CONTRACT OF TOTAL ASSIGNMENT OF MINING EXPLORATION AND EXPLOITATION RIGHTS FLG – 092
CONTRACT
OF TOTAL ASSIGNMENT OF MINING EXPLORATION AND EXPLOITATION RIGHTS FLG –
092
The
undersigned, XXXX XXXXXXX
XXXXXX XXXXXX, of adult age, resident of Bogota, identified with
citizenship card number 7.422.949 issued at Barranquilla, who acts in his own
name, and who for the effects of this act will be named THE ASSIGNOR, as one party,
and XXXXXXXX XXXXX
XXXXXX, of adult age, resident of Bogota, identified with citizenship
card number 79.375.380 issued at Bogota D.C., and XXXXX XXXX XXXXX, of adult
age, resident of Bogota, identified with citizenship card number 12.115.286 who
act in their condition of legal representatives of ENERGIA ANDINA SANTANDER RESOURCES
S.A.S., a simplified share corporation legally incorporated in Colombia
following private document dated May twenty seventh (27th) 2010,
registered at the Chamber of Commerce of the same circuit under mercantile
registration number 01998177, Tax Identification Number (NIT) 900.362.160-8, who
for the effects of this act will be named THE ASSIGNEE, with the purpose
of celebrating the Total Assignment of the Rights and Obligations derived from
the Concession Contract for the Exploration and Exploitation Contract for
Mineral Carbon Deposits number FLG – 092, signed between the
Colombian Institute of Geology and Mining – INGEOMINAS and the ASSIGNOR, contract that will
be ruled by the following Clauses after taking into account the following
Whereas:
WHEREAS
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THE ASSIGNOR subscribed
with the Colombian Institute of Geology and Mining – INGEOMINAS, the
Concession Contract for the Exploration and Exploitation of Mineral Carbon
Deposits.
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THE ASSIGNOR declares
that on the date of signature of this contract payment is pending for the
balance of the annual payment for the third year of exploration and the
full annual payment for the first year of Construction and Installation
for concept of annual payments of the surface xxxxxx on the concession
object of Assignment.
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In
development of the legal faculties conferred by Article 22 and following
of Law 685 of 2001, Mining Code, and Clause Eleventh of the concession
contract quoted in numeral one of the Whereas, the parties will file, once
paid the pending obligations with INGEOMINAS, the previous written notice
for the precedence of the act of assignment at the offices of the
Colombian Institute of Geology and Mining INGEOMINAS, related with
Concession FLG – 092.
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THE ASSIGNOR is willing
to assign the rights and obligations derived from CONCESSION CONTRACT No.
FLG – 092 and at the same time THE ASSIGNEE is willing to acquire the
rights and obligations derived from said mining Concession contract,
following the terms and conditions that are stipulated hereinafter in this
contract and by Law in relation with this legal
business.
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Following
the above, the Parties
AGREE
FIRST: ASSIGNMENT: THE ASSIGNOR
declares that by means of this contract he transfers as assignment title
and by the way of tradition in favor of THE ASSIGNEE who acquires the
same title and way, irrevocably and expressly, the totality of the rights and
obligations derived from the Concession Contract filed under the number FLG – 092, for Exploration and
Exploitation of Mineral Carbon Deposits, subscribed on the second (2nd) day of
February 2006 with the Colombian Institute of Geology and Mining – INGEOMINAS,
and registered at the National Mining Registry on the twenty third (23rd) day of
November 2006 in favor of THE
ASSIGNOR, on an area of Four Thousand Four Hundred Hectares (4,400 Ha),
located at the municipality of San Xxxxxxx de Chucuri, in the State of
Santander, Republic of Colombia, determined by the coordinates established in
Clause Second of the quoted Concession Contract, which is annexed to make
integral part of this contract.
PARAGRAPH ONE: Notwithstanding
the description and extent referred to in the Concession Contracts, the
assignment is made as for a true body.
PARAGRAPH TWO: Taking into
account that simultaneously with the celebration of this assignment contract,
delivery is made of the advice required by Article 22 of Law 685 of 2001, Mining
Code, this contract is subject to the suspension condition related with the
declaration that corresponds to be given by the mining authority in relation
with said cession.
Nevertheless,
THE ASSIGNOR authorizes
THE ASSIGNEE to advance
the procedures related with said assignment and engages himself to sign the
requests that may be required and the other additional documents required by the
corresponding authorities to formalize the assignment or the activities that by
means of this contract authorizes to be carried out by THE ASSIGNEE.
In the
same way, THE ASSIGNEE will present quarterly reports to THE ASSIGNOR related
with the execution of works.
