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EXHIBIT 10(qq)
Digest No. 354.
IRREVOCABLE OPTION AGREEMENT
COMPANIA MINERA EL BRONCE
TO
CDE CHILEAN MINING CORPORATION
In Santiago, Chile, on October 24, 1994, before me, MARIA GLORIA ACHARAN
TOLEDO, Chilean, lawyer, national identification card No. 5,575,365-2, Notary
Public of the Forty Second Notary of this Commune, with office at No. 257
Teatinos St., there appear: Mr. MAXIMILIANO CALLEJAS CALLEJAS, Chilean,
married, mining execution engineer, national identification card No.
3,172,853-3; Mrs. EDDA CALLEJAS MIRAND, Chilean, bachelor, agronomist, national
identification card No. 4,317,082 - 1, and Mrs. VERONICA ROJAS CLLEJAS,
Chilean, married, mining industrialist, national identification card No.
6,062,614-6, as directors and on behalf, as will be evidenced, of COMPANIA
MINERA EL BRONCE, contractual mining company dealing in the business indicated
in its name, Tax Payer Number 89,482,100-0, all domiciled in this city at No.
240 Carmencita St., Las Condes, for the one part; and for the other MICHAEL
CHARLES TIPPETT, citizen of the United States of America married, geologist,
Foreigener's identification card NO. 24,506,207-1, on behalf, as will be
evidenced, of CDE CHILEAN MINING CORPORATION AGENCIA CHILE, hereinafter "CDE",
Chilean Agency of a foreign stock corporation, dealing in the ining, industrial
and commercial line, both domiciled at No. 133 La Gloria, Las
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Condes, Santiago, the latter acting per se and on behalf, as will also be
evidenced, of COMPANIA MINERA CDE EL BRONCE, contractual mining company of the
same domicile, hereinafter also "CDE EL BRONCE"; the appearing parties of legal
age, who evidenced their identities with the respective cards and state:
FIRST: Compania Minera CDE El Bronce is a contractual mining company,
organized by public deed delivered on October 11, 1994 before the Notary of
Santiago Mrs. Gloria Acharan Toledo, that is registered on folio 205 No. 59 of
the Mining Property Register of 1994 and on folio 9,119 folio No. 20 of the
Mining Shareholders' Register of 1994, both of the Custodian of Mines of
Santiago. The corporate interest of CDE El Bronce is divided into one hundred
shares, of which ninety nine shares belong to Compania Minera El Bronce, of
which 99 are ordinary Series A shares, while the remaining share, called
preferred or Series B share, belongs to CDE, as is evidenced by the inscription
mentioned of folio 9,119, No. 9 of the Shareholders' Register of the Custodian
of Mines of Santiago of the year 1994. CDE El Bronce has purchased and acquired
the following mining claims, located in the Commune and Province of Petorca,
Fifth Region of Valparaiso, whose constitutive judgment and/or survey
certificate is registered in the Property Register of the Custodian of Mines of
Petorca, on the folios, numbers and years indicated in each mining claims as
follows:
1) Albertito Uno a Nueve whose survey certificate is on folio 11 over
No. 7 of 1982;
2) Alma Uno a Cincuenta y Cuatro, with survey certificate and
constitutive judgment registered on folio 12 over No. 3 of the year 1950;
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3) Bronce Nuevo Uno a Treinta y dos, with survey certificate
registered on folio 45 No. 19 of 1940;
4) Carlota Uno a cincuenta, with survey certificate and constitute
judgment registered on folio 19 over number 7 of 1988;
5) Carmencita Uno a Cuarenta y uno, with survey certificate registered
on folio 17 over No. 1981;
6) Corrida del Bronce Viejo or Bronce Viejo, with survey certificate
registered on folio 5 over No. 14 of 1889 and replacement of boundaries on
folio 34 over No. 13 of the year 1938;
7) El Chivato or Socavon del Chivato, with survey certificate
registered on folio 12 over No. 15 of 1898998, with replacement of boundaries
on folio 34 over No. 13 of 1934;
8) Defensa Uno a Cinco, with survey certificate registered on folio 31
over No. 18 of 1939;
9) Don Alberto Uno a Cuatro, with survey certificate registered on
folio 41 number 28 of 1983;
10) El Aspe, with survey certificate on folio 82 over Number 33 of
