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Exhibit 10.15
SHAREHOLDERS AGREEMENT
BETWEEN:
AZCO MINING INC.
("Azco")
AND
SANOU MINING CORPORATION
("Sanou")
AND:
WESTERN AFRICAN GOLD AND EXPLORATION S.A.
("WAG")
AND:
RANDGOLD RESOURCES LIMITED
("Randgold")
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TABLE OF CONTENTS
ARTICLE CLAUSE PAGE NO.
1. DEFINITIONS 4
2. PURPOSES AND TERMS 6
3. UNDERTAKING BY RANDGOLD 7
4. UNDERTAKING BY AZCO 8
5. UNDERTAKING BY WAG 8
6. ADDITIONAL SHAREHOLDING - WAG 9
7. ACQUISITION BY RANDGOLD OF SHARES IN WAG 9
8. ISSUANCE OF THE RANDGOLD SHARES 10
9. LOSS OF TERRITORY OF PERMITS 10
10. SALE AND PRE-EMPTIVE RIGHTS TO SHARES 10
11. FURTHER EXPENDITURE 11
12. BANKABLE FEASIBILITY STUDY 13
13. DILUTION OF SHAREHOLDING 13
14. MANAGER 15
15. FORMATION OF MINING COMPANY 19
16. DISTRIBUTION OF PROFITS 20
17. DISTRIBUTION OF CASH 21
18. CAMP EQUIPMENT AND DRILLING EQUIPMENT 21
19. WITHDRAWAL AND TERMINATION 21
20. REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS 22
21. RELATIONSHIP OF THE PARTIES 24
22. GENERAL PROVISIONS 25
SCHEDULES
SCHEDULES 1 AND 2 THE PERMITS
SCHEDULE 3 HEADS OF AGREEMENT
SCHEDULE 4 WARRANTIES
ANNEXURE"A" TO SCHEDULE 4 WARRANTIES: DISCLOSURES
SCHEDULE 5 NET PROFITS INTEREST
SCHEDULE 6 EQUIPMENT PURCHASE AGREEMENT
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THIS SHAREHOLDERS AGREEMENT made effective on the Effective Date as hereafter
set forth.
BETWEEN:
AZCO MINING INC., a company duly incorporated in the state of
Delaware, USA, and having an office for service of notices
hereunder at Suite 1250 - 999 West Hastings Street, Vancouver, BC
V6C 2W2 and SANOU MINING CORPORATION ("Sanou"), a wholly owned
subsidiary of Azco Mining Inc.
(Azco Mining Inc. hereafter called "Azco");
OF THE FIRST PART
AND:
WESTERN AFRICAN GOLD AND EXPLORATION S.A., a company duly
incorporated in Mali, of Tidiane Derne, Notary, B.P. 1945
Bamako, Mali
("WAG");
OF THE SECOND PART
AND:
RANDGOLD RESOURCES LIMITED, incorporated in Jersey, Channel
Islands, of 5 Press Avenue, Selby, Johannesburg, South Africa
("Randgold")
OF THE THIRD PART
WHEREAS:
A. WAG holds the Permits in Mali which give it the exclusive rights to
explore for gold and associated minerals and platinoids in the areas of
Dandoko and Medinandi in Mali.
B. WAG is wholly owned by Sanou, which is a wholly owned subsidiary of Azco
and Azco is additionally acting as agent for Sanou in this Agreement.
C. Randgold is actively engaged in, and has the expertise and capability to
prospect and mine for gold in Mali.
D. Azco and Randgold wish to establish a venture under which Randgold may
commence an exclusive prospecting, exploration and evaluation program to
determine whether potentially economic deposits of gold may exist on the
Permit Areas, and if so, the manner under which, through a joint
shareholding of WAG, Randgold and Azco, through its subsidiary Sanou,
will proceed to develop and conduct mining Operations in respect of any
such deposits.
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E. In pursuance of D above, Randgold and WAG have entered into a legally
binding Heads of Agreement dated 5 August 1998 under which the parties
have agreed on the basic terms of the Agreement.
F. Randgold, WAG, Sanou, and Azco have each taken all necessary action to
permit and authorize it to enter into this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual
covenants and provisions herein contained, THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE I
DEFINITIONS
1.1 Affiliate or Affiliates. means any person, partnership, joint venture,
or other form of enterprise which directly or indirectly controls, or is
controlled by or is under common control with a party, and in the case
of Randgold shall mean its partners in the Loulo project in Mali. For
this purpose, "control" shall mean the ability, directly or indirectly,
to direct or cause direction of management and policies through
ownership of voting shares, securities, contract, voting trust or
otherwise. Control shall mean de facto control, including without
limitation the power to appoint the majority of the directors or
equivalent officers of the body corporate or the control of the majority
of the voting rights of the body corporate;
1.2 Agreement. means this Agreement, including all amendments and
modifications which may be made to it from time to time, and all
schedules to this Agreement, which are incorporated in this Agreement by
this reference;
1.3 Assets. means all assets of WAG including the Permits from time to time;
1.4 Board. means the Board of Directors of WAG;
1.5 Budget. means a detailed estimate of all costs to be incurred by the
parties with respect to a Program and an estimated schedule of cash
advances to be made in respect of that Program;
1.6 Confidential Information. means the information referred to as such in
clause 22.7;
1.7 "$" or dollar. means the currency of the United States of America;
1.8 Effective Date. means the date of the last signature hereto;
1.9 Exploration. means, inter alia, all direct and indirect preparation,
analysis (and activities incident thereto), administration and filing
work and Exploration Expenditures conducted and incurred by the Manager
on the Permit Areas, at their instruction, or on their behalf, or by
assignment to another party, for the purpose of determining the
existence of ore on the Permit Areas and the economic viability of
extracting the same;
1.10 Exploration Expenditures. means all cash, expenses, obligations and
liabilities of whatever kind or nature spent directly or indirectly by
the Manager, and any person on their behalf or in substitution for them,
in connection with Exploration of the Permit Areas and any Programs,
including without limiting the generality of the foregoing, monies
expended in maintaining the Permits in good standing by doing and filing
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assessment work, in doing geophysical, geochemical and geological
surveys, drilling, assaying and metallurgical testing (and any costs
pursuant to seeking and performing a Feasibility Study), in acquiring
facilities, in paying the fees, wages, salaries, third party costs
(including legal, accounting, geological consultants and all other
parties engaged), traveling expenses and fringe benefits (whether or not
required by law) of all persons engaged in work with respect to and for
the benefit of the Permits, in paying for the food, lodging and other
reasonable needs of such men, in paying the Manager's administration fee
of 5% for supervision of all work done by the Manager and its
consultants and contractors for the benefit of the Permits;
1.11 Feasibility Study. means the final report produced in a form sufficient
to obtain financing and to obtain financial approval to develop a mine
within the Permit Area and otherwise to ascertain whether gold, or other
product which the Permit allows to be produced, from one or more
substantial deposits suitable for development within the Permit Area can
profitably be extracted, treated and sold under circumstances that would
provide a reasonable long term return to the parties. Such a report:
1.11.1 shall report on the economic feasibility of establishing a
mine and constructing facilities for removing and processing
deposits of gold;
1.11.2 shall include (amongst other matters) a review of geology, ore
reserves, metallurgy, environmental considerations, mining
methods, mine capital and operating cost estimates, process
flow sheets, process plant capital and specifications and
requirements, capital and operating cost estimates,
rate-of-return calculations, general personnel requirements
and appropriate sensitivity analyses incorporating price costs
sensitivities, and such other information as the Manager deems
appropriate; and
1.11.3 may be prepared by the Manager, an associated company of the
Manager or a contractor chosen by the Manager;
1.12 Heads of Agreement. means the Heads of Agreement dated 5 August 1998
between the parties referred to in Recital E, a copy of which is
attached as Schedule "3";
1.13 Implementation Date. means the date on which Randgold Shares are
transferred, which shall occur as best efforts by March 30, 1999 and
closing shall thereupon be deemed to occur effective on December 31,
1998, it being recognized that the effective date for recognition of
rights and obligations of this Agreement is the Effective Date;
1.14 Liabilities or Liability. means any and all claims, demands,
investigations, judgments, losses, liabilities, costs and expenses,
including reasonable attorneys' fees;
1.15 Mali. means the Republic of Mali;
1.16 Manager. means the person or entity appointed under clause 14.1 to
manage Operations, and includes any person appointed from time to time
to succeed the incumbent Manager in managing operations;
1.17 Operations. means the exploration, development, mining and other
activities of the parties in the Permit Areas, carried out under this
Agreement;
1.18 Permit Areas. means the area to which the Permits apply at the Effective
Date, as that area may be reduced from time to time in accordance with
the Permits;
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1.19 Permits. means the exclusive prospecting permits held under Arrete No.
