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EXHIBIT 10.23
EXPLORATION LICENSE AGREEMENT
between
THE GOVERNMENT OF THE STATE OF
ERITREA
and
GOLDEN STAR RESOURCES LTD. &
PAN AFRICAN RESOURCES CORPORATION
for
THE GRANT OF EXPLORATION RIGHT
AND LICENSE
in
THE ▇▇▇▇▇ VALLEY AREA
Asmara, April 19, 1996
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This Agreement, made and entered into at Asmara, Eritrea, this 19th day of
April, 1996
BY AND BETWEEN
The Government of the State of Eritrea (hereinafter referred to as "The
Government") represented by the Ministry of Energy, Mines and Water Resources
(hereinafter referred to as "The Ministry") of the one part
AND
GOLDEN STAR RESOURCES LTD. of One Norwest Center, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.▇.▇. & PAN AFRICAN RESOURCES CORPORATION of ▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ (hereinafter jointly referred to as "The
Licensee") of the other part
WITNESSETH:
WHEREAS, all mineral resources within the territory of Eritrea are public
property, and the State shall ensure the conservation and development of the
resources for the benefit of the people;
WHEREAS, the Government wishes to promote prospecting, exploration and
exploitation of mineral resources in accordance with appropriate technology,
and sound principles of resource management;
WHEREAS, the Government, and thereby the Ministry, through the operation of
mining enterprises, is desirous of creating more employment opportunities,
encouraging and developing local business, ensuring that skills, know-how and
technology are transferred to the people of Eritrea, acquiring basic data
regarding and related to the Country's mineral resources, and preserving and
rehabilitating the natural environment for further development of Eritrea;
WHEREAS, the Licensee, which warrant their financial, technical and managerial
competence for undertaking the program of exploration hereinafter provided for
under the terms and subject to the conditions set forth in this Agreement have
declared themselves willing to engage in mineral exploration operations in
Eritrea on the understanding that they shall, jointly and/or severally bear the
sole risk and cost of such exploration operations and on establishing that
there are good prospects for undertaking commercial mining operations may
jointly apply for and be granted a mining lease subject to the provisions of
the Mining Proclamation No. 68/1995;
WHEREAS, the Ministry and the said Licensee are willing to co-operate in
developing mineral resources on the basis of the laws and regulations of
Eritrea;
WHEREAS, the Ministry intends to grant the said Licensee such appropriate
license to explore for minerals on such terms and conditions set out
hereinunder;
WHEREAS, accordingly, on the application of the Licensee, the Ministry has
agreed to enter into an agreement with the Licensee pursuant to the Mining
Proclamation No. 68/1995 for the conduct by the Licensee of exploration
programme on the terms and conditions hereinafter provided.
NOW THEREFORE, in consideration of the mutual considerations, covenants and
conditions set hereinafter the Parties hereto have agreed as follows.
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1. DEFINITIONS
In this Agreement, unless otherwise specified, all definitions set forth in
Article 2 of the Mining Proclamation No. 68/1995, Mining Income Tax
Proclamation No. 69/1995 and Mining Operations Regulations No. 19/1995 shall
apply, and for the purposes of this Agreement the terms set forth below shall
have the meanings therein set forth:
1. "AGREEMENT" means this Agreement with all its annexes and such other
modifications and amendments made from time to time pursuant to this
Agreement;
2. "BUDGET" means the total budget expenditures prescribed in Article 6 of
this Agreement;
3. "DEPOSIT" means any natural concentration of minerals found on or within
a specified area of the earth's crust;
4. "DIRECTIVE" means Mining Directive(s) issued by the Ministry of Energy,
Mines and Water Resources pursuant to the Mining Proclamation No.
