopted budget, then the
remaining parties may advance the defaulting Shareholders portion.
- The advance made by a non-defaulting Shareholder on behalf of the defaulting
party will be treated as a demand note and will bear interest at LIBOR plus
3%.
-6-
- The defaulting Shareholder will have sixty (60) days after written notice of
default is given to (a) cure the default and either participate in the cash
call or reimburse the demand loan made by the non-defaulting Shareholder, or
(b) dilute as provided below.
DILUTION
- Upon failure to cure the default, the defaulting Shareholder's shareholding
will be diluted on a straight line basis in accordance with the standard
industry practice as outlined in Rocky Mountain Mineral Law Foundation's
Form 5A.
FUNDING BY THIRD PARTY LOANS
- In the event of funding requirements which cannot be funded by cashflow, BGL
shall be permitted to arrange debt financing from third parties.
- The Board and Shareholders of the Company shall provide all the necessary
approvals required for the establishment of third party loans, including but
not limited to the provision of any security over the mining title and
assets of the Company and commitment to gold refining, sales and hedging
undertakings.
6. BOARD OF DIRECTORS
- The business of the Company shall be conducted by the Board in the best
interests of the Company on sound commercial profit-making principles and in
accordance with the guidelines, principles and standards agreed and adopted
by the Shareholders from time to time, so as to generate the maximum
achievable maintainable profits available for distribution to Shareholders.
- The Board will consist of seven directors and seven alternates, of whom
three directors and three alternates will be nominated by BGL, two directors
and two alternates by GMWU, and one director and one alternate by each of
the Investors and the Government of Ghana.
- Directors' fees commensurate with the custom and practice of Ghana will be
paid to any Directors that are not full time employees of the Company, BGL
or its affiliates.
- Any reasonable expenses incurred by the Directors in performing their
responsibilities and attending meetings will be paid by or reimbursed by the
Company, upon presentation of appropriate documentation.
BOARD MEETINGS AND VOTING
- Meetings will be held in Ghana.
- The Chairman will be appointed by BGL and will have a casting vote in the
event of a tie on any resolution.
- Directors may be represented by alternates or substitutes to the extent
allowed by Ghana law.
- A quorum will be four directors (including those represented by alternates
or substitutes) of whom at least one is a BGL nominee and one is a GMWU
nominee. If at any meeting a quorum shall not be present by reason only of
the fact that the nominees are absent, then, the meeting shall stand
adjourned to the same day and time three weeks later and at that meeting the
quorum requirements shall be any two directors.
-7-
DECISIONS OF DIRECTORS
- A decision of the Board must be approved either by a resolution passed by
the affirmative vote of not less than that number of directors present and
constituting a quorum at a meeting of directors duly called or by an
instrument signed by all the directors.
- The Board has the authority to deal with everything except items
specifically required by Ghanaian law to be dealt with by the Shareholders
and except any decision to suspend, significantly curtail or cease
operations.
- No resolution will be effective unless it has been passed by the affirmative
vote of at least one nominee of BGL and one nominee of GMWU.
PROCEEDINGS AND MINUTES OF BOARD
- The Secretary of the Company shall keep minutes of each meeting and shall
provide a copy of such minutes in draft form to each Director and alternate
or substitute in attendance as soon as practicable but in any event no later
then fourteen (14) days after each meeting.
- Following receipt of draft minutes of any meeting, Directors and alternates
or substitutes who were in attendance shall provide to the Secretary within
a further period of ten (10) days a copy of the draft marked to show
suggested additions, revisions and deletions to the draft minutes. The
Secretary shall then circulate a revised draft reflecting such suggestions.
A Director or substitute in attendance who fails to provide a draft showing
suggested additions, revisions and deletions within such a time period shall
be deemed to have approved the minutes in the form circulated by the
Secretary. At the next following Board meeting the draft minutes shall be
discussed by the Board in light of all suggested additions, revisions and
deletions following which the Secretary shall prepare and circulate revised
minutes reflecting the results of the Board Discussion.
