Exhibit 10.15
APOLLO GOLD INCORPORATED
MONTANA TUNNELS ZINC CONCENTRATE AGREEMENT
AGREEMENT NO. ZN 00-0000-00
BETWEEN:
TECK COMINCO METALS LTD.
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0
(referred to in this Agreement as "BUYER")
AND:
APOLLO GOLD INCORPORATED
X.X. Xxx 000
Xxxxxxxxx Xxxx, Xxxxxxx
X.X.X. 00000
(referred to in this Agreement as "SELLER")
RECITALS:
A. Seller operates the Montana Tunnels Mine in the State of Montana in the
United States of America;
B. Buyer operates a Lead/Zinc Smelter in Trail, British Columbia, Canada.
The parties agree as follows:
TECK COMINCO METALS LTD. / APOLLO GOLD INCORPORATED
MONTANA TUNNELS ZINC CONCENTRATE AGREEMENT XXXXXXX 0, 0000
XXXXXXXXX XX. XX 00-0000-00 PAGE 2.
--------------------------------------------------------------------------------
1. DEFINITIONS:
-----------
The following definitions are used in this Agreement, unless the context
otherwise requires:
1.1 "ACCEPTANCE"
Approved for receipt by the Buyer's Receiving Department.
1.2 "DATE OF ARRIVAL"
The date of receipt of the last railcar of a lot at the Buyer's
works at Trail, British Columbia, Canada.
1.3 "DOLLARS"($) "CENTS"( )
Unless otherwise specified, lawful currency of the United States
of America.
1.4 "FCA"
Free Carrier as per ICC Incoterms 2000.
1.5 "METALS WEEK"
The XxXxxx-Xxxx, Inc. publication known as "Xxxxx'x Metals Week"
published in New York City, U.S.A.
1.6 "METRIC TON" or "MT" / "WET METRIC TON" OR "WMT" / "DRY METRIC TON" or
"DMT"
Equivalent to 2,204.6 pounds avoirdupois or 1,000 kilograms wet
or dry basis as specifically stated.
1.7 "OUNCE" or "OZ"
A xxxx ounce or 31.1035 grams.
1.8 "INCOTERMS"
ICC Incoterms 2000 as published in January 2000 as Publication
No. 560 by:
ICC Publishing S.A.
00, Xxxxx Xxxxxx xxx
00000 Xxxxx, Xxxxxx
1.9 "UNADJUSTED FIRE ASSAY"
Fire assay unadjusted for slag loss and cupel absorption.
1.10 "UNIT"
1% of a metric ton or 22.046 pounds avoirdupois, dry basis.
2. SUBJECT:
--------
2.1 The Seller agrees to sell and the Buyer agrees to buy Zinc
Concentrates referred to in Article 4, according to the terms and
conditions of this Agreement.
2.2 The Seller represents and warrants to the Buyer that it has the right
to sell and pass title of the Concentrates to be sold to the Buyer.
TECK COMINCO METALS LTD. / APOLLO GOLD INCORPORATED
MONTANA TUNNELS ZINC CONCENTRATE AGREEMENT XXXXXXX 0, 0000
XXXXXXXXX XX. XX 00-0000-00 PAGE 3.
--------------------------------------------------------------------------------
3. DURATION:
--------
3.1 This Agreement commences on October 1, 2002 and will remain in effect
for an initial term until March 31, 2005. Unless then terminated, this
Agreement will continue in effect thereafter for twelve month periods.
Absent default, this Agreement may be terminated effective as of the
end of the initial term or as of April 1 of any subsequent year by
either party giving notice to the other party before March 31 of any
year, to take effect April 1 of the following year. The first
opportunity to cancel this Agreement will be by either party giving
notice prior to March 31, 2004 to take effect April 1, 2005.
4. MATERIAL AND QUALITY:
--------------------
4.1 MONTANA TUNNELS ZINC CONCENTRATE, referred to in this Agreement as
Concentrates, produced at Helena, Montana, assaying approximately as
follows:
Zn 50.0 - 53.0 % S 30.0 - 33.0 %
Pb 1.0 - 3.0 % Au 0.15 - 0.3 oz/dmt
Cd < 0.12 % As < 0.02 %
Ag 5.0 - 15.0 oz/dmt F 0.01 %
Fe 6.5 - 8.0 % MgO 0.10 %
SiO2 1.0 - 2.5 % CaO 0.1 %
Cu 0.7 - 1.0 % H2O 8.0 %
4.2 The Concentrates will otherwise be free of any impurities deleterious
to the smelting and refining process and be suitable for handling with
typical concentrate loading and transfer equipment.
