ARGOR-HERAEUS
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Via Moree 14 Tel. 091 640 53 53 www.argor.com Switzerland
CH-6850 Mendrisio Fax 091 646 80 82 info@argor.com
REFINING CONTRACT
MADE THIS DAY OF 01.11.2005
BETWEEN
ARGOR-HERAEUS SA, VIA MOREE 14, MENDRISIO, SWITZERLAND
(THE "REFINER")
AND
BONG MIEU GOLD MINING COMPANY
(THE "SUPPLIER")
ARGOR-HERAEUS
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Switzerland
Definitions
The following terms shall have the following meanings; unless otherwise defined
such meanings to be equally applicable to the singular and the plural forms of
the terms defined.
Assay exchange: Means the exchange of the assay results obtained by the
Supplier's laboratory and the Refinery's laboratory, using the quality samples
obtained during the sampling operation of the Dore bars at the Refinery, by
crossing, registered mail on a previously agreed date, followed by exchange by
fax or e-mail the following working day.
Business Day: Means a day on which banks and companies in London, New York, and
in Switzerland are open for business.
Refiner: Means Argor-Heraeus SA, a company duly incorporated and registered in
Mendrisio, Switzerland, and duly licensed to carry on business as a precious
metal refinery.
CHF: Means the lawful currency of Switzerland.
Contract: Means this contract plus any Annexes to it, as amended from time to
time.
Delivery point: Means Zurich Kloten Airport, consign the Dore bars to VIA MAT
for transport to the Refinery
Dore: Means the ingots cast by the Refiner after melting the Dore bars,
containing 96% to 98% gold,m received from the Supplier to obtain samples for
the assay.
Dore bars: Means the bars produced by the Mine with a weight of approximately
500 to 1,000 oz, containing gold and silver as well as copper and
non-deleterious elements.
Mine: Means Bong Mieu Gold Mine
oz: Means a troy ounce equal to 31.1034768 grams; 32.1507465 oz = 1000 grams.
Refiner's Agent: Means the duly appointed agent, carrier or sub-contractor of
the Refiner, which is VIA MAT.
Refinery: Means the premises of the Refiner at Via Moree 14, CH 6850 Mendrisio,
Switzerland.
Representative: Means the duly appointed Representative of the Supplier for
weighing, homogenisation, and sampling
Return rate: Means the percentage of the analytically determined gold and
silver contained in the Dore for which the Refiner must make restitution.
Settlement assay: Means the final result obtained by the Refiner
Settlement weight: Means the weight after melt of the Dore determined by the
Refiner as adjusted for samples eventually sent to the Mine.
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Shipment: Means Dore bars with a total weight of approximately 35-40 kg once per
month for the first 6 months, then approximately 25 kg Dore twice a month.
Supplier: Means Bong Mieu Gold Mining Company Ltd. (Bogomin)
Swiss working day: Means a day on which banks and companies in Switzerland are
open for business
Umpire: Means the Central Office for Precious Metal Control, 3003 Berne,
Switzerland
Unallocated Precious Metal account: Means an account opened in the name of the
Supplier in the books of the Refiner.
US Dollars: Means the lawful currency of the United States of America.
VIA MAT: Means the transport company VIA MAT International - 8058 Zurich Kloten
Airport (FaxNo. +41-43-816 56 60)
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This Contract sets out the terms and conditions upon which the Refiner shall
receive Dore bars from the Supplier for refining.
1. Delivery of Dore bars
1.1 The Supplier shall notify the Refiner at least two Swiss working days in
advance by telefax or e-mail of the delivery of the Dore bars to the
Refiner's vault.
1.2 The notification of the Supplier pursuant to Subsection 1.1 shall set out:
o number of boxes/containers
o gross weight
o net weight
o detailed packing list
o Supplier's estimate of fineness of gold and silver contained in each
Dore bar
o estimated value of the Shipment, the name of the carrier, the flight
number and the estimated time of arrival at Zurich Kloten Airport
o the airway-bill number
The Dore bars shall be packed in wooden boxes, steel containers or other
packing suitable for the transportation by air and each box or container
shall be sealed by the Supplier.
The Supplier shall deliver the Shipment, at its own risk, to the Delivery
point.
The full risk in the Dore bars shall pass to the Refiner when it takes
delivery of the Dore bars at the Delivery point. The Refiner will insure
the Dore bars against the ordinary risks of storage (excluding strikes,
riots, civil unrest and war) at the Refinery from the moment the risk
passes to the Refiner.