97-1129/MMEH-SG transferring Arrete No. 92-7113/MMIE-CAB of 31 December
1992 and its renewal on 25 October 1996 by Arrete No. 96-1676/MMEH-SG,
from Consortium Miniere Industriel par Action "GUEFEST" in respect of
the areas known as Dandoko and Medinandi, copies of which are attached
as Schedules 1 and 2;
1.20 Program. means a description in reasonable detail of Operations relating
to the Permits to be conducted by the Manager for a year or for any
longer period and for which Budgets have been prepared;
1.21 Randgold Shares. means the shares in WAG to be acquired by Randgold so
as to make it a 75% shareholder in WAG;
1.22 Shareholding. means the percentage interest representing the ownership
interest of a party in the Operations, and all other rights and
obligations and items of property arising under this Agreement or to
which this Agreement relates, as such interest may from time to time be
adjusted. Shareholding shall be calculated to three decimal places and
rounded to two. Decimals of .005 shall be rounded down;
1.23 Shares. means the issued shares in WAG from time to time;
1.24 Year. means a period of 12 months, commencing on the anniversary of the
Effective Date.
ARTICLE 2
PURPOSES AND TERMS
2.1 General. Azco and Randgold enter into this Agreement to constitute
themselves shareholders of WAG with effect from the Effective Date, and
to pursue the purposes hereinafter mentioned, and they agree that all of
their rights and liabilities as against each other, and all of the
Operations, on or in connection with the Permit and the Permit Areas
shall be subject to and governed by this Agreement.
2.2 Purposes. The parties enter into this Agreement for the following
purposes and for no others:
2.2.1 in the case of WAG to make all its right, title and interest,
whether direct or indirect, or legal or beneficial, in the
Permits available for the purposes of and for use in connection
with the Operations;
2.2.2 in the case of Azco, as principal shareholder of WAG on the
Effective Date, to approve this Agreement as such shareholder and
to vote its Shares to instruct WAG to comply with the terms of
this Agreement and to procure that the other shareholders
similarly give their approval and vote their Shares;
2.2.3 in the case of Randgold to conduct Exploration within the Permit
Areas, to incur the expenditures provided for by this Agreement,
to act as Manager of activities on the Permit Areas, to maintain
the Permits in accordance with the Law of Mali, to safeguard the
Randgold Shares, as controlling shareholder of WAG to cause WAG
to be safeguarded and maintained free of liability or encumbrance
arising from the activities of Randgold as Manager, to evaluate
possible development and mining of the Permit Areas, to produce a
Bankable Feasibility Study, as Manager to engage in development
and mining in the Permit Areas, and to perform any other
operation or activity necessary, appropriate or incidental to any
of the
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foregoing.
2.3 Limitation. Unless the parties otherwise agree in writing, the
Operations shall be limited to the purposes described in clause 2.2, and
nothing in this Agreement shall be construed so as to enlarge such
purposes.
2.4 Effective Date and Term. The Effective Date shall be the date of the
last signature hereto. The term of this Agreement shall, unless it is
earlier terminated in accordance with its terms, be for so long as both
Azco and Randgold are shareholders of WAG.
ARTICLE 3
UNDERTAKING BY RANDGOLD
3.1 Randgold undertakes that from the Implementation Date it will over the
following 36 months, conduct Exploration over the Permit Areas, at a
minimum cost of $2 million, with the aim of establishing whether there
is a viable economic gold indicated resource of at least one million
ounces and thereafter it shall prepare a Bankable Feasibility Study on
such a resource for WAG, to be completed on a best efforts basis within
a further 12 months but to be completed within 18 months. Should the
indicated resource be less than 1,000,000 ounces but be a viable
resource then the parties shall in good faith continue this Agreement
with such amendments as are considered necessary and mutually agreeable.
3.2 In undertaking Exploration, Randgold will use methods and techniques
consistent with modern exploration practices.
3.3 The preparation of Budgets, target generation, management of Exploration
and the day to day activities associated therewith will be the sole
prerogative of the Board. The Board shall not effect certain decisions
except with the unanimous consent of the Board in the following
circumstances:
3.3.1 The abandonment, assignment, sale, surrender, or any other
disposition of a substantial or an economically material portion
of the Permits or the Permit Areas or of the workings established
thereon other than as is required in terms of the laws of Mali as
it affects the Permits;
3.3.2 joint venturing or otherwise optioning or permitting the entry of
any other party into this joint venture enterprise, except as
otherwise permitted in this Agreement;
3.3.3 financing of the enterprise herein contemplated on terms which
are not within normal commercial parameters prevailing in normal
corporate practice in the mining industry;
3.3.4 securitizing the enterprise herein contemplated;
3.3.5 contracting of any part of the enterprise on terms which are not
commercially reasonable within prevailing industry practice;
3.3.6 the acquiring of assets or the incurring of capital expenditure;
3.3.7 non-arms length transactions with any party hereto or an
Affiliate; or
3.3.8 any other transaction which creates an unequal or unusual benefit
or detriment to any Party.
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3.4 As controlling shareholder of WAG from the Implementation Date, Randgold
will vote its Randgold Shares to cause WAG to fulfill the terms of this
Agreement and Randgold will exercise its vote of its Randgold Shares to
cause Azco to have a 25% representation on the Board and, further, will
render Azco all such assistance as it may require to enforce its rights
hereunder in respect to WAG's compliance with this Agreement and to
require such of the Board of WAG.
3.5 Randgold, as controlling shareholder of WAG, shall ensure that WAG
properly renews the Permits as the law requires and maintains such
Permits in good standing. Randgold acknowledges that to the
Implementation Date Azco has been making application for the renewed
Permits based upon budgets and data provided by Randgold and in
contemplation of Randgold assuming responsibility for the same.
ARTICLE 4
UNDERTAKING BY AZCO
4.1 As the controlling shareholder of WAG on the Implementation Date, Azco
undertakes to vote its shareholdings to cause Sanou to cause WAG to
allot and issue to Randgold, sufficient WAG ordinary shares so as to
make Randgold a 75% shareholder of WAG as contemplated in parts 7 and 8
hereof.
4.2 Sanou and Azco will vote its Shares to cause WAG to fulfills its
obligations in terms of this Agreement while Azco has a controlling
interest.
4.3 Sanou and Azco will pass such resolutions and give such consent as is
required to give effect to this Agreement.
ARTICLE 5
UNDERTAKING BY WAG
5.1 WAG undertakes on the Implementation Date to allot and issue to Randgold
such shares as to make Randgold a holder of 75% of its issued ordinary
shares.
5.2 All governmental approvals which may be required to implement this
Agreement in Mali will be obtained by WAG as expeditiously as possible.
Randgold and Azco will provide whatever facilities may be necessary to
assist in such implementation.
5.3 Upon the implementation of the new shareholding, WAG will constitute the
Board so as to ensure that Randgold has a 75% representation and Azco a
25% representation. If necessary, changes to WAG statutes to give effect
to the implementation of this Agreement will be made by WAG. Upon the
termination of this Agreement Randgold will provide Azco with those
corporate documents provided to Randgold in clauses 8.1.1.2 and 8.1.1.7.
