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EXHIBIT 10.27
HEADS OF AGREEMENT
THIS HEADS OF AGREEMENT ("Agreement") is made effective this 22nd day
of July, 1996 ("Effective Date") by and between
BHP MINERALS INTERNATIONAL EXPLORATION INC., a Delaware corporation
with an address at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx
00000 XXX ("BHP")
and
GOLDEN STAR RESOURCES LTD., a corporation amalgamated under the laws
of Canada ("Golden Star"), with an address at Xxx Xxxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000.
INTRODUCTION
1. The Guyana Geology and Mines Commission has issued a reconnaissance
permit dated June 19, 1996, to BHP covering three areas having an
aggregate of approximately 2,500,000 acres in Guyana (the "Project
Area"). The Project Area is described in Exhibit B and is more
commonly referred to as the Guyana Reconnaissance Project.
2. Golden Star desires the exclusive right to: (i) determine whether to
proceed under the terms of this Agreement for the purpose of
evaluating the Project Area; and (ii) determine whether to negotiate a
detailed joint venture agreement, as provided below.
3. Definitions are set forth in Exhibit A. The Project Area is described
in Exhibit B. A copy of BHP's application for the reconnaissance
permit is attached as Exhibit C. Exhibits A, B, and C are attached to
and made a part of this Agreement.
THE PARTIES AGREE AS FOLLOWS:
1.0 PURPOSE AND LEGAL EFFECT
1.1 Purpose. This Agreement outlines the key commercial terms and
conditions agreed upon whereby BHP and Golden Star may associate themselves for
the following purposes:
1.1.1 to conduct a detailed evaluation of Minerals on the Project
Area; and
1.1.2 to negotiate a joint venture agreement ("JVA") for the
creation of a joint venture entity or such other form of entity to
evaluate, develop, mine, extract, produce, use, sell and export such
Minerals (the Joint Venture).
1.2 Effect. The Joint Venture may affect all or any portion of the Project
Area. Until superseded by a JVA, the terms and conditions set forth in this
Agreement shall govern the rights and obligations of the Parties. If a JVA is
executed, this Agreement shall be superseded. The JVA shall contain the terms
set forth in this Agreement and other terms as shall be mutually agreed. The
Parties shall in good faith endeavor to cause the JVA to be executed within
twenty-four (24) months of the Effective
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Date. Until such time as a JVA is executed by the Parties, this Agreement shall
be binding upon the Parties; provided however, that if the Parties fail to
cause the JVA to be executed within twenty-four (24) months as contemplated
herein, then Golden Star shall have sufficient rights to protect its minority
rights and economic interests under this Agreement, including without
limitation: rights protecting Golden Star from related party transactions,
matters relating to payments and financing which would materially affect cash
flow and other economic benefits running to Golden Star, and matters relating
to litigation, disposition of assets, accounting, abandonment of title to the
Project Area, and dissolution and liquidation of the Joint Venture.
1.3 Term. The Term of this Agreement shall commence on the Effective Date
and shall continue for the term and any extension of the last surviving
license, mining lease, or other mineral right held by the Joint Venture, BHP,
or Golden Star within the Project Area, unless earlier terminated as provide in
this Agreement.
2.0 GRANT OF RIGHTS
2.1 During the Term of this Agreement, BHP grants Golden Star access to:
(i) the Project Area, and (ii) all geological reports, evaluations, information
and data owned by, in the possession of or at the disposal of BHP and relating
to the Project Area.
2.2 BHP agrees during the Term of this Agreement to negotiate exclusively
with Golden Star a detailed JVA.
