Attach to Exhibit 10.20
Attached hereto is an English translation of the Joint Venture Agreement
between Corporacion Minera Boliviano S.A. ("Comibol") and ASC Bolivia LDC,
regarding the Cobrizos Concession. The Company employed translators to
translate the above referenced agreement and based on this the undersigned
believes that the attached is a fair and accurate English translation of the
above referenced agreement.
/s/ Keith R. Hulley
-------------------
Keith R. Hulley
Director
Apex Silver Mines Limited
Date: August 29, 1997
1
C O R R E S P O N D S
(SEAL)
*******************************AFFIDAVIT No.230/96*****************************
FOR THE JOINT VENTURE WRIT FOR THE DEVELOPMENT OF MINING ACTIVITIES, SUBSCRIBED
BETWEEN: THE CORPORACION MINERA DE BOLIVIA (COMIBOL), REPRESENTED BY DR.
ALBERTO ALANDIA BARRON - PRESIDENT AND LIC. LUIS ARNAL VELASCO - MANAGER OF THE
CONTRACTS AND FINANCES UNIT, AND "ASC BOLIVIA LDC" COMPANY, REPRESENTED BY MR.
JOHNNY DELGADO ACHAVAL.=
********************************************************************************
In La Paz city, at nine hours of October fifteen of the year nineteen ninety
six; before me, lawyer Dr. MARIA ESTHER VALLEJOS H., SPECIAL NOTARY OF MINES AND
PETROLEUM and witnesses named and signed at the end, presented themselves: For
one party, the CORPORACION MINERA DE BOLIVIA (COMIBOL), REPRESENTED BY DR.
ALBERTO ALANDIA BARRON, with ID No. 1191239 PT. (PRESIDENT) AND LIC. LUIS ARNAL
VELASCO, with ID No. 332387 L.P. (MANAGER OF THE CONTRACTS AND FINANCES UNIT),
and "ASC BOLIVIA LDC" COMPANY, REPRESENTED BY MR. JOHNNY DELGADO ACHAVAL, with
ID No. 39745 L.P.; all full of age, able by right, neighbors of this city, of
whose identity I certify, and said: They agree to convert into a public deed
the writ presented to me related to: WRIT FOR A JOINT VENTURE FOR THE
DEVELOPMENT OF MINING ACTIVITIES, accompanied by: Supreme Resolution No. 213601
dated 16/II/94; COMIBOL's Board of Directors Resolution No. 1084 dated
22/XII/95; COMIBOL's Board of Directors Resolution No. 1105 dated 06/II/96;
COMIBOL's Board of Directors Resolution No. 1183 dated 28/VI/96; Power of
Attorney Affidavits Nos. 140/94, 205/94 and 105/96; Annex "A" and "B"; Payment
Receipts for Mining License for the "Cobrizos" Mining Concession; Industry and
Commerce Registration Certificate for the "ASC BOLIVIA LDC" Company (Bolivian
Branch); and Bank Deposit Receipt; documents that fully transcribed are as
follows: ==================
WRIT.- SPECIAL NOTARY OF MINES: In the public deeds register under your
- ------
charge, please insert a Joint Venture Contract for the Development of mining
activities subscribed between the CORPORACION MINERA DE BOLIVIA (COMIBOL) and
ASC BOLIVIA LDC company, according to the following clauses and conditions:
==========================================
FIRST.- OF THE LEGAL CAPACITY OF THE PARTIES AND THOSE UNDERSIGNING.- 1.1
- -------
Undersign this Joint Venture Contract, on one side the
2
CORPORACION MINERA DE BOLIVIA, from now on called COMIBOL, a decentralized
Autarkic Entity belonging to the State created by S.D. 3196 dated October second
nineteen fifty two, passed as law on the twenty ninth of October, nineteen fifty
six with its own legal capacity and total administration autonomy, exercising
the Administration and High Direction of all the mining deposits, tailings, mill
tailings and slags, establishments, facilities, mine camps, complementary
properties in general, without exceptions, constituting the state owned mining,
whether they might be a result of the Mines' Nationalization or acquired after
it.========================
1.2. Subscribing the CONTRACT on the other side, the company whose trade name
is ASC BOLIVIA LDC, a limited liability company, a subsidiary of ANDEAN SILVER
CORPORATION LDC, an international mining company constituted at the Cayman
Islands through a constitution certificate dated September seventh nineteen
ninety five, whose original has been legalized by the Bolivian Consulate in
London (England) on the fourteenth of the same month and year, a subsidiary
legally constituted in Bolivia, through public Deed No. 49, issued before the
Special Notary of Mines of La Paz on the tenth of November nineteen ninety five,
registered at the General Register of Commerce and Stock Companies under
Register No. 09-037162-01 dated December six nineteen ninety five and at the
Taxpayers' Unique Register with RUC No. 7836635. ===== 1.3. LEGAL CAPACITY OF
THE SUBSCRIBING PARTIES. - COMIBOL subscribes the Contract represented by its
PRESIDENT, DR. ALBERTO ALANDIA BARRON, who has the legal representation of the
entity by virtue of S.D. 23727 dated February eleventh nineteen ninety four, of
his official appointment made by Supreme Resolution No. 213601 dated February
sixteenth of the same year and exercising the capacity conferred to him by
COMIBOL's General Board of Directors, by Resolution No. 826/94 dated March
fifteenth, nineteen ninety four, as well as LIC. LUIS ARNAL VELASCO, MANAGER OF
THE CONTRACTS AND FINANCES UNIT, appointed as such by COMIBOL'S General Board of
Directors Resolution No. 860/94 dated June thirteenth, nineteen ninety four and
in use of the powers conferred through Special Power by the said PRESIDENT OF
COMIBOL, through instrument No. 222/94 dated July eleventh, nineteen ninety four
undersigned before Public Notary in La Paz under the charge of Dr. Nelly Alfaro
and registered before the Notary of Mines in La Paz, under No. 205 dated twenty
eight of July nineteen ninety four; that will be inserted in the corresponding
Public Deed. ===========
1.4. Subscribing the Contract, in representation of ASC BOLIVIA LDC, by virtue
of a Limited Power conferred to him, mister JOHNNY DELGADO ACHAVAL, as truly and
legal agent and proxy, through instrument granted the seventh of March nineteen
ninety six before Notary Public at the Cayman Islands, George M. Shortridge,
certified by the Bolivian Consul in London (England), documents that have been
judicially translated from English to Spanish, by the authority of the Fifth
Civil Trial Judge in La Paz, and legalized before the Special Notary of Mines of
this capital city, under No. 105 on the first of April nineteen ninety six and
registered at the General Register of Commerce under Entry No. 728 in Book 07-0
on the eighth of the same month and year, special power that, as a whole, will
be inserted in the corresponding Public Deed.
=======================
3
SECOND.- CONTRACT BACKGROUND.- 2.1. In compliance of the Supreme Government's
- --------
Mining Policies and within the framework of the legal provisions in force, on
the matter, COMIBOL has publicly invited Mining Companies, national and foreign,
interested in the EXPLORATION with the option to EXPLOITATION and subsequent
MARKETING of the non-developed mining deposits, among others, those of the LOS
LIPEZ zone in the Department of Potosi, so that they can present proposals to
that end, and the Terms of Reference and the legal and administrative
requirements for the Public Tender have been widely published. In order to
guarantee the total legality of the public tender's results, as well as the
greatest efficiency in the judgment of the proposals to be presented,
independent consulting companies of recognized technical experience and
managerial solvency were equally involved. The evaluation results by BEHRE
DOLBEAR & COMPANY INC., the independent consultant selected, according to that
presented in the report dated January, nineteen ninety six, qualifies ASC
BOLIVIA LDC to be awarded the JOINT VENTURE CONTRACT for Mining Concessions to
be later described and that form part of ANNEX "A" of the Contract, a report
that has been approved by COMIBOL'S Board of Directors with Resolution No.
1105/96 dated February six, nineteen ninety six, and that at the same time
authorized the negotiations for the respective CONTRACT with ASC BOLIVIA LDC.
=============================================
THIRD.- DEFINITIONS.- The following definitions are established in the present
- -------
Contract, in an enunciative but not limited manner: 3.1. AREA GRANTED.- The
--------------
mining concessions belonging to COMIBOL included in this Contract and whose
total area is 1,687 hectares plus 4 hectares of Demasias Cobrizos. ========
The concessions of the AREA GRANTED are described individually in page four of
the Technical-Economical Proposal by ASC BOLIVIA LDC and in ANNEX "A" of the
Contract.- COMIBOL by express and written request from ASC BOLIVIA LDC will be
able to formulate mining petitions or grant complementary areas neighboring to
the GRANTED AREA, in which case ASC BOLIVIA LDC will formulate a Specific Work
Plan and will guarantee a minimal investment in the same conditions to that for
the AREA GRANTED. =======================
3.2. INVESTED CAPITAL.- Are all the expenses and investments made by ASC
------------------
BOLIVIA LDC for the exploration and development of mineral reserves, preparation
of pre-feasibility and feasibility studies; basic and in-detail engineering
designs; purchase, transport and import of equipment, machinery and materials;
installation of all the mining equipment and machinery, minerals concentrating
and refinery plants, workshops, laboratories, warehouses, offices, etc.;
construction of camps and buildings, tailings and waste accumulation systems,
energy distribution systems, energy plants, security systems, water reception
and storage systems; etc. and starting of the production operations, according
to generally accepted accounting principles. ===================
3.3. MINING CONCESSIONS.- Set of mining properties (Art. 33 of the Mining
--------------------
Code), in which the activities foreseen in the Contract can be performed. =====
3.4 MARKETING COMMISSION.- Payment in money for the sale management of the
----------------------
minerals or metals produced by ASC BOLIVIA LDC.- This commission is not an
integral part of the Marketing Costs. ============================
4
3.5 PRODUCTION EXPENSES.- Are all the operational expenses made by ASC BOLIVIA
---------------------
LDC during the minerals production process, up to obtaining the final products
to be marketed or exported placed in the mine, either these be mineral
concentrates or metals, according to generally accepted accounting principles.
=================
3.6 ADMINISTRATIVE EXPENSES (OVERHEADS).- Are all the expenses made by ASC
-------------------------------------
BOLIVIA LDC in the administrative duties and direction of the Joint Venture
Contract, different from the production expenses, according to generally
accepted accounting principles. =====================================
3.7 MARKETING EXPENSES.- Are all those that are made to convert the minerals in
--------------------
metals, by the smelting or refining company; they include metallurgical
deductions, treatment expenses, smelting and refining, analysis, assays,
arbitrations, penalties and other deductions and expenses directly related to
the conversion process to marketable metals. =============================
3.8 DEPRECIATION.- A deduction made according to Bolivian laws, due to the
--------------
reduction, wear and loss of value of the capital assets, for their reposition.