68/1995;
5. "EFFECTIVE DATE" means the date this Agreement is entered into;
6. "EXPENDITURES" means the funds projected for the first year and those to
be allocated for each subsequent year consisting of field expenditures,
local administrative overhead costs and additional transnational
overhead costs;
7. "EXPLORATION ACTIVITIES" means all activities related to searching for,
appraising and evaluating a deposit, provided for under an Exploration
Work Programme and, save as therein provided, shall include search by
use of geological, geochemical and geophysical methods relating to
surface and subsurface geology and structure, excavation, boring and
drilling, analysis of the physical and chemical properties of minerals
and examination of the economic feasibility of developing and exploiting
a deposit;
8. "EXPLORATION LICENSE OR LICENSE" means a license issued pursuant to this
Agreement and the Mining Proclamation to explore for minerals, as
defined herein, other than construction material, mineral water and
geothermal deposits in accordance with the terms and conditions of this
Agreement;
9. "EXPLORATION LICENSE AREA" MEANS the area described in Annex One, in
relation to which the Exploration License is granted in accordance with
the terms and conditions of this Agreement, less any area from time to
time relinquished or surrendered therefrom in accordance with the Mining
Proclamation;
10. "EXPLORATION PERIOD" means the period during which Exploration
Activities are authorised pursuant to the Exploration License granted
herewith and for such further periods as the License may be renewed in
accordance with the terms and conditions of this Agreement as well as
Article 10 of the Mining Proclamation;
11. "FORCE MAJEURE" shall have the meaning ascribed thereto in Article 25
(2) hereof;
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12. "LAW" means any law, proclamation, regulation, directive, or other
sovereign act of the Government presently in force or subsequently
coming into force including, but not limited to, the Mining
Proclamation, Mining Income Tax Proclamation, Mining Operations
Regulations and Mining Directives issued thereunder and any successor
proclamation, regulation and directive;
13. "MINERALS" means any naturally occurring mineral substance of potential
economic value forming part of or found on or within the earth's crust,
including salt, mineral water and geothermal deposits, but excluding
petroleum, natural gas and oil shale as defined in Articles 5 and 7 of
Proclamation No. 40/1993;
14. "MINING INCOME TAX PROCLAMATION" means the Mining Income Tax
Proclamation No. 69/1995;
15. "MINING OPERATIONS REGULATIONS" means the Legal Notice No. 19/1995 on
the Regulations of Mining Operations;
16. "MINING PROCLAMATION" means the Mining Proclamation No. 68/1995;
17. "PARTY" means a signatory to this Agreement and "PARTIES" means the
signatories to this Agreement jointly;
18. "TERMS" means the terms used herein that are defined and provided for in
Article 2 of the Mining Proclamation or Article 2 of the Mining Income
Tax Proclamation;
19. "WORK PROGRAMME" means exploration programme submitted by the Licensee
and approved by the Ministry.
2. GRANT OF EXPLORATION RIGHT AND LICENSE
1. The Ministry hereby grants to the Licensee an exclusive right for the
term provided in this Agreement and in accordance with the terms and
conditions of this Agreement, the provisions of the Mining Proclamation,
Mining Income Tax Proclamation, Mining Operations Regulations and
Directives issued thereunder, to engage in exploration for minerals
other than construction material, mineral water and geothermal deposits
within the License Area described hereinafter.
2. Contemporaneously herewith, the Licensee is granted, under and in
accordance with the Mining Proclamation, an Exploration License over the
entire area described hereinafter.
3. LICENSE AREA
1. The area which is the subject of this Agreement covering 300 (three
hundred) square kilometers consists of 6 (six) Exploration License Areas
of 50 (fifty) square kilometers each and is located in the area known as
▇▇▇▇▇ Valley. The exact location of the License Areas and their
boundaries more specifically described and delimited by surveyed markers
and indicated on a map of 1:250,000 scale using geographic co-ordinates
(UTM) is attached to this Agreement as Annex ONE.
2. For the purposes of this Agreement, the 6 (six) Exploration License
Areas and the 6 (six) Exploration Licenses granted hereinunder are
hereinafter referred to, in the singular form, as "License Area" and
"Exploration License" respectively.
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4. TERM
1. The term of this Agreement shall, without prejudice to Article 10 of
the Mining Proclamation, be for an initial period of three years and
may be renewed twice for additional terms of one year each.
2. The Exploration Period shall commence forty five (45) days from the
effective date of this Agreement.
5. RIGHTS OF THE LICENSEE
The Licensee shall exercise the following rights in accordance with the Mining
Proclamation, Mining Operations Regulations and Directive issued thereunder:
1. The Licensee shall have the right to conduct such exploration activities
in the License Area as it considers necessary to determine a geologically
proven and economically viable mineral deposit(s).
2. The Licensee may enter and occupy the land covered by the Exploration
License during its term for the purposes of exploration activities.
3. The Licensee may cut and use only such timber as is strictly necessary
for access to the Exploration License Area.
4. The Licensee may use the existing infrastructure if their use by such
Licensee shall not impair the use thereof by other persons.
5. In accordance with Article 22 of the Mining Proclamation, the Ministry
shall assist the Licensee in its dealings and communications with
inhabitants of the License Area and ensure that the Licensee is not
impeded in the exercise of its rights under the License.
6. The exercise by the Licensee of its rights under Articles 21 and 23(2)
of the Mining Proclamation shall be free of costs to Licensee, unless
currently required by other Laws.
7. The Parties agree to negotiate reasonably and in good faith with respect
to the financial contribution by the Licensee to the construction and
maintenance of infrastructure which may be required by Licensee and
which the Ministry feels may be used jointly with another licensee for
the joint economic benefit of Licensee and such other person, as
contemplated in Article 23(3) of the Mining Proclamation. In no case
shall the Ministry unilaterally impose on Licensee an obligation to
construct or contribute financially to the construction or maintenance
of any such infrastructure for joint use by others.