3.0 BHP'S OBLIGATIONS
3.1 During the Term of this Agreement, unless a Party should earlier
withdraw from this Agreement as provided in Section 8.0 (WITHDRAWAL AND
TERMINATION) or this Agreement should otherwise be terminated as provided
herein, BHP shall:
3.1.1 reimburse Golden Star, upon execution of this Agreement by
both Parties, for all actual Expenditures incurred by Golden Star on
or for the benefit of the Guyana Reconnaissance Project and in an
aggregate amount not to exceed $50,000; provided however, that Golden
Star shall provide BHP documentary evidence of payment of such
Expenditures satisfactory to BHP;
3.1.2 act as Manager and direct all Operations and engage the
services of Golden Star pursuant to Section 4.6.2 of this Agreement;
3.1.3 prepare work plans and budgets which the Parties shall review
and approve in accordance with Section 4.7 (Owners Council);
3.1.4 conduct Operations in the Project Area in a careful and
workmanlike manner and in compliance with all applicable laws,
ordinances, and regulations of all governmental authorities having
jurisdiction over Operations.
4.0 JOINT VENTURE AGREEMENT
4.1 General. The Parties shall undertake to negotiate in good faith a
definitive JVA or such other form of agreement whose purpose is to create a
business entity or such other legal structure through
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which the Parties shall jointly hold all mining rights, mining claims, water
rights, surface lands and other rights and entitlements, and conduct
Operations.
4.2 Joint Venture Entity. The exact nature of the business entity or legal
structure through which BHP and Golden Star shall hold Assets and conduct
commercial mining activity pursuant to the JVA shall be jointly determined by
the Parties giving due regard to the tax, legal liability and other
considerations of each Party, as well as any necessary government approvals.
4.3 Contribution of BHP Assets. Prior to the execution of the Joint
Venture Agreement, BHP shall hold all mining rights and mining claims and all
other Joint Venture Assets for the benefit of both Parties pursuant to this
Agreement. Upon execution of the Joint Venture Agreement, BHP shall, subject
to any required governmental approvals, immediately contribute and transfer all
Assets to the Joint Venture.
4.4 Participating Interests.
4.4.1 Initial Participating Interests. Upon the Effective Date: (i)
BHP shall have a 60% Participating Interest in the Joint Venture and
all Assets of the Joint Venture and Golden Star shall have a 40%
Participating Interest in the Joint Venture and all Assets of the
Joint Venture, and (ii) BHP and Golden Star shall participate jointly
in Operations on the basis of their respective Participating
Interests.
4.4.2 For purposes of this Agreement, prior to execution of the JVA,
the Parties shall be deemed to have a Joint Venture pursuant to the
terms of this Agreement and the term Joint Venture shall refer to and
include the respective Participating Interests of each Party in the
Project Area and Assets of the Joint Venture, and in connection
therewith such Joint Venture Assets held in BHP's name or in Golden
Star's name shall be held by such Party for the benefit of the Joint
Venture. For purposes of clarification, Assets belonging to Golden
Star which are used by Golden Star in the performance of services
under Section 4.6.2 (excluding such items which may be charged to the
Joint Venture as a capital acquisition) shall not be considered to be
an Asset of the Joint Venture.
4.4.3 Evidence of Interests. Upon execution of the JVA, BHP and
Golden Star shall execute and record in each appropriate official
record's office any and all documents and instruments in such form and
substance as may be required to evidence or perfect the Participating
Interests of the Parties in the Joint Venture and the Joint Venture's
interest in all Assets of the Joint Venture within the Project Area,
subject to governmental approval in accordance with Section 4.3
(Contribution of BHP Assets).
4.5 Financing Obligations. If, prior to completion of a Feasibility Study,
costs are incurred under Section 4.6.2 at the request of BHP in order to comply
with BHP's safety requirements, and such costs are in excess of Golden Star's
historical costs for such matters, and provided Golden Star's safety procedures
are in compliance with industry standards and the standards imposed by Law,
then the cost differential shall be at BHP's sole expense.
4.6 Management.
4.6.1 As long as BHP's Participating Interest in the Joint Venture
is equal to or greater than 50%, then BHP shall have the continuing
right to act as Manager of Operations. The Manager
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shall be responsible for the day to day management, conduct and
control of the Operations, subject to approved work plans and budgets
and the direction of the Owners Council. The Parties shall in good
faith negotiate and specify the powers and obligations of the Manager
which shall be included in the JVA.