1935;
11) Flor Maria Uno a Once, with survey certificate registered on folio
2 number 2 of 1980;
12) Chiripa, with survey certificate registered on folio 99 over No. 37
of 1937;
13) Gabriel Uno a Ochenta, with survey certificate and constitutive
judgment registered on folio 24 over No. 13 of 1992;
14) Jose Antonio Uno a Sesenta, with survey certificate and
constitutive judgment registered on folio 30 over No. 14 of 1992;
15) La Morocha Uno a Treinta, with survey certificate registered on
folio 14 No. 4 of 1997;
16) Luis Uno a Nueve, with survey certificate and
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constitutive judgment registered on folio 12 over No. 5 of 1992;
17) Luz Uno a Sesenta with survey certificate and constitutive judgment
registered on folio 1 No. 1 of the year 1994,
18) Patty Uno a Ocho, with survey certificate and constitutive judgment
registered on folio 2, No. 2 of 1989
19) Paz Uno a Cuarenta, with survey certificate and constitutive
judgment registered on folio 7 over No. 2 of the year 1994;
20) Poderosa Uno a Dos, with survey certificate registered on folio 32
over No. 13 of 1937;
21) Rolando Uno a Tres or Rolando Primero, Segundo y Tercero, with
survey certificate registered on folio 6 over No. 3 of 1941;
22) Samuel Uno a Cincuenta y Tres, with survey certificate and
constitutive judgment registered on folio 7 No. 4 of 1992;
23) Socavon de San Nicomedes o San Nicomedes, with survey certificate
registered on folio 14 No. 16 of 1892 and replacement of boundaries on folio 34
over Number 13 of 1938;
24) Urbano Uno a Doce, with survey certificate and constitutive
judgment registered on folio 2 over No. 3 of 1992;
25) Vallenar Uno a treinta, with survey certificate registered on folio
46 over No. 29 of the year 1983;
26) Rinconcito Uno a Cuatro, with survey certificate and constitutive
judgment registered on folio 22 No. 10 of 1993;
27) Almendro Uno a Sesenta, with survey certificate and constitutive
judgment registered on folio 12 number 8 of 1993;
28) Caracol Uno a Veinticuatro, with survey certificate and
constitutive judgment registered on folio 17 number 9 of 1993;
29) Petorquita Uno a Treinta y tres with survey certificate
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and constitutive judgment registered on folio 15 Number 6 of 1988;
30) Algarrobilla Uno al Cincuenta, with survey certificate registered
on folio 2 number 2 of the year 1988;
31) Boton de Oro Uno al Tres, with survey certificate registered on
folio 23 over No. 17 of 1983;
32) Francisca Uno al Doscientos, with survey certificate registered on
folio 43 number 7 of the year 1986;
33) Litre Uno al Cincuenta, with survey certificate registered on folio
26 number 8 of the year 1988;
34) Malvina Uno al Cinco, with survey certificate registered on folio
18 over No. 10 of the year 1984;
35) Presidente Montt Uno a Doscientos, with survey certificate
registered on folio 28 over number 6 of the year 1985;
36) Soledad Uno a Trescientos, with survey certificate registered on
folio 108 over number 32 of the year 1989,
37) Gran Rosario Uno al Diez, whose survey certificate is registered on
folio 28 No. 17 of the year 1939;
38) Resguardo Uno al Cincuenta, whose survey certificate is registered
on folio 14 No. 10 of the year 1987;
39) Ampliacion Relave Uno al Diez, whose survey certificate is
registered on folio 75 number 24 of the year 1989:
40) Rights equivalent to 87.5% in the mining claims Dichosa, Juego de
Chuecas and La Verde, whose survey certificate is registered on folio 58 over
No. 22 of the year 1937;
41) Beneficencia, whose survey certificate is registered on folio 31
number 15 of the year 1935;
42) El Buitre or el Guitre, La Gallina y Los Gallos, with survey
certificate registered on folio 1 number 1 of the year 1935;
43) Esperanca Uno al Cien, with survey certificate registered on folio
4 number 4 of the year 1986;
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44) Hospicio, with survey certificate registered on folio 26 number 13
of the year 1935;
45) Hospital, with survey certificate registered on folio 10 over No.