=====
3.9 DELIVERY.- The date in which COMIBOL will deliver and officially the
----------
GRANTED AREA to ASC BOLIVIA LDC.- The physical delivery will be documents
through a detailed Minutes to be drawn up in some place of the AREA GRANTED.
The Minutes will be signed by the parties' representatives appointed to that
end, with a prior written notice to them. The delivery will be done not later
than within thirty (30) days after the CONTRACT is signed. =====
3.10 OPERATIONAL CASH FLOW.- It is the sales values minus the costs of
-----------------------
disposal, marketing commissions, marketing expenses, production expenses and
administrative expenses, excluding the financial expenses, depreciation,
deferred expenses or taxes. ========================================
3.11 COSTS OF DISPOSAL.- Are all those directly related to the transport of
-------------------
concentrates or final products, from the mine to the smelter; they include
decreases, road, air and sea transport fees, transport insurance, handling, port
charges and other related. These costs of disposal are not an integral part of
the Marketing Expenses. =============================================
3.12 DEFERRED EXPENSES.- Are all payments or charges made and whose application
-------------------
is deferred until some previously stated terms are complied with or the
application period of the expense has expired. ======================
3.13 FINANCIAL EXPENSES.- Are all the capital amortization expenses and bank or
--------------------
from financial entities credits, interests, contracted by ASC BOLIVIAL LDC for
the compliance and execution of the Joint Venture Contract. ===============
3.14 TAXES.- Are all taxes, national, municipal or of any other nature, created
-------
or to be created by Law, that are applied to mining operations developed by ASC
BOLIVIA LDC, as a result of this Contract. ============================
3.15 PAY BACK PERIOD.- Any period, either be the initial one or any later one,
-----------------
including the month starting now, in which an expense has been made for
improvements in the capital and previous to the first day of the following month
to that in which ASC BOLIVIA LDC has recovered from the Cash Flow all the costs
and expenses for capital improvements. ===============================
5
3.16 PRODUCT(S).- All the materials, minerals, precipitates from mineral
------------
resources, concentrates, dore and any other product or sub-product, originated
in the GRANTED AREA. ==========================================
3.17 PAY BACK.- Means the date in which ASC BOLIVIA LDC'S shareholders have
----------
received from the Cash Flow all the costs and expenses for capital improvements
really made and registered according to generally accepted principles in
Bolivia. The calculation will be done at the end of each ASC BOLIVIA LDC's
fiscal year.- Nonetheless, COMIBOL's participation, mentioned in paragraph
11.1.2, will be applied from the moment in which the pay back is finished.
===========================
3.18 SALES GROSS VALUE.- Are the payments that ASC BOLIVIA LDC will receive
-------------------
from third parties, natural or juristic, for the sale of the refined metals or
concentrates, produced during the exploitation period, from which all the
expenses and costs established in point 3.7 will be deducted. ==============
FOURTH.- APPLICABLE LAWS.- 4.1. This Contract is subscribed and is governed by
- --------
the legal provisions that in a merely enunciative and not limitative manner are
expressed as follows: Arts. 136 and 138 of the Pol. Const. of Bolivia, S.D.
3196 (2-10/52), L. (2910/56), S.D. 22407 (11-01/90), S.D. 22408 (11-01/90), L.
1182 (17-09/90), L. 1297 (27-11/91), S.D. 23059 (13-02/92), L. 1243 (11-04/92),
L. 1333 (29-04/92), without regulations that came into force by S.D. 24176 dated
8/12/95, S.D. 23214 (21-07/92), D.S. 23230-A (30-07/92) and other legal
provisions in force on the matter or to be enacted in the future. This Joint
Venture Contract was approved by COMIBOL'S Board of Directors, through
Resolution No. 1183/96 dated June twenty eight nineteen ninety six. =========
FIFTH.- OF THE JOINT VENTURE CONTRACT, NAME AND ADDRESS.- 5.1. The Joint
- -------
Venture Contract, constituted by this document, called from now on CONTRACT,
does not compromise the patrimony of either of the associates nor affects in any
way the legal capacity of the signing parties; nor constitutes a society, nor
establishes an independent jurisdic person. ======= In the CONTRACT, it is not
established, for associates, a responsibility, solidary, jointly nor unlimited
for the acts, contracts and obligations that each one could perform, celebrate
and assume in the execution and compliance with the CONTRACT. ==
5.2 As a consequence of the CONTRACT, ASC BOLIVIA LDC does not acquire a right
of property at all in the civil regime nor as mining concessionaire in the
mining regime, on the land nor on the underground of the GRANTED AREA, nor on
the water rights, servitudes and customs, access roads, camps, constructions or
any other facilities that could exist. =================================
5.3. In the terms and conditions given in the CONTRACT, COMIBOL grants ASC
BOLIVIA LDC, in an express manner, the exclusive exploration rights, the option
to enter into the exploitation phase, once the first phase exploration is
entirely finished, as well as the marketing of the minerals to be mined over an
area of One Thousand Six Hundred and Eighty Seven (1,687) hectares of the
"COBRIZOS" Mining Concession, plus Four (4) hectares of Demasias Cobrizos,
located in the Rio Grande County, Nor Lipez Province of the Department of
Potosi, whose detail is expressed in Annex "A" of the CONTRACT. ==========
6
5.4. This exclusive right, in the conditions stated in the CONTRACT, is the
sole and total contribution by COMIBOL to the Joint Venture Contract convened in
this document, without any obligation nor responsibility from COMIBOL for the
execution and compliance with the CONTRACT. It also means that COMIBOL, during
the term of the contract, will not reduce, transfer, effect nor compromise its
rights and interests on the deposits it contributes to the joint venture, in any
measure nor for any motive, guaranteeing ASC BOLIVIA LDC the peaceful
possession, the use and enjoyment of the mining concessions object of the
CONTRACT. ===================================================
5.5. The parties, by mutual agreement convene in naming this Joint Venture
Contract as COMIBOL - ANDEAN - COBRIZOS R.C., with legal address in La Paz city,
Campos Street No. 265, Telephone 433800, Telefax (5912) 433737.
==============================================================
SIXTH.- OBJECT OF THE CONTRACT.- 6.1. Based on the background previously
- -------
stated, COMIBOL and ASC BOLIVIA LDC, through this contract convene in
subscribing a Joint Venture Contract for the exploration and exploitation
option, concentration, refining and smelting without any reserve and the
marketing of the mineral, metal products and sub-products that will be exploited
at the deposits situated in the GRANTED AREA, under the technical conditions
described in the proposal by ASC BOLIVIA LDC and accepted by COMIBOL, as stated
in its Proposal and constitutes part of the present CONTRACT.
===============================
6.2. The activities, object of the CONTRACT, comprise the identification and
development of reserves, design of the mining operation, rational and efficient
exploitation of the mineral resources, optimizing treatment processes and
metallurgical recovery, preparation of the respective technical and economical
feasibility projects and, in general, the application of a modern technology and
an efficient management of the performance of the mining operations, as well as
comply with the environmental obligations established by law, according to
Seventeenth Clause of the CONTRACT. ==============================
SEVENTH.- TERM OF EXPLORATION.- 7.1. The maximum term for the Exploration
- ---------
period will be of Five (5) years starting from the physical and official
delivery of the GRANTED AREA in this CONTRACT by COMIBOL to ASC BOLIVIA LDC.-
This delivery will be registered in a detailed minutes drawn up on site or where
the parties agree upon, and it must be subscribed by the officials to be
appointed to that end, with the presence of a competent authority.
===================================
7.2. The term of five (5) years of exploration, divided in three (3) phases is
as follows: ===== FIRST PHASE with a duration of twenty four (24) months. =====
SECOND PHASE with a duration of twenty four (24) months. ===== THIRD PHASE with
a duration of twelve (12) months. ===== TOTAL SIXTY (60) MONTHS, equivalent to
FIVE (5) YEARS.==============================
7.3. The First Phase is compulsory and thus its strict obeyance is guaranteed
by ASC BOLIVIA LDC, according to that stated in Clauses 9.1 and 9.2 of this
CONTRACT. ===================================================
7.4. During the First Phase, ASC BOLIVIA LDC, will execute the Work Program
consisting of page six up to page ten of their accepted and awarded Proposal, a
work
7
plan that will form part of this CONTRACT without the need of officially
registering it. ASC BOLIVIA LDC can explore the entire mining concessions or
part of them according to their election, but in any sectors the Work Plan will
be executed faithfully and totally, COMIBOL at a written and express request by
ASC BOLIVIA LDC can formulate mining petitions or grant complementary areas
within two (2) neighboring kilometers with the GRANTED AREA, in that case ASC
BOLIVIA LDC will formulate a specific Work Plan and will guarantee a minimal
investment to be made in such complementary areas, which will be subject to the
same conditions established for the Work Plan as well as the minimal investment
of the GRANTED AREA. ===========================
7.5 ASC BOLIVIA LDC, during the First Phase, can anticipate the conclusion of
the twenty four (24) months term, under the express condition that the execution
of the pledged Work Program has been finished for this Phase and, as a
consequence, can enter into the other exploration phases or exercise immediately
its option right to enter into the Exploitation Phase in the areas its studies
would have determined as positives. In this case, the Bank Guarantee
Certificate for the Compliance of Contract will be returned by COMIBOL within a
term not longer than sixty (60) days after the First Exploration Phase is
finished. The compliance with the Work Plan, as well as the starting of the
Exploitation will be unreservedly verified by COMIBOL, which will present the
detailed reports of one and the other situation, within sixty (60) days.
