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EXHIBIT 10.31
CERTIFICATE OF TRANSLATION
I, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President, General Counsel and Secretary
of Golden Star Resources Ltd. (the "Company") declare to the best of my
knowledge that the attached is an accurate English translation of the
Establishment Agreement dated October 15, 1996 between the Government of Mali
and PARC Fougala S.A.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President, General
Counsel and Secretary
State of Colorado )
County of Denver ) ss.
Subscribed and sworn to before me this 12th day of March, 1997 by
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Notary Public
My Commission Expires: October 25, 1999.
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ESTABLISHMENT AGREEMENT
BETWEEN
THE GOVERNMENT
OF THE REPUBLIC OF MALI
AND
THE COMPANY PARC-FOUGALA S.A.
FOR THE RESEARCH AND EXPLOITATION OF GOLD,
SILVER, RELATED SUBSTANCES AND PLATINOIDS
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BETWEEN: THE GOVERNMENT OF THE REPUBLIC OF MALI, hereinafter known as "the
STATE", represented by the Minister of Mines, Energy and Hydraulics, ▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
On the one hand
AND THE COMPANY PARC-FOUGALA S.A. hereinafter known as PARC FOUGALA,
having its principal offices at Bamako, P.O. Box 1339, represented by ▇▇.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, GENERAL MANAGER.
On the other hand.
WHEREAS:
The State has for several years been doing work in the Kayes Region,
defined in Annex 1.
PARC-FOUGALA has expressed the desire to conduct supplementary
research activity on a part of the territory of the Republic of Mali
situated in the Fougala sector, in the Cercle de Kenieba, Kayes Region
and in the event of the discovery of mineral deposits likely to lead
to a commercial exploitation, the right to proceed to the development
and exploitation of the said deposits;
This desire is perfectly in line with the mining policy of the
Government of the Republic of Mali which seeks to promote mining
research and exploitation activity in Mali;
The parties have met for the purpose of determining the best method to
carry out the research and exploitation of the mineral deposits which
might be discovered;
IT HAS BEEN AGREED AS FOLLOWS:
CHAPTER 1
GENERAL TERMS AND CONDITIONS
ARTICLE 1 DEFINITIONS
Under the terms of this present Agreement and without prejudice to the terms
and conditions of Article 1 of the Ordinance mentioned below, the following are
defined as:
1.1 MINING CODE: Ordinance No. 91-065/P-CTSP of September 19, 1991
relating to the organisation of research, exploitation, possession,
transportation, transformation and commercialisation of mineral,
fossil and quarry substances, other than liquid or gaseous
hydrocarbons in the territory of the Republic of Mali, Decree No. 91-
277/PM-RM of September 19, 1991 establishing the methods of
application of the above mentioned Ordinance No. 91-065/CTSP of
September 19, 1991 and Decree No. 91-278/PM-RM of September 19, 1991.
1.2 BOARD OF ADMINISTRATION: The Administrative Body of PARC-FOUGALA as
set forth in the Bye-laws.
1.3 AGREEMENT: this present Agreement, including therein all codicils or
amendments thereto and all the annexes.
1.4 DNGM: The National Headquarters of Geology and Mines of the Republic
of Mali or any organisation which may take its place, exercising
identical or similar functions.
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1.5 FEASIBILITY STUDY: The report covering the feasibility of the
exploitation of a deposit of mineral substances within the perimeter
and setting forth the programme envisaged for the said exploitation,
which must include, as an example but not restricted to the following:
a) the evaluation of the importance of the quality of the
exploitable reserves of mineral substances;
b) the determination of the possibility of subjecting the mineral
substances to a metallurgic treatment;
c) assessment of the socio-economic impact of the project;
d) assessment of the environmental impact of the project;
e) the presentation of a programme for the construction of the
mine giving details of the works, equipment, installations and
furnishings required for the commercial production of a
potential layer or deposit and the authorisations required and
the estimated costs associated therewith, accompanied by
forecasts showing estimated annual expenditures;
f) the establishment of a plan regarding the commercialisation of
the products, including the envisaged points of sale, the
customers, the conditions of sale and the selling prices;
g) a plan of the exploitation of the mine;
h) an economic evaluation of the project, including financial
forecasts of the exploitation accounts and balance sheets,
calculations of economic indicators (such as internal
profitability rates (TRI), rates of return (TR), net present
value (VAN), recovery period, profits, foreign currency profit
and loss statements of the project) and an analysis of the
sensibility of the project;
i) the conclusions and recommendations regarding the
economic feasibility and the calendarised schedule for the
establishment of commercial productions based on points a) to
g) above;
j) an evaluation of and the methodology to be employed in taking
responsibility for the expenses related to the safety of the
installations and of the inhabitants of the area inside the
borders of the protected zones;
k) all other information which the party responsible for the
preparation of the said feasibility study shall deem useful to
persuade all banking and financial institutions to undertake
to lend the funds required for the exploitation of the
deposit.
1.6 LIBOR: the interbank interest rate offered in London, over a period
of three (3) months, quoted by all international banks.
1.7 PARTICIPATION(S): with regard to the State, the initial participation
in an exploitation Company as set forth in article 14.1 of the
agreement, increased by the participation which it may have acquired,
as set forth in article 14 of the Agreement and, with regard to
PARC-FOUGALA, a participation of 100% in an exploitation Company less
the participation of the State, except in the case set forth in
article 17 of this present Agreement.
1.8 PARTY: PARC-FOUGALA or the State; "Parties" PARC-FOUGALA and the
State.
1.9 PERIMETER: The Perimeter defined in Annex 1. It can be modified in
accordance with the terms and conditions of the mining legislation.
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1.10 PRODUCTS: All mineral substances extracted from within the perimeter
for commercial purposes within the scope of this present Agreement.
1.11 WORKS PROGRAMME: a sufficiently detailed description of the research
activity to be undertaken and the objectives to be realised by
PARC-FOUGALA within the perimeter during the research phase.
1.12 PROJECT: All of the activities related to the perimeter undertaken
pursuant to the terms and conditions of this present Agreement.
1.13 AFFILIATED COMPANY: any physical person, association or joint venture
or any form of enterprise which, directly or indirectly, controls a
part, or is controlled by a part or is controlled by an individual or
corporate person who controls a part. Control is understood to mean
the holding, directly or indirectly, of the power to guide or to lead
the administration and the decision making of the company by the
exercise of voting rights.
1.14 FAIR MARKET VALUE: with regard to all assets and all property, a
reasonable price paid in cash, acceptable to a seller who is prepared
voluntarily to sell the asset or property in question on the open
market, allowing the time necessary to find a buyer willing to
purchase voluntarily, and without the seller or the purchaser having
to act out of necessity, constraint or any other special
circumstances.
1.15 EX-WORKS OR QUARRY VALUE: the value of the products sold in any
currency to a foundry, refinery or any other purchaser, less the cost
of refining or any other process or method of treatment required to
transform the mineral into a commercial finished product,commissions
for the commercialisation of the products, transportation costs,
weighing costs, analyses, if required, which have not already been
deducted by the purchaser.
1.16 NET CASH FLOW: the excess of gross income over the total of costs,
expenditures and losses.
For the requirements of this present definition gross revenue is
understood to be all amounts deposited by PARC-FOUGALA arising from
the sale of a portion of the products.
Costs, expenses and losses are understood to be all costs associated
with refining, smelting, treatment, transformation and
commercialisation of the products, including the costs of
transportation, insurance, sampling, weighing, analyses, if required,
which have not already been deducted by the purchaser and all amounts
effectively spent by PARC-FOUGALA including the cost of real assets
acquired for the purpose of the project including interest at LIBOR
plus 2% on all costs, expenses and non-recovered losses and a
reasonable amount for the administration and the management of the
company as set forth in the Operations Agreement.
Costs, expenses and non-recovered losses are understood to be the
cumulative total of the costs, expenses and losses of PARC-FOUGALA in
excess of the PARC-FOUGALA's cumulative gross revenue. The above
mentioned interest expense shall cease to be a deductible item when
the cumulative gross revenue is equal or superior to the cumulative
costs, expenses and losses. The terms "cumulative gross revenue" and
"cumulative costs, expenses and losses" signify all of the gross
revenue and all of the costs, expenses and losses, effectively
deposited, paid and/or registered from the effective date of this
present agreement until the date of the calculation thereof.