13 of the year 1898;
46) Nueva Espana, with survey certificate registered on folio 39 over
No. 17 of the year 1940;
47) Sanatorio, whose survey certificate is registered on folio 28 over
number 14 of the year 1935;
48) Gatica Uno a Cien, whose survey certificate is registered on folio
92 over No. 28 of the year 1989;
49) Pedro de Valdivia, with survey certificate registered on folio 85
number 34 of the year 1935;
50) San Ramon Primero y Segundo, whose survey certificate is registered
on folio 22 number 13 of the year 1942;
51) Santa Clotilde Tercero y Cuarto, whose survey certificate is
registered on folio 19 over No. 12 of the year 1942.
Compania Minera CDE El Bronce has also acquired the following exploration
concessions, mining manifestations and petitions:
EXPLORATION CONCESSIONS: Freirinita, with constitutive judgment registered on
folio 138 number 172 of the Register of Discoveries of the Custodian of Mines
of Petorca of the year 1991 and judgment of extension noted on the margin of
the previous inscription.
MINING MANIFESTATIONS AND PETITIONS: All registered in the Register of
Discoveries of Mines of the Custodian of Mines of Petorca, under the folio and
number of the year which is indicated in each c~
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Mining Manifestations:
a) Terraza Uno Uno a Dieciocho, registered on folio 243 number 229 of
1993, registered in its name on folio 54 No. 50 of the year 1994;
b) Terraza Dos Uno a Doce, registered on folio 243 over No. 230 of
1993, registered in its name on folio 54 over Number 56 of the year 1994;
c) Tatan Uno a Trece, registered on folio 186 over number 186 of 1993,
registered in its name on folio 53 over number 54 of the year 1994;
d) Montenegro Uno a Cuarenta y Ocho, registered on folio 13 over
number 13 of 1993, registered in its name on folio 54 number 53 of the year
1994;
e) Servia Uno a Veintiseis, registered on folio 15 No. 14 of 1994,
registered in its name on folio 52 over number 52 of the year 1994;
f) Croacia Uno a Veintiocho, registered on folio 12 No. 12 of 1994;
registered in its name on folio 52 No. 51 of the year 1994;
g) Atacamita Uno a Veinte, registered on folio 55 No. 69 of 1991,
registered in its name on folio 51 over No. 50 of the year 1994;
h) Maria Eugenia Uno a Diez, registered in its name on folio 24 over
No. 25 of the year 1994.
Mining Petitions:
a) Diego registered in its name on folio 48 over No. 47 of the year
1994;
b) Sofia, registered in its name on folio 39 No. 37 of the year 1994:
c) Ignacio, registered in its name on folio 40 No. 38 of the year 1994:
d) Morado, registered in its name on folio 7 over No. 8 of the year
1994;
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e) Negro, registered in its name on folio 6 over No. 7 of the year
1994;
f) Paulo, registered in its name on folio 47 over No. 46 of the year
1994;
g) Pedro, registered in its name on folio 38 No. 36 of the year 1994;
h) Tomas, registered in its name on folio 49 over No. 48 of the year
1994;
i) Veronica, registered in its name on folio 37 No. 35 of the year
1994.
Finally, Compania Minera CDE El Bronce has acquired the following mining
shares:
1) Fifty shares equivalent to fifty per cent of the total shares into
which the corporate interest is divided of Legal Mining Company "San
Sebastian Uno de Petorca", juridical person registered on folio 13 over No. 9
of the Property Register and on folio 22 over No. 44 of the Shareholders'
Register, both of the year 1987, of the Custodian of Mines of Petorca, and
that is the owner of the mining claims called "San Sebastian Uno al Quince"
whose survey certificate was registered on folio 9 No. 8 of the Property
Register of the same Custodian corresponding to the year 1984.
2) Fifty shares or fifty percent of the rights in Sociedad Legal
Minera San Lorenzo Una de la Quebrada del Chacal, owner of the mining claims
called San Lorenzo Uno al Diez, whose survey certificate is registered on
folio 18 No. 7 of the Property Register of the Custodian of Mines of Petorca
of 1952.