The quantity of fine gold to be delivered during the life - time of this
Contract is estimated at 70,000 oz.
A list of deleterious elements and the acceptable level of such elements in
the Dore bars is attached as Annex 1.
2. Refiner's liability for the Dore bars and credit to account
2.1 The moment the risk in the Dore bars passes to the Refiner, the Refiner
assumes responsibility for the Dore bars, the Dore and the gold and silver
contained therein, and will be liable to the Supplier for any loss of or
damage to the Dore bars, the Dore and the gold and silver contained
therein, whilst the Dore bars, the Dore and the gold and silver contained
therein, are in the custody of the Refiner.
The liability of the Refiner is limited, however, to the total value of a
Shipment, reduced by any charges payable by the Supplier under Section 9
for the amount of oz contained in the Shipment. The value of the Shipment
shall be assessed in accordance with this Contract; in case of loss or
damage prior to the Settlement weight and/or the Settlement assay having
been determined, the gross weight and/or Supplier's estimate of fineness as
notified by the Supplier to the Refiner pursuant to Subsection 1.1 shall be
taken for the computation of the amount of loss or damage.
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2.2 The Refinery will have available the final assay results 5 working days
after arrival of the Shipment at the Refinery. The assay results of the
Refinery, as determined by the Refinery's Sworn Federal Assayers, shall be
considered to be the agreed final assay.
2.3 The metal will be credited to the Unallocated Precious Metal account with
the Refinery on the Business Day after the availability of the final
assays. Should an assay exchange be requested the final settlement shall be
effected on the first business day after the availability of the agreed
final assays.
3. REFINER
3.1 The Refiner will perform all duties to be performed by a refiner.
3.2 The Refiner and the Supplier shall communicate in respect of all matters
relating to the refining process directly with each other.
4. WEIGHING AND SAMPLING
4.1 If (i) a Shipment delivered to the Refiner at the Delivery point does not
conform to the specifications notified by the Supplier to the Refiner
pursuant to Subsection 1.2 or (ii) the boxes or containers are damaged or
the seals are broken or damaged, the Refiner may refuse to accept delivery
of that Shipment. The Refiner shall immediately inform the Supplier by
telefax or electronic mail of the details of any such refusal.
4.2 Upon receipt of the Shipment at the Refinery the Refiner shall immediately
inspect the boxes/containers and calculate the gross weight of the
Shipment.
4.3 If upon inspection pursuant to Subsection 4.1 above any of the
boxes/containers are damaged, or any of the seals on the boxes/containers
are broken, or the total gross weight of the Shipment as calculated by the
Refiner differs by more than +/-one percent (= +/- 1 %) from the gross
weight notified by the Supplier to the Refiner pursuant to Subsection 1.1,
the Refiner shall immediately inform the Supplier by telefax or electronic
mail of the extent of the damage to the boxes/containers or to the seals,
as the case may be, and/or the difference in the gross weight and request
the approval of the Supplier to proceed with the weighing and the assay.
Pending approval of the Supplier, the Shipment shall be safely stored in
the vaults of the Refiner.
4.4 Where the Shipment arrives outwardly sound at the Refinery and with a total
gross weight within the agreed tolerance of +/- one percent (=+/- 1 %), the
Refiner shall confirm receipt and acceptance of the Shipment to the
Supplier/Representative within one Swiss working day from its arrival at
the Refinery.
No later than on the second Swiss working day following arrival of the
Shipment at the Refinery, the Refiner shall weigh the Dore bars and compare
the net weights arrived at with the net weights notified by the Supplier to
the Refiner pursuant to Subsection 1.1. The Refiner shall use an electronic
balance having a tolerance of +/- 1 gram.
In case of a difference of more than +/- 0.2 percent (two tenth of one
percent)] between net weight of a Dore bar as calculated by the Refiner and
the net weight notified by the Supplier pursuant to Subsection 1.1, the
Refiner shall immediately inform the Supplier by telefax or electronic mail
of such difference and request the
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approval of the Supplier to proceed with the assay of such Dore bar(s)
using the net weight arrived at by the Refiner. Pending approval of the
Supplier, the disputed Dore bar(s) and the packing material of such Dore
bar(s) shall be safely stored in the vaults of the Refiner.
In case the net weight arrived at by the Refiner is within the agreed
tolerance of +/- 0.2 percent [(+/- 0.2 %) the Refiner's weight shall apply.
