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EXHIBIT 10.29
HEADS OF AGREEMENT
(SURINAME RECONNAISSANCE PROJECT)
THIS HEADS OF AGREEMENT ("Agreement") is made effective this 19th day
of August, 1996 ("Effective Date") by and between
BHP MINERALS INTERNATIONAL EXPLORATION INC, a Delaware corporation
with an address at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ("BHP")
and
GOLDEN STAR RESOURCES LTD., a corporation amalgamated under the laws
of Canada ("Golden Star"), with an address at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
INTRODUCTION
1. The Parties envisage that they will make one or more applications to
the Minister of Mines of Suriname for licenses, permits, and other
mineral concessions (collectively referred to herein as tenements),
and that such tenements and the area covered thereunder will, by
mutual agreement, be made subject to this Agreement. This project is
commonly referred to as the Suriname Reconnaissance Project.
2. The area covered by such tenements are referred to herein as the
"Project Area". The Project Area will be amended from time to time to
incorporate or relinquish those areas covered by tenements which the
Parties determine, by mutual agreement, to include or exclude from the
terms of this Agreement. The Parties agree to include as part of the
Project Area those areas described in Exhibit B which are to be
covered by the applications to be filed shortly with the Minister of
Mines. The Project Area is more particularly described in Exhibit B,
which Exhibit will be amended from time to time. The tenements
located in Suriname in which the Parties currently have an interest
and which are specifically excluded from this Agreement are attached
hereto as Exhibit B-1.
3. The Parties desire the mutually exclusive right to: (i) determine
whether to proceed under the terms of this Agreement for the purpose
of evaluating the Project Area; and (ii) determine whether to
negotiate a detailed joint venture agreement, as provided below.
4. Definitions are set forth in Exhibit A. The Project Area is described
in Exhibit B. Exhibits A and B are attached to and made a part of
this Agreement.
THE PARTIES AGREE AS FOLLOWS:
1.0 PURPOSE AND LEGAL EFFECT
1.1 Purpose. This Agreement outlines the key commercial terms and
conditions agreed upon whereby BHP and Golden Star may associate themselves for
the following purposes:
1.1.1 to conduct a detailed evaluation of Minerals on the Project
Area; and
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1.1.2 to negotiate a joint venture agreement ("JVA") for the
creation of a joint venture entity or such other form of entity to
evaluate, develop, mine, extract, produce, use, sell and export such
Minerals (the Joint Venture).
1.2 Effect. The Joint Venture may affect all or any portion of the
Project Area. Until superseded by a JVA, the terms and conditions set forth in
this Agreement shall govern the rights and obligations of the Parties. If a
JVA is executed, this Agreement shall be superseded. The JVA shall contain the
terms set forth in this Agreement and other terms as shall be mutually agreed.
The Parties shall in good faith endeavor to cause the JVA to be executed within
twenty-four (24) months of the Effective Date. Until such time as a JVA is
executed by the Parties, this Agreement shall be binding upon the Parties;
provided however, that Golden Star shall have sufficient rights to protect its
minority rights and economic interests under this Agreement, including without
limitation: rights protecting Golden Star from related party transactions,
matters relating to payments and financing which would materially affect cash
flow and other economic benefits running to Golden Star, and matters relating
to litigation, disposition of assets, accounting, abandonment of title to the
Project Area, and dissolution and liquidation of the Joint Venture.
1.3 Term. The Term of this Agreement shall commence on the Effective Date
and shall continue for the term and any extension of the last surviving
license, mining lease, or other mineral right held by the Joint Venture, BHP,
or Golden Star within the Project Area, unless earlier terminated as provide in
this Agreement.
2.0 GRANT OF RIGHTS
2.1 During the Term of this Agreement, each Party grants to the other
Party, as applicable, access to: (i) the Project Area, and (ii) all geological
reports, evaluations, information and data owned by, in its possession or at
its disposal and relating to the Project Area.
2.2 The Parties agree during the Term of this Agreement to negotiate
exclusively with one another a detailed JVA in connection with the Project
Area.