==========================
7.6. ASC BOLIVIA LDC, at any time during the First Phase, but only after the
Minimum Work Program has been complied with, and not later than the last day of
the maximum term for the Phase, can suspend definitely the exploration of the
areas object of this CONTRACT and withdraw from the Joint Venture Contract, in
which case the CONTRACT will be resolved of full right at the date ASC BOLIVIA
LDC gives notice to COMIBOL of its decision. If ASC BOLIVIA LDC has not
fulfilled the Minimum Work Program, COMIBOL will cash the Bank Guarantee
Certificate of Contract Compliance, without the right to an appeal, claim nor
any exception that ASC BOLIVIA LDC could oppose against COMIBOL in the judicial
or extra-judicial way. The Joint Venture Contract will thus be rendered totally
null and judicially void. ===================
7.7. The simple reduction of the extension of any of the areas, constituting
the AREA GRANTED, according to that recommended by the studies done by ASC
BOLIVIA LDC, will not mean the suspension of the exploration according to that
stated by point 7.6 previous and ASC BOLIVIA LDC is obliged to continue the
execution of the Work Plan pledged in its proposal on the areas selected as
attractive, which will be executed until the expiry of the term established for
the First Phase. ======================
EIGHT.- EXPLORATION INITIAL PAYMENTS.- 8.1. ASC BOLIVIA LDC, according to the
- -------
Terms of Reference of the Public Tender will pay COMIBOL the following scale of
Exploration Initial Payments:
FIRST PHASE.- Three 57/100 American Dollars ($US 3.57) per hectare on the
- -------------
entire extension of the GRANTED AREA on 1.687 hectares plus 4 hectares of
Demasias Cobrizos. ==============================================
8.2. The payments described and stated in the previous Point (8.1), will be
paid on the 1.687 hectares plus 4 hectares of Demasias Cobrizos or mining
properties, within thirty
8
(30) days of the physical delivery of the concessions by COMIBOL to ASC BOLIVIA
LDC. Any reduction in the extension of the areas in any of the concessions of
the GRANTED AREA, either be during the maximum term of 24 months, or the Second
or Third Phases, will not cause the return or reimbursement of the Exploration
Initial Fees agreed upon in Points 8.1, 8.3 and 8.4 of this CONTRACT, by COMIBOL
to ASC BOLIVIA LDC and the amounts paid will be consolidated definitely in
favor of COMIBOL. ==================
8.3. SECOND PHASE: One Hundred and Nineteen 05/100 American Dollars ($US 119.05)
per Hectare on the extension of the concessions that, at the start of the Second
Phase, decides to explore within the term of 24 months established for this
Phase. The exploration operations discontinuity is admitted within a same
mining concession.- The first phase area can also be reduced or request
COMIBOL, or perform mining petitions to the State for larger extensions should
there be free land, according to that explained in the Twenty Sixth Clause of
this CONTRACT and according to that laid down in the last part of Clause 7.4 of
the CONTRACT.- ASC BOLIVIA LDC is obliged to notify COMIBOL of any area
reductions of the GRANTED AREA with a thirty (30) days' notice prior to the
ending of the preceding Phase term. It will also notify of any anticipation in
the term computing due to entering to the Exploitation Phase, in the same
conditions. =====================================================
8.4 THIRD PHASE: Five Hundred Ninety Five 24/100 American Dollars ($US 595.24)
per hectare as Initial Exploration Fee on the extensions of the mining
concessions, that at the start of the Third phase decides to exploit within the
term of TWELVE (12) MONTHS. ===== In this phase, the exploration operations
discontinuity is admitted within the same concession. The exploration area can
also be reduced with relation to the First and Second Phases or request COMIBOL
or make mining petitions to the State for a larger extension should there be
free land according to that established in Clause Twenty Sixth of this
CONTRACT.- ASC BOLIVIA LDC is obliged to notify COMIBOL of any reduction of
areas of the GRANTED AREA, with no less of THIRTY (30) DAYS before the
conclusion of the Second Phase. ===== It will also notify COMIBOL of the
anticipated conclusion within the term of this Phase when it decides to enter
the Exploitation Phase. =======================================
8.5. All the Payments of the Exploration Initial Fees established in Points
8.1, 8.2, 8.3 and aforementioned will be done by ASC BOLIVIA LDC before the
start of the corresponding Phase and within a term of thirty (30) days maximum,
at COMIBOL'S offices in La Paz city, receiving the corresponding fiscal receipts
for tax purposes. ===================================================
NINTH.- MINIMUM GUARANTEED INVESTEMENT DURING THE FIRST PHASE OF EXPLORATION.-
- -------
9.1. According to the Public Tender's Terms of Reference, ASC BOLIVIA LDC
accepts and is compelled to make a guaranteed Minimum Investment during the
First Phase of the Exploration Period of Six Hundred and Twenty Five Thousand
00/100 American Dollars ($US625,000.00), pledged in the Chapter and Investment
Plan, Page Eleven of its Proposal. =====
9.2. As a consequence, ASC BOLIVIA LDC guarantees the minimum total investment
of the established amount in the previous Point, through the presentation to
COMIBOL of a Bank Guarantee Certificate for Contract Compliance, issued
irrevocably in favor of
9
COMIBOL by BHN MULTIBANCO Bank of La Paz City, under No. 10001821 dated
September six nineteen ninety six for One Hundred and Twenty Five Thousand
00/100 American Dollars ($US 125,000.00) valid for Thirty (30) Months,
equivalent to twenty percent (20%) of the minimum investment pledged.
================
9.3. Whilst ASC BOLIVIA LDC, during the First Phase, is making the
corresponding investments, it can request COMIBOL the return of the original
Guarantee Certificate, simultaneously substituting it with a new certificate
covering the rest of the guarantee for the investment not yet made, and for the
corresponding term until in the term of twenty four (24) months, or before it if
the exploration term for the First Phase is anticipated, the minimum total
investment pledged has been made according to Clauses 7.3 and 9.1 of this
CONTRACT. The changeover of the guarantee certificates will be done within 30
days maximum, with prior verification and acceptance by COMIBOL that the
investments have been made by ASC BOLIVIA LDC, through documented evidence, with
attesting receipts and a report by an independent auditor. ======
9.4. If the last day of the twenty four (24) month period for the First Phase
has expired, and there would be a remainder of the investment not made by ASC
BOLIVIA LDC, COMIBOL will be able to execute and cash the Guarantee Certificate
valid at that date, and ASC BOLIVIA LDC won't be able to oppose a recourse nor
an exception of any nature. ==============================
9.6. The Three Phases that form part of the Exploration Period, have the
objective of developing mineralogical reserves, design of treatment plants and
the preparation of a rational and mechanized exploitation plan, design and
optimization of the metallurgical treatment and recovery processes, drawing up
technical-economical feasibility projects and the adoption of appropriate
measures for the protection of the environment, pollution control and recovery
of the land, objectives described in ASC BOLIVIA LDC'S Proposal Work Program.
==============================================================
9.7. Thus, it is agreed that, if ASC BOLIVIA LDC considered attractive
determined areas to start in them the Exploitation Phase, at any time within the
determined terms for any of the Three Phases, but if and when the Work Program
has been complied with entirely of the Exploration Phase given in ASC BOLIVIA
LDC'S proposal described in ANNEX "B" of this CONTRACT and the minimum
investment has been entirely made, apart from the technical-economical study,
ASC BOLIVIA LDC can enter into the exploitation phase, and must notify COMIBOL
of this decision for the purposes of verifying the compliance of the
aforementioned conditions and the financial-accounting management of the
corresponding share of COMIBOL established in ASC BOLIVIA LDC'S proposal.
=========================================
9.8. If ASC BOLIVIA LDC does not exercise its Exploitation option rights at the
end of the Exploitation Period, either it occurs at the expiry of any of its
Phases determined in the CONTRACT, or before, be decision of ASC BOLIVIA LDC,
the latter is obliged to present COMIBOL, without any charge or reimbursement of
any nature, all the technical information, drawings, maps, designs, calculations
and reports. ===========
9.9. The suspension or no performance of the compulsory minimum investment
pledged by ASC BOLIVIA LDC within the terms and conditions stated in this
10
CONTRACT, will mean for all legal ends and purposes, the statement by ASC
BOLIVIA LDC of its decision to withdraw from the Joint Venture Contract
constituted in this CONTRACT and COMIBOL without the need to comply with the
prior special formality will cash the Bank Guarantee Certificate presented by
ASC BOLIVIA LDC, without any right to appeal, exception nor protest of any kind
by the latter, either be judicially or extra-judicially. ====================
9.10. As a result, also, all the extension of the AREA GRANTED, object of this
CONTRACT, will be reverted to COMIBOL'S total domain. Within ninety (90) days
maximum, ASC BOLIVIA LDC must withdraw all the equipment and machinery employed
until then, assuming the costs and risks. ==============
The buildings, access roads and other facilities adhered to the ground that
would have been installed will remain for the benefit of COMIBOL as
improvements, without the right to a reimbursement nor any type of compensation
and the CONTRACT will be extinguished purely and simply. ======================
The equipment and machinery adhered to the ground can also be withdrawn if and
only the foundations nor the walls to which they are adhered, are not destroyed.
These tasks will be executed under the exclusive risk and charge of ASC BOLIVIA
LDC. =============================================
9.11. If the exploration areas cover only part of the GRANTED AREA, they must
conform squares parallel to the perimeter of such concessions. =============
9.12. The areas that in turn are rejected by ASC BOLIVIA LDC at the end of each
exploration phase, they will be excluded from the CONTRACT and will be reverted
to COMIBOL'S exclusive domain. In turn, the new areas will be annexed to the
CONTRACT, in the conditions stated in Clauses 3.1, 7.4 of the CONTRACT.
===================================================
TENTH.- OF THE EXPLOITATION PERIOD.- 10.1. Once all the stated conditions in
- -------
this CONTRACT are complied with, for the First and in its case for the Second
and/or Third Phases of the Exploration Period by ASC BOLIVIA LDC, without any
exception, not later than the last day of the maximum term for each phase, ASC
BOLIVIA LDC will notify COMIBOL about the areas it has selected in order to
start the Exploitation Period of the deposits contained therein, which will mean
the exercise of its option rights, which will be notified to COMIBOL through a
notarized letter enclosing the technical-economical feasibility studies for the
exploitation to be done and the marketing of the products.
======================================================
10.1. COMIBOL will issue its approval of the feasibility study or its
observations of the same, within ninety (90) days. COMIBOL can post
observations due to technical and economical reasons, the same will be
transmitted to ASC BOLIVIA LDC for their solution. If ASC BOLIVIA LDC dissents
from COMIBOL'S opinion, the dispute will be resolved via the arbitral procedures
established in Clause Twenty Third of this CONTRACT.
===================================
10.2. When ASC BOLIVIA LDC exercises its exploitation option rights, the
parties will not be subject to any negotiation, limiting themselves to the
compliance of the provisions in this CONTRACT.
===================================
10.4. Before the Exploitation Period is started, ASC BOLIVIA LDC is empowered
to establish the non-attractive areas and that will be rejected, the same will
be reverted of
11
right to COMIBOL'S whole domain and will be automatically
excluded from this Joint Venture Contract. =============================
10.5. COMIBOL will exercise its full and irrestrict right and administrative
powers on the rejected areas. ============================================
ELEVENTH.- OF COMIBOL'S SHARE OF THE EXPLOITATION RESULTS.- 11.1 COMIBOL'S
- ----------
share of the exploitation period is determined as follows, according to ASC
BOLIVIA LDC'S Proposal, of 14 pages. =================
11.1.1. During the recovery period of the capital invested by ASC BOLIVIA LDC
in the construction, installation and starting stages of the production
operations, ASC BOLIVIA LDC will pay COMIBOL an income equivalent to Five
percent (5%) of the Positive Operational Cash Flow, according to the definition
of the Third Clause Point 3.10 of this CONTRACT. ===========================
11.1.2. After the repayment of the initial investment, ASC BOLIVIA LDC will pay
COMIBOL Fifteen percent (15%) of the Positive Operational Cash Flow as defined
in Clause Three Point 3.10 of this CONTRACT. ===================
11.1.4. ASC BOLIVIA LDC is also compelled to increase COMIBOL'S share for each
Ten Cents of a Dollar ($US 0.10), on One Dollar Fifty Cents ($US 1.50) of the
international price of a pound of copper, with One percent (1%), up to a ceiling
of Twenty Two percent (22%) of the share of the operational cash Flow (e.g., for
$US 1.60 for a pound of copper, COMIBOL'S share will be 16%; for $US 1.70
COMIBOL'S share will be 17% and so on). =========================
11.1.5. The periodicity of the payments for the share by ASC BOLIVIA LDC to
COMIBOL will be done every three months with settlements or annual adjustments.