SECOND: EFFECTIVE DATE: Once
the express declaration of the administrative authority is made accepting the
corresponding act of assignment, or after the term of forty five (45) days
required for operation of positive administrative silence foreseen by law, the
Parties accept that THE
ASSIGNEE, starting with the signature of this agreement, assumes all
rights and responsibilities derived from the Concession Contract for Exploration
and Exploitation of Mineral Coal Deposits in the same position in which THE ASSIGNOR was
placed.
THIRD: COMPENSATION AND FORM OF
PAYMENT: In compensation for the assignment of the rights derived from
the Concession Contract for Exploration and Exploitation of Mineral Carbon
Deposits number FLG –
092, THE ASSIGNEE
will pay to THE ASSIGNOR
with destination INGEOMINAS:
The
amount of TWO HUNDRED AND FIFTEEN MILLION THREE HUNDRED AND SEVENTY SEVEN
THOUSAND EIGHT HUNDRED AND FORTY FOUR COLOMBIAN PESOS (COL$ 215,377,844.00)
corresponding to pending surface cannons to be paid on the date of signature of
this document on area FLG- 092, for the following concepts thus
distributed:
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3.1 Canon
for Third Year of exploration
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Col$ | 135,370,540.00 | ||
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Less
Payment made by Xxxxxxx Xxxxxx
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Col$ | 73,000,000.00 | ||
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Pending
balance for third year of exploration
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Col$ | 62,370,000.00 | ||
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Xxxxxx
first year of Construction and Installation
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Col$ | 145,757,304.00 | ||
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Total
to pay INGEOMINAS
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Col$ | 208,127,304.00 |
3.2
Budget for the mining environmental policy and for other concepts Col$
7,250,540.00.
FOURTH:
PARTICIPATION IN THE PRODUCTION.
4.1 THE ASSIGNOR,
independently of the total amount foreseen in the above clause as compensation
for the assignment of the rights and obligations derived from mining title FLG –
092 that are dealt with in this contract, will receive as advance in
the participation on the production of the area object of assignment, which is
dealt with in Numeral 4.2 of this clause, after the process of washing of the
mineral if it is required by the latter, the amount of ONE MILLION FIVE HUNDRED
THOUSAND DOLLARS OF THE UNITED STATES OF AMERICA (US$ 1,515,000) payable as
follows:
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(1)
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FIFTY
FIVE THOUSAND DOLLARS OF THE UNITED STATES OF AMERICA (US$ 55,000)
liquidated at the market representative rate on the date of subscription
of this contract, the signature of the mandates needed for legalization of
the assignment of the concession contract that is dealt with in this
document, as well as the previous assignment notice to be filed at
INGEOMINAS, and the permit to initiate
drillings.
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(2)
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The
amount of FORTY THOUSAND US DOLLARS (US$ 40,000) four work days after
signature of this contract, liquidated at the market representative rate
on the date of payment.
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(3)
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The
amount of TWO HUNDRED AND TWENTY THOUSAND DOLLARS OF THE UNITED STATES OF
AMERICA (US$ 220,000), liquidated at the market representative rate on the
date of payment, on the date of registration of assignment of title number
FLG – 092 at the
National Mining registry in favor of THE
ASSIGNEE.
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(4)
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And
the balance in six quarterly payments of TWO HUNDRED THOUSAND DOLLARS OF
THE UNITED STATES OF AMERICA (US$ 200,000) counted from the third month of
the date of registration at the mining registry of the assignment contract
in favor of the ASSIGNEE, which will be paid at the market representative
rate on the date of payment, and that will be discounted from the
corresponding value of the participation in the production once the latter
is initiated, in a percentage equal to 50% of the value of the
participation per ton, i.e. of two US dollars (US$ 2.00), of the mineral
effectively extracted from the mine. Notwithstanding the above, the
Parties accept that if initiation is made of the exploitation stage of the
area objet of assignment of the mining concession Contract, before
completing the totality of the payments foreseen in this clause, these
advances for participation in production are suspended, and
payment for participation dealt with in the following numeral will
proceed.
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4.2
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THE
ASSIGNOR, independently of the total payment foreseen in the above Clause
Third will receive as compensation for the assignment of the rights and
obligations derived from mining title FLG – 092 dealt with in this
contract, a participation in production after initiation of the
exploitation period of Concession Contract FLG – 092, equal to two
dollars (US$ 2.00) per ton of coal placed at the collection center of the
mine and the inventory cuts will be made on the last day of each month in
order to liquidate the value of the payment to be made, which will be
effective within the following thirty (30) calendar days, paying in this
way the mineral extracted from the said mining concession after the
process of washing of the mineral if the latter requires it. It is to
notice that since the payment dealt with in this Clause in numeral 4.1
correspond to an advance on the payment on the production of the mineral
effectively extracted, after the process of washing of the mineral if the
latter requires it, the value that has been paid for this concept will be
discounted in 50% in relation with the sale of each ton, until completion
of the total of the advance paid to the ASSIGNOR.