3.0 BHP'S OBLIGATIONS
3.1 During the Term of this Agreement, unless a Party should earlier
withdraw from this Agreement as provided in Section 8.0 (WITHDRAWAL AND
TERMINATION) or this Agreement should otherwise be terminated as provided
herein:
3.1.1 BHP shall reimburse Golden Star, upon execution of this
Agreement by both Parties, for all actual Expenditures incurred as of
the Effective Date by Golden Star on or for the benefit of the
Suriname Reconnaissance Project; provided however, that such
reimbursable Expenditures not exceed $50,000 and that Golden Star
shall provide BHP documentary evidence of payment of such Expenditures
reasonably satisfactory to BHP;
3.1.2 BHP shall act as Manager and direct all Operations and engage
the services of Golden Star pursuant to Section 4.6.2 of this
Agreement;
3.1.3 The Manager shall prepare work plans and budgets which the
Parties shall review and approve in accordance with Section 4.7
(Owners Council);
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3.1.4 The Parties will conduct Operations in the Project Area in a
careful and workmanlike manner.
4.0 JOINT VENTURE AGREEMENT
4.1 General. The Parties shall undertake to negotiate in good faith a
definitive JVA or such other form of agreement whose purpose is to create a
business entity or such other legal structure through which the Parties shall
jointly hold all mining rights, mining claims, water rights, surface lands and
other rights and entitlements, and conduct Operations.
4.2 Joint Venture Entity. The exact nature of the business entity or
legal structure through which BHP and Golden Star shall hold Assets and
conduct commercial mining activity pursuant to the JVA shall be jointly
determined by the Parties giving due regard to the tax, legal liability and
other considerations of each Party, as well as any necessary government
approvals.
4.3 Contribution of Assets. Prior to the execution of the Joint Venture
Agreement, the Party in whose name a license, permit or concession covered by
this Agreement has been issued shall hold such license, permit or concession
and all other Joint Venture Assets, as applicable, for the benefit of both
Parties pursuant to this Agreement. Upon execution of the Joint Venture
Agreement, each Party shall, subject to any required governmental approvals,
immediately contribute and transfer all Assets it owns or controls in
connection with the Project Area to the Joint Venture.
4.4 Participating Interests.
4.4.1 Initial Participating Interests. Upon the Effective Date: (i)
BHP shall have a 60% Participating Interest in the Joint Venture and
all Assets of the Joint Venture and Golden Star shall have a 40%
Participating Interest in the Joint Venture and all Assets of the
Joint Venture, and (ii) BHP and Golden Star shall participate jointly
in Operations on the basis of their respective Participating
Interests. On the basis of the adopted program and budget and except
as otherwise provided in Section 4.6 (Management), the Manager shall
submit to each Party prior to the last day of each month a billing for
estimated cash requirements for the next month. Within fifteen (15)
days after receipt of each billing, each Party shall advance to the
Manager its proportionate share of the estimated amount.
4.4.2 For purposes of this Agreement, prior to execution of the JVA,
the Parties shall be deemed to have a Joint Venture pursuant to the
terms of this Agreement and the term Joint Venture shall refer to and
include the respective Participating Interests of each Party in the
Project Area and Assets of the Joint Venture, and in connection
therewith such Joint Venture Assets held in BHP's name or in Golden
Star's name shall be held by such Party for the benefit of the Joint
Venture. For purposes of clarification, Assets belonging to Golden
Star which are used by Golden Star in the performance of services
under Section 4.6.2 (excluding such items which may be charged to the
Joint Venture as a capital acquisition) shall not be considered to be
an Asset of the Joint Venture.
4.4.3 Evidence of Interests. Upon execution of the JVA, BHP and
Golden Star shall execute and record in each appropriate official
record's office any and all documents and instruments in such form and
substance as may be required to evidence or perfect the Participating
Interests of the Parties in the Joint Venture and the Joint Venture's
interest in all Assets of the Joint
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Venture within the Project Area, subject to governmental approval in
accordance with Section 4.3 (Contribution of Assets).
4.5 Financing Obligations. If, prior to completion of a Feasibility
Study, costs are incurred under Section 4.6.2 at the request of BHP in order to
comply with BHP's safety requirements, and such costs are in excess of Golden
Star's historical costs for such matters, and provided Golden Star's safety
procedures are in compliance with industry standards and the standards imposed
by Law, then the cost differential shall be at BHP's sole expense.
