EXHIBIT 10.5
ASSIGNMENT OF CONTRACTS AND SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of the 19th day of February, 1996.
BETWEEN
MINCO MINING AND METALS CORPORATION, a company validly subsisting
under the laws of British Columbia with an office at Suite 1870,
401 West Georgia Street, Vancouver, British Columbia, V6B 5AI
("Minco")
PACIFIC CANADA RESOURCES INC., a company validly
subsisting under the laws of Ontario with an office at ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
("PCR")
W H E R E A S:
A. PCR has entered into a letter of intent with Teck Exploration Ltd. ("Teck")
and Baiyin Non-Ferrous Metals Company ("Baiyin") dated June 6, 1995, regarding
the exploration and development of the Lijiagou lead-zinc deposit and possible
acquisition of the Changba open pit mine (the "CB-LG Property") located in
Chenxian, Gansu Province, People's Republic of China (the "CB-LG Agreement"), a
copy of which is attached hereto as Schedule "A."
B. PCR is also party to a cooperation agreement between PCR, Patrician Gold
Mines Ltd. and the First Geoexploration Bureau of Ministry of Metallurgical
Industry dated October 4, 1994, regarding the formation of an equity joint
venture to explore, develop and produce certain mineral properties known as the
"Stone Lake," "Crystal Valley" and "Emperor's Delight" properties located,
respectively, in Lingshou County, Zhangjiakou District and Chende District all
in the Province of Hebei, People's Republic of China (the "FGEB Co-Operation
Agreement"), a copy of which is attached hereto as Schedule "B."
C. Patrician Gold Mines Ltd. assigned its interests in the FGEB Co-Operation
Agreement to Orient Gold Mines Ltd. ("Orient") pursuant to an assignment
agreement dated September 8,1994.
D. Pursuant to the terms of the FGEB Co-Operation Agreement, PCR entered into a
joint venture contract dated December 25, 1995, with FGEB in respect to the
exploration and development of the Emperor's Delight property, through PCR's
British Virgin Islands subsidiary Triple Eight Mineral Corporation ("Temco"),
(the "Emperor's Delight Joint Venture Contract"), a copy of which is attached
hereto as Schedule "C."
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E. Pursuant to an option agreement made between PCR and Orient dated March 3,
1995, (the "Temco Option Agreement"), a copy of which is attached hereto as
Schedule "D," PCR granted to Orient the right to earn a forty (40%) percent
share interest in Temco.
F. PCR has entered into an agreement (the "T-C Investment and Participation
Agreement") dated February 19, 1996, with Teck Corporation ("Teck") and with
Cominco Ltd. ("Cominco"), a copy of which is attached hereto as Schedule "E."
Under this T-C Investment and Participation Agreement, PCR has granted certain
rights to Teck and Cominco in exchange for them making a private placement in a
specified company which the parties have agreed will be Minco, subject to the
Closing of this Agreement.
G. For greater certainty, the CB-LG Agreement and the FGEB Co-Operation
Agreement do not contemplate that PCR will ever hold a direct interest in a
Chinese mineral property but rather will hold a right to acquire an interest in
a Chinese corporation which will hold all right, title and interest in and to
the relevant Chinese mineral properties.
H. Pursuant to a Cooperative Agreement made between Minco and the Sichuan Bureau
of Geology and Minerals Resources dated July 7, 1995, as amended by an undated
Supplementary Agreement (the "Chapuzi Agreement"), a copy of which is attached
hereto as Schedule "F," Minco holds the right to acquire an interest in certain
mineral properties known as the "Chapuzi Property" located in Sichuan Province,
People's Republic of China.
I. PCR has agreed to assign to Minco all its right, title and interest in and to
the CB-LG Agreement, FGEB Co-Operation Agreement, Emperor's Delight Joint
Venture Contract, Temco Option Agreement and Minco has agreed to assume all
liabilities under such agreements and PCR has also agreed to sell to Minco all
of the issued common shares of Temco owned by PCR, all on the terms and
conditions hereinafter set forth.
J. PCR and Minco have entered into a confidentiality agreement dated January 2,
1996 (the "Confidentiality Agreement"), relating to the confidentiality
obligations as between each other regarding the exchange of information in
contemplation of entering into this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
premises and the mutual promises, and agreements herein contained, the parties
hereto agree as follows:
1. INTERPRETATION
1.1 In this Agreement and in the recitals and Schedules hereto, unless the
context otherwise requires, the following expressions will have the following
meanings:
(a) "Act" means the Securities Act (British Columbia) and the Regulations
and Rules passed thereunder, as amended from time to time;
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(b) "Chapuzi Agreement" means the agreement pursuant to which Minco holds
an NCI (hereinafter defined) in the Chapuzi property:
(c) "Closing Date" means the fifth business day following the date upon
which Minco receives written notification from the Exchange that this
Agreement has been accepted for filing.