1.17 BOOK VALUE: the accounting value of the assets and investments on the
date of acquisition.
1.18 EXPLOITATION COMPANY (SE): the company to be constituted by the
parties for the exploitation of the mineral substances defined in this
present agreement.
1.19 MINERAL SUBSTANCES: gold, silver, related substances and platinoids.
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1.20 OFFICIAL JOURNAL: the official journal of the Republic of Mali.
1.21 NAME OF THE COMPANY: PARC-FOUGALA SA
ARTICLE 2 PURPOSE OF THE AGREEMENT
This present Agreement is intended to determine the general, economic, legal,
administrative, financial, fiscal, Customs and business framework within which
PARC-FOUGALA and/or the exploitation company shall undertake the research
activity inside the perimeter, with a view to determining the existence of
deposits likely to lead to an industrial exploitation and, if appropriate, to
the exploitation of the said deposits either on its own or in conjunction with
the State.
ARTICLE 3 DESCRIPTION OF THE PROJECT
3.1 The activities covered by this agreement shall be carried out in two
separate phases. The first phase shall consist of the realisation by
PARC-FOUGALA at its own expense of the activities associated with
researching the mineral substances and, to the extent that
PARC-FOUGALA shall consider appropriate, the preparation of a
feasibility study for each potential deposit discovered during this
phase.
In the event that PARC-FOUGALA should decide to construct a mine, the
second phase shall consist of the exploitation of the deposit(s), in
accordance with the terms and conditions set forth in articles 13 to
16 below.
3.2 It is understood by the parties that, within the boundaries of the
perimeter, the different phases of research and exploitation activity
can be carried out simultaneously, with the exploitation of one
deposit having begun while research activities continue for the
discovery of other deposits.
ARTICLE 4 COOPERATION OF THE ADMINISTRATION AUTHORITIES
The State makes known its intention to facilitate to the extent permitted by
legislation in effect, all the research activities to be carried out by
PARC-FOUGALA by providing all the assistance which it deems appropriate. The
same is true for the exploitation activities and later to the commercialisation
of the products which activity may be undertaken by the exploitation company.
CHAPTER II
RESEARCH ACTIVITIES AND FEASIBILITY STUDY
ARTICLE 5 GRANT OF RESEARCH PERMIT TO PARC-FOUGALA
Within a thirty day period following the execution of this present agreement,
the State shall grant to PARC-FOUGALA through an Ordinance from the Minister
responsible for Mines a research permit valid for the mineral substances and
applicable to the perimeter. This research permit shall give to PARC-FOUGALA
the rights and shall subject it to the obligations as set forth in the mining
legislation concerning research permits. It is understood that in order to
obtain the said permit, PARC-FOUGALA must comply with the formalities as set
forth in the Mining Code.
ARTICLE 6 OFFICE AT BAMAKO
6.1 PARC-FOUGALA must in any event set up an office in Bamako to be
responsible for coordinating the research activities set forth in this
present agreement.
6.2 The person in charge of the PARC-FOUGALA office shall be given
sufficient authority to enable him to decide on all questions relating
to the research activities which could be considered to be matters
coming under the heading of day to day operations of the said
programme.
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ARTICLE 7 RESEARCH ACTIVITY PROGRAMME
7.1 PARC-FOUGALA shall be 100% responsible for the concept, execution and
funding of the research activities.
7.2 During the first three years of validity of the research permit,
PARC-FOUGALA undertakes to carry out the research programme attached
to this present agreement as ▇▇▇▇▇ ▇▇▇.
7.3 In the event that PARC-FOUGALA should decide to renew the research
permit, in accordance with article 8.4 below, PARC-FOUGALA shall
submit to the National Headquarters of Geology and Mines at least two
(2) months prior to the end of the above mentioned third year , a
research activity programme, the new boundaries of the permit and a
forecast of expenses covering the entire renewal period. then,
PARC-FOUGALA shall submit to the DNGM, at least one month prior to the
end of each year, a detailed programme of research activity and a
forecast of expenses.
7.4 It is understood that agents from the DNGM shall be made available to
PARC-FOUGALA to assist in the preparation and execution of the
research programmes outlined in this present agreement.
The agents shall report to PARC-FOUGALA. They will be dependent upon
and will respect the authority of the head of the PARC-FOUGALA company
office in Bamako, appointed in accordance with article 6.1 of this
present agreement. The number of agents selected shall be decided by
mutual agreement. The terms of this section cannot be considered to
have the effect of modifying the responsibilities entrusted to
PARC-FOUGALA in section 7.1 above.
7.5 The analyses of samples shall be carried out in Mali, either in the
analytical laboratories already in existence or in a fixed or mobile
laboratory created for this purpose by PARC-FOUGALA. However, when
justified PARC-FOUGALA can arrange for analyses of samples including
voluminous samples using metallurgical studies outside Mali.
The results of the analyses must be communicated to the National
Headquarters of Geology and Mines.
7.6 PARC-FOUGALA shall carry all the types of insurance normally carried
by a diligent operator including public liability insurance, insurance
covering risk of loss or accidental deterioration of the equipment and
death, disability and sickness insurance for its employees.
ARTICLE 8 OBLIGATION REGARDING EXPENDITURES FOR RESEARCH ACTIVITIES
8.1 PARC-FOUGALA undertakes to be entirely responsible for funding all the
expenses related to the research activity programmes, except in cases
where the research is being carried out within the boundaries of an
exploitation permit.
8.2 PARC-FOUGALA undertakes to spend a minimum of CFA francs 250,000,000
(two hundred and fifty million) for the research activities during the
first twenty four (24) months after the grant of the research permit.
8.3 In accordance with article 10.1 below, PARC-FOUGALA shall have the
right to abandon its research activities at any time prior to the
expiration of the validity of the said research permit. In the event
that PARC-FOUGALA should exercise this right prior to the end of the
first twenty four (24) months of validity of the said research permit,
the company will have to pay to the State the difference between the
actual amount spent on research activities and the minimum expenditure
mentioned in article 8.2 above.
8.4 PARC-FOUGALA shall have the right to renew the research permit for a
further period of three (3) years, pursuant to the terms and
conditions set forth by the mining legislation if the cumulative total
of
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research expenditure for the first three (3) years of validity of the
said research permit reaches FCFA 450,000,000 (four hundred and fifty
million CFA francs). PARC-FOUGALA shall have the right to seek a
second renewal for an additional three (3) year period pursuant to the
same conditions as those governing the first renewal.
8.5 Aside from the wages, salaries and sundry expenses related to the
personnel actively engaged in the research activities in Mali, the
only items to be taken into consideration in the calculation of the
minimum expenditure shall be:
a) the amortisation of the material effectively utilised for the
research activities in Mali for the period of time that they are in
use;
b) the expenses incurred in Mali in genuine research activities
in Mali, which include the expenses related to the setting up of the
research programmes, experiments, analyses, external studies, etc. as
well as the technical services performed by PARC-FOUGALA or an
affiliated company at rates based on the base salary of the provider,
the social benefits, personnel related taxes and contributions and
other related charges and expenses. PARC-FOUGALA's general expenses
can be taken into consideration at a fixed rate of 6% of the said
expenses. For the purpose of verifying these expenditures, the
accounting of the company must be set up so as to allow for a
differentiation between the costs related to research and those
relating to administration.
ARTICLE 9 INFORMATION GATHERED FROM THE RESEARCH PROGRAMME
9.1 PARC-FOUGALA shall provide to the State a copy of all the reports
relating to the research activities as required by the mining
legislation.
9.2 At the expiry of the research permit and all renewals thereof as set
forth in article 8.4 above, PARC-FOUGALA must submit to the State a
definitive report as well as all maps, digraphs and depth charts, all
aerial surveys and all unedited data acquired during the course of the
research. This obligation shall apply equally to all other research
permits granted under the aegis of this present agreement.
9.3 The reports and data mentioned in article 9.1 cannot be made available
to third parties by the State without the prior written authorisation
of PARC-FOUGALA which will not withhold such permission without a
valid motive. In the event of abandonment of a research permit, these
reports and data shall become the property of the State.