4.6 Management.
4.6.1 As long as BHP's Participating Interest in the Joint Venture
is equal to or greater than 50%, then BHP shall have the continuing
right to act as Manager of Operations. The Manager shall be
responsible for the day to day management, conduct and control of the
Operations, subject to approved work plans and budgets and the
direction of the Owners Council. The Parties shall in good faith
negotiate and specify the powers and obligations of the Manager which
shall be included in the JVA.
4.6.2 Prior to completion of the Feasibility Study, Golden Star, at
the direction of the Manager, shall have the exclusive right and
obligation to execute and carry out all approved work plans and
budgets and provide a monthly report to the Manager as to the progress
and development of Operations. Golden Star shall invoice the Manager
monthly, on behalf of the Joint Venture, for costs and expenses
incurred, including, without limitation, a fee of 8% of the cost of
all work executed in connection with the implementation of approved
work plans and budgets; provided however, that this fee shall not be
applicable to charges for freight, assays, or third party contractors
(subcontractors). A preliminary invoice shall be prepared by Golden
Star not less than one month in advance of its incurring the expected
costs and such invoice shall be paid by BHP monthly in advance of
Golden Star incurring the projected costs and expenses, and such costs
and expenses shall be adjusted in the month following the month in
which they were incurred; provided however, that the 8% fee shall not
be invoiced in advance but shall be based on the costs and expenses
actually incurred. The purpose of this fee is not to provide Golden
Star with a profit, but to allow Golden Star to recover indirect costs
incurred in fulfilling its obligations hereunder. As a result, the
Parties shall review the fee semi-annually and the fee shall be
adjusted semi-annually if the Parties determine it to be insufficient
or excessive. Statements of costs shall be accompanied by invoices,
receipts or other evidence reasonably satisfactory to BHP which
substantiate the costs incurred. BHP and Golden Star shall indemnify,
defend, and hold harmless the other Party to this Agreement, its
directors, officers, employees, agents, and attorneys from and against
any and all losses, claims, damages, and liabilities arising out of
any act, omission, or any assumption of liability by the Party
providing the indemnification. Golden Star and BHP shall comply with
all requirements of all applicable governmental or local law, rule,
regulation, or order.
4.6.3 The Manager shall: (i) have the right to second personnel to
the Suriname Reconnaissance Project, (ii) after consultation with
Golden Star, have the right to engage the services of other
contractors having special qualifications or technical skills to
perform services requiring special qualifications or skills that
Golden Star's personnel do not possess or are not
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readily available, and (iii) provide the Parties quarterly reports
(March, June, September, and December), specifying in reasonable
detail the results of activities conducted by the Manager to date in
the Project Area.
4.6.4 Upon completion of the Feasibility Study, the Manager shall be
entitled to charge a management fee of 8% of allowable expenses, as
that term shall be defined in the JVA provided however, that this fee
shall not be applicable to charges for freight, assays, or third party
contractors (subcontractors). The purpose of this fee shall not be to
provide the Manager with a profit, but to allow the Manager to recover
indirect costs it incurs in fulfilling its obligations as Manager. As
a result, the Parties shall review the fee semi-annually and the fee
shall be adjusted semi-annually if the Parties determine it to be
insufficient or excessive. This management fee shall be considered to
be ordinary operating expenses of the Joint Venture.
4.6.5 The Manager shall be deemed to have resigned immediately upon
its Participating Interest becoming less than 50% or upon it having
become insolvent or bankrupt.