ARTICLE 6
ADDITIONAL SHAREHOLDING - WAG
6.1 In terms of the Convention d'Establishment, under the laws of Mali it is
understood by the parties hereto that the government of Mali has the
right to receive, at its election, a 15% carried interest in the Permit
Areas or in the company owning such. The government also has the right
to receive an additional 5% working interest. The parties acknowledge
the dilution effect of such government elections and shall suffer such
dilution pro-rata with their interests being 75% to Randgold and 25% to
Azco, or such interests as they may have at the relevant time in
accordance with any dilution which may have occurred
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to the date of the government's election.
ARTICLE 7
ACQUISITION BY RANDGOLD OF SHARES IN WAG
7.1 On the Implementation Date, Azco will vote for and approve and WAG
undertakes, to allot and issue and deliver to the escrow agent, as
contemplated in Article 7.2 and Article 8, such number of shares in
WAG's capital, so as to vest Randgold with 75% of the issued share
capital of WAG and Azco the holder of 25%. In connection with such
subscription WAG and Azco give Randgold the warranties set out in
Schedule "4".
7.2 The Randgold Shares will be retained in escrow by an agent in England
mutually acceptable to the parties, together with share transfer forms
signed by Randgold authorizing the transfer of the Randgold Shares to
Azco in the event of Randgold defaulting under the terms of this
Agreement and failing to cure such default (as either acknowledged by
Randgold or as adjudged by a competent tribunal) or this Agreement
terminating without Randgold having completed the expenditures
contemplated by this Agreement for Exploration and production of the
Bankable Feasibility Study
7.3 Once Randgold has spent $2 million on Exploration and concluded the
Bankable Feasibility Study acceptable to independent financial
institutions on the Permit Areas, the escrow agent shall release the
Randgold Shares and the signed share transfer forms to Randgold upon
receipt of such a written instruction from Azco and Randgold or upon
order of a competent tribunal.
7.4 All fees of the escrow agent shall be borne by the parties pro rata in
accordance with their ownership interests in WAG.
7.5 The transfer fees and expenses for the transfer of the Randgold Shares
to Randgold in terms of 7.1 above, will be for the account of Randgold,
and those for the transfer back from Randgold to Azco will be for Azco's
account.
ARTICLE 8
ISSUANCE OF THE RANDGOLD SHARES
8.1 Issuance of the Randgold Shares shall be effected upon the mutually
agreed Implementation Date (failing mutual agreement such shall occur on
the last day) at the Randgold offices in Bamako in the following
manner:
8.1.1 WAG shall deliver:
8.1.1.1 to the escrow agent, in accordance with a mutually acceptable
escrow agreement, a share certificate in respect of the
Randgold Shares made in the name of Randgold, together with a
transfer form, to be signed by Randgold to transfer the
Randgold Shares back to Azco in the event of a termination of
the agreement and undated resignations of Randgold Board
directors (to be released whenever a new Board member is
appointed by Randgold) as contemplated in, inter alia, Article
7 above and the below provisions;
8.1.1.2 to Randgold the books and records of WAG, to be immediately
returned in the event of Randgold not earning its Randgold
Shares, and WAG shall, and Randgold shall give all assistance
whenever requested to do so by Azco, give Azco and its
authorized representatives access
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to such books and records (and Azco and its representatives
shall be entitled to make and keep copies of such books and
records or extracts from such books and records) as Azco or
such representatives may reasonably require;
8.1.1.3 to Randgold a resolution by the shareholders and directors of
WAG approving, in terms of WAG's statutes, the issue of the
Randgold Shares;
8.1.1.4 to Randgold the appointment of the Randgold Board nominees and
the resignation of sufficient WAG directors to cause the Board
to be composed of 75% Randgold nominees and 25% Azco nominees.
8.1.1.5 to Randgold the written resignation of the secretary and public
officer of WAG, if required by Randgold;
8.1.1.6 to Randgold the written undertaking of the auditors of WAG to
resign upon the written request of Randgold;
8.1.1.7 to Randgold possession of the statutes of WAG, books of
account, Minute Books, tax files and all other documents owned
by WAG, to be returned immediately to Azco in the event that
Randgold does not earn the Randgold Shares.
ARTICLE 9
LOSS OF TERRITORY OF PERMITS
9.1 It is acknowledged by the parties that, consequent upon the operation of
the laws of Mali, that 50% of the Permits area must be abandoned upon
the renewal of the Permits. It is acknowledged that the area being
abandoned has been mutually agreed as that presently excluded from that
being applied for under the Permits renewal. It is further agreed that
if either party shall, legally or beneficially, acquire any interest in
the abandoned area during the currency of this Agreement that such shall
be deemed acquired on behalf of Randgold and Azco, or their appointed
nominees.
ARTICLE 10
SALE AND PRE-EMPTIVE RIGHTS TO SHARES
10.1 The Randgold Shares may not be sold, assigned, hypothecated, or
otherwise have any interest therein disposed until such time as Randgold
has fully earned the same. Thereafter the Randgold Shares may be sold in
accordance with the following provisions.
10.2 A shareholder wishing to sell or otherwise dispose of any interest in
all or part of its shares in WAG shall serve upon WAG notice in writing
of its intention to sell its shares, together with the share
certificates and signed transfer forms in respect of the shares
concerned ("the identified shares"). The offer shall specify the number
of identified shares offered for sale, the purchase price per share at
which the offeror is prepared to sell the identified shares, the value
of any offeror's loan accounts associated with such identified interest
offered for sale, the identity of any third party who has offered to
purchase the identified shares, the period for which the offer shall
remain open, (which shall not be less than 30 (thirty) days), and any
other material matter deemed by the offeror to be relevant to a
prospective purchaser of the identified shares. The offeror shall be
under no restriction as to the price at which it is prepared to sell the
identified shares. The offer shall be deemed to constitute WAG as the
agent of the offeror for the sale of the
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identified shares at the purchase price per share stated in the offer.
10.3 WAG shall offer the identified shares to the remaining shareholder or
shareholders.
10.4 If the remaining shareholder does not purchase all (or some lesser part
if approved by the offeror) the identified shares within the period for
which the offer is open, the offeror may dispose of the identified
shares (or at the election of the offeror the balance of the identified
shares) to a third party, provided that:
10.4.1 none of the terms and conditions of the disposal is more
favourable to the third party than the equivalent term or
condition specified in any offer to the remaining shareholder;
10.4.2 the disposal is concluded within 120 (one hundred and twenty)
days of the expiry of the offer to the remaining shareholder;
10.4.3 the purchasing party becomes a party to this Agreement;
10.4.4 the purchasing party shall have the capacity at the time of
sale to perform the obligations of the offeror and to enter
into all such guarantees, suretyships, or any other obligation
of the offeror, failing which, at the sole discretion of the
other shareholders, the offeror shall not be relieved of any
obligations arising from this agreement or any other agreement
entered into in the course of the development of the Permits.
10.4.5 If at the expiry of the offer period the remaining shareholder
has notified its willingness to accept the offered identified
shares, WAG shall record the transfer of such identified
shares to the remaining shareholder who shall be bound to pay
the price for the identified shares and the offeror shall be
bound upon payment to transfer the shares to the remaining
shareholder.
10.5 If upon the expiry of the offer period the aggregate of the shares for
which acceptances have been received is less than the aggregate of the
identified shares, the offeror may within 14 days elect to withdraw the
offer in which case the offer shall be deemed to be withdrawn and the
offeror shall be entitled to retain the identified shares.
10.6 The offeror shall execute and deliver, or cause to be delivered to each
purchaser of identified shares such documents, duly completed and
signed, as are necessary to transfer complete and full title in respect
of the shares sold to those purchasers.
10.7 Notwithstanding the provisions of this clause, any share may be
transferred by either shareholder to an Affiliate provided such
Affiliate becomes a party to this Agreement and the rights of
pre-emption conferred on the shareholders shall not arise on the
occasion of such transfer.