ARTICLE 10 CESSATION OF RESEARCH ACTIVITY
10.1 Subject to the terms and conditions set forth in article 8 of this
present agreement and pursuant to the terms and conditions set forth
in the Mining Code, PARC-FOUGALA can halt the research activities
prior to the expiry date of the period of validity of the research
permit when it is of the opinion that the results obtained to date do
not justify the continuation of the said activities.
10.2 In the event of a total shut down of research activities, all the
mining titles and the rights deriving from this present agreement
belonging to PARC-FOUGALA shall expire. PARC-FOUGALA shall then
submit to the State the definitive report as outlined in article 9.2
above.
ARTICLE 11 DISCOVERY OF OTHER SUBSTANCES
11.1 If during the course of the research activities, PARC-FOUGALA should
discover the presence of mineral substances other than gold and
silver, PARC-FOUGALA can extend the validity of its research permit to
include these new substances pursuant to the terms and conditions set
forth in the Mining Code.
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11.2 The parties shall enter into negotiations for the purpose of defining
the terms and conditions of an establishment agreement which will
permit the research into and exploitation of the said substances.
ARTICLE 12 FEASIBILITY STUDY
12.1 When, on the basis of data obtained during the research activities,
PARC-FOUGALA is of the opinion that there is, within the boundaries of
the perimeter, a potential deposit of mineral substances in sufficient
quantity and of sufficient quality to be a candidate for an industrial
exploitation, PARC-FOUGALA shall carry out a feasibility study on the
deposit which shall be submitted to the State for approval upon
completion.
12.2 If PARC-FOUGALA should decide, based on this study, to proceed to the
exploitation of the deposit, the State shall have a period of ninety
(90) days, from the date of submission of the request for an
exploitation permit by PARC-FOUGALA, to communicate in writing to
PARC-FOUGALA the percentage of its share in the capital of the
exploitation company as set forth in article 14 below.
CHAPTER III
EXPLOITATION
ARTICLE 13 METHODS OF EXPLOITATION
13.1 Whenever PARC-FOUGALA shall decide to proceed to the exploitation of a
deposit, a new exploitation Company can be formed for the purpose of
exploiting the said deposit. The exploitation Company shall be
governed by the terms and conditions set forth in this present
agreement and the Commercial Code in effect in the Republic of Mali.
13.2 Within a period of ninety (90) days following the submission by
PARC-FOUGALA of a request for an exploitation permit, the State shall
grant to PARC-FOUGALA the permit or authorisation for this deposit.
PARC-FOUGALA must then immediately hand over the permit or
authorisation to the exploitation Company.
PARC-FOUGALA shall retain ownership of the research permit pursuant to
the terms and conditions set forth in the Mining Code so that, if
justified, it can continue to carry out its research activities on the
perimeter.
13.3 From the moment the exploitation permit is granted, the exploitation
Company shall be authorised to begin the process of exploiting the
deposit and constructing the mine.
ARTICLE 14 SHARE OF THE PARTIES
14.1 Whenever a exploitation Company is formed in accordance with the
Mining code, 20% of the share Capital shall be given to the State with
no corresponding financial compensation in return for its initial
participation for which no fee was charged. The dividends deriving
from this free share shall be due and payable from the date of the
first production and throughout the period of production.
14.2 By express and accepted agreement between the parties, it is agreed
and understood that the State has incurred expenses for its research
activities within the boundaries of the perimeter. These expenses
amount to CFA 125,000,000, increased by interest at LIBOR plus 2% from
the date of execution of this present agreement. These expenses shall
either be credited to the account of the State for the requirements of
future requests for funds which shall be made by the operator of the
mine or considered as a shareholder advance and reimbursed to the
State upon demand in accordance with the terms to be negotiated with
the operator of the mine.
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14.3 In the event of an increase in the share capital of the exploitation
Company as a result of an Extraordinary General Assembly, 20% of the
new shares shall be granted to the State so that the State shall
continue to maintain its maximum percentage share in the Company as
set forth in article 14.1 above.
The State shall not be obliged in any way as a result of its
percentage share as set forth in article 14.1 above to contribute to
the costs of the research activity, the feasibility study or the
exploitation of the deposit until the date of the first production of
the said deposit.
14.4 The share of the State in the share capital of the exploitation
Company set forth in article 14.1 above cannot at any time during the
validity of this present agreement be allowed to exceed 20% of the
total amount of the said share capital.
14.5 In the event of a negotiation culminating in the transfer of the
rights pertaining to any permits or deposits or results of the
research activity, PARC-FOUGALA undertakes to involve the State and to
pay to the State 20% of any monies derived from the transaction.
ARTICLE 15 OBJECTIVES OF THE EXPLOITATION COMPANY
15.1 The objective of the exploitation Company shall consist of the
exploitation of the mineral substances within the boundaries of the
perimeter, the basis of the feasibility study and for which an
exploitation permit or authorisation shall have been granted and it
shall be deemed to include all operations necessary or useful for the
exploitation of the said deposit.
15.2 From the moment when PARC-FOUGALA transfers to the exploitation
Company the exploitation permit or authorisation for a mine, the
exploitation company shall proceed in a diligent manner and in
accordance with the corresponding regulations to initiate the
exploitation of the said deposit on which the feasibility study was
based.
ARTICLE 16 ORGANISATION OF THE EXPLOITATION COMPANY
16.1 The parties shall decide on the commercial name of the exploitation
Company when it is constituted.
16.2 The headquarters of the exploitation Company shall be located in the
Republic of Mali in the place to be decided upon by mutual agreement
between the parties.
16.3 The fiscal year of the exploitation Company shall begin on the 1st day
of January of each year and shall end on the 31st day of December of
the same year.
16.4 The exploitation Company can request technical assistance from one of
the parties and/or their affiliated Companies. The technical services
shall be provided in accordance with the terms and conditions set
forth in a Technical Assistance agreement.
ARTICLE 17 RIGHT OF THE STATE TO EXPLOIT A DEPOSIT ON ITS OWN
If the State considers that a new deposit within the boundaries of the
perimeter should be exploited, it can ask PARC- FOUGALA to do a feasibility
study on the exploitation of the said deposit. In the event that PARC-FOUGALA
should think otherwise and should be of the opinion that a feasibility study is
not justified, the State can carry out its own feasibility study and submit it
to PARC-FOUGALA with an indication as to whether or not it wishes to proceed to
the exploitation phase.
PARC-FOUGALA must notify the State, within a ninety (90) day period from the
date of receipt by PARC-FOUGALA of the feasibility study, whether it wishes to
participate in the exploitation of the deposit on which the feasibility study
was based.
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Failure on the part of PARC-FOUGALA to respond within the specified period of
time or in the event of a negative response from PARC-FOUGALA the State can
proceed on its own to exploit the said deposit. It will bear all the costs and
risks and no exploitation Company will be formed. The State, in this case,
will have a 100% share in the exploited deposit. If PARC-FOUGALA decides at a
later date to share in the exploitation of the deposit, an exploitation Company
will be formed by the parties and the terms and conditions set forth in
articles 13 to 16 above will be applicable.
ARTICLE 18 PURCHASES AND SUPPLIES
PARC-FOUGALA, the exploitation Company and their affiliated companies and all
sub contractors shall use as far as possible the services and raw materials
available in Mali and products manufactured in Mali to the extent that these
services and products are available and competitive with regard to price,
quality, guarantees and delivery schedules.
ARTICLE 19 EMPLOYMENT OF PERSONNEL FROM MALI
19.1 For as long as this present agreement shall be in force, PARC-FOUGALA
and the exploitation Company and their affiliated companies and
subcontractors undertake to:
a) give preference, where qualifications are equal, to personnel
from Mali;
b) implement a programme for the training and promotion of
personnel from Mali with a view to ensuring their
participation in all phases of the activities arising from
this present agreement;
c) provide housing for the workers and employees on the site of a
standard with regard to hygiene and sanitation that will meet
the requirements of the legislation in force or which will be
enacted;
d) respect the sanitary legislation and regulations as set forth
in documents currently in force and which may be enacted
later;
e) respect the legislation currently in force or which may be
enacted with regard to general working conditions,
remuneration schemes, prevention of and restitution for work
related accidents and professional illnesses, as well as
professional and union associations.