4.7 Owners Council.
4.7.1 All decisions during the Term of this Agreement relating to
the conduct of Operations and relating to the Joint Venture (including
work plans and budgets for each phase of work undertaken pursuant to
this Agreement) shall be made by the Owners Council. Prior to
execution of the JVA, the Owners Council shall (i) consist of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ representing Golden Star and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ representing BHP,
or their designees, and (ii) not take any binding decision unless both
representatives (or their designees) are present (which may be by
telephone). BHP and Golden Star shall have on the Owners Council a
number of votes proportionate to their respective or deemed
Participating Interest. Prior to execution of the JVA by both
Parties, the Owners Council shall not approve work programs and
budgets which in the aggregate would be in excess of One Million Five
Hundred Thousand Dollars ($1,500,000) for a period of twelve (12)
months, except with the unanimous consent of the Parties. Prior to
completion of the Feasibility Study, the Parties contemplate that work
programs will consist of one or more phases of work, and each phase
will be for a period of less than one year. At least thirty (30) days
prior to the expiration of an adopted phase of work, a proposed
program and budget for the succeeding phase shall be prepared by the
Manager and submitted to the Parties. By notice to the Owners
Council, within ten (10) days after the final vote adopting a program
and budget for a phase of work, a Party may elect to contribute to
such program and budget in some lesser amount than its respective
Participating Interest, or not at all, in which case its Participating
Interest will be diluted on a straight line basis.
4.7.2 All decisions of the Owners Council shall be taken by simple
majority vote unless otherwise agreed by the Parties for the purpose
of protecting minority interests; provided however, all decisions
relating to the inclusion of new areas to the Project Area shall be by
unanimous decision. The JVA shall include a provision to be mutually
agreed upon which specifies those matters which shall require a super
majority vote together with a provision for breaking deadlocks.
4.7.3 The decision to fund and to proceed with development and
construction of the First Mine shall be made solely by BHP; provided
that such decision shall be made on or before ninety (90) days
following completion of the Feasibility Study. Following completion
of the
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Feasibility Study, if a Party (relinquishing Party) elects not to
participate in development of the First Mine and the other Party
(continuing Party) chooses to fund construction of the entire First
Mine in accordance with the Feasibility Study and actually constructs
the First Mine, then the relinquishing Party shall have no continuing
right or interest to the First Mine and the relinquishing Party may
not thereafter participate in the First Mine.
4.7.4 Following completion of the Feasibility Study, the Owners
Council shall hold an annual meeting in June of each year, and such
additional times as the Parties may provide for in the JVA, in Denver
or San Francisco or such other mutually agreed places. Although the
Parties contemplate holding meetings to review and approve work plans
and budgets for each phase of work undertaken, the Parties do not
contemplate holding regular meetings prior to completion of the
Feasibility Study.
4.8 Dilution. Should either Party fail to advance funds as required under
this Agreement or the JVA, then its Participating Interest shall be diluted on
a straight line basis; provided however, if a Party fails within a reasonable
period to make a contribution or cash call which it previously committed to
make under an approved work plan and budget, it shall be in default and shall
be diluted in an accelerated manner to be mutually agreed by the Parties .
4.9 Accounting Procedure. The formal JVA shall contain a detailed
accounting procedure setting forth details for all allowable costs and other
matters pertinent to a mining venture.
5.0 REPRESENTATIONS
5.1 Mutual Representations. Each of the Parties represents to the other
Parties as follows:
5.1.1 that it is a corporation duly incorporated and in good
standing in its state and/or country of incorporation and that it is
qualified to do business and is in good standing in those states
and/or countries where necessary in order to carry out the purposes of
this Agreement;
5.1.2 that it has the right to enter into this Agreement and that
all corporate and/or other actions required to authorize it to enter
into and perform this Agreement have been properly taken;
5.1.3 that its obligations under this Agreement constitute legal,
valid and binding obligations enforceable against it.
5.2 All representations in this Section 5 shall be true and correct as of
the Effective Date and shall survive termination of this Agreement.
6.0 CONFIDENTIALITY AND PUBLIC STATEMENTS
6.1 Any information or data obtained in connection with the performance of
this Agreement is confidential and neither Golden Star nor BHP shall make any
public statement concerning this Agreement or the activities contemplated
thereunder without the prior consent of the other Party, which consent shall
not be withheld to the extent the disclosure is required by law or stock
exchange rule. The Manager shall be the spokesperson for the Joint Venture.