8. The Ministry shall assist all non-Eritrean employees, consultants and
contractors of the Licensee, and their families, to travel freely into
and out of Eritrea and promptly issue any visas, work permits or other
authorizations which may be requested.
9. Wherever the approval of the Government or the Ministry is required
under this Agreement or any applicable Law, such approval shall not
unreasonably be withheld, conditioned or delayed. Notwithstanding any
other provisions, the Government and the Ministry undertake to respond
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writing to all requests for approvals as promptly possible. Wherever
any approval or decision of the Government, including the Ministry
relating to Licensee under the Law is discriminatory in nature, such
decision shall be made reasonably, in such a manner as to carry out the
intent of this Agreement and the mutual intent of the Parties hereunder.
10. The Licensee is entitled to employ guards for and in the protection and
safety of its equipment, assets and properties located in the subject
exploration area.
11. Nothing in this Agreement shall limit any rights of either Party under
other applicable Eritrean Laws.
6. WORK PROGRAMME AND EXPENDITURE
1. The Licensee hereby submits a three-year Comprehensive Work Programme
and Budget described in ANNEX TWO, for the Exploration Period which
indicates the direction and expected outcome of the exploration
activities proposed to be undertaken by the Licensee in the License
Area. A Detailed Exploration Work Programme and Budget for the first
year of the Exploration Period, attached herewith as ANNEX THREE, is
hereby approved by the Ministry. Detailed Exploration Work Programmes
and Budgets for subsequent annual periods of the Exploration Period
shall be submitted for approval by the Ministry not later than thirty
(30) days prior to the end of the then existing annual period for which
a Detailed Exploration Work Programme and Budget has been approved.
2. The Licensee shall, in accordance with Article 4(2) of this Agreement,
promptly commence and diligently pursue the implementation of the Work
Programme in the License Area.
3. Subject to Article 19 hereinbelow, the Licensee agrees to spend in each
year of the Exploration Period, no less than the minimum Budgeted
Expenditure amounts set forth in the approved Work Programmes in the
implementation of the Exploration Work Programme submitted herewith.
4. If the Licensee fails in any year to fulfill the minimum Work Programme
or Budgeted Expenditure obligation, unless the Licensee provides due
explanation and justifications acceptable to the Ministry an amount
equal to such unfulfilled obligation shall be immediately paid to the
Ministry on simple demand from the Bank Guarantee provided for in
Article 7 in order to satisfy the deficiency as may be determined by the
Ministry.
5. The fulfillment of any work obligation shall relieve the Licensee of the
corresponding minimum expenditure obligations but the fulfillment of any
expenditure obligations shall not relieve the Licensee of the
corresponding work obligations.
6. The Ministry shall not withhold the approval of the Exploration Work
Programme and Budget except on reasonable grounds, which grounds shall
be provided to the Licensee in writing. The Licensee may, within thirty
(30) days after having received notice in writing that its proposed Work
Programme and Budget has not been approved and the grounds thereof,
submit a revised work programme for approval by the Ministry. Once a
Work Programme and Budget has been approved, any amendment or
modification shall be approved by the Ministry on the same terms and
conditions as are applicable to an initial submission of a Work
Programme and Budget as soon as practicable.
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7. Likewise, the Ministry agrees to respond in writing its approval or
reasoned disapproval and recommendations on technical revisions to the
subject Programme as promptly possible after receipt of any such
proposed revision.
7. GUARANTEE
1. The Licensee shall provide to the Ministry within sixty (60) days from
the effective date of the initial term of the exploration period a Bank
Guarantee, by a first-class bank acceptable to the latter in an amount
equal to the minimum expenditure obligation for the first year of the
initial three-year exploration period, provided that the form, terms and
conditions of the Bank Guarantee, payments out of which shall be on
demand, shall have to be acceptable to the Ministry.
2. The Bank Guarantees for the second and third year of the exploration
period and subsequent extensions thereof, shall be submitted within
thirty (30) days from the approval of the respective annual Work
Programme and Budgets, and the guarantees for each year shall correspond
to the minimum expenditure obligation of the applicable Work Programme
and Budget for each year as stipulated in this Agreement.
3. Without prejudice to the provisions of sub-article 4 hereof, the
guarantee for the first year shall be released upon the submission of
the guarantee for the second year and upon the successful completion of
the Work Programme and Budget of the corresponding year by the Licensee
to the satisfaction of the Ministry. Similarly, the guarantee for the
second year shall be released upon the submission of the guarantee for
the third year and the successful completion of the Work Programme and
Budget of the corresponding year by the Licensee to the satisfaction of
the Ministry. Each of the guarantees to be submitted by the Licensee
shall be valid for a minimum of fifteen (15) months.