(d) "Exchange" means the Vancouver Stock Exchange;
(e) "PCR Agreements" means, collectively, the FGEB Co-operation Agreement,
the Temco Option Agreement and the Emperor's Delight Joint Venture
Contract:
(f) "PCR Properties" means all of PCR's rights and interests in and to the
Properties held pursuant to the PCR Agreements;
(g) "Property" or "Properties" means a mineral property or properties in
China by whatever instrument it may be held by any interest,
contractual right, or other right to acquire an interest therein;
(h) "NCI," with respect to a Property, means a direct or indirect interest
in a Chinese mineral property which is available to be held by
foreigners or non-Chinese entities under Chinese law including,
without limitation, a share interest in a Chinese company which holds
title to a Chinese mineral property, or a contractual right to acquire
such share interest:
(i) "Teck-Cominco Private Placement" means the agreement to be negotiated
between Minco, Teck and Cominco whereby each of Teck and Cominco agree
to subscribe for 1,250,000 treasury shares of Minco at a price of
$0.80 per share; and
(j) "Temco Shares" means 600 of the 1,000 fully paid and non-assessable
issued common shares of Temco in the capital stock of Temco
beneficially owned by PCR.
1.2 The following schedules are incorporated by reference into this Agreement:
Schedule Description
A the CB-LG Agreement
B the FGEB Co-operation Agreement
C the Emperor's Delight Joint Venture Contract
D the Temco Option Agreement
E the T-C Investment and Participation Agreement
F the Chapuzi Agreement
G Minco's Unaudited December 31. 1995 Financial Statements
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H Minco's Material Liabilities
I Rights to acquire Securities in Minco
J Temco's Unaudited December 31. 1995 Financial Statement
K Temco's Material Liabilities
L Rights to acquire Securities in Temco
M Escrow Agreement
N Shareholders Agreement
O the Confidentiality Agreement
P PCR's third-party liabilities
2. REPRESENTATIONS AND WARRANTIES
2.1 Common Representations and Warranties
Each of Minco and PCR represents and warrants to the other, as
representations and warranties upon which each party has relied in entering into
this Agreement, which will be true at the Closing Date, and which will survive
the execution hereof, that:
(a) it is a body corporate duly formed, organized and validly subsisting
under the laws of its incorporating jurisdiction:
(b) it has full power and authority to carry on its business and to enter
into this Agreement and any agreement or instrument referred to or
contemplated by this Agreement;
(c) neither the execution and delivery of this Agreement, nor any of the
agreements referred to herein or contemplated hereby, nor the
consummation of the transactions hereby contemplated will be in
violation of its constating documents, or conflict with, or will
result in the breach of, or accelerate the performance required by,
any agreement to which it is a party and will not result in the
creation or imposition of any lien. encumbrance or restrictions of any
nature whatsoever in favour of a third party upon or against its
assets;
(d) it is resident in Canada within the meaning of the Income Tax Act
(Canada); and
(e) no proceedings are pending tor. and neither party is aware of any
basis for the institutions or any proceedings leading to is
dissolution or its winding-up, or the placing or it into bankruptcy,
or becoming subject to any other laws governing the affairs of
insolvent persons.
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2.2 Minco's Representations and Warranties
Minco represents and warrants to PCR, as representations and warranties
upon which PCR has relied in entering into this Agreement, which will be true at
the Closing Date, and which will survive the execution hereof, that:
(a) the authorized capital of Minco consists of 20,000,000 common shares
of which 3,223,373 common shares are validly issued, fully-paid and
non-assessable:
(b) no finder's fees, commissions or financial service fees of any type
whatsoever are payable by Minco in connection with transactions
contemplated by this Agreement other than a finder's fee of up to
100,000 shares of Minco which may be paid to a third party;
(c) the financial statements of Minco for the fiscal period ended December
31, 1995, attached hereto as Schedule "G" delivered to PCR present
fairly, in all material respects, the financial position of Minco as
at December 31, 1995, and the results of operations and the changes in
financial position for the year then ended in accordance with Canadian
generally accepted accounting principles applied on a consistent basis
and do not omit to state any material fact chat is required by
generally accepted accounting principles, or by applicable law, to be
stated or reflected therein, or which is necessary to make the
statements contained therein not misleading;
(d) since December 31, 1995, Minco has carried on its business in the
ordinary and normal course of the routine daily affairs of such
business. Since such date, there has been no material change in the
business, operations, affairs or conditions of Minco, financial or
otherwise, including, without, limitation, any change arising as a
result of any legislative or regulatory change, modification,
revocation, or suspension or any material license or right to do
business, fire, explosion, accident, casualty, labour trouble, flood,