4.5 The Supplier undertakes to inform the Refiner of the action chosen with
respect to a Shipment or disputed Dore bars for which approval has been
requested as soon as possible and the Refiner undertakes to act in
accordance with the instructions received from the Supplier as soon as is
practical.
4.6 For sampling the Refiner shall melt the Dore bars in electro induction
furnaces in suitable melt lots, comprising only Dore bars from the Mine,
and ranging from 300 oz to a maximum of 10,000 oz per melt in order to
achieve a homogeneous melt. From this melt the Refiner shall collect a
representative sample from the molten Dore prior to pouring - in the form
of a button, or a sample bar or another suitable shape - by using the
appropriate dip sampling device. The Refiner hereby agrees that there shall
be a minimum of one melt produced for the Supplier.
4.7 The after melt weight of the Dore shall be determined by the Refiner by
weighing on an electronic balance having a tolerance of +/- 0.1 gram the
bars or anodes cast after the melt of the Dore bars for sampling. The after
melt weight includes the weight of all samples.
4.8 From each dip-sample the Refiner shall take three quality samples of 5
(five) grams each by collecting and mixing well the drillings, which are
obtained from the dip-sample by means of a twist drill or another suitable
method. The Refiner shall pack, seal and allocate the quality samples as
follows:
o one sample shall be kept as reserve
o one sample shall be for the Refiner
o one sample shall be set aside by the Refiner for the Umpire, should
the Umpire be needed.
In case the sample taken as reserve is requested to be sent to the Mine or
the Supplier its weight is to be deducted from the after melt weight when
calculating the Settlement weight. No deduction from the after melt weight
will be made for the sample taken for the Refiner and the sample set aside
for the Umpire.
5. REPRESENTATIVE
5.1 The Supplier shall have the right to appoint at its own expense a
representative to supervise the weighing, melting and sampling operations.
The Supplier shall inform the Refiner of the name, address, telephone
number, telefax number and electronic mail address of the representative
appointed and of the authority delegated to him no later than the date on
which the Supplier notifies the Refiner pursuant to Subsection 1.1.
ARGOR-HERAEUS
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6. Use of Dore
The Refiner shall have the right to refine the Dore immediately after
determination of the after melt weight and the allocation of the sealed
samples pursuant to Subsections 4.7 and 4.8.
7. Return rate of gold and silver contained in the Dore The following Return
rates shall apply to the gold and silver contained in the Dore:
(i) Return rate of gold: 99.95%
(ii) Return rate of silver: 98.00%
8. METAL TRANSFER:
Metal transfers to unallocated metal accounts either loco London or loco
Zurich could be arranged upon request of the Supplier
METAL SALES:
The terms for metal sales to the Refiner are laid out in Annex 2
9. REFINING AND TRANSPORT CHARGES
9.1 The Refiner will charge the Supplier for handling, homogenisation,
sampling, assaying and refining of the gold and silver contained in the
Dore at a rate of: US$ 0.50 per oz gross weight, as determined by the
Refiner according to Subsection 4.4 for each Shipment delivered to it and
accepted by it.
9.2 The Refiner will charge the Supplier for the Refiner's transport and
insurance costs for ground transport, handling, customs clearance, vault
fee and insurance from Zurich Kloten Airport to the Refinery
US$ 395.00 for up to 50 kg gross weight or
US$ 0.25 / oz gross weight above 50 kg gross weight
9.3 All payments made by the Refiner to the Supplier shall be net, free of any
deductions, levies, taxes (but excluding profit or income taxes or the
like), withholding taxes or similar charges of whatsoever nature imposed by
any authority in Switzerland.
10. FORCE MAJEURE
10.1 Neither party - which for the purpose of this Section 10 includes the
Refiner - shall be deemed to be in default of its contractual obligations
hereunder where performance thereof is prevented by force majeure.
Any delay or any failure in the performance of its obligations under the
Contract by either party shall not give rise to any claims for damages if
and to the extent that such delay or failure is due to force majeure,
unless the event of force majeure is due to the negligence of the party
affected by force majeure.
Force majeure shall include, without limitation, acts, rules or regulations
of governmental authorities (civil or military, executive, legislative,
judicial or otherwise) that prevent a party from performing its duties
under this Contract; failure to receive, or to receive in a timely manner,
any permits, licences or approvals needed; breakdown of or major damage to
a mine, plant or the refiner's facilities; interruptions of transportation;
wars, riots, civil unrest; strikes or other concerted actions of workers;
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fires, floods, earthquakes, landslides and other acts of God and
consequences thereof; that make it impossible for a party to fulfil its
obligations under this Contract.