4.3 In the event that the composition of the Concentrates departs
materially from the typical composition or physical characteristics,
Seller and Buyer will negotiate in good faith with full disclosure to
overcome any significant hardship or technical difficulty which either
Seller or Buyer may suffer as a result.
5. QUANTITY:
--------
5.1 The quantity of Concentrates for this Agreement will be 100% of mine
production, approximately 40,000 to 45,000 dry metric tons per year.
6. SHIPMENT:
--------
6.1 Shipments will be made evenly by month at approximately 10,000 dry
metric tons per quarter, unless mutually agreed otherwise.
6.2 Upon three months notice there will be no deliveries during a
one-month smelter shutdown. For shutdowns in excess of one month,
except for reasons of force majeure, Buyer will work with Seller to
make alternative arrangements for storage and delivery.
6.3 Railcars will be loaded within railcar load limits. Charges for
under-loading or over-loading are to the Seller's account.
TECK COMINCO METALS LTD. / APOLLO GOLD INCORPORATED
MONTANA TUNNELS ZINC CONCENTRATE AGREEMENT XXXXXXX 0, 0000
XXXXXXXXX XX. XX 00-0000-00 PAGE 4.
--------------------------------------------------------------------------------
7. DELIVERY:
--------
7.1 The Concentrates will be delivered in bulk, loaded in covered gondola
railcars, FCA, Helena, Montana, U.S.A.
8. SETTLEMENT:
----------
8.1 Settlement will be by lot as per Articles 9, 10, 11, 12, 13, and 15,
using the final assays and the applicable price quotations.
9. PRICE: (PER DRY METRIC TON)
-----
9.1 Basis:
The price will be the sum of the payables less the deductions and
penalties, all fractions pro rata.
9.2 The following terms are to apply for the period the mine starts back
in operation until March 31, 2005. Terms for each twelve month period
following the expiration of the initial period ending March 31, 2005
are to be concluded prior to the expiration of the previous terms.
9.3 Payables:
Zinc:
Pay for 85% (minimum deduction 8 units) of the contained zinc at the
average of the Metals Week published monthly price for zinc designated
as "LME SHG SETTLEMENT" in U.S. dollars per metric ton.
Silver:
Based on an Unadjusted Fire Assay, deduct 3.0 xxxx ounces and pay for
70% of the balance of the contained silver at the Metals Week
published monthly price for silver designated as "LONDON SPOT" in U.S.
cents per xxxx ounce.
Gold:
Based on an Unadjusted Fire Assay, deduct 1 gram and pay for 80% of
the balance of the contained gold at the Metals Week published monthly
price for gold designated as "LONDON FINAL" in U.S. dollars per xxxx
ounce.
No other elements will be paid for.
9.4 Deductions:
Treatment Charge:
For the period from the mine start-up until March 31, 2004 the basic
treatment charge is $195.00.
TECK COMINCO METALS LTD. / APOLLO GOLD INCORPORATED
MONTANA TUNNELS ZINC CONCENTRATE AGREEMENT XXXXXXX 0, 0000
XXXXXXXXX XX. XX 00-0000-00 PAGE 5.
--------------------------------------------------------------------------------
For the period April 1, 2004 through March 31, 2005 the basic
treatment charge is $200.00.
Zinc Price:
The above treatment charges are based on a zinc price of $1,000.00 per
metric ton and will be:
a) Increased by 16 for each $1.00 that the zinc price is greater
than $1,000.00
b) Decreased by 14 for each $1.00 that the zinc price is less than
$1,000.00.
9.5 Penalties:
Iron:
For each 1% of contained iron greater than 7.5%, increase the basic
treatment charge by $1.50.
For each 1% of contained iron less than 6.5%, decrease the basic
treatment charge by $1.50.
Silica:
For each 1% of contained silica greater than 2.5%, increase the basic
treatment charge $1.50.
Moisture:
For each unit of moisture greater than 8%, increase the basic
treatment charge by $1.00.
9.6 Penalty indication is based upon the elements for which assays are
available. In case of other impurities that are deleterious to the
Buyer's process, the parties will negotiate corresponding penalties in
good faith.
10. LOTTING & DATING:
----------------
10.1 Each five consecutive railcars received at the Buyer's works will
constitute a smelter lot with the exception that a lot may be
truncated at month-end, in which case a lot may be less than five
railcars.
11. QUOTATIONAL PERIOD:
------------------
11.1 The quotational period for metal prices used to determine the
settlement value of a smelter lot will be those for the second
calendar month following the Date of Arrival.