drought, riot, storm, expropriation, condemnation, act of God. or
otherwise, except changes occurring in the ordinary course of the
routine daily affairs of business, which changes have not materially
adversely affected the organization, business, properties, prospects,
or financial condition of Minco;
(e) no order prohibiting the issue and sale of securities by Minco has
been issued and no proceedings for this purpose have been instituted,
are pending, or, to the knowledge or Minco, contemplated:
(f) this Agreement and any statement furnished to PCR by, or on behalf of
Minco, do not contain and will not contain an untrue statement of
material fact or omit or will omit to state a material fact or
circumstance necessary to make the statements contained herein or
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therein not misleading, or which may be material in PCR's decision to
enter into this Agreement:
(g) Minco owns, as of the date hereof, the NCI, or has rights to acquire
an NCI, in the Property as set out in the Chapuzi Agreement;
(h) the Chapuzi Agreement is a valid and subsisting contract enforceable
in accordance with its terms and Minco has not assigned, encumbered or
otherwise disposed or any interest in such agreement to any third
parties;
(i) to the best of its knowledge, there are no adverse claims, challenges,
actions, suits, disputes or proceedings regarding the Chapuzi
Agreement, and there are no such claims pending, nor is there any
basis therefor;
(j) there are no material liabilities, contingent or otherwise, of Minco
which are not disclosed in Schedule "H" attached hereto and Minco has
not guaranteed, or agreed to guarantee, any debt, liability or other
obligation of any person, firm or corporation other than as described
in Schedule "H;"
(k) no person, other than PCR, or as set out in Schedule "I," has any
right, agreement, or option, present or future, contingent or
absolute, or any right capable of becoming a right, agreement or
option:
(i) to require Minco to issue any further or other shares in its
capital or any security or other instrument convertible or
exchangeable in to shares in its capital, or to convert or
exchange any security or other instrument into, with or for
shares in its capital;
(ii) for the issue or allotment of any of the authorized but unissued
shares in its capital;
(iii) to require Minco to create any additional shares in its capital;
(iv) to require Minco to purchase, redeem, or otherwise acquire any of
the issued and outstanding shares in its capital;
(v) to require Minco to distribute any or all of its assets, or to
declare any dividends;
(vi) for the purchase of any assets or the acquisition or any interest
in a Property, or an NCI; or
(vii) to purchase or otherwise acquire any securities or Minco;
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(1) the Purchased Shares (as hereinafter defined) to be issued co PCR
pursuant to the provisions of paragraph 3, when issued, will be
validly issued as fully paid and non-assessable and will be free of
all resale restrictions other than any control block restrictions
which may apply and the one year hold period imposed by the Act;
(m) Minco has the corporate power to own the assets owned by it and to
carry out the business carried on by it and is duly registered and
qualified to carry on business in British Columbia;
(n) Minco is not indebted to any affiliate or director or officer of Minco
other than is set out in the Financial statements attached hereto as
Schedule "G;"
(o) no dividends or other distribution of any shares in the capital of the
Minco have been made, declared or authorized;
(p) Minco has not entered into any material contracts, agreements,
undertakings, or arrangements with third parties other as referred to
herein;
(q) there is no basis for and there are no actions, suits, judgments,
investigations or proceedings outstanding or pending or to the
knowledge of Minco threatened against or affecting Minco at law or in
equity or before or by any governmental agency or authority having
jurisdiction;
(r) Minco is not in breach of any laws, ordinances, statutes, regulations,
by-laws, orders or decrees to which it is subject or which apply to
it;
(s) all taxes, assessments, levies and other amounts which Minco is
required by law to pay, withhold or collect, will have been duly paid,
withheld or collected before the Closing Date; provided, however, that
none of the foregoing need be paid while the same is being contested
in good faith by appropriate proceedings diligently conducted;
(t) no director of Minco is indebted or under obligation to Minco on any
account whatsoever;
(u) all material transactions of Minco have been promptly and properly
recorded or filed in or with its respective books and records. The
minute books of Minco contain all records of the meetings and
proceedings of shareholders and directors thereof; and
(v) the performance of this Agreement will not be in violation of the
constating documents of Minco or of any agreement to which Minco is a
party and will not give any person or company any right to terminate
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or cancel any agreement or any right enjoyed by Minco and will not
result in the creation or imposition of any lien, encumbrance or
restriction of any nature whatsoever in favour of a third party upon
or against the assets of Minco.
