o | Registration statement pursuant to Section 12 (b) or 12(g) of the Securities Exchange Act of 1934 |
x | Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | Shell company report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Commission file number: 1-10533
|
Commission file number: 0-20122 | |
|
||
Rio Tinto plc
|
Rio Tinto Limited | |
|
ABN 96 004 458 404 | |
(Exact name of Registrant as specified in its charter)
|
(Exact name of Registrant as specified in its charter) | |
|
||
England and Wales
|
Victoria, Australia | |
(Jurisdiction of incorporation or organisation)
|
(Jurisdiction of incorporation or organisation) | |
|
||
2 Eastbourne Terrace
|
Level 33, 120 Collins Street | |
London, W2 6LG, United Kingdom
|
Melbourne, Victoria 3000, Australia | |
(Address of principal executive offices)
|
(Address of principal executive offices) |
Title of each class | Name of each exchange | Name of each exchange | Title of each class | |||
on which registered | on which registered | |||||
American Depositary Shares*
|
New York Stock Exchange | |||||
|
||||||
Ordinary Shares of 10p each**
|
New York Stock Exchange | |||||
|
||||||
7.125% Notes due 2013
|
New York Stock Exchange | New York Stock Exchange | 7.125% Notes due 2013 | |||
|
||||||
5.875% Notes due 2013
|
New York Stock Exchange | New York Stock Exchange | 5.875% Notes due 2013 | |||
|
||||||
6.500% Notes due 2018
|
New York Stock Exchange | New York Stock Exchange | 6.500% Notes due 2018 | |||
|
||||||
7.125% Notes due 2028
|
New York Stock Exchange | New York Stock Exchange | 7.125% Notes due 2028 | |||
|
||||||
8.900% Notes due 2014
|
New York Stock Exchange | New York Stock Exchange | 8.900% Notes due 2014 | |||
|
||||||
9.250% Notes due 2019
|
New York Stock Exchange | New York Stock Exchange | 9.250% Notes due 2019 |
* | Evidenced by American Depositary Receipts. Each American Depositary Share Represents one Rio Tinto plc Ordinary Shares of 10p each. | |
** | Not for trading, but only in connection with the listing of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission |
Title of each class | Title of each class | |
None
|
Shares |
None | None |
Title of each class | Number | Number | Title of each class | |||||||||||||
|
Ordinary Shares of 10p each | 1,529,003,871 | 606,831,240 | Shares | ||||||||||||
|
DLC Dividend Share of 10p | 1 | 1 | DLC Dividend Share | ||||||||||||
|
Special Voting Share of 10p | 1 | 1 | Special Voting Share |
Large accelerated filer x | Accelerated filer o |
Non-accelerated filer
o
(Do not check if a smaller reporting company) |
Smaller reporting company o |
Rio Tinto 2009 Form 20-F 3
Item 1. | Identity of Directors, Senior Management and Advisers |
Item 2. | Offer Statistics and Expected Timetable |
Item 3. | Key Information |
Income Statement Data | ||||||||||||||||||||
For the years ending 31 December | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
Amounts in accordance with IFRS | US$m | US$m | US$m | US$m | US$m | |||||||||||||||
Consolidated revenue
|
41,825 | 54,264 | 29,700 | 22,465 | 19,033 | |||||||||||||||
Group operating profit (a)
|
7,506 | 10,194 | 8,571 | 8,974 | 6,922 | |||||||||||||||
|
||||||||||||||||||||
Profit for the year from continuing operations
|
5,784 | 5,436 | 7,746 | 7,867 | 5,498 | |||||||||||||||
Loss after tax from discontinued operations
|
(449 | ) | (827 | ) | | | | |||||||||||||
|
||||||||||||||||||||
Profit for the year
|
5,335 | 4,609 | 7,746 | 7,867 | 5,498 | |||||||||||||||
|
||||||||||||||||||||
Basic earnings per share (b)
|
||||||||||||||||||||
Profit from continuing operations (US cents)
|
301.7 | 286.8 | 464.9 | 456.2 | 312.6 | |||||||||||||||
Loss after tax from discontinued operations (US cents)
|
(25.5 | ) | (52.7 | ) | | | | |||||||||||||
|
||||||||||||||||||||
Profit for the year per share (US cents)
|
276.2 | 234.1 | 464.9 | 456.2 | 312.6 | |||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Diluted earnings per share (b)
|
||||||||||||||||||||
Profit from continuing operations (US cents)
|
300.7 | 285.5 | 462.9 | 454.3 | 311.6 | |||||||||||||||
Loss after tax from discontinued operations (US cents)
|
(25.4 | ) | (52.4 | ) | | | | |||||||||||||
|
||||||||||||||||||||
Profit for the year per share (US cents)
|
275.3 | 233.1 | 462.9 | 454.3 | 311.6 | |||||||||||||||
Rio Tinto 2009 Form 20-F 4
Dividends per share | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
Dividends declared during the year (b)
|
||||||||||||||||||||
US cents
|
||||||||||||||||||||
interim
|
| 55.6 | 42.5 | 32.7 | 31.5 | |||||||||||||||
final and special
|
45.0 | 55.6 | 68.7 | 52.3 | 124.0 | |||||||||||||||
UK pence
|
||||||||||||||||||||
interim
|
| 29.6 | 20.9 | 17.5 | 17.8 | |||||||||||||||
final and special
|
28.8 | 37.9 | 35.3 | 26.7 | 69.8 | |||||||||||||||
Australian cents
|
||||||||||||||||||||
interim
|
| 63.3 | 49.6 | 42.9 | 41.4 | |||||||||||||||
final and special
|
51.6 | 83.0 | 76.1 | 67.8 | 163.9 | |||||||||||||||
Dividends paid during the year (US cents) (b)
|
||||||||||||||||||||
ordinary and special
|
55.6 | 124.3 | 94.8 | 156.7 | 68.3 | |||||||||||||||
Weighted average number of shares basic
(millions) (b)
|
1,763.6 | 1,570.1 | 1,572.9 | 1,630.5 | 1,668.2 | |||||||||||||||
Weighted average number of shares diluted
(millions) (b)
|
1,769.6 | 1,577.3 | 1,579.6 | 1,637.1 | 1,673.9 | |||||||||||||||
Statement of Financial Position Data | Restated (c) | |||||||||||||||||||
at 31 December | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
Amounts in accordance with IFRS | US$m | US$m | US$m | US$m | US$m | |||||||||||||||
Total assets
|
97,236 | 89,616 | 101,091 | 34,494 | 29,803 | |||||||||||||||
Share capital / premium
|
9,344 | 5,826 | 3,323 | 3,190 | 3,079 | |||||||||||||||
Total equity / Net assets
|
45,925 | 22,461 | 26,293 | 19,385 | 15,739 | |||||||||||||||
Equity attributable to Rio Tinto shareholders
|
43,831 | 20,638 | 24,772 | 18,232 | 14,948 | |||||||||||||||
Notes | ||
(a) | Group operating profit under IFRS includes the effects of charges and reversals resulting from impairments and profit and loss on disposals of interests in businesses. Group operating profit amounts shown above exclude equity accounted operations, finance items, tax and discontinued operations. | |
(b) | The rights issues were at a discount to the then market price. Accordingly, earnings per share and dividends per share for all periods up to the date on which the shares were issued have been adjusted for the bonus element of the issue. The bonus factor for Rio Tinto plc was 1.2105 and for Rio Tinto Limited was 1.2679. | |
(c) | The 31 December 2007 balance sheet has been restated for the revisions to Alcans fair value accounting which were finalised in 2008. |
Rio Tinto 2009 Form 20-F 5
Rio Tinto 2009 Form 20-F 6
Rio Tinto 2009 Form 20-F 7
US$ millions | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
Expected return on plan assets
|
581 | 857 | 438 | 261 | 249 | |||||||||||||||
Actual return on plan assets
|
1,472 | (2,451 | ) | 309 | 517 | 365 | ||||||||||||||
Difference between the expected and
actual return on plan assets (loss)/gain
(US$ million)
|
891 | (3,308 | ) | (129 | ) | 256 | 116 | |||||||||||||
Difference as a percentage of plan assets
|
7 | % | (36 | %) | (1 | %) | 5 | % | 3 | % | ||||||||||
| have economic or business interests or goals that are inconsistent with, or opposed to, those of the Group | |
| exercise veto rights to block actions that the Group believes are in its or the joint ventures best interests; | |
| take action contrary to the Groups policies or objectives with respect to its investments; or |
Rio Tinto 2009 Form 20-F 8
| be unable or unwilling to fulfil their obligations under the joint venture or other agreements, such as contributing capital to expansion or maintenance projects. |
Rio Tinto 2009 Form 20-F 9
Rio Tinto 2009 Form 20-F 10
Rio Tinto 2009
Form 20-F
11
Rio Tinto 2009
Form 20-F
12
Rio Tinto 2009
Form 20-F
13
Rio Tinto 2009
Form 20-F
14
Rio Tinto 2009
Form 20-F
15
Rio Tinto 2009
Form 20-F
16
Rio Tinto 2009
Form 20-F
17
Rio Tinto 2009
Form 20-F
18
Rio Tinto 2009
Form 20-F
19
Rio Tinto 2009
Form 20-F
20
Rio Tinto 2009
Form 20-F
29
Rio Tinto 2009
Form 20-F
30
Rio Tinto 2009
Form 20-F
31
Rio Tinto 2009
Form 20-F
32
Rio Tinto 2009
Form 20-F
33
Rio Tinto 2009
Form 20-F
34
Item 4.
Information on the Company
Aluminium
Copper
Diamonds & Minerals
Energy
Iron Ore
Exploration
Technology & Innovation
Table of Contents
Focus on operational delivery
Pursue our growth path
Complete the iron ore production joint venture
Prudent balance sheet management
Strengthen our relationship with China
Table of Contents
To give senior management a means to evaluate the Groups overall performance from an
operational, growth and sustainable development perspective.
To provide managers and their teams with clarity and focus on the areas that are critical
for the successful achievement of the Groups goals.
To give guidance to the
Remuneration committee
in framing the Groups remuneration policy.
Notes
(a)
The accounting information in these charts is drawn up in accordance with IFRS.
(b)
Underlying earnings is the key financial performance indicator which management uses
internally to assess performance. It is presented here as an additional measure of earnings to
provide greater understanding of the underlying business performance of the Groups
operations. Items excluded from net earnings to arrive at underlying earnings are explained in
note 2 to the 2009
Financial statements
. Both net earnings and underlying earnings deal with
amounts attributable to equity shareholders of Rio Tinto. However, IFRS requires that the
profit for the year reported in the income statement should also include earnings attributable
to outside shareholders in subsidiaries.
All injury frequency rate
Per 200,000 hours worked
1.35
1.10
1.21
(1)
0.98
0.82
(1)
Rio Tinto including former Alcan
Table of Contents
Underlying earnings
(a) (b)
US$ m
4,955
7,338
7,443
10,303
6,298
Total shareholder return (TSR)
%
78.5
7.5
92.7
(71.5
)
172.5
Net debt
(a)
US$ m
1,313
2,437
45,191
38,672
18,861
Capital expenditure
(a)
US$ m
2,554
3,988
4,968
8,488
5,356
Table of Contents
Operating cash flows
(a)
US$ m
8,031
10,923
12,569
20,668
13,834
Greenhouse gas emissions intensity
Indexed relative to 2008
Group intensity
109.4
110.8
110.2
113.1
(1)
100.0
(2)
92.5
(2)
(1)
Excluding former Alcan
(2)
Including former Alcan
All injury frequency rate reduced to 0.82 from 0.98
Set iron ore production and sales records
Progressed transformation of our aluminium business
Exceeded targeted controllable operating cost savings
Notes
(1)
This is the average Rio Tinto share of employees for managed businesses, excluding
contractors and employees in businesses classified as assets held for sale during 2009.
Integration synergies expected to exceed US$1.1 billion in 2010
Achieved rapid cost reductions and production curtailments
Business being transformed in readiness for the economic recovery
During the course of the year, aluminium prices plummeted by as much as 70 per cent from 2008
Table of Contents
Strong operating performance in 2009 supported by recovering market
Kennecott Utah Copper production up 37 per cent from 2008
Copper industry faces future supply challenges
Breakthrough agreement for development of major Mongolian copper-gold mine
Businesses oriented to OECD demand hence difficult conditions
Businesses showing signs of recovery, particularly in Asian markets
Diavik Diamonds underground mine starts production in 2010
Commencement of ramp up of Madagascar mineral sands mine
More robust seaborne coal markets emerging
De-bottlenecking of Australian coal export ports under way
New Clermont mine and Kestrel mine expansion on track
Nuclear power comeback spells promise for uranium
Table of Contents
Operated at full run rate of 220 million tonnes capacity in second half of 2009
Developing plans to produce 330 million tonnes per year
Uses automated mining technologies including driverless haul trucks
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Spillage of caustic soda on to soil and into the adjacent river following overflow from a
truck at port facilities in Saguenay, Canada.
Release of untreated water from the treatment plant to a lake at Diavik, Canada.
Discharge of water from a dam into a local creek in excess of licence conditions at Hail
Creek, Australia.
Hydrocarbon leakage to soil and groundwater at Havre St Pierre, Canada.
Overflow of a storm water tank releasing leachate and surface run off into the surrounding
environment at Alucam, Cameroon.
Processing liquor releases to a sea water channel at Gove, Australia.
Loss of lubrication oil into the local river following a valve failure on a generator at
Kemano, Canada.
Overflow of process water containing red mud from a holding pond into a local stream at
Gardanne, France.
Table of Contents
Capital project Rio Tinto share 100% unless stated
Approved
Estimated
Status/milestones
project funding
capital spend in
US$ billion
US$bn
2010 US$bn
3.6
1.1
Expansion of Hope Downs from 22mtpa to 30mtpa (US$350 million on
100% basis Rio Tinto share is 50%) was completed during the first
half of 2009. Work progressed on or ahead of schedule on the Mesa A
and Brockman 4 mines. Mesa A came onstream in early February 2010
and Brockman 4 is expected to commence production in the second
quarter of 2010.
1.8
0.3
Work has been slowed in response to market demand. The change to the
construction schedule will result in a completion date in the fourth
quarter of 2012.
0.2
0.1
Approved in October 2008, the project remains on budget and on
schedule to be completed in December 2012.
0.5
0.1
The project timing has been slowed. Intensive value improvement
exercise exploring all options for reducing cost, and optimising
project capital expenditures and returns.
0.4
0.1
The project has been slowed. Construction of the electrical
substation to be completed along with site preparation for potrooms
and foundation of the busbars room.
1.0
0.4
The project continues to target scheduled production of coal in 2012.
1.3
0.2
The project remains on track with first coal expected in the first
half of 2010, ramping up to full capacity of 12.2mtpa by 2013.
1.5
0.1
The project has been slowed to critical development activities. The
project continues through 2010 and is being reviewed to determine
the appropriate ramp-up timing.
0.8
The project has been largely completed with first production
expected in the first half of 2010
Table of Contents
Completed in 2009
Capital
Expenditure
US$
million
(100%
basis)
787
Capital investment of $563
million was approved in November
2007 in addition to $224 million
invested in 2006-2007 for the
feasibility studies and related
capital projects. The
underground mine produced its first ore in the
first quarter of 2010.
350
Approved in August 2007, the
expansion work was completed
during the first half of 2009.
901
Approved in November 2007, first
production took place in the first
quarter of 2010.
1,700
Approved in February 2005, first
hot metal was produced in June
2008.
225
Approved in September 2006, the
plant commenced operations in
June 2008.
1,000
Construction is substantially
complete. First production of
ilmenite took place at the end
of 2008.
952
Approved in January 2007, the
project was completed at the end
of 2008, ahead of time and
within budget.
226
Project completed in March 2007.
530
First ore was produced in May
2007, with the project completed
at the end of the third quarter
of 2007 on time and on budget.
803
This project was completed at
the end of 2007 on schedule and
on budget.
980
First production occurred in
November 2007, three months
ahead of schedule. The first
train load took place in
December 2007.
Table of Contents
Asset
Cost
Status
US$m
388
The purchase of an
additional 9.8%
interest increasing
the Groups total
holding to 19.7%
38,652
Acquisition of Alcan
Inc announced in
July 2007 and
completed in October
2007
35
Joint venture with BP
19
The purchase of a 3%
interest in Dampier
Salt from a minority
shareholder that
increased the
Groups total
interest to 68.4%
Asset
Proceeds
Status
US$m
764
Sold to Arch Coal, Inc
814
Sold to Vale
850
Sold to Vale
125
Sold to Qingtongxia Aluminium Group
68
Sold to multiple parties
741
IPO and connected debt offering
349
Sold to Schweiter Technologies
495
Sold to a joint venture
750
Sale completed to Hecla Mining, the Groups minority partner
1,695
Sold to Barrick Gold, the Groups majority partner, for
cash plus a deferred bonus payment and contingent royalty
interest
134
Sold to multiple parties
6
Rio Tinto Minerals disposed of its operations at Lassing
and Ennsdorf in Austria
Table of Contents
2009
Production
2008
Production
2007
Production
Rio Tinto
Total
Rio Tinto
Total
Rio Tinto
Total
Rio Tinto
% share (a)
share
share
share
100.0
38
38
21
21
100.0
2,519
2,519
2,325
2,325
405
405
100.0
1,125
1,125
1,370
1,370
252
252
80.0
3,959
3,167
3,842
3,074
3,816
1,766
10.0
1,657
166
1,504
150
288
29
100.0
1,347
1,347
1,293
1,293
1,260
1,260
100.0
492
492
758
758
144
144
8,815
9,008
3,877
100.0
435
435
424
424
80
80
40.0
573
229
572
229
109
44
46.7
73
34
91
43
19
9
51.0
106
54
118
60
147
75
100.0
171
171
172
172
32
32
100.0
11
11
50
50
10
10
25.1
420
105
415
104
80
20
100.0
177
177
178
178
177
177
59.4
556
331
556
330
548
325
100.0
244
244
254
254
49
49
100.0
215
215
212
212
40
40
100.0
190
190
187
187
35
35
100.0
224
224
247
247
47
47
100.0
5
5
5
5
100.0
235
235
234
234
44
44
100.0
38
38
43
43
8
8
100.0
109
109
165
165
33
33
10
5
163
81
31
15
100.0
193
193
197
197
37
37
100.0
99
99
100
100
18
18
20.0
351
70
49
10
50.0
98
49
171
86
32
16
100.0
101
101
130
130
25
25
79.4
271
215
316
250
351
279
51.6
528
272
523
270
97
50
3,808
4,062
1,473
80.0
440
352
796
637
216
173
100.0
7,185
7,185
6,245
6,245
985
985
12.0
15,645
1,877
18,063
2,168
3,392
407
(k
)
11,216
5,047
13,181
5,931
2,502
1,126
100.0
16,235
16,235
20,006
20,006
18,209
18,209
30,696
34,987
20,900
100.0
411
411
591
591
541
541
100.0
13
13
19
19
19
19
424
610
560
82.0
6,308
5,173
6,049
4,960
5,012
4,110
80.0
2,868
2,294
3,089
2,471
2,586
2,069
7,467
7,431
6,179
Table of Contents
2009
Production
2008
Production
2007
Production
Rio Tinto
Total
Rio Tinto
Total
Rio Tinto
Total
Rio Tinto
% share (a)
share
share
share
30.3
5,466
1,655
5,357
1,622
5,155
1,561
71.2
11,325
8,068
10,194
7,262
7,924
5,645
75.7
11,232
8,504
10,751
8,139
10,094
7,642
80.0
849
679
929
744
1,035
828
60.6
3,342
2,024
2,949
1,786
2,924
1,771
262
262
4,510
4,510
42.1
5,162
2,172
6,039
2,540
5,775
2,430
23,103
22,356
24,388
48.3
30,865
29,031
32,474
32,474
31,267
31,267
100.0
3,214
3,214
4,446
4,446
5,077
5,077
48.3
35,687
33,361
36,318
36,318
36,712
36,712
24.1
4,161
2,017
5,939
2,970
6,340
3,170
26,537
26,537
38,206
38,206
34,565
34,565
48.3
16,035
15,360
16,341
16,341
14,291
14,291
109,520
130,755
125,083
132,623
153,111
149,471
100.0
303.5
303.5
238.0
238.0
212.2
212.2
30.0
1,061.2
318.3
1,281.7
384.5
1,405.5
421.6
40.0
269.3
107.7
17.8
7.1
70.9
28.4
80.0
34.3
27.4
24.8
19.8
43.1
34.5
57.7
82.6
47.6
85.1
49.1
71.4
41.2
804.7
698.5
737.9
30.0
327.2
98.2
257.5
77.3
238.4
71.5
100.0
274.2
274.2
200.6
200.6
265.6
265.6
57.7
69.4
40.0
75.9
43.8
91.7
52.9
412.4
321.6
390.0
100.0
10,591
10,591
15,076
15,076
18,744
18,744
60.0
5,565
3,339
9,225
5,535
11,943
7,166
77.8
124
97
264
205
145
113
14,026
20,816
26,023
100.0
2
2
5
5
11
11
100.0
582
582
368
368
397
397
72
29
538
215
30.0
144
43
144
43
187
56
40.0
1,072
429
1,058
423
18
12
68
48
80.0
34
27
32
26
79
63
100.0
19
19
18
9
19
10
13
8
14
8
19
11
1,111
501
1,233
100.0
479
479
303
303
523
523
*
Coal other includes thermal coal and semi-soft coking coal.
Table of Contents
2009
Production
2008
Production
2007
Production
Rio Tinto
Total
Rio Tinto
Total
Rio Tinto
Total
Rio Tinto
% share (a)
share
share
share
1,509
1,509
2,032
2,032
1,777
1,777
100.0
106,808
106,808
95,553
95,553
94,567
94,567
60.0
11,041
6,625
10,382
6,229
10,549
6,330
(v
)
9,318
9,318
8,186
8,186
6,932
6,932
50.0
20,634
10,317
10,936
5,468
64
32
58.7
13,844
8,129
15,830
9,295
13,229
7,768
53.0
54,417
28,841
50,246
26,631
51,512
27,301
171,547
153,394
144,707
4.6
3.2
17.0
11.9
100.0
11.3
11.3
10.6
10.6
14.9
14.9
60.0
144
87
115
69
68.4
8,555
5,848
8,974
6,135
7,827
5,242
100.0
4,871
4,871
3,414
3,414
3,487
3,487
30.0
5,424
1,627
6,167
1,850
7,870
2,361
40.0
3,685
1,474
549
220
1,193
477
1,815
1,275
8,646
6,075
757
596
655
417
914
602
8,569
7,176
13,002
100.0
4,050
4,050
3,252
3,252
4,365
4,365
(Australia/Europe/North America) (y)
100.0
888
888
1,163
1,163
1,281
1,281
100.0
1,147
1,147
1,524
1,524
1,458
1,458
68.4
11,500
7,865
11,773
8,052
11,713
8,011
68.6
9,150
6,275
8,966
6,149
6,714
4,605
14,140
14,200
12,616
13.9
9.8
50.8
35.7
Table of Contents
(a)
Rio Tinto percentage share, shown above, is as at the end of 2009 and has applied over the
period 2007 2009 except for those operations where the Rio Tinto ownership has varied during
the year; the weighted average ownership for each year is shown below. The Rio Tinto share
varies at individual mines and refineries in the others category and thus no value is shown.
Rio
Tinto share %
Operation
See
Note
2009
2008
2007
(d
)
80.0
80.0
46.3
(n
)
94.0
100.0
100.0
(n
)
94.0
100.0
100.0
(n
)
47.0
50.0
50.0
(n
)
94.0
100.0
100.0
(x
)
68.4
68.4
67.0
(b)
Rio Tinto acquired the operating assets of Alcan with effect from 24 October 2007; production
is shown as from that date. The Rio Tinto assets and the Alcan assets have been combined under
the Rio Tinto Alcan name.
(c)
Production of smelter grade alumina at Gardanne ceased at the end of 2008. Production
continues from the Gardanne specialty alumina plant.
(d)
Rio Tinto held a 38.6 per cent share in Queensland Alumina until 24 October 2007; this
increased to 80.0 per cent following the Alcan acquisition.
(e)
The Anglesey smelter ceased smelting operations at the end of the third quarter of 2009.
(f)
The Beauharnois smelter ceased smelting operations in the second quarter of 2009.
(g)
The Lannemezan smelter closed in the first quarter of 2008.
(h)
Rio Tinto sold its 50 per cent interest in the Ningxia aluminium smelter with an effective
date of 26 January 2009.
(i)
Production at the Sohar smelter commenced in the third quarter of 2008.
(j)
Rio Tinto Alcan had an 80 per cent interest in the Awaso mine but purchased the additional 20
per cent of production. Rio Tinto Alcan sold its interest in Ghana Bauxite Company, owner of
the Awaso mine, with an effective date 1 February 2010.
(k)
Rio Tinto has a 22.95 per cent shareholding in the Sangaredi mine but receives 45.0 per cent
of production under the partnership agreement.
(l)
Borate numbers refer to B
2
O
3
quantities in thousands of tonnes.
(m)
Rio Tinto sold its 100 per cent interest in Tarong Coal with an effective date of 31 January
2008; production data are shown up to that date.
(n)
As a result of the initial public offering of Cloud Peak Energy Inc. on 20 November 2009, Rio
Tinto now holds a 48.3 per cent interest in the Antelope, Cordero Rojo and Spring Creek mines
and a 24.1 per cent interest in the Decker mine. These interests were formerly reported under
Rio Tinto Energy America but are now managed by Cloud Peak Energy.
(o)
During 2008, Rio Tinto acquired a 100 per cent interest in the Colowyo mine, having
previously held a partnership interest. All of Colowyos production was already included in
Rio Tintos share of production.
(p)
Rio Tinto sold its 100 per cent interest in the Jacobs Ranch mine with an effective date of 1
October 2009. Production data are shown up to that date.
(q)
Through a joint venture agreement with Freeport-McMoRan Copper & Gold (FCX), Rio Tinto is
entitled to 40 per cent of additional material mined as a consequence of expansions and
developments of the Grasberg facilities since 1998. Total production reflects the total
quantities attributable to the joint venture.
(r)
Rio Tinto sold its 40 per cent interest in the Cortez/Pipeline joint venture with an
effective date of end of February 2008. Production data are shown up to that date.
(s)
Rio Tinto sold its 70.3 per cent share in the Greens Creek joint venture with an effective
date of 16 April 2008. Production data are shown up to that date.
(t)
On 28 October 2008, Rio Tinto increased its shareholding in the Rawhide Joint Venture from 51
per cent to 100 per cent. The previous Joint Venture shareholder continued to be entitled to
49 per cent of production until 31 December 2008; thereafter Rio Tinto has been entitled to
100 per cent.
(u)
Rio Tinto sold its 100 per cent interest in the Corumbá mine with an effective date of 18
September 2009. Production data are shown up to that date.
(v)
Rio Tintos share of production includes 100 per cent of the production from the Eastern
Range mine. Under the terms of the joint venture agreement (Rio Tinto 54 per cent), Hamersley
Iron manages the operation and is obliged to purchase all mine production from the joint
venture.
(w)
Hope Downs started production in the fourth quarter of 2007.
(x)
Rio Tinto increased its shareholding in Dampier Salt Limited to 68.4 per cent at the
beginning of July 2007.
(y)
Talc production includes some products derived from purchased ores.
(z)
Quantities comprise 100 per cent of Rio Tinto Fer et Titane and 50 per cent of Richards Bay
Minerals (RBM) production until late 2009 when RBM concluded a Broad Based Black Economic
Empowerment transaction. Rio Tinto Iron & Titaniums share of RBM production reflects a
decrease from 50 to 37 per cent with effect from 9 December 2009.
(aa)
Ilmenite mined in Madagascar is being processed in Canada with effect from June 2009.
Table of Contents
An Ore Reserve means that part of a mineral deposit that can be economically and legally
extracted or produced at the time of the reserves determination. To establish this, studies
appropriate to the type of mineral deposit involved have been carried out to estimate the
quantity, grade and value of the ore mineral(s) present. In addition, technical studies have
been completed to determine realistic assumptions for the extraction of the minerals including
estimates of mining, processing, economic, marketing, legal, environmental, social and
governmental factors. The degree of these studies is sufficient to demonstrate the technical
and economic feasibility of the project and depends on whether or not the project is an
extension of an existing project or operation. The estimates of minerals to be produced
include allowances for ore losses and the treatment of unmineralised materials which may occur
as part of the mining and processing activities. Ore Reserves are sub-divided in order of
increasing confidence into Probable Ore Reserves and Proven Ore Reserves as defined below.
The term economically, as used in the definition of reserves, implies that profitable
extraction or production under defined investment assumptions has been established through the
creation of a mining plan, processing plan and cash flow model. The assumptions made must be
reasonable, including costs and operating conditions that will prevail during the life of the
project.
Ore reserves presented in accordance with SEC Industry Guide 7 do not exceed the quantities
that, it is estimated, could be extracted economically if future prices were to be in line
with the average of historical prices for the three years to 30 June 2009, or contracted
prices where applicable. For this purpose, contracted prices are applied only to future sales
volumes for which the price is predetermined by an existing contract; and the average of
historical prices is applied to expected sales volumes in excess of such amounts. Moreover,
reported ore reserve estimates have not been increased above the levels expected to be
economic based on Rio Tintos own long term price assumptions.
The term legally, as used in the definition of reserves, does not imply that all permits
needed for mining and processing have been obtained or that other legal issues have been
completely resolved. However, for reserves to exist, there is reasonable assurance of the
issuance of these permits or resolution of legal issues. Reasonable assurance means that,
based on applicable laws and regulations, the issuance of permits or resolution of legal
issues necessary for mining and processing at a particular deposit will be accomplished in the
ordinary course and in a timeframe consistent with the Companys current mine plans.
The term proven reserves means reserves for which (a) quantity is computed from
dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are
computed from the results of detailed sampling; and (b) the sites for inspection, sampling and
measurement are spaced so closely and the geologic character is so well defined that size,
shape, depth and mineral content of reserves are well established. Proven reserves represent
that part of an orebody for which there exists the highest level of confidence in data
regarding its geology, physical characteristics, chemical composition and probable processing
requirements.
The term probable reserves means reserves for which quantity and grade and/or quality are
computed from information similar to that used for proven reserves, but the sites for
inspection, sampling and measurement are farther apart or are otherwise less adequately
spaced. The degree of assurance, although lower than that for proven reserves, is high enough
to assume continuity between points of observation. This means that probable reserves
generally have a wider drill hole spacing than for proven reserves.
The amount of proven and probable reserves shown below does not necessarily represent the
amount of material currently scheduled for extraction, because the amount scheduled for
extraction may be derived from a life of mine plan predicated on prices and other assumptions
which are different to those used in the life of mine plan prepared in accordance with
Industry Guide 7.
The estimated ore reserve figures in the following tables are as of 31 December 2009.
Metric units are used throughout. The figures used to calculate Rio Tintos share of reserves
are often more precise than the rounded numbers shown in the tables, hence small differences
might result if the calculations are repeated using the tabulated figures. Commodity price
information is given in footnote (a).
Where operations are not managed by Rio Tinto the reserves are published as received from
the managing company.