===================================================
11.2. It is expressly agreed that COMIBOL, during all the time this CONTRACT is
in force, will have the right to supervise, verify and control the regularity of
the financial processes described in Points 11.1.1, 11.1.2., 11.1.3, 11.1.4 and
11.1.5 aforementioned, through the accounting analysis of ASC BOLIVIA LDC
documents, in order to establish exactingly COMIBOL'S share, and ASC BOLIVIA LDC
is compelled to disclose to COMIBOL the complete and authentic documents so that
the financial and accounting revisions be effective. ASC BOLIVIA LDC is also
compelled to employ generally accepted accounting principles, for the accounting
of its financial and marketing operations. The supervision, verification and
control of the operations accounting, will be done by COMIBOL in ASC BOLIVIA
LDC's offices and will be executed periodically, according to that determined by
the Administration Committee in the Internal Regulations, approved by the
parties. =========================
TWELFTH.-CONSTRUCTION, INSTALLATION, STARTING AND OPERATION STAGES.- 12.1. The
- ---------
Construction, Installation and Starting of the Operations as a whole, will not
exceed Three (3) years starting as of the date ASC BOLIVIA LDC notifies COMIBOL
as stated in Point 10.1 of Clause Tenth of this CONTRACT, unless force majeure
defined later on in this CONTRACT. ====
12.2. During the Exploitation Period, ASC BOLIVIA LDC will hold the exclusive
administration and will run all the risks of the operations, with absolute
autonomy in managerial decision making. With the same reaches and risks will
also have the
12
exclusive administration and autonomy in the marketing of the
minerals it produces, without any limitation, either be it locally or through
exports. =========
12.3. COMIBOL will not be held responsible at all for the development or the
financial results of the operations, its performance will be limited to the
punctual perception of its share in the Cash Flow and its share in the
coordinating, information and supervision organisms.
===============================
12.4. Nonetheless, the hiring parties agree that the administrative expenses of
the joint venture can not exceed Five percent (5%) of the production direct
costs.- Equally, it is also stated that the marketing commission and the
marketing costs can not exceed, as a whole, Two percent (2%) of the Net
Smelter's Return. ================================================
12.5. ASC BOLIVIA LDC will establish and execute a minerals marketing system
that will allow an efficient, transparent management, guaranteeing the
nonexistence of eventual benefits within or outside the country, for the benefit
of one of the parties to the detriment of the other. =========================
12.6. The purchase of equipment, machinery, materials, facilities and raw
materials by ASC BOLIVIA LDC will be done in such a manner that the interests of
the parties will not be affected and in particular COMIBOL's share. ========
THIRTEENTH.-TERM OF THE CONTRACT.- 13.1. This Joint Venture Contract will have
- ------------
a term of Forty (40) Years, starting as of the physical and official delivery of
the areas stated in this CONTRACT by COMIBOL to ASC BOLIVIA LDC. ===== This
term will be renewed in the same contract conditions for just one more time,
with a prior technical and economical justification, if ASC BOLIVIA LDC
expresses, in writing, its will to do it.- The stated term includes the
Exploration Period, either be in its entirety (5 years) or less, if ASC BOLIVIA
LDC enters into the Exploitation Period beforehand according to that laid down
in Clause 8.4 of the CONTRACT. ===================================
FOURTEENTH.- INVESTMENTS AND FINANCING.- 14.1. ASC BOLIVIA LDC Is empowered to
- ------------
finance on its account and risk the exploitation operations, either be with its
own or from others. COMIBOL will not acquire any type of obligation related to
such financing, whose service will be exclusively in charge of ASC BOLIVIA
LDC.============================================
14.2. The previous powers are translated in that ASC BOLIVIA LDC is obliged and
pledges to perform all the necessary investments in order to implement into the
operations modern technology, services, machinery, equipment, implements,
materials, facilities, constructions and suchlike, as well as assume the
commitments that will allow a rational exploitation of the mineralogical
deposits of the AREA GRANTED, object of this CONTRACT. =====================
14.3. The investments regime, initial as well as future, will respect
invariably and at all times, that stated in Clauses Eleventh of this CONTRACT,
relative to COMIBOL'S share of the results, regime that will remain invariable
during the whole term of the CONTRACT. =====================================
FIFTEENTH.- LABOR RELATIONS- 15.1. The hiring and administration of the
- -----------
workforce, technicians and employees during the Exploration Stage, as well as
during the Exploitation Stage is of the absolute and total responsibility of ASC
BOLIVIA LDC,
13
and it is of its entire responsibility the compliance with the
Labor General Law, its Regulatory Decree and related legal provisions and
complementary in force or to be enacted, as well as those provisions relative to
social security, professional risks, employer's and employee's contributions,
whilst COMIBOL is totally exempt of responsibility, and can not be demanded in
any lawsuit of labor nature nor in any civil, penal, tax, fiscal coactive,
social coactive nature, nor administrative, as an result of acts or omissions
resulting from the execution of this CONTRACT by ASC BOLIVIA LDC. =============
15.2. COMIBOL will deliver ASC BOLIVIA LDC the AREA GRANTED, object of this
CONTRACT, free from encumbrance or obligations of labor or legal character.
=====================================================
SIXTEENTH.- FORCE MAJURE.- 16.1. None of the hiring parties can demand of the
- -----------
other the compliance with the obligations acquired in this CONTRACT, when the
compliance has been delayed, hindered or impeded by causes not blamed on the
obligated party. Such causes will constitute those of force majeure or
fortuitous cases, as earthquakes, flooding, fire, strikes declared illegal,
civil commotion, factors that can affect transport in general, governmental
prohibitions and catastrophes in general, according to that laid down by
articles 379 and 380 of the Civil Code. ===== It will also be considered as a
force majeure a sustained fall for over six (6) months in the price of minerals
to be produced under the minimum established by the feasibility study, if and
when such situation causes the stoppage of the extraction or production
operations of the minerals. If these operations continue even under such market
conditions, the force majeure will disappear.
====================================
16.2. The period during which ASC BOLIVIA LDC will be hindered to normally
comply with this CONTRACT, will be added to the term stated in Clause
Thirteenth. =====================================================
16.3. Should a force majeure cause happen, ASC BOLIVIA LDC is obliged to notify
COMIBOL within the next five days, describing the nature of the happening and
its effects. =========================================
16.4. The omission of this notice will maintain COMIBOL'S indemnity in the
regularity of its share in the results and in the accounting of the time period.
===
16.5. When the force majeure causes are of such nature and magnitude that the
objectives of this CONTRACT and the joint venture in general are substantially
and permanently harmed or are affected in a continuous manner for more than six
months, the hiring parties can agree upon the termination of the CONTRACT.
==============================================================
SEVENTEENTH.- ENVIRONMENTAL STANDARDS AND ENVIRONMENTAL MANAGEMENT PLAN.- 17.1.
- -------------
During the performance of the works and during the life of this CONTRACT, ASC
BOLIVIA LDC will be subject to the environmental requirements, that is to say,
the allowable pollution limits in force in the country, established by Law. No.
1333 dated April twenty seventh nineteen ninety two and the regulations enacted
by S.D. 24176 dated December nineteen ninety five and other provisions in force
or to be enacted in the future. ========
17.2 ASC BOLIVIA LDC will draw up the environmental management plan, starting
from an initial audit, in order to avoid or mitigate the environmental impact,
as
14
established by the next Clause 17.4, as well as the work plan for the
execution and closure of activities. ==================================
17.3. The environmental management mainly comprises the recovery of the
exploited areas, in order to control the erosion, stabilize the ground and
protect the waters and the atmosphere, perform the treatment of waster
materials and eliminate in a safe manner the tailings, mill tailings and dumps.
=======================
17.4. When ASC BOLIVIA LDC starts its activities, it will determine the
environmental liabilities that could exist in the deposits, object of this
CONRACT, through the performance of the respective environmental audit,
according to that established in Clause 17.8.1. =========
17.5. ASC BOLIVIA LDC will be held responsible for the environmental pollution
flows originated in its mining works and through the accumulation of wastes
during the performance of its activities. In turn, COMIBOL will be responsible
for the accumulations and flows coming from mining works, done prior to this
CONTRACT, established in the environmental audit according to the previous
Clause 17.4. ============================================
17.6. When ASC BOLIVIA LDC does not comply with that determined in Clause 17.4
it will assume the exclusive responsibility for the flows and accumulations
resulting from the old and new mining works. ===========================
17.7. ASC BOLIVIA LDC will pay for damages, to those affected by the
environmental pollution generated by the accumulations and flows coming from its
mining works with absolute exclusion of COMIBOL. ====================
17.8. The environmental management, particularly in order to establish the
polluting accumulations and flows, will be controlled by ASC BOLIVIA LDC in the
following manner:==================
17.8.1. Through the drawing up of an initial environmental audit done by ASC
BOLIVIA LDC, to be done during the first six (6) months of the Exploitation
Period. ========================================================
17.8.2. Should COMIBOL have its own audit and ASC BOLIVIA LDC accept it, it
will be applicable and ASC BOLIVIA LDC must draw up the environmental management
plan within four (4) months, starting from the date of the affidavit
corresponding to the CONTRACT. ===================================
17.8.3. Through environmental audits for the compliance of obligations and the
establishment of responsibilities, resulting from the environmental management
plan, to be done every three years by specialized companies or entities of
national or international prestige, hired and paid by ASC BOLIVIA LDC. ======
17.8.4. Through annual reports on the environmental management prepared by ASC
BOLIVIA LDC.==============================================
17.8.5. COMIBOL can ask ASC BOLIVIA LDC the environmental information it
considers necessary and can perform on its own the audits it deems necessary.
=============================================================
17.8.6 The environmental management according to that established in Point
17.4, comprises the recovery of the exploited areas in order to reduce and
control erosion, stabilize the grounds and protect the waters and the
atmosphere, perform the treatment
15
of waste materials and eliminate in a safe manner the tailings, mill tailings
and dumps. ============================
17.8.7. The joint venture will not be able to be resolved as long as the terms
given in this Clause are not complied with. ===== On the other hand, ASC
BOLIVIA LDC will continue having the responsibilities corresponding to its
environmental management, according to the law, once the CONTRACT is dissolved.