2.3 PCR's Representations and Warranties
PCR represents and warrants to Minco, as representations and warranties
upon which Minco has relied in entering into this Agreement, which will be true
at the Closing Date, and which will survive the execution hereof, that:
(a) each of the PCR Agreements is a valid and subsisting contract
enforceable in accordance with its terms and PCR has not assigned,
encumbered or otherwise disposed of any interests in any of the PCR
Agreements to any third parties:
(b) Temco has the corporate power to own the assets owned by it and to
carry out the business carried on by it and is duly registered and
qualified to carry on business in the British Virgin Islands;
(c) Temco is not indebted to PCR or any affiliate or director or officer
of Temco other than is set out in the financial statements attached
hereto as Schedule "J;"
(d) no dividends or other distribution of any shares in the capital of the
Temco have been made, declared or authorized;
(e) Temco has not discharged or satisfied or paid any lien or encumbrance
or obligation or liability other than current liabilities in the
ordinary course of business;
(f) the business of Temco has been carried on in the ordinary course and
the Company has not incurred new liabilities or entered into any
transactions outside of the ordinary course of business of Temco since
December 31, 1995;
(g) the constating documents of Temco have not been altered since the
incorporation of Temco;
(h) Temco has not entered into any contracts, agreements, undertakings, or
arrangements with third parties other than (i) the Emperor's Delight
Joint Venture Contract and a preliminary version of such agreement
which was entered into as part of the process required to obtain
approvals under Chinese Law (ii) extension agreement relating to the
extension of the term of the FGEB Co-operation Agreement; and (iii) a
directorship of a company incorporated under the laws of the British
Virgin Islands;
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(i) there is no basis for and there are no actions, suits, judgments,
investigations or proceedings outstanding or pending or to the
knowledge of PCR threatened against or affecting Temco at law or in
equity or before or by any governmental agency or authority having
jurisdiction;
(j) Temco is not in breach of any laws, ordinances, statutes, regulations,
by-laws, orders or decrees to which it is subject or which apply to
it;
(k) neither PCR nor any director of Temco are indebted or under obligation
to Temco on any account whatsoever except as provided in the Temco
Option Agreement;
(1) all material transactions of Temco have been promptly and properly
recorded or filed in or with its respective books and records. The
minute books of Temco contain all records of the meetings and
proceedings of shareholders and directors thereof;
(m) the performance of this Agreement will not be in violation of the
constating documents of Temco or of any agreement to which Temco is a
party and will not give any person or company any right to terminate
or cancel any agreement or any right enjoyed by PCR or Temco and will
not result in the creation or imposition of any lien, encumbrance or
restriction of any nature whatsoever in favour of a third party upon
or against the assets of Temco;
(n) the authorized capital of Temco consists of 50,000 shares having a par
value of US$1.00 each of which the Temco Shares and the 400 shares
issued to Orient are the only shares that are issued and outstanding;
(o) the Temco Shares are validly issued, fully-paid and non-assessable
common shares not subject to any trading restrictions other than as
set out in the constating documents of Temco, and the Shares represent
the total issued and outstanding share capital of Temco;
(p) no finder's fees, commissions or financial service fees of any type
whatsoever are payable by Temco in connection with transactions
contemplated by this Agreement;
(q) the financial statements of Temco for the fiscal period ended December
31, 1995, attached hereto as Schedule "J" delivered to Minco present
fairly, in all material respects, the financial position of Temco as
at December 31, 1995, and the results of operations and the changes in
financial position for the year then ended in accordance with Canadian
generally accepted accounting principles applied on a consistent basis
and do not omit to state any material fact that is required by
generally accepted accounting principles, or by applicable law, to be
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stated or reflected therein, or which is necessary to make the
statements contained therein not misleading;
(r) since December 31, 1995, Temco has carried on its business in the
ordinary and normal course of the routine daily affairs of such
business. Since such date, there has been no material change in the
business. operations, affairs or conditions of Temco, financial or
otherwise. including, without limitation, any change arising as a
result of any legislative or regulatory change, modification,
revocation, or suspension or any material license or right to do
business, fire, explosion, accident, casualty, labour trouble, flood,
drought, riot, storm, expropriation, condemnation, act of God, or
otherwise, except changes occurring in the ordinary course of the
routine daily affairs of business, which changes have not materially
adversely affected the organization, business, properties, prospects,
or financial condition of Temco;
(s) there are no material liabilities, contingent or otherwise, of Temco
which are not disclosed in Schedule "K" attached hereto, and Temco has
not guaranteed or agreed to guarantee, any debt, liability or other
obligation of any person, firm or corporation other than or described
in Schedule "K;"
(t) no person, other than Minco, or as set out in Schedule "L," has any
right, agreement, or option, present or future, contingent or
absolute, or any right capable of becoming a right, agreement or
option:
(i) to require Temco to issue any further or other shares in its
capital or any security or other instrument convertible or
exchangeable in to shares in its capital, or to convert or
exchange any security or other instrument into, with or for
shares in its capital;
(ii) for the issue or allotment of any of the authorized but unissued
shares in its capital;
(iii) to require Temco to create any additional shares in its capital;
(iv) to require Temco to purchase, redeem, or otherwise acquire any of
the issued and outstanding shares in its capital;
(v) to require Temco to distribute any or all of its assets, or to
declare any dividends;
(vi) for the purchase of any assets or the acquisition or any interest
in a Property, or an NCI; or
(vii) to purchase or otherwise acquire any securities of Temco;
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(u) no order prohibiting the issue and sale of securities by Temco has
been issued and no proceedings for this purpose have been instituted,
are pending, or, to the knowledge of PCR, contemplated;
(v) this Agreement and any statement furnished to Minco by, or on behalf
of PCR and Temco, do not contain and will not contain an untrue
statement of material fact or omit or will omit to state a material
fact or circumstance necessary to make the statements contained herein
or therein not misleading, or which may be material in Minco's
decision to enter into this Agreement;
(w) PCR or Temco owns, as of the date hereof, the NCI, or has rights to
acquire an NCI, in Property as set out in the PCR Agreements;
(x) to the best of its knowledge, there are no adverse claims, challenges,
actions, suits, disputes or proceedings regarding the PCR Agreements,
and there are no such claims pending, nor is there any basis therefor.