4. Subject to the prior approval by the Ministry of each of such completed
quarterly Work Programme and Budget for and during each of such year,
the relative amount of the Bank Guarantee shall be automatically reduced
at the end of each quarter, by the amount of the Minimum Expenditures
incurred in accordance with the Budget in that quarter, upon the
submission of the corresponding quarterly report setting forth the
portion of the Work Programme completed and the corresponding Minimum
Expenditures pursuant to the Budget.
5. This Agreement shall be null and void if the Licensee fails to submit
the required Bank Guarantee within sixty (60) days as stated in sub-
article 1 of this Article for the first year of the initial exploration
period. Where the Licensee fails to submit the required Bank Guarantee
in accordance with sub-article 2 of this Article for the second and
third years and subsequent extensions thereof, then such failure shall
be a ground for the termination of this Agreement.
6. If at the end of the initial term of the Exploration Period or any
extension thereof or upon the date of expiration or termination of this
Agreement the Licensee has not fulfilled the minimum work obligations
and/or the expenditure obligations required under the last approved
Annual Work Programme and Budget, the Licensee shall pay the amount
corresponding to the unexpended minimum budgeted expenditure obligation
to the Ministry as provided for in Article 6(4) hereinabove.
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7. If the Licensee performs work or expenditure in any year in excess of
that for which he is obligated such excess shall be credited towards the
obligations for the next succeeding annual period; provided that at
least a minimum agreed programme of work and expenditure is done in the
succeeding year, if applicable.
8. OBLIGATIONS OF THE LICENSEE
The Licensee agrees and undertakes to comply, among others, with the following
obligations provided for in the Mining Proclamation, Mining Income Tax
Proclamation, Mining Operations Regulations and Directives issued thereunder:
1. Within forty five (45) days from the effective date of this Agreement,
commence and carry out exploration activities in a prudent, diligent and
efficient manner, in accordance with appropriate technology and good
international exploration practices generally accepted in the mining
industry;
2. Comply with all work programmes and expenditure obligations, unless a
departure therefrom is justified and receives the prior written approval
of the Ministry, and avoid the performance of work or the incurring of
expenditure which is not required;
3. Conduct exploration activities in such a manner as to ensure the health
and safety of its employees and other persons and to minimize damage or
pollution to the environment;
4. Conduct exploration activities in accordance with applicable laws,
regulations and directives;
5. Give preference to the employment of Eritrean nationals, provided that
such persons have the required qualifications and experience;
6. Based on the training programme approved by the Ministry, give all
employees the training and education required by the duties of their
respective employment in the exploration activities and comply with
applicable training programmes;
7. The preference to domestic materials, goods and services, where they are
readily available at competitive prices and are of comparable quality;
and
8. Comply with all reporting and filing obligations specified hereinafter
and any other applicable laws.
9. BOOKS, RECORDS AND REPORTS
1. The Licensee agrees and undertakes to keep and maintain during the term
of the license all financial, employment, commercial, other books,
supporting documents and records of its operations and comply with all
other reporting and filing obligations under the applicable Eritrean
Laws. All such books, records and reports shall be maintained in the
English language and in United States Dollars, and in accordance with
generally accepted accounting principles in Canada.
2. The Licensee agrees to submit to the Ministry quarterly technical
progress and expenditure reports as well as comprehensive annual
exploration reports in the form and content provided for in the Mining
Proclamation, Mining Operations Regulations and Mining Directives issued
thereunder.
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3. It is agreed and understood that all reports and returns shall be
submitted within forty five (45) days after the end of each quarter and
year, and the Licensee shall make available to the Ministry or other
duly authorized officials all the books, documents and records for the
purposes of inspection upon a reasonable prior notice, during normal
business hours.
4. In the event of a surrender or relinquishment of the entire Exploration
License Area or upon the termination of this Agreement, the Licensee
shall be obligated to submit to the Ministry a Final Exploration Report,
describing coherently its efforts and the results of such efforts.
5. It is agreed and understood that all technical reports to be submitted
shall include details of the complete and entire exploration work
undertaken and shall be accompanied by relevant data and appropriate
evaluation results and findings.
10. CONFIDENTIALITY
1. All information submitted in applications, reports and other filings
pursuant to this Agreement shall be confidential.
2. Notwithstanding the provisions of sub article 1 of this Article:
(a) Authorized Government officials may request access on a confidential
basis to such information for their official duties, and in such
capacity permit access to accountants, professional consultants and
legal counsel;
(b) The Government or the Ministry may compile and distribute information,
geographic or geological maps, statistics and reports and other
documents where the identity of Licensee is not disclosed or apparent
and his interests are in no way adversely affected; and
(c) This confidentiality obligation shall not be applicable to information
that has been disclosed by the Licensee to a third party or is otherwise
in the public domain.