- Within ten (10) days following such Board meeting the Secretary shall
provide a copy of the final text of such minutes to each director and
alternate and substitute. If no further comments are received by the expiry
of a further period of ten (10) days the minutes as so provided by the
secretary shall be deemed to have been approved by the Board and shall be
signed. If further comments are received prior to the expiry of such a
period, the minutes shall be discussed and finalized by Majority Decision at
the next Board meeting, following which they shall again be circulated and
finalized in accordance with the procedures set out in the immediately
preceding sentence. Pending finalization the Company shall be entitled,
unless the Board by Majority Decision in any specific case resolves
otherwise, to conduct its business on the assumption that Board decisions
included in draft minutes provided to each Director and alternate by the
Secretary have been made as set out in the draft minutes.
BOARD COMMITTEES
- The Board will have such committees as is determined by Board resolution.
7. SHAREHOLDERS AND VOTING
- Shareholders meetings shall be held annually for the purposes of appointing
the Board and transacting the other business; and at such other times as may
be required to transact any other business.
-8-
- A quorum for a meeting of Shareholders shall be at least two individuals
present in person and holding or representing by valid proxy not less than
25% of the outstanding Shares.
- All matters requiring shareholder approval shall be approved by a majority
of the votes cast at a meeting or by a written resolution signed by
Shareholders holding 50% of the Shares, subject to any higher percentage
required by the Code for specific items.
- Any decision to suspend, significantly curtail or cease operations will
require the affirmative vote of holders of not less than 70% of the Shares.
8. MANAGEMENT
- The Company will have a Chairman who will be the nominee of BGL.
- The Company will have a Managing Director and a Secretary who will each have
such duties and responsibilities as are determined by the Board.
- Day to day management shall be performed by the Manager, who, as long as BGL
owns at least 30% of the Shares, will be BGL, in accordance with the
Management Agreement.
9. FINANCIAL
- The Company shall maintain proper company and accounting records and shall
cause monthly and annual financial statements to be prepared in accordance
with generally accepted accounting principles.
- PricewaterhouseCoopers, or such other internationally recognized firm of
accountants agreed in writing between the Parties, shall be auditors of the
Company.
- Budgets shall be approved annually based on draft budgets presented by the
Managing Director.
- Prior to the commencement of each Financial Year, the Company will send to
the Directors draft Budgets for each category of activity to be undertaken
by the Company in such Financial Year.
- The draft budget will be circulated to the Board for consideration, to be
approved annually no later then 30 days after the commencement of each year.
10. RESTRICTION ON TRANSFER
- No Share transfers will permitted except as provided in this Agreement.
- Neither the GMWU nor the Trust may transfer any of their respective Shares
so long as either of them is indebted to BGL in respect of any portion of
the subscription price.
- BGL will be entitled to transfer its Shares to any Affiliate or third party
who agrees to be bound by the terms of this Agreement.
- The Investors will be permitted to transfer Shares amongst themselves or to
Affiliates who agree to be bound by the terms of this Agreement.
- No Shareholder will be entitled to pledge its Shares unless the pledgee
agrees to be bound by the terms of this Agreement.
-9-
- Subject to the foregoing, a Shareholder wishing and entitled transfer any of
its Shares must first offer its Shares to the other Shareholders (except the
Government), on a pro rata basis, at the same price and on the same terms on
which they would sell them to a third party.
- If Shareholders holding in the aggregate of not less than -% of the
outstanding Shares wish to sell all of their shares to a third party, the
remaining Shareholders (except the Government) may be required by such
selling Shareholders to sell their shares to such third party on the same
terms and conditions under which that party is purchasing the Shares from
the selling Shareholders.