4.6.2 Prior to completion of the Feasibility Study, Golden Star, at
the direction of the Manager, shall have the exclusive right and
obligation to execute and carry out all approved work plans and
budgets and provide a monthly report to the Manager as to the progress
and development of Operations. Golden Star shall invoice the Manager
monthly, on behalf of the Joint Venture, for costs and expenses
incurred, including, without limitation, a fee of 8% of the cost of
all work executed in connection with the implementation of approved
work plans and budgets; provided however, that this fee shall not be
applicable to charges for freight, analysis, or third party
contractors (subcontractors). A preliminary invoice shall be prepared
by Golden Star not less than one month in advance of its incurring the
expected costs and such invoice shall be paid by BHP monthly in
advance of Golden Star incurring the projected costs and expenses, and
such costs and expenses shall be adjusted in the month following the
month in which they were incurred; provided however, that the 8% fee
shall not be invoiced in advance but shall be based on the costs and
expenses actually incurred. The purpose of this fee is not to provide
Golden Star with a profit, but to allow Golden Star to recover
indirect costs incurred in fulfilling its obligations hereunder. As a
result, the Parties shall review the fee annually and the fee shall be
adjusted annually if the Parties determine it to be insufficient or
excessive. Statements of costs shall be accompanied by invoices,
receipts or other evidence reasonably satisfactory to BHP which
substantiate the costs incurred. BHP and Golden Star shall indemnify,
defend, and hold harmless the other Party to this Agreement, its
directors, officers, employees, agents, and attorneys from and against
any and all losses, claims, damages, and liabilities arising out of
any act, omission, or any assumption of liability by the Party
providing the indemnification. Golden Star and BHP shall comply with
all requirements of all applicable governmental or local law, rule,
regulation, or order.
4.6.3 The Manager shall: (i) have the right to second personnel to
the Guyana Reconnaissance Project, (ii) after consultation with Golden
Star, have the right to engage the services of other contractors
having special qualifications or technical skills to perform services
requiring special qualifications or skills that Golden Star's
personnel do not possess or are not readily available, and (iii)
provide the Joint Venture quarterly reports (March, June, September,
and December), specifying in reasonable detail the results of
activities conducted by the Manager to date in the Project Area.
4.6.4 Upon completion of the Feasibility Study, the Manager shall be
entitled to charge a management fee of 8% of allowable expenses, as
that term shall be defined in the JVA provided however, that this fee
shall not be applicable to charges for freight, analysis, or third
party contractors (subcontractors). The purpose of this fee shall not
be to provide the Manager with a profit, but to allow the Manager to
recover indirect costs it incurs in fulfilling its obligations as
Manager. As a result, the Parties shall review the fee annually and
the fee shall be adjusted annually if the Parties determine it to be
insufficient or excessive. This management fee shall be considered to
be ordinary operating expenses of the Joint Venture.
4.6.5 The Manager shall be deemed to have resigned immediately upon
its Participating Interest becoming less than 50% or upon it having
become insolvent or bankrupt.
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4.7 Owners Council.
4.7.1 All decisions during the Term of this Agreement relating to
the conduct of Operations and relating to the Joint Venture (including
work plans and budgets for each phase of work undertaken pursuant to
this Agreement) shall be made by the Owners Council, a governing body
to be appropriately structured to serve the type of business entity
chosen for the JVA. Prior to execution of the JVA, the Owners Council
shall (i) consist of Xxxxxx Xxxxxxx representing Golden Star and
Xxxxxx Xxxxxxx representing BHP, or their designees, and (ii) not take
any binding decision unless both representatives (or their designees)
are present (which may be by telephone). BHP and Golden Star shall
have on the Owners Council a number of votes proportionate to their
respective or deemed Participating Interest. Prior to execution of the
JVA by both Parties, the Owners Council shall not approve work
programs and budgets which in the aggregate are in excess of Three
Million Dollars ($3,000,000), except with the unanimous consent of the
Parties.
4.7.2 All decisions of the Owners Council shall be taken by simple
majority vote unless otherwise agreed by the Parties in the JVA for
the purpose of protecting minority interests. The JVA shall include a
provision to be mutually agreed upon which specifies those matters
which shall require a super majority vote together with a provision
for breaking deadlocks.