2.4 The representations, warranties, covenants and agreements by each of the
parties contained in this Agreement or any certificates or documents delivered
pursuant to the provisions hereof or in connection with the transaction
contemplated hereby shall be true at and. as of the date of Closing of this
Agreement as though such representations and warranties were made at and as of
such time. Notwithstanding any investigations or inquiries made by a party prior
to the execution of this Agreement or the waiver of any condition by such party,
the representations, warranties, covenants and agreements of the other party
shall survive the execution and Closing of this Agreement and notwithstanding
the purchase and sale herein provided for, shall continue in full force and
effect.
2.5 The representations and warranties hereinbefore set out are conditions on
which the parties have relied in entering into this Agreement and will survive
the acquisition of the PCR Agreements and the Temco Shares by Minco, and each of
Minco and PCR will indemnify and save the other harmless from all loss, damage,
costs, actions and suns arising out of or in connection with any breach of any
representation, warranty, covenant, agreement or condition made by Minco or PCR,
as the case may be, and contained in this Agreement.
3. ASSIGNMENT OF PCR AGREEMENTS AND TRANSFER OF TEMCO SHARES
3.1 Upon and subject to the terms and conditions of the Agreement. PCR hereby
agrees to sell, transfer and assign to Minco and Minco agrees io purchase from
PCR the PCR Properties and the Temco Shares. Without limiting the generality of
the foregoing, as part of such sale, transfer and assignment, PCR agrees to
assign to Minco all its rights and interests in and to each of the PCR
Agreements and Minco Agrees to assume all liabilities under the PCR Agreements.
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3.2 The purchase price to be paid by Minco for the PCR Properties and the Temco
Shares (the "Purchase Price") will be:
(a) the allotment and issuance to PCR of Seven Million Two Hundred and
Eighty Thousand (7,280,000) common shares of Minco (the "Purchased
Shares"). The parties acknowledge and agree that the total number of
such shares to be issued is to be equal to approximately two-thirds
(2/3) of the total number of shares of Minco outstanding on a
fully-diluted basis as at the date of this Agreement and before giving
effect to the Teck-Cominco Private Placement. Such Purchased Shares
shall comprise:
(i) Two Million Four Hundred Thousand (2,400,000) free-trading shares
(the "Free Trading Shares") having a deemed value of $0.97 per
share. These Free Trading Shares will be subject to the
restrictions set out in section 8.1(f) herein. The parties
acknowledge and agree that the number of Free Trading Shares to
he issued to PCR hereunder is io be based upon the value of the
interest in the Emperor's Delight Property which may be earned by
PCR pursuant to the Emperor's Delight Joint Venture Contract; and
(ii) Four Million Eight Hundred and Eighty Thousand (4,880,000) escrow
shares (the "Escrow Shares"). These Escrow Shares will be subject
both to the restrictions set out in section 8.1(f) herein and to
the terms and conditions of an escrow agreement in the form
attached hereto as Schedule "M" (the "Escrow Agreement") and such
Escrow Shares may be released from escrow only in accordance with
the provisions of the Escrow Agreement and of this Agreement; and
(b) the assumption by Minco of PCR's liabilities to third parties as are
set out in Schedule "P" attached hereto.
3.3 PCR acknowledges that it may he required to execute and deliver such other
documents as may reasonably be requested by Minco in order to obtain necessary
regulatory approval of the transactions herein contemplated and PCR hereby
agrees to execute and deliver any and all such documents forthwith at such
request of Minco.
3.4 Subject to section 5.1 herein, following the execution of this Agreement by
both parties, Minco will submit this Agreement to the Exchange and request the
acceptance for filing hereof and the purchase of the PCR Properties and Temco
Shares. Thereafter, both parties will diligently pursue obtaining such
acceptance for filing and regulatory approval and comply with all reasonable
requests of the Exchange in connection therewith, but neither party will, in any
event, be liable for failure to obtain such acceptance or approval. Each party
will cooperate with the other as reasonably necessary to secure such acceptance
for filing and other required approvals.
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3.5 PCR acknowledges that the Purchased Shares to be allotted and issued to it
hereunder pursuant to exemptions from the registration and prospectus
requirements of the Act, and acknowledges, confirms to and covenants with Minco
that:
(a) it will comply with all requirements of applicable securities
legislation in connection with the issuance to it of the Shares and
the resale of the Shares including, without limitation, entering into
the Escrow Agreement if required; and
(b) it is not entering into this Agreement as result of any material
information about the affairs of Minco that, to its knowledge, has not
been publicly disclosed.