11. DEFAULT
- A Shareholder shall be in default under this agreement if, at any time (a)
such Shareholder is in breach of any of its material obligations under this
Agreement and which continues for seven (7) days after notice by the Company
specifying such breach given to all Shareholders; (b) bankruptcy, insolvency
- Non defaulting Shareholders may acquire the defaulting Shareholder's shares
for their fair market value.
12. DISPUTE RESOLUTION
- Any dispute, controversy or claim arising under or in connection with this
Agreement, and which cannot be resolved within sixty (60) days of attempted
negotiations between the Parties, shall be settled by arbitration in
accordance with this section.
- Matters subject to arbitration shall be settled by arbitration in accordance
with the rules and regulations of the London Court of International
Arbitration in effect on the date of this agreement.
- The place of arbitration shall be London England.
- The language of the arbitration shall be English.
- The arbitration shall be the sole and exclusive forum for resolution of the
dispute or controversy and the award shall be final and binding.
- A Party may demand arbitration by delivering a written notice thereof to the
other Party setting forth a complete, concise statement of the issue(s) in
dispute, the amount involved and the remedy requested.
- The arbitrators shall render a written decision within six months after
having been appointed.
- Notwithstanding anything herein, the arbitral panel shall have the power to
decide any dispute ex aequo et ▇▇▇▇, with the objective of deciding such
matters fully in accordance with the intent of the Parties as indicated by
this Agreement.
- The arbitrator(s) shall have the right to award or include in their award
any relief which they deem proper in the circumstances, including, without
limitation, money damages (with interest on unpaid amounts from date due),
specific performance, injunctive relief and legal fees and costs in
accordance with this section.
- The arbitrator(s) shall not have the authority to award exemplary, punitive,
consequential or special damages and each Party shall be limited to the
recovery of any actual damages sustained by it.
-10-
- The number of arbitrators shall be three. One arbitrator shall be nominated
by each of the Parties and shall then agree on the appointment of a third
arbitrator, who shall be disinterested in the dispute and shall have no
connection with any party.
- All arbitrators shall be persons having experience in the minerals industry
- Unless the three arbitrators have been appointed within thirty (30) days
after the date on which either Party requests the settlement of any dispute
by arbitration pursuant to this Section, the London court of International
Arbitration shall appoint the three arbitrators referred to above. The
appointing authority may appoint from among nationals of any country,
whether or not a Party is a national of that country.
13. GENERAL
- The interpretation and performance of the Agreement shall be governed by the
laws of the Republic of Ghana.
- The Party's obligations will be suspended for the duration of a Force
Majeure event.
- Confidentiality and non-disclosure obligations.
- All Notices shall be in writing and may be given by being delivered or sent
by facsimile or mail to the authorized address of the Shareholder and the
Company.
14. SHAREHOLDER WARRANTIES
- Each of the Shareholders represents and warrants to each other Shareholder
that it has the capacity to enter into and perform this agreement and all
the obligations contemplated herein and that all corporate and other actions
required to authorize it to enter into and perform this Agreement have been
properly taken
- that such Shareholder owns beneficially and of record the number of Shares
which are expressed to be owned by such Shareholder in the Agreement, that
such Shares are not subject to any mortgage, lien, charge, pledge,
encumbrance, security interest or adverse claim and that no Person has any
rights to become a holder or possessor of any of such Shares or of the
certificates representing the same;
- if such Shareholder is an individual, that such Shareholder has the capacity
to enter into and give full effect to this Agreement;
- if such Shareholder is a corporation, that it is duly incorporated and
validly existing under the laws of its jurisdiction of incorporation and
that it has the corporate power and capacity to own its assets and to enter
into and perform its obligations under this Agreement;
- if such Shareholder is a trust, partnership or joint venture, that it is
duly constituted under the laws which govern it and that it has the power to
own its assets and to enter into and perform its obligations under this
Agreement;
- that this Agreement has been duly authorized and duly executed and delivered
by such Shareholder and constitutes a valid and binding obligation
enforceable in accordance with its terms, subject to the usual exceptions as
to bankruptcy and the availability of equitable remedies;
- that the execution, delivery and performance of this Agreement does not and
will not contravene the provisions of its articles, by-laws, constating
documents or other
-11-
organizational documents or the documents by which it was created or
established or the provisions of any indenture, agreement or other
instrument to which such Shareholder is a party or by which such Shareholder
may be bound;
- that all of the foregoing representations and warranties will continue to be
true and correct during the continuance of the Agreement.