10.2 The party affected by force majeure shall give prompt notice thereof and
thereafter inform the other parties of the cessation of such event of force
majeure without delay.
During any period of force majeure affecting the Refinery the Supplier
shall have the right to send Dore bars to a different refinery without any
obligation to the Refiner.
In case an event of force majeure continues for more than 30 days either
the Supplier or the Refiner may terminate the Contract with immediate
effect by giving notice in writing.
11. Representations and Warranties The Supplier represents and warrants to the
Refiner that:
(i) the execution and delivery of this Contract by the Supplier have been
duly authorised by all necessary corporate actions and all necessary
permits and authorisations that it is required by any authority in the
country of production and exportation to have, have been obtained by
it and are in full force; and
(ii) the Contract constitutes valid and binding obligations of the
Supplier.
The Refiner represents and warrants to the Supplier that:
(i) the execution and delivery of this Contract by the Refiner have been
duly authorised by all necessary corporate actions and the Refiner has
the capacity, the facilities and necessary permits and authorisations
to perform the obligations and services envisaged under this Contract
in a professional manner and in accordance with generally accepted
standards; and
(ii) the Contract constitutes valid and binding obligations of the Refiner.
12. Termination of Contract
12.1 This Contract is valid for the period commencing on November 1st 2005 and
ending on October 31' 2007 (the "Expiry Date") and may be extended for
further periods on such terms and conditions as may be agreed upon by the
parties. Unless agreement on the extension and the new terms and conditions
is reached no later than one week prior to the expiry of the present
Contract, this Contract shall lapse on the Expiry Date.
12.2 As long as any party has not fulfilled any obligation entered into prior to
the termination of this Contract, whether such termination is due to the
Contract having expired or otherwise, this Contract shall continue to apply
in full to such obligation(s).
13. Settlement of disputes
13.1 In the event of any disagreement, conflict or dispute that may arise in
connection with this Contract the parties undertake, as soon as is
practical, but no later than 10 Business Days following the occurrence of
such event, to confer with each other - by telephone or by meeting in
person or in such other way as deemed appropriate - to find an equitable
and just solution for both parties.
13.2 Should the parties fail to reach an agreement on the settlement of the
dispute either party may refer the matter to the courts in accordance with
Section 18 of this Contract.
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14. DEFAULT
If a party fails to fulfill its obligations under this Contract and has not
remedied such failure within 10 Business Days following notice from the
other party, the other party shall have the right to terminate its
obligations under this Contract forthwith, unless such failure is due to an
open dispute to be settled as defined in Section 13.
15. Amendments
Amendments or modifications to this Contract are only valid if they are in
writing and signed by both parties.
16. Severability
In case any Section or Subsection of this Contract is held illegal, invalid
or unenforceable the remainder of this Contract shall not be affected
thereby. The Section or Subsection that has become illegal, invalid or
unenforceable shall be deemed to be replaced by a Section or Subsection
that comes economically nearest to the meaning and intention of the Section
or Subsection to be replaced.
17. SUBJECT TO CHANGE OF MARKET CONDITIONS
If, during the life of the contract, any of the underlying market
conditions (including such charges as freight, insurance, exchange rates,
interest rates etc) change significantly in such a way as to have a direct
impact on the agreed refining charge by more then 20% [twenty], the two
parties will confer with each other and renegotiate the contract in good
faith and amend the contract accordingly. If the two parties fail to reach
an agreement, either party has the right to terminate the contract within a
3 months period from the end of their unsuccessful negotiation.
18. APPLICABLE LAW AND JURISDICTION
This Contract is governed by, and will be construed in accordance with the
law's of Switzerland and the parties agree that the Courts of Arbitration
in Switzerland are to have jurisdiction to settle any disputes which may
arise out of or in connection with this Contract and that any suit,
proceeding or action arising out of or in connection with this Contract may
be brought in such Courts.