12. PAYMENT:
-------
12.1 Basis:
Buyer will make payment by lot for the Concentrates received as
follows:
TECK COMINCO METALS LTD. / APOLLO GOLD INCORPORATED
MONTANA TUNNELS ZINC CONCENTRATE AGREEMENT XXXXXXX 0, 0000
XXXXXXXXX XX. XX 00-0000-00 PAGE 6.
--------------------------------------------------------------------------------
12.2 First Provisional:
The first provisional payment will be:
a) 85% of the estimated value of the lot.
b) Calculated on the latest available information at the time of
payment.
c) Made 7 calendar days after Date of Arrival or the first business
day thereafter.
12.3 Second Provisional:
a) In the event that the final settlement information is not
available within 60 days of the Date of Arrival, a second
provisional payment for the remaining balance up to 100% of the
provisional value, will be made at that time by the Buyer.
(b) Calculated on the latest information available at the time of
payment.
12.4 Final:
Final settlement invoices will be prepared by the Buyer and payments
will be made promptly after final weights, assays, and settlement
quotations are known. Any balance due Buyer or Seller, in accordance
with final settlement, will be paid promptly.
Should the balance due not be paid within 30 days of receiving final
weights, assays, and settlement quotations, then party owed has the
right to apply interest to the due settlement. Interest will commence
accruing 3 working days after all final settlement information is
available to the party owing.
12.5 Right to Set Off:
From any settlement resulting in payment due, either party has the
right to deduct any amounts owed to them by the other party.
12.6 Method of Payment:
Payments will be made by electronic fund transfer to the Seller's or
Buyer's bank account, as advised from time to time.
13. WEIGHING, SAMPLING, AND MOISTURE DETERMINATION:
----------------------------------------------
13.1 The Concentrates will be weighed, sampled, and moisture will be
determined upon arrival of the Concentrate at Buyer's works, in
accordance with established practices and in the customary manner as
outlined in Appendix A attached. The cost of these operations will be
for the Buyer's account. Seller will have the right to be represented
at its own expense. The weights and moistures so determined will be
final for settlement.
14. SAMPLING:
--------
14.1 The sample of each smelter lot will be divided into four parts as
follows:
- One for the Seller
- One for the Buyer
TECK COMINCO METALS LTD. / APOLLO GOLD INCORPORATED
MONTANA TUNNELS ZINC CONCENTRATE AGREEMENT XXXXXXX 0, 0000
XXXXXXXXX XX. XX 00-0000-00 PAGE 7.
--------------------------------------------------------------------------------
- One to be set aside for Umpire purposes
- One set aside as a reserve.
14.2 The Seller, Umpire and reserve samples will be sealed with the Buyer's
seal. Should the Seller choose to be represented, the Seller may also
apply its seal.
14.3 After sampling, the product may be placed in process by the Buyer.
15. ASSAYING:
--------
15.1 From the samples obtained, Buyer and Seller will determine their own
assays and exchange signed assay certificates by crossing mail on a
pre-arranged date.
15.2 The average of the Buyer's and Seller's assays will be final for
settlement for zinc, silver and gold, unless any of the following
splitting limits are exceeded:
Zn 0.40 % Au 0.01 oz/dmt
Ag 0.3 oz/dmt
15.3 In the case of iron and silica the Buyer's assays will be used for
settlement. The Seller will retain the option to request the exchange
of these assays. Should this option be exercised by the Seller then
the following splitting limits will apply:
Fe 0.50 % SiO2 0.30%
15.4 In cases where these limits are exceeded, the Umpire sample will be
forwarded by the Buyer to the following Umpires who will be instructed
to provide assays as per Article 9, Pricing. The following Umpires
will be used in rotation by lot:
X.X. Xxxxxx North America Ltd. Lakefield Research Limited
X.X. Xxx 0000 Postal Bag 4300, 000 Xxxxxxxxxx Xxxxxx
130 Tradd Street Lakefield, Ontario
Spartanburg, S.C. Canada X0X 0X0
X.X.X. 29304-3504
15.5 If the Umpire result falls between the results of Buyer and Seller, or
coincides with either, the arithmetic mean of the Umpire assay and the
party which is nearer to the Umpire assay will be the settlement
assay. Otherwise, the middle of the three assays will be the
settlement assay.
15.6 The cost of the Umpire assay will be for the account of the party
whose result is furthest from that of the Umpire, but if the Umpire
assay is the exact mean of the two parties' assays, the cost of the
Umpire analysis will be borne equally by both parties.