19.2 From the date of the first production from the first mine on the
perimeter, the exploitation Company undertakes to contribute to:
a) the implementation, extension or improvement of the sanitation
and school system at a reasonable distance from the deposit to
satisfy the normal needs of the workers and their families.
b) the on site construction of leisure facilities for the staff.
19.3 The State undertakes to grant to PARC-FOUGALA, the exploitation
Company, their affiliated companies and subcontractors the
authorisations required to enable their employees to do overtime and
to work through the night or on days which are normally considered to
be days off or holidays in accordance with the legislation in force at
the time.
19.4 With regard to PARC-FOUGALA, the exploitation Company and/or their
affiliated companies and subcontractors as well as their employees,
the State undertakes not to enact any legislation either labour or
business related which might be considered to be discriminatory
vis-a-vis the laws which would be applicable to other businesses
engaged in a similar activity in Mali.
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ARTICLE 20 EMPLOYMENT OF EXPATRIATE PERSONNEL
20.1 PARC-FOUGALA and/or the exploitation Company, their affiliates and
subcontractors can hire for their activities in Mali, those expatriate
employees who, in the respective opinion of PARC-FOUGALA and the
exploitation Company are required for the efficient operation of the
exploitation and for the success thereof.
The State will facilitate the acquisition of the permits and
authorisations which are required for these expatriate employees in
accordance with the legislation in force at the time of employment.
20.2 With regard to PARC-FOUGALA, the exploitation Company and/or their
affiliated companies and subcontractors for so long as this present
agreement shall remain in force, the State undertakes not to enact any
legislation which can be viewed as a restriction of the terms and
conditions under which the legislation in effect or to be enacted
permits:
a) the entry, the right to stay and the departure of any employee
of PARC-FOUGALA, the exploitation Company and/or their
affiliated companies and subcontractors and this applies
equally to their families and personal effects;
b) subject to article 20.1 above, the hiring and dismissal by
PARC-FOUGALA, the exploitation Company and/or their affiliated
companies and subcontractors, of the persons of their choice
regardless of their nationality or the nature of their
professional qualifications.
20.3 The State does however reserve at all times the right to forbid the
entry and the right of abode of citizens of countries hostile to the
Republic of Mali and of persons whose presence might in some way
compromise public law and order or who engage in political activity.
ARTICLE 23 GENERAL GUARANTEES GRANTED BY THE STATE
21.1 The State undertakes to guarantee to PARC-FOUGALA and to the
exploitation Company the continuation of the economic and financial
advantages and tax and Customs conditions as set forth in this present
agreement. Any modification which may at some future date be enacted
into law, in particular with regard to the Mining Code, shall not be
applicable to PARC-FOUGALA and the exploitation Company with their
prior written approval. Any terms or conditions which are more
favourable and which may become law after the date of execution of
this present agreement and pertaining to legislation in general shall
automatically be applicable in full to PARC- FOUGALA and the
exploitation Company.
21.2 The State guarantees equally to PARC-FOUGALA, to the exploitation
Company, to their affiliated companies or contractors and to the
persons normally employed by these organisations that they shall never
in any way be subjected to any for of legal or administrative
discrimination in law or in fact.
ARTICLE 22 FISCAL REGULATIONS
22.1 The fiscal regime defined in this present agreement shall vary in
accordance with the different phases of the operations.
22.2 From the date of execution of this present agreement and during the
first three years of production, PARC- FOUGALA, the exploitation
Company and their affiliated companies and subcontractors, as the case
may be, shall be exempted from the payment of all taxes (including the
Value Added Tax and the Services Tax), dues, contributions or any
other direct or indirect taxes which they would have to pay personally
or for the payment of which they would have been responsible with the
exception of:
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a) the fixed tax levied on the grant of a research permit
regardless of its size: CFA 30,000;
b) the tax on the renewal of the research permit at each renewal
date and for so long as this present agreement shall remain in
effect: FCA 300,000;
c) the fixed tax levied on the grant of an exploitation permit:
FCA 1,000,000;
d) the additional surface rent for the research permit for so
long as this agreement shall be in force:
- FCA 50/km(2) per annum for the first period;
- FCA 100/km(2) per annum for the first renewal;
- FCA 200/km(2) per annum for the second renewal
e) the additional surface rent for the exploitation permit:
- FCA 50,000/km(2) per annum;
f) the mandatory Employers contribution (CFE) at the rate in
effect (the base being equal to the total of the gross amount
comprising remuneration, benefits and salaries of the
employees, including the expatriate staff);
g) the business fees and contributions due on behalf of the
employees, including the expatriate employees, as set forth in
the legislation in effect;
h) the General Tax on Income payable by the employees;
i) the vehicle license fees with the exception of the work
vehicles and other vehicles directly associated with the
research activities;
j) the stamp duties on the import permits related to vehicles as
well as the tax on the insurance contracts issued therefor,
with the exception of work vehicles and/or other vehicles
directly associated with the research activities;
k) the Ad valorem tax at the rate of 3%;
l) the contribution on services rendered at the rate of 3%.
22.3 After the first three years of production extracted from a mine for
which an exploitation permit is held, the exploitation Company, its
affiliated companies and subcontractors will be obliged to pay in the
name of this mine:
a) the additional surface rent for the exploitation permit:
- FCA 75,▇▇▇.▇▇(2) per annum;
b) registration fees;
c) stamp duties;
d) tax on the real estate revenue and the tax on the mortmain
assets with the exception of the exemptions set forth in the
Mining Code;
e) patent fees;
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f) the lodging tax set at a rate of 1% of the combined payroll of
all the employees;
g) the lump sum employers contribution (CFE) at the going rate,
the base being equal to the total of the gross amount of the
remuneration, benefits and salaries of the employees
regardless of their present or future nationality;
h) the General Income Tax payable by the employees;
i) the social fees and contributions normally payable on behalf
of the employees as set forth in the current legislation;
j) the tax on profits at the rate of 35% subject to article 22.4
below;
k) the license fees for vehicles, with the exception of heavy
machinery and/or other vehicles directly associated with the
exploitation activity;
l) the Value added Tax (VAT);
m) the tax on the insurance contracts issued by insurance
companies domiciled in Mali;
n) the Ad Valorem tax at a rate of 3%;
o) the fee for services rendered at the rate of 3%.
No other tax, levy, contribution or fee of any type whatsoever, either
direct or indirect which may in future be levied by the State at any
level whatever shall be applicable to the parties, PARC-FOUGALA and
the exploitation company, their affiliated companies and
subcontractors during the exploitation period.
22.4 Notwithstanding the terms and conditions set forth in article 22.3 j),
the exploitation Company shall be exempt from the payment of the tax
on Profits during the first five years after the date of the first
production.
22.5 The net taxable profit of the exploitation company subject to direct
taxation at the rate of 35% shall be determined in accordance with the
terms and dispositions of articles 103 and 104 of the Mining Code and
subject to the definitions and modifications as set forth below:
a) the liabilities as defined in article 105 of the Mining Code
shall include those amounts owed by the exploitation Company
to the shareholders and/or their affiliated companies as well
as to third parties.
b) the exploitation company shall be authorised to register as a
debit to the exploitation account the real interest paid to
third parties as well as to its shareholders and/or their
affiliated companies provided that the interest rate paid to
the said affiliated companies does not exceed LIBOR plus 2%.
c) the applicable amortisation rates shall be those established
by the legislation in force at the date of execution of this
present agreement, and most particularly the inter-ministerial
ordinance No. 236-MF- MDITP of January 23, 1975.
The amortisation shall take effect from the date of the first
production for those assets required prior to that date. The
amortisation of the assets required after the first production
shall take effect at the date on which the said assets are
brought into use.
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The amortisations entered into the accounting system during
the years in which the company shows a loss can be deferred
for the requirements of the calculation of the net profit
subject to the tax on profits. The amounts of the deferred
amortisations shall be deducted, after the deduction of the
reported losses, during the first fiscal year in which the
exploitation company shows a profit and during subsequent
profitable years.
Research and exploitation expenses which cannot be attributed
to assets subject to amortisation shall be capitalised and
depreciated by straight line depreciation over the lesser of
the following two terms: either ten years or the estimated
productive life of the mine.
d) All the costs related to technical assistance provided by
PARC-FOUGALA, as listed in Annex II shall be deductible, in
full, for the purposes of calculating the tax on profits. The
exploitation company undertakes to provide to the State a
certified annual statement of accounts in accordance with
article 104 c) of the Mining Code.
e) The exploitation company shall be authorised to report as a
new item, for a period of five years, all exploitation losses
incurred after the first production. In this context, the
exploitation losses shall signify the excess of all the
deductions mentioned in article 105 of the Mining Code over
the entire revenue stream as set forth in article 103 of the
said Code.