SCHEDULE H
DETAILED LIST AND COSTING OF WORKING CAPITAL AND SPARE PARTS
REQUIREMENTS FOR PGR
BGL has received the list contained in PGR's letter dated 27th October, 2001
detailing requirements for $500,000.
SCHEDULE I
TOLL PROCESSING AGREEMENT
1. BGL OBLIGATIONS
- to purchase 100% of ore produced by PGR from the PGR Lease Area during the
term of the Agreement, which shall be crushed to a closed size set of 10.16
cm. (4 inches) containing more than 3 g/t of gold per ton measured over a
period of 24 hours and delivered at a rate greater than 100 tonnes per day
for the duration of a 7-day measurement period ("PGR Ore");
- to take delivery of PGR Ore at PGR's Central Shaft headgear bin, title and
risk therefore passing to BGL at the point where the PGR Ore discharges from
the conveyor known as CV 4 and enters into the cylindrical ropeway bin;
- to intermingle PGR Ore with its own ore and process it in such manner as BGL
deems appropriate;
- to provide, maintain, calibrate and operate tonnage measurement and sampling
facilities satisfactory to PGR acting reasonably and to maintain and operate
such cylindrical ropeway bin and loading facilities as BGL may require;
- to permit PGR and its duly authorized technical representatives unrestricted
access to measurement and sampling facilities;
- to perform gold assay either at BGL's facilities or at an independent
facility selected by BGL;
- to permit PGR to check at its expense all assayed samples; and
- to pay PGR, as provided under "Payment", for all ounces of fine gold hoisted
in PGR Ore.
2. PGR OBLIGATIONS
- to provide 100% of PGR Ore for purchase and treatment by BGL during the term
of the Agreement;
- to maintain and operate all ore handling facilities from underground up to
and including CV 4;
- to provide BGL's employees and representatives with unrestricted access to
the weighing, loading and sampling facilities to carry out their
operational, supervisory, maintenance, calibration and security duties; and
- to pay all taxes and royalties on the gold produced from PGR Ore.
-12-
3. MEASUREMENT AND ASSAY
- Moisture sampling to determine percentage of dry solids shall be conducted
on a shift basis, and total tonnage hoisted shall be adjusted to dry tonnage
prior to calculating gold hoisted.
- Dry tonnes hoisted per shift shall be computed against the weighted average
of gold grade for the relevant shifts to determine the cumulative ounces of
gold hoisted over a seven (7) day period.
- Each sample shall be split into three (3) identical portions of which: the
first portion shall be submitted to the BGL laboratory, or an independent
laboratory of BGL's choice, for gold analysis; the second portion shall be
made available to PGR; and the third portion shall remain in safekeeping for
use in disputes.
- Sample analysis shall make use of the Catalyst Cyanide Assaying technique
wherein large samples are bottle rolled in ▇▇▇▇▇ WELL catalyst for one hour.
- This laboratory technique is specified in order to eliminate the effects of
"free gold scatter and to reduce assay time, thereby allowing faster
determination of the PGR Ore grade.
- LeachWELL(TM) 60X shall be used as the catalyst; industry approved
procedures shall be employed.
- PGR or BGL may at any time submit a written request to review the assay
methodology, which may then be amended accordingly by agreement between the
parties.
4. PAYMENT
- Payment for the PGR Ore hoisted in each seven-day period ending at 8:00 AM
Monday (the "Measurement Period") shall be made by 5:00 PM on the following
Monday.