4.7.3 The decision to fund and to proceed with development and
construction of the First Mine shall be made solely by BHP; provided
that such decision shall be made on or before ninety (90) days
following completion of the Feasibility Study. Following completion of
the Feasibility Study, if a Party (relinquishing Party) elects not to
participate in development of the First Mine and the other Party
(continuing Party) chooses to fund construction of the entire First
Mine in accordance with the Feasibility Study and actually constructs
the First Mine, then the relinquishing Party shall have no continuing
right or interest to the First Mine and the relinquishing Party may
not thereafter participate in the First Mine.
4.7.4 Following completion of the Feasibility Study, the Owners
Council shall hold an annual meeting in June of each year, and such
additional times as the Parties may provide for in the JVA, in Denver
or San Francisco or such other mutually agreed places. Although the
Parties contemplate holding meetings to review and approve work plans
and budgets for each phase of work undertaken, the Parties do not
contemplate holding regular meetings prior to completion of the
Feasibility Study.
4.8 Dilution. Should either Party fail to advance funds as required under
this Agreement or the JVA, then its Participating Interest shall be diluted on
a straight line basis in the manner to be mutually agreed by the Parties in the
JVA; provided however, if a Party fails within a reasonable period to make a
contribution or cash call which it previously committed to make under an
approved work plan and budget, it shall be in default and shall be diluted in
an accelerated manner to be mutually agreed by the Parties in the JVA.
4.9 Accounting Procedure. The formal JVA shall contain a detailed
accounting procedure setting forth details for all allowable costs and other
matters pertinent to a mining venture.
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5.0 REPRESENTATIONS
5.1 Mutual Representations. Each of the Parties represents to the other
Parties as follows:
5.1.1 that it is a corporation duly incorporated and in good
standing in its state and/or country of incorporation and that it is
qualified to do business and is in good standing in those states
and/or countries where necessary in order to carry out the purposes of
this Agreement;
5.1.2 that it has the right to enter into this Agreement and that
all corporate and/or other actions required to authorize it to enter
into and perform this Agreement have been properly taken;
5.1.3 that its obligations under this Agreement constitute legal,
valid and binding obligations enforceable against it.
5.2 BHP's Representations and Covenants. BHP represents to Golden Star
that:
5.2.1 any and all claims, concessions, mining rights, grants, or
other contractual agreements by which BHP holds rights included in the
Project Area and BHP's Assets are in good standing and full force and
effect in accordance with all applicable laws;
5.2.2 except for any required governmental approval, BHP has the
unconditional right and authority to transfer its interest in the
Project Area and BHP's Assets without the consent or approval of any
other party;
5.2.3 there are no pending, or to BHP's knowledge no threatened
actions, suits, claims or proceedings with respect to the Project Area
or BHP's Assets;
5.2.4 to the best of BHP's knowledge after reasonable inquiry: (i)
BHP is in compliance in all material respects with all Laws relating
to or affecting the Project Area; (ii) no condition or use of the
Project Area violates any Law governing land use; (iii) BHP has
obtained or is in the process of obtaining all material
authorizations, licenses, permits, consents, certificates, and orders
of any governmental or regulatory body relating to or affecting the
Project Area; (iv) the operations of BHP, its agents or contractors,
on or related to the Project Area have complied in all material
respects with and have not resulted in any violation of Law; and (v)
the Project Area is free and clear of all liens, charges, encumbrances
and/or conflicting claims and rights of any nature and kind
whatsoever;
5.2.5 to the best of BHP's knowledge after reasonable inquiry: (i)
no material spill, discharge, leak, emission, ejection, escape,
dumping, or any release or threatened release of any kind, of any
toxic or hazardous substance or waste (as defined by any applicable
Law) has occurred from, on in or under the Project Area or into the
environment, except releases permitted or otherwise authorized by or
under such Law; (ii) no toxic or hazardous substance or waste has been
disposed or is located on the Project Area as a result of activities
by BHP on, at, or related to the Project Area; and (iii) no toxic or
hazardous substance or waste has been treated on or is now stored in
the Project Area.