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19. NOTICES
All notices under this Contract shall be given by letter sent by mail or by
courier to the address of the parties or by telefax to the telefax number
below:
Notices to the Refiner:
Argor-Heraeus SA
Via Moree 14
CH 6850 Mendrisio
Switzerland
Attn.: Dr. Wilfried H. Horner, Mr. Dario Torriani
Tel.: +41-91-640 53 03 / +41-91-6405340
Fax.: +41-91-646 80 82
e-mail: wilfried. noernerargor. com & dario.torriani@argor.com
Notices to the Supplier
Bong Mieu Gold Mining Company Ltd.
c/o Olympus Pacific Minerals Inc.
10 King Street East, Suite 500
Toronto, Ontario, M5C 1C3
Canada
Attn.: Mr. Erik H. Martin C. F. O.
Tel.: +1-416-572 25 25 Fax.: +1-416-572 42 02
e-mail: emartin@olympuspacific.com
Copy to:
Bong Mieu Gold Mining Company Ltd.
113-2 Nguyen Chi Thanh Street
Danang, Vietnam
Attn.: Ms. Rosemarie Padilla
Fax: +84-511-82 41 30
ARGOR-HERAEUS
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For and on behalf of Argor-Heraeus SA
/s/ Dr. Wilfried H. Horner /s/ Bernhard Schnellmann
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Dr. Wilfried H. Horner Bernhard Schnellmann
Director Marketing Director Precious Metals Services
For and Behalf of Bong Mieu Gold Mining Company Ltd. (Bogomin)
ARGOR-HERAEUS
Rodney H. Murfitt
General Manager
Annexes:
Annex 1 - Deleterious elements
Annex 2 - Metal purchase agreement
ARGOR-HERAEUS
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Annex 1
Deleterious elements in refining MATERIAL
In the following the most common impurities in refining material are specified
and limits are formulated below which the material is acceptable without
additional amounts being charged to the Supplier:
These limits are to be considered as indications and have to be re-evaluated
depending on the material and the process of refining it is destined for.
Class I: Impurities, which are hazardous to personal and environment
Element acceptable levels
Radioactive none
Mercury Hg none
Arsenic As max. 100 ppm
Cadmium Cd max. 100 ppm
Class II Impurities, which can disturb the refining process and as well
influence the environmental protection processes
Element acceptable levels
Lead Pb max. 3 %0
Tin Sn max. 3 %0
Selenium Se max. 500 ppm
Tellurium Te max. 500 ppm
Bismuth Bi max. 100 ppm
Antimony Sb max. 100 ppm
There are other elements, which may be present in refining material, that do not
have hazardous properties or disturb the processing significantly if present in
minor quantities, but may disturb severely the homogenisation and sampling due
to the fact that they produce a heavy segregation when the metal solidifies.
These elements in particular are:
Iron Fe
Nickel Ni
Cobalt Co
This list is not representative for all material compositions and subject to
adjustment in case of necessity.
In case the Dore bars supplied by the Supplier contain impurities that are
deleterious to other persons or to the refining process, the Refiner shall have
the right to either
o reject the Shipment; all expenses incurred by the Refiner in connection
with the rejected Shipment being for the account of the Supplier, or
o ask for additional payments from the Supplier in order to cover any
additional cost the Refiner incurs in connection with such deleterious
elements.
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ANNEX 2
PURCHASE AGREEMENT OF METALS
Upon request by Bong Mieu Gold Mining Company Ltd. ("Bong Mieu"), Argor-Heraeus
SA ("Argor") will purchase metals as follows:
o For Gold: at the AM - fixing of the London Bullion Market in US$ per
troy ounce
o For Silver at the silver - fixing of the London Bullion Market in US$
per troy ounce
Orders for London Gold fixing must be received by Argor at least 30 minutes
prior to the start of the AM fixing for gold as well as prior to the start of
London Silver fixing.
Pricing will be at the fixing rate, flat in US$.
After each fixing, Argor will inform Bong Mieu about execution and immediately
instruct to transfer proceeds to a Vietnamese bank account as per the
instructions given to Argor by Bong Mieu.
Until further notice, transfer of the proceeds should be directed to the
following account:
DEUTSCHE BANK AG
65 Le Loi Boulevar
District 1, Ho Chi Minh City
Account number: 1 00 9794- 00-1
Account name: Bong Mieu Gold Mining Co., Ltd.
Argor guarantees that the transfer of proceeds will take place on the same day
of the purchase but do not take responsibility as to when the funds will be
credited to Bong Mieu's bank account.
Argor will deduct its costs from the proceeds of the metal sales in accordance
to the Refinery Contract. A detailed statement listing all items and prices will
be faxed by Argor to Bong Mieu as soon as the payment is effected.