- Payment shall be calculated as follows:
PAYMENT = DMT X WAG X MRF UOC X 31.1035
--------------- * [ LGF - ------------- ]
31.1035 WAG
- Where:
(i) PAYMENT is the amount calculated in United States dollars to be
paid to PGR on the Monday following each Measurement Period.
Payment shall be made in a combination of Ghanaian Cedi and United
States dollars, in accordance with the provisions of the Foreign
Exchange Retention Agreement entered into between BGL and the
Government of Ghana.
(ii) DMT is the number of dry metric tonnes of PGR Ore hoisted during
the Measurement Period.
-3-
(iii) WAG is the weighted average grade in grams per tonne of the PGR
Ore hoisted during the Measurement Period.
(iv) MRF is the metallurgical recovery percentage factor for the PGR
Ore, which is agreed to be 81%. PGR or BGL may at any time submit
a written request to review the MRF, which may then be amended
accordingly by agreement between the parties.
(v) 31.1035 is the number of grams in each ▇▇▇▇ ounce.
(vi) LGF is the London PM Gold Fix by the LME in United States dollars
per ▇▇▇▇ ounce of gold on the Wednesday immediately following the
Measurement Period.
(vii) UOC is the Unit Operating Cost, which is estimated to be $17.80
per tonne of PGR Ore, based on the PGR published production and
cost figures for the period January 2000 to August 2001 and
subject to final agreement between the parties.The UOC will be
subject to a rise and fall formula based on the input cost of key
variables to be agreed between the parties.
- For the duration of any period (other than a force majeure period which
would have affected the PGR plant) during which BGL is unable to transport
or treat PGR Ore, BGL shall be obligated to purchase all PGR Ore produced by
PGR and make payments to PGR as if such PGR Ore had been transported and
treated by BGL in accordance with the provisions of the Agreement. For
greater certainty, BGL shall be responsible for all additional costs
incurred during such period.
5. EXCLUSIONS
- BGL shall not be obligated treat or pay for PGR Ore hoisted, which otherwise
complies with the requirements for PGR Ore as defined above but whose
weighted average assay return is less than 3 g/t for a seven-day period.
- Where the weighted average assay return for any 24-hour period is less than
3 g/t, BGL may, having taken reasonable steps to inform PGR thereof,
stockpile all PGR Ore at an area close to Central Shaft designated by PGR,
until such time as the weighted average assay return is once again more than
3 g/t.
- Title and risk of PGR Ore so stockpiled shall return to PGR. In the event
that BGL subsequently agrees to accept such stockpiled ore, title and risk
shall be assumed by BGL once the ore has been reloaded;
- All costs incurred in stockpiling such ore as well as any rehandling, will
be for PGR's account and may be offset by BGL from any future payments due
to PGR.
- BGL shall not be obligated to, pay for or treat PGR Ore hoisted, whose total
metric tonnage is less than 700 tonnes for a seven-day period.
-4-
6. DISPUTES
- In the event that the independent laboratory assays for a 24-hour period
differ by more than 10% from those of the BGL laboratories, either party
will have the right to declare a dispute.
- In the event that a continuous difference between the two laboratories is
observed of greater than 5% over a seven-day period, either party will have
the right to declare a dispute.
- In the event of a dispute being declared, the third "dispute sample" shall
be submitted to a mutually acceptable third laboratory for independent
analysis. The assay return from this analysis shall be accepted by both
parties without reservation or right of appeal.
- The party declaring the dispute shall pay for the third party assay costs.
- Payment of the disputed amount shall be made based on BGL's calculation and
any over or under payment will be deducted or added to the first payment to
be made to PGR after the dispute has been resolved.
7. TERM AND TERMINATION
- The agreement will come into effect within 24 hours of the Decommissioning
and shall remain in effect unless and until terminated as provided below.