5.3 Law. For the purposes of this Section 5 (REPRESENTATIONS), the term
"Law" or "Laws" includes any applicable governmental law, rule, statute,
regulation, ordinance, permit or order.
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5.4 All representations in this Section 5 shall be true and correct as of
the Effective Date and shall survive termination of this Agreement.
6.0 CONFIDENTIALITY AND PUBLIC STATEMENTS
6.1 Any information or data obtained in connection with the performance of
this Agreement is confidential and neither Golden Star nor BHP shall make any
public statement concerning this Agreement or the activities contemplated
thereunder without the prior consent of the other Party, which consent shall
not be withheld to the extent the disclosure is required by law or stock
exchange rule. The Manager shall be the spokesperson for the Joint Venture.
7.0 TRANSFER OF INTEREST
7.1 Right of First Refusal. Except as provided in Section 7.2
(Exceptions), if BHP or Golden Star at any time wish to and can transfer all or
part of their respective rights under this Agreement, the Joint Venture or
their ownership interest in the Joint Venture entity or Assets thereof to a
third party which is not an Affiliate, the Party wishing to transfer
("Transferor") shall first offer such interest to the other Party
("Non-transferor") on the terms to be offered to or accepted from the third
party, with all such terms fully described and including the financial value of
any non- cash consideration specified. If the Non-transferor does not elect
within sixty (60) days of receiving such offer to accept the same, the
Transferor shall be entitled for the next six (6) months to transfer the
offered interest to a third party on the same terms without further obligation
to the Non-transferor, and if such interest is not transferred within said six
(6) month period, the obligation to offer such interest to the Non-transferor
shall again be applicable.
7.2 Exceptions.
7.2.1 The right of first refusal shall not apply to transfers to
facilitate the granting of security by a Party to a recognized
financial institution in connection with its financing of its share of
the costs of development and operation of a mine in the Project Area.
7.2.2 A Party may transfer any interest to an Affiliate provided
that said Party shall give written notice thereof to the
Non-transferor.
8.0 WITHDRAWAL AND TERMINATION
8.1 Prior to completion of the Feasibility Study, each Party may at any
time withdraw from this Agreement by providing at least 30 days prior written
notice to the other Party of such withdrawal. Upon such withdrawal, this
Agreement shall terminate and the withdrawing Party shall have no further
interests or rights under this Agreement and the Parties shall thereupon be
released and discharged from all of their respective liabilities and
obligations hereunder, except those liabilities and obligations existing on the
date of termination; provided however, if a Party withdraws from this Agreement
prior to completion of a work plan and budget for a phase of work approved in
accordance with Section 4.7.1 prior to the giving of notice of such withdrawal,
the withdrawing Party shall be liable to the other Party for its prorata share
of the incomplete portion of such work and budget; and provided further, the
withdrawing Party shall transfer and assign to the other Party free of charge
all of its rights and interests in and to the Joint Venture and the Joint
Venture Assets, subject however, to any required governmental approval.
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8.2 Transfer of Licenses.
8.2.1 Subject to the terms thereof and any applicable laws and
regulations, the Party withdrawing pursuant to Section 8.1 shall offer
to transfer such license or permit held by it on behalf of the Joint
Venture to the other Party free of charge.
8.2.2 In the event that, whether by the operation of law or
otherwise, a license or permit cannot be transferred or otherwise
disposed of, then the Parties shall negotiate in good faith an
agreement upon mutually acceptable terms in which the withdrawing
Party shall continue to hold such license or permit for the benefit of
the non-withdrawing Party; provided however, that (i) the
non-withdrawing Party shall indemnify the withdrawing Party on terms
that are satisfactory to the withdrawing Party, and (ii) the
non-withdrawing Party shall not be obligated to incur any additional
costs or liabilities for continuing to hold such license or permit,
and (iii) the withdrawing Party shall not be obligated to hold such
license or permit for a period greater than 24 months following the
date of its withdrawal; provided further, that in the event the
reconnaissance permit (Permission for Geological and Geophysical
Survey under Section 97 of the Mining Act) dated June 19, 1996, is
still in effect at the time of any withdrawal by BHP, than at Golden
Star's request (subject to (i) and (ii) above), BHP shall continue to
hold the permit in its name until such time as the government of
Guyana has officially granted or denied the application(s) for
prospecting license(s) made under section 4 of the permit (and BHP has
transferred any license granted to Golden Star), provided that BHP
shall not be required to hold the permit for longer than 24 months
from the application date of such prospecting license. Any
application(s) for prospecting license(s) pursuant to the foregoing
clause shall be prepared by Golden Star and Golden Star shall bear all
responsibility for the content and timing of such applications. Such
applications shall be submitted in BHP's name and BHP undertakes to
sign any such application within ten (10) business days after its
receipt from Golden Star.