Table of Contents
Type
of
Total ore reserves at end
mine
2009
(b)
Tonnage
Grade
Interest
Rio Tinto
%
share
Recoverable
BAUXITE
(c)
mineral
millions
millions
of tonnes
%Al
2
O
3
of tonnes
O/P
186
49.4
100.0
186
O/P
214
49.6
12.0
26
O/P
130
52.4
23.0
30
O/P
1,699
52.7
100.0
1,699
1,941
Marketable
BORATES
(d)
product
millions
millions
of tonnes
of tonnes
Reserves at operating mine
Rio Tinto Minerals - Boron (US) (e)
O/P
22.3
100.0
22.3
S/P
2.3
100.0
2.3
24.6
Coal type
Marketable
Marketable coal quality
(h)
reserves
(i)
(i)
Marketable
COAL
(g)
Calorific
Sulphur
reserves
millions
value
content
millions
of tonnes
MJ/kg
%
of tonnes
Reserves at operating mines
Rio Tinto Coal Australia
O/C
SC
126
28.21
0.47
30.3
38
O/C
SC
18
26.17
0.31
71.2
13
O/C
MC
209
32.20
0.35
82.0
172
O/C
SC + MC
278
28.99
0.54
75.7
210
U/G
SC + MC
128
31.60
0.59
80.0
102
O/C
SC + MC
24
29.41
0.43
60.6
14
O/C
SC + MC
270
30.68
0.44
42.1
114
663
O/C
SC
265
20.59
0.24
48.3
128
O/C
SC
17
23.92
0.44
100.0
17
O/C
SC
372
19.54
0.29
48.3
180
O/C
SC
2
21.87
0.40
24.1
1
O/C
SC
272
21.75
0.33
48.3
131
456
1,119
Rio Tinto Coal Australia
O/C
SC
189
27.90
0.33
50.1
95
O/C
SC
350
26.73
0.51
75.7
265
360
Table of Contents
Type of
Total ore reserves
Average
mine
at end 2009
mill
(b)
Tonnage
Grade
recovery
Interest
Rio Tinto
%
%
share
Recoverable
COPPER
metal
Millions
millions
of tonnes
%Cu
of tonnes
Reserves at operating mines
Bingham Canyon (US) (r)
O/P
484
0.48
85
100.0
1.992
S/P
40
0.33
85
100.0
0.113
O/P
1,652
1.07
82
30.0
4.352
O/P
2,289
0.53
33
30.0
1.198
O/P
73
0.94
68
30.0
0.140
S/P
7
1.26
82
30.0
0.023
S/P
88
0.88
33
30.0
0.076
S/P
49
0.62
68
30.0
0.062
O/P+ U/G
2,590
1.00
89
(t
)
7.061
O/P+ U/G
74
0.87
89
80.0
0.460
S/P
6
0.36
85
80.0
0.014
U/G
75
0.60
88
57.7
0.228
15.719
U/G
4
2.93
95
100.0
0.102
O/P
930
0.50
87
19.7
0.794
0.896
DIAMONDS
(c)
Recoverable
diamonds
Millions
carats
millions
of tonnes
per tonne
of carats
Reserves at operating mines
Argyle (Australia)
O/P+ U/G
83
2.1
100.0
174.9
S/P
2
1.6
100.0
3.2
O/P+ U/G
20
3.0
60.0
35.8
O/P
20
0.7
77.8
10.8
S/P
0.02
1.2
77.8
0.02
224.7
Recoverable
GOLD
metal
millions
grammes
millions
of tonnes
per tonne
of ounces
Reserves at operating mines
Bingham Canyon (US) (r)
O/P
484
0.25
62
100.0
2.471
S/P
40
0.20
62
100.0
0.159
O/P+ U/G
2,590
0.86
69
(t
)
13.006
U/G
74
0.35
74
80.0
0.489
S/P
5.9
0.20
76
80.0
0.023
16.149
U/G
4
0.29
73
100.0
0.025
U/G
930
0.36
71
19.7
1.497
1.522
Table of Contents
Type of
Total ore reserves
Average
mine
at end 2009
mill
(b)
Tonnage
Grade
recovery
Interest
Rio Tinto
%
%
share
Marketable
IRON ORE
(c)
product
Millions
millions
of tonnes
%Fe
of tonnes
Reserves at operating mines
Hamersley wholly owned (Australia)
O/P
15
62.7
100.0
15
O/P
621
62.0
100.0
621
O/P
49
61.5
100.0
49
O/P
76
63.7
100.0
76
S/P
17
63.0
100.0
17
O/P
23
61.1
100.0
23
O/P
18
61.2
100.0
18
O/P
15
63.1
100.0
15
O/P
74
61.9
100.0
74
O/P
314
61.9
100.0
314
O/P
206
58.5
100.0
206
S/P
3
58.5
100.0
3
O/P
102
58.9
100.0
102
O/P
81
63.0
60.0
48
O/P
71
62.8
54.0
38
O/P
353
61.4
50.0
176
O/P
584
65.0
58.7
343
O/P
246
57.3
53.0
130
S/P
21
56.8
53.0
11
O/P
340
61.8
53.0
180
S/P
7
58.3
53.0
4
614
2,464
Recoverable
MOLYBDENUM
metal
Millions
millions
of tonnes
%Mo
of tonnes
Reserves at operating mine
Bingham Canyon (US) (r) (hh)
O/P
484
0.046
69
100.0
0.154
S/P
40
0.023
69
100.0
0.006
0.160
Recoverable
NICKEL
metal
millions
millions
of tonnes
%Ni
of tonnes
Undeveloped reserves (q)
U/G
4
3.47
87
100.0
0.110
Table of Contents
Type of
Total ore reserves
Average
mine
at end 2009
mill
(b)
Tonnage
Grade
recovery
Interest
Rio Tinto
%
%
share
Recoverable
SILVER
metal
millions
grammes per
millions
of tonnes
tonne
of ounces
Reserves at operating mines
Bingham Canyon (US) (r)
O/P
484
2.11
73
100.0
23.982
S/P
40
1.82
73
100.0
1.733
O/P+ U/G
2,590
4.18
70
(t
)
79.698
105.413
Marketable
TALC
(d)
product
millions
millions
of tonnes
of tonnes
Reserves at operating mines
Rio Tinto Minerals talc
O/P+ U/G
33.2
100.0
33.2
0.3
100.0
0.3
33.5
Marketable
TITANIUM DIOXIDE FEEDSTOCK
(d)
product
millions
millions
of tonnes
of tonnes
Reserves at operating mines
O/P
51.4
100.0
51.4
D/O
11.9
80.0
9.5
D/O
24.4
37.0
9.0
S/P
0.6
37.0
0.2
70.1
Recoverable
URANIUM
metal
millions
millions
of tonnes
%U
3
0
8
of tonnes
Reserves at operating mines
Energy Resources of Australia (Australia)
O/P
6.3
0.242
83
68.4
0.009
S/P
21.4
0.104
83
68.4
0.013
O/P
186.7
0.031
85
68.6
0.033
S/P
6.0
0.034
85
68.6
0.001
0.056
Table of Contents
Type of
Proven ore reserves
Probable ore reserves
mine
at end 2009
at end 2009
(b)
Tonnage
Grade
Drill hole
Tonnage
Grade
Drill hole
Spacing
(jj)
Spacing
(jj)
BAUXITE
(c)
millions
millions
of tonnes
%Al
2
O
3
of tonnes
%Al
2
O
3
Reserves at operating mines
O/P
140
49.4
50m x 100m
46
49.2
200m x 200m
O/P
150
49.7
200m x 200m
64
49.2
Max 400m
O/P
130
52.4
75m x 75m
O/P
339
51.9
150m x 150m
1,360
53.0
300m x 300m
BORATES
(d)
millions
millions
of tonnes
of tonnes
Reserves at operating mine
Rio Tinto Minerals - Boron (US) (e)
O/P
14.8
120m x 120m
7.5
445m x 445m
S/P
2.3
% Yield to
Recoverable
give
reserves
marketable
Marketable Reserves
total
reserves
Proven
Drill hole
Probable
Drill hole
spacing
(jj)
spacing
(jj)
millions
millions
millions
COAL
(g)
of tonnes
of tonnes
of tonnes
Reserves at operating mines
Rio Tinto Coal Australia
O/C
167
75
64
350m
62
500m
O/C
22
82
18
150m
0.3
150m
O/C
410
51
61
1000m
149
2000m
O/C
403
69
218
300m
60
500m
U/G
153
83
47
500m
81
1000m
O/C
37
65
21
125m
3
500m
O/C
413
65
149
450m
121
1000m
O/C
265
100
255
300m
10
500m
O/C
17
100
14
140m
3
300m
O/C
372
100
289
250m
84
400m
O/C
2
100
2
250m
O/C
272
100
234
300m
38
400m
Rio Tinto Coal Australia
O/C
197
96
185
220m
4
150 to 300m
O/C
459
76
350
125m to 500m
Table of Contents
Type of
Proven ore reserves
Probable ore reserves
mine
at end 2009
at end 2009
(b)
Tonnage
Grade
Drill hole
Tonnage
Grade
Drill hole
spacing
(jj)
spacing
(jj)
COPPER
millions
millions
of tonnes
%Cu
of tonnes
%Cu
O/P
285
0.54
88m
199
0.40
106m
S/P
32
0.37
8
0.19
O/P
718
1.15
55m x 55m
933
1.00
85m x 85m
O/P
552
0.53
60m x 60m
1,738
0.53
100m x 100m
O/P
17
0.87
45m x 45m
56
0.96
50m x 50m
S/P
7
1.26
S/P
88
0.88
S/P
49
0.62
O/P + U/G
816
1.12
13m to 47m
1,774
0.95
42m to 97m
O/P + U/G
4
0.65
25 x 25 x 50m
70
0.88
50 x 50 x 100m
S/P
6
0.36
U/G
75
0.60
76m
U/G
3.6
2.93
25m
O/P
127
0.58
50m
803
0.48
75m x 100m
DIAMONDS (c)
millions
carats
millions
Carats
of tonnes
per
of tonnes
per
tonne
tonne
O/P + U/G
23
1.1
50m x 50m
61
2.5
50m x 50m
S/P
0.7
2.9
1.2
0.8
O/P + U/G
9
3.1
24m to 40m
11
2.9
24m to 40m
O/P
20
0.7
50m
S/P
0.02
1.2
GOLD
millions
grammes
millions
grammes
of tonnes
per
of tonnes
per
tonne
tonne
O/P
285
0.28
88m
199
0.22
106m
S/P
32
0.22
8
0.11
O/P + U/G
816
1.07
13m to 47m
1,774
0.77
42m to 97m
O/P + U/G
4
0.52
25 x 25 x 50m
70
0.34
50 x 50 x 100m
S/P
6
0.20
UG
3.6
0.29
25m
O/P
127
0.93
50m
803
0.27
75m to 100m
Table of Contents
Type of
Proven ore reserves
Probable ore reserves
mine
at end 2009
at end 2009
(b)
Tonnage
Grade
Drill hole
Tonnage
Grade
Drill hole
spacing
(jj)
spacing
(jj)
IRON ORE
(c)
millions
millions
of tonnes
%Fe
of tonnes
%Fe
O/P
13
62.7
50m x 50m
3
62.8
Max 100m
O/P
366
62.2
50m x 50m
255
61.9
200m x 100m
O/P
39
61.8
75m x 75m
10
60.3
Max 150m
O/P
34
63.8
30m x 30m
42
63.6
60m x 30m
S/P
17
63.0
O/P
20
61.4
60m x 30m
3
59.0
60m x 30m
O/P
16
61.4
50m x 50m
2
60.1
100m x 50m
O/P
9
63.1
30m x 30m
5
63.1
60m x 30m
O/P
74.0
61.9
120m x 120m
O/P
222
62.5
60m x 60m
92
60.5
60m x 60m
O/P
206
58.5
50m x 50m
S/P
3
58.5
O/P
102
58.9
50m x 50m
O/P
59
63.1
60m x 60m
21
62.7
Max 120m
O/P
55
62.8
60m x 60m
16
62.9
Max 120m
O/P
26
61.7
50m x 50m
327
61.4
50m x 50m
O/P
440
65.0
122m x 61m
144
65.0
122m x 122m
O/P
227
57.3
max 70m x 70m
18
57.0
max 100m x 100m
S/P
3
57.0
19
56.8
O/P
173
62.1
max 50m x 50m
167
61.4
max 200m x 50m
S/P
1
59.7
7
58.1
MOLYBDENUM
millions
millions
of tonnes
%Mo
of tonnes
%Mo
O/P
285
0.047
88m
199
0.046
106m
S/P
32
0.025
8
0.015
NICKEL
millions
millions
of tonnes
%Ni
of tonnes
%Ni
U/G
3.6
3.47
25m
Table of Contents
Type of
Proven ore reserves
Probable ore reserves
mine
at end 2009
at end 2009
(b)
Tonnage
Grade
Drill hole
Tonnage
Grade
Drill hole
spacing
(jj)
spacing
(jj)
SILVER
millions
grammes
millions
grammes
of tonnes
per tonne
of tonnes
per tonne
O/P
285
2.36
88m
199
1.75
106m
S/P
32
2.06
8
0.90
O/P + U/G
816
4.24
13m to 47m
1,774
4.16
42m to 97m
TALC
(d)
millions
millions
of tonnes
of tonnes
O/P + U/G
24.2
10m to 50m
9.0
15m to 100m
S/P
0.3
TITANIUM DIOXIDE
millions
millions
FEEDSTOCK
(d)
of tonnes
of tonnes
O/P
27.9
max 60m x 60m
23.5
min 60m x 60m
D/O
11.4
200m x 100m
0.5
400m x 100m
Mine
D/O
8.9
50m x 50m
15.5
800m x 100m
S/P
0.6
URANIUM
millions
Millions
of tonnes
%U
3
0
8
of tonnes
%U
3
0
8
O/P
3.2
0.242
25m x 25m
3.1
0.242
50m x 50m
S/P
21.4
0.104
O/P
19.4
0.029
20m x 20m
167.2
0.031
120m x 120m
S/P
6.0
0.034
Table of Contents
(a)
Commodity prices (based on a three year average historical price to 30 June 2009) used to test
whether the reported reserve estimates could be economically extracted, include the following
benchmark prices:
Ore reserve
Unit
US$
pound
1.09
pound
2.99
ounce
779
dmtu*
1.01
dmtu*
1.03
pound
25.18
pound
12.13
ounce
13.71
Prices for all other commodities are determined by individual contract negotiation. The
reported reserves for these commodities have been tested to confirm that they could be
economically extracted using a combination of existing contract prices until expiry and
thereafter three year historical prices.
(b)
Type of mine: O/P = open pit, O/C = open cut, U/G = underground, D/O = dredging operation
(c)
Reserves of iron ore, bauxite and diamonds are shown as recoverable reserves of marketable
product after accounting for all mining and processing losses. Mill recoveries are therefore
not shown.
(d)
Reserves of industrial minerals are expressed in terms of marketable product, i.e. after all
mining and processing losses. In the case of borates, the marketable product is
B
2
O
3
.
(e)
RTM Boron reserve tonnage increased due to conversion of mineralised material as part of a
pit design update.
(f)
Stockpile components of reserves are shown for all operations at the relevant mine.
(g)
Coal reserves are shown as both recoverable and marketable. The yield factors shown reflect
the impact of further processing, where necessary, to provide marketable coal. All reserves at
operating mines are assigned, all undeveloped reserves are unassigned. By assigned and
unassigned, we mean the following: assigned reserves means coal which has been committed by
the coal company to operating mine shafts, mining equipment, and plant facilities, and all
coal which has been leased by the company to others; unassigned reserves represent coal which
has not been committed, and which would require new mineshafts, mining equipment, or plant
facilities before operations could begin in the property.
(h)
Coal type: SC: steam/thermal coal, MC: metallurgical/coking coal.
(i)
Analyses of coal from the US were undertaken according to American Standard Testing Methods
(ASTM) on an As Received moisture basis whereas the coals from Australia have been analysed
on an Air Dried moisture basis according to Australian Standards. MJ/kg = megajoules per
kilogramme. 1 MJ/kg = 430.2 Btu/lb.
(j)
Blair Athol reserve depletions were due to production.
(k)
Hail Creek reserves increased as a result of a major model update including an upgrade of
some mineralised material to reserves.
(l)
Hunter Valley Operations reserves decreased due to production and mine design updates.
(m)
As a result of the IPO of Cloud Peak Energy Inc. on 20 November 2009, Rio Tinto now holds a
48.3 per cent interest in the Antelope, Cordero Rojo and Spring Creek mines and a 24.1 per
cent interest in the Decker mine. These interests were formerly reported under Rio Tinto
Energy America but are now managed by Cloud Peak Energy.
(n)
Antelope reserves decreased following production as well as a model update.
(o)
Colowyo reserves were depleted through production.
(p)
Decker reduced reserves through production and a contract buy out.
(q)
The term undeveloped reserves is used here to describe material that is economically viable
on the basis of technical and economic studies but for which mining and processing permits may
have yet to be requested or obtained. There is a reasonable, but not absolute, certainty that
the necessary permits will be issued and that mining can proceed when required.
(r)
Bingham Canyon reserve tonnages decreased through production and mine design changes
including updated geotechnical inputs.
(s)
Escondida oxide reserve changes followed updating of economic considerations,
geometallurgical inputs and material reclassification.
(t)
Under the terms of a joint venture agreement between Rio Tinto and FCX, Rio Tinto is entitled
to a direct 40 per cent share in reserves discovered after 31 December 1994 and it is this
entitlement that is shown.
(u)
Northparkes underground reserves declined due to production and revision of the mining model.
(v)
The reduction in Palbora reserves follows production.
(w)
Rio Tinto increased its interest in the Oyu Tolgoi project from 9.9 per cent to 19.7 per
cent.
(x)
The Eagle gold reserve is reported for the first time following a model update.
(y)
Brockman 2 (Brockman ore) reserves reduced due to production.
(z)
Marandoo (Marra Mamba ore) reserves declined after production and updating of the geological
model.
(aa)
Mt Tom Price (Marra Mamba ore) reserves declined following production as well as incorporation of a new geological model and pit design changes.
(bb)
Nammuldi (Marra Mamba ore) reserve tonnage lessened following production.
(cc)
Turee Syncline Central (Brockman ore) is reported for the first time following economic and geological studies.
(dd)
Yandicoogina (Process Product) reserve tonnage reduced from production and model updates incorporating new factors based on reconciliation.
(ee)
Hamersley Eastern Range (Brockman Ore) reserve tonnes have reduced following production, update of the geological model, inclusion of reconciliation data and subsequent pit design revisions.
(ff)
Hope Downs 1 (Marra Mamba ore) was reported as Hope Downs in 2008.
(gg)
Reserves at Iron Ore Company of Canada are reported as marketable product, at a natural
moisture content of 2 per cent using process upgrade factors derived from current IOCC
concentrating and pellet operations and a modelling cut off grade of 16 per cent concentrate
weight yield. The in situ mined material equivalent is 1,369 million tonnes at 38.0 per cent
iron; made up of proven ore reserves of 1,028 million tonnes at 38.1 per cent iron and
probable ore reserves of 341 million tonnes at 37.5 per cent iron.
(hh)
Molybdenum grades interpolated from exploration drilling assays have been factored based on a long reconciliation history to blasthole and mill samples.
(ii)
During the fourth quarter of 2009, Richards Bay Minerals concluded a Broad Based Black Economic Empowerment transaction. The table above reflects a change from 50 per cent to 37 per cent in Rio Tintos interest in RBM, with effect from 9 December 2009.
(jj)
Drill hole spacings are either average distances, a specified grid distance (a regular
pattern of drill holes the distance between the drill holes along the two axes of the grid
will be aligned to test the size, shape and continuity of the mineral deposit; as such there
may be different distances between the drill holes along the two axes of a grid) or the
maximum drill hole spacing that is sufficient to determine the reserve category for a
particular deposit. As the continuity of mineralisation varies from deposit to deposit, the
drill hole spacing required to categorise a reserve varies between and within deposit types.
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Rio Tinto 2009
Form 20-F
62
Rio Tinto 2009
Form 20-F
63
Rio Tinto 2009
Form 20-F
64
Rio Tinto 2009
Form 20-F
65
Rio Tinto 2009
Form 20-F
66
Rio Tinto 2009
Form 20-F
67
Rio Tinto 2009
Form 20-F
68
Rio Tinto 2009
Form 20-F
69
Rio Tinto 2009
Form 20-F
70
Rio Tinto 2009
Form 20-F
71
Rio Tinto 2009
Form 20-F
72
Rio Tinto 2009
Form 20-F
73
Rio Tinto 2009
Form 20-F
74
Rio Tinto 2009
Form 20-F
75
Rio Tinto 2009
Form 20-F
76
Rio Tinto 2009
Form 20-F
77
Rio Tinto 2009
Form 20-F
78
Rio Tinto 2009
Form 20-F
79
Rio Tinto 2009
Form 20-F
80
Rio Tinto 2009
Form 20-F
81
Rio Tinto 2009
Form 20-F
82
Rio Tinto 2009
Form 20-F
83
Rio Tinto 2009
Form 20-F
84
Rio Tinto 2009
Form 20-F
85
Rio Tinto 2009
Form 20-F
86
Rio Tinto 2009
Form 20-F
87
Rio Tinto 2009
Form 20-F
88
Rio Tinto 2009
Form 20-F
89
Rio Tinto 2009
Form 20-F
90
Rio Tinto 2009
Form 20-F
91
Rio Tinto 2009
Form 20-F
92
Rio Tinto 2009
Form 20-F
93
Chairmans statement providing a high level review of the Group
Chief executives statement providing a high level review of the Groups operations
Group financial performance
Operating reviews for each of the principal product groups and global support groups
Financial review of the Group
Table of Contents
Table of Contents
5 March 2010
Table of Contents
Table of Contents
5 March 2010
Table of Contents
2009
2008
2007
US$m
US$m
US$m
5,784
5,436
7,746
(449
)
(827
)
5,335
4,609
7,746
(463
)
(933
)
(434
)
4,872
3,676
7,312
1,426
6,627
131
6,298
10,303
7,443
Underlying
Net
earnings
earnings
Changes from 2008 to 2009
US$m
US$m
10,303
3,676
(6,879
)
484
652
(172
)
318
742
890
(40
)
(4,005
)
(4,005
)
(971
)
6,854
(815
)
(182
)
(174
)
489
6,298
4,872
(a)
See Note 2 on page A-25 of the
2009 Financial statements
for a reconciliation of underlying
earnings to net earnings.
Year end price
Year end price
Average price
Average price
2009
2008
2009
2008
3.33
1.32
2.32
3.20
2,207
1,454
1,665
2,572
1,104
865
970
872
11
10
11
31
Table of Contents
Underlying
Net
earnings
earnings
Changes from 2007 to 2008
US$m
US$m
7,443
7,312
4,983
299
233
(336
)
(219
)
(882
)
(47
)
(1,171
)
2,860
2,860
1,469
(8,293
)
653
(325
)
10,303
3,676
(a)
See Note 2 on page A-25 of the
2009 Financial statements
for a reconciliation of underlying
earnings to net earnings.
Table of Contents
2009
2008
2007
US$m
US$m
US$m
499
1,470
1
(1,552
)
(8,406
)
(113
)
28
843
190
(182
)
(231
)
(57
)
12
(477
)
(209
)
(1,426
)
(6,627
)
(131
)
1.
Net impairment charges include impairment charges of US$1,103 million (2008: US$7,579
million; 2007: US$113 million) and loss after tax of discontinued operations of US$449 million
(2008: US$827 million; 2007; nil).
2.
The Chinalco break fee was US$195 million pre-tax.
Table of Contents
2009
2008
2007
US$m
US$m
US$m
4,126
6,017
2,664
(578
)
1,271
1,051
1,866
1,597
3,373
1,420
2,581
498
800
474
475
(188
)
(133
)
167
(28
)
25
(547
)
(366
)
(540
)
5
(133
)
20
(578
)
(1,030
)
(265
)
6,298
10,303
7,443
(1,426
)
(6,627
)
(131
)
4,872
3,676
7,312
Table of Contents
Greenhouse gas emissions intensity
Indexed relative to 2008
Group intensity
109.4
110.8
110.2
113.1
(1)
100.0
(2)
92.5
(2)
(1)
Rio Tinto excluding former Alcan
(2)
Rio Tinto including former Alcan
Approximately 4.5 million tonnes of CO
2
-e associated with third party transport of our products and raw materials.
An estimated 120 million tonnes of CO
2
-e associated with customers using our coal in electricity generation and steel production.
Approximately 330 million tonnes of CO
2
-e associated with customers using our iron ore to produce steel. These emissions are not in addition to the coal use emissions above, as some customers use both our iron ore and our coal to produce steel.
Table of Contents
Uranium is used in low carbon power generation.
Our high purity ductile iron is used in the production of wind turbines.
Aluminium makes cars lighter, reducing the amount of fuel used during their operation, and it can be efficiently recycled.
Total energy use
Petajoules
245
(1)
257
(1)
540
(2)
553
(2)
497
(2)
(1)
Rio Tinto
(2)
Rio Tinto including former Alcan
Table of Contents
US$ million
12,038
688
(578
)
1,690
35,992
Underlying earnings contribution* 2007-2009
US$m
1,040
(207
)
(55
)
1,073
(86
)
(495
)
1,271
(2,243
)
(4
)
(41
)
233
206
(578
)
*
See note 31 on page A-44 and note 51 on page A-80 of the
2009 Financial statements
for a reconciliation of underlying earnings by product group to consolidated net profit for
the year as determined under IFRS. All amounts presented by the product groups exclude net
interest and other centrally reported items.
Deliver on our baseline commitments including customer service, sustainable development,
and ensuring the safety of our employees.
Continue our journey of transformation and deliver on cost improvements.
Surpass our synergy target and complete the integration process, which includes
accelerating our cultural integration.
Protect and enhance our superior growth options while preserving cash.
Reduction of 22 per cent in the all injury frequency rate from 2008 to 2009.
Delivered after tax synergy benefits of US$924 million during 2009 with an annualised
sustainable run rate of US$1.1 billion at the end of 2009.
Transformational change to both administrative and production costs drove further
efficiencies across the entire organisation.
Strategically managed sustaining capital expenditure allocations, and completed value
improvement exercises at major capital project sites to improve long term costs.
Adjusted production of bauxite, alumina and aluminium to align with the downturn in market
demand.
Improve safety performance towards the objective of zero harm.
Maintain focus on transformational change to enhance margins, reduce operating costs and
optimise efficiencies at all operations worldwide.
Continue to align production levels with market requirements.
Drive additional value growth initiatives such as capital efficiency projects and research
and development programmes.
Table of Contents
Strategically progress key projects including the Yarwun 2 expansion project (Australia),
Kitimat Modernisation Project, AP50 pilot plant and Shipshaw optimisation (Canada).
Rio Tinto Alcan remains committed to delivering on operational efficiencies and improving
its baseline cost structure.
Major cost reduction measures and further aligning production with market demands are
expected to position Rio Tinto Alcan to continue to lead the restructured global aluminium
industry going forward.
To build stronger margins and remain long in bauxite and alumina, the group holds the
worlds largest bauxite reserves and a competitive position in the alumina sector.
Carbon trading and emissions regulations will factor strongly in the coming years,
particularly in OECD countries, and the groups AP technology and clean energy sources are
expected to provide advantages in a carbon constrained marketplace.
Table of Contents
All injury frequency rate
Per 200,000 hours worked
1.41
1.45
1.67
(1)
1.33
1.04
(1)
Including former Alcan
Aluminium greenhouse gas emissions intensity
Indexed relative to 2008
Group intensity
117.7
119.4
117.0
118.7
(1)
100.0
(2)
90.1
(2)
(1)
Rio Tinto excluding former Alcan
(2)
Rio Tinto including former Alcan
Table of Contents
Table of Contents
Table of Contents
US$ million
6,206
2,223
1,866
553
5,028
Underlying earnings contribution* 2007-2009
US$m
3,479
(185
)
(49
)
(963
)
(620
)
(66
)
1,597
(487
)
(40
)
556
304
(64
)
1,866
*
See note 31 on page A-44 and note 51 on page A-80 of the
2009 Financial statements
for a reconciliation of underlying earnings by product group to consolidated net profit for
the year as determined under IFRS. All amounts presented by the product groups exclude net
interest and other centrally reported items.
Deliver shareholder value by significantly increasing copper production in the medium term.
Be an innovative, disciplined acquirer and developer of value creating assets.
Optimise and develop the groups existing assets.
Continue to invest in innovative technologies such as block caving and sulphide leaching to
maintain leadership in the mines of the future.
Leverage the diverse portfolio of producing and developing mines to adapt to changing
economic conditions.
At Kennecott Utah Copper (KUC), the concentrator set multiple plant production records,
including total ore milled and copper in concentrate produced.
Also at KUC, the resource development team identified a new copper-molybdenum-gold porphyry
system.
KUC and Escondida both successfully negotiated new mutually beneficial collective
bargaining agreements with their work forces in 2009.
A landmark investment agreement with the Government of Mongolia progressed the development
of the Oyu Tolgoi project. Rio Tinto increased its stake in Ivanhoe Mines to 19.7 per cent.
Kennecott Eagle Nickel successfully addressed certain key legal challenges to its mine
permits in the US.
Exceed the improved safety performance in 2009 with a focus on embedding process safety
risk reviews.
Development of the world class Oyu Tolgoi copper-gold deposit in Mongolia.
At KUC, progress the molybdenum autoclave project and continue life of mine extension
through local drilling programmes.
Table of Contents
Complete the Northparkes E48 development and ramp up to full production.
The Copper Projects function will maintain and maximise options around key projects and
pursue opportunities to accelerate the start of production.
Industry fundamentals support a strong outlook on price, with robust long term demand and
supply side constraints.
Continued price volatility with upside potential.
Industry will be challenged by mines of increasing depth, decreasing grade profiles and
increasing exposure to higher risk regions.
Gradual transition to underground mines which require higher capital costs and investment
in innovative technologies.
Table of Contents
All injury frequency rate
Per 200,000 hours worked
1.26
1.31
1.24
1.06
0.67
Copper cathode greenhouse gas emissions intensity
Indexed relative to 2008
Group intensity
74.6
84.6
72.7
100.0
81.3
Table of Contents
Table of Contents
Table of Contents
US$ million
2,618
528
800
519
4,612
Underlying earnings contribution* 2007-2009
US$m
483
331
(50
)
(49
)
(167
)
(74
)
474
(298
)
(24
)
(245
)
88
805
800
*
See note 31 on page A-44 and note 51 on page A-80 of the
2009 Financial statements
for a reconciliation of underlying earnings by product group to consolidated net profit for
the year as determined under IFRS. All amounts presented by the product groups exclude net
interest and other centrally reported items.
To safely and efficiently maximise shareholder value.
To be the preferred supplier of natural rough diamonds, borates, talc and titanium dioxide.
To be responsible and transparent in relations with neighbouring communities.
To differentiate in the marketplace through superior service and technical support.
To continue to invest in growth projects in the existing businesses and seek Tier 1
development opportunities in new mineral sectors.
First shipments of ilmenite from QIT Madagascar Minerals (QMM).
Broad Based Black Economic Empowerment restructuring completed at Richards Bay Minerals.
Underlying EBITDA for RTM maintained at 2008 levels through strong cost reductions and
positive pricing despite significantly lower volumes.
Licences renewed for Jadar lithium-borate development project in Serbia.
Potasio Rio Colorado (PRC) project in Argentina and a second potash project near Regina in
Canada sold to Vale for a combined gain of US$797 million, included in underlying earnings.
Construction of Diavik Diamonds underground mine in Canada substantially completed.
Progressed the Bunder hard rock diamond discovery in India
Business improvement programmes delivered significant cost reductions in response to global
economic conditions.
Continue to strive for zero harm to people across all operations.
Manage production and maximise cash flow in line with global economic recovery.
Continue to operate in a responsible and sustainable manner.
Table of Contents
Continue to differentiate Rio Tinto from other diamond and industrial minerals suppliers by
providing superior product quality, supply reliability and customer service.