=====================================================
17.8.8. In order to avoid controversies ASC BOLIVIA LDC will timely and
sufficiently inform the representatives of the local populations, on the aspects
related to the protection of the environment and will try to interest them in
the environmental repair works. ===== Also, ASC BOLIVIA LDC must comply with
the legal requirements regarding the information to third parties and others
that correspond. ====================================================
EIGHTEENTH.- INEXISTENCE OF SOLIDARITY.- 18.1. it is expressly agreed that the
- ------------
hiring parties do not assume a joint solidarity of any nature with respect to
the obligations contracted by any of them for the compliance of the obligations
resulting from this CONTRACT, unless that eventually and by free will and in an
express manner any of them assumes such obligations, which will be truly
recorded in a notarized document. ===================================
18.2. It is also expressly convened that this document contains all the
agreements, specifications and provisions agreed by the hiring parties, and none
of them will be obliged nor related to the other by any statement, pledge or
verbal or written agreement that is not expressly incorporated in this CONTRACT.
===================================================
NINETEENTH.- QUALITY OF THE CONCESSIONAIRE.- 19.1. According to that laid down
- ------------
by Art. 197 of Law No. 1243 for the Updating of the Mining Code, ASC BOLIVIA LDC
does not acquire property rights nor a mining concession at all on the soil or
underground of the mining concessions forming part of the AREA GRANTED. ===
19.2. Nonetheless, COMIBOL grants in favor of ASC BOLIVIA LDC the operational
exclusiveness during the exploration phase as well as during the construction,
installation, starting and exploitation and the annexing of facilities,
equipment, machinery and other complementary assets, such as constructions,
access roads, water and right of way servitudes and customs of the said
concessions, understanding as exclusiveness the fact that during the life of
this CONTRACT none of COMIBOL's rights on such concessions, understanding as
exclusiveness the fact that during the life of this CONTRACT none of COMIBOL's
rights on such concessions, servitudes, uses and customs will be affected,
reduced nor harmed in any way, guaranteeing the quiet and peaceful possession,
use and enjoyment of the same, protecting all the investment and development of
ASC BOLIVIA LDC's activities, defending such rights against incursions,
invasions and other disturbances by third parties, either they be trade unions,
cooperatives, entities or persons, appealing to the means and resources given by
the laws of the Republic. ==================
TWENTIETH.- COORDINATION, INFORMATION AND SUPERVISION OF THE JOINT VENTURE.-
- -----------
20.1. ASC BOLIVIA LDC will have under its exclusive and autonomous control and
responsibility the management of all the exploration and exploitation
16
operations, without any exclusion nor limitation, with the restrictions
established in the laws of the Republic. ===============================
20.2. Nonetheless, this Joint Venture Contract will have as coordination,
information and follow-up organism, a COMMITTEE constituted at the signing of
the CONTRACT, that will be composed by four (4) members, two (2) of them
appointed by COMIBOL, and the other two (2) by ASC BOLIVIA LDC, whose emoluments
will be paid by the party appointing them. ====================
20.3. The COMMITTEE will constitute the main relationship means between COMIBOL
and ASC BOLIVIA LDC during the life of the CONTRACT.- The main responsibility
of the COMMITTEE will be to maintain the best managerial relations between the
parties and to contribute so that any disagreement, that could come up between
them, be discussed and resolved in a concerted manner.
=======================================================
20.4. The COMMITTEE's attributions, among others that it will determine, will
be: ===========================================================
a) Approve during its first meetings an internal bylaw that will regulate the
COMMITTEE's activities. ==========================================
b) Verify the proper compliance of the conditions of this CONTRACT. ========
c) Create a communications system between ASC BOLIVIA LDC'S managerial body and
the COMMITTEE in order to ease the flow of the relations between both bodies.
=================================================
d) Formulate the recommendations it considers opportune for the better
compliance of the CONTRACT'S objectives, not meaning that such recommendations
are compulsory for the parties. ========================
e) Gather all the technical, administrative and financial information in order
to conserve it within reach for its inspection and study by the parties.
===========
f) Recommend the execution of technical audits of the performed operations by
the virtue of this CONTRACT, taking care that such audits at no time hinder or
interfere with the operations or impairs ASC BOLIVIA LDC's administrative
autonomy. These audits will be paid by the party requiring them. ============
g) Periodically formulate the recommendations that are considered necessary,
with relation to the development of ASC BOLIVIA LDC's operational plans. ====
TWENTY-FIRST.- BOARD OF DIRECTORS.- 21.1. Within fifteen days of having signed
- --------------
the parties this CONTRACT, these will organize a BOARD OF DIRECTORS.
==================================================
21.2. This BOARD OF DIRECTORS will be formed by representatives from both
parties, COMIBOL and ASC BOLIVIA LDC, with equal number of members, whose
emoluments will be paid by the party appointing them. ==============
21.3. The BOARD OF DIRECTORS will meet whenever necessary and called by the
President at his/her own initiative or at the request of the parties. =======
21.4. The President of the BOARD OF DIRECTORS will be appointed by the members
of the BOARD OF DIRECTORS at the first ordinary meeting of such organism.
======================================================
21.5. The responsibilities of the BOARD OF DIRECTORS are, apart from those it
decides: =====================================================
17
21.5.1. To determine the general policies of the joint venture; ==============
21.5.2. To approve the financial statements of the joint venture; ============
21.5.3. To approve the hire of external independent auditors so they will emit
an opinion on the joint venture's annual financial statements; =================
21.5.4. To know and approve the recommendations with regard to the plans,
projects and reports put before them by the COMMITTEE;=================
21.5.5. The joint venture's BOARD OF DIRECTORS will be the relations organism
between COMIBOL'S Board of Directors and ASC BOLIVIA LDC's executive body,
for everything concerning to the running of the joint venture.============
21.5.6. To know the audited financial statements done by external and
independent auditors of optimum quality, at the end of each fiscal year; =======
21.6 The BOARD OF DIRECTORS' duties will, at no time, interfere nor impair the
administrative autonomy of ASC BOLIVIA LDC, on the joint venture's operations
during the Exploitation Stage and marketing of the minerals. ======
21.7 The BOARD OF DIRECTORS will carry a chronological and circumstantial
minutes of every and all their meetings, and the former will be signed by those
present. =======================================================
TWENTY-SECOND.- TAX AND CONTRIBUTIONS REGIME.-22.1 All the taxes and liens
- ---------------
applicable to the mining industry, as well as those applicable to the import of
equipment, machinery, raw materials, materials and other assets, to the
marketing of minerals locally and for export, in force at the date of the
signing of this CONTRACT that will be enacted in the future will be exclusively
paid by ASC BOLIVIA LDC, and effects on COMIBOL'S corresponding share will be
regulated by that stated in Clause Eleventh of this CONTRACT.
=================================================
22.2. Those taxes applicable to profits each party will obtain from the mining
operation, object of this CONTRACT will be the entire responsibility of each of
them, without any other responsibility for the other party. =================
22.3 The contributions to entities of Social Security Complementary Funds or
similar other ones existing or to be created, are of the exclusive
responsibility and charge of ASC BOLIVIA LDC, with COMIBOL's absolute exclusion.
======
TWENTY-THIRD.- RESOLVING OF CONFLICTS BETWEEN PARTIES AND ARBITRATION.- 23.1
- --------------
All controversies and claims that could arise between parties with regards to
the interpretation or execution of this CONTRACT, will be tried to resolve them
amicably and fast between such parties. In case they can not resolve them
through mutual negotiations within sixty (60) days, any of the hiring parties
can request the matter under conflict to be put before an arbitrator.
========================================================
23.2 In such circumstances, the controversy or interpretation will be resolved
through settlement and/or arbitration according to the Regulations given by the
National Chamber of Commerce's Settlement and Arbitration Center in La Paz
(Bolivia) that, forming part of this Clause, the parties declare to know and
accept. The Center will appoint the arbitrator from among the members of the
Arbitral Body of such Settlement and Arbitration Center belonging to the
aforementioned Chamber. =========================================
18
23.3 No recourse will proceed against the Arbitrator's decisions, thus the
parties expressly resign to put it forward. ====================================
23.4 The arbitration costs will be paid by the loser in the Arbitral Decision.
====
TWENTY-FOURTH.- CONTRACT TRANSFERRAL TO A THIRD PARTY.- 24.1. This Joint
- ---------------
Venture Contract is a result of the award to a proposal formulated by ASC
BOLIVIA LDC to COMIBOL involving the evaluation of certain technical, financial
conditions and of the industrial capability and competence of the bidder.
Nonetheless, ASC BOLIVIA LDC is empowered to incorporate into the CONTRACT's
execution one or more members of known prestige and capability in the Mining
Industry, or in the investments and financial branch, as well as transfer or
subrogate partially their share or obligations resulting from this CONTRACT.-
To that effect, the previous conditions stated as follows must be complied with:
==================================================
24.2 To this effect, it will request the prior and written authorization from
COMINOL, providing all the details demonstrating the suitability of the
collective or individual persons that are pretended to be incorporated or those
that will partially substitute ASC BOLIVIA LDC's participation.
====================
24.3 COMIBOL reserves itself the right to assess the industrial and/or
financial sufficiency of the Entity or person acquiring or is subrogated the
partial share of ASC BOLIVIA LDC in the CONTRACT, with the right to veto if that
or this does not have the required conditions to the effect, with the sole
obligations to give the concrete and reasonable motives restricting its
acceptance. ===== The third parties that could be incorporated to the Joint
Venture Contract, will assume the obligations, that as members, are stated in
this CONTRACT. ===============
24.4 Any modification to the partial participation or share of ASC BOLIVIA LDC
in this CONTRACT, by virtue of having obtained it through a public tender under
special conditions, either be the incorporation of new members, transfer of
rights, subrogation of rights or other contractual forms, the rights and shares
corresponding to COMIBOL stated in this CONTRACT won't be able to be altered,
modified, reduced nor affected. ===============================
TWENTY FIFTH.- RESCISSION OF CONTRACT.- 25.1. During the exploration phases,
- --------------
COMIBOL will be able to rescind the CONTRACT unilaterally, in the following
cases: ===================================
25.1.1. Nonfulfillment of the initial payments by ASC BOLIVIA LDC for each
phase, which should be done within the first thirty (30) days. ===============
25.1.2. Nonfulfillment in executing the work program and minimum investment
pledged by ASC BOLIVIA LDC for the First Exploration Phase, in which case the
Bank Guarantee Certificate presented by ASC BOLIVIA LDC to COMIBOL will be
cashed, and COMIBOL will give notice to ASC BOLIVIA LDC furnishing the motives.