ARTICLE 11
FURTHER EXPENDITURE
11.1 Once Randgold has expended US $2,000,000.00 on Exploration during the
three year period and has produced the Bankable Feasibility Study, it
will be the unrestricted owner of 75% of WAG constituting the Randgold
Shares and such shall be released to Randgold from escrow.
11.2 After Randgold has expended funds on Exploration and produced the
Bankable Feasibility Study then the Board of WAG will thereafter call
for contributions from its
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shareholders for funds for further Budgets in accordance with programs
and Budgets approved by the Board. A Budget requiring cash calls in
excess of $1,000,000US shall be approved unanimously by the Board but in
the event of disagreement and dead-lock extending in excess of 30 days,
the Manager shall have a casting vote which shall determine the issue. A
cash call for a Budget shall be for no more than the projected Budget
requirements for the succeeding quarter, unless additional expenditure
is approved by all parties.
11.3. Within 45 days of the approval by the Board of such program and budget,
the shareholders may elect to contribute to such program and budget as
follows:
11.3.1 in proportion to their then existing shareholding as at the
beginning of the period covered thereby; or
11.3.2 in some lesser amount than its respective shareholding, or not
at all, in which case its shareholding shall be recalculated
as provided in Article 13.
11.4 In the event that none of the shareholders will contribute their portion
of a Budget, or in the event that any part of a Budget is unfunded and
no shareholder will assume the unfunded portion, then the Budget shall
be considered void and the Manager and the Board shall produce a new
Budget for which the shareholders will fund the entire Budget.
11.5 From the commencement of a Budget the Manager shall immediately notify
the Board of any material departure from an approved program and Budget.
If the Manager exceeds an approved Budget by more than 10% (ten
percent), then the excess over 10% (ten percent), unless directly caused
by an emergency or unexpected expenditure or unless otherwise authorized
by the Board and the parties hereto, shall be for the sole account of
the Manager, and such excess shall not be included in the calculations
of the shareholding for the purpose of dilution or otherwise. Budget
overruns of 10% (ten percent) or less shall be borne by the contributing
parties in proportion to their respective shareholding as of the
beginning of the period covered by the program and budget in question.
Such overrun shall be funded by the parties in accordance with their
shareholding within 30 days of invoice by the Manager.
11.6 From the commencement of a Budget in case of emergency, the Manager may
take any action it deems necessary to protect life, limb or property, to
protect the assets or to comply with law or government regulation.
Likewise, the Manager may make expenditures for unexpected events which
are beyond its reasonable control and which do not result from a breach
by it of its standard of care. In the case of either an emergency or
unexpected expenditure, the Manager shall promptly notify the parties of
the emergency or unexpected expenditure, and the Manager shall be
reimbursed therefore by the parties in proportion to their respective
shareholding as of the beginning of the period covered by the then
current program and budget.
11.7 Within 15 (fifteen) days of a shareholder's election in terms of
subclause 11.3 for a Budget which has been fully committed for funding
the shareholders shall advance to the Manager their proportionate share
of the estimated amount of the forthcoming calendar quarter adjusted if
necessary to take account of the election. Thereafter on the basis of
the approved program and Budget, the Manager shall submit to the
shareholders 15 days prior to the last day of each calendar quarter a
billing for estimated cash requirements for the next ensuing calendar
quarter. The shareholders shall advance to the Manager their
proportionate share of the estimated amount by the first day of such
next ensuing quarter. Time is of the essence for payment of such
billings.
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11.8 If a shareholder fails to meet cash calls in the amount and at the times
specified in clause 11.7 they shall be in default. Such default if not
rectified within 14 (fourteen) days.
following receipt of written notification by the Manager shall result in
a dilution by the shareholder as provided for in clause 13.
ARTICLE 12
BANKABLE FEASIBILITY STUDY
12.1 At any time during the duration of the first 36 months of the Agreement
the Manager may decide that the results of the Exploration warrants the
preparation of a Bankable Feasibility Study.
12.2 To the extent that Randgold has not completed its funding of
US$2,000,000 in Exploration expenditure then Randgold shall apply such
unexpended amount to the funding of the Bankable Feasibility Study.
ARTICLE 13
DILUTION OF SHAREHOLDING
13.1 Once Randgold has fully earned its interest in accordance with the terms
of this Agreement then the shareholders of WAG shall contribute to the
costs of Budgets and programs in proportion to their shareholding at any
relevant time.
13.2 It is anticipated, and permitted, that the parties shall largely or
fully fund Budgets through inter-corporate loans to WAG and it is
acknowledged that all funds advanced to date are in the form of loans.
All loans shall be advanced under a first charge security which shall
rank between the parties equally and ratably in accordance with their
shareholder interests, subject only to subordination to bona fide third
party lenders approved by the Board or to charges required by law. Until
Randgold has fully earned its Randgold Shares, all loans shall rank
equally and ratably with the actual amount of outstanding loans as
between Azco and Randgold. It is acknowledged that in regard to Azco's
historical debt of approximately $4,000,000 US (the "Azco Debt"), and
the debenture of such amount outstanding on the books of WAG, that upon
Randgold earning its Randgold Shares the Azco Debt shall be amended to
provide that such shall be an encumbrance only on the interest of Azco
in WAG, shall not be a general liability of such company, and shall only
be paid from the revenue of WAG attributable to Azco's equity interest
in WAG.
13.3 In the event that Mali elects to receive a non-contributory 15% and
further elects to receive a 5% working interest then the other
shareholders in the mining company will be required to contribute the
proportionate costs towards further Budgets in the following proportions
or dilute:
13.3.1 If Mali elects to receive the 15% carried plus the 5% working interest,
then the shareholding and contributions in the mining company will be:
Shareholding Contribution
------------ ------------
Randgold 60% 71.25%
Azco 20% 23.75%
Mali 20% 5%
13.3.2 If Mali elects not to receive a 5% working interest but to
remain with its 15%
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non-contributory interest, the parties shareholding and contributions
will be:
Shareholding Contribution
------------ ------------
Randgold 63.75% 75%
Azco 21.25% 25%
Mali 15% 0%
13.4 The shareholding of that party electing to reduce its contribution to a
Budget or not to contribute at all or failing to make a cash call, shall
be recalculated at the time of election or default and abated in
accordance with the formula set out hereunder. The percentage interest
of a Party shall be recalculated by multiplying such percentage interest
by a factor (hereafter called "X"), expressed as a decimal factor
derived by the following formula. The Party not being diluted shall have
its interest increased by the interest lost by the diluting party
resulting from the following formula:
A + B
X = -----
C + D
Where X is the recalculation factor; and
A is the deemed expenditure of the party whose interest is being diluted
and shall be the sum of the following as identified for each party:
1) US $2,000,000 (two million United States Dollars) plus all other
costs to the completion of the Bankable Feasibility Study for
Randgold (the "Randgold Expenses") plus Azco's historical
expenditures of sec. 13.4(3) below multiplied by Randgold's
contribution percentage of sections 13.3.1 or 13.3.2, dependent
upon Mali's election, shall be deemed for Randgold;
2) Azco's contribution percentage of section 13.3.1 or 13.3.2,
dependent upon the relevant Mali election, multiplied by the
Randgold Expenses shall be deemed for Azco; and
3) Azco's historical expenditure to acquire the Permits and to
explore the same in the amount of $4,000,000 US for Azco (less
the amount paid by Randgold to Azco for the camp);
B is the diluting party's actual contribution to Budgets to date;
C is the total deemed expenditure for a Party, of numerator A 1 to 3
above;
D is the total amount which a Party should have contributed in
accordance with its contributory interest of sections 13.3.1 or
13.3.2.
13.5 Once a party has suffered dilution of its shareholding, it shall be
entitled to resume contributions to Budgets for the next quarter and
thereafter, only at the diluted level of its shareholding, provided
however, that the shareholding of a diluted party may be increased in
the event of any other party subsequently itself suffering dilution of
its shareholding in terms of the above. However, a diluted party may
employ a one time election at any time, for a period of 12 months
following dilution, to regain its interest ("Repurchase Election") by
paying the party which has borne the additional cost the total costs
during that period the paying party has borne for the other party's
diluted interest to the date of the Repurchase Election plus a fifty
(50%) percent premium plus interest at
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US Treasury Department month end prime plus 4% and calculated monthly on
the non-premium amount.