3. The confidentiality obligation in sub articles 1 and 2 of this Article
shall end upon the termination of the Exploration License.
4. All information, data, reports and other files obtained by the Licensee
from the Government or the Ministry, which have not been disclosed to a
third party or are not in public domain, shall not be published,
transferred or disclosed to third party without the prior written
approval of the Ministry.
5. All information and data gathered during the exploration period shall
become the property of the Government upon the expiration or termination
of the exploration license.
11. SAMPLES
The Licensee may remove, transport, analyze and, with the prior written consent
of the Ministry, export samples of minerals for testing, provided that a
comparable sample is submitted to the Directorate of the Geological Survey of
Eritrea. However, such minerals shall remain the property of the Government,
and if requested by the Ministry the Licensee shall, unless so destroyed in the
process
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of testing, return such exported samples to Eritrea. In all events, complete
and detailed results of such testing and analysis shall be furnished to the
Ministry free of any charges.
12. ENVIRONMENTAL PROTECTION
1. During its exploration activities the Licensee shall comply with all
environmental laws and regulations in force in Eritrea.
2. The Licensee shall not unduly disturb or interfere with the living
conditions of the indigenous population lawfully settled within the
License Area and its surroundings and shall respect their customs and
shall provide a fully adequate resettlement programme if that is
essential and approved by the Ministry.
3. The Licensee shall, upon the relinquishment, surrender or termination of
its Exploration License, take commensurate measure to safeguard any pits
and such other works so that the health, life and property of persons is
not endangered.
13. INSPECTION
The Mines Controller from the Ministry or other duly authorized officials shall
have the right to inspect and ensure that the exploration activities are
carried out in accordance with this Agreement, and the provisions of the Mining
Proclamation, Mining Operations Regulations and Mining Directives issued
thereunder during business hours following reasonable prior notice therefor to
the Licensee.
14. FOREIGN EXCHANGE
1. The Licensee may make remittances outside Eritrea in accordance with the
Regulations of the Bank of Eritrea, Mining Proclamation, Mining
Operations Regulations and Directives issued thereunder.
2. Expatriates employed in exploration operations may remit salaries and
other payments accruing from their employment in accordance with the
foreign exchange regulations of Eritrea.
15. CUSTOMS DUTIES AND TAXES
1. The Licensee and its sub-contractors, if any, shall pay 0.5 percent duty
on all imports into Eritrea of equipment, machinery, vehicles and spare
parts (excluding sedan cars and their spare parts) as well as consumable
materials necessary for the exploration activities in accordance with
the provisions of the Mining Proclamation.
2. It is understood that office equipment and supplies, including computer
equipment, software and other high technology equipment and intellectual
property are equipment for purposes of Article 38(1) of the Mining
Proclamation. The Ministry shall intently assist to ensure that all
imports and exports be accomplished expeditiously.
3. Expatriate employees, consultants and contractors of the Licensee, and
their families who are required to take up residence in Eritrea shall be
entitled to import and export all personal and household effects free
and clear of any taxes, duties and charges, the Ministry shall exert its
utmost efforts.
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4. All goods imported pursuant to sub-articles 1 and 2 of this Article may
be exported, free of all export duties and taxes, but may be sold or
transferred to a person in Eritrea with the payment of duty and tax
thereon in accordance with the applicable laws.
5. The compensation received, according to their contract of employment, by
expatriate personnel of the Licensee or its sub-contractors or
consultants shall be subject to the payment of income tax at a flat rate
of 20% (twenty percent).
16. FEES AND RENTALS
1. The Licensee shall pay rentals and license and renewal fees as provided
in the Mining Operations Regulations.
2. Payment of the license and renewal fees specified in sub-article 1 of
this Article shall be made upon the issue and renewal of the Exploration
License respectively while rentals shall be paid annually in advance,
the first year's payment having been made upon the execution of this
Agreement, in United States Dollars.
3. In the event of a surrender of any part of the Exploration License Area,
pursuant to Article 19 of this Agreement, no rental payments shall be
refunded in whole or in part in respect of any area so surrendered for
which yearly rental has been paid in advance nor shall rental
payments be refunded in the event of termination.
17. RENEWAL OF LICENSE
1. If the Licensee applies in writing to the Ministry not less than three
(3) months before the expiration of this Agreement, it shall have the
right to renew the Exploration License, provided it has fulfilled
the obligations specified in the License, meets all requirements in
connection with an application for the renewal of an Exploration License
and is not in breach of any provisions of the Mining Proclamation,
Mining Income Tax Proclamation, Mining Operations Regulations and Mining
Directives issued thereunder which constitute grounds for suspension or
revocation of the Exploration License.
2. Provided the Licensee applies for a renewal of the Exploration License
prior to the expiration of the License or any renewal thereof, the
rights of the Licensee under the License and this Agreement shall
continue to be valid until the Ministry has made a final determination
with respect to the application.