4. RELEASE OF ESCROW SHARES
4.1 The Escrow Shares issued to PCR hereunder shall be released to PCR on the
following basis:
(a) one escrow share for each $0.97 in the value of the interests to be
acquired by Minco from PCR hereunder in any of the PCR Properties,
based on a valuation report to be prepared by a qualified independent
consultant, less any expenditures required to be made by Minco,
pursuant to the PCR Agreements or otherwise, in order to earn its
interests in such Properties; provided that all required Chinese
governmental approvals in order to perfect the interests to be
acquired by Minco hereunder have been obtained for each of the
Properties that are the subject of the valuation report;
(b) one escrow share for each $0.97 in the value of the interest in any
New Projects (as defined in paragraph 6 herein) acquired by Minco
pursuant to this Agreement or the T-C Investment Participation
Agreement, such value to be determined on the same basis and subject
to the same provisions as described in sub-paragraph 4.1(a) above,
mutatis mutandis;
(c) one Escrow Share for every $1.81 expended by Minco, PCR, Teck,
Cominco, Temco or any other third party expending monies (including
PCR's joint venture partner in Temco, Orient) or on exploration and
development of the PCR Properties or of any New Projects acquired by
Minco pursuant to this Agreement or the T-C Investment and
Participation Agreement, exclusive of general and administrative
expenses, determined in accordance with the provisions applicable to
natural resources issuers under Local Policy Statement #3-07 of the
British Columbia Securities Commission; and
(d) one Escrow Share for every $0.97 in cumulative Cash Flow, as
hereinafter defined, from the operations of Minco on the PCR
Properties and any New Projects as defined in paragraph 6 herein and
as determined in accordance with generally accepted accounting
principals and by reference to Minco's annual audited financial
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statements, provided that each PCR Property and each New Project will
be considered separately without taking into account any negative cash
flow chat may exist in any other PCR Property or New Project.
4.2 For the purposes of subparagraph 4.1(d) herein, Cash Flow means net profit
for a fiscal year of Minco adjusted for the following add backs: depreciation,
amortization of goodwill, deferred income taxes, and amortization of research
and development costs, plus any other capitalization charges as may be permitted
by the Exchange. Cumulative Cash Flow, less any amounts used in prior Escrow
Share releases pursuant to subparagraph 4.1(d), divided by $0.97 per share,
equals the total number of Escrow Shares which may be released in any
twelve-month period. During the currency of the Escrow Agreement, Minco shall
determine (i) the cumulative Cash Flow commencing after the Closing Date (as
defined in paragraph 1.1 herein), (ii) the total exploration and development
expenditures on the Properties pursuant to subparagraph 4. l(c), and (iii) the
number of Escrow Shares available for release to PCR, within One Hundred Twenty
(120) days from each fiscal year end of Minco.
4.3 Minco shall file its annual audited financial statements, prepared in
accordance with generally accepted accounting principles, with the Exchange and
the number of Escrow Shares to be released from escrow to PCR at any time shall
be subject to the prior written consent of the Exchange. Notwithstanding the
foregoing, in the event that not all of the Escrow Shares are released to PCR
within Ten (10) years of the Closing Date, as hereinafter defined, any Escrow
Shares not released shall be forfeited by PCR and cancelled and Minco shall have
no further obligation or liability to PCR with respect to such Escrow Shares.
For greater certainty the Escrow Shares shall not be forfeited for any reason
other than the expiration of the aforementioned Ten (10) year period.
5. CONDITIONS PRECEDENTS
5.1 This Agreement and the obligations of each party are in each case subject
to each of the following occurring on or before ten (10) days next following the
date on which this Agreement is executed:
(a) the acceptance for filing of this Agreement by the Exchange;
(b) the execution of an investment and participation agreement between
Minco, Teck and Cominco under which Minco will have rights and
obligations substantially the same as those of PCR under the T-C
Investment and Participation Agreement;
(c) the execution of a subscription agreement between Minco, Teck and
Cominco relating to the Teck-Cominco Private Placement, unless already
included in the investment and participation agreement referred to in
section 5. l(b) above;
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(d) all representations and warranties of each party made to the other in
this Agreement, or in any written statement delivered by each party to
the other under this Agreement, are true at the Closing Date;
(e) each of the covenants and agreements of, conditions imposed upon, and
the deliveries set out herein, to be made, satisfied, or complied with
by each party in favour of the other on or before the Closing Date has
been fully performed, satisfied and complied with in all respects on
or before the Closing Date; and
(f) the execution by PCR of the T-C Investment and Participation
Agreement.
5.2 If the conditions set out in section 5.1 herein are not satisfied on or
before the date which is ten (10) days next following the date on which this
Agreement is executed, either party may, in its sole discretion, terminate this
Agreement at any time thereafter whereupon neither party shall have any further
obligation to the other party under this Agreement.