22.6 In accordance with article 96 of the Mining Code, the State guarantees
to PARC-FOUGALA and to the exploitation company the continuation of
the fiscal regime subject to the terms and conditions set forth in
article 21.1 of this present agreement.
Throughout the period of validity of this present agreement, no
modification can be made to the regulations governing the tax base and
the collection of legislated taxes and tariffs without the prior
written agreement of PARC-FOUGALA and/or the exploitation company.
Throughout the period of validity of this present agreement,
PARC-FOUGALA and the exploitation company cannot be subjected to the
payment of taxes, levies and contributions levied and due to the State
but created at a later date.
ARTICLE 23 CUSTOMS REGULATIONS
23.1 PARC-FOUGALA and/or the exploitation company and their affiliated
companies and subcontractors shall benefit from the following customs
duty exemptions during the period of validity of the research permit
and for the first three years of production.
a) Regulations for the temporary free importation ad prorata
temporis for the material, machinery and apparatus, heavy
equipment, utility vehicles and other assets intended to be
reexported once the research and exploitation operations have
been completed.
b) Common law regulations for passenger vehicles used for
PARC-FOUGALA or the exploitation Company's activities as well
as passenger vehicles intended for private use.
c) Exemption from Customs duties and taxes applicable to tools,
chemical products, reactive products, petroleum products, oil
and grease for machinery required for their activities, spare
parts (with the exception of those needed for private
vehicles), the materials and materiel, machinery and equipment
intended to be assimilated permanently in the mine.
23.2 With regard to their personal effects, the expatriate personnel
employed by PARC-FOUGALA and the exploitation company and their
affiliated companies and subcontractors shall benefit from an
exemption of duties and taxes for a period of six months from the date
of their arrival in Mali.
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23.3 At the time of re-export the products will be exempted from all export
duties and taxes, all taxes on turnover at the time of export and all
other levies normally applicable to exports during the period of
validity of this present agreement. The profit from the sale of these
exports shall not be subject to any form of taxation, either direct or
indirect, and the parties and the exploitation company can convert the
profit from the said sales into foreign currency.
23.4 At the time of reexport, the material and equipment which was used for
the research and exploitation activities shall be exempted from the
payment of the customary export duties and taxes.
23.5 In the event that any of these items which in accordance with the
above mentioned terms are exempted from the payment of import duty are
resold in Mali, PARC-FOUGALA, the exploitation company and/or their
affiliated companies and subcontractors or their employees must first
obtain permission from the State and shall be liable for the payment
of duty on the resold items. These value of these items shall be
assessed in accordance with the legislative conditions prevailing at
the time of the sale.
23.6 After the first three (3) years of production, the exploitation
Company, its affiliated companies and subcontractors shall be subject
to the payment of the Customs duties and taxes which are applicable at
the date of execution of this present agreement with the exception:
- petroleum products, oils and lubricants required for the
generation of energy for the extraction, transportation and
treatment of the mineral.
These petroleum products, oil and lubricants required for the
generation of energy shall remain exempted from the payment of all
Customs duties and taxes throughout the period of validity of this
present agreement.
ARTICLE 24 ECONOMIC REGULATIONS
24.1 Subject to the terms and conditions of this present agreement, the
State, throughout the period of validity of this present agreement,
shall not with regard to PARC-FOUGALA and/or the exploitation company,
their affiliated companies and subcontractors, initiate nor implement
any proceedings which may be seen to imply a restriction of the terms
and conditions under which the legislation prevailing at the date of
execution of this present agreement permits:
a) the unrestricted choice of suppliers and subcontractors
(subject to the terms of article 18 above);
b) the unrestricted import of merchandise, material, machinery,
equipment, spare parts and consumer goods (subject to the
terms of article 23 above);
c) the free circulation inside Mali of material and assets
mentioned in the preceding paragraph as well as all substances
and products obtained from the research and exploitation
activities.
24.2 The State undertakes to provide all the permits and all the
authorisations which are needed for the fulfillment of the rights
guaranteed in articles 23 and 24 of this present agreement.
24.3 In the event of the sale of gold or other mineral substances included
in the voluminous samples intended for metallurgic assays,
PARC-FOUGALA must deduct this revenue from the research expenses.
In the case of small mines, the value of the finished products
extracted from the samples intended for treatment assays
(laboratories, pilot factories, etc.) shall be subject to the ad
valorem tax in the event that the revenue should be used for any other
purpose than for the research expenses.
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24.4 Subject to the terms of this present agreement, PARC-FOUGALA and/or
the exploitation company shall be authorised to enter into agreements
at a price which is seen to be reasonable vis-a-vis the world market
and to export the products, as well as to trade the products freely
except in countries which are hostile to the Republic of Mali or to
engage in trade with nationals of those countries. All agreements
between PARC-FOUGALA and/or an affiliated company or between the
exploitation company and its shareholders shall be drafted in such a
way that the terms and conditions contained therein are not more
favourable than the terms and conditions negotiated with third
parties.
24.5 If, during the course of the exploitation activities carried out in
accordance with the terms and conditions set forth in this present
agreement, PARC-FOUGALA and/or the exploitation company should decide
to terminate the activity, they shall not be permitted to transfer to
a third party their installations, machinery and equipment until they
have granted to the State a first option on the acquisition of these
assets at their estimated value at the time of the decision to
terminate the activity.
24.6 PARC-FOUGALA, the exploitation company and/or their affiliated
companies and subcontractors shall be authorised to import on a duty
free basis the materials and products required either directly or
indirectly for their operations.
For the implementation of the duty free import proceedings,
consideration will be given not only to the conditions of quality and
delivery schedules but also to the possibility of obtaining the
materials and products at competitive prices on the local market.
ARTICLE 25 FINANCIAL REGULATIONS
25.1 Subject to the terms and conditions governing this present agreement,
the State guarantees, throughout the period of validity of this
present agreement, to PARC-FOUGALA, the exploitation company and their
affiliated companies and subcontractors the following:
a) unrestricted conversion and transfer of funds intended for the
settlement of all debts (principal and interest) in foreign
currency from the suppliers and creditors who are not Malian;
b) the unrestricted conversion and transfer of net profits to be
distributed to non Malian associates and of all amounts
intended for the amortisation of funding obtained from non
Malian institutions and from companies affiliated with
PARC-FOUGALA, after the payment of all taxes and duties
imposed by this present agreement;
c) the unrestricted conversion and transfer of profits and funds
resulting from the liquidation of assets, after the payment of
the taxes, customs duties and levies set forth in this present
agreement.
25.2 In order to allow the exploitation company or PARC-FOUGALA to face the
exploitation costs and to make payments to suppliers and creditors for
the goods purchased and services provided and for the loans which have
been contracted and for future services and dividends arising from its
activities, the State, through the application of article 8 of Law No.
89-12 AN-RM of February 9, 1989, shall authorise the exploitation
company or PARC-FOUGALA to maintain in a foreign country in US dollars
or in any other hard currency, an adequate fund from the profit of its
exports.
25.3 PARC-FOUGALA and the exploitation company shall be authorised to open
an account in foreign currency in Mali or abroad.
25.4 The State guarantees the unrestricted conversion and transfer to
countries outside Mali of all the savings of the expatriate personnel
employed by PARC-FOUGALA and the exploitation company as well as by
their affiliated companies and subcontractors which have been taken
from their salaries or which result from the liquidation of
investments made in Mali or from the sale of their personal effects in
Mali.
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Through the application of article 6 of Law No. 89-12 AN-RM of
February 9, 1989, the State shall authorise the expatriate personnel
residing in Mali to open accounts in foreign currency in Mali or
abroad.
