[PSGC LOGO OMITTED]
PHUOC SON GOLD COMPANY LIMITED
644-646 Ngo Quyen, Da Nang City, Vietnam
Tel: 84-0511-945288, Fax: 84-0511-945290
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September 16, 2006
CONTRACT OF MINING ORE
DAKSA PROJECT
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AGREEMENT FOR FULFILMENT OF CONTRACT
Contract No: 25/2006PS
THIS AGREEMENT is made on the Sixteenth of September, 2006,
BETWEEN: PHUOC SON GOLD CO., LTD.
Address: 644-646 Ngo Quyen St, Danang City.
Phone: 0511-945289
Fax: 0511-945290
Represented by Mr. Nguyen Ngoc Quynh - Deputy General Director
(Hereinafter termed the "Principal") of the one part;
AND: HUONG TOAN COMPANY LTD
Address: 45 Nguyen Hoang st, Tam ky, Quang Nam
Account No: 562 100000 41634 at the Development & Investment Bank of
Quang Nam Province
Phone: 0510-851962
Fax: 0510-851962
Represented by: Mr.Nguyen Tam Mien - Position: Director
(Hereinafter termed the "Contractor") of the one part;
WHEREBY it is hereby agreed between the parties as follows:
IN consideration of the payments to be paid at the time and in the manner set
forth in the Conditions hereto annexed, the Contractor shall complete all the
works and supply services described in the Specifications attached and subject
to the Terms and Conditions and stipulations contained in the said
Specifications and in the Conditions of Contract attached.
THAT the Principal shall pay to the Contractor the contract sum or such other
sum or sums that become payable, as in the attached Conditions.
THAT the Conditions and Specifications attached shall form part of this
Agreement.
This contract is made in four (4) copies, two (2) in English and two (2) in
Vietnamese. Each party keeps one of each.
IN WITNESS on the above date this Agreement was:
SIGNED BY: [SEAL] /s/ Nguyen Ngoc Quynh
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For and on behalf of: PHUOC SON GOLD CO., LTD (Principal)
SIGNED BY: [SEAL] /s/ Nguyen Tam Mien
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For and on behalf of: HUONG TOAN COMPANY LTD (Contractor)
ANNEXURES
Annex A: Specifications
Annex B: Terms and Conditions
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ANNEX A: SPECIFICATIONS
1. CONTRACT LOCATION:
The general area is the area of Dak Sa Mine at Phuoc Duc Commune within Mining
Licence No.116/GP-BTNMT and Investment License No: 2355/GP of Phuoc Son Gold
Project in Phuoc Son District, Quang Nam Province.
2. WORK TO BE PROVIDED BY THE CONTRACTOR:
Mining at Dak Sa Mine, including:
2.1 Deal with Government authorities to carry out all necessary formalities of
explosive magazine pursuant to current regulations and construction of an
explosive magazine of 3 tonne capacity at the location approved by the
Principal;
2.2 Prepare construction site, build the explosive magazine and equip it as
required to meet safety requirement in accordance with Vietnamese Standards, and
get approval for the use of explosives;
2.3 Supply the appropriate explosives as required by the Principal.
2.4 Be responsible for buying, transporting, storing and using explosives
serving for mining work;
2.5 Prepare blasting plan and get it approved by Government authority as
required by the Law;
2.6 Supply appropriate labourer to do the work.
2.7 Average capacity of mining is of 100,000.00 tonnes of ore per year.
2.8 Volume of rock/ore blasting work: It is expected to develop tunnels of 4.0 m
wide, 4.0 m high and 780 meters long to yield 12,480m3 of rock blasted. Average
volume of work is 2,080m3/month.
2.9 The kind of explosive may vary depending on availability of local suppliers.
3. GENERAL REQUIREMENTS
3.1 SAFETY, SECURITY AND STANDARD OPERATING PROCEDURES:
The Contractor shall:
o Provide fully documented safety and standard operating procedures
within 15 days of contract award.
o Provide all things necessary to implement the safety and standard
operating procedures and programme that have been approved.
o Provide list of employees with identification, position and photo of
each employees on site to the Chief Security of the Principal.
o Provide the list of mobile equipment with plate numbers and make to
the Chief of Security of the Principal.
3.2 COMPLIANCE WITH PLAN AND WORK SPECIFICATIONS
The Contractor shall:
o Comply with all standard work specifications set by the Principal.
o Follow the plans and instructions given by the Principal.
3.3 EXPLOSIVE REQUIREMENT AND BLASTING WORK
o The dynamite to be used should have at least an unconfined velocity of
detonation ranging from 4 to 6 km/sec and a density range of 1.1 to
1.3 g/cc.
o Dynamites must be primed using a #8 detonator (electric blasting cap
or non-electric blasting) cap.
o Blasting must be fired in sequence using electric blasting caps or
non-electric blasting caps with delays.