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7.0 TRANSFER OF INTEREST
7.1 Right of First Refusal. Except as provided in Section 7.2
(Exceptions), if BHP or Golden Star at any time wish to and can transfer all or
part of their respective rights under this Agreement, the Joint Venture or
their ownership interest in the Joint Venture entity or Assets thereof to a
third party which is not an Affiliate, the Party wishing to transfer
("Transferor") shall first offer such interest to the other Party
("Non-transferor") on the terms to be offered to or accepted from the third
party, with all such terms fully described and including the financial value of
any non- cash consideration specified. If the Non-transferor does not elect
within sixty (60) days of receiving such offer to accept the same, the
Transferor shall be entitled for the next six (6) months to transfer the
offered interest to a third party on the same terms without further obligation
to the Non-transferor, and if such interest is not transferred within said six
(6) month period, the obligation to offer such interest to the Non-transferor
shall again be applicable.
7.2 Exceptions.
7.2.1 The right of first refusal shall not apply to transfers to
facilitate the granting of security by a Party to a recognized
financial institution in connection with its financing of its share of
the costs of development and operation of a mine in the Project Area.
7.2.2 A Party may transfer any interest to an Affiliate provided
that said Party shall give written notice thereof to the
Non-transferor.
8.0 WITHDRAWAL AND TERMINATION
8.1 Prior to completion of the Feasibility Study, each Party may at any
time withdraw from this Agreement by providing at least 30 days prior written
notice to the other Party of such withdrawal. Upon such withdrawal, this
Agreement shall terminate and the withdrawing Party shall have no further
interests or rights under this Agreement and the Parties shall thereupon be
released and discharged from all of their respective liabilities and
obligations hereunder, except those liabilities and obligations existing on the
date of termination; provided however, if a Party withdraws from this Agreement
prior to completion of a work program and budget for a phase of work approved
in accordance with Section 4.7.1 prior to the giving of such notice of
withdrawal, the withdrawing Party shall be liable to the other Party for its
prorata share of the incomplete portion of such work and budget; and provided
further, the withdrawing Party shall transfer and assign to the other Party
free of charge all of its rights and interests in and to the Joint Venture and
the Joint Venture Assets, subject however, to any required governmental
approval.
8.2 Transfer of Licenses.
8.2.1 Subject to the terms thereof and any applicable laws and
regulations, the Party withdrawing pursuant to Section 8.1 shall offer
to transfer such license or permit held by it on behalf of the Joint
Venture to the other Party free of charge.
8.2.2 In the event that, whether by the operation of law or
otherwise, a license or permit cannot be transferred or otherwise
disposed of, then the Parties shall negotiate in good faith an
agreement upon mutually acceptable terms in which the withdrawing
Party shall continue to hold such license or permit for the benefit of
the non-withdrawing Party; provided however, that (i) the
non-withdrawing Party shall indemnify the withdrawing Party on terms
that are
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satisfactory to the withdrawing Party, and (ii) the withdrawing Party
shall not be obligated to incur any additional costs or liabilities
for continuing to hold such license or permit, and (iii) the
withdrawing Party shall not be obligated to hold such license or
permit for a period greater than 24 months following the date of its
withdrawal.
8.3 Upon the withdrawal of a Party, the withdrawing Party shall turn over
to the other Party originals of all factual maps, reports, assay results and
other factual data and documentation relating to the Project Area in its
possession, without any warranty or representation as to the accuracy,
completeness, reliability or usefulness thereof
9.0 GOVERNING LAW
9.1 The formation, interpretation, and performance of this Agreement and
the JVA shall be governed by the internal law, but not the conflicts of law
rules, of California, except that the laws of Suriname shall apply as to real
property and mineral rights issues. Any terms or agreements herein which by
their nature may or must be performed or occur after termination of this
Agreement shall survive such termination.
10.0 DISPUTE RESOLUTION
10.1 Matters to be Arbitrated. Any dispute, controversy or claim arising
under or in connection with this Agreement, and which cannot be resolved within
60 days of attempted negotiations between the Parties, shall be settled by
arbitration in accordance with this Section 10.
10.2 Procedure for Arbitration.
10.2.1 Matters subject to arbitration shall be settled by arbitration
in accordance with the UNCITRAL Arbitration Rules in effect on the
date of this Agreement, which Rules are deemed to be incorporated by
reference into this clause. The place of arbitration shall be San
Francisco, California, or such other location as may be agreed upon by
the Parties. The language of the arbitration shall be English. The
arbitration shall be the sole and exclusive forum for resolution of
the dispute or controversy and the award shall be final and binding.