8.3 Upon the withdrawal of a Party, the withdrawing Party shall turn over
to the other Party originals of all factual maps, reports, assay results and
other factual data and documentation relating to the Project Area in its
possession, without any warranty or representation as to the accuracy,
completeness, reliability or usefulness thereof
9.0 GOVERNING LAW
9.1 The formation, interpretation, and performance of this Agreement and
the JVA shall be governed by the internal law, but not the conflicts of law
rules, of California, except that the laws of Guyana shall apply as to real
property and mineral rights issues. Any terms or agreements herein which by
their nature may or must be performed or occur after termination of this
Agreement shall survive such termination.
10.0 DISPUTE RESOLUTION
10.1 Matters to be Arbitrated. Any dispute, controversy or claim arising
under or in connection with this Agreement, and which cannot be resolved within
60 days of attempted negotiations between the Parties, shall be settled by
arbitration in accordance with this Section 10.
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10.2 Procedure for Arbitration.
10.2.1 Matters subject to arbitration shall be settled by arbitration
in accordance with the UNCITRAL Arbitration Rules in effect on the
date of this Agreement, which Rules are deemed to be incorporated by
reference into this clause. The place of arbitration shall be San
Francisco, California, or such other location as may be agreed upon by
the Parties. The language of the arbitration shall be English. The
arbitration shall be the sole and exclusive forum for resolution of
the dispute or controversy and the award shall be final and binding.
Judgment thereon may be entered by any court having jurisdiction.
10.2.2 A Party may demand arbitration by delivering a written notice
thereof to the other Party setting forth a complete, concise statement
of the issue(s) in dispute, the amount involved and the remedy
requested. The arbitrators shall render a decision within six (6)
months after having been appointed.
10.2.3 The number of arbitrators shall be three (3), each of whom
shall be disinterested in the dispute and shall have no connection
with any Party. At least two (2) of the arbitrators shall be persons
having experience in the minerals industry. Unless the three (3)
arbitrators have been appointed by agreement of the Parties within
thirty (30) days after the date on which any Party requests the
settlement of any dispute by arbitration pursuant to this Section 10,
the International Chamber of Commerce shall appoint the three (3)
arbitrators referred to above. The appointing authority may appoint
from among nationals of any country, whether or not a Party is a
national of that country.
10.2.4 The Parties consent that the United States District Court for
the Northern District of California shall have non-exclusive
jurisdiction with respect to all aspects of the enforcement of the
arbitration provisions of this Agreement.
11.0 NOTICES
11.1 All notices to be made or given by a Party hereunder shall be in
writing and delivered by mail or by telefax at the following addresses:
To Golden Star: Golden Star Resources Ltd.
Xxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn.: The Corporate Secretary
FAX: (000) 000-0000
BHP: BHP Minerals International
Exploration Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: The Corporate Secretary
Facsimile: (1) (000) 000-0000
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copy to: Minera BHP de Chile
Xx. Xxxxxxxxx 0000, 00xx Xxxxx
Xxx Xxxxxx, Xxxxxxxx, Xxxxx
Attention: Manager Exploration
Facsimile: (56)(0) 000-0000
A Party may change its address by notice to the other Party.
11.2 All notices shall be given:
11.2.1 by personal delivery (including courier); or
11.2.2 by registered mail, charges prepaid; or
11.2.3 by electronic communication, with a confirmation sent by
registered mail.