13.6 If a party's interest is diluted to 5% or less of WAG then it shall
relinquish all of its interest and shareholding and receive a 4% net
profits interest ("NPI"). The NPI shall be calculated on the net profit
determined in accordance with Schedule "5" hereto.
ARTICLE 14
MANAGER
14.1 Appointment
14.1.1 Each party hereby appoints Randgold as the Manager of WAG for
the period in which Randgold is the largest shareholder of WAG
and agrees that the Manager shall have overall management
responsibility for WAG. The parties agree that Randgold may
from time to time appoint an Affiliate to be Manager to act on
its behalf under this Agreement and that, in this respect,
Randgold may appoint Affiliates to manage (in accordance with
this Agreement) all or any other specific areas to which this
Agreement relates. Randgold agrees to serve as Manager unless
and until it resigns (whether by Randgold nominating an
Affiliate to act as Manager in its place or otherwise) or is
deemed to resign as provided in clause 14.4
14.1.2 If Randgold assigns or transfers its shares in WAG to an
Affiliate then, if Randgold is the Manager at the time of such
assignment or transfer, Randgold shall continue as Manager
under this Agreement, unless it otherwise determines to
transfer the Manager's duties to such Affiliate.
14.1.3 In the event that an Affiliate succeeds Randgold as Manager
Randgold and the Affiliate shall take such transitional steps
as are necessary for the Affiliate to assume and perform the
powers and duties of Manager under this Agreement.
14.1.4 Subject to notice to the Board and non-objection thereby and
subject to Randgold's continuing obligations of supervision,
Randgold may sub-contract part or all of its duties as Manager
to reputable and capable independent contractors so long as
such sub-contracts do not materially add to cost in the areas
where Randgold has capability to perform the duties.
14.2 Powers And Duties Of Manager
Subject to the provisions of this Agreement, the Manager shall have the
following powers and duties:
14.2.1 The Manager shall, by itself or through its employees, agents,
independent contractors or Affiliates, manage, direct and
control operations on behalf of WAG in regard to the Permits,
and for that purpose shall have control of all the Assets. The
Manager shall conduct operations in accordance with programs
and budgets adopted by, and the lawful decisions and directions
of the Board, but shall otherwise be entitled to conduct
operations in the Manager's absolute discretion.
14.2.2 The preparation of budgets and the expenditure of funds shall
be at Randgold's sole discretion, save that such expenditure
shall comply with the undertaking by Randgold to expend $2
million on Exploration on the Permit
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Areas within 3 years of the Implementation Date.
14.2.3 The Manager shall implement the decisions of the Board, shall make all
expenditure necessary to carry out adopted programs, and shall promptly
advise the Board if it lacks sufficient funds to carry out its
responsibilities under this Agreement.
14.2.4 The Manager shall:
14.2.4.1 purchase or otherwise acquire all material, supplies,
equipment, water, utility and transportation services required
for Operations, such purchases and acquisitions to be made on
the best terms available, taking into account all of the
circumstances;
14.2.4.2 obtain such customary warranties and guarantees as are
available in connection with such purchases and acquisitions;
14.2.4.3 keep the Assets free or procure that the Assets are kept, free
and clear of all liens and encumbrances, except for those
existing at the time of, or created concurrent with, the
acquisition of such Assets; and
14.2.4.4 pay, on behalf of such parties as are liable to contribute, all
costs and expenses incurred through the conduct of Operations.
14.2.5 The Manager shall conduct such title examinations and, to the extent it
is able to do so in view of which entity holds title to the Permits,
cure such title defects as may be advisable in the reasonable judgment
of the Manager.
14.2.6 The Manager shall:
14.2.6.1 make or arrange for all payments required by permits, licenses,
concessions, contracts and other agreements related to the
Permits;
14.2.6.2 pay all taxes, assessments and like charges on Operations and
Assets except taxes determined or measured by a party's sales
revenue or net income; and
14.2.6.3 do all other acts, including the preparation and lodgment of
such reports as are required by law, as are reasonably
necessary to maintain the Assets in good standing.
14.2.7 The Manager shall:
14.2.7.1 apply for all necessary permits, licenses and approvals
required for or in connection with operations;
14.2.7.2 comply with applicable laws and regulations;
14.2.7.3 notify the Board promptly of any allegations of substantial
violation of such applicable laws or regulations;
14.2.7.4 prepare and file all reports or notices for Operations;
14.2.7.5 shall prosecute and defend on behalf of WAG but shall not
initiate
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without consent of the Board, any litigation or administrative
proceedings arising out of Operations. The parties shall have
the right to participate, at their own expense, in such
litigation or administrative proceedings;
14.2.8 The Manager shall notify each party of any litigation or administrative
proceeding of which it becomes aware which is instituted against the
Manager or the parties arising out of Operations, and of any material
matter arising out of Operations which could reasonably be regarded as
giving rise to a right in the parties or the Manager to commence any
litigation or administrative proceeding. If the Board does not consent
to the Manager initiating a litigation or administrative proceeding, a
party may institute that proceeding in its own name and at its own
expense, but shall keep the Manager and each other party fully informed
of the progress of the proceeding and shall indemnify the Manager and
each other party against all losses, liabilities, damages and such costs
which they may incur in respect of or arising out of the proceeding.
14.2.9 The Manager shall procure and maintain such insurance as may be required
by all applicable laws, rules or regulations and good mining practice in
respect of Operations. No other insurance shall be provided for the
benefit of the parties. However, a party may procure and maintain at its
cost and expense such other specific insurance relating to Operations as
it shall consider necessary and such other insurance shall be solely for
the benefit of the party procuring the same and the premium therefor
shall be for the account of that party. Further, such insured party
shall indemnify each other party against any liabilities incurred by the
other party as a result of a claim by the relevant insurer, whether by
subrogation or otherwise.
14.2.10 The Manager may not dispose of Assets, whether by sale, assignment,
abandonment or other transfer, except with the consent of all of the
parties. Notwithstanding, the Manager shall carry out all procedures
required on behalf of WAG to abandon any part of the Permits required by
law and to the extent determined by the Board and the Manager shall also
act to secure such new permit areas as the Board may determine to
acquire.
14.2.11 The Manager shall have the right to carry out its powers, duties and
obligations under this Agreement through its employees, agents,
independent contractors or Affiliates.
14.2.12 The Manager shall keep and maintain all required accounting and
financial records in respect of WAG in accordance with customary cost
accounting practices in the mining industry.
14.2.13 The Manager shall select and employ at competitive rates all supervision
and labour necessary or appropriate to all Operations. All persons
engaged or employed hereunder, the number thereof, their hours of labour
and their compensation shall be determined by the Manager, and they may
be employees of the Manager.
14.2.14 At the end of each half year, the Manager shall provide to the parties a
report on Operations which shall include copies of all information
acquired in Operations, including, but not limited to, maps, drill logs,
core tests, reports, surveys, assays, analyses, production reports,
Operations, technical,
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accounting and financial records. In addition, the Manager shall, upon
receiving reasonable notice and at reasonable times, allow the parties
at their sole risk and expense, and subject to reasonable safety
regulations, to:
14.2.14.1 inspect the Assets and Operations, but shall be entitled to
request that the inspecting parties first undertake not
unreasonably to interfere with Operations; and
14.2.14.2 have access to, and inspect and copy, all information
relating to Operations.
14.2.15 The Manager shall undertake all other activities reasonably
necessary to fulfill the foregoing.
14.2.16 If the Manager fails to adequately insure the project or
causes the insurance to fail then the Manager shall indemnify
and hold harmless the parties hereto and their directors,
officers, employees, agents and any other person to which a
party hereto has responsibility for all damages, costs,
injury, litigation, liability, indemnity, prosecution or any
other matter arising from the acts or omissions of the
Manager arising from willful acts or omissions or gross
negligence.