5.3 This Agreement shall also be subject to PCR making available to Minco of
the following on or before the Closing Date:
(a) all non-public data, agreements, evaluations, professional reports and
other information in the possession or control of PCR with respect to
the PCR Properties;
(b) written consent of Baiyin to the assignment of the CB-LG Agreement
hereunder.
5.4 PCR agrees to diligently pursue obtaining the written consent required
pursuant to section 5.3 (h) hereunder, but PCR will in no event be liable for
failure to obtain such written consent.
6. EXCLUSIVE RIGHT OF ACQUISITION
6.1 For a period of time commencing on the date of this Agreement and expiring
on March 1, 2000, Minco shall have the exclusive right to acquire from PCR, at
cost and in the manner hereinafter described (the "Right of Acquisition") all
right, title and interest in and to any new base or precious metal Property
which PCR identifies and in respect to which PCR has acquired an NCI (a "New
Property") or in respect to which PCR has a reasonable expectation of acquiring
an NCI. The Right of Acquisition may be extended beyond March 1, 2000, upon
agreement of the parties hereto.
6.2 Upon identification of a New Property, PCR shall deliver a notice to Minco
providing reasonable details regarding the New Property, including a description
of the NCI acquired or to be acquired by PCR therein, which notice shall be
accompanied by copies of all documentation in the possession of PCR regarding
the New Property, including but not limited to all underlying agreements and
geological reports regarding the New Property (the "New Property Notice").
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Minco and PCR shall thereupon enter into a separate confidentiality agreement
relating to such New Property.
6.3 Upon receipt of the New Property Notice and in the event Teck and Cominco
have not yet exercised their "Earn-in Rights" in respect to two NCI's, as
defined in the T-C Investment and Participation Agreement, Minco shall forthwith
provide a complete copy of the New Property Notice to Teck and Cominco in
accordance with the provisions of Part 6 of the T-C Investment and Participation
Agreement, with a request that Teck and Cominco determine whether the New
Property is one that should be governed by the T-C Investment and Participation
Agreement.
6.4 In the event that after receiving a complete copy of the New Property
Notice Teck and Cominco determine that the New Property is one that should be
governed by the T-C Investment and Participation Agreement, then Minco shall be
deemed to have exercised the Right of Acquisition and PCR shall be deemed to
have assigned all its right, title and interest in the New Property to Minco.
6.5 In the event that Teck and Cominco determine that the New Property is not
one that should be governed by the T-C Investment and Participation Agreement or
in the event that Teck and Cominco have exercised their "Earn-in Rights" in
respect to two NCI's, as defined in the T-C Investment and Participation
Agreement, then Minco shall, as soon as practicable following the determination
of Teck and Cominco, if applicable, but in any event not later than 30 days
following receipt of the New Property Notice by Minco notify PCR in writing of
its decision to either exercise or decline to exercise its Right of Acquisition.
6.6 If Minco elects not to exercise its Right of Acquisition, PCR will be free
to deal with the New Properly as it sees fit, and the Property shall thereafter
not be subject to this Agreement. Failure by Minco to notify PCR of its election
within the time limit in section 6.5 will be deemed to be an election that Minco
has declined to exercise the Right of Acquisition.
6.7 If Minco elects or is deemed to have elected to exercise its Right of
Acquisition in respect to a New Property, PCR shall assign all its right, title
and interest in the New Property to Minco. PCR shall thereafter provide Minco
with copies of all documentation reasonably necessary to substantiate PCR's
out-of-pocket costs in respect to the acquisition of its interests in such New
Property and Minco shall forthwith upon receipt of such documentation reimburse
PCR for all such out-of-pocket costs and in addition, Minco shall be responsible
for payment of' any finder fees, commissions or other payments due to third
parties in connection with the acquisition of the New Property, the payment of
which are in accordance with regulatory requirements and have been approved by
Minco's board of directors. PCR furthermore agrees to execute and deliver to
Minco any and all documentation reasonably necessary to perfect such the
assignment of its interests in the New Property to Minco and to provide to Minco
all such reasonable assistance that Minco may require to secure the Property and
NCI therein.
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6.8 The rights of acquisition held by Minco under section 6 herein shall be
subject to any prior rights that Teck and Cominco may have under the T-C
Investment and Participation Agreement.
7. MINCO BOARD APPOINTMENTS
7.1 The parties agree that forthwith upon execution of this Agreement, Minco
shall take such steps as are necessary to change the constitution of the board
of directors of Mince in accordance with the Shareholders Agreement attached
hereto as Schedule "N."