11.3 All notices shall be effective and shall be deemed received:
11.3.1 if by personal delivery or by registered mail, on the date of
delivery if delivered during normal business hours, and if not
delivered during normal business hours, on the next business day
following delivery; or
11.3.2 if by electronic communication, on the next business day
following receipt of the electronic communication.
12.0 RELATIONSHIP OF PARTIES
12.1 The relationship of the Parties under this Agreement is contractual
only. This Agreement is not intended to make any Party the employee, agent,
partner or legal representative of the other Party, or to create any fiduciary
relationship between the Parties. No Party shall have any authority to act for
or to assume any obligation or responsibility on behalf of any other Party.
12.2 Each Party may freely engage in and receive full benefits from any
business or other activity, whether or not competitive with the Joint Venture
or one another, without any obligation whatsoever to the other Party.
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13.0 ENTIRE AGREEMENT
13.1 This Agreement contains the entire understanding and agreement of the
Parties with respect to the subject matter of this Agreement and supersedes all
prior agreements and understandings as between the Parties.
SIGNED FOR AND ON BEHALF OF
BHP MINERALS INTERNATIONAL EXPLORATION INC.
By/S/ X.X. Xxxxxxx
Name: X.X. Xxxxxxx
Title: V. P. Exploration
GOLDEN STAR RESOURCES LTD.
By/S/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Executive V.P. Exploration
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EXHIBIT A
DEFINITIONS
For the purposes of this Agreement, the following terms shall have the
following meanings assigned to them:
"Affiliate" means any person, partnership, joint venture, corporation, or other
form of enterprise which directly or indirectly controls, is controlled by, or
is under common control with, a Party hereto. For purposes of the preceding
sentence, "control" means possession, directly or indirectly, of the power to
direct or cause direction of management and policies through ownership of
voting securities, contract, voting trust, or otherwise. It is understood and
agreed that control of a company can be exercised by another company or
companies if such latter company or companies owns shares carrying more than
50% of the votes exercisable at a general meeting (or its equivalent) of the
first mentioned company, and a particular company is deemed to be indirectly
controlled by a company or companies (the parent company or companies) if a
series of companies can be identified beginning with the parent company or
companies and ending with the particular company so related that each company
of the series except the parent company or companies is directly controlled by
one or more of the companies in the series.
"Agreement" means this Heads of Agreement including all amendments and
modifications thereof, and all schedules and exhibits, which are incorporated
herein by this reference.
"Assets" means the following:
(a) all interests, rights, and privileges (whether absolute or
conditional, whether existing or future) in real property,
mineral rights, and surface lands falling with the Project
Area, including, without limitation, all prospecting and
mining licenses, permits, leases, and other entitlements;
(b) all Minerals, Product, and materials of commercial value
produced or derived from the Project Area under this
Agreement;
(c) all mines and facilities located on the Project Area together
with all equipment used in the Operations;
(d) all inventory; all personalty, tangible and intangible,
obtained or used by a party in connection with the conduct of
Operations, including without limitation all geological data,
surveys, assays, analyses and other data or information
acquired in the course of Operations.
"BHP" means BHP Minerals International Exploration Inc., a corporation duly
organized under the laws of the State of Delaware, United States of America or
any nominated Affiliate thereof.
"Construction Capital" means all funds required to complete construction of the
First Mine, including working capital and capitalized interest requirements,
until First Commercial Production has been achieved.
"Dollars" or "$" means U.S. dollars.
"Effective Date" means July ____, 1996.
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"Expenditures" means any costs incurred by a Party in connection with the
Project Area, whether direct or indirect, on or off the Project Area, and for
purposes of: (i) prospecting, exploration, evaluation, and development of the
Project Area; (ii) payments of fees, duties, or other charges or deductions to
acquire, maintain or as required by any license, permit, or other documents
issued by governmental bodies or other persons granting the right to use
mineral resources and surface lands, (iii) all other expenses incurred in
connection with the Project Area, prospecting licenses, mining leases, or this
Agreement, including expenses for all permits and documents issued by the
Government of Guyana or its authorized agent, environmental and other studies,
charges incurred for site preparation, engineering, surveying, permits,
equipment rental, third-party contractor services, construction of roads, costs
of equipment and supplies, labor costs, legal fees, all fees and xxxx ups
payable to Golden Star under any consulting agreement with BHP, and all direct
salary and field expenses of exploration personnel, transportation costs, and
(iv) any Feasibility Study. Notwithstanding anything contained herein to the
contrary, during the Initial Term Expenditures shall not include costs incurred
by BHP to keep and maintain title to the Project Area.