16. FORCE MAJEURE:
-------------
16.1 If either party is prevented from or delayed in the performance of any
obligation, other than the obligations to make payment, by reason of
any cause beyond its control, including but not restricted to abnormal
weather conditions, an act of God, breakdown or destruction of plant
or equipment, shortage of or inability to secure normal
transportation, labour difficulties or shortage of labour or
government acts or regulations, and from which that party cannot
TECK COMINCO METALS LTD. / APOLLO GOLD INCORPORATED
MONTANA TUNNELS ZINC CONCENTRATE AGREEMENT XXXXXXX 0, 0000
XXXXXXXXX XX. XX 00-0000-00 PAGE 8.
--------------------------------------------------------------------------------
reasonably relieve itself, that party will be excused from performance
during the continuance of the contingency and will not be liable to
the other for damages.
16.2 It is a condition of obtaining relief under Article 16.1 that the
party claiming relief will:
a) give the other party immediate notice of its inability to perform
and of the cause or causes;
b) provide the other party as soon as reasonably possible with
written particulars of inability; and;
c) use all reasonable efforts to remove the cause of prevention or
delay as soon as possible and resume with the least possible
delay the performance of its obligations under the Agreement. If
Buyer gives notice to Seller pursuant to Article 16.2, then, by
reasonable notice to Buyer, Seller may elect to sell the affected
tonnage in question to a third party or parties selected by
Seller. In such event the quantity affected will be deducted from
the amount to be shipped and sold during that year, provided
however, that at any time prior to the date of the exercise of
that election by Seller, Buyer may notify Seller either:
i) that the cause of the prevention or delay has been removed
and it will accept delivery of the shipment, or
ii) that although the cause stated above has not been removed,
it will take delivery at the normal receiving location and
pay the provisional invoices as stipulated in Article 12.2.
In this latter event, appropriate adjustments will be made
when final prices, weights and assays are known.
16.3 Subject to the foregoing, if any cause of prevention or delay
continues for more than 90 days after notice has been given by the
affected party, either party may, by notice to the other party, elect
to cancel the amount of Concentrate remaining to be sold and purchased
for the remainder of the current Agreement year, provided that any
such election will in no way effect the Buyer's obligation to pay for
Concentrate already shipped.
16.4 If any cause or causes referred to in Article 16.1 results in planned
production levels at or shipments from the Seller's source of
Concentrate or planned production at the Buyer's smelter to be
reduced, then the party affected may, if it has complied with the
requirements of Article 16.2, elect to reduce by up to a pro rata
amount the quantity of Concentrate to be delivered or received under
this Agreement, and the rights and obligations of the parties for that
year will be modified to the extent of the reduction.
16.5 Notwithstanding any other provisions of this Agreement, Seller and
Buyer will always have the right to curtail or suspend production if
economic conditions at the time would otherwise produce a financial
loss to either party. If Seller or Buyer exercise this right, it will
be treated as if it were a condition of force majeure and the
provisions of this Article 16 will apply.
16.6 Force Majeure will not apply to material in transit, nor material for
which conveyance has been reserved or fixed.
TECK COMINCO METALS LTD. / APOLLO GOLD INCORPORATED
MONTANA TUNNELS ZINC CONCENTRATE AGREEMENT XXXXXXX 0, 0000
XXXXXXXXX XX. XX 00-0000-00 PAGE 9.
--------------------------------------------------------------------------------
17. FAIR PRICING:
------------
17.1 If any of the quotations for payable metals cease to exist or cease to
be published or should no longer correctly reflect the full market
value for one or several of these metals, then Buyer and Seller will
promptly consult together with a view to agreeing upon a new pricing
basis. The basic objective will be to secure continuity of fair market
pricing.
18. TITLE AND RISK:
--------------
18.1 Title and risk will pass from the Seller to the Buyer upon loading of
the Concentrate on conveyance at Helena, Montana, U.S.A.
19. NOTICES:
-------
19.1 All notices, advices, submissions, designations, consents, as well as
all documents, invoices, etc., for the purpose of administration which
are required to be made by either party to the other party under this
Agreement will be in the English language, and will be deemed to be
properly served if given in writing by letter, fax or e-mail to the
following addresses:
Seller: Apollo Gold Incorporated
X.X. Xxx 000
Xxxxxxxxx Xxxx, Xxxxxxx
X.X.X. 00000
Fax: 000-000-0000
E-Mail: xxxxx0000@xxx.xxx
Buyer: Teck Cominco Metals Ltd.