ARTICLE 26 ADMINISTRATIVE, MINING AND LAND GUARANTEES
26.1 The state guarantees to PARC-FOUGALA and to the exploitation company
the right to occupy and use all the land required for the research and
exploitation activities of the deposit(s) on which this mining
research permit or mining exploitation permit is based within the
scope of this present agreement both inside and outside the boundaries
of the perimeter, in accordance with the terms and conditions set
forth in the Mining Code. The occupation and utilisation of the said
lands shall not involve PARC-FOUGALA and the exploitation company in
any payment of taxes, fees, rents or contributions which are in
addition to those which have been specified in this present agreement.
At the request of the exploitation company or PARC-FOUGALA, the State
shall proceed to relocate those inhabitants whose presence on the said
lands would hinder the research and/or exploitation activities.
PARC-FOUGALA and/or the exploitation company shall be required to pay
a fair indemnification to the inhabitants both for depriving them of
the right to enjoy their land and for the damage which their stated
activities might cause to the holders of land deeds, common law
occupation rights or to the beneficial owners of any other rights
whatever they may be.
26.2 PARC-FOUGALA and the exploitation company shall have the right, at
their own expense, to cut down the trees as required for their
activities and to take and use the said wood, earth, stones, sand,
gravel, chalk, plaster and waterfalls and all other materials and
elements which might be required in the realisation of the objectives
set forth in this present agreement in accordance with the prevailing
legislation.
26.3 The Mining Code in effect in Mali on the date of execution of this
present agreement shall govern the mining titles granted or renewed to
PARC-FOUGALA and the exploitation company throughout the period of
validity of this present agreement.
ARTICLE 27 EXPROPRIATION
The State does hereby assure PARC-FOUGALA, the exploitation company and their
affiliated companies and subcontractors that it does not intend to expropriate
the future exploitations nor seize any of their assets. However, if the
circumstances or a critical situation should require that such measures be
taken, the State recognises that, in accordance with international legislation,
it will be required to pay an adequate indemnification to the injured parties.
ARTICLE 28 PROTECTION OF THE ENVIRONMENT
PARC-FOUGALA and/or the exploitation company undertake to:
a) to preserve, throughout the duration of this agreement, the
environment and the public infrastructures affected by their
activities;
b) to repair all damage caused to the environment and to the
infrastructure beyond normal wear and tear;
c) comply strictly with all aspects of current legislation
regarding hazardous wastes, natural resources and the
protection of the environment;
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d) landscape the excavated sites in accordance with
internationally accepted mining industry standards;
e) comply with all the terms and conditions of the laws
establishing the regulations for the management of the forest,
fauna and water resources;
f) set up a system for the purification of the residual waters in
the mine.
ARTICLE 29 IMPLEMENTATION OF MEASURES FOR THE PROTECTION OF THE
ENVIRONMENT
The Minister responsible for the Environment can periodically, in case of need,
and with the consent of the Minister responsible for Mines, implement measures
to control the impact of the research and mining exploitation activities on the
environment.
ARTICLE 30 CULTURAL HERITAGE
In accordance with legislation in effect regarding the protection of the
national cultural heritage, the exploitation phase must be preceded by an
archaeological study funded by PARC-FOUGALA and/or the exploitation company on
the land within the exploitation perimeter. The study is to be carried out by
the appropriate department of the Minister responsible for Culture.
During the research activities if any items related to the national cultural
heritage are discovered: assets, fixed or moveable, PARC-FOUGALA undertakes not
to disturb these objects for a period not to exceed one month from the
notification date and to lose no time in informing the administrative
authorities of the find. The exploitation company, PARC-FOUGALA or their
associates undertake to participate in the salvage operations.
ARTICLE 31 TRANSFER, SUBSTITUTION AND NEW PARTIES
31.1 Either one of the parties can, with the prior written consent of the
other party, grant to other individuals who are technically and
financially qualified all or a portion of the rights and obligations
which the said party shall have acquired by virtue of this present
agreement including its participation in the exploitation company and
the research and exploitation permits. In such an instance, the
assignees must assume all the rights and obligations of the assignor
as specified in this present agreement or resulting from its share in
the exploitation company as well as those rights and obligations which
derive from the research and exploitation permits. With regard to the
share of one party in the exploitation company or the transfer of a
permit, the other party retains the right of preemption.
31.2 Article 31.1 above shall not be applicable to the transfer by one
party of all or a portion of its rights deriving from this present
agreement or from its share or from its assets in an exploitation
company if the said transfer is to an affiliated company.
31.3 PARC-FOUGALA shall be free, after having given notice of its intention
to the State, to hand over the execution of this present agreement to
any affiliated company.
31.4 In the event of such a substitution by PARC-FOUGALA in favour of an
affiliated company, PARC-FOUGALA shall nevertheless retain full
responsibility for compliance with the obligations set forth in the
agreement.
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CHAPTER IV
FINAL CLAUSES
ARTICLE 32 ARBITRATION
32.1 The parties undertake to:
a) reach an amicable settlement for all their differences
regarding the interpretation or the application of this
present agreement;
b) in the event of litigation or difference of opinion regarding
the technical aspects of the agreement, to submit the dispute
to an expert recognised for his technical knowledge, chosen
jointly by the parties and not being of the same nationality
as either party nor having any ties to either party. The
decision of this expert must be made known within 30 days of
his appointment and shall be binding and not subject to
appeal. In the event of disagreement regarding the
understanding of the nature of the dispute or litigation or in
the event of disagreement between the parties regarding the
choice of the independent expert, the dispute will be settled
by arbitration in accordance with the terms and conditions set
forth in article 32.1 above.
32.2 Subject to the terms and conditions set forth in article 31.1, all
litigation or dispute related to this present agreement shall be sent
to arbitration in accordance with the agreement governing the
settlement of disputes regarding investments between States and
citizens of other States, which became effective on October 14, 1966
(hereinafter known as "the Arbitration Agreement")
In the event of arbitration:
a) the arbitration will be held in Paris unless the parties agree
otherwise;
b) the arbitration proceedings will be held in French, with
translation into English if required, and the applicable law
shall be the law of the Republic of Mali;
c) the costs of the arbitration shall be borne by the losing
party.
32.3 For the purposes of the arbitration the parties agree that the
operations to which this present agreement refers constitute an
investment in the sense of article 25, line 1 of the Arbitration
Agreement.
32.4 In the event that, for whatever reason, the International Centre for
the Resolution of Disputes related to investments (CIRDI) should
declare itself to be unsuited for or should refuse to accept the
arbitration, the dispute shall then be definitively settled in
accordance with the Arbitration Settlement of the International
Chamber of Commerce in Paris. The arbitration shall be presided over
by a single arbitrator appointed by mutual agreement between the
parties. This arbitrator shall be a citizen of a different country
from either of the parties and shall have proven experience in the
mining industry. In the event that the parties cannot reach agreement
on the choice of an arbitrator, the arbitration shall be presided over
by three arbitrators appointed in accordance with the Arbitration
Settlement of the International Chamber of Commerce in Paris. The
terms and conditions of article 31.2 shall apply.
32.5 The parties undertake to implement, without delay, the ruling handed
down by the arbitrators and to renounce any claim to an appeal. Any
competent tribunal can be requested to ratify the ruling handed down.
ARTICLE 33 APPLICABLE LAW
This present agreement shall be governed by the laws of the Republic of Mali.
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The State declares that this present agreement is authorised by the Malian
mining legislation. It is expressly understood that, throughout the period of
validity of the agreement, that the laws of Mali constitute the laws of the
parties, subject to respect of the other terms and conditions of public order.
ARTICLE 34 TERM OF THE AGREEMENT
34.1 This present agreement shall be valid for a maximum period of 30 years
from the date of execution. In the event that the duration of
exploitation of a deposit should exceed the duration of this present
agreement, the parties undertake to negotiate a new agreement.
34.2 This present agreement shall be terminated prior to its expiry date in
the following instances:
a) by mutual written agreement of the parties;
b) In the event of a total renunciation by PARC-FOUGALA and the
exploitation company of their mining titles, or the annulment
thereof in accordance with the terms and conditions of the
Mining Code;
c) in the event of insolvency, bankruptcy, liquidation of assets
or other similar collective procedures involving PARC-FOUGALA
during the research period or the exploitation company during
the exploitation phase.
ARTICLE 35 EFFECTIVE DATE
This present agreement shall become effective once it has been signed by both
parties.
ARTICLE 36 ANNEXES
▇▇▇▇▇▇▇ ▇, II and II to this present agreement are an integral part of the
agreement.