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o Explosive loading and blasting must be in accordance with Vietnamese
regulations of safety and technique or as indicated by the Mine.
o Average volume and kind of explosive for Phuoc Son area:
Phuoc Son Initial Explosives Requirement
ITEM NO. DESCRIPTION UNIT MONTHLY usage
- -------- ------------------------------------ ---- -------------
1 Exel Detonators, Non-Electric,
3.6 m. long, Delay Nos. 0 - 15 Pcs See Below
2 Exel Detonators, Non-Electric,
2.4 m. Long, Delay No. 0 - 15 Pcs See Below
3 Detonating Cord (Cordtex) 5 g/m Pcs 1188
4 Anfo Prills (25 kg/sack) Kg 9900
5 Powergel, 3151 Magnum, 32 mm x
200 mm, 25 kg/box. kg 28.947,6
6 Powergel, 3151 Magnum, 25 mm x
200 mm, 25 kg/box.
7 Powergel, 3151 Magnum, 32 mm x
700 mm, 25 Kg/ Box kg 2.412,3
8 Powergel, 3151 Magnum, 25 mm x
700 mm, 25 Kg/ Box
9 Powergel, 3000 Trimex 19 x 460 kg 1.064,25
9 Exel Detonator, Electric Pcs 66
10 Blasting cable, 100 m./Roll m. 110
11 Twin Twist Wire, 500 m/Roll m. 2640
12 OhmMeter. DO 2000 Pc. 2 per 2 years
13 Exploder Machine, 4 pcs for the next Pcs 2 per 2 years
6 months
EXEL DETONATORS, NON-ELECTRIC
Delay #0 3.6 m Long pcs 66
Delay #1 3.6 m. Long pcs 66
Delay #2 3.6 m. Long pcs 66
Delay #3 3.6 m. Long pcs 66
Delay #4 3.6 m. Long pcs 66
Delay #5 3.6 m. Long pcs 132
Delay #6 3.6 m. Long pcs 132
Delay #7 3.6 m. Long pcs 264
Delay #8 3.6 m. Long pcs 264
Delay #9 3.6 m. Long pcs 396
Delay #10 3.6 m. Long pcs 396
Delay #11 3.6 m. Long pcs 396
Delay #12 3.6 m. Long pcs 396
Delay #13 3.6 m. Long pcs 396
Delay #14 3.6 m. Long pcs 396
Delay #15 3.6 m. Long pcs 132
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3.4 CONTRACTOR'S LOG AND REPORT
The Contractor shall maintain a daily log and report, in which a daily
record of all work conducted is to be recorded and reported. The
Contractor's logs shall be made available for inspection at any time,
upon request of the Mine Superintendent and or officials of the Mine
Department. The daily report (duly signed by the Contractor's
representative and concurred by the Principal's representative) is to
be provided to the Mine Superintendent at the end of each day.
3.5 Overall Supervision and Management
The work shall be conducted to the overall satisfaction of the Mine
Superintendent.
4. COMMENCEMENT & COMPLETION DATES
The work is to commence on SEPTEMBER 16, 2006.
Average production is to be maintained at a rate consistent with the entire
contract being completed within a maximum period of 3 years. During the
execution, if either party want to terminate the contract prior to the term
hereof, an agreement must be reached by the two parties.
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ANNEX B: TERMS AND CONDITIONS
1. CONTRACTOR'S RESPONSIBILITIES
The Contractor shall provide all materials, labor, equipment, mobilization and
demobilization of equipment and other requirements to complete the schedule of
work.
The Contractor shall carry out and perform the work safely, in a professional
manner and in accordance with the highest standards of practice.
In particular, the Contractor shall:
o Nominate a site representative to supervise the performance of the
work and accept overall instructions and supervision from the Mine
Superintendent.
o Strictly follow all requirements of transporting, storing and using
explosive and blasting work.
o Accept instructions from the Mine Superintendent.
o Keep a comprehensive log or diary which records daily work progress.
o Protect the environment during works.
o Ensure and be responsible for the safety of all men working under him.
o Maintain the work sites in a clean, safe and orderly condition. In
particular, all rubbish, or damaged equipment are to be removed out of
mine by the Contractor.
o Maintain and secure his equipment onsite.
o Otherwise comply with the terms of this contract.
2. PRINCIPAL'S RESPONSIBILITIES
In particular, the Principal shall:
o Provide a site representative, known as the "Mine Superintendent" to
monitor and supervise work in progress and modify the work, if
necessary due to unforeseen problems.
o Provide the Contractor with additional specifications or instructions,
if necessary.
o Provide on-site security during the term of the contract.
o Make all payments due in a timely manner.
o Otherwise comply with the terms of this contract.
o Provide the Contractor with all legal documents and others relating to
mining license during making plan for blasting, construction and
getting permits to use explosives in accordance with regulations of
Law.