18. MODIFICATION
If the Licensee, upon a discovery of a mineral deposit(s), determines that the
Exploration License Area does not include the entire mineral deposit(s), the
Licensee may request that the area be adjusted to incorporate the entire
deposit, provided that no exclusive license or an application thereof exists
for such minerals in the additional area adjacent to the License Area and that
it does not exceed the maximum area allowed and that the area has not been
reserved or excluded. If the Licensee and the Ministry agree on an appropriate
adjustment to the Work Programme and Budget Expenditure obligations, the
Ministry shall modify the Exploration License to include such additional
adjacent area(s).
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19. SURRENDER
1. The Licensee may, by giving at least three (3) months' prior written
notice to the Ministry, surrender all or any part of the Exploration
License Area provided that the Licensee has fulfilled all obligations
under the Exploration License and is in compliance with the provisions
of the Mining Proclamation, Mining Operations Regulations and Directives
issued thereunder.
2. Upon surrender of part or the whole of the Exploration License, the
Licensee shall vacate the surrendered portion of the Exploration License
Area.
20. RELINQUISHMENT
1. The Licensee shall relinquish part of the Exploration License Area
during renewal of the Exploration License in accordance with the Mining
Proclamation, Mining Operations Regulations and Directives issued
thereunder.
2. In applying for each renewal of the Exploration License, the Licensee
shall indicate the portion of the License Area to be relinquished, which
portion shall not be less than one quarter of the original Exploration
License Area.
3. The Licensee shall vacate the whole area relinquished and shall also
vacate the entire Exploration License Area upon the termination of the
Exploration License, provided no mining license is applied for in
respect of an area included in the Exploration License Area.
4. Required relinquishments shall be from 25% of the entire License Area
and not necessarily from each of the six individual license areas
comprising the License Area. Further the portion of the License Area
relinquished at any time may consist of two or more non-contiguous
blocks. The Licensee shall be entitled to relinquish areas of the
License Area such that the remaining License Area is not rectangular
where reasonably necessary in order to ensure that the Licensee can keep
discovered mineral deposits within the License Area after any required
relinquishment.
5. The Licensee shall be entitled to apply in the ordinary course for new
licenses over portions of the License Area required to be relinquished
by law.
21. TERMINATION
This Agreement may be terminated for the following reasons:
1. By mutual agreement of the Parties.
2. When the Licensee relinquishes or surrenders the whole area of the
Exploration License.
3. If the Exploration License is revoked by the Ministry pursuant to the
provisions of the Mining Proclamation, the Mining Operations Regulations
and Directives issued thereunder.
4. When the term of the Exploration License expires without being renewed
or if no mining license has been applied for in respect of an area
included in the Exploration License Area.
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5. Upon the dissolution, liquidation, or bankruptcy of the Licensee subject
to the rights of its successors according to the provisions of the
Mining Proclamation, the Mining Operations Regulations and other
relevant laws of Eritrea.
22. ACQUISITION OF PROPERTY
1. Upon the termination of the Exploration License, the Government or the
Ministry may acquire all of the immovable and movable property used in
exploration activities at a price equal to the then undepreciated and
unamortized value of such assets, as shown in the financial books of
account of the Licensee.
2. If the Government or the Ministry does not exercise the rights provided
for under sub-article (1) of this Article within ninety (90) days from
the date of termination, the Licensee shall be free to dispose of such
assets to another person in accordance with the applicable laws of
Eritrea.
23. TRANSFER AND ASSIGNMENT
The Exploration License granted herewith may not be encumbered or inherited
but, may subject to the provisions of the Mining Proclamation, Mining
Regulations and Directives issued thereunder, be transferred or assigned with
the prior approval of the Ministry if it is satisfied that the incoming party
has the financial and technical resources to meet the obligations of the
License.
24. MINE DEVELOPMENT AND PRODUCTION
1. The Parties to this Agreement understand and agree that the objective of
this Agreement is to promptly commence an aggressive exploration
programme aiming at the discovery of economically viable deposit(s)
within the Exploration Period specified in this Agreement or any
extensions thereof and submit full scale feasibility study by the end of
the second extension period at the latest, so as to proceed to mine
development and production if the exploratory work of the Licensee
disclose a commercially viable mineral deposit(s) and if the Licensee
wishes to obtain a Mining License.
2. In the event of a discovery of an economically viable deposit(s), the
Licensee shall have the right to acquire a Mining License in respect of
an area included in the Exploration License Area covering the principal
deposit(s) for such mine(s) and any other deposits which may reasonably
be covered in any subsequent expansion of the original mine(s), as
contemplated in the feasibility study presented to the Ministry, and to
develop the mineral deposit subject to negotiations and under such terms
and conditions as may be mutually agreed upon by the Parties hereto.