- Annex I: Coordinates of the perimeter
- Annex II: Programme and Cost of the operations
- ▇▇▇▇▇ ▇▇▇: Signatory powers
ARTICLE 37 AMENDMENTS
37.1 Any clause which is not included in the text of this present agreement
can be put forward by one or other of the parties and it will be given
careful consideration. Both parties shall make a genuine effort to
reach a mutually satisfactory agreement, at the close of which, the
said clause shall be the object of an amendment which shall be annexed
to this present agreement and signed by both parties and ratified by
the State.
37.2 The rights and obligations of the parties resulting from this present
agreement seek to establish, at the time of execution of the said
agreement, an economic equilibrium between the parties; if, however,
during the course of the activities associated with the agreement,
significant variations in the economic conditions give rise to
expenses which are considerably more onerous for one or other of the
parties than those envisaged at the time of execution of the said
agreement, which culminate in unfair consequences for one or other of
the parties, it is hereby agreed that the parties shall reexamine the
terms and conditions of this present agreement in a spirit of
objectivity and loyalty for the purpose of reinstating the
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initial equilibrium. The present clause creates a simple obligation
for the parties to renegotiate in view of an eventual readaptation of
the Agreement, with the exception of an express agreement between the
parties otherwise, the Agreement will still be in effect and will
continue to be in force during the renegotiation.
ARTICLE 38 RENUNCIATION, PARTIAL ANNULMENT, RESPONSIBILITY
38.1 With the exception of an intentional renunciation in writing, the fact
that one party does not exercise all or a portion of the rights
conferred thereto through the application of this present agreement
shall not constitute, at any time, a relinquishment of the rights
which have not been exercised.
38.2 If any one of the terms and conditions of this present agreement
should be declared null and no longer applicable, in full or in part,
for whatever reason, such an event shall not be permitted to annul
this present agreement which shall remain in full force and effect.
38.3 If one party is of the opinion that it has been severely affected by
this partial annulment, it can request a review of the offending terms
and conditions of this present agreement. The parties shall make an
effort to reach a fair solution.
ARTICLE 39 FORCE MAJEURE
39.1 The non-performance by one or other of the parties of any of the
obligations arising from this present agreement, other than
obligations related to payments and notifications, shall be excused to
the extent that the said failure to comply is due to an event of force
majeure (Act of God). If compliance with an obligation affected by an
event of force majeure is delayed, the time frame specified for
compliance of the said obligation, as well as the duration of the
Agreement specified in article 33, notwithstanding any condition to
the contrary in this present agreement, shall be duly extended for a
period of time equal to the delay caused by the occurrence of the
event of force majeure.
However, it is understood that neither the State nor PARC-FOUGALA can
invoke in their favour as an event of force majeure any act or action
(or any failure to act) which is their fault.
39.2 In accordance with the terms and conditions of this present agreement
the following shall be deemed to be cases of force majeure: all
events, acts or circumstances alien to the will of the party such as
war or conditions attributable to war, insurrection, civil
disturbances, blockades, embargo, strikes or other labour conflicts,
riots, epidemics, earth quakes, floods or other weather related
disasters, explosions, fires, lightening, actions of the prince, acts
of terrorism. It is the intention of the parties that the term force
majeure should be interpreted as closely as possible to the principles
and usage of international law.
39.3 When one or other of the parties is of the opinion that it is
prevented from complying with any one of its obligations as a result
of an event of force majeure, it must immediately notify the other
party in writing of this impediment indicating the cause thereof. The
parties must do all that is within their power to ensure the rapid
resumption of normal compliance with the obligations affected by the
act of force majeure, with the proviso that neither of the parties
shall be obliged to settle disputes with third parties, including
labour conflicts, unless the conditions are acceptable or if
settlement is mandatory as a result of a definitive arbitration ruling
or a decision handed down by a competent court of law. The State
undertakes to cooperate with PARC-FOUGALA and/or the exploitation
company to settle any labour conflict which might arise.
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ARTICLE 40 REPORTS, ACCOUNTS AND INSPECTIONS
40.1 PARC-FOUGALA and/or each exploitation company, as appropriate,
undertake for the duration of this present agreement to:
a) set up in Mali a genuine, veritable and detailed accounting
system covering its operations, accompanied by support
documents which are required for verification of the accuracy
of the accounts. This accounting activity will be controlled
by the representatives of the State duly appointed for this
purpose;
b) make available for inspection by the State or its duly
authorised representatives all the accounts or documents which
are held abroad but which relate to the operations in Mali.
40.2 All the information made known by PARC-FOUGALA and/or the exploitation
company to the State through the application of the terms of this
present agreement, shall be deemed to be confidential and the State
undertakes not to pass on the information to third parties without the
prior written consent of PARC-FOUGALA and/or the exploitation company
which, as appropriate, will not be refused without a valid reason.
ARTICLE 41 SANCTIONS AND PENALTIES
In the event of failure to comply with the obligations resulting from the laws
and regulations in effect at the date of execution of this present agreement,
to the extent that these laws and regulations apply to PARC-FOUGALA and the
exploitation company subject to the terms of article 21 of this present
agreement, the sanctions and penalties set forth in the same regulatory
legislative documents shall be immediately applicable.
ARTICLE 42 NOTIFICATION
All communications or notifications required to be given under this present
agreement must be sent by registered letter with acknowledgment of receipt or
by telex confirmed by a registered letter with acknowledgment of receipt, as
follows:
a) all notifications to the company must be sent to the address
below:
PARC-FOUGALA
Villa No. ▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇.▇. Box E 1339
Tel:fax 22.77.51
Bamako - MALI
At the time of constitution of an exploitation company, all
notifications can validly be sent to the address of the
exploitation company.
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b) All notifications to the State can validly be sent to the
National Headquarters for Geology and Mining at the address
below:
National Headquarters
for Geology
and Mining
P.O. Box 223
Bamako
Republic of Mali
Tel: 22.58.21/22.91.11
Fax: 22.91.11/22.71.74
Any change of address must be notified in writing as soon as
possible by one party to the other.
ARTICLE 43 LANGUAGE OF THE AGREEMENT AND MEASURING SYSTEM
43.1 This present agreement is written in the French language. All reports
or other documents specified or to be specified through the
application of this present agreement must be written in the French
language.
The translation of this present agreement into any other language
shall be done solely for the purpose of facilitating the application
thereof. In the event of any contradiction between the text in French
and the text in any other foreign language, the French text shall
prevail.
43.2 The accepted measuring system shall be the metric system.
ARTICLE 44 INTERVENTION OF THE EXPLOITATION COMPANY
At the time of constitution of each exploitation company as specified in this
present agreement, the exploitation company shall sign four original copies of
this present agreement and this signature shall be taken as acceptance on the
part of the exploitation company of the obligations deriving from this present
agreement.
Issued in Bamako, on October 15, 1996
in four original copies
FOR THE COMPANY PARC-FOUGALA FOR THE GOVERNMENT OF THE
REPUBLIC OF MALI
THE MANAGING DIRECTOR THE MINISTER FOR MINES,
ENERGY AND HYDRAULICS
Hamed ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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ANNEX I
COORDINATES OF THE PERIMETER
POINT A: 12 degrees 57'20'' North / 11 degrees 15'26'' West
--------
POINT B: 12 degrees 57'20'' North / 11 degrees 13'10'' West
--------
POINT C: 12 degrees 54'15'' North / 11 degrees 13'10'' West
--------
POINT D: 12 degrees 54'15'' North / 11 degrees 15'26'' West
--------
SURFACE AREA: 24km(2)
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ANNEX II
PROGRAMME FOR AND COSTS OF
THE PROPOSED ACTIVITIES
I. OBJECTIVES OF THE PROPOSED RESEARCH PROGRAMME IN THE FOUGALA ZONE
There is a layer of lower Proterozoic rocks contained within the byrrimien
formation which is recognised in Mali and in Western Africa as being one of
the most important sites for gold deposits. There is evidence of recognised
gold and copper mineralisation within the boundaries of the perimeter in
question. The zone presents a geological configuration similar to that of the
GREENSTONE Belts which are located in Eastern Canada, Western Australia and the
Guyanese shield in South America which are the largest gold producing zones.