CDE El Bronce acquired the mining claims, mining exploration
concession, manifestations, petitions and shares already identified by purchase
made from Compania Minera El
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Bronce, according to public deed delivered on this same date and in this same
Notary. In the same instrument, CDE El Bronce set up first mortgage on such
mining claims, concessions, rights and shares, binding itself not to encumber
or alienate them, and not to enter into acts and contracts with them. Such
mortgage and prohibition will only be maintained current during the period this
option is in effect and it is the obligation of CDE El Bronce and of Compania
Minera El Bronce to release them before CDE exercises this option, without any
cost whatsoever for CDE
SECOND. Compania Minera El Bronce hereby grants to CDE, an irrevocable
and exclusive purchase option, in the terms of article 169 of the Mining Code,
on twenty ordinary shares of CDE El Bronce, in the form and conditions
accounted for in this instrument in such a way that once the option is
exercised and the capitalization of loans referred to in the fifth clause
hereof is made, CDE will acquire and will be the owner of fifty one percent of
all the shares into which the corporate interest of CDE El Bronce may be
divided, Minera El Bronce remaining as owner of the balance of forty nine
percent.
THIRD: The Purchase Option referred to in the preceding paragraph is
given for the period that expires on July 25, 1997. Consequently, at any time
before such time expires, and provided that by that time the loans indicated in
the sixth clause and the disbursements detailed in the seventh clause have been
made in investments, CDE may exercise its option, expressing its will to enter
into the purchase sale contract on the twenty shares of CDE El Bronce, subject
of this agreement.
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As a consequence of the exercise of the option and of the
capitalization referred to in the fifth Clause, CDE shall be the owner of fifty
one per cent of all the shares that result after such capitalization and
Compania Minera El Bronce will be the owner of the balance of forty nine
percent. For this purpose, CDE must give notice of its decision to exercise the
option by sending a registered letter addressed through a Notary Public to the
domicile of Compania Minera El Bronce. In the event CDE does not express its
intention to enter into the purchase sale referred to within the time
stipulated, it will be understood that it desists from its option and this will
lapse by matter of law. Likewise, at any time since this date and pending the
stipulated time period, CDE may decide not to persevere in this option
agreement and desist from its option, notice of which decision must be given to
Compania Minera El Bronce by registered letter addressed to the domicile of the
latter through a Notary Public, and the same effects indicated herein will
occur as regards the loans.
FOURTH. During the effectiveness of this option agreement, CDE is
expressly authorized, through the persons it may appoint, to enter the mining
properties owned by the CDE El Bronce being able to make therein all kinds of
prospection work, reconnaissance, take samples, and in general, investigations
that will enable it to make a qualitative and quantitative evaluation of the
concessions, and to introduce in the mining claims all kinds of equipment and
machinery to perform the reconnaissance and prospection work and set up camps
for the persons working therein, and CDE El Bronce must give the facilities
that may be necessary for these purposes. This cannot in any way represent the
interruption or obstruction of the activities and operations that CDE El Bronce
carries out at present, nor will the latter have any
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obligation to provide services, supplies or materials for such work, even less
so gratuitously.
It is expressly agreed that during the life of this agreement, Minera
El Bronce or its affiliates will have the right to participate in the biddings,
in equal economic and technical conditions as those offered by third parties,
and may be awarded the performance of the exploration works, exploration and
construction programs. For the same object indicated, furthermore, CDE may
extract, for its own risk and cost, minerals from the mining claims to the
extent and quantities that may be necessary for such purpose, regardless of the
grade of fines and regardless of whether they are oxides, sulfides or of these
metals or others that are associated, such as gold or copper minerals. CDE
shall not make any payment whatsoever to CDE El Bronce for account of the value
of the minerals for the extraction of the minerals to the extent and in the
amounts indicated value of the minerals while this option is effective. CDE
will be fully responsible and accountable for damages, impairments or
deterioration imputable to CDE or that is caused or may be caused to the person
or property of CDE El Bronce or of third parties, as a result or by reason of
the performance of the work referred to in this clause, as well as for the
fulfillment of the legal and regulatory provisions with regard to mining safety
or environmental rules that may be applicable to the exploration operations.
CDE may manifest mining claims and/or ask for exploration concessions within
the area of interest specified in Appendix A hereof during its effectiveness,
acting always in the name and in representation of CDE El Bronce, it being
expressly established, furthermore, that any manifestation or petition that CDE
or any of its dependents, consultants or advisers
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file within such area of interest during the life of this contract, will be
understood to be made by CDE El Bronce for all purposes, without prejudice of
what is provided in the final paragraph of article 41 of the Mining Code.