"Feasibility Study" means a comprehensive description of the construction,
development, mining, processing, and marketing plan for the First Mine within
the Project Area in such form and detail as is normally required by a financial
institution familiar with mining for the purposes of project financing. The
Feasibility Study shall include the confirmation of reserves by the conduct of
detailed drilling works, hydrological and geotechnical works, environmental
studies, and the mining of one or more bulk samples of diamonds or ore for
metallurgical studies which may require the construction of one or more shafts,
the construction of an incline, or works associated with a trial mine. The
Feasibility Study shall contain estimates of both capital and operating costs
and shall analyze how to proceed with mining operations to economically and
commercially extract the target mineral(s), identify the optimum structure for
the mining venture, and include reference to relevant marketing and financial
aspects.
"First Mine" means the first mine to be developed by the Parties pursuant to
the Feasibility Study and which can be developed as a stand-alone mine.
"Golden Star" means Golden Star Resources Ltd., a corporation amalgamated under
the laws of Canada, or any nominated Affiliate thereof.
"Joint Venture Agreement" or "JVA" means the formal agreement which will detail
the basis upon which the Parties shall mutually evaluate, develop, mine,
extract, produce, use, sell and export of Minerals and associated mineral
resources and, accordingly, hold all mining rights, mining claims, water
rights, surface lands, licenses and permits.
"Manager" means the person or entity with overall management responsibility for
this Agreement and the JVA. The Manager shall be bestowed with power sufficient
to undertake, manage, direct and control all day to day activities and
decisions reasonably necessary to fulfill the purposes of the JVA, and such
activities shall be performed in accordance with international mining industry
practice and the terms of this Agreement. The Manager shall consult with each
non-managing Party in planning and executing each work plan and budget,
including that for producing the Feasibility Study. The Manager's powers shall
be subject always to the overriding authority of the Owners Council. The JVA or
a separate management agreement will specify with more particularity the
Manager's responsibilities, rights and obligations.
"Law" or "Laws" shall have the meaning ascribed to it in Section 5.3.
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"Minerals" means all gold bearing ores, precious minerals, base minerals, and
all associated minerals on or within the Project Area, specifically excluding
diamonds and iron ore.
"Operations" means all activities carried out in connection with the Project
Area under this Agreement, including, without limitation, prospecting,
exploration, the development of a mine, the mining, extraction, treatment,
storage and processing of Minerals, marketing of Product, the acquisition or
construction of any improvements, personalty, fixtures or equipment reasonably
necessary therefor, and any other activities or operations related to or
necessary for exploration, development and mining in the Project Area.
"Owners Council" means the governing body described in Section 4.7 (Owners
Council).
"Participating Interest" means an undivided ownership interest held by Golden
Star or BHP in the Joint Venture, the Assets contributed thereto and the
business entity or other legal entity created thereunder which entitles the
holder to that share of the Joint Venture entity and its Assets and profits and
Product thereof and which requires the holder to contribute to that share of
the costs and expenses of the development and operations thereof.
"Party" or "Parties" means BHP and/or Golden Star, or their successors in
interest.
"Product" or "Products" means all Minerals and materials of commercial value
produced or derived from the Project Area under this Agreement.
"Project Area" means those lands more particularly described in Section 1.1 and
in Exhibit B attached hereto.
"Term" shall have the meaning ascribed to it in Section 1.3 (Term).
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EXHIBIT B
PROJECT AREA
The Project Area is described in the reconnaissance application and is
generally depicted in the map attached hereto as Exhibit B-1, being commonly
referred to as the Guyana Reconnaissance Project.
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