Retain and continue to develop the best people.
The diverse markets being served by the groups operations continue to be affected by the
health of the global economy.
In Diamonds, rough prices are expected to improve during 2010 although this is dependent on
the recovery in the US and consumption from emerging markets.
Market weakness in the minerals business in 2009 is expected to slowly reverse in 2010,
with more rapid recovery in Asia and emerging economies.
Declines in the housing and automotive sectors will be offset to some degree by government
incentive programmes, but will continue to affect sales.
Table of Contents
All injury frequency rate
Per 200,000 hours worked
1.43
0.92
0.92
0.58
0.71
Titanium slag and iron greenhouse gas emissions intensity
Indexed relative to 2008
Group intensity
101.1
102.7
102.3
100.0
110.7
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Table of Contents
Table of Contents
US$ million
6,709
2,576
1,420
686
2,538
Underlying earnings contribution* 2007-2009
US$m
498
1,623
(51
)
177
257
77
2,581
(592
)
(54
)
(67
)
136
(584
)
1,420
*
See note 31 on page A-44 and note 51 on page A-80 of the
2009 Financial statements
for a reconciliation of underlying earnings by product group to consolidated net profit for
the year as determined under IFRS. All amounts presented by the product groups exclude net
interest and other centrally reported items.
The Energy groups core purpose is to maximise the value it creates for shareholders from
supplying the worlds mineable energy needs.
The group focuses its resources on excellence in operations; large scale, long life, cost
competitive assets.
Opportunities for brownfield expansions are being progressed across the business.
Australian thermal and semi soft coal production of 37.4 million tonnes (Rio Tinto share
23.1 million tonnes) a five per cent increase on 2008.
Record production and sales results throughout the year from many operations.
Safety performance improved at most operations.
Successful divestment of numerous energy assets in line with the Group divestment strategy.
Separation from Rio Tinto Energy America (RTEA) and transition to a standalone business in
2009 by Colowyo Coal Company.
A milestone achievement of 100 indigenous employees at Energy Resources of Australia (ERA),
representing almost 20 per cent of ERAs workforce.
Continued delivery of operational excellence programmes in all businesses to systematically
eliminate waste, reduce process variability, and engage and empower our workforce.
Continuing to improve HSE performance, including contractor safety.
Maximising free cash flow and continuing to operate in a responsible and sustainable
manner.
Timely delivery of current expansion projects.
Continuing work with industry, government and infrastructure providers to resolve coal
supply chain bottlenecks and increase export capacities.
Positioning the group as the supplier of choice as the global economy recovers.
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Retaining and continuing to develop the best people.
Aligning business growth strategies with climate change and energy strategy.
Rio Tinto believes the outlook for seaborne coal remains very positive.
The supply-demand balance for both thermal and metallurgical coals remains tight and
towards the end of 2009 prices were increasing across all types of coal.
The rising domestic prices in China have supported the demand for imported coal, while
traditional importing markets continue to increase imports in line with a broader economic
recovery.
A global resurgence in nuclear power is under way, driven in large part by the need for
energy security and baseload electricity generation that minimises emissions of greenhouse
gases.
Uranium prices are likely to increase if many new uranium projects, which were looking less
financially attractive due to the effect of weaker uranium prices, are delayed.
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The sale of Rio Tinto Energy Americas (RTEA) Jacobs Ranch mine to Arch Coal for a cash
consideration of US$764 million, completed on 1 October 2009.
The balance of RTEAs assets (excluding Colowyo) were transferred to Cloud Peak Energy
Resources LLC (CPER). Rio Tinto received total proceeds of US$741 million in connection with
Cloud Peak Energy Incs initial public offering and related transactions. As a result, Rio
Tinto now indirectly holds a 48.3 per cent interest in the Antelope, Cordero Rojo and Spring
Creek mines and a 24.1 per cent interest in the Decker mine.
The sale of Coal & Allieds Maules Creek project to Aston Resources, a private Australian
company, for A$480 million (US$379 million) was completed on 18 February 2010.
Coal & Allieds Vickery asset was sold to Whitehaven Coal (ASX listed) for A$31.5 (US$26.5)
million, with an effective date of 4 February 2010.
All injury frequency rate
Per 200,000 hours worked
1.31
0.89
0.90
0.87
0.71
Australian coal greenhouse gas emissions intensity
Indexed relative to 2008
Group intensity
82.8
86.2
95.7
100.0
98.6
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US$ million
12,598
7,389
4,126
2,148
11,263
Underlying earnings contribution* 2007-2009
US$m
2,664
3,654
(71
)
165
(446
)
51
6,017
(2,920
)
(22
)
694
352
5
4,126
*
See note 31 on page A-44 and note 51 on page A-80 of the
2009 Financial statements
for a reconciliation of underlying earnings by product group to consolidated net profit for
the year as determined under IFRS. All amounts presented by the product groups exclude net
interest and other centrally reported items.
The strategy is to maximise the return to shareholders from iron ore assets worldwide.
Focus will remain on reducing costs and building on cash generation initiatives.
Increasing or maintaining return from existing assets through brownfield developments where
possible, particularly to contribute to sustaining capacity.
Advancement of expansions under study to achieve 330 million tonnes per annum capacity in
the Pilbara by 2015, within ongoing capital expenditure constraints.
Continue detailed planning on integration for implementation of the proposed Pilbara
production joint venture with BHP Billiton, as various regulatory approvals are sought.
Global iron ore production of more than 217 million tonnes (Rio Tinto share 171.5 million
tonnes), a 12 per cent increase on 2008.
Maintained integrity of operations despite weather and global financial crisis setbacks.
Milestone of three billion tonnes exported from Rio Tintos operations in the Pilbara.
Yandicoogina became the first mine in Australia to record 50 million tonnes annual
production.
Operations Centre established for remote control of mines, rail and ports.
Achieving a proper, expeditious and fair resolution of the case of the four Shanghai
colleagues detained by China in July 2009.
Building on 2009s success in removing bottlenecks to achieve sustained production at or
above nameplate capacity.
Fully extracting benefits from operations integration though advances such as the
Operations Centre and improved planning and scheduling.
Continuing to improve the business safety performance, notwithstanding the escalation of
business activity and expansion work.
Securing approval for and implementing the proposed production joint venture in the Pilbara
with BHP Billiton.
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Advancing the Orissa, India, and Simandou, Guinea, development projects.
The outlook for global iron ore remains very positive, with seaborne iron ore trade
continuing to expand to meet major Asian demand.
Growth fundamentals remain unchanged from before the financial crisis, and continue to be
dominated by the rise of China, where urbanisation continues apace.
Chinas increase in steel intensity is following or exceeding market expectations, and Rio
Tinto expects steel consumption to double by 2020. India is expected to follow that same path,
though at a less rapid pace.
Growth in the more stable markets of Japan, Korea, Taiwan, Western Europe and North America
should remain relatively constant.
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All injury frequency rate
Per 200,000 hours worked
1.58
1.27
0.98
0.91
0.81
Australian coal greenhouse gas emissions intensity
Indexed relative to 2008
Group intensity
77.6
76.1
81.4
100.0
87.3
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Year
Discovery
Commodity
Location
Potasio Rio Colorado
Potash
Argentina
Resolution
Copper
US
Simandou
Iron ore
Guinea
La Granja
Copper
Peru
Caliwingina
Iron ore
Australia
Sulawesi
Nickel
Indonesia
Mutamba
Titanium
Mozambique
Jadar
Lithium / Borates
Serbia
All injury frequency rate
Per 200,000 hours worked
0.55
0.88
1.25
0.97
0.61
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Project
Commodity
Country
Stage
Nickel/copper
US
Order of
magnitude
Bauxite
Brazil
Order of
magnitude
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Maintain and promote a safe working environment.
Continue to embed operational excellence in business units.
Maximise the contribution of technology to the Groups vision of industry leadership.
Deploy technology solutions that increase earnings.
Design and build valuable new investment projects.
Position the Group to unlock orebodies that require innovative mining solutions.
Lead the Groups response to climate change.
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A full consolidated cash flow statement is contained in the
2009 Financial statements
. Cash flow
from operations, including dividends from equity accounted units, was US$13,834 million, 33 per
cent lower than 2008, primarily as a consequence of lower prices.
Cash flow from operations, including dividends from equity accounted units, was a record US$20,668
million, 64 per cent higher than 2007 due to the effect of higher commodity prices for the first
nine months of the year.
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Notes
(a)
Debt obligations include bank borrowings repayable on demand.
(b)
Interest payments have been projected using the interest rate applicable at 31 December 2009,
including the impact of currency and interest rate swap agreements where appropriate. Much of
the debt is subject to variable interest rates. Future interest payments are subject,
therefore, to change in line with market rates.
(c)
Unconditional purchase obligations relate to commitments to make payments in the future for
fixed or minimum quantities of goods or services at fixed or minimum prices. The future
payment commitments have not been discounted and mainly relate to commitments under take or
pay power and freight contracts. They exclude unconditional purchase obligations of jointly
controlled entities apart from those relating to the Groups tolling arrangements
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Effect on
underlying earnings
Average exchange
of 10% change in
rate for 2009
full year average
US cents
+/- US$m
79
444
88
171
139
22
US$1= 558 pesos
20
64
14
12
43
157
19
Effect on net
Of which amount
earnings of 10%
impacting
Effect of items
Closing
strengthening of
underlying
impacting
exchange rate
US dollar
earnings
directly on equity
US cents
US$m
US$m
US$m
89
190
80
(1
)
95
(64
)
(6
)
114
14
13
2
(42
)
144
254
15
12
73
17
18
Notes
(a)
The sensitivities show the net sensitivity of US dollar exposures in Australian dollar functional currency
companies, for example, and Australian dollar exposures in US dollar functional currency companies.
(b)
Rio Tinto Alcan Inc., which has a US functional currency for accounting purposes, has a
significant amount of US dollar denominated external and intragroup debt held in Canada and is
taxed on a Canadian currency basis. The above sensitivities as at 31 December 2009 for a 10
per cent strengthening of the US dollar do not include any tax benefit related to this debt
because the capital losses generated would not be recognised. If the US dollar weakened below
97 Canadian cents then tax charges would begin to be recognised at 15 per cent.
Effect on net assets
Closing
of 10% change in
exchange rate
closing rate
US cents
+/- US$m
89
2,366
144
678
95
219
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2009
2008
2007
Commodity
Source
Unit
US$
US$
US$
LME
Tonne (c)
1,665
2,572
2,638
LME
Pound
2.32
3.20
3.24
LBMA
Ounce
970
872
691
Australian benchmark (fines) (a)
dmtu (b)
1.09
1.29
0.79
Metals Week: quote for dealer oxide price
Pound
11
31
30
Notes
(a)
average for the calendar year
(b)
dry metric tonne unit
(c)
restated from Pound to Tonne
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Dual listed company reporting
Asset carrying values
Asset lives
Ore reserve estimates
Close down, restoration and clean up obligations
Overburden removal costs
Deferred tax on fair value adjustments
Exploration
Functional currency
Underlying earnings
Post retirement benefits
Deferred tax potentially recoverable on Group tax losses
Contingencies
Acquisition accounting
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Rio Tinto 2009
Form 20-F
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Rio Tinto 2009
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Rio Tinto 2009
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Rio Tinto 2009
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Rio Tinto 2009
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Rio Tinto 2009
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Appointment and election:
Director of Rio Tinto plc and Rio Tinto Limited effective 1 September 2008. Jan was elected by
shareholders at the 2009 annual general meetings. He was appointed chairman at the conclusion of
the 2009 annual general meetings.
Skills and experience:
Jan was appointed chairman of the board of British American Tobacco plc in 2004 having been a non
executive director since 1999. A former non executive director of Lloyds Bank Group plc, Jan was
previously Group finance director of Richemont from 1988 until April 2004 and chairman of RHM plc
between June 2005 and March 2007.
External appointments (current and recent):
Non executive director of Marks and Spencer Group plc since November 2008, chairman of the board of
British American Tobacco plc from 2004 until October 2009, non executive director and chairman of
the Audit committee of Lloyds Banking Group plc from 2005 and 2008 respectively until April 2009,
chairman of RHM plc from 2005 until March 2007.
Appointment and election:
Director of Rio Tinto plc and Rio Tinto Limited since 2006. Tom was last re-elected in 2008.
Skills and experience:
Tom joined Rio Tinto in 1993 on Rio Tintos acquisition of Nerco and held a series of management
positions before being appointed chief executive of the Industrial Minerals group in 2000, after
which he became chief executive of the Copper group and head of Exploration in 2004. He took over
as chief executive with effect from May 2007.
External appointments (current and recent):
Director of Ivanhoe Mines Limited from 2006 to 2007, director of Palabora Mining Company from 2004
to 2006, member of the executive committee of the International Copper Association from 2004 to
2006.
Appointment and election:
Appointed a director of Rio Tinto plc and Rio Tinto Limited on 9 February 2010, with effect since 1
April 2010. Bob was elected by shareholders at the 2010 annual general meetings.
Skills and experience:
Bob is chairman of Groupe Aeroplan Inc and serves on the board of Bell Canada Enterprises (BCE
Inc), the holding company for Bell Canada. He was previously president and chief executive officer
of CAE Inc, a world leader in flight simulation and training. Before that he spent 16 years at
Bombardier Inc where he was first head of the Aerospace Group and then president and chief
executive officer. He has also served as chairman of Air Canada and of the Aerospace Industries
Association of Canada.
Bob was inducted to the Order of Canada as well as lOrdre National du Québec. He has been awarded
honorary doctorates from five Canadian universities.
External appointments (current and recent):
Non executive director of Groupe Aeroplan Inc since 2005 and chairman since January 2008, non
executive director of Bell Canada Enterprises (BCE Inc) since May 2009, president and chief
executive officer of CAE Inc from August 2004 until September 2009, non executive director of
Nortel Corporation from 2000 to 2006, Allen Vanguard Corporation from 2003 to 2005 and Ace Aviation
Holdings Inc from 2004 to April 2009.
Appointment and election:
Director of Rio Tinto plc and Rio Tinto Limited since 2005. Vivienne was last re-elected in 2008.
Skills and experience:
Vivienne was executive vice president and chief executive officer, Alternative Energy for BP plc
until June 2009. She became a member of the BP group chief executives committee when she became
chief executive of the Gas, Power and Renewables business. During her career at BP she worked in
chemicals, exploration, finance and refining and marketing. Vivienne holds degrees in chemistry
from Oxford University and in business administration from INSEAD.
External appointments (current and recent):
Non executive director of Climate Change Capital Limited since May 2008 and non executive chairman
since November 2009, member of the supervisory board of Vallourec since 23 February 2010, member of
the board of INSEAD since May 2009, executive vice president for BP plc between 2004 and 2009.
Appointment and election:
Director of Rio Tinto plc and Rio Tinto Limited since 2005. Sir Rod was last re-elected by
shareholders in 2009.
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External appointments (current and recent):
Non executive chairman of JPMorgan Australia and New Zealand since 2006, director of CLP Holdings
since 2006, director of News Corporation plc since 1999, director of John Swire & Son Pty Limited
since 1997, chairman Infrastructure Australia since February 2008, director of Allco Finance Group
Limited from 2006 until 2009, chief executive British Airways plc from 2000 until 2005, chairman of
the EU/Hong Kong Business Co- operation Committee of the Hong Kong Trade Development Council from
2002 until 2006.
Appointment and election:
Chief financial officer of Rio Tinto plc and Rio Tinto Limited since 2002. Guy was last re- elected
by shareholders in 2007 and stands for re-election in 2010.
Skills and experience:
Guy joined the Group in 1980 after gaining an MBA having previously been in investment banking. He
has subsequently held a variety of commercial and management positions, including head of Business
Evaluation and president of Rio Tinto Brasil.
External appointments (current and recent):
Non executive director and senior independent director of Cadbury plc from 2007 and 2008
respectively until Mar 2010. Chairman of the Audit committee until April 2009.
Appointment and election:
Director of Rio Tinto plc and Rio Tinto Limited since 2006. Michael was elected by shareholders in
2007 and stands for re-election in 2010.
Skills and experience:
Michael sold his interest in, and ceased to be a director of, Hastings Funds Management Ltd during
2005, the pioneering infrastructure asset management company which he founded in 1994. He is
chairman of Treasury Group Limited, an incubator of fund management companies. He is chairman of
the Australian Football League, having previously played the game professionally, and is a former
chairman of the Australian Sports Commission.
External appointments (current and recent):
Chairman of Treasury Group Limited since 2005, director of the Walter & Eliza Hall Institute of
Medical Research since 2001, chairman of the Victorian Funds Management Corporation from 2006 to
2008, managing director of Hastings Funds Management Ltd from 1994 to 2005, director of Australian
Infrastructure Fund Limited from 1994 to 2005.
Appointments and election:
Director of Rio Tinto plc and Rio Tinto Limited since 2007. Yves was elected by shareholders in
2008.
Skills and experience:
Yves Fortier was ambassador and permanent representative of Canada to the United Nations from 1988
to 1992. He is chairman emeritus and a senior partner of the law firm Ogilvy Renault and was
chairman of Alcan from 2002 until 2007.
External appointments (current and recent):
Chairman emeritus and senior partner of Ogilvy Renault since June 2009, chairman of Ogilvy Renault
from 1992 until May 2009, director of NOVA Chemicals Corporation from 1998 until April 2009,
chairman and director of Alcan Inc. from 2002 until 2007, director of Royal Bank of Canada from
1992 to 2005, director of Nortel Corporation from 1992 to 2005, governor of Hudsons Bay Company
from 1998 to 2006, trustee of the International Accounting Standards Committee from 2000 to 2006.
Appointment and election:
Appointed a director of Rio Tinto plc and Rio Tinto Limited on 9 February 2010. Ann was elected by
shareholders at the 2010 annual general meetings and was appointed chairman of the Audit Committee
at the conclusion of the 2010 annual general meetings.
Skills and experience:
Ann has more than 25 years experience in the financial services industry. She spent 10 years at
Swiss Re, latterly as chief financial officer from 2003 until 2007 and from 2008 until January 2009
she was chief financial officer and executive director of Northern Rock.
External appointments (current and recent):
Non executive director of UBS AG since April 2009, non executive director of Atrium Underwriting
Group Limited and Ariel Group Limited since November 2007, non executive director of Prudential
since August 2007 and chairman of the Audit committee since October 2009, chief financial officer
and executive director of Northern Rock from 2008 to 2009.
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Appointment and election:
Director of Rio Tinto plc and Rio Tinto Limited since 2004. He was last re-elected by shareholders
in 2008 and is chairman of the Committee on social and environmental accountability.
Skills and experience:
Richard was executive vice president and chief operating officer of DuPont until the end of
September 2009. He was responsible for a number of the global functions, and for the non US
operations of DuPont, with particular focus on growth in emerging markets. During his career he has
worked at senior levels for McKinsey & Co, PepsiCo and America West Airlines, where he was
president and CEO.
External appointments (current and recent):
Non executive director of Qantas Airways Limited since June 2008, economic adviser to the governor
of Guangdong Province, China since 2003, executive vice president and chief operating officer of
DuPont from 1999 until September 2009, director of the United Way of Delaware between 2002 and June
2009 (chairman between January 2006 and June 2007).
Appointment and election:
Director of Rio Tinto plc and Rio Tinto Limited since 2002. Andrew was appointed the senior
independent non executive director and chairman of the Remuneration committee at the conclusion of
the 2008 annual general meetings. Andrew was last re-elected by shareholders in 2009.
Skills and experience:
Andrew is chairman and chief executive officer of Schlumberger Limited, where he has held a
succession of financial and operational management positions, including that of executive vice
president of Schlumberger Oilfield Services and president and chief operating officer of
Schlumberger Limited. He has worked in Asia, Europe and the US. He joined Schlumberger in 1975. He
holds a degree in economic history from Cardiff University and qualified as a chartered accountant
with Ernst & Young.
External appointments (current and recent):
Chairman and chief executive officer of Schlumberger Limited since 2003, member of the board of
trustees of King Abdullah University of Science and Technology in Jeddah, Saudi Arabia since
October 2008, member of the advisory board of the King Fahd University of Petroleum and Minerals in
Dhahran, Saudi Arabia since 2007, member of the commercialisation advisory board of Imperial
College of Science Technology and Medicine, London since 2002, member of the UK prime ministers
Council of Science and Technology from 2004 to 2007.
Appointment and election:
Director of Rio Tinto plc and Rio Tinto Limited since 2003. He was last re-elected by shareholders
in 2007 and stands for re-election in 2010.
Skills and experience:
Lord Kerr was in the UK Diplomatic Service for 36 years and headed it from 1997 to 2002 as
permanent under secretary at the Foreign Office. Previous postings included being principal private
secretary to two chancellors of the Exchequer, serving in the Soviet Union and Pakistan, and spells
as ambassador to the European Union (1990 to 1995), and the US (1995 to 1997). He has been an
independent member of the House of Lords since 2004.
External appointments (current and recent):
Director of Scottish Power Limited since July 2009, deputy chairman of Royal Dutch Shell plc since
2005, director of The Scottish American Investment Trust plc since 2002, advisory board member, BAE
Systems since 2008, chairman of the Centre for European Reform (London) since 2008, vice president
of the European Policy Centre (Brussels) since 2007, chairman of the Court and Council of Imperial
College, London since 2005, trustee of the Rhodes Trust since 1997 and the Carnegie Trust for the
Universities of Scotland since 2005, director of The Shell Transport and Trading Company plc from
2002 to 2005, advisory board member, Scottish Power (Iberdrola) from 2007 to July 2009, trustee of
The National Gallery from 2002 to February 2010.
Appointment and election:
Director of Rio Tinto plc and Rio Tinto Limited since 2007. Paul was elected by shareholders at the
2008 annual general meetings.
Skills and experience:
Paul was clerk of the Privy Council Office and secretary to the Cabinet of the Government of Canada
from 1985 to 1992 and was president and chief executive officer of the Canadian National Railway
Company from 1992 to 2002. Until 2004, he was president and chief executive officer of Bombardier
Inc.
External appointments (current and recent):
Chairman of Global Container Terminals since 2007, director of BCE Inc since 1999, director of
McCain Foods since 1996, director of Bell Canada since 1996, trustee of the International
Accounting Standards Foundation since 2007, co-chair of the Prime Minister of Canadas Advisory
Committee on the Renewal of the Public Service since 2006, strategic advisor to Société Générale
(Canada) since 2005, member of the advisory board of General Motors of Canada since 2005, non
executive director of Alcan Inc. from 1998 to 2007.
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Appointment and election:
Director of Rio Tinto plc and Rio Tinto Limited effective 5 June 2009. Sam was elected by
shareholders at the 2010 annual general meetings.
Skills and experience:
Sam was appointed executive director and chief executive Iron Ore and Australia in June 2009. He
joined Rio Tinto in 1991, following 20 years in the automotive industry at General Motors and
Nissan Australia. He has held a number of management positions within the Group, including managing
director of Comalco Foundry Products, CRA Industrial Products, Hamersley Iron Sales and Marketing,
Hamersley Iron Operations, vice president of Rio Tinto Iron Ore (with responsibility for Hamersley
Iron and Robe River) and from 2001 to 2004 chief executive of the Aluminium group and from 2004 to
2009 chief executive of the Iron Ore group. Sam is also a Fellow of the Australian Institute of
Management, the Australasian Institute of Mining and Metallurgy and the Australian Institute of
Company Directors.
External appointments (current and recent):
Director of Western Australian Newspaper Holdings Limited since December 2008, chair of Black Swan
State Theatre Company Limited since March 2009, chair of WA chapter of Australian Business Arts
Foundation since 2008, director of the Committee for Perth Ltd between 2006 and August 2009,
director of the Australian Mines and Metals Association, between 2001 and 2005, director of the
Australian Chamber of Commerce and Industry, between 2003 and 2005.
Skills and experience:
He was previously a managing director of The Shell Transport and Trading Company plc and group
managing director of The Royal Dutch/Shell Group of Companies, for whom he had worked since 1966.
External appointments (current and recent) upon leaving the Group:
Director of Air Liquide SA since 2006, director of the Tetra Laval Group since 2005, director of
Standard Chartered plc since 2003, chairman of the Commonwealth Business Council since 2007, non
executive member of the Defence Board of the UK Ministry of Defence since 2006, chairman of the
International Chamber of Commerce (UK) from 2005 to 2008.
Skills and experience:
Dick joined Rio Tinto following the acquisition of Alcan where he had held several senior
management positions since 1997 including executive vice president and president and chief
executive officer from 2006 to 2007.
External appointments (current and recent) upon leaving the Group:
Director of AbitibiBowater Inc. since 2003 and its chairman since February 2009, director of the
International Aluminium Institute since 2001 and chairman since 2008, director of the Conference
Board of Canada since 2007.
Appointment and election:
Director of Rio Tinto plc and Rio Tinto Limited from January 2009 until February 2009. He resigned
from the boards of Rio Tinto prior to his election at the 2009 annual general meetings.
Skills and experience:
Jim was chairman of Tata Steel Europe Limited and deputy chairman of Tata Steel of India, following
the Corus takeover by Tata in April 2007. He was also chairman of Doncasters Group Ltd, an
international specialist engineering company and a non executive director of Alstom SA, a senior
adviser of HSBC and a member of their European Advisory Council and chairman of the European
Advisory Board of AEA, a New York based Private Equity Partnership.
External appointments (current and recent) upon leaving the Group:
Director of TNK-BP since January 2009, chairman of Tata Steel Europe Limited since November 2008,
deputy chairman of Tata Steel of India since 2007, chairman of Doncasters Group Limited since 2006,
non executive director Alstom SA since 2003 and director of Corus Group Limited from 2001 to 2008.
Skills and experience:
Sir David was chairman of Prudential plc until December 2008, prior to which he was deputy governor
of the Bank of England. His earlier career was with Kleinwort Benson where he spent 22 years,
holding various positions including chief executive and
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External appointments (current and recent) upon leaving the Group:
Non executive director of Foreign & Colonial Investment Trust plc since May 2008, chairman, Kings
Cross Central General Partnership since October 2008, chairman of Prudential plc from 2002 until
2008, member of the Financial Reporting Council between 2003 and 2007.
Skills and experience:
David joined Cazenove in 1969 and in 1986 he became the partner in charge of the firms Capital
Markets Department. He became chairman of Cazenove Group Limited in 2001 and JPMorgan Cazenove in
2005 until January 2010 when he became vice chairman of JPMorgan.
External appointments (current and recent) upon leaving the Group:
Vice chairman of JPMorgan effective January 2010, chairman of Cazenove Group Limited between 2001
and January 2010, chairman of JPMorgan Cazenove Holdings Limited (formerly Cazenove Group plc)
between 2005 and January 2010.
Notes
Audit committee
(Vivienne Cox, Michael Fitzpatrick, Ann Godbehere, Lord Kerr and Paul Tellier)
Remuneration committee
(Michael Fitzpatrick, Richard Goodmanson, Andrew Gould, and Paul Tellier)
Nominations committee
(Jan du Plessis, Robert Brown, Vivienne Cox, Sir Rod Eddington, Michael Fitzpatrick,
Yves Fortier, Richard Goodmanson, Andrew Gould, Lord Kerr and Paul Tellier)
Committee on social and environmental accountability
(Robert Brown, Sir Rod Eddington, Yves Fortier, Richard Goodmanson and Lord Kerr)
Independent
(Robert Brown, Vivienne Cox, Sir Rod Eddington, Michael Fitzpatrick, Yves Fortier, Ann
Godbehere, Richard Goodmanson, Andrew Gould, Lord Kerr and Paul Tellier)
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Skills and experience:
Hugo Bague was appointed Group executive, People and Organisations in October 2009 having joined
Rio Tinto as global head of Human Resources in 2007. Previously he worked for six years for
Hewlett-Packard where he was the global vice president Human Resources for the Technology Solutions
Group, based in the US. Prior to this he worked for Compaq Computers, Nortel Networks and Abbott
Laboratories based in Switzerland, France and Germany.
External appointments (current and recent):
Member of the Advisory Council of United Business Institute in Brussels, Belgium since 1995.
Skills and experience:
Preston was appointed Group executive, Technology & Innovation in October 2009. He joined the Group
in 1991 at Kennecott Utah Coppers Bingham Canyon mine as vice president, Technical Services. In
1995 he became vice president and general manager of the Boron operations in California and was
chief executive of Rio Tinto Borax from 1999 to 2003. Preston then became chief executive of the
Energy group and in November 2007, upon a management re-organisation, he also assumed
responsibility for the Industrial Minerals group.
Skills and experience:
Bret was appointed Group executive, Business Support & Operations in October 2009. He joined the
Group in 1995 and has held a series of management positions, including chief executive of the
Copper and Diamonds groups, president and chief executive officer of Rio Tinto Energy America and
chief financial officer of Rio Tinto Iron Ore. Prior to joining the Group, Bret worked for
PricewaterhouseCoopers for nine years, providing auditing and consulting services to the mining
industry.
External appointments (current and recent):
Director of Ivanhoe Mines Limited between 2007 and 2009, member of the executive committee of the
International Copper Association between 2006 and 2009, member of the Coal Industry Advisory Board
to the International Energy Agency (IEA) between 2003 and 2006, member of the board of directors of
the US National Mining Association between 2002 and 2006.
Skills and experience:
Jacynthe became chief executive, Rio Tinto Alcan on 1 February 2009. She joined Alcan in 1988 and
has significant operational and international experience in the aluminium industry. She was chief
executive officer, Primary Metal, Rio Tinto Alcan, where she was responsible for all primary metal
facilities and power generation installation worldwide. Her previous roles in Alcan include
president and chief executive officer, Bauxite & Alumina business group and senior management roles
in business planning, human resources and environment, health and safety. Jacynthe has a bachelors
degree in chemistry from Laval University in Quebec.
External appointments (current and recent):
Member of the Hautes Etudes Commerciales Board since June 2009, member of the Quebec Council of
Manufacturers since April 2008, member of the International Aluminium Institute since 2006.
Skills and experience:
Andrew was appointed chief executive of Rio Tinto Copper in October 2009. He joined Rio Tinto in
1992, initially working for Hamersley Iron. Andrew went on to hold operating roles within the
Energy, Aluminium and Iron Ore product groups, including at the Mount Thorley, Hunter Valley,
Weipa, Mount Tom Price, Marandoo and Brockman mines. In 2007, he became global practice leader,
Mining within Rio Tintos Technology & Innovation group. Prior to his current role, Andrew was
president and chief executive officer, Kennecott Utah Copper.
External appointments (current and recent):
Director of Ivanhoe Mines Limited since November 2009.
Skills and experience:
Harry was appointed chief executive of Rio Tintos Diamonds & Minerals product group in October
2009. He joined the Group in 1990 from Anglo American Corporation and has held management positions
in South Africa, Australia and the UK. Harry spent
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External appointments (current and recent):
Chairman of the Australian Uranium Association from 2006 to 2007, chairman of the Copper
Development Association, South Africa from 2000 to 2003, director of Energy Resources of Australia
Limited from 2004 to 2007.
Skills and experience:
Doug was appointed chief executive of Rio Tintos Energy group in October 2009. He has been with
the Group since 1986 when he joined CRA as corporate counsel. Since then he has held various legal,
commercial, business analysis, strategy, operational and project evaluation and development roles,
including in the Aluminium, Energy and Diamonds & Minerals product groups, and within corporate
functions. Dougs previous roles have included managing director of Dampier Salt, Rio Tinto Coal
Australia and Rio Tinto Diamonds. Prior to his current role, he was managing director, Strategy of
Rio Tinto.