Likewise, CDE binds itself so that any petition, manifestation,
concession or mining right it acquires or decides, promises or takes the option
to acquire from third parties within the area of interest referred to, must be
done in favor of CDE El Bronce and in its representation, unless the Board of
Directors of the latter company does not approve the acquisition, promise or
option in question, in which case the respective petitions, manifestations or
concessions may be acquired, taken in promise or option by CDE in its own name
and interest.
FIFTH. In the event CDE exercises the option to purchase twenty
ordinary shares of CDE El Bronce, then CDE will pay to Compania Minera El
Bronce the equivalent in national currency of TWO HUNDRED THOUSAND DOLLARS of
the United States of America. This payment must be made by check in the name of
Compania Minera El Bronce that must be delivered on the date the option is
exercised. In addition, CDE and Compania Minera El Bronce shall cause that
simultaneously the general shareholders' meeting of CDE El Bronce shall
increase the capital of the company and issue the new pertinent shares, through
capitalizing the total amount of the loans in accordance with the sixth clause
hereof, in the case of CDE and through capitalization of the balance of price
resulting from the purchase sale of the mining claims, assets and properties
evidenced in the public deed between ComPania
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Minera El Bronce and CDE El Bronce of this same date before this same Notary.
For the purpose of such capitalizations, the General Shareholders' Meeting must
resolve the issue of the number of shares that may be necessary in order that
CDE may subscribe a number of shares such that together with the shares it
acquires when the option is exercised it will be the owner of fifty one per
cent of the total shares of CDE El Bronce and Compania Minera El Bronce shall
subscribe a number of shares such that, together with those which it owns at
the date of capitalization, it will hold the remaining forty nine percent. As a
consequence of such capitalization, the By-laws of CDE El Bronce must be
modified and shall substantially be those contained in Annex B hereto.
SIXTH. It is a condition precedent to maintain this option in effect
and to be able to exercise it validly, that CDE shall have made local loans to
CDE El Bronce, in their equivalent in pesos national legal currency, in
accordance with the "observed dollar~ exchange rate established by the Central
Bank of Chile in effect on the business day prior to the date of the respective
actual payment, in the amounts and dates indicated below:
a) US$ 4,800,000 of which total US$ 4,050,000 are loaned in this same
act, leaving on record that US$ 750,000 were loaned prior to this date.
b) US$ 7,869,100, loan that will be made at the latest on July 25, 1995.
c) US$ 3,934,600, loan that will be made at the latest on July 25, 1996.
d) US$ 3,866,700, loan that will be made at the latest on July 25, 1997.
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The timely granting of the loans mentioned above is a condition to
maintain the option effective, so that if CDE does not make such loans when
due, it will be understood that it has desisted from its option and that,
therefore it has decided not to persevere in this agreement.
CDE will be entitled to make in advance one or all of the loans
referred to in this clause, and CDE is obliged to accept one or all the loans
made to it. No interest will accrue on the loans indicated in letters a), b),
c) and d), and they will be directed by CDE El Bronce exclusively to the
payment of the installments of price of the Purchase sale referred to in the
preceding fifth clause, expressly authorizing Compania Minera El Bronce to
receive the respective sums directly applying them to such payment, and the
parties binding themselves and CDE El Bronce to proceed as indicated, and CDE
El Bronce promises to record them properly in its accounts by virtue of the
mercantile current account that is agreed in this same act.
SEVENTH: In addition to the loans and payment indicated in the
preceding clause, CDE binds itself to make expenditures in a Program of
Investments and Explorations that will be agreed mutually between CDE and
Compania Minera El Bronce, with the purpose of increasing the reserves or
calculating the volume or discovering new reserves and increasing the operating
efficiency of the operations in El Bronce orebody, by means of investment in
mining equipment and/or in the ore processing plant, or others tending to
optimize the efficiency of the ongoing mining operations, or in order to cover
working capital requirements or operating deficits, for a sum of up to five
million one hundred and ninety thousand dollars of the United States of
America, according to the
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same exchange rate indicated in the sixth clause hereof, in line with the
following schedule:
a) A minimum of three million dollars of the United States of America
before July 25, 1995; and
b) The balance until completing five million one hundred and ninety
thousand dollars of the United States of America, before July 25, 1996, or on
a future date if the parties should agree.