Judgment thereon may be entered by any court having jurisdiction.
10.2.2 A Party may demand arbitration by delivering a written notice
thereof to the other Party setting forth a complete, concise statement
of the issue(s) in dispute, the amount involved and the remedy
requested. The arbitrators shall render a decision within six (6)
months after having been appointed.
10.2.3 The number of arbitrators shall be three (3), each of whom
shall be disinterested in the dispute and shall have no connection
with any Party. At least two (2) of the arbitrators shall be persons
having experience in the minerals industry. Unless the three (3)
arbitrators have been appointed by agreement of the Parties within
thirty (30) days after the date on which any Party requests the
settlement of any dispute by arbitration pursuant to this Section 10,
the International Chamber of Commerce shall appoint the three (3)
arbitrators referred to above. The appointing authority may appoint
from among nationals of any country, whether or not a Party is a
national of that country.
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10.2.4 The Parties consent that the United States District Court for
the Northern District of California shall have non-exclusive
jurisdiction with respect to all aspects of the enforcement of the
arbitration provisions of this Agreement.
11.0 NOTICES
11.1 All notices to be made or given by a Party hereunder shall be in
writing and delivered by mail or by telefax at the following addresses:
To Golden Star: Golden Star Resources Ltd.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: The Corporate Secretary
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
BHP: BHP Minerals International
Exploration Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: The Corporate Secretary
Facsimile: (1) (▇▇▇) ▇▇▇-▇▇▇▇
copy to: Minera BHP de Chile
▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attention: Manager Exploration
Facsimile: (56)(▇) ▇▇▇-▇▇▇▇
A Party may change its address by notice to the other Party.
11.2 All notices shall be given:
11.2.1 by personal delivery (including courier); or
11.2.2 by registered mail, charges prepaid; or
11.2.3 by electronic communication, with a confirmation sent by
registered mail.
11.3 All notices shall be effective and shall be deemed received:
11.3.1 if by personal delivery or by registered mail, on the date of
delivery if delivered during normal business hours, and if not
delivered during normal business hours, on the next business day
following delivery; or
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11.3.2 if by electronic communication, on the next business day
following receipt of the electronic communication.
12.0 RELATIONSHIP OF PARTIES
12.1 The relationship of the Parties under this Agreement is contractual
only. This Agreement is not intended to make any Party the employee, agent,
partner or legal representative of the other Party, or to create any fiduciary
relationship between the Parties. No Party shall have any authority to act for
or to assume any obligation or responsibility on behalf of any other Party.
12.2 Each Party may freely engage in and receive full benefits from any
business or other activity, whether or not competitive with the Joint Venture
or one another, without any obligation whatsoever to the other Party.
13.0 ENTIRE AGREEMENT
13.1 This Agreement contains the entire understanding and agreement of the
Parties with respect to the subject matter of this Agreement and supersedes all
prior agreements and understandings as between the Parties.
SIGNED FOR AND ON BEHALF OF
BHP MINERALS INTERNATIONAL EXPLORATION INC.
By: /s/ ▇. ▇▇▇▇▇▇
Name: ▇. ▇▇▇▇▇▇
Title: Manager Exploration
GOLDEN STAR RESOURCES LTD.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive V.P. Exploration
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EXHIBIT A
DEFINITIONS
For the purposes of this Agreement, the following terms shall have the
following meanings assigned to them:
"Affiliate" means any person, partnership, joint venture, corporation, or other
form of enterprise which directly or indirectly controls, is controlled by, or
is under common control with, a Party hereto. For purposes of the preceding
sentence, "control" means possession, directly or indirectly, of the power to
direct or cause direction of management and policies through ownership of
voting securities, contract, voting trust, or otherwise. It is understood and
agreed that control of a company can be exercised by another company or
companies if such latter company or companies owns shares carrying more than
50% of the votes exercisable at a general meeting (or its equivalent) of the
first mentioned company, and a particular company is deemed to be indirectly
controlled by a company or companies (the parent company or companies) if a
series of companies can be identified beginning with the parent company or
companies and ending with the particular company so related that each company
of the series except the parent company or companies is directly controlled by
one or more of the companies in the series.