3. Notwithstanding sub-article 2 of this Article, the Licensee shall be
granted a Mining License upon:
(a) certification by the Licensee that an ore body or bodies exist in the
License Area of a quality and in quantities that may be economically
viable to mine;
(b) submission and approval of a feasibility study prepared in accordance
with internationally accepted mining industry standards and practices;
(c) application in writing to the Ministry for the grant of a Mining
License;
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(d) fulfillment of all obligations under the Exploration License and
provided that the Licensee is not in breach of any provisions of this
Agreement, the Mining Proclamation, Mining Income Tax Proclamation,
Mining Operations Regulations and Mining Directives issued thereunder
which constitutes grounds for suspension or revocation of the
Exploration License; and
(e) meeting all other requirements in connection with the issuance of a
Mining License as provided for in the Mining Proclamation, Mining
Operations Regulations, Mining Directives issued thereunder and Mining
Income Tax Proclamation as may be applicable.
25. FORCE MAJEURE
1. Any failure by the Ministry or by the Licensee to carry out any of its
obligations under this Agreement shall not be deemed a breach of
contract, infraction under the laws or default if such failure is caused
by force majeure, that Party having taken all appropriate precaution,
due care and reasonable alternative measures with the objective of
avoiding such failure and of carrying out its obligations under this
Agreement.
2. For the purposes of this Agreement, the Parties hereby agree that "Force
Majeure" shall mean circumstances or events beyond the reasonable
control of either Party, including occurrences such as riots, strikes,
wars (declared or undeclared), insurrections, rebellions, terrorist
acts, civil disturbances, orders of any government authority, whether
such authority be actual or assumed, natural phenomena or calamities,
provided, however, that the inability to obtain equipment or supplies or
fuel shall not be a cause of force majeure unless as a result of force
majeure and provided further that if any failure to comply with the
provisions of this Agreement is occasioned by a law, regulation or order
of the Government and the Licensee is operating in accordance with
generally accepted international mining industry practices in the
License Area and is making reasonable efforts to comply with such laws,
regulations or order, the occurrence shall be deemed force majeure.
3. If the Licensee or the Ministry or the Government are prevented from
complying with this Agreement, in whole or in part, by force majeure,
the Party claiming force majeure shall give written notice to the other
Party as soon as practicable after its occurrence and the obligations of
the affected Party which are directly related to the force majeure shall
be suspended during the continuance of the force majeure.
4. Upon the occurrence of any force majeure, then anything in this
Agreement to the contrary notwithstanding, all time periods and
deadlines and the term of this Agreement shall each be extended for a
period equal to the total of the periods during which such force majeure
existed, plus such further periods, if any' as shall be necessary to
make good the time lost as a result of such force majeure.
5. If an obligation is suspended by force majeure for more than one year,
the Parties to this Agreement may enter into good faith negotiations on
the continuation of this Agreement for the balance of the term.
26. SETTLEMENT OF DISPUTES
1. Except as otherwise provided in this Agreement, if, during the term of
this Agreement or thereafter, any difference or dispute arises with
respect to the construction, meaning or effects of
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this Agreement or arising out of or related or in connection with this
Agreement, or concerning the rights and obligations of a Party
hereunder, which difference or dispute can not be mutually resolved by
the Parties within ninety (90) days, either Party shall have the right
to submit the difference or dispute to a binding arbitration process
under this Article. No Party shall have the right to seek any remedy or
relief from any court or other tribunal except with respect to the
enforcement of a right to arbitration or of any award or other remedy
provided thereunder.
2. The dispute or difference referred to under sub-article 1 of this
Article shall be finally settled by arbitration in accordance with the
I.C.C. (International Chamber of Commerce) Arbitration Rules, as at
present in force.
3. The arbitration, including the rendering of the award shall take place
in Asmara, Eritrea and shall be in the English Language. The decision
of the majority of the arbitrators shall be final and binding upon the
Parties.
4. The number of arbitrators shall be three (3). Each Party shall appoint
one (1) arbitrator and so notify the other Party of such appointment and
those two (2) arbitrators shall appoint the third arbitrator who shall
be the umpire.
5. In the event that the two arbitrators appointed under sub-article 4 of
this Article are unable to agree upon a third arbitrator or if a Party
fails to designate an arbitrator within the time provided herenn, then
the I.C.C. Court shall, upon application of a Party, appoint the third
arbitrator (in the former event) or appoint the third arbitrator as well
as the arbitrator on behalf of the Party which failed to designate an
arbitrator (in the later event).
6. The cost of arbitration, including attorney fees and costs, and the cost
of remuneration of the arbitrators shall be borne in the manner
determined by the arbitrators.