14.2.17 The Manager shall not be in default of its duties if its
inability to perform results from the failure of the parties
to perform acts or to contribute funds, call or other amounts
required of them by this Agreement.
14.3 Standard of Care
The Manager shall conduct all Operations in a good workmanlike and
efficient manner, in accordance with sound mining and other applicable
international industry standards and practices and shall operate in
accordance with all applicable laws of Mali and in accordance with the
terms and provisions of the Permits.
14.4 Resignation and Deemed Offer to Resign
The Manager may resign as Manager of WAG at any time upon three month's
prior written notice to the directors of WAG and Azco, or may be deemed
to have resigned on the date of occurrence of the following, and in
either case WAG shall elect a new Manager:
14.4.1 where Randgold's shareholding in WAG is no longer the
largest; or
14.4.2 the Manager, in that capacity, fails to perform a material
obligation imposed upon it under this Agreement and such
failure continues for a period of 60 days after notice from a
party demanding performance and the Manager has not disputed
the default, otherwise has been adjudged in default; or
14.4.3 the Manager fails to pay the bills of WAG within 60 days after
they are due, provided such failure is not as a result of a
party failing to make part or all of the cash calls or other
contributions required of it under this Agreement; or
14.4.4 the Manager suffers the appointment of a receiver, liquidator,
administrators, assignee, custodian, trustee, sequestrator or
similar official for a substantial part of its assets in a
proceeding brought against or initiated by it, and such
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appointment is neither made ineffective nor discharged within
90 days after the making thereof or such appointment is
consented to, requested by or acquiesced in by it; or
14.4.5 the Manager:
14.4.5.1 commences a voluntary case under any applicable bankruptcy,
insolvency or similar law now or hereafter in effect; or
14.4.5.2 consents to the entry of an order of relief in an involuntary
case under any such law or to the appointment of or taking
possession by a receiver, liquidator, administrator,
assignee, custodian, trustee, sequestrator or other similar
official of any substantial part of its assets; or
14.4.5.3 makes a general assignment for the benefit of creditors; or
14.4.6 entry is made against the Manager of a judgment, decree or
order for relief by a court of competent jurisdiction in an
involuntary case commenced under any applicable bankruptcy,
insolvency or other similar law of any jurisdiction now or
hereafter in effect.
14.4.7 in the event that Randgold is the majority shareholder but
has elected or failed to contribute to two or more quarterly
Budgets then Randgold may be replaced by the next largest
shareholder which is contributing to Budgets and wishes to be
Manager; or
14.4.8 on termination of this Agreement.
14.5 Charges Levied by Manager
14.5.1 The Manager shall be entitled to charge each month a
management fee equal to 5% of the funds expended in respect
of Operations on or relating to the Permit Areas during the
previous month.
14.5.2 The management fee charged by the Manager under this clause
may be regarded for all purposes as part of the relevant
party's contribution to the minimum exploration expenditure
of $2 million which relates to the period during which the
charge is made.
14.5.3 Nothing contained in this Agreement shall require the
Manager, in its capacity as such, to advance its own funds
for costs or expenses of the parties under this Agreement
except for the Manager's obligation to fund cost overruns as
contemplated in Article 11.
14.6 Transactions With Affiliates
If the Manager engages Affiliates to provide services hereunder, it
shall do so on terms no less favourable than would be the case with
arm's length transactions.
ARTICLE 15
FORMATION OF MINING COMPANY
15.1 After completion of a Bankable Feasibility Study, if the parties elect
to proceed with the
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development and if the law of Mali so requires, they shall form a mining
company for that purpose. If the law of Mali does not require a new
mining company then WAG shall continue as the mining company unless the
parties mutually agree otherwise. The interest in the new mining company
shall be held by WAG or, if the parties so elect, the new mining company
shall allot to each of the parties the number of shares in accordance
with their interests in WAG, adjusted for any dilution, and proportional
in terms of the interest elected to be received by Mali as set forth
below.
15.1.1 Shareholding if Mali elects not to contribute towards Further
Expenditure:
WAG 85%
MALI 15%
15.1.2 Shareholding if Mali contributes in full (5%) towards Further
Expenditure:
WAG 80%
MALI - 20%
15.2 The mining company shall adopt a memorandum and articles of association
in the form normally adopted at the relevant time by Malian mining
companies unless the parties otherwise agree.
15.3 The mining company shall apply for an exploitation permit in its own
name in respect of the Permit Areas or if that cannot be done, the
parties shall jointly do so on behalf of the mining company.
15.4 Randgold will be appointed the first Manager and operator of the mining
company on the same terms of this Agreement.
15.5 The Manager shall arrange financing for the development of a mine by the
mining company. The intention of the parties is that external project
finance be arranged to the maximum available. Any project financing
shortfall shall be met by Randgold and Azco and if it elects to
participate, by Mali, pro-rata to their shareholding in the mining
company.
ARTICLE 16
DISTRIBUTION OF PROFITS
16.1 All charges and expenses, as set forth in Part 13 regarding dilution
which for the purposes hereof include exploration, operating,
administration and depreciation costs incurred by Randgold and Azco on
the Permit Areas up to the completion of the Bankable Feasibility Study,
shall be considered as a loan by those parties to WAG.
16.2 The expenditure by Randgold and Azco up to the date of completion of the
Bankable Feasibility Study will not bear interest. Expenses incurred
after that date will bear monthly interest at the following rate:
16.2.1 if the funds have been borrowed, the rate of interest must be
such as to cover the interest on the borrowed funds together
with all other costs associated with the loan;
16.2.2 if the funds have not been borrowed, the interest rate must
be that which the
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party's main bank will charge to its preferential clients,
on a non-guaranteed loan.
16.3 The above loans together with the interest shall be repaid to Azco and
Randgold out of the proceeds of the sale of the product of the mine
subject to cash being available in WAG as determined by the Manager on a
reasonable basis after considering submissions from the parties.
16.4 The net after-tax profit of WAG, after setting aside sufficient for
working capital and capital expenditure, shall be distributed in the
following preferential order:
16.4.1 to satisfy the obligations of the mining company to Mali;
16.4.2 to repay loans from third parties in accordance with the
terms of such loan agreements;
16.4.3 to pay interest on party loans, then to repay in the order in
which they were advanced the principal of non-interest
bearing loans as defined above to Randgold and Azco and
thereafter to pay principal on party loans ratably in
accordance with shareholdings;
16.4.4 the balance to the parties in accordance with their
shareholding applicable at that time.
ARTICLE 17
DISTRIBUTION OF CASH
17.1 All the cash available for payment of loans and distribution in
accordance with Article 16.4 above, as at the last day of each quarter
shall be distributed to the parties within 14 (fourteen) days after the
end of such quarter in the proportions of their shareholding.
17.2 Should any difference arise between the parties as to the amount of cash
available for distribution as at the last day of any quarter, the
difference shall be determined by WAG's auditor or another party
mutually selected to mediate.
ARTICLE 18
CAMP EQUIPMENT AND DRILLING EQUIPMENT
18.1 Randgold has offered to buy from WAG or Azco (in accordance with their
ownership) and Azco and WAG have accepted the offer, camp equipment and
drilling equipment located at Dabia. Any proceeds WAG is to receive as
an allocation of any part, or all, of the equipment, the parties agree
shall be paid directly to Azco as a reduction of its loan to WAG. A copy
of the offer and its acceptance is attached hereto as Schedule `6'. The
basis of the sale is that the equipment is sold as is, and no
representations are made as to its conditions and suitability, other
than that no other party has any rights to the equipment, which is fully
paid for.
18.2 Effective as of 13 October 1998 this equipment is the property of
Randgold subject to execution of this Agreement.
18.3 Payment of the purchase price of US$277,500 will be made by Randgold to
Azco within 90 days of the actual closing of the issue of WAG shares to
Randgold, for the equipment and prices set forth in the enclosed
Schedule "6".