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THE
ASSIGNEE obliges himself to fulfill the terms and conditions foreseen in the
Work Plan (PTO)
approved by INGEOMINAS.
PARAGRAPH ONE: Payments dealt
with in this clause in favor of the ASSIGNOR are not part of the value fixed as
compensation for the ASSIGNMENT of Mining title FLG – 092, since this value is
entirely considered in clause THIRD of this contract.
FIFTH. Starting with signature
of this contract, THE ASSIGNOR
authorizes THE ASSIGNEE
to advance the mining activities that he may consider necessary, taking
into account that mining contract FLG – 092 is at the stage of exploration,
construction and installation making the corresponding payment for the required
Surface Xxxxxx, the presentation of the reports on said activities using the
Basic Ming Forms, and other connected activities that may be required to keep
the mining title in agreement with the norms of the Colombian Mining Code. THE
ASSIGNEE must execute at its own responsibility, cost, and risk all the works of
exploration, development and production required to extract, transport and
commercialize the coal produced in the project area. In the same way, he must
use his best efforts to start coal production as soon as it is possible, and to
increment monthly production in order to reach the monthly production
established in the Mining Exploitation Plan included in the Work Program for
exploitation approved by INGEOMINAS and in agreement with the recoverable coal
reserves.
SIXTH. ARBITRATION: Any
difference or controversy related with this contract, its execution and
liquidation will be submitted to the decision of arbiters following Decree 2279
of 1989, Law 446b of 1998, Decree 1818 of 1998 and other complementary
dispositions, applying the following rules: a) The decision of the Tribunal will
be in law; b) The Tribunal will be made up by three arbiters, except when the
matter to be debated is a minor amount, in which case there will be only one
arbiter; c) Internal organization of the Tribunal will be subject to the rules
foreseen by the Arbitration Center of the Chamber of Commerce; d) The Tribunal
will seat at the city of Bogota, D.C. at the Arbitration Center of the Bogota
Chamber of Commerce; e) The term for duration of the arbitration will be two (2)
months counted from the first audience for the procedure.
SEVENTH: INEXISTENCE OF SALE,
LIMITATIONS OR ENCUMBRANCES AND CLEAN UP: THE ASSIGNOR expressly declares
that he has not promised to assign and that there is no assignment procedure for
any other person, for partial or total assignment of his rights on the
Concession Contract mentioned above, and that furthermore, the latter is free
from limitations or encumbrances and that he obliges himself to clean up by
eviction in all cases foreseen by law.
THE ASSIGNOR manifests that if
there is a justified claim from a third party for any cause not imputable to
THE ASSIGNEE, to obtain
the amount agreed to in this contract or vis-à-vis the rights derived from the
mining concession contract, within legal terms, THE ASSIGNOR will answer to
THE ASSIGNEE and the
third party claiming for damages and losses caused, and must reimburse
immediately the amounts of money that he may have received, duly indexed, for
whose purpose this contract gives executive merit for collection, provided that
the causes that generate the claim are imputable in a direct way by error or
omission on the part of THE
ASSIGNOR.
EIGHTH. CONFIDENTIALITY – INFORMATION
OBTAINED DURING THE CONTRACT. The Parties engage themselves to keep under
the most strict confidentiality all information or documentation to which they
may have access as a result o the nature of this contract. Therefore, they will
limit divulgation of the information only to employees who have the need to know
it (and in the case of having subsidiaries, to the employees of the
subsidiaries), they will notify said employees the obligations assumed in this
document and will use the information only for the purposes established herein.
The Parties: 1. Will not reveal this Agreement nor information related with what
it is agreed in it, without written previous approval of an authorized
representative of the other Party, and 2. Xxxx protect said information with the
greatest care to avoid its non authorized divulgation, using the same degree of
care that they use to protect their own confidential information. In the event
of violation of this clause, the affected Part will have the right to
compensation equal to 500 Monthly Legal Minimum Wages in Force as well as to
payment of all expenses and damages caused on occasion of default on his
clause.
NINTH: INTERPRETATION AND
INTEGRATION: In matters not dealt with in the above clauses, the norms of
the Mines, Civil, and Commerce Codes and those of the Civil Procedure Code will
be used in a substitute way.
TENTH: NOTIFICATIONS: Notices
foreseen in this contract by the Parties must be sent to the following
addresses:
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THE
ASSIGNOR:
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Attention:
Xxxx Xxxxxxx Xxxxxx Xxxxxx
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Address:
Xxxxx 00 X Xx. 00 X 06
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Bogota
D.C.
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THE
ASSIGNEE:
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ENERGIA
ANDINA SANTANDER RESOURCES S.A.S.