Attention: Raw Materials Manager
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0
Tel: 000-000-0000 Fax: 000-000-0000
E-Mail: xxxx.xxxxxxx@xxxxxxxxxxx.xxx
20. SUCCESSORS AND ASSIGNS:
----------------------
20.1 This Agreement and all its provisions will be binding and enure to the
benefit of the successors and assignees of the respective parties.
Neither party will assign this Agreement without the written consent
of the other party, such consent not to be unreasonably withheld.
21. JURISDICTION:
------------
21.1 This Agreement will be construed in accordance with, and the rights of
the parties will be governed by the laws of the Province of British
Columbia, Canada.
TECK COMINCO METALS LTD. / APOLLO GOLD INCORPORATED
MONTANA TUNNELS ZINC CONCENTRATE AGREEMENT XXXXXXX 0, 0000
XXXXXXXXX XX. XX 00-0000-00 PAGE 10.
--------------------------------------------------------------------------------
22. ARBITRATION:
-----------
22.1 Any controversy or claim arising out of or relating to this Agreement,
or any alleged breach, will be settled by arbitration in the Province
of British Columbia under the provisions of the Commercial Arbitration
Act, and judgement upon the award rendered may be entered in a Court
of the Province of British Columbia having jurisdiction.
23. PRIOR AGREEMENTS:
----------------
23.1 This Agreement will constitute the entire Agreement between the
parties and supersedes all prior Agreements and understandings,
whether oral or written, in relation to the subject matter and no
modification, amendment or variation will be effective or binding on
the parties unless agreed to in writing by them.
The parties, intending to be legally bound, have signed this Agreement which is
in effect on OCTOBER 1, 2002.
TECK COMINCO METALS LTD.
/s/ A.R. (Xxxx) Xxxxxxx
-----------------------------------
A.R. (Xxxx) Xxxxxxx
/s/ X.X. (Xxxxx) Vice
-----------------------------------
X.X. (Xxxxx) Vice
APOLLO GOLD INCORPORATED
/s/ M.L. (Xxxxxxx) Xxx
-----------------------------------
M.L. (Xxxxxxx) Xxx
/s/ X.X. (Llee) Xxxxxxx
-----------------------------------
X.X. (Llee) Xxxxxxx
XXXX COMINCO METALS LTD. / APOLLO GOLD INCORPORATED
MONTANA TUNNELS ZINC CONCENTRATE AGREEMENT XXXXXXX 0, 0000
XXXXXXXXX XX. XX 00-0000-00 PAGE 11.
--------------------------------------------------------------------------------
APPENDIX A
----------
MONTANA TUNNELS SAMPLE PREPARATION PROCEDURE
--------------------------------------------
ZINC CONCENTRATE METAL VALUE SAMPLES
------------------------------------
BUYER SAMPLING AND LOTTING
--------------------------
Samples are removed from each of Montana Tunnels railcars by Buyer's Standard
Operating Procedures to obtain representative material for moisture
determination and assay sample preparation. A bulk sample is collected from each
railcar and held until five consecutive railcars have been received and sampled
at the Buyer's works to constitute a smelter lot, with the exception that a lot
may be truncated at month-end in which case a lot may be less than five
railcars. A single lot composite sample portion is prepared from the railcar
bulk samples using the weights of the concentrate from each railcar and the
sample moisture content from each railcar to prepare a representative lot sample
on a dry weight basis applying Buyer's Standard Operating Procedures. The
resulting composite sample for the lot is blended and split using Buyer's
Standard Operating Procedures to provide appropriate amounts of concentrate for
assay sample preparation and reserve samples.
ASSAY SAMPLE PREPARATION
------------------------
Metal value control samples for Montana Tunnels Zinc Concentrates will be
prepared by the Buyer in a manner that will provide a representative increment
of the whole material in which the metallic particle fractions of the sample
have not been altered by the sample preparation process. Control sample
portions are prepared from each of Montana Tunnels' lot composite samples using
Buyer's Standard Operating procedures for sample increment division and material
blending methods with the following exceptions.
1. Physical separation of oversize metallic fractions with screens or other
------------------------------------------------------------------------
coarse particle concentrating methods is not permitted in the sample
--------------------------------------------------------------------
preparation process.
-------------------
2. Comminution of Montana Tunnels' Zinc Concentrates by mechanized grinding or
---------------------------------------------------------------------------
by hand grinding of either a portion of the whole amount of the sample is
-------------------------------------------------------------------------
not permitted.
-------------
Screens of larger mesh size (>400 micron) can be used only to break up sample
lumps and blend samples by passing the entire sample material through the mesh.
Final blending and increment division of a sample into necessary pulp sacks for
assay and reserve samples is accomplished using Buyer's Standard Operating
Procedures.