The complete and timely fulfillment of the disbursements in the way of
explorations and investments established in this clause is a condition for CDE
to exercise its option, so that the latter cannot validly exercise it, or
demand the execution of the final purchase sale agreement, if it is not up to
date in the fulfillment of such obligation of expenditures in explorations and
investments, in the minimum amounts indicated above, and in order to evidence
that such expenses in exploration and investment have been made, a report or
certificate from the auditing firm Langton Clarke y Cia. Limitada, or from
another prestigious auditing firm elected by the parties will suffice. Should
CDE decide to exercise its option in advance, the expenses in explorations and
investments that have not been materialized until the date of such decision
must in any event be implemented according to the same schedule established
above, CDE being obliged to make the corresponding disbursements for the
minimum sums indicated in this clause, before CDE El Bronce can be required to
make new explorations and investments with own resources. Once the option has
been exercised and the expenses in explorations and investments committed by
CDE have materialized, any future expenditure in explorations shall be made by
mutual agreement of the parties.
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As compensation for the expenses and investments made by CDE in the
expansion of EL Bronce mine and its plant while this option is effective, CDE
has received the ownership of one preferent share in CDE El Bronce. Such share
will have a preference and will remain effective while this option is
effective, and which will consist in the right of CDE to propose the majority
of the members of the Board of Directors of CDE El Bronce, and in the
obligation of the Series A shareholders to appoint those persons proposed by
CDE and in the right to receive fifty one per cent of the profits of the
company. At the time CDE acquires fifty one per cent of the Company's shares,
the preferent share referred to shall lose its preferences and will become an
ordinary share. If CDE does not exercise the option during the period in which
the option is effective, on the business day following that on which the option
has fallen due, CDE will transfer such share to CompanIa Minera El Bronce or
whoever the latter may indicate for a value equivalent in national currency to
one dollar of the United States of America. If CDE does not fulfill its
obligation to transfer such share on the occasion indicated, the arbitrator
appointed in the thirteenth clause hereof shall be authorized to do it in its
name.
EIGHTH. Should CDE exercise its option, in the form and conditions
indicated in the preceding clauses, the final purchase sale public deed must be
executed and the increase of the capital of CDE El Bronce, the issue and
subscription of the new shares corresponding to the capitalization referred to
above, shall be effected on the same day on which it exercises the option
before the same Notary attesting to this deed or whoever acts in her stead,
succeeds or replaces her. In this same event, the periods that are pending
expiration for the payment of the loans indicated in the sixth clause, shall
expire, and CDE will be obliged to make and CDE El Bronce
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will be obliged to accept, all the loans that are outstanding at the time the
option is exercised in the way indicated in such clause, and to execute the
purchase sale deed and make the capital increase and the issue of CDE El Bronce
shares on the same day on which the option is exercised. Once CDE has validly
exercised the option, has made all the loans as indicated and has executed the
final purchase sale deed, Compania Minera El Bronce shall be obliged to concur
to execute such purchase-sale deed. If, notwithstanding the fulfillment of the
above conditions, Compania Minera El Bronce should refuse to or should not
concur to execute it on the occasion indicated previously in this clause, CDE
itself may execute an acceptance deed which, only in such case, shall cause the
effects indicated in the final paragraph of article 169 of the Mining Code.
On the same date on which CDE acquires the twenty shares subject of
this option agreement, Compania Minera El Bronce and CDE as only shareholders
of CDE El Bronce, must concur to a general shareholders' meeting of this
company and agree on the capitalizations of loans and issues of shares
indicated in the fifth clause above that will enable CDE to become the owner of
fifty one percent of all the shares of CDE El Bronce and Compania Minera El
Bronce of the balance of forty nine per cent, in the terms referred to in such
clause.