====================================================
25.2. In case the contract is terminated for any reason during the Exploration
Phase, all the improvements made by ASC BOLIVIA LDC in the areas of the CONTRACT
will stay behind for the benefit of the concessions, object of the former,
without any charge for COMIBOL, with the exception of the tools, equipment,
vehicles, materials and those facilities liable to be withdrawn that have not
been adhered to the ground, all of which
19
will be able to be withdrawn by ASC BOLIVIA LDC. ===== All the technical
information related to the explored areas, together with the charts, studies,
calculations and complementary details, will also pass as COMIBOL'S property,
without any charge to it. =============
25.3. The CONTRACT can also be terminated due to the following causes: ===
25.3.1. If the CONTRACT has expired, if it hadn't been extended according to
that laid down in Clause Thirteenth; ==================================
25.3.2. By mutual agreement of the hiring parties; =======================
25.3.3. By ASC BOLIVIA LDC's unilateral decision, when certain circumstances
appear that make unviable the exploitation in rentable economical conditions. ==
25.3.4. When the construction, installation and starting of the operation
exceed Three (3) years since the notification by ASC BOLIVIA LDC to COMIBOL
announcing its exercise of right to option, unless there are force majeure
causes.
==============================================================
25.3.5. When the force majeure causes are produced, such as defined in Clause
Sixteenth of this CONTRACT. ====================================
25.4. In case of termination of this contract for any of the motives stated in
this CONTRACT, either be during the Exploration Period or in the Exploitation
phase, ASC BOLIVIA LDC will be obliged to comply with the delivery of the
studies and other information in the next ninety (90) days.
==========================
TWENTY-SIXTH.- EXCLUSION AREA.- 26.1 ASC BOLIVIA LDC can not formulate petitions
- --------------
nor perform mining activities, either by itself or through an intermediary, in
an area of two (2) kilometers from the perimeter of the concession the object of
this CONTRACT, unless there is an express authorization from COMIBOL. In any
case, the petition made infringing this prohibition, will be considered as done
for and for COMIBOL's benefit. ========================
26.2 COMIBOL also won't be able to perform mining activities, either by itself
or through an intermediary, in an exclusion area of one kilometer from the
perimeter of the concessions object of this CONTRACT, unless the parties agree
to the contrary. ======================================================
TWENTY-SEVENTH.- OPTION TO PURCHASE.- 27.1. At the definitive closure of
- -----------------
operations due to the CONTRACT's expiry, ASC BOLIVIA LDC grants COMIBOL the
option rights, for a period of ninety (90) days, for the purchase of its rights
and tangible assets in the joint venture, in equal opportunities as other
interested parties. =======================================================
27.2. COMIBOL and ASC BOLIVIA LDC will appoint an expert appraiser in charge of
establishing the price of the assets, using as basis for the appraisal the
market value. ===============================================
27.3. If COMIBOL decides to exercise its option rights, it must notify so of
its decision to ASC BOLIVIA LDC through a notarized letter, within the term
established in Point 27.1. ====================================================
27.4. The payment of the price will be done within the following sixty (60)
days after the notice provided in the previous point is given.
===================
20
TWENTY EIGHT.- CONTRACT'S CONSTITUTIVE DOCUMENTS.- 28.1. Are part of this
- --------------
CONTRACT and will be inserted in the corresponding Public Deed the following
documents: =============================================
A) Supreme Decree No. 213601 dated February sixteenth nineteen
ninety four.=
B) COMIBOL'S Board of Directors Resolution No. 1084 dated
December twenty second nineteen ninety five.
========================================
C) COMIBOL's Board of Directors Resolution No. 1105 dated
February six nineteen ninety six. ==============================================
D) General Administration Power of Attorney conferred to Dr.
Alberto Alandia Barron No. 140 awarded in the Notary of Mines in La Paz on may
seventeenth nineteen ninety four. ============================================
E) Special Power of Attorney conferred to Lic. Luis Arnal
Velasco, registered in the Notary of Mines in La Paz, under No. 205 on July
twenty eight nineteen ninety four.
========================================================
F) Special Power of Attorney conferred to Mr. Johnny Delgado
Achaval, registered in the Notary of Mines in La Paz, under No. 105 on April
first nineteen ninety six, registered in the Commerce General Register, Entry
728, Book 07-0 the same month and year.
G) COMIBOL'S Board of Directors Resolution No. 1183/96 dated
June twenty eight nineteen ninety six.
==============================================
H) Pages 4, 11, and 14 of ASC BOLIVIA LDC'S proposal.
=================
TWENTY-NINTH.- MINING LICENSES.- 29.1.- During the Exploration Phase, the
- --------------
mining licenses on all the areas forming part of the mining concessions of the
AREA GRANTED will be in charge of COMIBOL. =============================
29.2. Starting from the date ASC BOLIVIA LDC notifies COMIBOL that it will make
use of its option right, the mining licenses on the areas declared as positive
by ASC BOLIVIA LDC and in which the Exploration Phase will be developed, will be
paid by ASC BOLIVIA LDC on behalf of COMIBOL and the receipts will be given by
ASC BOLIVIA LDC to COMIBOL since they are documents representative of its
concessionaire right. This payment won't be compensated nor reimbursed by
COMIBOL nor by the joint venture and will be done exclusively by ASC BOLIVIA
LDC. ======================================================
THIRTIETH.- OFFICIAL REGISTRATION OF THE CONTRACT.- 30.1. The official
- -----------
registration's expenses for this CONTRACT, together with the ANNEXES and
corresponding documents, will be paid by ASC BOLIVIA LDC, at the Special Notary
of Mines in La Paz city. ====================================
30.1 ASC BOLIVIA LDC is obliged to present COMIBOL Three (3) Affidavits of the
officially registered CONTRACT, without any charge for COMIBOL, within sixty
(60) days after the writ is signed. =======================================
THIRTY-FIRST.- CONSENT AND ACCEPTANCE.- 31.1. We, DR. ALBERTO ALANDIA BARRON,
- --------------
PRESIDENT OF THE CORPORACION MINERA DE BOLIVIA (COMIBOL) and LIC. LUIS ARNAL
VELASCO, MANAGER OF THE CONTRACTS AND FINANCE UNIT OF THE CORPORACION MINERA DE
BOLIVIA (COMIBOL), both full of age, neighbors of this city, with ID.'s No.
1191230 Pt. and No. 332387 L.P., respectively, able by right, on one side, and
MR. JOHNNY DELGADO ACHAVAL, in
21
representation of ASC BOLIVIA LDC, of full age, neighbor of this city, with ID
No. 39745 L.P., able by right, we give our full consent and accept every and
each of the clauses, terms and conditions of this CONTRACT, to which we give
full validity as Private Document between parties, whilst it is converted into a
public deed, pledging to a faithful and strict compliance, subscribing it in La
Paz city, on the Eleventh of September nineteen ninety six.- And you, Special
Notary of Mines will add all the rest of safety and style clauses.
==========================================
FOR CORPORACION MINERA DE BOLIVIA: Signed.- Lic. Luis Arnal Velasco.- MANAGER OF
CONTRACTS AND FINANCES.- Signed.- Dr. Alberto Alandia Barron.- PRESIDENTE. =====
FOR ASC BOLIVIA LDS: Signed.- Mr. Johnny Delgado Achaval. AGENT AND PROXY. =====
Signed. Dr. Jorge Eyzaguirre Duran. - RUC 02199106.- C. Ab. 0157.- LEGAL ADVISOR
COMIBOL. ===== JED/rav. ======================================================
ANNEX "A".- ASC BOLIVIA LDC.- MINING CONCESSION TO BE EXPLORED.- The area of
- -----------
interest is located in the Lipez region and our proposal is specifically
referred to the following mining concessions: =========
NAME OF THE CONCESSION NO. OF HECTARES
- ------------------------------ ---------------
Cobrizos 168
Ines 99
Kohollpani 100
Puntillas 250
Reintegro 100
Santo Tomas 500
Santo Tomas II 470
TOTAL 1,687
Our offer puts emphasis on the development of a complete exploration program for
the First Phase in the mining concessions Cobrizos and Reintegro. Also proposes
a minimum work scope in the rest of the concessions without the restriction
that, if the results are encouraging, they will continue with exploration works
over the minimum investment proposed for each one. =====SEAL: Legal Advisory
COMIBOL. It is a faithful copy of the original. La Paz, 13 Sept. 1996.-
Signed: Dr. Jorge Eyzaguirre Duran.- RUC 02199106 C. Ab. 0157. LEGAL ADVISOR
COMIBOL. ============
Signed: Dra. Nelly A. Maldonado.- Lawyer - 048903.- Notary Public 1/st/ class. -
La Paz - Bolivia 003. ================================================
BUDGETS AND INVESTMENT PLAN.- For the execution of the First Phase in
- -----------------------------
Reintegro, we propose a minimum investment of US$ 248,000 (Two hundred seventy
seven thousand American dollars). For Cobrizos we propose a minimum investment
of US$ 248,000 (Two hundred forty eight thousand American dollars, in the
understanding that in this concession US$ 29,000 have already been invested for
the execution of the prospection visit, mapping, outcrops sampling and part of
soil geochemistry. For the First Phase in Cobrizos and Reintegro, it is
proposed a total minimum investment of US$ 525,000.- The execution of the
Second Phase will depend on the results obtained in the First Phase and in the
case it is decided to continue with the Second Phase in one or both properties,
this will be timely notified to COMIBOL. An investment of US$
22
425,000 has been estimated for the Second Phase in each of the selected
properties. ===== We also propose to execute only Stage One of the First Phase
in the Ines, Kohllpani, Puntillas, Santo Tomas and Santo Tomas II concessions,
with a minimum investment of US$ 20,000 (Twenty thousand American dollars) in
each, making a total of US$ 100,000 (One hundred thousand American dollars) for
all five concessions. Should we decide to stop after executing Stage One or to
continue exploring in any of these concessions, COMIBOL will be timely notified
of such; and the rest of the Stages of the First Phase can thus immediately
continue. ===== The estimated costs for each exploration activity are given
below, pointing out that are referred only to direct exploration expenses and
the administrative expenses are not considered. ===== SEAL: Legal Advisory
COMIBOL.- It is a faithful copy of the original.- La Paz, 13 Sept. 1996.-
Signed: Dr. Jorge Eyzaguirre Duran.-RUC 02199106.- C. Ab. 0157.- Legal Advisor
COMIBOL.- Signed: Dra. Nelly A. de Maldonado.- Lawyer 048903.- Notary Public
1/st/ Class. - La Paz - Bolivia 003. ===
PARTICIPATION OFFERED TO COMIBOL.- In case the feasibility study for one or
- ----------------------------------
several concessions is positive and our company decides to exercise its right to
exploitation, a detailed investment plan will be prepared. At present, we are
in conditions to offer COMIBOL the following participation terms during the
production period: ==============================================
1. 5% (Five percent) of the positive operational cash flow during the recovery
period of the invested capital. =====================================
2. 15% (Fifteen percent) of the positive operation cash flow after the recovery
of the investments. ==============================================
3. For each 10 cents of a dollar over US $1.50 of the international price for
one pound of copper, we will increase on 1% COMIBOL'S share up to a ceiling of
22% of the operational cash flow's share (e.g.: for US$ 1.60 for one pound
copper, COMIBOL'S share will be 16%, for US$ 1.70 it will be 17%, etc.). =====
The advantage of applying this scale as a function of the market's price for
copper is that COMIBOL'S share improves when the project by itself considers it
feasible; that is to say, improves COMIBOL'S share whilst at the same time the
company's situation improves. ===== ASC BOLIVIA LDC does not wish to speculate
and we do not refuse to offer fixed share percentages before knowing the results
from the feasibility study; we think that it should be clear that our wish is to
offer COMIBOL a substantial share when the market conditions so allow. =====
SEAL: Legal Advisory COMIBO.- It is a faithful copy of the original.- La Paz, 13
Sept. 1996.- Signed: Dr. Jorge Eyzaguirre Duran.- RUC 02199106.- C. Ab. 0157.