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ARTICLE 19
WITHDRAWAL AND TERMINATION
19.1 Termination
The parties may terminate this Agreement at any time by unanimous
written agreement. Randgold shall be entitled to terminate this
Agreement at any time until it has fully earned its Randgold Shares on
the giving of 90 days' prior written notice to each other party and
subject to all obligations arising from Randgold's operations as Manager
and controlling shareholder of WAG shall have been discharged or Azco
shall have been satisfied that sufficient security has been given for
such discharge. However, termination shall not be effected in the time
frame which is less than 180 days prior to the expiration of the Permits
unless such shall be left in good standing adequate to renew the Permits
in accordance with the terms of the Permits and Malian law. Termination
shall be deemed to occur on the later of the last day of the notice
period or the day that unfulfilled obligations are finally fulfilled.
19.2 Continuing Obligations
Upon termination of this Agreement each party shall remain bound by and
liable to satisfy, perform and fulfill their or its (as the case may be)
obligations which are or were due to be satisfied, performed or
fulfilled prior to the date of termination or withdrawal (as the case
may be), and also any obligations which are expressed by this Agreement
to survive termination or withdrawal (as the case may be).
19.3 Return of WAG Shares on Termination
Promptly after termination the escrow agent shall be instructed by
Randgold to deliver the Randgold Shares together with the transfer forms
to Azco. Azco may then deal with or transfer the shares as it requires,
at its cost. The Manager shall take all action necessary to wind up the
activities of the operations and all costs and expenses incurred in
connection with the termination of this Agreement shall be expenses
chargeable to Randgold save for the share transfer fees.
19.4 Right to Data After Termination
After termination of this Agreement each party shall be entitled to
copies of all information acquired in connection with this Agreement as
of the date of termination and not previously furnished to it.
ARTICLE 20
REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS
20.1 Capacity Disclosures
Each of the parties represents, warrants and undertakes that:
20.1.1 it is a company duly incorporated and in good standing in its
place of incorporation and that it is qualified to do
business and is in good standing in such jurisdictions as are
necessary in order to enable it to carry out the purposes of
this Agreement;
20.1.2 it has the capacity to enter into and perform this Agreement
and all transactions and obligations which are contemplated
and provided for in this Agreement;
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20.1.3 all corporate and other action required to authorize it to
enter into and perform this Agreement and all transactions
and obligations which are contemplated and provided for in
this Agreement (including the obtaining and effecting of such
consents, authorizations, registrations and other authorities
as it requires in connection with entering into and
performance of this Agreement and such transactions) have
been properly taken;
20.1.4 it will not breach any other agreement or arrangement by
entering into or performing this Agreement and that this
Agreement has been duly executed and delivered by it and is
valid and binding upon it in accordance with its terms;
20.1.5 no litigation, arbitration, tax claim, dispute or
administrative or other proceedings is current or pending or,
to its knowledge, threatened which may have a material
adverse effect on its ability to perform its obligations
under this Agreement or on its financial condition or
business and in each case it shall provide such evidence of
the same as the other party may reasonably require; and
20.1.6 in addition, each party represents and warrants that it has
disclosed to the other parties all material facts and
circumstances which, if not disclosed, would cause the
representations and warranties given by the party in this
clause to be materially misleading.
20.2 Mineral Rights
Additionally, WAG represents, warrants and undertakes to Randgold that,
as at the date of this Agreement:
20.2.1 it is the registered holder of the Permits listed in clause
1.19; and
20.2.2 to be best of its knowledge and belief (having made all
reasonable inquiries):
20.2.2.1 no option, pre-emptive right, lease, prospecting
contract or other right or interest vested in any
third party exists in respect of the Permits,
which might restrict, prejudice, or in any way
detract from the rights conferred on Randgold
under this Agreement; and
20.2.2.1 there are no restrictions or limitations on
exploration or mining in or on the Permit Areas
other than the normal restrictions imposed by law
and the restrictions set out in the Permits;
20.2.3 the Permits are in good standing at the Effective Date, and
remain in good standing as at the Implementation Date of this
Agreement;
20.2.4 it has disclosed to Randgold all obligations that must be
fulfilled to keep the Permits in good standing during the
duration of this Agreement;
20.2.5 it will, and it shall procure that its Affiliates will make
no further commitment to the Malian Ministry of Mines, or
other relevant mining authorities, or any other person, that
would affect the conditions required to be met to maintain
the Permits in good standing without first discussing and
agreeing those conditions and commitments with Randgold;
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20.2.6 all prospecting and other activities by it and its Affiliates
up to the Effective Date in the Permit Areas have been in
accordance with the rights granted under the Permits;
20.2.7 since the Effective Date it has delivered to or made
available to Randgold all data, records and other information
concerning title to, and all geological data relating to, the
Permits and the Permit Areas which was in its or its
Affiliates' possession or control as at the Effective Date or
which has since come into its or its Affiliates' possession
or control; and
20.2.8 it has been entitled to, and shall continue to be entitled
to, deliver or make available to Randgold all data, records
and information of the type referred to in clause 20.2.7 and
that the data, records and information are, and shall be,
complete, true and accurate.
20.3 Azco Covenants
Azco covenants and agrees as follows and each of these covenants shall
continue during the term of this Agreement:
20.3.1 Azco will assist, to the extent that it reasonably can and at
the cost of Randgold, the Manager in any aspects of
administration of title to the Permits which, because of the
operation of Malian law, regulation or practice, the Manager
is unable to fully perform or comply;
20.3.2 without limitation to clause 20.3.1, at any time, and in any
case at the request of the Manager, it shall use its best
efforts to assist the Manager in obtaining or maintaining the
Permits which are necessary to the conduct of Operations, and
it shall assist the Manager by informing the Manager of title
and mining problems or items which may affect the Permits;
20.3.3 it shall make known and available to the Manager, its
employees and agents any and all data, maps, or other
documents or information which Azco may have or may acquire
from time to time pertaining to the Permits or pertaining to
the Permit Areas;
20.3.4 it will not, unless expressly permitted by this Agreement,
enter into any agreement or arrangement, or purport to enter
into any agreement or arrangement, pursuant to which any third
party, entity or person would or may obtain any interest in,
or rights in respect of, the Permits, or any rights to
prospect, explore or mine in, or to evaluate or develop, the
Permit Areas.
ARTICLE 21
RELATIONSHIP OF THE PARTIES
21.1 No Partnership
Nothing contained in this Agreement shall be deemed to constitute a
party the partner of the other parties or, except as otherwise herein
expressly provided, to constitute a party the agent or legal
representative of the other parties or to create any fiduciary
relationship between the parties. It is not the intention of the parties
to create, nor shall this Agreement be construed to create, any mining,
commercial or other partnership. Neither parties shall have any
authority to act for or to assume any obligation or responsibility on
behalf of the other parties except as otherwise expressly provided
herein. The rights,
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duties, obligations and liabilities of the parties shall be several and
not joint or collective. Each party shall be responsible only for its
obligations as set out in this Agreement and shall be liable only for
its share of the costs and expenses as provided in this Agreement.
21.2 Tax Returns
Each party shall be responsible for its own tax returns.
21.3 Other Business Opportunities
Except as expressly provided in this Agreement, each party shall have
the right independently to engage in and receive full benefits from
business activities, except where directly competitive with Operations,
without consulting the other, unless such competitive operation exists
on the Implementation Date and has been disclosed. Neither party shall
have any obligation to the other party with respect to any opportunity
to acquire any property outside the Permit Areas at any time, except as
provided herein or in any other agreements between the parties. Each
party shall indemnify, defend and hold harmless the other party and its
Affiliates, and its or their respective directors, officers and agents
from and against any liabilities which may be imposed upon, asserted
against or incurred by any of them and which arise out of or result from
any act or any assumption of liability by the indemnifying party, or any
of its directors, officers, shareholders, employees, agents, attorneys
and Affiliates, when such assumption is done or undertaken, or
apparently done or undertaken, on behalf of the other parties or its
Affiliates, other than pursuant to the authority expressly granted
herein or as otherwise agreed in writing between the parties.