If the above is not fulfilled, the arbitrator appointed in the
thirteenth clause of this option agreement shall be authorized to concur and
vote on behalf of Compania Minera El Bronce and of CDE in the General
Shareholders' meeting of CDE El Bronce that has the purpose of increasing the
capital and issue the corresponding shares to be paid by the capitalization of
the credits of CDE and the balance of price of Compania Minera El Bronce within
a period of ten days since
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the date of the purchase sale or of the unilateral acceptance of the option for
the twenty shares. If for any reason the capitalization of the loans in shares
cannot be made within the time period indicated and subject to such condition,
Compania Minera El Bronce unilaterally promises to sell to CDE thirty ordinary
shares in CDE El Bronce for a value of three hundred dollars of the United
States of America, which must be transferred on the business day following the
date of expiration of the period of ten days already mentioned, authorizing the
arbitrator to concur on behalf of Compania Minera El Bronce in the
corresponding purchase sale deed.
In this same last event the capitalizations of the loans will be made
in any event, without issuing new shares.
NINTH: The shares issued by CDE El Bronce subject of this agreement
shall be sold, if CDE elects to acquire them, free from encumbrances,
prohibitions, lawsuits, embargoes and rights of third parties. In the same way,
the mining claims identified in the first clause of this deed, must be free
from all encumbrances, mortgages, prohibitions, embargoes, lawsuits or rights
of third parties. Likewise, Compania Minera El Bronce binds itself to continue
diligently and at its full cost and responsibility, all the proceedings, works,
acts and formalities that may be necessary for the constitution and defense of
the exploitation mining concessions owned by it, located within the area of
interest identified in Annex D attached to this agreement. During the period of
effectiveness of the purchase option, the full and timely payment of the claim
fees for such mining claims shall be for account of CDE El Bronce. If CDE El
Bronce does not make timely payment,CDE shall be authorized to pay such claim
fees
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directly, and to request the immediate reimbursement of the sums paid for this
purpose.
TENTH: In the event CDE expressly gives notice of its decision not to
persevere in this option agreement, as provided for in the final part of the
preceding third clause, the option will lapse by law after ten calendar days
have run since the remittance of the certified letter mentioned in that clause.
In this event, CDE shall not be obliged to make any other loan or payment of
those detailed in the sixth clause, or make the investments and expenditures
detailed in the seventh clause that have not been made enforceable on the date
on which the purchase option has lapsed.
ELEVENTH: Should CDE desist from its option as indicated in the
preceding clause, or for any other reason the option is understood to be
desisted or lapsed, all the sums that CDE El Bronce has received or could have
received as loans by virtue of this option agreement, shall remain in its full
benefit in the way of compensation and as only indemnification for the
facilities, rights and authorities given to CDE under the fourth clause hereof.
Before the expiration of the period of one hundred and twenty calendar days
since the date on which the option lapses or is understood to be desisted, CDE
must send to CDE El Bronce a report on the work performed and deliver to it,
without cost or charge for the latter, the data, background, results and
reports on the exploration work performed in the mining claims individualized
in the first clause, and those which are located within the area of interest
defined in the second clause. Within this same time period, CDE must remove, at
its exclusive cost, all the equipment, property, machinery and camps it may
have introduced in the mining claims, with
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the exception only of those properties that, because of their nature and/or
destination cannot be removed from the mining claims, due the risk of causing
cave-ins or landslides, all of which shall inure to the benefit of the mining
claims, without charge or cost of reimbursement for CDE El Bronce. Likewise,
within the aforementioned period of one hundred and twenty days, CDE must
transfer to CDE El Bronce any mining manifestation, petition or concession that
it may have applied for, constituted or acquired in its own name within the
area of interest specified in Annex D hereof, with the exception of those that
it could have validly acquired in accordance with what is provided for in the
fourth clause of this document. The price or value of the transfer, if
pertinent, is established hereby in the sum corresponding to the rate of
manifestation, to the rate of petition, or to the last claim fee paid, as may
be the case.
TWELFTH. CDE El Bronce binds itself not to encumber and/or alienate the
ownership of the mining claims or mining rights, nor to enter into any kind of
contract therein, and thus imposing on itself voluntary prohibition to encumber
and alienate them. In addition, COMPANIA Minera El Bronce binds itself not to
encumber and/or dispose of the shares of which it is the owner in CDE El
Bronce, while this option is in effect. The prohibitions consented by this
clause shall subsist while this agreement is in effect, and if such is the
case, until the execution and inscription of the final purchase sale deed as
well as the new shares issued after the CAPITAL increase of CDE El Bronce have
been registered in the name of CDE in the Shareholders' Register of CDE El
Bronce. Once the option has become extinguished or lapsed, or the public deed
of purchase sale of fifty one per cent of the mining claims subject thereof has
been executed, the
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prohibitions mentioned before shall be understood to be automatically released,
without the need of a new declaration in this sense. During the life of this
option agreement, furthermore, CDE El Bronce may not assign or transfer to
third parties in any way, the right to extract ore from the mining claims owned
by the company whose shares are the subject of this agreement.