Legal Advisor COMIBOL. Signed: Dra. Nelly A. De Maldonado.- Lawyer 048903.-
Notary Public 1/st/ Class. - La Paz - Bolivia 003. ============
ANNEX "B".- ASC BOLIVIA LDC. - EXPLORATION PROGRAM.- OBJECTIVES.- Our
- -----------
objective is to discover, delimit, make feasible and exploit at least one low
grade copper - silver deposit and a minimum volume of 10 millions tons,
susceptible to be open pit exploited. ===== GENERAL PLAN.- The exploration
program for the First Phase in the Cobrizo and Reintegro concessions will
consist of the following: geological mapping, detailed sampling of the
outcrops, soil geochemistry, geophysical survey when necessary, trench
geological sampling and mapping, preliminary drillings,
23
metallurgical tests and pre-feasibility conceptual study.- The First Phase in
the Ines, Kohollpani, Puntillas, Santo Tomas and Santo Tomas II properties will
consist only of the execution, during the first year, of detailed geological
mapping and detailed samplings of rocks and soils. Depending on the results it
will be decided whether or not to continue with exploration works during the
second year. ===== The First Phase will be divided in three stages: Stage 1 will
include a prospection visit, rocks outcrops mapping and sampling; Stage 2 will
consist of the enabling and ventilation of old mining workings, soil
geochemistry, geophysics of trenches; finally Stage 3 will include primary
drillings using reverse circulation, metallurgical tests and a pre-feasibility
conceptual study. ===== We propose to gradually perform the following tasks:
===== YEAR 1: Mapping, sampling, geochemistry/geophysics. ===== YEAR 2:
Trenches, preliminary drilling, metallurgical tests and pre-feasibility study.
===== A field team will be working permanently during Year one and a second team
will be added in Year two for the start and continuation of the drilling if we
decide to continue with more than one concession. ===== Apart from the
geological field work to be completed during Year one of the First Phase, we
will pay greater attention in the neighboring areas to COMIBOL'S concessions
with the objective of obtaining new concessions in case that the results of the
exploration done so justify. ===== FIRST PHASE IN COBRIZOS AND REINTEGRO.- In
July nineteen ninety five, our company signed an agreement with the Litoral
Cooperative in order to explore the Cobrizos concession in the understanding
that this Cooperative had a lease CONTRACT in force with COMIBOL. Based on this
agreement we have completed Stage One of the exploration program of the First
Phase for Cobrizos. It will be required to execute Stage One in Reintegro and
then the program will continue until the First Phase is completed in both
concessions. ===== FIRST PHASE IN THE REMAINING CONCESSIONS.- The exploration in
the other concession (Ines, Kohollpani, Puntialls, Santo Tomas and Santo Tomas
II), will start after the mapping/sampling is done in Reintegro.- The team will
got to the extreme southwest and will start the geological mapping and sampling
in Santo Tomas, then in Santo Tomas II, Ines, Puntillas and finally Kohollpani.
All this work will be done during the first year. ===== Where the results from
the first year work be favorable, we will continue with the next exploration
stages programmed for the First Phase, otherwise the property(ies) will be
rejected. ===== Chart No. 1 shows a general chronogram for the execution of the
works programmed. ===============================
24
"A S C B O L I V A L D C"
CHART NO. 1
GENERAL CHRONOGRAM
***********************************************************************************************************************************
CONCESSIONS FIRST PHASE: SECOND PHASE: THIRD PHASE:
NAME/ACTIVITY EXPLORATION FEASIBILITY DEVELOPMENT
YEAR 1 YEAR 2 YEAR 1 YEAR 2 YEAR 1 YEAR 2
- -----------------------------------------------------------------------------------------------------------------------------------
COBRIZOS
MAPPING done
SAMPLING partially done
REHABILITATION OF GALLERIES X
GEOCHEMISTRY done
GEOPHYSICS/TRENCHES X
PRELIMINARY DRILLINGS X
METALLURGICAL TESTS X
PRE-FEASIBILITY X
DRILLING TO TEST RESERVES X
FEASIBILITY X
FINANCING X
START OF DEVELOPMENT X
- ----------------------------------------------------------------------------------------------------------------------------------
REINTEGRO
MAPPING X
SAMPLING X
REHABILITATION OF GALLERIES X
GEOCHEMISTRY X
GEOPHYSICS/TRENCHES X
PRELIMINARY DRILLINGS X
METALLURGICAL TESTS X
PRE-FEASIBILITY X
DRILLING TO TEST RESERVES X
FEASIBILITY X
FINANCING X
START OF DEVELOPMENT X
- -----------------------------------------------------------------------------------------------------------------------------------
PUNTILLAS-INES
MAPPING X
SAMPLING X
REHABILITATION OF GALLERIES X
GEOCHEMISTRY X
GEOPHYSICS/TRENCHES X
PRELIMINARY DRILLINGS X
METALLURGICAL TESTS X X
PRE-FEASIBILITY X
DRILLING TO TEST RESERVES X
FEASIBILITY X
FINANCING X
START OF DEVELOPMENT X
- -----------------------------------------------------------------------------------------------------------------------------------
SANTO TOMAS I - II
MAPPING X
SAMPLING X
REHABILITATION OF GALLERIES X
- -----------------------------------------------------------------------------------------------------------------------------------
25
************************************************************************************************************************************
CONCESSIONS FIRST PHASE: SECOND PHASE: THIRD PHASE:
NAME/ACTIVITY EXPLORATION FEASIBILITY DEVELOPMENT
YEAR 1 YEAR 2 YEAR 1 YEAR 2 YEAR 1 YEAR 2
- -----------------------------------------------------------------------------------------------------------------------------------
GEOCHEMISTRY X
GEOPHYSICS/TRENCHES X
PRELIMINARY DRILLINGS X
METALLURGICAL TESTS X
PRE-FEASIBILITY X
DRILLING TO TEST RESERVES X
FEASIBILITY X
FINANCING X
START OF DEVELOPMENT X
- -----------------------------------------------------------------------------------------------------------------------------------
KOHOLLPANI
MAPPING X
SAMPLING X
REHABILITATION OF GALLERIES X
GEOCHEMISTRY X
GEOPHYSICS/TRENCHES X
PRELIMINARY DRILLINGS X
METALLURGICAL TESTS X
PRE-FEASIBILITY X
DRILLING TO TEST RESERVES X
FEASIBILITY X
FINANCING X
START OF DEVELOPMENT X
- -----------------------------------------------------------------------------------------------------------------------------------
26
WORK SCOPE, METHODOLOGY AND EXCUTORS - FIRST PHASE. =======
Using Cobrizos as an example, we proposed the following work scope: =====
MAPPING.- The geological mapping will be done at scales of 1:2,000 and
1:10,000. Where there are underground workings, the mappings will be done at a
scale of 1:200. These mappings will be done by Scott McDonald, a geologist from
Andean Silver, and/or Dra. Catrin Ellis Jones, geologist from MINTEC.- The
mapping at Cobrizos has been finished except in areas where there are old
underground workings, where the mapping will be done at a scale 1:500 after
clearing and an adequate ventilation. ===== SAMPLING.- The exact nature of the
sampling programs will depend on the own characteristics of each mining
concession.- In some places we will sample intensively the rock outcrops; in
other places the rock wall will be sampled in order to determine if
dissemination exists or not.- Approximately 300 samples will be taken from the
outcrops and mining workings at Cobrizos; to date, 83 samples have already been
obtained, the remainder will be obtained from underground workings once they
have been cleared and ventilated. Geochemical sampling programs will be
executed in each concession.- Recently, at Cobrizos we have done a geochemical
sampling in an area 750 x 750 meters, taking samples every 25 meters on a square
grid. In total, 480 samples have been obtained that will be analyzed for Au,
Ag, Cu, Pb and Zn. We propose to perform similar programs at each of the
concessions of interest. These works will also be executed by geologists Scott
McDonald and Catrin Ellis Jones and support personnel from MINTEC. =====
TRENCHES AND/OR GEOPHYSICS.- In areas where there are no rock outcrops, low
frequency geophysical methods will be employed in order to determine the most
propitious places to dig trenches, which will be mapped and sampled in detail.
Also, when necessary and advisable, detailed geophysical surveys in order to
direct and if possible, pinpoint the drilling objectives. ==== A local services
company that has experience in similar jobs and good quality equipment, will be
hired for trench digging; an alternative is Terra Ltda. That has already done
several similar jobs for MINTEC's projects.- The geophysical surveys will be
executed by a specialized company from Canada or U.S.A. (Val D'or, Gradient,
Quantec, etc.).- The mapping and sampling will be done by the aforementioned
geologists. ====== PRELIMINARY DRILLING.- For these works we will hire with
priority the known drilling services company Layne Drilling; the supervision,
control and samples preparation will be in charge of specialized personnel from
MINTEC, the samples' chemical analysis will be done at Bondar Clegg's laboratory
in Oruro or S.G.S. in La Paz; the control for these analysis will be done in
prestigious laboratories in Canada or U.S.A. ====== 1,200 meters will be drilled
in six wells using reverse circulation equipment in order to verify geological
concepts and estimate mineral contents. Each well will have an approximate
depth of 200 meters, with a 5.5" diameter and samples to be analyzed will be
taken every meter. ===== METALLURGICAL TESTS.- At present we are using and will
continue to do so, the services from Kappes Cassidy to perform metallurgical
tests; also, should the case be, we would hire the University of Cardiff to do
this work for Cobrizos and those concessions related with possible copper-silver
deposits.- These laboratories will perform, at our request, cyaniding tests
(cyanide leach), flotation tests, solvent extraction tests and other required
mineralogical tests. ===== PRE-FEASIBILITY STUDY.- Before starting with
27
the drilling program in detail, a pre-feasibility conceptual study will be made
for the Cobrizos - Reintegro projects and for any concession reaching this
exploration stage.- In order to make this study, the services of Pincock Allen &
Holt will be hired, who have already done similar studies for ASC Peru LDC. ====
SECOND PHASE.- With the execution of the Second Phase in Cobrizos -Reintegro, it
is hoped to reach the target of delimiting a minimum of 10 million tons of
reserves indicated up to 50 million tons depending on the results from the
metallurgical tests and pre-feasibility analysis. At the present state of our
knowledge, it is not yet possible even to estimate the reach of the Second Phase
at the rest of the mining properties. ====== DRILLING TO DELIMIT RESERVES.- In
order to delimit a minimum of 10 million tons, approximately 2,250 meters will
be drilled with reverse circulation, distributed in 15 wells of around 150
meters deep each. Should the metallurgical tests and other results indicate that
we can hope to delimit some 50 million tons, 25 wells, 200 meters deep each,
will be drilled, totaling 5,000 meters of drilling of an equivalent amount
depending on the nature of the deposit. ====== FEASIBILITY STUDY.- In order to
perform this study, the services of Pincock Allen & Holt will be hired.- This
study will be done if and when the drilling results are sufficient; otherwise
more drilling and other works will be done to prepare this
study during the Third Phase. ====================================== PAYMENT
-------
RECEIPT FOR THE "COBRIZOS" MINING LICENSES.- DATE: La Paz, 15 March 1996.-
- --------------------------------------------
NAME: CORPORATION MINERA DE BOLIVIA.- Register No. 03.- TRADE NAME: GRUPO
MINERO NOR LIPEZ.- Address: Potosi.- KEYS: 526.0.4.- 1165.0.5.- 1123.0.0.-
TAX CODE.- 1105.0.7. ===== DETAILS: Payment for mining licenses call
CONCESSION: 25 de Julio.- Aguilar.- Alianza.- Bolivar.- COBRIZOS.- Copacabana.-
- -----------
Don Bruno.- El Morro.- German Busch.- Ines. === COUNTY: Soniquera.- Soniquera.