The principal objective of the research and exploitation programme consists of
producing evidence of a gold mineralisation contained in a body of hard rock
which would justify a viable exploitation.
The dimension and the form of the mineralisation would be defined to facilitate
the reliable determination of both the tonnage and the quality. Metallurgic
and geotechnical characteristics can be evaluated.
Other information will be sought for the purpose of carrying out a feasibility
study which will determine the best method for exploitation and the best method
of treating the ore for the extraction of the gold, the cost of construction
and operation of a mine and also an overall financial evaluation of the whole
project.
An important part of the work programme will involve the collection of base
environmental data, with particular emphasis being given to the physical and
social aspects thereof with a view to minimising the impact of the prospecting
activities and exploitation on the environment.
PAN AFRICAN RESOURCES CORPORATION has already done research in this zone and
some of these research projects are still active.
The research projects consist of:
- geological cartography
- rock sampling
- VLF-EM geophysics
- depth drilling
The development of phase II of the research programme proposed here will depend
on the results obtained from phase I.
II. PROPOSED RESEARCH AND EXPLORATION PROGRAMME
The proposed programme which is expected to take three years will be carried
out in three successive stages.
The undertaking to proceed to phases II and III will depend on the success of
the work carried out during the first phase.
II/I PHASE I
Compilation and evaluation of all the available technical data as well as the
information obtained from other earlier activities carried out in the region
for the purpose of gaining an understanding of the geology, structure,
distribution and control of the mineralisation.
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Geological cartography of the zone on a scale of 1/50.000 and geophysical
surveys.
Digging of ▇▇▇▇▇ and/or ditches for taking geochemical samples and to
facilitate the task of making a detailed geological map.
Drilling work which will be done either with percussion drills, inverse
circulation equipment or by channeling may be initiated during phase I
depending on the results of the preliminary studies carried out on the zone.
II/2 PHASE II
- Detailed geochemical work, detailed geological cartography,
supplementary drilling with diamond or inverse circulation drills.
- Geotechnical evaluation of the drill holes; preliminary work on
metallurgic tests.
- Collection of environmental data; evaluation of the physical and
social environment.
- Calculation of the mineralised resources defined by the drill holes.
II/3 PHASE III
This will consist of undertaking:
- intensive drilling to define the layer, detailed metallurgic test
work, geotechnical evaluation and environmental studies, calculation
of the geological reserves and the exploitable reserves, engineering
studies and an assessment of the infrastructures in regard to the
human and technical resources available, methods of transport, water
supply, electricity and other utilisable resources.
- prefeasibility study on the opening and operation of a mine, meetings
with the Minister for Mines and other related departments with a view
to defining the best way to ensure the smooth running of the project.
- completion of a feasibility study for the development of exploitation
operations with a significant portion of the study devoted to the
concept behind the project and an environmental impact study.
The completion of phase III and the comprehensive feasibility study may extend
beyond the initial three year period.
III FORECAST COSTS AND PROPOSED TIME FRAME
The minimum expenditure proposed for the first year amounts to US$200,000.
During this first year phase I will be completed and, depending upon the
results, the second phase will be implemented.
The expenses forecast for each of the three phases described above will be as
follows:
-----------------------------------------------------------------------
PHASES FORECAST COSTS IN $
-----------------------------------------------------------------------
I 200,000.00
-----------------------------------------------------------------------
II 300,000.00
-----------------------------------------------------------------------
III 400,000.00
-----------------------------------------------------------------------
i.e. a total of US$ 900,000.00 for the three phases
which equates to FCFA 450,000,000.
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IV. TECHNICAL AND FINANCIAL RESOURCES
4.1 THE COMPANY
PAN AFRICAN RESOURCES CORPORATION is a company which is registered in Barbados
and based in Denver in the United States. The principal business objective of
this company is the identification and assessment of projects relating to gold
in Africa.
PAN AFRICAN RESOURCES CORPORATION has been quoted on the CANADIAN DEALERS
NETWORK Exchange since February 1996.
PAN AFRICAN RESOURCES CORPORATION is a subsidiary of GOLDEN STAR RESOURCES.
GOLDEN STAR RESOURCES is a Canadian company based in Denver in the USA and
quoted on the Toronto Stock Exchange and on the American Stock Exchange.
4.2 ACTIVITIES IN SOUTH AMERICA
Since 1985, Golden Star has been involved in programmes designed for
prospecting gold and diamonds in Guyana, Surinam, French Guiana and Venezuela.
In 1985 golden Star acquired the Omai gold project in Guyana and implemented a
programme of prospecting and evaluation and conducted a feasibility study as
well.
In 1990, Cambior Inc., a Canadian company joined with golden Star in a joint
venture operation for the construction of a mine, the cost of which amounted to
$148 million. The production of gold began in January 1993. Golden Star owns
a 30% share in the mine, the Guyanese government 5% and Cambior 65%. Annual
production of gold is estimated to be 7,500 kilos.
In Suriname, the feasibility study on the ▇▇▇▇▇ ▇▇▇▇▇▇▇ project will be carried
out during this year.
Golden Star has undertaken very in-depth research programmes covering the above
mentioned projects and zones in the rock formations which are very similar to
the byrrimien formation in Mali. Several of these projects have been performed
through joint venture associations with other mining companies. Research
expenses for the year 1996 are estimated to be US$30 million.
The company has built up considerable technical competence in the area of
research and evaluation of deposits of precious metals and the company
currently employs a significant number of persons qualified to carry out these
specialised projects.
4.3 ACTIVITIES IN AFRICA
GOLDEN STAR RESOURCES has naturally turned its attention to the "other half" of
the Guyanese shield situated in Western Africa. The company is very satisfied
with the Malian potential in terms of gold rock and has undertaken to
implement a serious exploration programme in the region.
The objective of the programme detailed above is to give proof of a deposit for
the development of which an investment of US$100 million will be required for a
potential return of one billion dollars in sales of gold.
PAN AFRICAN RESOURCES CORPORATION is currently taking advantage of the wealth
of technical expertise residing in GOLDEN STAR.
PAN AFRICAN RESOURCES CORPORATION is currently engaged in exploration
activities in Mali, Gabon, Ivory Coast, Ethiopia and very shortly in Erythria.
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V. REPORTS, RELATIONS WITH THE GOVERNMENT WORK METHODS
At the start of its activities in Mali, Ivory Coast, Gabon and Ethiopia, the
company will do all that is necessary to maintain an excellent working
relationship with the government of Mali and the ministerial departments
concerned with the development of the mining industry in Mali.
Technical reports covering all aspects of the research programme will be
submitted on a regular basis to the Malian authorities.
The PARC company wishes, through a close liaison with qualified representatives
from the department of mines who will be involved in the different projects for
the purpose of providing technical and administrative assistance, to contribute
to the development of the mining industry through the transfer of its expertise
in matters relating to mining exploration to these State representatives as
well as to its Malian employees.
The company undertakes to give preference to Malians in all areas of its
activity provided that the candidates meet the required standards regarding
competence and competitiveness.
VI. SITE OF THE PERMIT
The requested zone covers a surface area of 24 km(2) and in located within the
Keniba Circle, in the Kayes region.
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ANNEX III
FIRST RESOLUTION
The Assembly approves purely and simply the Bye-laws of the company
PARC-FOUGALA S.A.
This resolution was unanimously adopted.
SECOND RESOLUTION
The General Assembly declares the release of a quarter of the capital as
indicated in the declaration of subscription and payment.
This resolution was unanimously adopted.
THIRD RESOLUTION
The Constitutional General Assembly appoints as first administrators:
- the company PARC, represented by ▇▇. ▇. ▇▇▇▇▇▇▇
- ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
- Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇
- ▇▇▇▇▇ ▇▇▇▇▇
- ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ BAH
- ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
- Mr. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
- ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
This resolution was unanimously adopted
FOURTH RESOLUTION
The Constitutional General Assembly states that the company "PARC-FOUGALA" is
in compliance with the laws and regulations of the Republic of Mali.
The General Assembly will appoint at a later date the Auditors of the company.
FIFTH RESOLUTION
The Constitutional General Assembly agrees to grant all the necessary powers to
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ for the purpose of complying with all the formalities arising
from this present Constitutional General Assembly and to proceed with the start
up of the company.
This with authority to delegate to others.
This resolution was unanimously adopted.
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