External appointments (current and recent):
Director of Australian Coal Association from 2006 to 2008, director of Dalrymple Bay Coal Terminal
Pty Ltd from 2006 to 2007, director of Port Waratah Coal Services Ltd from 2006 to 2007, director
of Queensland Resources Council from 2006 to 2007, member of the Coal Industry Advisory Board to
the IEA from 2006 to 2008, director of Coal & Allied Industries Limited between 2006 and 2007 and
since 2008, director of Rössing Uranium Limited since November 2009.
Skills and experience:
Debra was appointed Group executive, Legal & External Affairs in October 2009 having joined Rio
Tinto as global head of Legal in January 2008. Debra previously worked at United Technologies
Corporation in the US where she was vice president, deputy general counsel and secretary. Before
then, she was a partner with the law firm OMelveny & Myers, in Washington DC. Debra served as
general counsel at the US Federal Trade Commission from 1997 to 2001.
External appointments (current and recent):
Member, Council on Foreign Relations since 1993, American Law Institute 1991, commissioner,
Congressional Antitrust Modernisation Commission from 2004 to 2007.
Skills and experience:
Ben joined as company secretary of Rio Tinto plc during 2007. Prior to joining Rio Tinto, he spent
five years with BG Group plc, two of them as company secretary. He has previously worked for
National Grid plc, British American Tobacco plc and PricewaterhouseCoopers LLP. Ben is a fellow of
the Institute of Chartered Secretaries and Administrators.
External appointments (current and recent):
None.
Skills and experience:
Stephen joined Rio Tinto in 1983 and has held various positions in Accounting, Treasury, and
Employee Services before becoming company secretary of Rio Tinto Limited in 2002. He holds a
bachelor of business degree and is a certified practising accountant.
External appointments (current and recent):
None.
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monitoring the effectiveness and appropriateness of executive remuneration policy and
practice;
recommending executive remuneration policy to the board;
reviewing and determining the terms of service, including remuneration and any termination
arrangements, for the chairman, executive directors, PGCEOs, Group executives and the company
secretary of Rio Tinto plc;
reviewing and confirming the remuneration and conditions of employment for other senior
managers; and
recommending share-based long term incentive plans to the board.
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Table of Contents
Objective of component
2009 policy
2010 onwards
Table of Contents
1.
MSP, Performance options, Performance shares
constitute long term incentives as detailed
above.
2.
Annual bonus constitutes STIP.
3.
The performance options are the percentage of
each executives remuneration that consists of
options.
In order to reflect the prevailing economic climate and to move the mix of the package towards more
variable pay, executive salaries will be frozen again in 2010.
The STIP is an annual bonus plan, designed to support overall remuneration policy by focusing
participants on achieving annual financial, strategic and operational goals which contribute to
sustainable shareholder value.
For 2009, the maximum annual bonus opportunity under the STIP for the executives is 120 per cent of
salary (target opportunity of 60 per cent of salary). This amount is payable wholly in cash.
Table of Contents
Executive directors and
PGCEOs %
Group executives %
50.00
20.00
25.00
10.00
25.00
10.00
30.00
15.00
15.00
50.00
50.00
37.50
37.50
12.50
12.50
6.25
6.25
3.75
3.75
2.50
2.50
50.00
50.00
100.00
100.00
Executive directors and
PGCEOs %
Group executives %
52.50
21.00
26.25
10.50
26.25
10.50
31.50
15.75
15.75
17.50
17.50
8.75
8.75
5.25
5.25
3.50
3.50
70.00
70.00
30.00
30.00
30.00
30.00
100.00
100.00
*
Financial measures are 75 per cent of the total business measures.
**
Safety is 25 per cent of the total business measures.
Sam Walsh is considered a PGCEO with regard to STIP performance measures.
Table of Contents
The 2004 Share Option Plan a market value share option plan which is subject to TSR
performance and has been approved by shareholders.
The 2004 Mining Companies Comparative Plan a performance share plan which is subject to
TSR performance and has also been approved by shareholders.
The Management Share Plan a plan which generally provides service based awards.
Alcoa
Anglo American
Barrick Gold
BHP Billiton
Freeport-McMoRan
Newmont Mining
Vale do Rio Dolce
Xstrata
Rank in group
Percentage vesting %
150
121.3
92.5
63.8
35
0
50 per cent to the performance of the HSBC Global Mining Index; and
50 per cent to the performance of the Morgan Stanley Capital World Index.
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150% of initial award vests
Straight-line vesting
23% of maximum award
Table of Contents
director
Post-employment benefit
Plan membership UK employer pension plans as provided to other UK-based employees.
Pension is indexed to the UK Retail Price Index to a maximum of ten per cent per annum.
Tom Albanese
Tom Albanese specific provision:
Target defined benefit of 2/3rds of basic salary at age 60, inclusive of benefits accrued in the
US.
Guy Elliott
Guy Elliott specific provision:
Target defined benefit of 2.3 per cent of basic salary for each year of service with the Company
to age 60.
Retirement date 31 December 2009.
Unfunded defined contribution benefit.
Companys contribution was 20 per cent of basic salary, plus interest.
Unfunded benefit will be used to purchase an annuity at retirement.
Also participated in the Alcan Employee Savings Plan (Canada) to which the Company pays a maximum
contribution of 60 per cent of any employee contribution up to four per cent of base salary.
Plan membership Australian employer funded superannuation plan as provided to other Australian
based employees.
Target defined benefit is a lump sum multiple of 4.05 times final basic salary at age 62.
Additional Company contribution on a defined contribution basis of 20 per cent of the lesser of 50
per cent of the annual STIP award or 20 per cent of basic salary. This is in line with typical market
practice in Australia.
Annual bonus
Annual bonus
Performance options (SOP)
Performance shares (MCCP)
Potential range of cash bonus payments
Potential range of bonus deferral in
(% of March 2010 salary)
(% of March 2010 salary)
in March 2011 in respect of 2010
March 2011 in respect of 2010
Executive
Min
Max
Min
Max
Min
Max
Min
Max
2
0
£
907,500
0
£
907,500
0
300
0
300
0
£
675,500
0
£
675,500
0
300
0
300
0
A$1,475,000
0
A$1,475,000
0
300
0
300
0
£
360,000
0
£
360,000
0
300
0
300
0
US$725,000
0
US$725,000
0
300
0
300
0
US$700,000
0
US$700,000
0
300
0
300
0
US$825,000
0
US$825,000
0
300
0
300
0
US$650,000
0
US$650,000
0
300
0
300
0
£
360,000
0
£
360,000
0
300
0
300
0
A $850,000
0
A $850,000
0
300
0
300
0
US$570,000
0
US$570,000
0
300
0
300
1.
In addition to the payments above, Jacynthe Côté has two special MSP grants which vest in
2010 as part of her legacy Alcan arrangements. See page 123.
2.
Maximum reflects potential under the plan to vest 150 per cent of the original award for
outstanding performance.
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Executive
Base salary paid
Other payments
2009 STIP
7
Total short
Value of LTIP awards
Remuneration received
and benefits
1
payment
term pay
granted in 2009
2
for 2009
£
907,500
£
884,522
£
589,285
£
2,381,307
£
1,415,700
£
3,797,007
£
675,500
£
370,035
£
552,444
£
1,597,979
£
1,053,780
£
2,651,759
US$1,500,000
US$5,278,915
US$976,037
US$7,754,952
US$2,340,000
US$10,094,952
A$1,475,000
A$510,860
A$1,307,534
A$3,293,394
A$2,301,000
A$5,594,394
£
360,000
£
437,251
£
284,336
£
1,081,587
£
396,000
£
1,477,587
US$725,000
US$792,322
US$389,955
US$1,907,277
US$1,131,000
US$3,038,277
US$700,000
US$574,426
US$534,492
US$1,808,918
US$1,092,000
US$2,900,918
US$813,125
US$686,116
US$1,499,241
US$1,287,000
US$2,786,241
C$2,200,049
C$2,200,049
C $2,200,049
US$421,373
US$559,259
US$401,653
US$1,382,285
US$386,131
US$1,768,416
£
266,933
£
258,475
£
113,997
£
639,405
£
174,843
£
814,248
£
245,000
£
1,029,954
£
178,322
£
1,453,276
£
1,453,276
A$734,333
A$873,286
A$540,161
A$2,147,780
A$606,900
A$2,754,680
A$920,000
A$243,722
A$662,890
A$1,826,612
A$1,012,000
A$2,838,612
US$570,000
US$712,799
US$467,541
US$1,750,340
US$627,000
US$2,337,340
1.
Includes superannuation, pension, health care, expatriate payments, car allowances or cars,
other perquisite payments and any special one time bonus payments as detailed in Table 1a.
2.
The LTIP value is the expected value of the LTIP award granted in 2009.
3.
Total pay received for time as both CEO Rio Tinto Alcan primary metal and CEO Rio Tinto
Alcan. C$ amount includes the one time special bonus payments as detailed in Table 1a.
4.
Total pay received in US$ for time as both CEO KUC and CEO Copper.
5.
Total pay received in £ for time as both CEO RTI&T and CEO Diamonds & Minerals.
6.
Total pay received in A$ for time as both managing director strategy within Rio Tinto
Australia and CEO Energy.
7.
STIP payment made in 2010 in respect of 2009 performance.
Improve organisational effectiveness by creating alignment between the executives
individual objectives and Rio Tintos business strategy.
Provide a consistent, transparent and balanced approach to measure, recognise and reward
executive performance.
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TSR (US$) - Rio Tinto Group vs FTSE100, ASX All Share
Rio Tinto
FTSE
ASX All
HSBC
and HSBC Global Mining Index
DLC
100
share
Index
Total return basis Index 2004 = 100
100
100
100
100
162
108
113
142
194
141
152
197
395
154
200
312
85
80
95
129
272
114
170
266
Year
Dividends
Share price -
Share price -
Total shareholder return
paid during
Rio Tinto plc
Rio Tinto Limited
(TSR) %
the year
pence
A$
US cents
per share
1 Jan
31 Dec
1 Jan
31 Dec
plc
Ltd
Group
68.0
1,231
3,390
29.97
74.89
182.2
156.7
172.5
152.0
4,392
1,231
105.65
29.97
(71.5
)
(71.1
)
(71.5
)
116.0
2,245
4,392
58.60
105.65
99.5
82.9
92.7
191.5
2,193
2,245
54.42
58.60
6.2
9.2
7.5
83.5
1,266
2,193
30.86
54.42
77.4
80.2
78.5
Plan period that ended 31 December 2009
Alcoa, Anglo American, Barrick Gold, BHP Billiton,
Cameco, Freeport-McMoRan, Gmexico B, Newmont
Mining, Peabody Energy, Teck Cominco, Vale do Rio
Dolce, Xstrata
6th (44.8 per cent TSR)
39.60 per cent of initial award (26.4 per cent of
maximum) for executive directors and participants who
were PGCEOs at the time of the grant and 57.1 per
cent for all other plan participants based on TSR
results. The Committee believes that this is
consistent with the Companys underlying performance
over the four year vesting period. The vesting matrix
for the 2006 award which vested in 2010 was adjusted
in 2007 by the Committee to reflect industry
consolidation.
Plan period that ended 31 December 2009
10.20 per cent
-6.20 per cent
0 per cent vested based on TSR results as reviewed and approved by the Committee and were cancelled
Plan period that ended 31 December 2009
100.00 per cent
Table of Contents
Bonus
SOP (Performance Options)
MCCP (Performance Shares)
MSP (Service Awards)
Executive
% of
% of
% of
%
%
%
%
%
%
maximum
maximum
target
vested
forfeited
vested
forfeited
vested
forfeited
STIP awarded
STIP forfeited
STIP awarded
54.00
46.00
108
100
39.6
60.4
N/A
N/A
68.00
32.00
136
100
39.6
60.4
N/A
N/A
54.00
46.00
108
N/A
N/A
N/A
N/A
N/A
N/A
74.00
26.00
148
100
39.6
60.4
N/A
N/A
79.00
21.00
136
100
N/A
N/A
100
N/A
45.00
55.00
90
100
39.6
60.4
N/A
N/A
64.00
36.00
127
100
57.1
42.9
N/A
N/A
69.00
31.00
139
N/A
N/A
N/A
N/A
N/A
N/A
91.00
9.00
174
100
57.1
42.9
100
35.00
65.00
122
100
39.6
60.4
N/A
N/A
44.00
56.00
88
100
57.1
42.9
100
70.50
29.50
141
100
57.1
42.9
100
60.00
40.00
120
100
57.1
42.9
100
68.00
32.00
139
N/A
N/A
N/A
N/A
N/A
N/A
Retention of key talent
- In 2007, at the time of the pre-conditional offer from BHP
Billiton, Rio Tinto introduced a retention programme for key executives below the level of
executive director and PGCEO. Retention payments under this programme were made in December
2008 and July 2009. Hugo Bague, Andrew Harding, Harry Kenyon-Slaney and Doug Ritchie received
payments under this programme as detailed in Table 1. The retention programme was put in place
prior to Messrs Harding, Kenyon-Slaney and Ritchie becoming PGCEOs. Doug Ritchie received an
additional award of A$835,000 in recognition of his particular contribution to the business as
managing director, strategy. Of this, A$275,550 was paid in cash and A$559,450 as MSP shares
as detailed in Table 1a.
Integration bonuses
- As disclosed in the 2008 remuneration report, Dick Evans was eligible
for a Rio Tinto Alcan integration bonus of up to 426 per cent of salary (US$6,397,500) at
target and 640 per cent of salary (US$9,596,250) at maximum. The Committee determined that
this bonus was justified in order to lock in the essential skills and knowledge of Dick Evans
and to incentivise him to deliver synergies and accelerate the integration of Rio Tinto Alcan
into the Group. The Committee has reviewed performance against the objectives set for this
bonus and determined that Dick Evans should receive 71 per cent of the target reward or 301
per cent of salary (US$4,515,036). This reflects the exceptional synergy savings generated
over the past two years, the strong progress in developing and appointing a successor and the
organisational and cultural integration of Rio Tinto Alcan into the wider Group.
Alcan Inc long term cash plan
- Consistent with its normal granting schedule, in September
2007 the human resources committee of the board of the former Alcan Inc approved the final
long term incentive award made prior to Alcan Inc being acquired by Rio Tinto. To encourage
retention of Alcan Inc employees, the last award did not vest at the change of control in
October 2007 and was made in the form of a long term cash award that vested on 15 December
2009 subject to participants remaining in employment. Jacynthe Côté was granted an award under
the 2007 Alcan long term cash plan in September 2007 and received payment of the award when it
vested in December 2009 as reported in Table 1a. Dick Evans
Table of Contents
was not eligible for a payment in December 2009. There are no further payments to be made under
the 2007 Alcan long term cash plan.
One-off long term incentive grant
- Upon promotion to the role of PGCEO Rio Tinto Alcan,
and based on the terms of her legacy Alcan Inc. contract, Jacynthe Côté was granted a one-time
conditional award of shares equal to 25 per cent of her current annual base salary to
incentivise her to deliver synergy savings and to promote the effective integration of Rio
Tinto Alcan from an organisational and cultural perspective. The award is subject to
performance conditions which provide for 50 per cent of the award to vest on 1 February 2010
and 50 per cent on 1 February 2011 if the performance conditions are met. Effective from
October 2007, Jacynthe Côté was also granted a one-off service based, special retention grant
as part of her legacy Alcan Inc. arrangements on assuming the role of president and CEO
Primary Metals, Rio Tinto Alcan. Forty per cent of the award vested on 25 January 2009 and 60
per cent vests on 25 October 2010. The payment made under this award is detailed in Table 1a.
Termination
- As disclosed in the 2008 remuneration report, Keith Johnsons position was
deemed redundant and he left the Group on 31 July 2009 after many valued years of service.
Consistent with policy, Keith Johnson received a redundancy payment equal to 12 months base
salary plus car allowance. This payment was in addition to the 12 months notice period
provided for in his contract. In addition, Keith Johnson will be reimbursed for taxation and
finance planning advice not to exceed £10,000 for 2009 and 2010. The payments are detailed in
Table 1a. The payments detailed above are in line with his contract and local policy. Given
Keith Johnsons many years of service and performance the Committee considers these payments
appropriate.
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1.
Dick Evans was not entitled to receive any termination payment at the cessation of his
contract on 31 December 2009.
Table of Contents
As at 31 Dec 2009
As at 31 Dec 2008
£
70,000/A$160,000
£70,000/A$160,000
£
700,000
£693,000
£
35,000
£35,000
£
30,000
£30,000
£
15,000/A$37,500
£15,000/A$37,500
£
20,000
£20,000
£
10,000/A$25,000
£10,000/A$25,000
£
7,500
£7,500
£
20,000
£20,000
£
7,500/A$18,750
£7,500/A$18,750
£
4,000/A$10,000
£4,000/A$10,000
£
2,000/A$5,000
£2,000/A$5,000
Table of Contents
Secretary
Remuneration committee
5 March 2010
Table of Contents
Short term benefits
Other
Long term benefits
cash
based
benefits
3
Value of share based awards
6
Year
Base
Cash
Non
Total
Other long
Deferred
CCA
8
MCCP
salary
bonus
2
monetary
short term
term benefits
shares
7
benefits
4
benefits
5
Stated in US$000
1
Executive directors
2009
1,421
947
8
323
2,699
186
3,915
2008
1,664
10
329
2,003
169
(2,837
)
2009
1,057
888
24
168
2,137
122
2,862
2008
1,239
28
166
1,433
111
(2,518
)
2009
1,500
5,491
422
7,413
505
4,013
2008
1,500
1,350
413
3,263
139
48
2009
1,167
1,170
71
20
2,428
184
2,697
2008
1,245
77
37
1,359
163
(2,434
)
Other key management personnel
2009
564
752
139
210
1,665
36
59
344
2008
663
462
107
216
1,448
32
8
2009
725
390
83
492
1,690
125
2,265
2008
714
21
693
1,428
110
(2,092
)
2009
700
534
444
1,678
34
1,486
2008
680
651
1,331
30
(698
)
2009
813
2,226
27
3,066
60
97
556
2009
421
596
298
1,315
26
47
415
2009
383
287
78
19
767
2,340
2008
774
317
24
30
1,145
(1,655
)
2009
418
362
77
61
918
37
41
455
2009
581
986
23
2
1,592
31
57
756
2009
728
593
4
1
1,326
60
74
1,232
2008
773
178
4
1
956
52
(763
)
2009
570
468
543
1,581
50
67
203
2008
548
146
721
1,415
43
18
1.
The total remuneration is reported in US dollars. The amounts can be converted into sterling
at the rate of US$1 = £0.6389, into Australian dollars at the rate of US$1 = A$1.2637 or
alternatively into Canadian dollars at the rate of US$1 = C$1.13740, each being the average
exchange rate for 2009. The annual cash bonus is payable under the STIP and this may be
converted at the 2009 year end exchange rate of US$1 = £0.6222 to ascertain the sterling
equivalent, US$1 = A$1.1179 to calculate the Australian dollar value or alternatively,
US$1=C$1.0546 to calculate the Canadian dollar value. The 2009 figures reported in this table
are less than the 2008 figures due to exchange rate variation.
2.
Cash bonus includes STIP and other special one-off bonuses as described in the Remuneration
report on page 101 to 116. It includes a retention payment for Andrew Harding, Hugo Bague,
Doug Ritchie and Harry Kenyon-Slaney. For Jacynthe Côté, it also includes the 2007 Alcan LTI
payout and the COC award payment. For Doug Ritchie, it also includes a one-off recognition
award cash payment.
3.
Other cash based benefits include cash in lieu of a car and fuel and cash in lieu of
holiday. For Hugo Bague and Harry Kenyon-Slaney, it also includes a cash supplement equal to
20 per cent of the amount by which their Contributory Salary exceeds the Earning Cap as
defined in the Rio Tinto Pension Fund. Cash in lieu of company share dividend payments is
included for Hugo Bague.
4.
Non monetary benefits for executives include healthcare, the provision of a car, flexible
perquisites and secondment costs comprising housing, education, professional advice, tax
equalisation and relocation payments made to and on behalf of executives living outside their
home country. For Harry Kenyon-Slaney and Andrew Harding, it includes a 2008 tax payable that
was paid by the Company in 2009. For Tom Albanese and Guy Elliott, it includes the cost of
spouse travel and the value of company provided transport. Rio Tinto provides accident cover
for employee members of the Rio Tinto Pension Fund. Some of the executive directors and key
management personnel are members of the Rio Tinto Pension Fund; the total premium paid in 2009
was US$7,827.
5.
Total short term benefits represents the short term benefits total required by the UK
Companies Act 2006 and total remuneration under the Australian Corporations Act 2001 and
applicable accounting standards.
6.
The value of share based awards has been determined in accordance with the recognition and
measurement requirements of IFRS2 Share-based Payment. The fair value of awards granted
under the Share Option Plan (SOP), the Management Share Plan (MSP), the Bonus Deferral Plan
(BDP) and the Share Savings Plan (SSP) have been calculated at their dates of grant using an
independent lattice-based option valuation model provided by external consultants, Lane Clark
and Peacock LLP Some of these awards will be settled in cash, rather than the transfer of
shares, and so the fair value of these cash settled awards has been calculated based on Rio
Tintos share price at 31 December 2009. The fair value of awards granted under the Mining
Companies Comparative Plan (the MCCP) has been calculated using a Monte Carlo valuation model
based on the market price of shares and their relative TSR performance at 31 December 2009.
Over 2009, the increase in Rio Tintos share price, has led to a significant increase in the
value attached to the MCCP under the IFRS2 accounting standard. Further details of the
valuation methods and assumptions used for these awards are included in note 49 (Share Based
Payments) in the
2009 financial statements
. The fair value of other share based awards is
measured at the purchase cost of the shares from the market. The non executive directors do
not participate in the long term incentive share schemes.
7.
Deferred shares represents the deferral of the 2008 bonus under STIP into Rio Tinto shares.
8.
CCA (Company Contributed Awards) represents the shares provided to employees below the
executive directors and PGCEO level under the 2008 bonus deferral programme to provide and
enhance retention.
Table of Contents
Long term benefits
Value of share based awards
6
Post employment benefits
10
Other post
Currency
11
Pension and
employment
Termination
Total
of actual
Stated in US$'000
1
Year
MSP
SOP
Others
9
superannuation
benefits
benefits
remuneration
payment
2009
1,179
4
1,056
9,039
£
2008
1,327
5
1,443
2,110
£
2009
691
5
389
6,206
£
2008
840
9
534
409
£
2009
1,838
342
14,111
US$/C$
2008
621
338
4,409
US$
2009
636
313
6,258
A$
2008
718
4
327
137
A$
2009
341
39
2
41
2,527
£
2008
835
44
3
46
2,416
£
2009
550
1
218
4,849
US$
2008
717
2
177
8
350
US$
2009
494
1
129
1
3,823
US$
2008
484
1
79
2
1,229
US$
2009
990
75
364
3
5,211
US$/C$
2009
144
36
3
67
2,053
US$
2009
689
2
158
1,357
5,313
£
2008
551
8
384
433
£
2009
114
44
1
88
1,698
£
2009
247
69
3
164
2,919
A$
2009
280
101
3
188
3,264
A$
2008
125
136
3
195
704
A$
2009
427
29
1
163
8
2,529
US$
2008
281
123
8
1,888
US$
9.
Others include the Share Savings Plan and Share Ownership Plan as described in the
section on other share awards on page 107.
10.
The costs shown for defined benefit pension plans and post retirement medical benefits
are the service costs attributable to the individual, calculated in accordance with IAS19.
The cost for defined contribution plans is the amount for Dick Evans, contributed in the
year by the Company. American PGCEOs enjoy a Company matching of personal contribution for
shares under the 401K arrangements up to a maximum of US $14,700 for: Preston Chiaro, Bret
Clayton and Debra Valentine.
11.
For Jacynthe Côté and Dick Evans, base salary is paid in US dollars. All other short term
benefits received are paid in Canadian Dollars.
Table of Contents
Short term benefits
Other cash based
Non monetary
Total
Currency of
Stated in US$'000
1
Year
Fees
benefits
2
benefits
3
remuneration
4
actual payment
Chairman
2009
808
37
845
£
2008
53
53
£
Non
executive directors
2009
172
9
181
£
2008
196
7
2
205
£
2009
133
9
142
£
2008
158
7
21
186
£
2009
143
29
172
A$
2008
155
24
11
190
A$
2009
162
29
191
A$
2008
175
24
2
201
A$
2009
133
22
155
£
2008
158
26
37
221
£
2009
157
13
6
176
£
2008
186
26
15
227
£
2009
200
200
£
2008
231
11
242
£
2009
168
9
177
£
2008
200
11
54
265
£
2009
37
13
50
£
2009
197
197
£
2008
158
7
26
191
£
2009
584
14
82
680
£
2008
1,310
31
197
1,538
£
2009
149
22
171
£
2008
177
22
41
240
£
1.
The total remuneration is reported in US dollars. The amounts can be converted into sterling
at the rate of US$1 = £0.6389 or alternatively into Australian dollars at the rate of US$1 =
A$1.2637, each being the average exchange rate for 2009. The 2009 figures reported in this
table are less than the 2008 figures due to exchange rate variation.
2.
The Other cash based benefits for non executive directors comprise overseas meeting
allowances. The values of car and fuel allowances are included for Paul Skinner.
3.
Non monetary benefits include for Jim Leng the cost of accompanied travel in 2009. For
Richard Goodmanson, it includes the value of professional advice received. For Paul Skinner
and Jan du Plessis, it includes the value of company provided transport and medical insurance
premiums. The value of a retirement gift is also included for Paul Skinner. Rio Tinto plc
provides accident cover for non executive directors; the total premium paid in 2009 was
US$6,418.
4.
Represents short term benefits total required under the UK Companies Act 2006 and total
remuneration under Australian Corporations Act 2001 and applicable accounting standards.
Accrued benefits
Transfer values
Age
Years of
At 31
At 31
Change in
Change in
At 31
At 31
Change,
Transfer
service
Dec
Dec
accrued
accrued
Dec
Dec
net of
value of
completed
2008
2009
benefits
Benefit
2008
2009
personal
change in
during the
net of
contributi
accrued
year
inflation
1
-ons
Benefit
ended 31
net of
Dec 2009
inflation
1
£000 pa
£000 pa
£000 pa
£000 pa
£000
£000
£000
£000
pension
pension
pension
pension
52
28
286
336
50
43
2,836
4,060
1,224
692
54
29
434
456
22
12
6,728
7,706
978
196
A$000
A$000
A$000
A$000
A$000
A$000
A$000
A$000
lump sum
lump sum
lump sum
lump sum
60
18
4,904
5,203
299
237
4,904
5,203
218
237
1.
Price inflation is calculated as the increase in the relevant retail or consumer price index
over the year to 31 December 2009, except for Australia where a September to September change
is used.
2.
Tom Albanese became a director of Rio Tinto plc and Rio Tinto Limited with effect from 7
March 2006. He accrued pension benefits in the US plans for service up to 30 June 2006, and is
accruing benefits under the UK fund for subsequent service.
3.
The transfer value of benefits in the UK plans is calculated in a manner consistent with
Retirement Benefit Schemes Transfer Values (GN11) published by the Institute of Actuaries
and the Faculty of Actuaries.
4.
The transfer value of benefits in the US plans is represented by the Accumulated Benefit
Obligation calculated on the accounting assumptions used for the Groups post-retirement
benefits disclosures.
Table of Contents
Company Contributions
Age
Years of service completed
Year to 31 Dec 2008 US$000
Year to 31 Dec 2009 US$000
62
2
338
342
A$000
A$000
60
18
54
59
5.
Dick Evans became a director of Rio Tinto plc and Rio Tinto Limited with effect from 25
October 2007 and has a UK unfunded Defined contribution Benefit. He also participated in the
Alcan Employee Savings Plan. He ceased to be an executive director on 20 April 2009 and
retired on 31 December 2009.
Rio Tinto plc
Rio Tinto Limited
Movements
1 Jan
31 Dec
14 May
1 Jan
31 Dec
14 May
Exercise of
Compensation
4
Other
5
2009
1
2009
2
2010
2
2009
1
2009
2010
2
options
3
57,176
129,438
227,798
276,059
54,094
(159,531
)
n/a
n/a
2,200
2,200
454
1,024
1,173
719
826
2,912
2,912
2,086
30,000
30,000
30,000
60,771
95,099
96,384
34,431
19,795
(18,613
)
40,000
n/a
40,000
2,100
6,252
6,252
4,152
2,697
3,045
3,045
2,307
4,990
5,646
3,339
1,077
1,642
2,642
1,565
3,000
12,000
12,000
9,000
n/a
2,500
3,812
3,812
1,312
5,795
9,920
N/A
4,125
10,396
10,956
10,956
43,033
66,950
66,950
601
16,132
7,184
5,950
16,296
16,383
7,282
3,151
64,849
79,776
90,989
207,507
11,102
(192,469
)
8,502
18,927
22,470
197
7,441
6,330
2,760
2,760
5,184
5,184
8,802
21,331
5,212
(22,925
)
15,802
15,818
15,941
6,742
(6,603
)
25,330
25,346
n/a
16
6,825
6,825
15,595
455
8,532
(217
)
7,213
25,016
n/a
22,560
8,883
(13,640
)
2,800
2,800
1.
Or date of appointment, if later.
2.
Or date of retirement, or resignation or at date no longer a KMP, if earlier.
3.
Shares obtained through the exercise of options under the Rio Tinto Share Savings Plan or the
Rio Tinto Share Option Plan. The number of shares retained may differ from the number of
options exercised.
4.
Shares obtained through the Rio Tinto Share Ownership Plan and / or vesting of awards under
the Mining Companies Comparative Plan or Management Share Plan.
5.
Share movements due to sale or purchase of shares, shares received under the Dividend
Reinvestment Plan, shares purchased / sold through the Rio Tinto America Savings Plan or non
executive directors share purchase plan.
6.
The shareholdings of Tom Albanese, Preston Chiaro and Bret Clayton include Rio Tinto plc ADRs
held through the Rio Tinto America Savings Plan.
7.
The balances at 31 December 2008 for the following individuals were understated in the 2008
Remuneration report: Tom Albanese by 97 Rio Tinto plc shares; Hugo Bague by 50 Rio Tinto plc
shares; Guy Elliott by 52 Rio Tinto plc shares and Andrew Gould by 77 Rio Tinto plc shares.
Table of Contents
Table of Contents
1.
Or at date of appointment, if later. Balances relate to awards granted for service prior to
being designated a KMP for remuneration report disclosure purposes.
2.
Or at date of resignation, or at date no longer a KMP, if earlier.
3.
Awards denominated in pounds sterling were for Rio Tinto plc ordinary shares of 10p each and
awards denominated in Australian dollars were for Rio Tinto Limited shares.
4.
The weighted fair value per share of conditional awards granted in 2009 was as follows: Bonus
Deferral Plan was £17.32 (adjusted for rights issue) for Rio Tinto plc and A$41.75 (adjusted
for rights issue) for Rio Tinto Limited; Mining Companies Comparative Plan was £13.56
(adjusted for rights issue) for Rio Tinto plc and A$32.74 (adjusted for rights issue) for Rio
Tinto Limited; Management Share Plan was £17.32 (March 2009 grant as adjusted for rights
issue) and £26.17 (September 2009 grant) for Rio Tinto plc and A$41.77 (March 2009 grant as
adjusted for rights issue) and A$59.15 (September 2009 grant) for Rio Tinto Limited.
5.
Conditional awards are awarded at no cost to the recipient and no amount remains unpaid on
any shares granted.
6.
The transaction value shown is based on share price being the respective closing prices for
Rio Tinto plc and Rio Tinto Limited shareson date of election.
7.