3. OVERALL CONTROL OF WORK
The work shall be carried out under the overall direction and to the
satisfaction of the Principal through the Mine Superintendent for his designate.
4. BASIS OF PAYMENTS TO THE CONTRACTOR
o Currency: The currency of the contract is Vietnamese Dong and will be
paid in accordance with the exchange rate applicable at the payment
time.
o Payment to the contractor will be based on the volume of work done,
labour cost and/or actual material consumption at the agreed quoted
cost;
o The estimated cost for explosive supply and consumption per month:
985,000,000 VND
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o BUILDING EXPLOSIVE MAGAZINE AND FORMALITIES TO USE THE MAGAZINE (Refer
to quotation dated July 15th, 2006) 185,000,000VND
o MINING
The mining work will be paid based on labour, material and management
cost.
I. Fixed cost per month (3 shifts per day): 103,000,000 VND
1. Labor cost: 78,000,000 VND
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- Leader: 01 person x 6,000,000 = 6,000,000 VND
- Commander of blasting: 03 persons x 6,000,000 = 18,000,000 VND
- Worker loading explosive: 06 persons x 5,000,000 = 30,000,000 VND
- Driver: 03 persons x 4,000,000 = 12,000,000 VND
- Store keeper: 03 persons x 4,000,000 = 12,000,000 VND
2. Transport cost: 15,000,000 VND
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- Rent means of transport for labor and explosive: = 6,000,000 VND
- Fuel: = 9,000,000 VND
3. Management cost: 10,000,000 VND
---------------
The fixed cost will vary depending on the scheduled working hours of
the Principal. For a single shift schedule, the fixed cost per month
shall be 34,333,000 VND.
II. Explosive cost:
Unit price of explosive: (the unit price can be changed due to the
notice from supplier in accordance with current regulations of the
State). (refer to the Explosives list attached)
Contractor will be responsible for supplying explosive and secondary
materials as above unit price.
The total cost of explosive will be computed on basis of above unit
price and actual consumption for that month.
Contractor will be paid an additional amount of 10% of the total cost
of explosive used in maintenance of storage, insurance, other legal
costs during usage of explosive.
The estimated cost: 99,000,000 VND/motnh
o THE CONTRACT VALUE shall be deemed to be 1,337,000,000 VND/month
(Equal to US$ 83,500 ) (Including VAT).
5. PAYMENTS
Payments by the Principal to the Contractor shall be made in installments, as
follows:
(i) The Principal will advance the Contractor an amount of
100,000,000.00VND (ONE HUNDRED MILLION DONGS) for constructing the
magazine after signing the contract. The remainder will be paid to
the Contractor after the magazine is inspected and approved by the
Principal.
(ii) Payments will be made at the end of every month according to the work
completed and certified by the Mine Superintendent.
(iii) After final completion of the schedule of work, the remaining value
of the work performed (including surcharges, or deduction of
penalties, if any) will be paid 30 days after final completion and
demobilization.
Payment will be effective from the date the Principal receives the
Contractor's VAT invoice.
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6.INSURANCE & INDEMNITY
During the time of mining, the two parties shall be responsible for insurance
duties as defined by the current stipulations.
The Principal shall have the current insurance policies for the mining works.
The Contractor must have the current insurance policies that cover materials,
equipments, store, workman compensation, civil compulsory insurance for the
third party.
The Contractor shall have in place current insurance policies that cover public
liability and worker compensation.
All of the Contractor's activities hereunder shall be at its own risk and the
Contractor shall not be entitled to insurance protection provided by the
Principal, provided that the Principal shall defend and indemnify the Contractor
from losses, claims, demands, liabilities, suits or actions arising from
injuries or death, or from the loss or damage to the property of any person or
persons, by the acts or omissions of the Principal or any person other than the
Contractor performing on its behalf any negligent acts or omissions.
The Contractor shall defend and indemnify the Principal and its directors,
officers, employees and agents from any and all losses, claims, demands,
liabilities, suits or actions arising from injury or death of any person or
persons, or from the loss or damage to the property of any person or persons, by
the acts or omissions of the Contractor or any person performing on its behalf
any negligent acts or omissions.
7.CONTRACTOR'S PERSONNEL
The Contractor and the Contractor's personnel shall abide by local laws and
regulations. The Contractor and the Contractor's personnel shall at all times
maintain good relations with the local people and authorities and will notify
the Principal if any conflicts arise. The Contractor shall remove any Contractor
employee who is objectionable or unsatisfactory to the Principal and shall
provide a replacement employee at no cost to the Principal.
The Contractor shall maintain the highest standards of safety and shall take
every reasonable precaution against accident or injury to the works and forest
property and to persons whether employed on the works or otherwise. The issue
and use of Personal Protective Equipment (PPE) for all Contractor employees is
required; as a minimum this should be a hard hat and stout shoes. The Principal
reserves the right to reject from the works any Contractor employee not wearing
the requisite PPE.