"Agreement" means this Heads of Agreement including all amendments and
modifications thereof, and all schedules and exhibits, which are incorporated
herein by this reference.
"Assets" means the following:
(a) all interests, rights, and privileges (whether absolute or
conditional, whether existing or future) in real property,
mineral rights, and surface lands falling with the Project
Area, including, without limitation, all prospecting and
mining licenses, permits, leases, and other entitlements;
(b) all Minerals, Product, and materials of commercial value
produced or derived from the Project Area under this
Agreement;
(c) all mines and facilities located on the Project Area together
with all equipment used in the Operations;
(d) all inventory; all personalty, tangible and intangible,
obtained or used by a party in connection with the conduct of
Operations, including without limitation all geological data,
surveys, assays, analyses and other data or information
acquired in the course of Operations.
"BHP" means BHP Minerals International Exploration Inc., a corporation duly
organized under the laws of the State of Delaware, United States of America or
any nominated Affiliate thereof.
"Dollars" or "$" means U.S. dollars.
"Effective Date" means August 19, 1996.
"Expenditures" means any costs incurred by a Party in connection with the
Project Area, whether direct or indirect, on or off the Project Area, and for
purposes of: (i) prospecting, exploration, evaluation, and development of the
Project Area; (ii) payments of fees, duties, or other charges or
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deductions to acquire, maintain or as required by any license, permit, or other
documents issued by governmental bodies or other persons granting the right to
use mineral resources and surface lands, (iii) all other expenses incurred in
connection with the Project Area, prospecting licenses, mining leases, or this
Agreement, including expenses for all permits and documents issued by the
Government of Suriname or its authorized agent, environmental and other
studies, charges incurred for site preparation, engineering, surveying,
permits, equipment rental, third-party contractor services, construction of
roads, costs of equipment and supplies, labor costs, legal fees, all fees and
▇▇▇▇ ups payable to Golden Star under any consulting agreement with BHP, and
all direct salary and field expenses of exploration personnel, transportation
costs, and (iv) any Feasibility Study. Notwithstanding anything contained
herein to the contrary, during the Initial Term Expenditures shall not include
costs incurred by BHP to keep and maintain title to the Project Area.
"Feasibility Study" means a comprehensive description of the construction,
development, mining, processing, and marketing plan for the First Mine within
the Project Area in such form and detail as is normally required by a financial
institution familiar with mining for the purposes of project financing. The
Feasibility Study shall include the confirmation of reserves by the conduct of
detailed drilling works, hydrological and geotechnical works, environmental
studies, and the mining of one or more bulk samples of diamonds or ore for
metallurgical studies which may require the construction of one or more shafts,
the construction of an incline, or works associated with a trial mine. The
Feasibility Study shall contain estimates of both capital and operating costs
and shall analyze how to proceed with mining operations to economically and
commercially extract the target mineral(s), identify the optimum structure for
the mining venture, and include reference to relevant marketing and financial
aspects.
"First Mine" means the first mine to be developed by the Parties pursuant to
the Feasibility Study and which can be developed as a stand-alone mine.
"Golden Star" means Golden Star Resources Ltd., a corporation amalgamated under
the laws of Canada, or any nominated Affiliate thereof.
"Joint Venture Agreement" or "JVA" means the formal agreement which will detail
the basis upon which the Parties shall mutually evaluate, develop, mine,
extract, produce, use, sell and export of Minerals and associated mineral
resources and, accordingly, hold all mining rights, mining claims, water
rights, surface lands, licenses and permits.
"Law" or "Laws" means any applicable governmental law, rule, statute,
regulation, ordinance, permit or order.
"Manager" means the person or entity with overall management responsibility for
this Agreement and the JVA. The Manager shall be bestowed with power
sufficient to undertake, manage, direct and control all day to day activities
and decisions reasonably necessary to fulfill the purposes of the JVA, and such
activities shall be performed in accordance with international mining industry
practice and the terms of this Agreement. The Manager shall consult with each
non- managing Party in planning and executing each work plan and budget,
including that for producing the Feasibility Study. The Manager's powers shall
be subject always to the overriding authority of the Owners Council. The JVA or
a separate management agreement will specify with more particularity the
Manager's responsibilities, rights and obligations.