The amount in US dollars has been converted from sterling at the rate of £1 = US1.5652 and
Australian dollars at the rate of A$1 = US$0.7913, being the average exchange rate for 2009
used elsewhere in this Annual report
.
8.
For information on the rights issue please see Other remuneration disclosures in the
Remuneration report.
9.
100 per cent of the 2008 bonus under STIP was deferred into Rio Tinto shares.
10.
50 per cent of the 2008 bonus under STIP was deferred into Rio Tinto shares which vests
equally in 2010 and 2011. In addition, a Company Contribution Award was made which vests
equally in 2010 and 2011.
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Rights issue
Vested during
Lapsed/
adjustment
Date of grant
1 Jan 2009
1
Granted
2009
Exercised
cancelled
(Jul-09)
Rio Tinto plc Share Savings Plan
Albanese
6-Oct-06
791
166
Bague
17-Oct-08
238
50
20-Oct-09
84
Chiaro
6-Oct-06
298
298
298
17-Oct-08
304
63
Clayton
5-Oct-07
163
34
Elliott
7-Oct-03
1,431
1,431
1,431
17-Oct-08
520
109
Johnson (Disclosure to 1/2/09)
6-Oct-06
456
Kenyon-Slaney (Disclosure from 1/11/09)
5-Oct-07
280
20-Oct-09
434
Valentine
17-Oct-08
304
63
Albanese
6-Mar-01
102,718
21,622
13-Mar-02
125,336
26,383
7-Mar-03
139,165
29,294
22-Apr-04
84,020
84,020
17,686
9-Mar-05
83,926
17,666
7-Mar-06
67,511
67,511
14,211
13-Mar-07
66,186
13,931
10-Mar-08
73,561
15,484
17-Mar-09
59,504
12,525
Bague
9-Sep-07
8,835
1,858
17-Mar-09
12,982
2,732
Chiaro
7-Mar-03
37,160
7,822
22-Apr-04
70,490
70,490
14,838
9-Mar-05
63,527
13,372
7-Mar-06
51,274
51,274
10,793
13-Mar-07
38,519
8,108
10-Mar-08
29,354
6,179
17-Mar-09
25,903
5,452
Clayton
22-Apr-04
13,315
13,315
2,802
9-Mar-05
11,539
2,428
7-Mar-06
10,767
10,767
2,266
13-Mar-07
33,850
7,125
10-Mar-08
28,342
5,965
17-Mar-09
25,010
5,264
Côté (Disclosure from 1/2/09)
17-Mar-09
29,476
6,204
Elliott
13-Mar-02
61,703
12,988
7-Mar-03
97,387
20,499
22-Apr-04
73,700
73,700
15,513
9-Mar-05
72,972
15,360
7-Mar-06
58,100
58,100
12,230
13-Mar-07
44,052
9,272
10-Mar-08
36,503
7,683
17-Mar-09
44,292
9,323
Evans (Disclosure to 20/4/09)
10-Mar-08
60,733
17-Mar-09
53,594
Johnson (Disclosure to 1/2/09)
22-Apr-04
43,500
9-Mar-05
47,937
7-Mar-06
37,869
13-Mar-07
28,294
10-Mar-08
22,696
Kenyon-Slaney (Disclosure from 1/11/09)
13-Mar-07
9,103
17-Mar-09
6,938
Valentine
17-Mar-09
11,201
2,357
Table of Contents
Value
Vested and
Pre
Post
options
Market price
Date from
exercisable on
rights issue
rights issue
exercised
on date of
which first
31 Dec 2009
2
31 Dec 2009
2
option price
option price
during 2009
7
exercise
exercisable
Expiry date
Albanese
957
£
20.68
£
17.084
1-Jan-12
1-Jul-12
Bague
288
£
32.17
£
26.576
1-Jan-12
1-Jul-12
84
N/A
£
21.480
1-Jan-13
1-Jul-13
Chiaro
£
20.88
N/A
(£1,054.92
)
£
17.34
1-Jan-09
7-Jan-09
367
£
20.50
£
16.935
1-Jan-11
17-Jan-11
Clayton
197
£
35.57
£
29.385
1-Jan-10
6-Jan-10
Elliott
£
11.07
N/A
£
11,118.87
£
18.84
1-Jan-09
1-Jul-09
629
£
32.17
£
26.576
1-Jan-14
1-Jul-14
Johnson (Disclosure to 1/2/09)
456
£
20.68
N/A
1-Aug-09
1-Feb-10
Kenyon-Slaney (Disclosure from 1/11/09)
280
N/A
£
23.850
1-Jan-13
1-Jul-13
434
N/A
£
21.480
1-Jan-15
1-Jul-15
Valentine
367
£
20.50
£
16.935
1-Jan-11
18-Jan-11
Albanese
124,340
124,340
£
12.656
£
10.455
6-Mar-05
6-Mar-11
151,719
151,719
£
14.586
£
12.050
13-Mar-05
13-Mar-12
168,459
168,459
£
12.630
£
10.434
7-Mar-06
7-Mar-13
101,706
101,706
£
13.290
£
10.979
22-Apr-09
22-Apr-14
101,592
101,592
£
18.262
£
15.086
9-Mar-08
9-Mar-15
81,722
81,722
£
27.112
£
22.397
7-Mar-09
7-Mar-16
80,117
£
27.012
£
22.315
13-Mar-10
13-Mar-17
89,045
£
57.232
£
47.280
10-Mar-11
10-Mar-18
72,029
£
20.010
£
16.530
17-Mar-12
17-Mar-19
Bague
10,693
£
34.506
£
28.506
9-Sep-10
9-Sep-17
15,714
£
20.010
£
16.530
17-Mar-12
17-Mar-19
Chiaro
44,982
44,982
£
12.630
£
10.434
7-Mar-06
7-Mar-13
85,328
85,328
£
13.290
£
10.979
22-Apr-09
22-Apr-14
76,899
76,899
£
18.262
£
15.086
9-Mar-08
9-Mar-15
62,067
62,067
£
27.112
£
22.397
7-Mar-09
7-Mar-16
46,627
£
27.012
£
22.315
13-Mar-10
13-Mar-17
35,533
£
57.232
£
47.280
10-Mar-11
10-Mar-18
31,355
£
20.010
£
16.530
17-Mar-12
17-Mar-19
Clayton
16,117
16,117
£
13.290
£
10.979
22-Apr-09
22-Apr-14
13,967
13,967
£
18.262
£
15.086
9-Mar-08
9-Mar-15
13,033
13,033
£
27.112
£
22.397
7-Mar-09
7-Mar-16
40,975
£
27.012
£
22.315
13-Mar-10
13-Mar-17
34,307
£
57.232
£
47.280
10-Mar-11
10-Mar-18
30,274
£
20.010
£
16.530
17-Mar-12
17-Mar-19
Côté (Disclosure from 1/2/09)
35,680
£
20.010
£
16.530
17-Mar-12
17-Mar-19
Elliott
74,691
74,691
£
14.586
£
12.050
13-Mar-05
13-Mar-12
117,886
117,886
£
12.630
£
10.434
7-Mar-06
7-Mar-13
89,213
89,213
£
13.290
£
10.979
22-Apr-09
22-Apr-14
88,332
88,332
£
18.262
£
15.086
9-Mar-08
9-Mar-15
70,330
70,330
£
27.112
£
22.397
7-Mar-09
7-Mar-16
53,324
£
27.012
£
22.315
13-Mar-10
13-Mar-17
44,186
£
57.232
£
47.280
10-Mar-11
10-Mar-18
53,615
£
20.010
£
16.530
17-Mar-12
17-Mar-19
Evans (Disclosure to 20/4/09)
60,733
£
57.232
N/A
10-Mar-11
10-Mar-18
53,594
£
20.010
N/A
17-Mar-12
17-Mar-19
Johnson (Disclosure to 1/2/09)
43,500
£
13.290
N/A
22-Apr-09
31-Jul-10
47,937
47,937
£
18.262
N/A
9-Mar-08
31-Jul-10
37,869
£
27.112
N/A
7-Mar-09
31-Jul-10
28,294
£
27.012
N/A
13-Mar-10
13-Mar-11
22,696
£
57.232
N/A
10-Mar-11
10-Mar-12
Kenyon-Slaney (Disclosure from 1/11/09)
9,103
N/A
£
22.315
13-Mar-10
13-Mar-17
6,938
N/A
£
16.530
17-Mar-12
17-Mar-19
Valentine
13,558
£
20.010
£
16.530
17-Mar-12
17-Mar-19
Table of Contents
Rights issue
Vested during
Lapsed/
adjustment
Date of grant
1 Jan 2009
1
Granted
2009
Exercised
cancelled
(Jul-09)
Harding (Disclosure from 1/11/09)
6-Oct-06
455
N/A
20-Oct-09
723
N/A
Ritchie (Disclosure from 1/11/09)
6-Oct-06
455
N/A
20-Oct-09
422
N/A
Thorne (Disclosure to 31/10/09)
05-Oct-07
567
N/A
Walsh
7-Oct-05
601
601
601
N/A
17-Oct-08
505
N/A
20-Oct-09
125
N/A
Harding (Disclosure from 1/11/09)
13-Mar-02
2,894
N/A
7-Mar-03
9,383
N/A
22-Apr-04
1,526
N/A
9-Mar-05
2,275
N/A
7-Mar-06
5,253
N/A
13-Mar-07
3,777
N/A
17-Mar-09
6,268
N/A
Ritchie (Disclosure from 1/11/09)
7-Mar-06
7,308
N/A
13-Mar-07
10,200
N/A
17-Mar-09
8,230
N/A
Thorne (Disclosure to 31/10/09)
13-Mar-02
939
939
N/A
7-Mar-03
11,159
11,159
N/A
22-Apr-04
10,462
10,462
10,462
N/A
9-Mar-05
10,665
N/A
7-Mar-06
14,568
14,568
N/A
13-Mar-07
13,037
N/A
17-Mar-09
13,724
N/A
Walsh
22-Apr-04
54,400
54,400
N/A
9-Mar-05
58,823
N/A
7-Mar-06
48,079
48,079
N/A
13-Mar-07
35,861
N/A
10-Mar-08
30,523
N/A
17-Mar-09
40,005
N/A
1.
Or at date of appointment, if later. Balances relate to awards granted for service prior to
being designated a KMP for Remuneration report disclosure purposes.
2.
Or at date of resignation, or at date no longer a KMP, if earlier.
3.
All options granted over ordinary shares. Rio Tinto plc ordinary shares of 10p each stated
in sterling; Rio Tinto Limited shares stated in Australian dollars. Each option is granted
over one share.
4.
The closing price of Rio Tinto plc ordinary shares at 31 December 2009 was £33.90 (2008:
£14.90) and the closing price of Rio Tinto Limited shares at 31 December 2009 was A$74.89
(2008: A$133.50). The adjusted high and low prices during 2009 of Rio Tinto plc and Rio Tinto
Limited shares were £34.20 and £11.40 and A$74.89 and A$29.38 respectively.
5.
The option prices represents the exercise price payable on the options. No amounts are unpaid
on any shares allocated on the exercise of options.
6.
The weighted fair value per option granted in 2009 was as follows: Rio Tinto plc Share
Savings Plan two year contract £7.96; three year contract £9.70; four year contract £9.30 and
five year contract £9.28; Rio Tinto Limited Share Savings Plan three year contract A$21.09 and
five year contract A$20.63. Rio Tinto plc Share Option Plan £5.47 (March 2009 grant as
adjusted for the rights issue) and £8.29 (September 2009 grant); Rio Tinto Limited Share
Option Plan A$13.36 (March 2009 grant as adjusted for the rights issue).
7.
The value of options exercised during 2009 is calculated by multiplying the number of options
exercised by the difference between the market price and the option price on date of exercise.
8.
For information on the rights issue please see Other remuneration disclosures on page 113.
Table of Contents
Value of
options
Vested and
Pre
Post
exercised
Market price
Date from
exercisable on
rights issue
rights issue
during
on date of
which first
31 Dec 2009
2
31 Dec 2009
2
option price
option price
2009
7
exercise
exercisable
Expiry date
Harding (Disclosure from 1/11/09)
455
A$56.80
A$40.691
1-Jan-10
1-Jul-10
723
N/A
A$48.730
1-Jan-15
1-Jul-15
Ritchie (Disclosure from 1/11/09)
455
A$56.80
A$40.691
1-Jan-10
1-Jul-10
422
N/A
A$48.730
1-Jan-15
1-Jul-15
Thorne (Disclosure to 31/10/09)
567
N/A
A$63.161
1-Jan-13
1-Jul-13
Walsh
A$40.92
N/A
A$3,804.33
A$47.25
1-Jan-09
1-Jul-09
505
A$82.19
A$66.081
1-Jan-14
1-Jul-14
125
N/A
A$48.730
1-Jan-15
1-Jul-15
Harding (Disclosure from 1/11/09)
2,894
2,894
N/A
A$23.762
13-Mar-05
13-Mar-12
9,383
9,383
N/A
A$17.227
7-Mar-06
7-Mar-13
1,526
1,526
N/A
A$18.297
22-Apr-09
22-Apr-14
2,275
2,275
N/A
A$30.933
9-Mar-08
9-Mar-15
5,253
5,253
N/A
A$54.951
7-Mar-09
7-Mar-16
3,777
N/A
A$58.479
13-Mar-10
13-Mar-17
6,268
N/A
A$33.451
17-Mar-12
17-Mar-19
Ritchie (Disclosure from 1/11/09)
7,308
7,308
N/A
A$54.951
7-Mar-09
7-Mar-16
10,200
N/A
A$58.479
13-Mar-10
13-Mar-17
8,230
N/A
A$33.451
17-Mar-12
17-Mar-19
Thorne (Disclosure to 31/10/09)
A$39.8708
A$23.762
A$33,304.45
A$59.23
13-Mar-05
13-Mar-12
A$33.3360
A$17.227
A$468,711.48
A$59.23
7-Mar-06
7-Mar-13
A$34.4060
A$18.297
A$428,241.05
A$59.23
22-Apr-09
22-Apr-14
10,665
10,665
A$47.0420
A$30.933
9-Mar-08
9-Mar-15
14,568
14,568
A$71.0600
A$54.951
7-Mar-09
7-Mar-16
13,037
A$74.5880
A$58.479
13-Mar-10
13-Mar-17
13,724
A$49.5600
A$33.451
17-Mar-12
17-Mar-19
Walsh
54,400
54,400
A$34.4060
A$18.297
22-Apr-09
22-Apr-14
58,823
58,823
A$47.0420
A$30.933
9-Mar-08
9-Mar-15
48,079
48,079
A$71.0600
A$54.951
7-Mar-09
7-Mar-16
35,861
A$74.5880
A$58.479
13-Mar-10
13-Mar-17
30,523
A$134.1760
A$118.067
10-Mar-11
10-Mar-18
40,005
A$49.5600
A$33.451
17-Mar-12
17-Mar-19
Table of Contents
Vested and
Vested during
Lapsed/
exercisable on
Date of grant
1 Jan 2010
1
Granted
2010
Exercised
cancelled
14 May 2010
2
Albanese
6-Oct-06
957
Bague
17-Oct-08
288
20-Oct-09
84
Chiaro
17-Oct-08
367
Clayton
5-Oct-07
197
197
Elliott
17-Oct-08
629
5-Oct-07
280
20-Oct-09
434
Valentine
17-Oct-08
367
Albanese
6-Mar-01
124,340
124,340
13-Mar-02
151,719
151,719
7-Mar-03
168,459
168,459
22-Apr-04
101,706
101,706
9-Mar-05
101,592
101,592
7-Mar-06
81,722
81,722
13-Mar-07
80,117
80,117
10-Mar-08
89,045
17-Mar-09
72,029
22-Mar-10
119,230
Bague
9-Sep-07
10,693
17-Mar-09
15,714
22-Mar-10
47,297
Chiaro
7-Mar-03
44,982
44,982
22-Apr-04
85,328
85,328
9-Mar-05
76,899
76,899
7-Mar-06
62,067
62,067
13-Mar-07
46,627
46,627
10-Mar-08
35,533
17-Mar-09
31,355
22-Mar-10
60,838
Clayton
22-Apr-04
16,117
16,117
9-Mar-05
13,967
13,967
7-Mar-06
13,033
13,033
13-Mar-07
40,975
40,975
10-Mar-08
34,307
17-Mar-09
30,274
22-Mar-10
58,740
Côté
17-Mar-09
35,680
22-Mar-10
69,230
Elliott
13-Mar-02
74,691
33,000
41,691
7-Mar-03
117,886
117,886
22-Apr-04
89,213
89,213
9-Mar-05
88,332
88,332
7-Mar-06
70,330
70,330
13-Mar-07
53,324
53,324
10-Mar-08
44,186
17-Mar-09
53,615
22-Mar-10
88,749
Kenyon-Slaney
13-Mar-07
9,103
9,103
17-Mar-09
6,938
22-Mar-10
47,297
Valentine
17-Mar-09
13,558
22-Mar-10
47,831
Table of Contents
Value of
Post
options
Market price
Date from
rights issue
exercised
on date of
which first
14 May 2010
2
option price
during 2010
7
exercise
exercisable
Expiry date
Albanese
957
£
17.084
1-Jan-12
1-Jul-12
Bague
288
£
26.576
1-Jan-12
1-Jul-12
84
£
21.480
1-Jan-13
1-Jul-13
Chiaro
367
£
16.935
1-Jan-11
17-Jan-11
Clayton
£
29.385
£
1,046.07
£
34.695
1-Jan-10
6-Jan-10
Elliott
629
£
26.576
1-Jan-14
1-Jul-14
Kenyon-Slaney
280
£
23.850
1-Jan-13
1-Jul-13
434
£
21.480
1-Jan-15
1-Jul-15
Valentine
367
£
16.935
1-Jan-11
18-Jan-11
Albanese
£
10.455
£
3,227,244.70
£
36.410
6-Mar-05
6-Mar-11
£
12.050
£
3,695,874.84
£
36.410
13-Mar-05
13-Mar-12
168,459
£
10.434
7-Mar-06
7-Mar-13
101,706
£
10.979
22-Apr-09
22-Apr-14
101,592
£
15.086
9-Mar-08
9-Mar-15
81,722
£
22.397
7-Mar-09
7-Mar-16
£
22.315
13-Mar-10
13-Mar-17
89,045
£
47.280
10-Mar-11
10-Mar-18
72,029
£
16.530
17-Mar-12
17-Mar-19
119,230
£
37.050
22-Mar-13
22-Mar-20
Bague
10,693
£
28.506
9-Sep-10
9-Sep-17
15,714
£
16.530
17-Mar-12
17-Mar-19
47,297
£
37.050
22-Mar-13
22-Mar-20
Chiaro
£
10.434
£
972,780.73
£
32.060
7-Mar-06
7-Mar-13
£
10.979
£
1,798,799.57
£
32.060
22-Apr-09
22-Apr-14
£
15.086
£
1,305,283.63
£
32.060
9-Mar-08
9-Mar-15
62,067
£
22.397
7-Mar-09
7-Mar-16
£
22.315
13-Mar-10
13-Mar-17
35,533
£
47.280
10-Mar-11
10-Mar-18
31,355
£
16.530
17-Mar-12
17-Mar-19
60,838
£
37.050
22-Mar-13
22-Mar-20
Clayton
16,117
£
10.979
22-Apr-09
22-Apr-14
13,967
£
15.086
9-Mar-08
9-Mar-15
13,033
£
22.397
7-Mar-09
7-Mar-16
£
22.315
13-Mar-10
13-Mar-17
34,307
£
47.280
10-Mar-11
10-Mar-18
30,274
£
16.530
17-Mar-12
17-Mar-19
58,740
£
37.050
22-Mar-13
22-Mar-20
Côté
35,680
£
16.530
17-Mar-12
17-Mar-19
69,230
£
37.050
22-Mar-13
22-Mar-20
Elliott
41,691
£
12.050
£
845,460
£
37.67
13-Mar-05
13-Mar-12
117,886
£
10.434
7-Mar-06
7-Mar-13
89,213
£
10.979
22-Apr-09
22-Apr-14
88,332
£
15.086
9-Mar-08
9-Mar-15
70,330
£
22.397
7-Mar-09
7-Mar-16
£
22.315
13-Mar-10
13-Mar-17
44,186
£
47.280
10-Mar-11
10-Mar-18
53,615
£
16.530
17-Mar-12
17-Mar-19
88,749
£
37.050
22-Mar-13
22-Mar-20
Kenyon-Slaney
£
22.315
13-Mar-10
13-Mar-17
6,938
£
16.530
17-Mar-12
17-Mar-19
47,297
£
37.050
22-Mar-13
22-Mar-20
Valentine
13,558
£
16.530
17-Mar-12
17-Mar-19
47,831
£
37.050
22-Mar-13
22-Mar-20
Table of Contents
Vested and
Vested during
Lapsed/
exercisable on
Date of grant
1 Jan 2010
1
Granted
2010
Exercised
cancelled
14 May 2010
2
Harding
6-Oct-06
455
455
20-Oct-09
723
Ritchie
6-Oct-06
455
455
20-Oct-09
422
Walsh
17-Oct-08
505
20-Oct-09
125
Harding
13-Mar-02
2,894
2,894
7-Mar-03
9,383
9,383
22-Apr-04
1,526
1,526
9-Mar-05
2,275
2,275
7-Mar-06
5,253
5,253
13-Mar-07
3,777
3,777
17-Mar-09
6,268
22-Mar-10
46,597
Ritchie
7-Mar-06
7,308
7,308
13-Mar-07
10,200
10,200
17-Mar-09
8,230
22-Mar-10
48,270
Walsh
22-Apr-04
54,400
54,400
9-Mar-05
58,823
58,823
7-Mar-06
48,079
48,079
13-Mar-07
35,861
35,861
10-Mar-08
30,523
17-Mar-09
40,005
22-Mar-10
83,763
Table of Contents
Post
Value of options
Market price
Date from
rights issue
exercised during
on date of
which first
14 May 2010
2
option price
2010
7
exercise
exercisable
Expiry date
Harding
455
A$40.691
1-Jan-10
1-Jul-10
723
A$48.730
1-Jan-15
1-Jul-15
Ritchie
A$40.691
A$14,218.30
A$71.940
1-Jan-10
1-Jul-10
422
A$48.730
1-Jan-15
1-Jul-15
Walsh
505
A$66.081
1-Jan-14
1-Jul-14
125
A$48.730
1-Jan-15
1-Jul-15
Harding
A$23.762
A$148,311.71
A$75.010
13-Mar-05
13-Mar-12
A$17.227
A$542,177.89
A$75.010
7-Mar-06
7-Mar-13
A$18.297
A$86,544.04
A$75.010
22-Apr-09
22-Apr-14
A$30.933
A$100,275.18
A$75.010
9-Mar-08
9-Mar-15
A$54.951
A$105,369,98
A$75.010
7-Mar-09
7-Mar-16
A$58.479
13-Mar-10
13-Mar-17
6,268
A$33.451
17-Mar-12
17-Mar-19
46,597
A$76.150
22-Mar-13
22-Mar-20
Ritchie
7,308
A$54.951
7-Mar-09
7-Mar-16
A$58.479
13-Mar-10
13-Mar-17
8,230
A$33.451
17-Mar-12
17-Mar-19
48,270
A$76.150
22-Mar-13
22-Mar-20
Walsh
54,400
A$18.297
22-Apr-09
22-Apr-14
58,823
A$30.933
9-Mar-08
9-Mar-15
48,079
A$54.951
7-Mar-09
7-Mar-16
A$58.479
13-Mar-10
13-Mar-17
30,523
A$118.067
10-Mar-11
10-Mar-18
40,005
A$33.451
17-Mar-12
17-Mar-19
83,763
A$76.150
22-Mar-13
22-Mar-20
Table of Contents
Table of Contents
Committee on social
Audit
Remuneration
and environmental
Nominations
Chairmans
committee
committee
accountability
committee
committee
Sir David Clementi
Andrew Gould
Richard Goodmanson
Jan du Plessis
Jan du Plessis
Vivienne Cox
Sir David Clementi
Sir Rod Eddington
All non executive directors
Tom Albanese
Michael Fitzpatrick
Michael Fitzpatrick
Yves Fortier
Guy Elliott
Ann Godbehere
Richard Goodmanson
Lord Kerr
Lord Kerr
Paul Tellier
Paul Tellier
1.
Paul Skinner was chair of the Nominations committee and Chairmans committee until his
retirement on 20 April 2009.
2.
Upon his appointment as chairman, Jan du Plessis ceased to be a member of the Audit
committee.
3.
All non executive directors became members of the Nominations committee with effect from 1
January 2010.
4.
David Mayhew attends the Audit committee in an advisory capacity.
5.
Ann Godbehere became a member and chairman designate of the Audit committee upon her
appointment on 9 February 2010. Ann became chairman of the Audit committee at the conclusion
of the 2010 annual general meetings.
Table of Contents
Committee on
social and
Board -
Board -
Audit
Remuneration
Nominations
environmental
Chairmans
scheduled
short notice
committee
committee
committee
accountability
committee
A
B
A
B
A
B
A
B
A
B
A
B
A
B
8
8
8
8
22
17
8
7
8
5
10
10
8
7
8
8
8
6
10
8
8
8
8
8
4
3
2
2
15
15
8
8
8
7
3
3
5
5
8
8
8
8
22
20
2
2
5
4
8
8
8
7
10
8
8
7
8
8
8
7
3
3
5
5
8
8
8
5
8
8
5
5
8
7
8
5
8
7
3
3
8
8
8
6
10
9
5
5
1
1
1
1
1
1
8
8
8
7
3
3
2
2
5
5
1
1
8
8
8
8
8
7
10
10
8
8
5
5
Notes
A = Maximum number of meetings the director could have attended. B = Number of meetings attended.
Table of Contents
Obtain independent professional advice in the satisfaction of its duties at the cost of the
Group;
Have such direct access to the resources of the Group as it may reasonably require
including the external and internal auditors
Table of Contents
Sir David Clementi
(chairman)
5 March 2010
Nominations committee
5 March 2010
Table of Contents
Table of Contents
The Ore reserves steering committee is the primary governance body over the ore reserve estimation
and disclosure processes. The members of the Committee are: the Group executive Technology &
Innovation, global head of Planning and Reporting, global practice leader, Strategic Production
Planning Technology & Innovation, chief advisor, Evaluation, chief advisor, Orebody Knowledge,
Technology & Innovation, chief advisor, Resources and Reserves Technology & Innovation, general
manager, Resource Development Rio Tinto Iron Ore and consulting geologist Rio Tinto Exploration.
Rio Tinto recognises the importance of effective timely communication with shareholders and
the wider investment community.
Statement of business practice
The board has adopted a Groupwide whistleblowing programme called
Speak-OUT
. Employees are
encouraged to report any concerns, including any suspicion of a violation of the Groups financial
reporting or environmental procedures, through an independent third party and without fear of
recrimination. A process has been established for the investigation of any matters reported with
clear lines of reporting and responsibility in each Group business.
Rio Tintos report on sustainable development follows the guidelines of the Association of British
Insurers.
Rio Tinto has a set of rules which restrict the dealing in Rio Tinto securities by directors and
employees with access to inside information. These rules require those people to seek clearance
from the chairman or the company secretary before any proposed
Table of Contents
Rio Tintos overriding objective is to maximise the overall long term return to shareholders
through a strategy of investing in large, cost competitive mines and businesses. The directors
recognise that creating shareholder return is the reward for taking and accepting risk. The
directors have established a process for identifying, evaluating and managing the material business
risks faced by the Group. This process was in place during 2009 and up to and including the date of
approval of the
2009 Annual report.
Rio Tinto recognises that risk is an integral and unavoidable component of the business, and that
it is characterised by both threat and opportunity. The Group fosters a risk aware corporate
culture in all decision making, and is committed to managing all risk in a proactive and effective
manner through competent risk management. To support this commitment, risk is analysed in order to
inform the management decisions taken at all levels within the organisation. The principles of the
risk analysis and management process are set out in the Risk policy and standard which is in the
corporate governance section of the website.
The Risk policy and standard is supported by an integrated framework of risk governance and
reporting specifying how the Group organises the handling of risk. Together with the policy, the
supporting roles and infrastructure, the framework makes up the complete Rio Tinto approach to risk
analysis and management.
Two of the Groups management committees, the Executive committee and the Disclosures and
procedures committee regularly review reports related to the Groups control framework. Each year,
the leaders of the Groups businesses and administrative offices complete an internal control
questionnaire that seeks to confirm that adequate internal controls are in place, are operating
effectively and are designed to capture and evaluate failings and weaknesses, if any exist, and
take prompt action, as appropriate. Once reviewed by the Executive committee, the results of this
process are presented to the Audit committee and the board as a further part of their review of the
Groups internal controls. Assurance functions, including internal auditors and sustainable
development auditors, perform reviews of the integrity and effectiveness of control activities and
provide regular written and oral reports to directors and management committees.
Auditor independence
Table of Contents
The Corporate Assurance function provides independent and objective assurance on the adequacy and
effectiveness of the Groups systems for risk management, internal control, and governance together
with ideas and recommendations to improve those systems. The function has adopted international
auditing standards set by the Institute of Internal Auditors Inc.
Financial statements
The Code
The Listing Rules of the ASX require Rio Tinto to report the extent to which it complies with the
good practice recommendations in the ASX Principles and the reasons for any non compliance. Rio
Tinto confirms that it has continued to comply fully with the ASX Principles throughout 2009.
Table of Contents
Rio Tinto plc, as a foreign issuer with American Depositary Shares listed on the NYSE, is obliged
by the NYSE Standards to disclose any significant ways in which its practices of corporate
governance differ from the NYSE standards.
As far as is known, Rio Tinto plc is not directly or indirectly owned or controlled by another
corporation or by any government or natural person. As of 14 May 2010, the total amount of the
voting securities owned by the directors of Rio Tinto plc as a group was 398,568 ordinary shares of
10p each representing less than one per cent of the number in issue.
Under the UK Disclosure and Transparency Rules and the Australian Corporations Act, any
shareholder of Rio Tinto plc with voting rights of three per cent or more or any person with voting
power of five per cent or more in Rio Tinto Limited, is required to provide the companies with
notice. Excluding the interest held by Tinto Holdings Australia Pty Limited in Rio Tinto Limited,
the shareholders who have provided such, or an equivalent, notice are:
Notes
1.
Shining Prospect Pte. Ltd, a Singapore based entity owned by Chinalco (Aluminum Corporation
of China) acquired 119,705,134 Rio Tinto plc shares on 1 February 2008. Through the operation
of Corporations Act as modified, this gives these entities and their associates voting power
of 9.32 per cent in the Rio Tinto Group on a joint decision matter, making them substantial
shareholders of Rio Tinto Limited as well as of Rio Tinto plc.
2.
As far as it is known, Rio Tinto is not directly or indirectly owned or controlled by another
corporation or by any government.
3.
Rio Tinto is not aware of any arrangement which may result in a change of control.
4.
The disclosure reflects the information as notified to the Company at the time the notice was received
and does not reflect any subsequent changes to the holding which have not been notified in accordance with the UK
Disclosure & Transparency Rules, or the Australian Corporations Act, such as the take up of rights under the Rights
Issues undertaken in July 2009.
As at 14 May 2010
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Notes
1.
Tinto Holdings Australia Pty Limited is a wholly owned subsidiary of Rio Tinto plc.
2.
Other large registered shareholders are nominees who hold securities on behalf of beneficial
shareholders.
Information about material related party transactions of the Rio Tinto Group is set out in
note 44 to the
2009 Financial statements
.
Neither Rio Tinto plc nor Rio Tinto Limited nor any of their subsidiaries is a defendant in
any proceedings which the directors believe will have a material effect on either Companys
financial position or profitability.