- The Alternative Facility has been provided in accordance with a time
schedule to be agreed and subject to acceptance of the Alternative Facility
by PGR, which shall not unreasonably be withheld.
- The date of Decommissioning shall be agreed and confirmed by both parties,
on not less than 60 days' prior notice. In the event of Decommissioning
occurring without a 60-day agreed notification period, the agreement shall
commence within 60 days of Decommissioning.
- PGR may suspend treatment of PGR Ore by giving BGL not less than thirty (30)
days' written notice thereof.
- In the event PGR is unable to give the required notice, it will reimburse
BGL for all reasonable costs incurred to demobilise the weighing, sampling
and transportation arrangements.
- For the period of the suspension, PGR will reimburse BGL for all reasonable
costs, including, but not limited to, security, transportation standby, care
and maintenance, etc.
- PGR may terminate the agreement at any time by giving 30 days' written
notice to BGL, whereupon BGL shall be released (1) from all future
obligations to purchase or treat PGR Ore and (2) from any obligation to
provide an Alternative Facility as defined in the agreement to which this is
a Schedule.
- BGL may terminate the agreement at any time by giving 30 days' written
notice to PGR, which shall specify that an the Alternative Facility as
defined in the agreement is now available, whereupon the agreement shall
terminate on the date specified in such notice,
-5-
subject only to the acceptance of the Alternative Facility by PGR, which
shall not unreasonably be withheld.
- In the event PGR fails to supply PGR Ore or to comply with the requirements
of the definition set out above under "BGL Obligations" averaged over a
three-month period, BGL shall be entitled to terminate the agreement and be
released from its obligations.
- Either party may terminate the agreement upon the bankruptcy or insolvency
of the other.
8. OTHER
- Interpretation and performance shall be governed by Ghana law.
- The parties' obligations will be suspended for the duration of a force
majeure event.
- Notices will be given in the manner provided for in the Agreement to which
this is a schedule.
SCHEDULE J
FORM OF PGR COUNSEL OPINION
November ___, 2001
Bogoso Gold Limited
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Area,
▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇
▇▇▇▇▇
Dear Sirs,
AGREEMENT DATED NOVEMBER - , 2001 BETWEEN BOGOSO GOLD LIMITED AND
PRESTEA GOLD RESOURCES LIMITED
We are a firm of legal practitioners duly qualified, licensed and of good
standing under the laws of the Republic of Ghana.
We have acted as legal advisors to Prestea Gold Resources Limited (the
"Company") in connection with the above-referred Agreement (the "Agreement") and
the transactions provided for therein ("Transactions"), including the grant by
the Company to Bogoso Gold Limited ("BGL") of an option (the "Option") to
acquire shares in the Company:
We have reviewed:
1. the Agreement;
2. the Resolutions of the shareholders of the Company dated November -, 2001
approving the Agreement and the Transactions;
3. the Regulations and minute books of the Company;
4. the approval letter issued by the Ministry of Mines of the Republic of Ghana
dated ________________, 2001;
5. the approval letters issued by the __________________ dated ________________,
2001;
6. the mining lease (the "Mining Lease") dated June 29, 2001 between the
Government and the Company; and
7. [OTHER DOCUMENTS]
-2-
We have considered all such questions of law, examined all such other
agreements, documents and instruments, as we have considered necessary for the
purpose of rendering the opinions set forth herein. With respect to the various
questions of fact material to our opinion, we have relied on the various
representations contained in such agreements, documents and instruments.
Capitalized terms and expressions used in this opinion letter have the meanings
ascribed to them in the Agreement.
In our examination, we have assumed the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as certified or photostatic copies and the authenticity of the
originals of such latter documents. In addition we have assumed: (i) the
genuineness of all signatures, (ii) the due authorization, execution and
delivery of all documents by the parties thereto other than BGL; and (iii) the
due authority of all persons executing such documents.