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Attention:
Xxxxxxxx Xxxxx Xxxxxx
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Address:
Xxxxxxx 00 Xx. 00 X 00
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Office
403
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Bogota
D.C.
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ELEVENTH: PREVALENCE OF THE CONTRACT:
This contract contains the totality of the obligations and rights of the
parties with relation to assignment of the rights on the Concession Contract
mentioned above and will replace and terminate any other communication,
agreement or contract between the parties in relation with the same object,
whether expressed in written or verbal form.
TWELFTH: MODIFICATIONS:
Modifications to the terms of this Agreement in order to be engaging and valid
for the Parties must be recorded in writing and signed by the Parties before
witnesses.
THIRTEENTH: NOTARY AND REGISTRATION
EXPENSES: Expenses caused by legalization of this contract and those
required for its registration will be paid by THE ASSIGNEE.
FOURTEENTH: APPLICABLE LAW:
This Agreement is ruled by Colombian law and jurisdiction and competence will be
had at Colombian tribunals.
FIFTEENTH: UNILATERAL
WITHDRAWAL: The Parties agree expressly and irrevocably that THE ASSIGNEE has the
unilateral faculty to end the obligations contained in any of the stages of the
mining concession contract by means of written communication to the ASSIGNOR. In
said case, THE ASSIGNEE will only be obliged to fulfillment of the obligations
foreseen in this document that may be caused until the date of effective
termination, without THE ASSIGNOR being able to claim additional compensation or
indemnity. Likewise, THE ASSIGNOR may end this contract after ninety (90) days
of default on any of the obligations foreseen in this contract on the side of
THE ASSIGNEE, event in which THE ASSIGNOR will have the faculty to initiate all
legal actions allowed by Colombian Law to demand payment of the obligations and
damages caused by default. In any event, if on the date of effective termination
of the agreement by any of the parties, the assignment may have been completed
to the name of THE ASSIGNEE, the latter will return the mining title to its
original holder or to whom the latter indicates, by means of assignment of the
same, to whose effect it will file the documents of assignment of title at
INGEOMINAS within three (3) work days following effective termination of this
agreement. Likewise, THE ASSIGNEE must deliver all geological and technical
information contained in the exploration, exploitation and installing studies on
the date, duly subscribed by the signature(s) [of those] in charge of carrying
out these jobs.
SIXTEENTH: VALIDITY: The
Parties manifest that this agreement will remain valid and will be compulsory
during a term equal to that of the concession contracts and their extensions,
plus three more years. THE ASSIGNEE will keep the mining title up to date,
timely fulfilling all obligations derived from the same and all other applicable
laws.
SEVENTEENTH: INFORMATION
OBLIGATION: In the event of total or partial assignment of the right
acquired with this contract, THE ASSIGNEE obliges himself
to communicate the agreed obligations to the buying party.
EIGHTEENTH: ACCEPTANCE: The
parties manifest that they read the contract contained in this instrument and
that therefore they subscribe it in proof of acceptance, recognizing its content
and legalizing their signatures before Notary on a date that will be the same of
the contract; in the event when there exist different dates, the latest of them
will prevail over the others.
NINETEENTH: CONTRACTUAL
DOMICILE: The parties choose as contractual domicile the city of Bogota
D.C.
In sign
of acceptance, the Parties sign two copies with the same content on the
twentieth (20th) day of
October 2010.
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THE
ASSIGNOR
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THE
ASSIGNEE
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XXXX
XXXXXXX XXXXXX XXXXXX
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XXXXX
XXXX XXXXX
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XX
7.422.949 from Barranquilla
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CC
12.115.286 from Neiva
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Legal
Representative –s-
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Xxxxxxxx
Xxxxx Xxxxxx
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XX
No. 7.375.380 from Bogota
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Legal
Representative
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ENERGIA
ANDINA SANTANDER
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RESOURCES
S.A.S.
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Documents
annexed in simple copy.
On the
part of THE ASSIGNOR
Concession
Contract FLG – 092 INGEOMINAS
Mining
Registry Certificate FLG – 092 INGEOMINAS
Citizenship
Card of Xxxx Xxxxxxx Xxxxxx Xxxxxx
Unique
Tax Register – RUT
On the
Part of the ASSIGNEE
Copy of
the citizenship card of Xxxxxxxx Xxxxx Xxxxxx
Copy of
the citizenship card of Xxxxx Xxxx Xxxxx
Certificate
of existence and Legal Representation of Energia Andina Santander Resources
S.A.S. issued by the Chamber of Commerce of Bogota D.C.
Unique
Tax Register – RUT
Existing
Geological Studies
Topographic
Blueprints
Other
information under control of he ASSIGNOR and that may be useful for exploration
work.