21.4 Termination of Rights
Except as otherwise provided in this Agreement, neither Azco nor
Randgold shall permit or cause all or any part of its interest in the
shares of WAG, and WAG shall not permit or cause all or any part of its
interest in the Permits to be sold, exchanged, encumbered, surrendered,
abandoned or otherwise terminated.
21.5 Prohibition on Partition and Disposition
No party shall seek partition, or sale in lieu of partition of the
Permits or the Permit Areas during the continuance of this Agreement,
and each party waives any rights which it may have in this regard. WAG,
nor any party, shall dispose of any interest in the Permits or the
Permit Areas or any material Assets except if unanimously approved by
the parties hereto or where required by law.
21.6 Employees
Where the Manager is a party, employees of the Manager are not and shall
not be regarded as, and shall not be held out to be, employees of the
other parties.
ARTICLE 22
GENERAL PROVISIONS
22.1 Notices
All notices, payments and other required communications hereunder
("Notices") between the parties and the Manager shall be in writing and
shall be addressed, respectively, as follows. All notices shall be
given:
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22.1.1 by personal delivery to the parties or its representative; or
22.1.2 by electronic communication, with a confirmation sent by
registered or certified mail, return receipt requested. All
notices shall be effective and shall be deemed delivered:
22.1.2.1 if by personal delivery on the date of delivery
and
22.1.2.2 if by electronic communication on the date of receipt of
the electronic communication. A party may change its
address from time to time by notice to the other party
and the Manager;
If to Azco:
at the address first herein set forth
If to WAG:
at the address notified by the board
If to Randgold:
Randgold Resources Limited
P O Box 82291, Southdale, 2135
SOUTH AFRICA
Attn: Company Secretary
Fax No: 27 11 837 1068
22.2 Waiver
The failure of a party to insist on the strict performance of any
provision of this Agreement or to exercise any right, power or remedy
upon a breach hereof shall not constitute a waiver of any provision of
this Agreement or limit the party's right thereafter to enforce any
provision or exercise any right.
22.3 Modification
No modification or amendment of this Agreement shall be valid unless
made in writing and duly signed by the parties. If, in the event of
experience gained through the operation of this Agreement, the parties
agree that application of any of its provisions results in a material
inequity to one or all of the parties, then the parties agree that they
will meet to discuss possible changes in such provision(s) proposed by
the parties as a means of obviating such inequity.
22.4 Force Majeure
The obligations of a party shall be suspended to the extent and for the
period that performance is prevented by any cause, whether foreseeable
or unforeseeable, beyond its reasonable control, including, without
limitation, labour disputes (however arising and whether or not employee
demands are reasonable or within the power of the 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 exploration or exploitation, right, License, permit or
concession; curtailment or suspension of activities to remedy or
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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, sink holes, drought or other adverse weather
condition; delay or failure by suppliers or transporters of materials,
parts supplies, services or equipment or by contractors 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. The
affected party shall promptly give notice to the other party and the
Manager of the suspension of performance, stating therein the nature of
the suspension, the reasons therefor and the expected duration thereof.
The affected party shall resume performance as soon as reasonably
possible.
22.5 Governing Law
22.5.1 This Agreement shall be governed by and interpreted in
accordance with the laws of England. The parties submit to
the exclusive jurisdiction of the courts exercising
jurisdiction there in connection with matters concerning this
Agreement.
22.5.2 In event of any dispute, the parties shall attempt to resolve
the matter amicably by negotiation of not less than 60 days,
following which the matter shall be referred to the
respective Chairmen of the parties. If the Chairmen of the
parties are unable to resolve the matter within 30 days of
notice to negotiate the dispute shall be determined
judicially.
22.6 Further Assurances
Each of the parties agree that it shall take from time to time such
action and sign or execute such additional instruments as may be
reasonably necessary or convenient to implement and carry out the intent
and purpose of this Agreement.
22.7 Confidentiality and Public Statements
22.7.1 Except as otherwise provided herein, the terms and conditions
of this Agreement, and all data, reports, records and other
information of any kind whatsoever developed or acquired by
either party in connection with this Agreement (together
"Confidential Information"), shall be treated by the parties
as confidential, and no party shall reveal or otherwise
disclose such Confidential Information to third parties
without the prior written consent of the other party.
22.7.2 Confidentiality shall not apply to:
22.7.2.1 the disclosure of Confidential Information to any
Affiliate, or to the directors, officers or employees
of a party or any Affiliate, or to the directors,
officers or employees of a party of any Affiliate to
any public or private financing agency or institution,
to any contractors or subcontractors which the parties
may engage and to employees and consultants of the
parties or to any third party to which a party
contemplates the transfer of all or part of its
shareholding in WAG, provided that in each case, other
than the disclosure of Confidential Information to
Affiliates and directors, officers, employees of the
party and its Affiliates, only such Confidential
Information as the disclosee
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shall have a legitimate business need to know shall be
disclosed, and that in each case the party shall
ensure that the disclosee protects the confidential
nature of such information at least to the same extent
as the parties are obligated to do under this clause;
22.7.2.2 Confidential Information which comes into
the public domain other than through a breach of this
clause;
22.7.2.3 the disclosure by a party of the minimum information
necessary in order to comply with any applicable law
or legally binding order of any government agency or
judicial body or of securities laws or listings
agreements to which a party may be subject.
22.7.3 The provisions of this clause shall apply during the term of
this Agreement and shall also continue to apply for one year
following its termination, and shall continue to apply to a
party which forfeits, surrenders, assigns, transfers or
otherwise disposes of its shares for one year following the
date of such occurrence.
22.7.4 Subject to requirements of relevant securities laws and
rules, a party shall not make any public announcement or
public disclosure with regard to this Agreement, whether or
not relating to Confidential Information, without the prior
written consent of the other parties as to the content and
timing of such announcement or disclosure, which consent
shall not be unreasonably withheld.
22.8 Entire Agreement, Successors and Assigns
This Agreement supersedes all prior agreements and understandings
between the parties relating to the subject matter hereof, including the
Heads of Agreement. This Agreement shall be binding upon and inure to
the benefit of the respective successors and permitted assigns of the
parties.
22.9 Severability
If part of this Agreement is rendered illegal, invalid or unenforceable
under applicable law, the remaining provisions of this Agreement shall
continue in force.
22.10 Default
If a party defaults in the performance of any obligation under this
Agreement or any provision of this Agreement (the "defaulting party"),
each other party (the "non-defaulting party") may serve upon the
defaulting party written notice of default. If the defaulting party
within 30 (thirty) days following such notice does not cure the alleged
default, the defaulting party shall be deemed to be in default of this
Agreement, except as may be expressly provided otherwise in this
Agreement, and the non-defaulting party may at that point exercise such
rights and remedies which it has in respect of the default. Except as
otherwise provided, the rights and remedies for default provided in this
Agreement shall be in addition to, and not in lieu of, any other rights
or remedies available to the non-defaulting party under this Agreement
or under law including, without limitation, specific performance and
injunctive relief.
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IN WITNESS WHEREOF the parties have hereunto set their hands and seals in the
presence of their duly authorized signatories effective as at the Effective Date
as defined in this Agreement.
The CORPORATE SEAL of
AZCO MINING INC.
was hereunto affixed in the presence of:
- ---------------------------------------------
Authorized Signatory
DATE:
-----------------------
The CORPORATE SEAL of
SANOU MINING CORPORATION
was hereunto affixed in the presence of:
- ---------------------------------------------
Authorized Signatory
DATE:
-----------------------
The CORPORATE SEAL of
WESTERN AFRICAN GOLD AND
EXPLORATION S.A.
was hereunto affixed in the presence of:
- ---------------------------------------------
Authorized Signatory
DATE:
-----------------------
Executed by the authorized signatory of
RANDGOLD RESOURCES LIMITED:
- ---------------------------------------------
Authorized Signatory
DATE:
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