Both Companies have paid dividends on their shares every year since incorporation in 1962. The
rights of Rio Tinto shareholders to receive dividends are explained under the description of the
Dual Listed Companies Structure on page 147.
The aim of Rio Tintos progressive dividend policy is to increase the US dollar value of ordinary
dividends over time. The rate of the total annual dividend, in US dollars, is determined taking
into account the results for the past year and the outlook for the current year. Under Rio Tintos
dividend policy, the interim dividend is set at one half of the total ordinary dividend for the
previous year and the final ordinary dividend is expected to be at least equal to the previous
interim dividend. This policy was suspended in 2009 due to the recapitalisation of the balance
sheet.
The majority of the Groups sales are transacted in US dollars, making this the most reliable
measure for the Groups global business performance. It is Rio Tintos main reporting currency and
consequently the natural currency for dividend determination. Dividends determined in US dollars
are translated at exchange rates prevailing two days prior to the announcement and are then
declared payable in sterling by Rio Tinto plc and in Australian dollars by Rio Tinto Limited. On
request, shareholders of Rio Tinto plc can elect to receive dividends in Australian dollars and
shareholders of Rio Tinto Limited can elect to receive dividends in sterling.
On announcing the US$14.8 billion (net) rights issues on 5 June 2009, the directors announced that
an interim dividend would not be paid for 2009. The 2009 final dividend of 45 US cents per share
was declared by the directors on 11 February 2010 and the applicable translation rate was US$1.5606
to the pound sterling and US$0.87285 to the Australian dollar.
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Rio Tinto offers a DRP to registered shareholders, which provides the opportunity to use cash
dividends to purchase Rio Tinto shares in the market free of commission. Due to local legislation
the DRP cannot be extended to shareholders in the US, Canada and certain other countries.
The prices of Rio Tinto plc and Rio Tinto Limited shares and Rio Tinto plc ADRs are available
during the day on the Rio Tinto and other websites.
The principal market for Rio Tinto plc shares is the London Stock Exchange (LSE), the shares trade
through the Stock Exchange Electronic Trading Service (SETS) system.
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ADR holders may instruct JPMorgan as to how the shares represented by their ADRs should be
voted.
Rio Tinto Limited shares are listed on the Australian Securities Exchange (ASX). The ASX is the
principal trading market for Rio Tinto Limited shares. The ASX is a national stock exchange
operating in the capital city of each Australian State with an automated trading system.
The following table shows share prices for the period indicated, the reported high and low
middle market quotations, which represent an average of bid and asked prices, for Rio Tinto plcs
shares on the LSE based on the LSE Daily Official List, the highest and lowest sale prices of the
Rio Tinto plc ADRs as reported on the NYSE composite tape and the high and low closing sale prices
of Rio Tinto Limited shares based upon information provided by the ASX. There is no established
trading market in the US for Rio Tinto Limiteds shares.
Pence per
US$ per
A$ per Rio Tinto
Rio Tinto plc share
Rio Tinto plc ADS
1
Limited share
High
Low
High
Low
High
Low
2,657
1,472
38.30
22.85
69.10
38.82
3,322
2,352
53.52
37.20
87.97
65.38
5,784
2,505
102.30
40.74
146.90
69.50
7,078
1,049
118.03
12.50
156.10
32.00
3,420
1,140
55.93
16.58
74.89
29.38
2,610
2,245
44.79
36.35
62.88
56.11
2,740
2,312
45.84
36.96
61.74
55.25
3,000
2,505
50.62
39.33
67.50
56.85
3,310
2,693
55.93
44.63
73.78
62.59
3,420
3,087
54.99
50.00
74.89
69.80
3,638
3,053
60.10
48.15
80.00
68.00
3,467
3,036
54.43
46.39
72.92
65.57
3,910
3,468
59.77
51.56
79.75
71.01
4,062
3,379
62.24
50.57
81.25
72.00
5,850
4,159
99.12
65.59
137.10
101.00
7,078
5,233
118.03
85.60
156.10
124.17
5,764
3,310
99.34
43.96
137.50
84.50
3,487
1,049
54.87
12.50
95.00
32.00
2,047
1,140
30.27
16.58
45.11
29.38
2,608
1,784
45.73
26.55
60.89
41.65
2,740
1,885
45.84
30.00
62.88
46.63
3,420
2,505
55.93
39.33
74.89
56.85
1
On 12 April 2010, Rio Tinto announced a ratio change for the Rio Tinto plc American
Depository Receipts (ADR) programme. With effect from 30 April 2010, one ADR represents one
Ordinary share of 10p in Rio Tinto plc prior to this date one ADR represented 4 Ordinary shares.
To effect this change, ADR holders received 3 additional ADRs for every 1 ADR held as of 22 April
2010, the ADR record date. Prior year comparatives have been restated for the impact of the ratio
change.
In 1995, Rio Tinto shareholders approved the terms of the dual listed companies merger (the
DLC merger) which was designed to place the shareholders of both Companies in substantially the
same position as if they held shares in a single enterprise owning all of the assets of both
Companies. As a condition of its approval of the DLC merger, the Australian Government required Rio
Tinto plc to reduce its shareholding in Rio Tinto Limited to 39 per cent by the end of 2005.
Consistent with the commitments made to the Australian Government in 1995, the Rio Tinto plc
shareholding in Rio Tinto Limited has been reduced over time and currently stands at 28.2 per cent.
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The Sharing Agreement provides for dividends paid on Rio Tinto plc and Rio Tinto Limited shares to
be equalised on a net cash basis, that is without taking into account any associated tax credits.
Dividends are determined in US dollars and are then, except for ADR holders, translated and paid in
sterling and Australian dollars. The Companies are also required to announce and pay their
dividends and other distributions as close in time to each other as possible.
In principle, the Sharing Agreement provides for the public shareholders of Rio Tinto plc and Rio
Tinto Limited to vote as a joint electorate on all matters which affect shareholders of both
Companies in similar ways. These are referred to as Joint Decisions. Such Joint Decisions include
the creation of new classes of share capital, the appointment or removal of directors and auditors
and the receiving of annual financial statements. Joint Decisions are voted on a poll.
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If either of the Companies goes into liquidation, the Sharing Agreement provides for a valuation to
be made of the surplus assets of both Companies. If the surplus assets available for distribution
by one Company on each of the shares held by its public shareholders exceed the surplus assets
available for distribution by the other Company on each of the shares held by its public
shareholders, then an equalising payment between the two Companies shall be made, to the extent
permitted by applicable law, such that the amount available for distribution on each share held by
public shareholders of each Company conforms to the Equalisation Ratio. The objective is to ensure
that the public shareholders of both Companies have equivalent rights to the assets of the combined
Group on a per share basis, taking account of the Equalisation Ratio.
The laws and regulations of the UK and Australia impose restrictions and obligations on persons who
control interests in public quoted companies in excess of defined thresholds that, under certain
circumstances, include obligations to make a public offer for all of the outstanding issued shares
of the relevant company. The threshold applicable to Rio Tinto plc under UK law and regulations is
30 per cent and to Rio Tinto Limited under Australian law and regulations is 20 per cent.
In 1995, each Company entered into a Deed Poll Guarantee in favour of creditors of the other
Company. Pursuant to the Deed Poll Guarantees, each Company guaranteed the contractual obligations
of the other Company and the obligations of other persons which are guaranteed by the other
Company, subject to certain limited exceptions. Beneficiaries under the Deed Poll Guarantees may
make demand upon the guarantor thereunder without first having recourse to the Company or persons
whose obligations are being guaranteed. The obligations of the guarantor under each Deed Poll
Guarantee expire upon termination of the Sharing Agreement and under other limited circumstances,
but only in respect of obligations arising after such termination and, in the case of other limited
circumstances, the publication and expiry of due notice. The shareholders of the Companies cannot
enforce the provision of the Deed Poll Guarantees.
Rio Tinto plc adopted new Articles of Association by special resolution passed on 20 April
2009 which were amended further by special resolution on 20 April 2009 effective 1 October 2009.
Rio Tinto Limited adopted a new Constitution by special resolution
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As explained on pages 146 to 147 under the terms of the DLC merger the shareholders of Rio
Tinto plc and of Rio Tinto Limited entered into certain contractual arrangements which are designed
to place the shareholders of both Companies in substantially the same position as if they held
shares in a single enterprise which owned all of the assets of both Companies. Generally and as far
as is permitted by the UK Companies Act and the Australian Corporations Law this principle is
reflected in the Articles of Association of Rio Tinto plc and in the Constitution of Rio Tinto
Limited. The summaries below include descriptions of material rights of the shareholders of both
Rio Tinto plc and Rio Tinto Limited. Unless stated otherwise the Articles of Association of and
Constitution are identical.
The objects of Rio Tinto plc were previously set out in the fourth clause of its Memorandum of
Association and the objects of Rio Tinto Limited were set out in the second clause of its
Constitution. Included in these objects was the right for each Company to enter into, with one
another, operate and carry into effect an Agreement known as the DLC Merger Sharing Agreement (the
Sharing Agreement) and a Deed Poll Guarantee.
Under Rio Tinto plcs Articles of Association a director may not vote in respect of any
proposal in which he or any other person connected with him, has any material interest other than
by virtue of his interests in shares or debentures or other securities of or otherwise in or
through the Company, except where resolutions:
indemnify him or a third party in respect of obligations incurred by the director on behalf
of, or for the benefit of, the Company, or in respect of obligations of the Company, for which
the director has assumed responsibility under an indemnity, security or guarantee;
relate to an offer of securities in which he may be interested as a holder of securities or
as an underwriter;
concern another body corporate in which the director is beneficially interested in less
than one per cent of the issued shares of any class of shares of such a body corporate;
relate to an employee benefit in which the director will share equally with other
employees; and
relate to liability insurance that the Company is empowered to purchase for the benefit of
directors of the Company in respect of actions undertaken as directors (or officers) of the
Company.
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Under English law, dividends on shares may only be paid out of profits available for
distribution, as determined in accordance with generally accepted accounting principles and by the
relevant law. Shareholders are entitled to receive such dividends as may be declared by the
directors. The directors may also pay shareholders such interim dividends as appear to them to be
justified by the financial position of the Group.
Voting at any general meeting of shareholders on a resolution on which the holder of the
Special Voting Share is entitled to vote shall be decided by a poll, being a written vote, and any
other resolution shall be decided by a show of hands unless a poll has been duly demanded. On a
show of hands, every shareholder who is present in person or by proxy at a general meeting has one
vote regardless of the number of shares held. On a poll, every shareholder who is present in person
or by proxy has one vote for every ordinary share or share for which he or she is the holder and,
in the case of Joint Decisions, the holder of the Special Voting Share has one vote for each vote
cast by the public shareholders at the parallel meeting of shareholders. A poll may be demanded by
any of the following:
the chairman of the meeting;
at least five shareholders entitled to vote at the meeting;
any shareholder or shareholders representing in the aggregate not less than one tenth (Rio
Tinto plc) or one twentieth (Rio Tinto Limited) of the total voting rights of all shareholders
entitled to vote at the meeting;
any shareholder or shareholders holding shares conferring a right to vote at the meeting on
which there have been paid-up sums in the aggregate equal to not less than one tenth of the
total sum paid up on all the shares conferring that right; or
the holder of the Special Voting Share.
an ordinary resolution, which includes resolutions for the election of directors, the
receiving of financial statements, the cumulative annual payment of dividends, the appointment
of auditors, the increase of authorised share capital or the grant of authority to allot
shares;
a special resolution, which includes resolutions amending the Companys Articles of
Association of Rio Tinto plc or the Constitution of Rio Tinto Limited, disapplying statutory
pre-emption rights or changing the Companys name or the modification of the rights of any
class of the Groups shares at a meeting of the holders of such class of shares or relating to
certain matters concerning the winding up of either Company.
If, at any time, the share capital is divided into different classes of shares, the rights
attached to any class may be varied, subject to the provisions of the relevant legislation, with
the consent in writing of holders of three fourths in value of the shares of that class or upon the
adoption of an extraordinary resolution passed at a separate meeting of the holders of the shares
of that class. At every such separate meeting, all of the provisions of the Articles of Association
and Constitution relating to proceedings at a general meeting apply, except that the quorum is to
be the number of persons (which must be two or more) who hold or represent by proxy not less than
one third in nominal value of the issued shares of the class.
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Except as the shareholders have agreed or may otherwise agree, upon a winding up, the balance
of assets available for distribution:
after the payment of all creditors including certain preferential creditors, whether
statutorily preferred creditors or normal creditors; and
subject to any special rights attaching to any class of shares;
Except for the provisions of the Foreign Acquisitions and Takeovers Act 1975 which impose
certain conditions on the foreign ownership of Australian companies, there are no limitations
imposed by law, Rio Tinto plcs Articles of Association or Rio Tinto Limiteds Constitution, on the
rights of non residents or foreign persons to hold or vote the Groups ordinary shares or ADSs that
would not apply generally to all shareholders.
Iron Ore Joint Venture Framework Agreement
On 5 December 2009, Rio Tinto and BHP Billiton signed binding agreements that set out the
terms that will regulate the establishment of the joint venture and its ongoing operation. Those
terms are consistent with the core principles set out in the Framework Agreement, except that the
joint marketing of 15 per cent of output contemplated by the core principles will not take place:
all output will be sold by Rio Tinto and BHP Billiton separately.
The joint venture will encompass the management and operation of the economic interests of Rio
Tinto and BHP Billiton in all current and future iron ore operations in Western Australia,
including exploration interests, leases, mines, rail lines, ports and associated infrastructure,
and all related employees and contractors. However, the joint venture will not include BHP
Billitons Hot Briquetted Iron plant (HBI) or Rio Tintos interest in HIsmelt, and its application
to other secondary processing activities will be limited. Marketing activities and business
development outside Western Australia are also outside the scope of the joint venture.
The economic interests of Rio Tinto and BHP Billiton in the joint venture will be equal. The joint
venture is a contractual arrangement and the parties will not be acquiring shares in each others
iron ore companies or legal or beneficial interests in each others iron ore assets. The parties
will obtain an economic exposure to each others iron ore production assets through each of them
subscribing for debentures in an interposed company in the others group that holds shares in the
others asset holding subsidiaries.
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Management of the joint venture will be overseen by a non executive Owners Council comprised of
four representatives of each party. All decisions of the Owners Council must be approved by both
parties, subject to certain deadlock breaking mechanisms.
The joint venture manager, a new entity owned equally by Rio Tinto and BHP Billiton, will manage
all day to day activities of the joint venture without interference from Rio Tinto and BHP
Billiton. In addition, the manager will develop plans for realisation of synergies and will present
the Owners Council with annual business plans and budgets designed to achieve full utilisation of
system capacity and options for maximisation of production capacity through expansion. The manager
must ensure joint venture operations are conducted safely at all times, act equitably and fairly to
the parties, and act in accordance with business plans and budgets approved by the Owners Council.
The joint venture will operate with a minimum cash balance and will be financed entirely by the
parties, through money subscribed for debentures and money advanced by loan to the relevant iron
ore companies conducting operations. The manager of the joint venture will call for cash from Rio
Tinto and BHP Billiton on a regular basis to fund the joint venture and capital expenditure
programmes. The parties may elect to fund their proportionate share of an expansion or acquisition
by way of project financing and may use their interests in the joint venture to secure corporate
debt.
Sole risk rights will exist for expansion projects which involve capital expenditure exceeding
US$250 million (indexed).
Rio Tinto and BHP Billiton will continue to compete and market iron ore to their customers
separately. A separation protocol will ensure that the manager has no knowledge of Rio Tinto and
BHP Billitons marketing strategies or sale terms relating to production from the joint venture.
The manager will supply equal product volumes and specifications of product to each party to the
extent possible. Where equal supply is not possible, adjustments will be made to ensure that each
party receives equal value. These adjustments may include differential distributions on the
debentures.
The parties will both be free to sell some or all of their respective interests in the joint
venture without any pre-emptive rights or change of control restrictions applying (although certain
principles and restrictions will apply depending on the nature and extent of the disposal). The
right to vote on the Owners Council can, however, only be exercised by a person with an economic
interest of more than 25 per cent of the joint venture, except in the unlikely scenario where
neither party holds an economic interest above 25 per cent. Neither party will be entitled to sell
the underlying assets or interests separately from the joint venture interest, and rights to create
security interests over the underlying assets and interests are limited.
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Rio Tinto plc, Rio Tinto Canada Holding Inc. and Rio Tinto Finance plc entered into a facility
agreement dated 12 July 2007 (the Facility Agreement) with Credit Suisse, Deutsche Bank AG,
London Branch, The Royal Bank of Scotland plc and Société Générale. The Facility Agreement
comprises two term facilities and two revolving facilities (including a swingline facility) up to a
total amount of US$40 billion. The funds made available under the Facility Agreement will be used,
among other things, to finance or refinance, directly or indirectly the consideration or other
amounts payable in respect of the Groups purchase for cash of all the outstanding shares of Alcan
Inc.
Rio Tinto plc
Under current Australian legislation, the Reserve Bank of Australia does not restrict the import
and export of funds and no permission is required for the movement of funds into or out of
Australia, except that restrictions apply to certain financial transactions relating to specified
individuals and entities associated with certain regimes. The Department of Foreign Affairs and
Trade has responsibility for the administration of restrictions relating to terrorists and their
sponsors, and the former Iraqi regime.
UK resident individuals shareholdings in Rio Tinto plc
Dividends carry a tax credit equal to one ninth of the dividend. Individuals who are not
liable to income tax at the higher rate will have no further tax to pay. Higher rate tax payers are
liable to tax on UK dividends at 32.5 per cent which, after taking account of the tax credit,
produces a further tax liability of 25 per cent of the dividend received.
The taxation effect of participation in the DRP will depend on individual circumstances.
Shareholders will generally be liable for tax on dividends reinvested in the DRP on the same basis
as if they had received the cash and arranged the investment. The dividend should, therefore, be
included in the annual tax return.
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Shareholders who have any queries on capital gains tax issues are advised to consult their
financial adviser.
Taxation of dividends
Shareholders will generally be liable for tax on dividends reinvested in the DRP on the same
basis as if they had received the cash and arranged the investment. The dividend should therefore
be included in the annual tax return as assessable income.
The Australian capital gains tax legislation is complex. If shareholders have acquired shares
after 19 September 1985 they may be subject to capital gains tax on the disposal of those shares.
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For the purposes of the Conventions and of the US Internal Revenue Code of 1986, as amended,
(the Code) US holders of ADSs are treated as the owners of the underlying shares.
Taxation of dividends
Under the UK Estate Tax Treaty, a US holder, who is domiciled in the US and is not a national
of the UK, will not be subject to UK inheritance tax upon the holders death or on a transfer
during the holders lifetime unless the ADSs and shares form part of the business property of a
permanent establishment in the UK or pertain to a fixed base situated in the UK used in the
performance of independent personal services. In the exceptional case where ADSs or shares are
subject both to UK inheritance tax and to US Federal gift or estate tax, the UK Estate Tax Treaty
generally provides for tax payments to be relieved in accordance with the priority rules set out in
the Treaty.
Transfers of Rio Tinto plc ADSs will not be subject to UK stamp duty provided that the
transfer instrument is not executed in, and at all times remains outside, the UK.
Taxation of dividends
US holders are not normally subject to any Australian tax on the disposal of Rio Tinto Limited
ADSs or shares unless they have been used in carrying on a trade or business wholly or partly
through a permanent establishment in Australia, or the gain is in the nature of income sourced in
Australia.
Australia does not impose any gift, estate or inheritance taxes in relation to gifts of shares
or upon the death of a shareholder.
An issue or transfer of Rio Tinto Limited shares does not require the payment of Australian
stamp duty.
In general, taking into account the earlier assumptions that each obligation of the Deposit
Agreement and any related agreement will be performed according to its terms, for United States
federal income tax purposes, if you hold ADRs evidencing ADSs, you will be treated as the owner of
the shares represented by those ADRs. Exchanges of shares for ADRs, and ADRs for shares, generally
will not be subject to United States federal income tax.
Under the United States federal income tax laws, and subject to the passive foreign investment
company, or PFIC, rules discussed below, if you are a United States Holder, the gross amount of any
dividend the Group pays out of its current or accumulated earnings and profits (as determined for
United States federal income tax purposes) is subject to United States federal income taxation. If
you are a non-corporate United States Holder, dividends paid to you in taxable years beginning
before 1 January 2011 that constitute qualified dividend income will be taxable to you at a maximum
tax rate of 15% provided that, in the case of shares or ADSs, you hold the shares or ADSs for more
than 60 days during the 121-day period beginning 60 days before the ex-dividend date. Dividends we
pay with respect to the shares or ADSs will generally be qualified dividend income.
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Subject to the PFIC rules discussed below, if you are a US holder and you sell or otherwise
dispose of the Groups ADSs or shares, you will recognise capital gain or loss for US federal
income tax purposes equal to the difference between the US dollar value of the amount that you
realize and your tax basis, determined in US dollars, in your shares or ADSs. Capital gain of a non
corporate US holder is generally taxed at preferential rates where the holder has a holding period
greater than one year. The gain or loss will generally be income or loss from sources within the
United States for foreign tax credit limitation purposes.
We believe that the Groups shares or ADSs should not be treated as stock of PFIC for US
federal income tax purposes, but this conclusion is a factual determination that is made annually
and thus may be subject to change. If we were to be treated as a PFIC, unless the shares or ADSs
are marketable stock and a US Holder elects to be taxed annually on a mark-to-market basis with
respect to the shares or ADSs, gain realized on the sale or other disposition of the shares or ADSs
would in general not be treated as capital gain. Instead, if you are a US Holder, you would be
treated as if you had realized such gain and certain excess distributions rateably over your
holding period for the shares or ADSs and would be taxed at the highest tax rate in effect for each
such year to which the gain was allocated, together with an interest charge in respect of the tax
attributable to each such year. In addition, dividends that you receive from us will not be
eligible for the special tax rates applicable to qualified dividend income if we are a PFIC either
in the taxable year of the distribution or the preceding taxable year, but instead will be taxable
at rates applicable to ordinary income.
Rio Tinto plc and Rio Tinto Limited file reports and other information with the SEC. You may
read without charge and copy at prescribed rates any document filed at the public reference
facilities of the SECs principal office at 100 F Street NE, Washington, DC 20549, United States of
America. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the
public reference facilities.
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In accordance with the terms of the Deposit Agreement, JPMorgan may charge holders of Rio
Tinto ADSs, either directly or indirectly, fees or charges up to the amounts described below.
Category
Depositary Actions
Associated Fee
underlying shares
Issuance of ADSs against the deposit of shares, including deposits
and issuance in respect of:
US$5.00 per 100
ADSs (or portion
thereof) evidenced
by the new ADSs
delivered
Distribution or sale of securities, the fee being in an amount
equal to the fee for the execution and delivery of ADSs which would
have been charged as a result of the deposit of such securities
US$5.00 for each
100 ADSs (or
portion thereof)
Acceptance of ADSs surrendered for withdrawal of deposited
securities
US$5.00 for each
100 ADSs (or
portion thereof)
evidenced by the
ADSs surrendered
Transfers, combining or grouping of depositary receipts
US$2.50 per ADS
particularly those charged on
an annual basis
US$0.02 per ADS (or
portion thereof)
not more than once
each calendar year
and payable at the
sole discretion of
the depositary by
billing holders or
deducting such
charge from one or
more cash dividends
or other cash
distributions
Expenses incurred on behalf of holders in connection with
Expenses payable at
the sole discretion
of the depository
by billing holders
or by deducting
charges from one or
more cash dividends
or other cash
distributions
Routine programme maintenance;
Reporting;
Distribution of cash dividends;
Annual meeting services; and
Report mailing services.
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The Group maintains disclosure controls and procedures as such term is defined in Exchange Act
Rule 13a-15(e). The common management of each of Rio Tinto plc and Rio Tinto Limited, with the
participation of their common chief executive and finance director, have evaluated the
effectiveness of the design and operation of the Groups disclosure controls and procedures
pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report and have
concluded that these disclosure controls and procedures were effective at a reasonable assurance
level.
The common management of each of Rio Tinto plc and Rio Tinto Limited is responsible for
establishing and maintaining adequate internal control over financial reporting. The Companies
internal control over financial reporting is a process designed under the supervision of their
common chief executive and finance officer to provide reasonable assurance regarding the
reliability of financial reporting and the preparation and fair presentation of the Groups
published financial statements for external reporting purposes in accordance with IFRS.
There were no changes in the internal controls over financial reporting that occurred during
the period covered by this Annual report on Form 20-F that have materially affected or are
reasonably likely to materially affect the internal controls over financial reporting of each of
Rio Tinto plc and Rio Tinto Limited.
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Rio Tinto plc
Rio Tinto Limited
Rio Tinto Group
(a) Total
(b) Average
(c) Total number
(a) Total
(b) Average
(c) Total number
(d) Approximate
number of
price
of shares
number of
price
of shares
dollar value of
shares
paid per share
purchased as part
shares
paid per share
purchased as part
shares that may
purchased
of publicly
purchased
of publicly
yet be purchased
(including ESOT)
announced plans
announced plans
under the plans
or programmes
or programmes
or programmes
US$
US$
US$
26,530
27.36
10,000
29.05
175,937
31.44
114,090
33.86
105,533
32.57
241,889
31.62
652,598
38.11
247,587
46.84
377,811
57.36
30,532
43.29
16,526
49.66
1,046
38.39
23,774
51.12
319,321
47.21
58,135
61.09
80,630
66.39
65,436
66.67
686,346
36.03
1,861,029
45.38
270,326
71.96
459,750
63.97
212,034
67.51
271,553
61.02
401,068
73.29
24,280
60.95
Table of Contents
Exhibit
Number
Description
Articles of Association of Rio Tinto plc (adopted by special
resolution passed on 20 April 2009 and amended on 1 October
2009)
Constitution of Rio Tinto Limited (ACN 004 458 404) (as
adopted by special resolution passed on 24 May 2000 and
amended by special resolution on 18 April 2002, 29 April 2005,
27 April 2007, 24 April 2008 and 20 April 2009)
Facility Agreement, dated 12 July 2007, among Rio Tinto,
Credit Suisse, Deutsche Bank AG, London Branch, The Royal Bank
of Scotland plc, and Societe Generale (incorporated by
reference to Exhibit (b)(1) to the Schedule TO-T filed by Rio
Tinto plc and Rio Tinto Canada Holding Inc. on 24 July 2007,
File No. 1-10533)
DLC Merger Implementation Agreement, dated 3 November 1995
between CRA Limited and The RTZ Corporation PLC relating to
the implementation of the DLC merger (incorporated by
reference to Exhibit 2.1 of Rio Tinto plcs Annual report on
Form 20-F for the financial year ended 31 December 1995, File
No. 1-10533)
DLC Merger Sharing Agreement, dated 21 December 1995 and
amended on 14 April 2005, 29 April 2005 and 18 December 2009
between CRA Limited and The RTZ Corporation PLC relating to
the ongoing relationship between CRA and RTZ following the DLC
merger
RTZ Shareholder Voting Agreement, dated 21 December 1995 and
amended on 18 January 2010 between The RTZ Corporation PLC,
RTZ Shareholder SVC Pty. Limited, CRA Limited, R.T.Z.
Australian Holdings Limited and The Law Debenture Trust
Corporation p.l.c
CRA Shareholder Voting Agreement, dated 21 December 1995 and
amended 18 January 2010 between CRA Limited, CRA Shareholder
SVC Limited, The RTZ Corporation PLC and The Law Debenture
Trust Corporation p.l.c., relating to the RTZ Special Voting
Share
Table of Contents
Service Agreement dated 4 May 2007 between Mr T Albanese and
Rio Tinto London Limited (incorporated by reference to Exhibit
4.01 of Rio Tinto plcs Annual report on Form 20-F for the
financial year ended 31 December 2007, File No. 1-10533)
Memorandum effective 1 March 2008 to Service Agreement dated
12 April 2006 between Mr T Albanese and Rio Tinto London
Limited (incorporated by reference to Exhibit 4.02 of Rio
Tinto plcs Annual report on Form 20-F for the financial year
ended 31 December 2007, File No. 1-10533)
Service Agreement dated 19 June 2002 between Mr G R Elliott
and Rio Tinto London Limited (incorporated by reference to
Exhibit 4.31 of Rio Tinto plcs Annual report on Form 20-F for
the financial year ended 31 December 2002, File No. 1-10533)
Memorandum effective 1 March 2008 to Service Agreement dated
19 June 2002 between Mr G R Elliott and Rio Tinto London
Limited (incorporated by reference to Exhibit 4.01 of Rio
Tinto plcs Annual report on Form 20-F for the financial year
ended 31 December 2007, File No. 1-10533)
Rio Tinto plc Share Option Plan 2004 (incorporated by
reference to Exhibit 4.3 of Rio Tintos Registration statement
on Form S-8, File No. 333-147914)
Rio Tinto plc Mining Companies Comparative Plan 2004
(incorporated by reference to Exhibit 4.4 of Rio Tintos
Registration statement on Form S-8, File No. 333-147914)
Rio Tinto Limited Share Option Plan 2004 (incorporated by
reference to Exhibit 4.6 of Rio Tintos Registration statement
on Form S-8, File No. 333-147914)
Rio Tinto Limited Mining Companies Comparative Plan 2004
(incorporated by reference to Exhibit 4.7 of Rio Tintos
Registration statement on Form S-8, File No. 333-147914)
Medical expenses plan (incorporated by reference to Exhibit
4.67 of Rio Tinto plcs Annual report on Form 20-F for the
financial year ended 31 December 2000, File No. 1-10533)
Pension plan (incorporated by reference to Exhibit 4.68 of Rio
Tinto plcs Annual report on Form 20-F for the financial year
ended 31 December 2000, File No. 1-10533)
Rules of The Rio Tinto plc 2008 Bonus Deferral Plan
(incorporated by reference to Exhibit 4.15 of Rio Tinto plcs
Annual report on Form 20-F for the financial year ended 31
December 2008, File No. 1-10533)
US Annex to the Rules of the Rio Tinto plc 2008 Bonus Deferral
Plan (incorporated by reference to Exhibit 4.16 of Rio Tinto
plcs Annual report on Form 20-F for the financial year ended
31 December 2008, File No. 1-10533)
Rules of The Rio Tinto Limited 2008 Bonus Deferral Plan
(incorporated by reference to Exhibit 4.17 of Rio Tinto plcs
Annual report on Form 20-F for the financial year ended 31
December 2008, File No. 1-10533)
US Annex to the Rules of the Rio Tinto Limited 2008 Bonus
Deferral Plan (incorporated by reference to Exhibit 4.18 of
Rio Tinto plcs Annual report on Form 20-F for the financial
year ended 31 December 2008, File No. 1-10533)
Implementation Agreement between Rio Tinto Limited, Rio Tinto
plc, BHP Billiton Limited and BHP Billiton plc dated 5
December 2009 (including the schedules).
List of subsidiary companies.
Certifications pursuant to Rule 13a-14(a) of the Exchange Act.
Certifications furnished pursuant to Rule 13a-14(b) of the
Exchange Act (such certifications are not deemed filed for
purpose of Section 18 of the Exchange Act and not incorporated
by reference in any filing under the Securities Act).
Consent of Independent Accountants to the incorporation of the
audit report relating to the Rio Tinto Group and effectiveness
of internal control over financial reporting of the Rio Tinto
Group by reference in registration statements on Form F-3 and
Form S-8.
Consent of Independent Accountants to the incorporation of the
audit report relating to Minera Escondida Limitada by
reference in registration statements on Form F-3 and Form S-8.
*
Filed herewith.
**
Pursuant to a request for confidential treatment filed with the Securities and Exchange, the
confidential portions of this exhibit have been omitted and filed seperately with the
Securities and Exchange Commission.