THIRTEENTH: In the event any difficulty, difference of opinions, dispute
or controversy should arise in relation to the stipulations of this agreement,
whether related with their validity, interpretation, performance of resolution,
such difficulty, difference, dispute or controversy shall be submitted to
arbitration. The parties hereby appoint Mr. Pedro Doren Swett as arbitrator and
if he should not be able to or should not wish to accept the office, they
appoint Mr. Ricardo Rivadeneira Montreal, who will have the nature of
arbitrators ex aequo et bono. Mr. Pedro Doren Swett or Mr. Ricardo Rivadneira
Montreal, as the case may be, are authorized to determine the rules of
procedure, including insofar as the form of notice to the parties is concerned,
but in any event the first notice must be served personally or in accordance
with what is provided in article 44 of the Code of Civil Procedure. If neither
of the persons mentioned above is available, the arbitrator will be appointed
by mutual agreement by the parties, and in the absence of such agreement, the
appointment will be made by the Civil Judge of Santiago sitting at the time,
but in this case the arbitrator, who will act without appeal, must be a lawyer
and shall act as arbitrator in the procedure and arbitrator at law in the
award. For this purpose the appointment may only fall on a person who has been
associate justice of the Supreme Court or of the Court of 1Appeals over at
least two
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consecutive periods. The seat of the tribunal will be the city of Santiago.
There will be no appeal on the judgment, which is expressly waived by the
parties. Authorization is given hereby to the arbitrator in the event he should
be requested to (i) sign the public deed implementing the purchase sale of the
shares of CDE El Bronce on behalf of CDE and/or Compania Minera El Bronce, and
(ii) attend general shareholders' meetings of CDE El Bronce on behalf of CDE
and/or Compania Minera El Bronce and vote on the shares held by CDE or Compania
Minera El Bronce to increase the capital of CDE El Bronce and consider as paid
the shares issued by capitalization of the loans granted by CDE and Compania
Minera El Bronce.
FOURTEENTH: For all purposes derived from this agreement, the parties
establish their domicile in the city and Commune of Santiago, Chile.
FIFTEENTH The bearer of an authorized copy of this deed is authorized to
request and sign the inscriptions, subsinscriptions and annotations that may be
pertinent in the competent Custodians of Mines, as well as to sign and file the
memoranda that such Custodian may require for this purpose.
AUTHORITIES. The authority of the directors of Compania Minera El Bronce to
represent this company is evidenced by the public deeds delivered before the
Notary Mr. Raul Perty Pefaur on June 23, 1993, on November 4, 1993 and on
September 30, 1994.
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The authority of Mr. Michael Charles Tippett to represent CDE Chilean Mining
Corporation is evidenced by the power legalized in the Notary of Mrs. Maria
Gloria Acharan Toledo under number 1453 of January 22, 1991, which was
delivered on December 4, 1990 before the Notary Public of Idaho, Mrs. Mary
Eixenberger, in the city of Coeur D'Alene, Idaho, United States of America.
The authority of CDE Chilean Mining Corporation to represent Compania Minera
CDE El Bronce is evidenced by the public deed delivered before me on October
11, of this year. The aforementioned documents are not inserted as they are
known to the parties and the attesting notary.
IN WITNESS WHEREOF and after reading, the appearing parties sign. Copy is
given. ExemPt from taxes. This deed was noted in the Digest of Public
Instruments on this same date. Attest
PP. "COMPANIA MINERA EL BRONCE~
MAXIMILIANO CALLEJAS CALLEJAS
EDDA CALLEJAS MIRANDA
VERONICA ROJAS CALLEJAS
PP. CDE CHILEAN MINING CORPORATION AGENCIA CHILE
MICHAEL CHARLES TIPPETT
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