- -San Agustin.- San Cristobal. - Rio Grande.- Soniquera.- San Agustin.- San
Agustin.- San Agustin ====PROVINCES: -Nor Lipez. Nor Lipez. Nor Lipez - Nor
Lipez.- Nor Lipez.- Nor Lipez.- Nor Lipez.-Nor Lipez.- Nor Lipez.- Nor Lipez.-
====== HAS: 1.000.-300.-120.-500.-168.-80.- 136.- 10.- 180.-99.- TOTAL:
2.593==== corresponding to the 1/st/ Semester 1996. ===== Interests.- Fines on
interests.-Art. 121 Fines for non-compliance. - Rep. Of Receipt ===== TAXES: Bs.
6.482,50.-Bs. 88,07. - Bs. 8,81. - Bs. 648,25. - Bs. 2,00. - TOTAL:
------
SONIQUERA.- San Agustin. ==== PROVINCES: Nor Lipez.- Nor Lipez. ====== HAS:
- --------- ---------- ----
1.000.- 300.- 120.- 500.- 168.- 80.- 136.- 10.- 180.- 99.- TOTAL: 2.593. ======
------
corresponding to the 1/st/ Semester 1996. ===== Interests.- Fines on interests.
- - Art. 121 Fines for non-compliance. - Rep. Of Receipt ===== TAXES: Bs.
7.229,63. ===== THEY ARE: Seven Thousand Two Hundred and Twenty Nine 63/100
Bolivianos. ==== SEAL: Regional Administration Revenue Service.- Paid.- 15 Mar.
1996.- Teller 1.- La Paz - Bolivia. === Signed: Rene Burgoa Calderon.- Chief
Fiscal Obligations Control Unit a.i..- Reg. Administration. === Initials of
Paymaster: G.O.A. ====== OTHER PAYMENT RECEIPT OF THE "COBRIZOS" MINING
----------------------------------------------
LICENSE.- DATE: La Paz, 27 May 1996.- NAME: CORPORATION MINERA DE BOLIVIA.-
- ---------
Register No. 03.- TRADE NAME: GRUPO MINERO NOR LIPEZ.- Address: Potosi.-
KEYS: 526.0.4.- 1165.0.5- 1123.0.0- TAX CODE.- 1105.0.7. ===== DETAILS: Payment
for mining licenses called: CONCESSION: 25 de Julio.- Aguilar.- Alianza.-
-----------
Bolivar.- COBRIZOS.- Copacabana.- Don Bruno.- El Morro.- German Busch.- Ines.
=== COUNTY: Soniquera.- Soniquera.- San Agustin.- San Cristobol.- Rio Grande.-
-------
Soniquera.- San Agustin.- San Agustin.- San Agustin. ==== PROVINCES: Nor Lipez.-
----------
Nor Lipez.- Nor Lipez.- Nor Lipez.- Nor Lipez.- Nor Lipez.- Nor Lipez.- Nor
Lipez.- Nor Lipez.- Nor Lipez.- Nor Lipez. ====== HAS: 1.000.- 300.- 120.- 500.-
----
168.- 80.- 136.- 10.- 180.- 99.- TOTAL:
-----
28
2.593. ==== Corresponding to the 2/nd/ Semester 1996. === Rep. of Receipt. ====
TAXES: Bs. 6,573,26.- Bs. 2,00. TOTAL:
Bs. 6,575.26. ===== THEY ARE: Six Thousand Five Hundred and Seventy Five 26/100
Bolivianos. ==== SEAL: Regional Administration Revenue Service.- Paid.- 4 Jun.
1996.- Teller 1.- La Paz - Bolivia. === Signed: Rene Burgoa Calderon.- Chief
Fiscal Obligations Control Unit a.i..- Reg. Administration. === Initials of
Paymaster: G.O.A. === REGISTRATION CERTIFICATE AT THE INDUSTRY AND COMMERCE
-----------------------------------------------------
REGISTER FOR "ASC BOLIVIA LDC" COMPANY.- MINISTRY OF FINANCES AND ECONOMICAL
- ----------------------------------------
DEVELOPMENT.- National Secretariat for Industry and Commerce.- General Direction
for the Register of Commerce and Stock Companies.- Bolivia.- CERTIFICATE OF
--------- --------------
REGISTRATION.- No. 016458.- The General Director for the Register of Commerce
- --------------
and Stock Companies, empowered by the Code of Commerce and Decree Law No. 16833
dated July 19, 1979, at the written request by the interested party. ====
CERTIFIES: That the company of Trade Name: ASC BOLIVIA L.D.C. (BOLIVIAN
- ----------
BRANCH).- Dedicated to the main activity of: MINING, GEOLOGY.- With legal
representation by Mr. JOHNNY DELGADO ACHAVAL.- and Legal Address at: Federico
Zuazo Street No. 1598,.- La Paz District,.- and type of legal organization:
BRANCH OF COMPANY CONSTITUTED OVERSEAS.- With a principal paid of Bs. 24,400.-
According to Balance Sheet AP.AL 15-11-95.- Taxpayer Unique Register RUC
7836635.- It is legally registered in this Direction.- Under Register No. 9-
--------------------------------------------
37162-1.- Approved by Administrative
Resolution No. 6594,- dated 06-12-95.- Having complied with the requirements
demanded by Law, the aforementioned company can perform activities in its
sector.- This Certificate only certifies the object pointed out before and is
valid for Sixty days starting from the date it was issued, IT IS NOT RENEWED.
=== La Paz, July Third nineteen ninety six. ==== Seal: National Secretariat for
Industry and Commerce.- La Paz - Bolivia.- Signed: Dra. Angelina Vucsanovich de
Vargas.- GENERAL DIRECTOR FOR THE REGISTER OF COMMERCE AND STOCK COMPANIES.
======== BANK DEPOSIT RECEIPT.- Banco de La Paz S.A. Place: La Paz.- Day:
----------------------
twelve.- Month: September.- Year: Ninety six.- Current Account X.- Account
Number: 11101077251.- Name or Trade Name: Annex: Official Gazette.- National
Chamber of Mining.- Cobrizos Project Joint Venture COMIBOL and ASC BOLIVIA LDC.-
Depositor's illegible signature.- Cash Deposit: 40.- Total deposited: 40.- They
are: Forty 00/100 Bolivianos. --- Bank Signature and Seal: Banco de La Paz
S.A..- Main Office.- 12 Sept. 1996. === Ninoska Quint Pantoja.- Teller Section.-
Illegible signature. =========================== CONCLUSIONS: It is according
------------
to the original writ and annexed documents presented before me, the same after
being numbered and signed by me the Notary, have been added to the collection of
its class according to articles thirty one of the Law of the Notary and two
hundred and sixteen of the Mining Code.- Those appearing before approve and
ratify this JOINT VENTURE CONTRACT AFFIDAVIT FOR THE DEVELOPMENT OF MINING
ACTIVITIES, SUBSCRIBED BETWEEN: THE CORPORACION MINERA DE BOLIVA (COMIBOL),
REPRESENTED BY DR. ALBERTO ALANDIA BARRON - PRESIDENT AND LIC. LUIS ARNAL
VELASCO - MANAGER OF THE CONTRACT AND FINANCES UNIT, AND THE COMPANY "ASC
BOLIVIA LDC", REPRESENTED BY MR. JOHNNY DELGADO ACHAVAL, signing together with
the witnesses citizens Custodia Claure J., with ID No. 467852 L.P. and Leonardo
Linares N., with ID No. 3361005 L.P., full of age,
29
able by right, neighbors of this city, who are informed of this contents,
without any observations to the latter. I GIVE FAITH. ==== Signed: FOR
CORPORACION MINERA DE BOILIVA: DR. ALBERTO ALANDIA BARRON - PRESIDENT. === and
LIC. LUIS ARNAL VELASCO - MANAGER OF CONTRACTS AND FINANCES. === Signed: FOR ASC
BOLIVIA LDC: MR. JOHNNY DELGADO ACHABAL.- AGENT AND PROXY. === Signed: Custodia
Claure J. ID No. 467852 L.P.-WITNESS.- Signed: Leonardo Linares N., ID No.
3361005 L.P.- WITNESS.- Signed before me, Lawyer MARIA ESTHER VALLEJOS H.-
SPECIAL NOTARY OF MINES AND PETROLEUM. VERIFIES: THIS AFFIDAVIT COMPARES WITH
--------
THE ORIGINAL REFERRED TO AND TO WHICH I REMIT MYSELF, THE SAME THAT AFTER BEING
COMPARED, FAITHFULLY AND LEGALLY CORRECTED, I AUTHORIZE, SEAL, SIGN AND STAMP IN
LA PAZ CITY ON THE TWENTY EIGHTH OF OCTOBER NINETEEN NINETY SIX.
=================================
(SEAL): Special Notary of Mines and Petroleum
MARIA ESTHER VALLEJOS H.
LAWYER
NOTARY
La Paz - Bolivia
(Signed)
Dra. Maria Esther Vallejos H.
SPECIAL NOTARY OF MINES AND PETROLEUM
La Paz - Bolivia
NOTE OF MINING REGISTER: Date: 30 of
October 1996, under item 248
of Book 'B' the previous Affidavit
has been registered
La Paz, 30 of October 1996
(Signed)
Dra. Maria Esther Vallejos H.
SPECIAL NOTARY OF MINES AND PETROLEUM
La Paz - Bolivia