8. CLOSING
8.1 On the Closing Date, the following events shall occur:
(a) Minco shall deliver to PCR a copy of the Exchange letter of acceptance
in respect to this Agreement;
(b) PCR shall deliver to Minco a deed of assignment in respect to each of
the PCR Agreements;
(c) PCR shall deliver to Minco the Temco Shares duly endorsed for
transfer, and make adequate provision for transfer of control of all
corporate records, registers and documents of Temco, including the
minute book and corporate seal of Temco:
(d) PCR shall cause to be delivered to Minco a legal opinion from a
qualified British Virgin Islands lawyer that the Temco Shares were
legally created, and are fully paid and non-assessable; and that Temco
has taken all necessary corporate actions to authorize and approve the
transfer of the Temco Shares to Minco, and that the transfer will not
breach or cause a breach of any terms of the constating documents of
Temco:
(e) Each of Minco and PCR shall execute and deliver to one another the
Escrow Agreement;
(f) Minco shall issue to PCR certificates representing the Free Trading
Shares and Escrow Shares, which certificates will be endorsed with a
legend indicating that they are held subject to the one year hold
period imposed by the Act and, in the case of the Escrow Shares, that
such shares may only be traded in accordance with the terms of the
Escrow Agreement;
(g) Minco and PCR shall cause the Shareholders Agreement (as defined by
paragraph 7.1 herein), fully executed, to be delivered to one another;
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(h) Minco shall cause to be delivered to PCR a legal opinion from a
qualified British Columbia lawyer that the Free Trading and Escrow
Shares were legally created, and are fully paid and non-assessable;
and that Minco has taken all necessary corporate actions to authorize
the issuance of the Free Trading Escrow Shares to PCR, and that the
transfer will not breach or cause a breach of any terms of the
constating documents of Minco;
(i) The Teck-Cominco Private Placement shall be completed; and
(j) The payment by Minco to PCR of PCR's third party liability as set out
in Schedule "P."
9.1 Any notice, direction or other instrument required or permitted to be given
under this Agreement will be in writing and may be given by the delivery of the
same or by mailing the same by prepaid registered or certified mail or by
sending the same by telegram, telex. telecommunication or other similar form of
communication, in each case addressed as follows:
(a) if to Minco at:
Minco Mining and Metals Corporation
Suite 1870. ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇
Fax No.: ▇-▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chairman & C.E.O.
(b) if to PCR at:
Pacific Canada Resources Inc.
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ Fax No.: ▇-▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇ ▇. ▇▇▇, Managing Director
9.2 Any notice, direction or other instrument aforesaid will, if delivered, be
deemed to have been given and received on the day it was delivered, and if
mailed, be deemed to have been given and received on the tenth business day
following the day of mailing, except in the event of disruption of the postal
services in which event notice will he deemed to he received only when actually
received and, if sent by fax, be deemed to have been given or received on the
next business day of the recipient party following the date on which it was so
sent.
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9.3 Any party may at any time give to the other, notice in writing of any
change of address of the party giving such notice and from and after the giving
of such notice, the address or addresses therein specified will be deemed to be
the address of such party for the purposes of giving notice hereunder.
10. GENERAL
10.1 This Agreement, other than the Confidentiality Agreement, constitutes the
entire agreement between the parties and replaces and supersedes all prior
agreements, memoranda, correspondence, communications, negotiations and
representations, whether verbal or written, express or implied, statutory or
otherwise between the parties with respect to the subject matter herein. For
greater certainty, the parties agree that, if this Agreement is terminated for
any reason, the Confidentiality Agreement will not be terminated and the rights
and obligations set out therein will continue to be in effect.
10.2 The parties hereto agree that they and each of them will execute all
document and do all acts and things within their respective powers to carry out
and implement the provisions or intent of this Agreement.
10.3 The headings to the respective sections herein will not be deemed part of
this Agreement but will be regarded as having been used for convenience only.
10.4 All references to monies hereunder will be in Canadian funds. All payments
to be made to any party hereunder will be made by cash, certified cheque or bank
draft mailed or delivered to such party at its address for notice purposes as
provided herein, or for the account of such party at such bank or banks in
Canada as such party may designate from time to time by written notice. Said
bank or banks will be deemed the agent of the designating party for the purpose
of receiving, collecting and receipting such payment.
10.5 This Agreement will enure lo the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns.
10.6 This Agreement may be signed by facsimile and in one or more counterparts
and signed counterpart copies, when read together, shall be irrevocably deemed
to constitute a single binding Agreement signed by both parties.
10.7 This Agreement will he governed and interpreted in accordance with the laws
of British Columbia (except tor its conflict of laws provisions) and the laws of
Canada applicable therein. All actions arising from this Agreement will be
commenced and prosecuted in the courts of British Columbia, and the parties
hereby attorn to the jurisdiction thereof.
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IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the day and year first above written.
THE CORPORATE SEAL OF MINCO )
MINING AND METALS CORPORATION )
was hereunto affixed in the presence of: )
)
)
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ) C/S
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Authorized Signatory )
)
)
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ )
--------------------------------------------)
Authorized Signatory )
THE CORPORATE SEAL OF PACIFIC )
CANADA RESOURCES INC. was hereunto )
affixed in the presence of: )
)
)
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇ ) C/S
--------------------------------------------)
Authorized Signatory )
)
)
/s/ ▇▇▇ ▇. ▇▇▇ )
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Authorized Signatory )