7. The final decision of the majority of the arbitrators shall be reduced
in writing and shall be binding upon the Parties hereto without the
right of appeal to any or other tribunal except on grounds of public
policy and shall be the sole and exclusive remedy regarding any claims,
counterclaims, issues or accounting presented to the arbitrators.
8. Any judgment upon the award of the arbitrators may be entered in any
court having jurisdiction thereof for execution.
27. AMENDMENTS
This Agreement shall not be amended, modified or supplemented except by an
instrument in writing signed by the Parties.
28. WAIVER
Any waiver of an obligation of the Licensee shall be in writing and signed by
the Ministry. No waiver shall be implied if the Ministry does not exercise a
remedy under this Agreement.
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29. REGISTRATION AND REPRESENTATION OF LICENSEE
1. The Licensee shall be registered in the Registry of Business Licensing
Office and shall maintain an office in Eritrea during the entire term of
the License and shall not be required to obtain any other authorization
or permission from any other Government office in order to conduct all
activities authorized by the Exploration License or to import any goods
required for the exploration activities.
2. The Licensee shall also maintain in Eritrea, during the term of the
License, a representative who or which is authorized to act on its
behalf and shall notify the Ministry of the identity of such
representative or any change thereof
3. Every license and every instrument under which such right is
transferred, assigned, relinquished, surrendered, suspended, revoked, or
otherwise dealt with shall be registered in the registry maintained for
this purpose by the Ministry. Each instrument relating to such rights
must be presented for registration within 90 (ninety) days after the
date thereof (or within such further time as the Ministry may allow) or
it shall otherwise become null and void.
4. A copy of every instrument required to be filed with the Ministry for
the registration, together with map(s) or other plan(s) necessary for
the identification of the area concerned, shall be filed with the
appropriate authority of the Government pursuant to the applicable laws.
30. NOTICE
Any and all notices, requests, demands and other communications required or
permitted to be made or given under this Agreement shall be in writing and
shall be deemed to have been duly made or given upon receipt thereof if
delivered by hand, registered mail, cable, telex, or facsimile to the following
addresses:
(a) If to the Ministry:
Director General, Department of Mines
Ministry of Energy, Mines and Water Resources
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Fax: ▇▇▇-▇-▇▇▇▇▇▇
(b) If to the Licensee:
Golden Star Resources Ltd.
Pan African Resources ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇▇. ▇/▇
▇▇▇▇ ▇ VOLO, ▇▇▇▇ ▇/▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Fax: Tel: 291-1-18 23 30
Attention: ▇▇▇▇▇ Valley Project Manager
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With a copy by FAX or Telegram to:
Golden Star Resources Ltd.
Pan African Resources Corporation
One Norwest Center
1700 Lincoln Street, Suite 1950
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
Fax: ▇-▇▇▇-▇▇▇-▇▇▇▇
Attention: Chairman and General Counsel
31. GOVERNING LAW
1. This Agreement shall be governed by, interpreted and construed in
accordance with the laws of Eritrea.
2. The Parties agree and undertake that for matters not contained in this
Agreement, the Mining Proclamation, Mining Income Tax Proclamation, the
Mining Operations Regulations and Directives issued thereunder shall
apply.
3. The Parties hereby agree and re-endorse that for and in the
implementation of this Agreement the provisions of Article 52(2) of the
Mining Proclamation and thereby the provisions of this Agreement in
consonance with said Proclamation shall prevail.
32. HEADINGS
The headings given to Articles in this Agreement are for convenience only and
shall not affect the construction or interpretation of this Agreement.
33. CO-OPERATION OF THE PARTIES
Each of the Parties agrees to execute and deliver all such further instruments,
and to do and perform all such further acts and things, as shall be necessary
or convenient to carry out the provisions of this Agreement.
34. ANNEXES
The following documents annexed herewith are integral parts of this Agreement.
ANNEX ONE Description and Maps of License Area
ANNEX TWO Three-year Comprehensive Exploration Work Programme of the
Initial Exploration Period
ANNEX THREE Detailed Exploration Work Programme for the First year of
the Initial Exploration Period
ANNEX FOUR Minimum Annual Exploration Expenditure Obligation of
Licensee.
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35. EFFECTIVE DATE
This Agreement comes into force on the day the Parties to this Agreement affix
their respective signature and seal.
IN WLTNESS THEREOF, the Parties hereto have executed this Agreement on the day
and year first above written.
FOR AND ON BEHALF OF THE GOVERNMENT
OF THE STATE OF ERITREA
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇
Title: Minister of Energy Mines & Water Resources
Signature: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇
FOR AND ON BEHALF OF GOLDEN STAR
RESOURCES LTD.
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Representative
Signature: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
FOR AND ON BEHALF OF PAN AFRICAN
RESOURCES CORPORATION
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
Signature: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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