Based on the foregoing we are of the opinion that:
1. The Company has been duly incorporated, is validly existing under the laws of
the Republic of Ghana, is in good standing and is duly qualified to do business
in the Republic of Ghana.
2. The Company's authorized capital stock consists of - equity shares of which -
have been issued as fully paid and non-assessable shares, made up of - Class "A"
shares (the "Class `A' Shares") and - Class "B" shares (the "Class `B' Shares").
There is no material difference between the rights, privileges and restrictions
attached to the Class "A" Shares and the Class "B" shares except that only the
Government may hold Class "B" Shares and is entitled at all times to hold 10% of
the issued and outstanding shares in the capital of the Company for no
consideration.
3. The Government is the registered owner of - fully paid and non-assessable
Class "B" Shares, representing 10% of the issued and outstanding shares in the
capital of BGL.
4. The Ghana Mineworkers Union ("GMWU) is the registered owner of - fully paid
and non-assessable Class "A" Shares, representing - % of the issued and
outstanding shares in the capital of the Company.
5. All governmental and regulatory consents and approvals required from the
Republic of Ghana, the Government or any ministry or other department of the
Government (including without limitation the Bank of Ghana and the Ministry of
Mines of the Republic of Ghana) required in connection with (i) the Agreement;
and (ii) the Transactions, including the Option, have been obtained.
6. The Company has the corporate power and authority to execute and deliver the
Agreement and each PGR Document to be delivered on the Closing Date and the
Option Closing
-3-
Date and to perform its obligations under, and to carry out and consummate all
transactions and actions provided for, or contemplated by, the Agreement. All
corporate action required on the part of the directors and shareholders of the
Company in connection with the Agreement and the Transactions has been taken,
and none of the foregoing conflicts with the Regulations of the Company or any
other agreement to which it is a party or by which any of its properties or
assets is bound.
7. The Agreement is, and each PGR Document delivered or to be delivered on the
Closing Date and the Option Closing Date, respectively, will be, the valid and
binding obligation of the company enforceable in accordance with its terms.
8. The only registrations and filings in public offices or registries required
in connection with the Agreement and the Transactions and their implementation
are:
(i) - - -
9. No stamp duty or other taxes or duties are payable in respect of the
Agreement or the Transactions except on ___________________.
10. The Mining Lease grants the Company the exclusive right to work, develop and
produce gold in the ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ identified in the Mining Leases
(the "Mining Lease Area") including the processing, storing and transportation
of ore and materials.
11. The Mining Lease is valid for a period of thirty (30) years and may be
extended for a further period subject to the Company giving the Government not
less than six (6) months notice of its intention to do so before the expiration
of the applicable term.
12. To the best of our knowledge, after reasonable inquiry, the Mining Lease is
not subject to any mortgage, charge, encumbrance or other security interest.
13. To the best of our knowledge, after reasonable inquiry, there are no
actions, suits, claims or proceedings legal or administrative with respect to
the Mining Lease Area is excess of US$5,000 individually, or US$50,000 in the
aggregate.
Our opinion expressed in paragraph 13 above is qualified to the extent that:
(a) the enforceability of any provision of any ____________________ may be
limited by bankruptcy, insolvency or similar laws of general application
affecting the rights of creditors and secured parties generally;
(b) a particular court may refuse to grant certain equitable remedies including
specific performance with respect to the provisions of any
______________________.
Our opinion is limited solely to the laws of the Republic of Ghana in effect on
the date hereof and no opinion is expressed herein as to any matters governed by
the laws of any other jurisdiction.
-4-
This opinion is furnished to you solely in connection with the Agreement and the
Transactions and may not be relied upon or described or quoted by any other
person, firm or entity other than the addressees without, in each instance, our
prior written consent.
Yours sincerely,
SCHEDULE K
PGR SHAREHOLDER APPROVAL
Resolution of the shareholders of PRESTEA GOLD RESOURCES LIMITED (the "Company")
passed on November ____, 2001 pursuant to section 174 (1) of the Companies Code.