"Minerals" means all gold bearing ores, precious minerals, base minerals, and
all associated minerals on or within the Project Area, specifically excluding
diamonds and iron ore. The Parties intend that as
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between them, BHP reserves unto itself and shall have exclusive rights to all
iron ore and Golden Star reserves unto itself and shall have exclusive rights
to all diamonds within the Project Area.
"Operations" means all activities carried out in connection with the Project
Area under this Agreement, including, without limitation, prospecting,
exploration, the development of a mine, the mining, extraction, treatment,
storage and processing of Minerals, marketing of Product, the acquisition or
construction of any improvements, personalty, fixtures or equipment reasonably
necessary therefor, and any other activities or operations related to or
necessary for exploration, development and mining in the Project Area.
"Owners Council" means the governing body described in Section 4.7 (Owners
Council).
"Participating Interest" means an undivided ownership interest held by Golden
Star or BHP in the Joint Venture, the Assets contributed thereto and the
business entity or other legal entity created thereunder which entitles the
holder to that share of the Joint Venture entity and its Assets and profits and
Product thereof and which requires the holder to contribute to that share of
the costs and expenses of the development and operations thereof.
"Party" or "Parties" means BHP and/or Golden Star, or their successors in
interest.
"Product" or "Products" means all Minerals and materials of commercial value
produced or derived from the Project Area under this Agreement.
"Project Area" means those lands more particularly described in Section 1.1 and
in Exhibit B attached hereto.
"Term" shall have the meaning ascribed to it in Section 1.3 (Term).
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EXHIBIT B
PROJECT AREA
The Project Area, being commonly referred to as the Suriname Reconnaissance
Project, is generally depicted in the maps attached hereto as Exhibit B-2 and
is described as follows:
The areas being prepared for application of a Right of Reconnaissance are
AREA "A"
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The area enclosed within the following defined points:
1) Western boundary defined by Corantijn River and points
a) 57 16 23 W 5 55 44 N
b) 56 85 47 W 5 55 46 N
c) 56 85 62 W 5 12 22 N
d) 57 21 45 W 5 12 21 N, and
2) the North, East and West boundaries defined by the Corantijn River and points
a) 57 23 29 W 5 12 21 N
b) 57 29 30 W 5 12 22 N
AREA "B'
--------
The area enclosed within the following 4 points:
a) 56 85 47 W 5 55 46 N
b) 56 47 69 W 5 55 47 N
c) 56 47 60 W 5 12 83 N
d) 56 85 62 W 5 12 22 N
AREA "C"
--------
The area enclosed within the following 4 points:
a) 56 47 69 W 5 55 47 N
b) 56 18 68 W 5 55 46 N
c) 55 91 56 W 5 19 50 N
d) 56 47 55 W 5 19 28 N
AREA "D"
--------
The area enclosed within the following 3 points:
a) 56 47 69 W 5 19 28 N
b) 56 91 56 W 5 19 50 N
c) 56 47 52 W 4 61 ▇▇ ▇
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AREA "E'
--------
The area enclosed within the following 4 points:
a) 56 85 00 W 5 12 22 N
b) 56 47 69 W 5 12 83 N
c) 56 47 53 W 4 68 84 N
d) 56 84 86 W 4 69 04 N
AREA "F"
--------
The area enclosed within the following 8 points:
a) 56 97 66 W 4 81 92 N
b) from Point "a" to Point "c" following the Road
c) 56 84 91 W 4 84 18 N
d) 56 84 86 W 4 69 04 N
e) 56 47 53 W 4 68 84 N
f) 56 47 52 W 4 61 17 N
g) 56 84 83 W 4 22 25 N
h) 56 97 89 W 4 49 52 N
The total area described above will need to be split into 6 distinct areas to meet the legislative requirements.
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EXHIBIT B-1
EXCLUDED TENEMENTS
The tenements located in Suriname in which the Parties currently have an
interest and other areas which are specifically excluded from this Agreement
are generally depicted in the maps attached hereto as Exhibit B-2 and include,
without limitation, the following:
1. Saramacca (2600 square kilometers)
(See maps attached to original document)
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