Table of Contents
Rio Tinto Limited
(Registrant)
/s/ Ben Mathews
Name:
Ben Mathews
Title: Assistant Secretary
Date: 27 May 2010
Table of Contents
American Depositary Receipt evidencing American Depositary Shares (ADS).
Australian currency. Abbreviates to A$.
International Financial Reporting Standards as adopted in Australia.
One thousand million.
Canadian currency. Abbreviates to C$.
Rio Tinto plc and/or Rio Tinto Limited, as the context so requires.
Dual listed companies merger (1995).
International Financial Reporting Standards as adopted by the European Union.
International Accounting Standards Board as issued by th IASB.
International Financial Reporting Standards.
London Bullion Market Association.
London Metal Exchange.
UK currency. Abbreviates to £, pence or p.
The holders of Rio Tinto plc shares that are not companies in the Rio Tinto Limited group
and the holders of Rio Tinto Limited shares that are not companies in the Rio Tinto plc group.
South African currency. Abbreviates to R.
Rio Tinto Limited, and, where the context permits, its subsidiaries and associated companies.
Rio Tinto Limited and its subsidiaries and associated companies.
The holders of Rio Tinto Limited shares.
The shares in Rio Tinto Limited.
The DLC Dividend Share in Rio Tinto Limited.
The Special Voting Share in Rio Tinto Limited.
Rio Tinto plc and its subsidiaries and associated companies.
An American Depositary Share representing the right to receive four Rio Tinto plc ordinary shares.
Rio Tinto plc and its subsidiaries and associated companies.
The shares of 10p each in Rio Tinto plc.
The holders of Rio Tinto plc shares.
Rio Tinto plc ordinary shares
The DLC Dividend Share of 10p in Rio Tinto plc.
The Special Voting Share of 10p in Rio Tinto plc
Rio Tinto Limited shares or Rio Tinto plc ordinary shares, as the context requires.
The agreement, dated 21 December 1995, as amended between Rio Tinto Limited and Rio Tinto plc relating
to the regulation of the relationship between Rio Tinto Limited and Rio Tinto plc following the DLC merger.
United States currency. Abbreviates to dollars, $ or US$ and US cents or USc.
Aluminium oxide. It is extracted from bauxite in a chemical refining process and is subsequently the principal raw
material in the electro-chemical process by which aluminium is produced.
At the final stage of the smelting of copper concentrates, the copper is cast into specially shaped slabs called anodes for
refining to produce refined cathode copper.
Mainly hydrated aluminium oxides (Al
2
O
3
.2H
2
O). Principal ore of alumina, the raw
material from which aluminium is made.
The deliberate use of bacteria to speed the chemical release of metals from ores.
An underground bulk mining method. It involves undercutting the orebody to induce ore fracture and collapse by gravity.
The broken ore is recovered through draw points below.
A generic term for mineral compounds which contain boron and oxygen.
Refined copper produced by electrolytic refining of impure copper or by electro-winning.
Separating crushed and ground ore into portions of different size particles.
By virtue of its carbonisation properties, it is used in the manufacture of coke, which is used in the steel making process.
Also known as metallurgical coal.
The product of a physical concentration process, such as flotation or gravity concentration, which involves separating ore
minerals from unwanted waste rock. Concentrates require subsequent processing (such as smelting or leaching) to break
down or dissolve the ore minerals and obtain the desired elements, usually metals.
The lowest grade of mineralised material considered economic to process. It is used in the calculation of the quantity of
ore present in a given deposit.
Table of Contents
A method of separating finely ground minerals using a froth created in water by specific reagents. In the flotation
process certain mineral particles are induced to float by becoming attached to bubbles of froth whereas others, usually
unwanted, sink.
The proportion of metal or mineral present in ore, or any other host material, expressed in this document as per cent,
grams per tonne or ounces per ton.
The average grade of ore delivered to the mill.
Mineral composed of iron, titanium and oxygen.
By virtue of its carbonisation properties, it is used in the manufacture of coke, which is used in the steel making
process. Also known as coking coal.
A rock from which a metal(s) or mineral(s) can be economically and legally extracted.
The quantity of ore processed.
Reserves for which quantity and grade and/or quality are computed from information similar to that used for proven
reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced.
The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of
observation.
Reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or
drill holes; grade and/or quality are computed from the
results of detailed sampling and (b) the sites for
inspection, sampling and measurement are spaced so closely
and the geologic character is so well defined that size,
shape, depth and mineral content of reserves are well
established.
The quantity of ore and waste rock excavated from the mine. In this document, the term is only applied to surface mining
operations.
A mineral composed of titanium and oxygen (TiO
2
).
The tonnes of waste material which must be removed to allow the mining of one tonne of ore.
(SX-EW)
Processes for extracting metal from an ore and producing pure metal. First the metal is leached into solution; the
resulting solution is then purified in the solvent extraction process; the solution is then treated in an electro-chemical
process (electro-winning) to recover cathode copper.
The rock wastes which are rejected from a concentrating process after the recoverable valuable minerals have been
extracted.
A feedstock rich in titanium dioxide, produced, in Rio Tintos case, by smelting ores containing titanium minerals.
Underlying earnings is an additional measure to provide greater understanding of the underlying business performance of
operations.
Zirconium mineral (ZrSiO
4
).
Pounds sterling
Australian dollars
Year ended 31 December*
Period
Average
High
Low
Year ended 31 December*
Period
Average
High
Low
end
rate
end
rate
1.62
1.57
1.70
1.35
2009
0.890
0.790
0.940
0.620
1.44
1.86
2.03
1.44
2008
0.698
0.852
0.983
0.607
1.99
2.00
2.11
1.92
2007
0.878
0.839
0.937
0.772
1.96
1.84
1.98
1.72
2006
0.788
0.753
0.791
0.706
1.73
1.82
1.93
1.71
2005
0.734
0.763
0.799
0.727
*
The Noon Buying Rate on such dates differed slightly from the rates used in the preparation
of Rio Tintos financial statements as of such date. No representation is made that pound
sterling and Australian dollar amounts have been, could have been or could be converted into
dollars at the Noon Buying Rate on such dates or at any other dates.
Table of Contents
Fourth quarter 2009 operations review
Announcement of results for 2009
Rio Tinto plc and Rio Tinto Limited shares and Rio Tinto plc ADRs quoted ex-dividend for 2009 final dividend
Record date for 2009 final dividend for Rio Tinto plc shares and ADRs
Record date for 2009 final dividend for Rio Tinto Limited shares
Plan notice date for election under the dividend reinvestment plan for the 2009 final dividend
Payment date for 2009 final dividend to holders of Ordinary shares and ADRs
Annual general meeting for Rio Tinto plc
First quarter 2010 operations review
Annual general meeting for Rio Tinto Limited (adjourned from 22 April)
Second quarter 2010 operations review
Announcement of half year results for 2010
Rio Tinto plc and Rio Tinto Limited shares and Rio Tinto plc ADRs quoted ex-dividend for 2010 interim dividend
Record date for 2010 interim dividend for Rio Tinto plc shares and ADRs
Record date for 2010 interim dividend for Rio Tinto Limited shares
Plan notice date for election under the dividend reinvestment plan for the 2010 interim dividend
Payment date for 2010 interim dividend to holders of Ordinary shares and ADRs
Third quarter 2010 operations review
Fourth quarter 2010 operations review
Announcement of results for 2010
Table of Contents
Page
A-2
A-3
A-4
A-5
A-6
A-7
A-8
A-9
A-25
A-26
A-26
A-26
A-27
A-27
A-28
A-30
A-31
A-31
A-33
A-34
A-34
A-35
A-35
A-35
A-36
A-37
A-37
A-37
A-38
A-39
A-39
A-39
A-39
A-40
A-41
A-41
A-42
A-43
A-45
A-47
A-51
A-57
A-58
A-59
A-60
A-61
A-61
A-62
A-64
A-65
A-66
A-66
A-66
A-67
A-67
A-68
A-74
A-78
A-81
A-82
Table of Contents
Years ended 31 December
2009
2008
2007
Note
US$m
US$m
US$m
41,825
54,264
29,700
3
(33,818
)
(37,641
)
(20,752
)
5
(1,573
)
(8,015
)
(58
)
41
692
2,231
2
12
(514
)
(1,134
)
(574
)
12
894
489
253
7,506
10,194
8,571
6
786
1,039
1,584
8,292
11,233
10,155
24
365
(176
)
194
261
(173
)
57
7
120
204
134
7
(929
)
(1,618
)
(538
)
(249
)
(292
)
(166
)
(432
)
(2,055
)
(319
)
7,860
9,178
9,836
8
(2,076
)
(3,742
)
(2,090
)
5,784
5,436
7,746
19
(449
)
(827
)
5,335
4,609
7,746
463
933
434
4,872
3,676
7,312
9
301.7
c
286.8
c
464.9
c
9
(25.5
)c
(52.7
)c
9
276.2
c
234.1
c
464.9
c
9
300.7
c
285.5
c
462.9
c
9
(25.4
)c
(52.4
)c
9
275.3
c
233.1
c
462.9
c
(a)
Consolidated revenue includes subsidiary sales to equity accounted units.
(b)
Profits arising on the disposal of interests in undeveloped projects are stated net of charges of nil (2008: US$156 million; 2007: nil),
related to such projects.
c)
The rights issues were at a discount to the then market price. Accordingly, earnings per share for all periods up to the date on
which the shares were issued have been adjusted for the bonus element of the issues. The 2008 comparatives have been
restated accordingly. See note 46 for other information relating to the rights issues.
Table of Contents
Years ended 31 December
2009
Attributable to
shareholders
Outside
of Rio Tinto
interests
Total
US$m
US$m
US$m
4,872
463
5,335
3,732
429
4,161
(13
)
(13
)
(206
)
(107
)
(313
)
16
34
50
(4
)
(1
)
(5
)
357
1
358
(3
)
(3
)
(847
)
3
(844
)
368
368
297
24
321
3,697
383
4,080
8,569
846
9,415
2008
Attributable to
shareholders
Outside
of Rio Tinto
interests
Total
US$m
US$m
US$m
3,676
933
4,609
(4,383
)
(411
)
(4,794
)
(2
)
(2
)
28
6
34
245
107
352
(173
)
(1
)
(174
)
(1
)
(1
)
(1,294
)
(20
)
(1,314
)
(283
)
(283
)
280
(36
)
244
(5,583
)
(355
)
(5,938
)
(1,907
)
578
(1,329
)
2007
Attributable to
shareholders
Outside
of Rio Tinto
interests
Total
US$m
US$m
US$m
7,312
434
7,746
1,765
135
1,900
(199
)
(223
)
(422
)
89
76
165
49
2
51
(16
)
(16
)
139
6
145
(11
)
(11
)
159
40
199
1,975
36
2,011
9,287
470
9,757
Table of Contents
Years ended 31 December
2009
2008
2007
Note
US$m
US$m
US$m
13,224
19,195
10,805
610
1,473
1,764
13,834
20,668
12,569
(1,136
)
(1,538
)
(489
)
(410
)
(348
)
(168
)
(3,076
)
(3,899
)
(3,421
)
9,212
14,883
8,491
41
2,028
2,563
(37,526
)
(5,388
)
(8,574
)
(5,000
)
253
171
49
(44
)
(288
)
(273
)
(265
)
(334
)
(216
)
59
281
224
(3,357
)
(6,181
)
(42,742
)
5,855
8,702
(34,251
)
(876
)
(1,933
)
(1,507
)
(1,648
)
14,877
23
37
5,775
4,697
39,195
(22,195
)
(12,667
)
(1,017
)
(25
)
(10
)
(17
)
710
(19
)
72
54
(2,463
)
(9,108
)
35,097
(284
)
(101
)
(27
)
3,108
(507
)
819
1,034
1,541
722
21
4,142
1,034
1,541
5,784
5,436
7,746
8
2,076
3,742
2,090
432
2,055
319
6
(786
)
(1,039
)
(1,584
)
41
(692
)
(2,231
)
(2
)
5
1,573
8,015
58
3,427
3,475
2,115
27
930
265
308
27
(363
)
(464
)
(162
)
27
(470
)
(448
)
(121
)
653
(1,178
)
130
908
658
(385
)
(570
)
951
375
322
(42
)
(82
)
13,224
19,195
10,805
Table of Contents
At 31 December
2009
2008
Note
US$m
US$m
11
14,268
14,296
12
5,730
6,285
13
45,803
41,753
14
6,735
5,053
170
264
16
284
166
17
1,375
1,111
18
2,231
1,367
85
220
20
841
666
77,522
71,181
16
4,889
5,607
17
4,447
5,401
168
251
501
406
20
694
264
21
4,233
1,181
14,932
13,110
19
4,782
5,325
97,236
89,616
21
(91
)
(147
)
22
(756
)
(9,887
)
25
(5,759
)
(7,197
)
26
(412
)
(480
)
(1,329
)
(1,442
)
27
(1,182
)
(826
)
(9,529
)
(19,979
)
22
(22,155
)
(29,724
)
25
(591
)
(452
)
26
(601
)
(268
)
(299
)
(450
)
18
(4,304
)
(4,054
)
27
(4,993
)
(3,601
)
27
(7,519
)
(6,506
)
(40,462
)
(45,055
)
19
(1,320
)
(2,121
)
(51,311
)
(67,155
)
45,925
22,461
28
246
160
29
4,924
961
4,174
4,705
30
14,010
(2,322
)
30
20,477
17,134
30
43,831
20,638
2,094
1,823
45,925
22,461
(a)
Refer to statement of changes in equity.
Table of Contents
Attributable to shareholders of Rio Tinto
Share
Share
Retained
Other
capital
premium
earnings
reserves
Outside
Total
(notes 28 and 29)
(a)
(note 30)
(note 30)
Total
interests
equity
US$m
US$m
US$m
US$m
US$m
US$m
US$m
1,121
4,705
17,134
(2,322
)
20,638
1,823
22,461
4,168
4,401
8,569
846
9,415
710
710
710
(876
)
(876
)
(410
)
(1,286
)
(17
)
(35
)
(52
)
(52
)
3,339
(531
)
3
11,936
14,747
14,747
53
53
(218
)
(218
)
65
30
95
95
5,170
4,174
20,477
14,010
43,831
2,094
45,925
Attributable to shareholders of Rio Tinto
Share
Retained
Other
capital
Share
earnings
reserves
Outside
Total
(notes 28 and 29)
premium
(note 30)
(note 30)
Total
interests
equity
US$m
US$m
US$m
US$m
US$m
US$m
US$m
1,391
1,932
19,033
2,416
24,772
1,521
26,293
2,742
(4,649
)
(1,907
)
578
(1,329
)
(258
)
(258
)
(258
)
(1,933
)
(1,933
)
(348
)
(2,281
)
(128
)
(128
)
(128
)
6
25
31
31
(12
)
2,767
(2,767
)
12
72
72
34
27
61
61
1,121
4,705
17,134
(2,322
)
20,638
1,823
22,461
Attributable to shareholders of Rio Tinto
Share
Retained
Other
capital
Share
earnings
reserves
Outside
Total
(notes 28 and 29)
premium
(note 30)
(note 30)
Total
interests
equity
US$m
US$m
US$m
US$m
US$m
US$m
US$m
1,271
1,919
14,401
641
18,232
1,153
19,385
7,468
1,819
9,287
470
9,757
120
120
120
(1,507
)
(1,507
)
(164
)
(1,671
)
(64
)
(64
)
(64
)
13
24
37
37
38
38
19
20
39
39
(1,372
)
(1,372
)
(1,372
)
24
24
1,391
1,932
19,033
2,416
24,772
1,521
26,293
(a)
Charges to share premium in 2009 include underwriting fees and other fees for the Rio Tinto plc
rights issue together with the mark-to-market losses from inception to receipt of proceeds on forward contracts taken out by
Rio Tinto plc to provide confidence in the absolute dollar proceeds of the rights issue.
(b)
Refer to Statement of comprehensive income.
(c)
Refer to note 1 (d).
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Corporate information
The financial statements of the Group were authorised for
issue in accordance with a directors resolution on 5
March 2010. The financial statements in the 20-F were authorised
for issue by the board of directors on 27 May 2010.
Rio Tinto plc and Rio Tinto Limited are listed and incorporated respectively on Stock Exchanges in the United Kingdom and Australia.
Rio Tinto plcs registered office is at 2 Eastbourne Terrace, London W2 6LG, United Kingdom. Rio Tinto Limiteds registered office
is at 120 Collins Street, Melbourne, Australia, 3000.
Rio Tintos business is finding, mining and processing mineral resources. Major products are aluminium, copper, diamonds, coal,
uranium, gold, industrial minerals (borax, titanium dioxide, salt, talc), and iron ore. Activities span the world but are strongly
represented in Australia and North America with significant businesses in South America, Asia, Europe and Africa.
Basis of preparation
The basis of preparation and accounting policies used in preparing the financial statements for the year ended 31 December 2009
are set out below.
The financial statements for the year ended 31 December 2009 have been prepared in accordance with International Financial
Reporting Standards both as adopted by the EU (EU IFRS) and as issued by the International Accounting Standards Board (IFRS),
Interpretations issued from time to time by the International Financial Reporting Interpretations Committee (IFRIC) adopted by the
European Union that are mandatory for the year ended 31 December 2009, the Companies Act 2006 applicable to companies reporting
under IFRS and in accordance with applicable United Kingdom law, applicable Australian law as amended by the Australian Securities
and Investments Commission Order dated 27 January 2006 (as amended on 22 December 2006) and Article 4 of the European Union
IAS regulation.
The IFRS financial information has been drawn up on the basis of accounting policies consistent with those applied in
the financial statements for the year to 31 December 2008, except for the following:
IFRS 8 Operating segments
IFRS 7 Financial instruments Disclosures (amendment)
IAS 1 Presentation of financial statements (revised)
IFRS 2 (amendment), Share-based payment Vesting conditions and cancellations
Amendment to IAS 32 Financial instruments:Presentation and IAS 1 Presentation of financial statements Puttable financial instruments and obligations arising on liquidation
Amendment to IAS 39 Eligible hedged items
Amendment to IAS 39 and IFRS 7 Reclassification of financial assets
Amendment to IFRIC 9 and IAS 39 on embedded derivatives
Improvements to IFRS
2008 to the extent mandatory in 2009. This standard collates many minor changes to IFRS. The amendments most relevant to the Group relate to the classification of derivatives which are not hedges by maturity rather than as short term and the imputation of interest on government grants.
IFRIC 12 Service concession arrangements
IFRIC 13 Customer loyalty programmes
IFRIC 15 Agreements for construction of real estate
IFRIC 16 Hedges of a net investment in a foreign operation
IFRIC 18 Transfers of assets from customers
The effect of adopting the above standards and interpretations is not material to Group earnings or to shareholders funds in the
current or prior year. Therefore, prior year information has not been restated. IFRS 7, IFRS 8 and IAS 1 (revised) relate to disclosure
only, prior year information has been reclassified to conform with the current presentation. The reclassifications do not affect prior year
statements of financial position.
In addition, the Group has early adopted Amendment to IAS 32 Classification of rights issues. The amendment permits rights issues to
existing shareholders which allow those shareholders to receive a fixed number of shares at a fixed price in a currency other than the
entitys functional currency, to be classed as equity transactions provided the offer is pro rata to all shareholders. Prior to the amendment
such an offer was treated as giving rise to a derivative liability. As a consequence, the US$827 million gain in the income statement which
arose at the half year under the previous accounting rules has been removed with a corresponding credit to equity.
The Group has not applied the following pronouncements: those which are expected to be most relevant to the Group are IFRS 3 and
IAS 27 (revised).
IAS 1 (amendment), Presentation of financial
statements
mandatory for year 2010
IAS 27 (revised) Consolidated and separate financial statements
- mandatory for year 2010. The standard requires the effects of
all increases or decreases in the ownership of subsidiaries to be recorded in equity if there is no change in control. They will
therefore no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost.
Any remaining interest in the company is re-measured to fair value and a gain or loss is recognised in profit or loss.
IAS 38 (amendment), Intangible Assets
mandatory for year 2010
IFRS 3 (amendment) Business combinations
- mandatory for business combinations after 1 January 2010. Under the revised
standard, all payments to purchase a business are to be recorded at fair value at the acquisition date with contingent payments
classified as debt subsequently re-measured through the income statement. All acqusition related costs should be expensed.
When a business is acquired in which the Group previously held a non-controlling stake, or the Group increases its stake in a
business which it does not control, the existing stake is re-measured to fair value at the date of acquisition. Any difference
between fair value and carrying value is taken to the income statement.
IFRS 5 (amendment), Non-current assets held for sale
and discontinued operations
mandatory for year 2010
Eligible Hedged Items (an amendment to IAS 39 Financial Instruments: Recognition and Measurement)
- mandatory for year 2010
IFRIC 17 Non cash distributions to owners
- mandatory for year 2010
IFRS 2 Share-based payment Group cash settled share based payment transactions
-mandatory for year 2010
Improvements to IFRS 2009 mandatory for year 2010.
This standard collates further minor changes to IFRS.
Amendment to IFRIC 14, IAS 19 Prepayments of a minimum funding requirement
-mandatory for year 2011
Amendment to IAS 24 Related party disclosures
- mandatory for year 2011
IFRIC 19 Extinguishing financial liabilities with equity instruments
- mandatory for year 2011
IFRS 9, Financial instruments mandatory for year 2013
The Group is evaluating the impact of the above pronouncements. The above changes are not expected to be material to the
Groups earnings or to shareholders funds.
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Judgements in applying accounting policies and key sources of estimation uncertainty
Many of the amounts included in the financial statements involve the use of judgement and/or estimation. These judgements and
estimates are based on managements best knowledge of the relevant facts and circumstances, having regard to previous
experience, but actual results may differ from the amounts included in the financial statements. Information about such
judgements and estimation is contained in the accounting policies and/or the Notes to the financial statements, and the key areas
are summarised below.
Areas of judgement that have the most significant effect on the amounts recognised in the financial statements are:
- Merger accounting for the 1995 merger of the economic interests of Rio Tinto plc and Rio Tinto Limited into the dual listed
companies (DLC) structure (page A-8).
- Review of asset carrying values and impairment charges and reversals note 1(e) and (i), note 5 and note 11
- Estimation of asset lives, note 1 (e and i)
- Determination of ore reserve estimates note 1(j)
- Close down, restoration and clean up obligations note 1(k)
- Deferral of stripping costs note 1(h)
- Recognition of deferred tax on mineral rights recognised in acquisitions note 1(m)
- Capitalisation of exploration and evaluation costs -note 1(f)
- Identification of functional currencies note 1(d)
- The definition of Underlying earnings note 2
- Acquisitions note 1(b)
Key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are:
- Review of asset carrying values and impairment charges and reversals note 1(e) and (i), note 5 and note 11
- Estimation of close down and restoration costs and the timing of expenditure note 1(k) and note 27
- Estimation of environmental clean up costs and the timing of expenditure note 1(k) and note 27
- Estimation of liabilities for post retirement costs note 50
- Recoverability of potential deferred tax assets note 1 (m) and note 18 (d)
- Contingencies note 35
These areas of judgement and estimation are discussed further
on page A-19.
(a)
Accounting convention
The financial information included in the financial statements for the year ended 31 December 2009, and for the related
comparative period, has been prepared under the historical cost convention, as modified by the revaluation of certain derivative contracts,
financial assets and post retirement assets and liabilities. The Groups policy in respect of these items is set out in the notes below.
(b)
Basis of consolidation
The financial statements consist of the consolidation of the accounts of Rio Tinto plc and Rio Tinto Limited (together the Companies)
and their respective subsidiaries (together the Group).
All intragroup balances, transactions, income and expenses and profits or losses, including unrealised profits arising
from intragroup transactions, have been eliminated on consolidation. Unrealised losses are eliminated in the same way
as unrealised gains except that they are only eliminated to the extent that there is no evidence of impairment.
Subsidiaries:
Subsidiaries are entities over which the Companies have the power to govern the financial and operating policies in
order to obtain benefits from their activities. Control is presumed to exist where the Companies own more than one half of the voting
rights (which does not always equate to percentage ownership) unless it can be demonstrated that ownership does not constitute
control. Control does not exist where other parties hold veto rights over significant operating and financial decisions. In assessing
control, potential voting rights that are currently exercisable or convertible are taken into account. The consolidated financial
statements include all the assets, liabilities, revenues, expenses and cash flows of the Companies and their subsidiaries after
eliminating intragroup transactions as noted above.
For partly owned subsidiaries, the allocation of net assets and net earnings to outside shareholders is shown in the line Amounts
attributable to outside equity shareholders on the face of the Group statement of financial position and Group income statement.
Associates:
An associate is an entity, that is neither a subsidiary nor a joint venture, over whose operating and financial policies the
Group exercises significant influence. Significant influence is presumed to exist where the Group has between 20 per cent and 50
per cent of the voting rights, but can also arise where the Group holds less than 20 per cent if it has the power to be actively involved
and influential in policy decisions affecting the entity. The Groups share of the net assets, post tax results and reserves of associates
are included in the financial statements using the equity accounting method. This involves recording the investment initially at cost to
the Group, which therefore includes any goodwill on acquisition, and then, in subsequent periods, adjusting the carrying amount of
the investment to reflect the Groups share of the associates results less any impairment of goodwill and any other changes to the
associates net assets such as dividends. Unrealised gains on transactions between the Group and its associates are eliminated
to the extent of the Groups interest in the associates.
Joint ventures:
A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is
subject to joint control. Joint control is the contractually agreed sharing of control such that significant operating and financial
decisions require the unanimous consent of the parties sharing control. In some situations, joint control exists even though the
Group has an ownership interest of more than 50 per cent because of the veto rights held by joint venture partners. The Group has
two types of joint ventures:
Jointly controlled entities (JCEs):
A JCE is a joint venture that involves the establishment of a corporation, partnership or other
entity in which each venturer has a long term interest. JCEs are accounted for using the equity accounting method.
In addition, for both associates and jointly controlled entities, the carrying value will include any long term debt interests that in substance
form part of the Groups net investment.
Jointly controlled assets (JCAs):
A JCA is a joint venture in which the venturers have joint control over the assets contributed to or
acquired for the purposes of the joint venture. JCAs do not involve the establishment of a corporation, partnership or other entity.
This includes situations where the participants derive benefit from the joint activity through a share of the production, rather than by
receiving a share of the results of trading. The Groups proportionate interest in the assets, liabilities, revenues, expenses and
cash flows of JCAs are incorporated into the Groups financial statements under the appropriate headings.
The Group uses the term Equity accounted units to refer to associates and jointly controlled entities collectively.
Where necessary, adjustments are made to the results of subsidiaries, joint ventures and associates to bring their accounting
policies into line with those used by the Group.
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Acquisitions
On the acquisition of a subsidiary, the purchase method of accounting is used whereby the purchase consideration is allocated to the
identifiable assets, liabilities and contingent liabilities (identifiable net assets) of the subsidiary on the basis of fair value at the date of
acquisition. Provisional fair values allocated at a reporting date are finalised within twelve months of the acquisition date.
When part or all of the amount of purchase consideration is contingent on future events, the cost of the acquisition initially recorded
includes a reasonable estimate of the fair value of the contingent amounts expected to be payable in the future. The cost of the
acquisition is adjusted when revised estimates are made, with corresponding adjustments made to goodwill until the ultimate
outcome is known.
The results of businesses acquired during the year are brought into the consolidated financial statements from the date on which
control, joint control or significant influence commences and taken out of the financial statements from the date on which control,
joint control or significant influence ceases.
Disposals
Individual non current assets or disposal groups (ie groups of assets and liabilities) to be disposed of, by sale or otherwise in a
single transaction, are classified as held for sale if the following criteria are met:
- the carrying amount will be recovered principally through a sale transaction rather than through continuing use, and
- the disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary
for such sales, and
- the sale is highly probable.
Disposal groups held for sale are carried at the lower of their carrying amount and fair value less costs to sell and are
presented separately on the face of the statement of financial position with the related assets and liabilities being presented as
a single asset and a single liability respectively. Comparative statement of financial position information is not restated. Disposal
groups acquired with a view to resale are held at fair value determined at the acquisition date and no profits or losses are recognised
between acquisition date and disposal date.
For a disposal group held for sale that continues to be carried at its carrying amount, the profit on disposal, calculated as net sales
proceeds less the carrying amount, is recognised in the income statement in the period during which control passes to the buyer.
Where the fair value less costs to sell of a disposal group is lower than the carrying amount at the time of classification as held for
sale, the resulting charge is recognised in the income statement in that period. On classification as held for sale, the assets are no
longer depreciated. When the fair value less costs to sell of a disposal group falls below the carrying amount during the period in
which it is classified as held for sale, the charge is included in the income statement at that time.
If the disposal group or groups represent a separate major line of business or geographical area of operations, or are part of a single
coordinated plan to dispose of a separate major line of business or geographical area of operations, or are subsidiaries acquired
exclusively with a view to resale, they are classified as discontinued operations. The net results attributable to such discontinued
operations are shown separately and comparative figures in the income and cash flow statements are restated.
The Group accounts for transactions with outside equity shareholders using the parent company model. Under this model, acquisitions
of an outside equity shareholders interest will generally give rise to additional goodwill and a disposal will give rise to a profit or loss
in the income statement.
(c)
Sales revenue
Sales revenue comprises sales to third parties at invoiced amounts, with most sales being priced ex works, free on board (f.o.b.)
or cost, insurance and freight (c.i.f.). Amounts billed to customers in respect of shipping and handling are classed as sales
revenue where the Group is responsible for carriage, insurance and freight. All shipping and handling costs incurred by the Group
are recognised as operating costs. If the Group is acting solely as an agent, amounts billed to customers are offset against the
relevant costs. Revenue from services is recognised as services are rendered and accepted by the customer.
Sales revenue excludes any applicable sales taxes. Mining royalties are presented as an operating cost or, where they are in
substance a profit based tax, within taxes. Co-product revenues are included in sales revenue.
A large proportion of Group production is sold under medium to long term contracts, but sales revenue is only recognised on
individual sales when persuasive evidence exists that all of the following criteria are met:
- the significant risks and rewards of ownership of the product have been transferred to the buyer;
- neither continuing managerial involvement to the degree usually associated with ownership, nor effective control over the
goods sold, has been retained;
- the amount of revenue can be measured reliably;
- it is probable that the economic benefits associated with the sale will flow to the Group; and
- the costs incurred or to be incurred in respect of the sale can be measured reliably.
These conditions are generally satisfied when title passes to the customer. In most instances sales revenue is recognised when
the product is delivered to the destination specified by the customer, which is typically the vessel on which it will be shipped, the
destination port or the customers premises.
Sales revenue is commonly subject to adjustment based on an inspection of the product by the customer. In such cases, sales
revenue is initially recognised on a provisional basis using the Groups best estimate of contained metal, and adjusted
subsequently.
Certain products are provisionally priced, ie the selling price is subject to final adjustment at the end of a period normally ranging
from 30 to 180 days after delivery to the customer, based on the market price at the relevant quotation point stipulated in the contract.
As is customary in the industry, revenue on provisionally priced sales is recognised based on estimates of the fair value of the
consideration receivable based on forward market prices. At each reporting date provisionally priced metal is marked to market based on
the forward selling price for the quotational period stipulated in the contract. For this purpose, the selling price can be measured reliably
for those products, such as copper, for which there exists an active and freely traded commodity market such as the London Metals
Exchange and the value of product sold by the Group is directly linked to the form in which it is traded on that market.
The marking to market of provisionally priced sales contracts is recorded as an adjustment to sales revenue. Information on provisionally
priced sales contracts is included in note 33.