WHEREAS:
A. The Honourable Minister for Lands, Forestry and Mines by letter (ref:
DB-44/124/07) dated March 29, 2001 to the Company, Bogoso Gold Limited
("BGL"), and Prestea Sankofa Gold Limited instructed the same to enter into
tripartite negotiations according to terms of reference communicated to the
Mediator, ▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ by letter (ref: DB-44/124/07) dated March 29,
2001;
B. The Company and BGL entered into a Letter Agreement dated May 21, 2001,
which contemplates the entering into of a definitive agreement between them.
C. As contemplated by the Letter Agreement, BGL's 90% shareholder, Golden Star
Resources Ltd, entered into an agreement with Barnato Exploration Limited
dated June 21, 2001, which was subsequently completed on October 2, 2001,
whereby for valuable consideration which has been delivered, Barnex
abandoned its claims and rights to what is known as the Prestea Property in
Ghana;
D. The Company surrendered its mining lease dated November 1, 2000 to the
Government of Ghana ("Government") in return for a new mining lease over the
Prestea Property below a depth of 150.37 metres below sea level granted on
June 29, 2001;
E. BGL was granted a mining lease over the Prestea Property to a depth of
150.37 metres below sea level on June 29, 2001; and
F. BGL and PGR entered into an Agreement, dated November ________, 2001 (the
"Agreement"), complying with the terms of the Letter Agreement
BE IT RESOLVED THAT:
1. The Agreement be and is hereby approved, ratified and confirmed, subject
only to the obtaining of the necessary consents and approvals, including but
not limited to, the approval of Government.
2. Without limiting the generality of the foregoing, the following specific
provisions of this Agreement are hereby approved, ratified and confirmed:
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(i) The adequacy of payment of US$4.0 million (of which US$0.5 million
has already paid) as consideration for the property and rights
conveyed and granted by PGR;
(ii) The formation of the Trust by BGL and issuance of a 10%
shareholding in the Company to the Trust, as contemplated in the
Agreement;
(iii) The offering of 10% shareholding in the Company to individual
Ghanaian Investors for US$0.5 million, which if not subscribed to
will be made available to Ghana Mine Workers Union and BGL in
equal proportions unless one of the parties does not take up their
subscription in which case the other party can take up the whole
subscription; and
(iv) The appointment of PricewaterhouseCoopers as the Auditors of the
Company on or before the Option Exercise Date.
3. The officers of the Company be and each of them hereby is, authorised,
empowered and directed, in the name of and on behalf of the Company or
otherwise, to do and perform (or cause to be done or performed) all acts and
things and to execute, deliver and file, or cause to be executed, delivered
and filed, any such agreements, documents, payments, applications,
instruments, certificates, and undertakings (with such changes or
modifications as they may deem advisable or appropriate), and to take such
other and further actions, in the name and on behalf of the Company, as they
may deem to be proper, necessary, desirable or appropriate to carry out and
effectuate the purpose and intent of the foregoing resolutions, to comply/
with the requirements of the agreements approved by the foregoing
resolutions, and the authority for the taking of such actions and the
making, execution, delivery or filing of such agreements, documents,
payments, applications, instruments or certificates shall be conclusively
evidenced thereby, and that all acts and things previously done and
performed (or caused to be done or performed) in the name of and on behalf
of the Company or otherwise prior to the date of these resolutions in
connection with the transactions contemplated by the foregoing resolution.
These resolutions may be executed by the Shareholders in as many
counterparts as may be necessary, each of which so signed (including those
transmitted by electronic facsimile) shall be deemed to be an original, and
such counterparts together shall constitute one and the same instrument and
notwithstanding the date of execution shall be deemed to bear the date first
above written.
Signed:___________________
Signed:___________________
GHANA MINEWORKERS UNION of the TUC (Ghana)