8.SUBCONTRACTORS
The Contractor shall not sublet any of the work, without first receiving written
approval from the Principal. The Contractor shall have full responsibility for
any subcontractors so approved.
9.CONFIDENTIALITY
The Contractor shall not divulge any information regarding this contract or
bring any persons other than the Contractor's staff to the work site, except
with the specific written permission of the Principal.
10.FORCE MAJEURE
Neither party shall be liable for any failure to perform, or for delay in the
performance of any obligation under this contract as a result of war, flood,
inevitable accident, embargoes, legal restraint or other cause beyond its
reasonable control.
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In the event that adverse weather conditions (beyond that which a competent
operator would normally be expected to continue operating) are encountered, then
the problem shall first be discussed with the Mine Superintendent, who will
decide whether Force Majeure can be invoked.
11.ARBITRATION
Both parties agree to fulfill their respective obligations under this contract
If however any dispute between parties should arise, then the parties will
endeavor to settle the matter in a spirit of mutual co-operation, but in the
event that a dispute cannot be so settled, then the matter shall be referred to
the Vietnamese Court of Arbitration.
12.DURATION OF CONTRACT
12.1. FORMAL TERMINATION
This contract shall terminate fifteen (15) days from the date of completion
of the schedule of work, as signed off by the Mine Superintendent.
12.2 EXTENSION OF SCOPE OR TERM:
Depending on the rate of progress achieved by the Contractor, the Principal
may request the Contractor to bring additional equipment and/or laborers to
the site, increase the volume or scope of work, and/or extend the term of
this contract. In case the Principal requires Contractor to bring
additional equipment and/or laborers to the site, the Principal shall pay
for mobilization of additional equipment and laborers based on mutual
agreement.
The Principal must give the Contractor notice of any such extension not
less than 20 days prior to such additional work being required.
12.3 EARLY TERMINATION
Average production will be maintained at a rate consistent with the entire
contract being completed within the period stated in the Schedule of Works.
However, this contract may be terminated at any time prior to completion of
the work schedule if the Principal assumes that The contractor can not
complete the work on time as the schedule or due to neglectfulness, poor
performance, poor management so that the contractor can not complete
conditions in the contract. Upon such termination, the Principal shall pay
to the Contractor all monies due for the work completed. The Contractor
will not, however, require any payment from the Principal for the unused
portion of the contract value.
13. SURVIVAL
Notwithstanding the termination of this contract, any duty or obligation
which has been incurred and which has not been fully observed, performed or
discharged shall survive such expiration or termination until such duty or
obligation has been fully observed, performed or discharged.
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THOA THUAN
AGREEMENT
On CANCELLATION OF CONTRACT NO 25/2006 PS DATED SEPTEMBER 16,2006
Today, the 27th of November 2006 we are;
PARTY A: PHUOC SON GOLD CO LTD
REPRESENTATIVE: MR. NGUYEN NGOC QUYNH
POSITION: DEPUTY DIRECTOR GENERAL
PARTY B: HUANG TOAN CO. LTD.
REPRESENTATIVE: MR. NGUYEN TAM MIEN
After discussion, the parties agreed as following:
1. The contract No 25/2006 PS was signed by the parties on 16 September 2006
due to the bad weather and the change of Phuoc Son's construction plan, the
contract couldn't be started until now. Based on the actual situation, the
both parties agreed to cancel the contract.
2. When required, the parties may discuss to enter into other contract for
each item as building magazine, supply explosives, blasting service.
3. This agreement is effective since 27 November 2006.
[GRAPHICS OMITTED] [GRAPHICS OMITTED]
THOA THUAN
AGREEMENT
On CANCELLATION OF CONTRACT NO 25/2006 PS DATED SEPTEMBER 16, 2006
Today, the 27th of November 2006 we are;
PARTY A: PHUOC SON GOLD CO LTD
REPRESENTATIVE: MR. NGUYEN NGOC QUYNH
POSITION: DEPUTY DIRECTOR GENERAL
PARTY B: HUANG TOAN CO. LTD.
REPRESENTATIVE: MR. NGUYEN TAM MIEN
After discussion, the parties agreed as following:
1. The contract No 25/2006 PS was signed by the parties on 16 September 2006
due to the bad weather and the change of Phuoc Son's construction plan, the
contract couldn't be started until now. Based on the actual situation, the
both parties agreed to cancel the contract.
2. When required, the parties may discuss to enter into other contract for
each item as building magazine, supply explosives, blasting service.
3. This agreement is effective since 27 November 2006.
[SEAL] [SEAL]
[ILLEGIBLE] [ILLEGIBLE]
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
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[ILLEGIBLE] [ILLEGIBLE]