Certain other of the Groups products, such as iron ore, are sold under long term contracts at a benchmark price which is agreed annually.
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Where the benchmark price has not been finally agreed at the end of an accounting period, revenue is estimated based on the best
available information, having reference to the terms of the contractual agreement and, where appropriate, to sales with other customers.
(d)
Currency translation
The functional currency for each entity in the Group, and for jointly controlled entities and associates, is the currency of the primary
economic environment in which it operates. For many entities, this is the currency of the country in which they operate. Transactions
denominated in other currencies are converted to the functional currency at the exchange rate ruling at the date of the transaction
unless hedge accounting applies, in which case the contract rate is used. Generally, this applies when derivatives or embedded
derivatives are designated as cashflow hedges of the Groups sales. The Groups accounting policies for derivative financial instruments
and hedge accounting are explained in more detail in note (p) (iii) below. Monetary assets and liabilities denominated in foreign currencies
are retranslated at year end exchange rates.
The US dollar is the currency in which the Groups Financial statements are presented, as it most reliably reflects the global business
performance of the Group as a whole.
On consolidation, income statement items are translated from the functional currency into US dollars at average rates of exchange.
Statement of financial position items are translated into US dollars
at year end exchange rates. Exchange differences on the translation
of the net assets of entities with functional currencies other than the US dollar, and any offsetting exchange differences on net debt
hedging those net assets, are recognised directly in the foreign currency translation reserve via the statement of comprehensive
income (net of translation adjustments relating to Rio Tinto Limiteds share capital).
Exchange gains and losses which arise on balances between Group entities are taken to the foreign currency translation reserve
where the intragroup balance is, in substance, part of the Groups net investment in the entity.
The balance of the foreign currency translation reserve relating to an operation that is disposed of is transferred to the income
statement at the time of the disposal.
The Group finances its operations primarily in US dollars but part of the Groups US dollar debt is located in subsidiaries having
functional currencies other than the US dollar. Except as noted above, exchange gains and losses relating to such US dollar debt
are charged or credited to the Groups income statement in the year in which they arise. This means that the impact of financing in
US dollars on the Groups income statement is dependent on the functional currency of the particular subsidiary where the debt is
located.
Exchange differences arising on closure provisions are capitalised at operating mines. Except as noted above, or in note (p) below relating
to derivative contracts, all other exchange differences are charged or credited to the income statement in the year in which they arise.
(e)
Goodwill and intangible assets (excluding exploration and evaluation expenditure)
Goodwill represents the difference between the cost of acquisition and the fair value of the identifiable assets, liabilities and
contingent liabilities acquired. Goodwill is initially determined based on provisional fair values. Fair values are finalised
within 12 months of the acquisition date. Goodwill on acquisition of subsidiaries is separately disclosed and goodwill on acquisitions
of associates and JCEs is included within investments in equity accounted units. For non wholly owned subsidiaries, interests
attributable to outside equity shareholders are initially recorded based on the proportion of the fair values of the identifiable assets
and liabilities and contingent liabilities recognised at acquisition attributable to outside equity shareholders. Where the Groups interest
in the net fair value of the acquired companys identifiable assets, liabilities and contingent liabilities exceeds costs, the values assigned
are reassessed. Any excess after that reassessment is recognised immediately in the income statement.
In 1997 and previous years, goodwill was eliminated against reserves in the year of acquisition as a matter of accounting policy, as
was then permitted under UK GAAP. Such goodwill was not reinstated under subsequent UK accounting standards or on transition to
IFRS.
Goodwill is not amortised; rather it is tested annually for impairment. Goodwill is allocated to the cash generating unit or group of cash
generating units expected to benefit from the related business combination for the purposes of impairment testing which is carried out in
accordance with accounting policy note 1(i). Goodwill impairments cannot be reversed. Investments in equity accounted units are tested
for impairment as a single asset. Goodwill included in the Groups investment in equity accounted units is not tested on an annual basis
therefore but only as part of the Groups overall testing for impairment when a trigger for impairment has been identified.
Intangible assets acquired as part of an acquisition of a business are capitalised separately from goodwill if the asset is separable
or arises from contractual or legal rights, and the fair value can be measured reliably on initial recognition.
Purchased intangible assets are initially recorded at cost and finite life intangible assets are amortised over their useful economic
lives on a straight line or units of production basis, as appropriate. Intangible assets having indefinite lives and intangible assets that
are not yet ready for use are not amortised and are reviewed annually for impairment in accordance with accounting policy note 1(i).
Intangible assets are considered to have indefinite lives when, based on an analysis of all of the relevant factors, there is no
foreseeable limit to the period over which the asset is expected to generate cash flows for the Group. The factors considered in
making this determination include the existence of contractual rights for unlimited terms; or evidence that renewal of the contractual
rights without significant incremental cost can be expected for indefinite periods into the future in view of the Groups future investment
intentions. The life cycles of the products and processes that depend on the asset are also considered.
Where amortisation is calculated on a straight line basis, the following useful lives have been determined for classes of intangible
assets.
Trademark, patented and non patented technology
Trademarks: 14 to 20 years
Patented and non patented technology: 10 to 20 years
Other intangible assets
Internally generated intangible assets and computer software: 2 to 5 years
Other intangible assets: 2 to 20 years
Contract based intangible assets
Power contracts: 2 to 39 years
Other purchase and customer contracts: 5 to 15 years
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(f)
Exploration and evaluation
Exploration and evaluation expenditure comprises costs that are directly attributable to:
- researching and analysing existing exploration data;
- conducting geological studies, exploratory drilling and sampling;
- examining and testing extraction and treatment methods; and/or
- compiling pre-feasibility and feasibility studies.
Exploration expenditure relates to the initial search for deposits with economic potential. Evaluation expenditure arises from a
detailed assessment of deposits or other projects that have been identified as having economic potential.
Expenditure on exploration activity is not capitalised.
Capitalisation of evaluation expenditure commences when there is a high degree of confidence in the projects viability and hence it
is probable that future economic benefits will flow to the Group.
The carrying values of capitalised evaluation amounts are reviewed twice per annum by management and the results of these
reviews are reported to the Audit committee. In the case of
undeveloped projects, there may be only mineralised material to form a
basis for the impairment review. The review is based on a status report regarding the Groups intentions for development of the
undeveloped project. In some cases, the undeveloped projects are regarded as successors to ore bodies, smelters or refineries
currently in production. Where this is the case, it is intended that these will be developed and go into production when the current
source of ore is exhausted or to replace the reduced output, which results where existing smelters and/or refineries are closed. It
is often the case that technological and other improvements will allow successor smelters and/or refineries to more than replace the
capacity of their predecessors.
Subsequent recovery of the resulting carrying value depends on successful development or sale of the undeveloped project.
If a project does not prove viable, all irrecoverable costs associated with the project net of any related impairment provisions
are written off.
(g)
Property, plant and equipment
Property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment losses.
The cost of property, plant and equipment comprises its purchase price, any costs directly attributable to bringing the asset to the
location and condition necessary for it to be capable of operating in the manner intended by management and the estimated close
down and restoration costs associated with the asset. Once a mining project has been established as commercially viable,
expenditure other than that on land, buildings, plant and equipment is capitalised under Mining properties and leases together with
any amount transferred from Exploration and evaluation.
In open pit mining operations, it is necessary to remove overburden and other waste materials to access ore from which minerals
can be extracted economically. The process of mining overburden and waste materials is referred to as stripping. During the
development of a mine (or pit), before production commences, stripping costs are capitalised as part of the investment in
construction of the mine.
Costs associated with commissioning new assets, in the period before they are capable of operating in the manner intended by
management, are capitalised. Development costs incurred after the commencement of production are capitalised to the extent they
are expected to give rise to a future economic benefit. Interest on borrowings related to construction or development projects is
capitalised until the point when substantially all the activities that are necessary to make the asset ready for its intended use are
complete.
(h)
Deferred stripping
As noted above, stripping costs incurred in the development of a mine (or pit) before production commences are capitalised as part
of the cost of constructing the mine (or pit) and subsequently amortised over the life of the mine (or pit) on a units of production basis.
Where a mine operates several open pits that are regarded as separate operations for the purpose of mine planning, stripping
costs are accounted for separately by reference to the ore from each separate pit. If, however, the pits are highly integrated for
the purpose of mine planning, the second and subsequent pits are regarded as extensions of the first pit in accounting for
stripping costs. In such cases, the intial stripping (ie overburden and other waste removal) of the second and subsequent pits
is considered to be production phase stripping relating to the combined operation.
The Groups determination of whether multiple pit mines are considered separate or integrated operations depends on each
mines specific circumstances. The following factors would point towards the stripping costs for the individual pits being accounted
for separately:
- If mining of the second and subsequent pits is conducted consecutively with that of the first pit, rather than concurrently.
- If separate investment decisions are made to develop each
pit, rather than a single investment decision being made at the outset.
- If the pits are operated as separate units in terms of mine planning and the sequencing of overburden and ore mining, rather than
as an integrated unit.
- If expenditures for additional infrastructure to support the second and subsequent pits are relatively large.
- If the pits extract ore from separate and distinct ore bodies, rather than from a single ore body.
This additional factor would point to an integrated operation in accounting for stripping costs:
- If the designs of the second and subsequent pits are significantly influenced by opportunities to optimise output from the
several pits combined, including the co-treatment or blending of the output from the pits.
The relative importance of each of the above factors is considered in each case to determine whether, on balance, the stripping
costs should be attributed to the individual pit or to the combined output from the several pits. As this analysis requires judgment,
another company could make the determination that a mine is separate or integrated differently than the Group, even if the fact
pattern appears to be similar. To the extent the determination is different, the resulting accounting would also be different.
The Group defers stripping costs incurred subsequently,
during the production stage of its operations, for those operations where this is the most appropriate basis for matching the costs against the related economic benefits and the effect is material. This is
generally the case where there are fluctuations in stripping costs over the life of the mine (or pit). The amount of stripping costs
deferred is based on the ratio (Ratio) obtained by dividing the tonnage of waste mined either by the quantity of ore mined or by the
quantity of minerals contained in the ore. Stripping costs incurred in the period are deferred to the extent that the current period Ratio
exceeds the life of mine (or pit) Ratio. Such deferred costs are then charged against reported profits to the extent that, in subsequent
periods, the current period Ratio falls short of the life of mine (or
pit) Ratio. The life of mine (or pit) Ratio is based on proven and
probable reserves of the mine (or pit).
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The life of mine (or pit) waste-to-ore ratio is a function of the pit design(s) and therefore changes to that design will generally
result in changes to the Ratio. Changes in other technical or economic parameters that impact on reserves will also have an impact
on the life of mine (or pit) Ratio even if they do not affect the pit design(s). Changes to the life of mine (or pit) Ratio are accounted for
prospectively.
In the production stage of some mines (or pits), further development of the mine (or pit) requires a phase of unusually high
overburden removal activity that is similar in nature to preproduction mine development. The costs of such unusually high
overburden removal activity are deferred and charged against reported profits in subsequent periods on a units of production basis.
This accounting treatment is consistent with that for stripping costs incurred during the development phase of a mine (or pit), before
production commences.
If the Group were to expense production stage stripping costs as incurred, there would be greater volatility in the year to year results
from operations and excess stripping costs would be expensed at an earlier stage of a mines operation.
Deferred stripping costs are included in Mining properties and leases within property, plant and equipment or in investments in
equity accounted units, as appropriate. These form part of the total investment in the relevant cash generating unit, which is reviewed
for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable. Amortisation of
deferred stripping costs is included in net operating costs or in the Groups share of the results of its equity accounted units, as
appropriate.
(i)
Depreciation and impairment
Depreciation of non current assets
Property, plant and equipment is depreciated over its useful life, or over the remaining life of the mine if shorter. Depreciation commences
when an asset is available for use. The major categories of property, plant and equipment are depreciated on a units of production and/or
straight-line basis as follows:
Units of production basis
For mining properties and leases and certain mining equipment, the economic benefits from the asset are consumed in
a pattern which is linked to the production level. Except as noted below, such assets are depreciated on a units of
production basis.
Straight line basis
Assets within operations for which production is not expected to fluctuate significantly from one year to another or which
have a physical life shorter than the related mine are depreciated on a straight line basis as follows:
Land and Buildings
Land
Not depreciated
Buildings
5 to 50 years
Plant and equipment
Other plant and equipment
3 to 35 years
Power assets
25 to 100 years
Capital work in progress
Not depreciated
Residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date. Changes to
the estimated residual values or useful lives are accounted for prospectively. In applying the units of production method, depreciation is
normally calculated using the quantity of material extracted from the mine in the period as a percentage of the total quantity of material
to be extracted in current and future periods based on proven and
probable reserves and, for some mines, other mineralisation.
Such non reserve material may be included in depreciation calculations in limited circumstances and where there is a high degree
of confidence in its economic extraction. Development costs that relate to a discrete section of an ore body and which only provide
benefit over the life of those reserves, are depreciated over the estimated life of that discrete section. Development costs incurred
which benefit the entire ore body are depreciated over the estimated life of the ore body.
Impairment of non current assets
Property, plant and equipment and intangible assets with finite lives are reviewed for impairment if there is any indication that the
carrying amount may not be recoverable. Impairment is normally assessed at the level of cash-generating units which, in accordance
with IAS 36 Impairment of Assets, are identified as the smallest identifiable group of assets that generates cash inflows, which are
largely independent of the cash inflows from other assets.
In addition, an impairment loss is recognised for any excess of carrying amount over the fair value less costs to sell of a non current
asset or disposal group held for sale.
Goodwill and indefinite-life intangible assets are reviewed for impairment annually or at any time during the year if an indicator of
impairment is considered to exist. Goodwill acquired through business combinations is allocated to groups of cash-generating units that
are expected to benefit from the related business combination. The groups of cash-generating units represent the lowest level within the
Group at which goodwill is monitored for internal management purposes and these groups are not larger than the reporting segments
determined in accordance with IFRS 8 Operating segments.
When an impairment review is undertaken, recoverable amount is assessed by reference to the higher of value in use (being the net
present value of expected future cash flows of the relevant cash generating unit) and fair value less costs to sell (fair value). The best
evidence of fair value is the value obtained from an active market or binding sale agreement. Where neither exists, fair value is based
on the best information available to reflect the amount the Group could receive for the cash generating unit in an arms length
transaction. This is often estimated using discounted cash flow techniques.
Where recoverable amount is assessed using discounted cash flow techniques, the resulting estimates are based on detailed mine
and/or production plans. For value in use, recent cost levels are considered, together with expected changes in costs that are
compatible with the current condition of the business and which meet the requirements of IAS 36.
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The cash flow forecasts are based on best estimates of expected future revenues and costs, including the future cash costs of
production, capital expenditure, close down, restoration and environmental clean up. These may include net cash flows expected to be
realised from extraction, processing and sale of mineralisation that
does not currently qualify for inclusion in proven or probable ore
reserves. Such non reserve material is included where there is a high degree of confidence in its economic extraction. This expectation
is usually based on preliminary drilling and sampling of areas of mineralisation that are contiguous with existing reserves. Typically,
the additional evaluation to achieve reserve status for such material has not yet been done because this would involve incurring costs
earlier than is required for the efficient planning and operation of the mine.
Where the recoverable amount of a cash generating unit is dependent on the life of its associated ore body, expected future cash flows
reflect long term mine plans, which are based on detailed research, analysis and iterative modelling to optimise the level of return from
investment, output and sequence of extraction. The mine plan takes account of all relevant characteristics of the ore body, including
waste to ore ratios, ore grades, haul distances, chemical and metallurgical properties of the ore impacting on process recoveries and
capacities of processing equipment that can be used. The mine plan is therefore the basis for forecasting production output in each
future year and for forecasting production costs.
The Groups cash flow forecasts are based on estimates of future commodity prices, which assume market prices will revert to the
Groups assessment of the long term average price, generally over a period of three to five years. These long term commodity prices,
for most commodities, are derived from an analysis of the marginal costs of the producers of these commodities. These assessments
often differ from current price levels and are updated periodically. For the long run, the Group does not believe that forward prices quoted in
the metals markets provide a good indication of future price levels since forward prices tend to be strongly influenced by spot price levels.
In some cases, prices applying to some part of the future sales volumes of a cash generating unit are predetermined by existing
sales contracts. The effects of such contracts are taken into account in forecasting future cash flows.
The discount rates applied to the future cash flow forecasts represent an estimate of the rate the market would apply having regard to
the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted. The
Groups weighted average cost of capital is used as a starting point for determining the discount rates, with appropriate adjustments
for the risk profile of the countries in which the individual cash generating units operate.
For operations with a functional currency other than the US dollar, the impairment review is undertaken in the relevant functional
currency. The great majority of the Groups sales are based on prices denominated in US dollars. To the extent that the currencies
of countries in which the Group produces commodities strengthen against the US dollar without commodity price offset, cash flows
and, therefore, net present values are reduced.
When calculating value in use, IAS 36 requires that calculations should be based on exchange rates current at the time of the
assessment.
Non-financial assets other than goodwill that have suffered an impairment are tested for possible reversal of the impairment whenever
events or changes in circumstances indicate that the impairment may have reversed.
(j)
Determination of ore reserve estimates
The Group estimates its ore reserves and mineral resources based on information compiled by Competent Persons as defined in
accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves of December
2004 (the JORC code). Reserves, and for certain mines, other mineral resources, determined in this way are used in the calculation
of depreciation, amortisation and impairment charges, the assessment of life of mine stripping ratios and for forecasting the timing
of the payment of close down and restoration costs and clean up costs.
For the purposes of this combined Annual report on Form 20-F estimates of ore reserves have been computed in accordance with the
SECs Industry Guide 7, rather than in accordance with the JORC code, and are shown on pages 29 to 38. Ore reserves presented in
accordance with SEC Industry Guide 7 do not exceed the quantities that, it is estimated, could be extracted economically if future prices
were to be in line with the average of historical prices for the three years to 30 June 2009, or contracted prices where applicable. For this
purpose, contracted prices are applied only to future sales volumes for which the price predetermined by an existing contract; and the
average of historical prices is applied to expected sales volumes in excess of such amounts. Moreover, reported ore reserve estimates
have not been increased above the levels expected to be economic based on Rio Tintos own long term price assumptions. Therefore, a
reduction in commodity prices from the three year average historical price levels would not necessarily give rise to a reduction in reported
ore reserves.
In assessing the life of a mine for accounting purposes,
mineralisation is only taken into account where there is a high
degree of confidence of economic extraction.
There are numerous uncertainties inherent in estimating ore reserves, and assumptions that are valid at the time of estimation may
change significantly when new information becomes available. Changes in the forecast prices of commodities, exchange rates,
production costs or recovery rates may change the economic status of reserves and may, ultimately, result in the reserves being
restated.
(k)
Provisions for close down and restoration and for environmental clean up costs
Close down and restoration costs include the dismantling and demolition of infrastructure and the removal of residual materials
and remediation of disturbed areas. Estimated close down and restoration costs are provided for in the accounting period when
the obligation arising from the related disturbance occurs, whether this occurs during the mine development or during the
production phase, based on the net present value of estimated future costs. Provisions for close down and restoration costs do
not include any additional obligations which are expected to arise from future disturbance. The costs are estimated on the basis of
a closure plan. The cost estimates are updated annually during the life of the operation to reflect known developments,
eg revisions to cost estimates and to the estimated lives of operations, and are subject to formal review at regular intervals.
Close down and restoration costs are a normal consequence of mining, and the majority of close down and restoration expenditure
is incurred at the end of the life of the mine. Although the ultimate cost to be incurred is uncertain, the Groups businesses estimate
their respective costs based on feasibility and engineering studies using current restoration standards and techniques.
The amortisation or unwinding of the discount applied in establishing the net present value of provisions is charged to the income
statement in each accounting period. The amortisation of the discount is shown as a financing cost, rather than as an operating
cost.
The initial closure provision together with other movements in the provisions for close down and restoration costs, including those
resulting from new disturbance, updated cost estimates, changes to the estimated lives of operations and revisions to discount rates
are capitalised within property, plant and equipment. These costs are
then depreciated over the lives of the assets to which they relate.
Where rehabilitation is conducted systematically over the life of the operation, rather than at the time of closure, provision is made
for the estimated outstanding continuous rehabilitation work at each statement of financial position date and the cost is charged to the
income statement.
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Provision is made for the estimated present value of the
costs of environmental clean up obligations outstanding at the
statement of financial position date. These costs are
charged to the income statement. Movements in the environmental clean up provisions are presented as an operating cost, except for the unwind of the discount
which is shown as a financing cost. Remediation procedures may commence soon after the time the disturbance, remediation process and estimated remediation
costs become known, but can continue for many years depending on the nature of the disturbance and the remediation techniques.
As noted above, the ultimate cost of environmental remediation is uncertain and cost estimates can vary in response to many factors including changes to the
relevant legal requirements, the emergence of new restoration techniques or experience at other mine sites. The expected timing of expenditure can also change,
for example in response to changes in ore reserves or production rates. As a result there could be significant adjustments to the provision for close down
and restoration and environmental clean up, which would affect future financial results.
(l)
Inventories
Inventories are valued at the lower of cost and net realisable value, primarily on a weighted average cost basis. Average costs are calculated by reference to
the cost levels experienced in the current month together with those in opening inventory. Cost for raw materials and stores is purchase price and for
partly processed and saleable products is generally the cost of production. For this purpose the costs of production include:
- labour costs, materials and contractor expenses which are directly attributable to the extraction and processing of ore;
- the depreciation of mining properties and leases and of property, plant and equipment used in the extraction and processing of ore; and
- production overheads.
Stockpiles represent ore that has been extracted and is available for further processing. If there is significant uncertainty as to when the stockpiled ore
will be processed it is expensed as incurred. Where the future processing of this ore can be predicted with confidence, eg because it exceeds the mines cut
off grade, it is valued at the lower of cost and net realisable value. If the ore will not be processed within the 12 months after the statement of financial
position date it is included within non current assets. Work in progress inventory includes ore stockpiles and other partly processed material. Quantities
are assessed primarily through surveys and assays.
(m)
Taxation
Current tax is the tax expected to be payable on the taxable income for the year calculated using rates that have been enacted or substantively enacted by the
statement of financial position date. It includes adjustments for tax expected to be payable or recoverable in respect of previous periods.
Temporary differences are the difference between the carrying value of an asset or liability and its tax base. Full provision is made for deferred taxation
on all temporary differences existing at the statement of financial position date with certain limited exceptions. The main exceptions to this principle are
as follows:
- tax payable on the future remittance of the past earnings of subsidiaries, associates and jointly controlled entities is provided for except where the Group
is able to control the remittance of profits and it is probable that there will be no remittance in the foreseeable future;
- deferred tax is not provided on the initial recognition of an asset or liability in a transaction that does not affect accounting profit or taxable profit
and is not a business combination, such as on the recognition of a provision for close down and restoration costs and the related asset or on the recognition
of new finance leases. Furthermore, with the exception of the unwind of discount, deferred tax is not recognised on subsequent changes in the carrying value
of such assets and liabilities, for example where the related assets are depreciated or finance leases are repaid; and
- deferred tax assets are recognised only to the extent that it is probable that they will be recovered. Probable is defined as more likely than not.
Recoverability is assessed having regard to the reasons why the deferred tax asset has arisen and projected future taxable profits for the relevant entity (or
group of entities).
Deferred tax is provided in respect of fair value adjustments on acquisitions. These adjustments may relate to assets such as mining rights that, in general,
are not eligible for income tax allowances. In such cases, the provision for deferred tax is based on the difference between the carrying value of the asset
and its nil income tax base. The existence of a tax base for capital gains tax purposes is not taken into account in determining the deferred tax provision
relating to such mineral rights because it is expected that the carrying amount will be recovered primarily through use and not from the disposal of mineral
rights. Also, the Group is only entitled to a deduction for capital gains tax purposes if the mineral rights are sold or formally relinquished.
Current and deferred tax relating to items recognised directly in equity are recognised in equity and not in the income statement.
(n)
Post employment benefits
For defined benefit post employment plans, the difference between the fair value of the plan assets (if any) and the present value of the plan liabilities is
recognised as an asset or liability on the statement of financial position. Any asset recognised is restricted, if appropriate, to the present value of any
amounts the Group expects to recover by way of refunds from the plan or reductions in future contributions. Actuarial gains and losses arising in the year are
taken to the statement of comprehensive income. For this purpose, actuarial gains and losses comprise both the effects of changes in actuarial assumptions and
experience adjustments arising because of differences between the
previous actuarial assumptions and what has actually
occurred.
Other movements in the net surplus or deficit are recognised in the income statement, including the current service cost, any past service cost and the effect
of any curtailment or settlements. The interest cost less the expected return on assets is also charged to the income statement. The amount charged to the
income statement in respect of these plans is included within operating costs or in the Groups share of the results of equity accounted units as appropriate.
The most significant assumptions used in accounting for pension plans are the long term rate of return on plan assets, the discount rate and the mortality
assumptions. The long term rate of return on plan assets is used to calculate interest income on pension assets, which is credited to the Groups income
statement. The discount rate is used to determine the net present value of future liabilities. The discount rate used is the yield on high quality corporate
bonds with maturity and terms that match those of the post employment obligations as closely as possible. Where there is no developed corporate bond market
in a country, the rate on government bonds is used. Each year, the unwinding of the discount on those liabilities is charged to the Groups income statement
as the interest cost. The mortality assumption is used to project the future stream of benefit payments, which is then discounted to arrive at a net present
value of liabilities.
The values attributed to plan liabilities are assessed in accordance with the advice of independent qualified actuaries.
The Groups contributions to defined contribution
pension plans are charged to the income statement in the period to which the contributions relate.
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(o)
Cash and cash equivalents
For the purposes of the statement of financial position, cash and cash equivalents comprise cash on hand, deposits held on call with banks and short term,
highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value. For the
purposes of the cash flow statement, cash and cash equivalents are net of bank overdrafts that are repayable on demand which are shown as current liabilities
on the statement of financial position.
(p)
Financial instruments
(i) Financial assets
The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, available-for-sale and
held to maturity investments. The classification depends on the purpose for which the financial assets were acquired. Management determines the
classification of financial assets at initial recognition.
(a) Financial assets at fair
value through profit or loss
Derivatives are included in this category unless they are designated as hedges. Assets in this category are classified based on their maturity. Generally, the
Group does not acquire financial assets for the purpose of selling in
the short term.
Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the income statement.
(b) Loans and receivables
Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are classified as
current assets or non current assets based on their maturity date. Loans and receivables comprise trade and other receivables, other financial assets and
cash and cash equivalents in the statement of financial position. Loans and receivables are carried at amortised cost less any impairment.
(c) Available-for-sale
financial assets
Available-for-sale financial assets are non derivatives that are either designated as available for sale or not classified in any of the other categories.
They are included in non current assets unless the Group intends to dispose of the investment within 12 months of the statement of financial position date.
Changes in the fair value of available-for-sale financial assets denominated in a currency other than the functional currency of the holder other than equity
investments, are analysed between translation differences and other changes in the carrying amount of the security. The translation differences are recognised
in profit or loss. Any impairment charges are also recognised in
profit or loss, while other changes in fair value are recognised in
equity.
When financial assets classified as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are included in the income
statement within net operating costs.
Dividends on available-for-sale equity instruments are also recognised in the income statement within interest receivable and similar income when the Groups
right to receive payments is established.
Financial assets not carried at fair value through profit and loss are initially recognised on the trade date at fair value plus transaction costs.
Financial assets are derecognised when the investments mature or are sold, and substantially all the risks and rewards of ownership have been transferred.
(ii) Financial liabilities
Borrowings and other financial liabilities are recognised initially at fair value, net of transaction costs incurred and are subsequently stated at amortised
cost. Any difference between the amounts originally received (net of transaction costs) and the redemption value is recognised in the income statement over the
period to maturity using the effective interest method.
Borrowings and other financial liabilities are classified as current liabilities unless the Group has an unconditional right to defer settlement of the
liability for at least 12 months after the statement of financial position date.
(iii) Derivative financial instruments and hedge
accounting
The Groups policy with regard to Financial risk management is set out in note 33. When the Group enters into derivative contracts these transactions are
designed to reduce exposures related to assets and liabilities, firm commitments or anticipated transactions.
Commodity based contracts that meet the definition of a derivative in IAS 39 but are entered into in accordance with the Groups expected purchase or sales
requirements are recognised in earnings as described in note 1(c) Sales revenue above.
All other derivatives are initially recognised at their fair value on the date the derivative contract is entered into and are subsequently remeasured subject
to IAS 39 at their fair value at each statement of financial position date. The method of recognising the resulting gain or loss depends on whether or not the
derivative is designated as a hedging instrument and, if so, the nature of the item being hedged. The Group designates certain derivatives as either hedges of
the fair value of recognised assets or liabilities or of firm commitments (fair value hedges) or hedges of highly probable forecast transactions (cash flow
hedges).
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to apply hedge
accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the
hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instruments effectiveness in offsetting the
exposure to changes in the hedged items fair value or cash flows attributable to the hedged risk. Hedges that are expected to be highly effective in achieving
offsetting changes in fair value or cash flows are assessed on an ongoing basis to determine that they actually have been highly effective throughout the
financial reporting periods for which they were designated.
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Fair value hedges:
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement,
together with any changes in the fair value of the hedged asset or liability or firm commitment that is attributable to the hedged risk. Where derivatives
are held with different counterparties to the underlying asset or liability or firm commitment, the fair values of the derivative assets and liabilities are
shown separately in the statement of financial position as there is no legal right of offset. The gain or loss relating to the effective portion of interest
rate swaps hedging fixed rate borrowings is recognised in the income statement within interest payable and similar charges.
Cash flow hedges:
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in
equity. The gain or loss relating to the ineffective portion is recognised immediately in the income statement within net operating costs. Amounts
accumulated in equity are recycled in the income statement in the period when the hedged item affects profit or loss, for example when the forecast sale
that is being hedged takes place. The realised gain or loss relating to the effective portion of forward foreign exchange or commodity contracts hedging
sales is recognised in the income statement within sales revenue. When the forecast transaction that is being hedged results in the recognition of a
non financial asset the gains and losses previously deferred in equity are transferred from equity and adjust the cost of the asset. The gains and losses
are recognised subsequently in the income statement within net operating costs when the non financial asset is amortised.
When a cash flow hedging instrument expires or is sold, or when a cash flow hedge no longer meets the criteria for hedge accounting, although the
forecasted transaction is still expected to occur, any cumulative gain or loss relating to the instrument which is held in equity at that time remains in
equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected
to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.
When a fair value interest rate hedging instrument expires or is sold, or when a fair value interest rate hedge no longer meets the criteria for hedge
accounting, the fair value adjustments which have been made to the hedged item are amortised through the income statement over its remaining life.
Derivatives that do not qualify for hedge accounting:
Any derivative contracts that do not qualify for hedge accounting, are marked to market at the
statement of financial position date. In respect of currency swaps, the gain or loss on the swap and the offsetting gain or loss on the financial asset or
liability against which the swap forms an economic hedge are shown in separate lines in the income statement within the lines net gains/(losses) on
derivatives not qualifying for hedge accounting and net exchange gains/(losses) on external debt and intragroup balances. In respect of other
derivatives, the mark to market may give rise to charges or credits to the income statement in periods before the transaction against which the derivative
is held as an economic hedge is recognised. These charges or credits would be recognised in the line net gains/(losses) on derivatives not qualifying
for hedge accounting.
Embedded derivatives:
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and
characteristics are not closely related to their host contracts. In some cases, the embedded derivatives may be designated as hedges and will be accounted
for as described above.
(iv) Fair value
Fair value is the amount at which a financial instrument could be exchanged in an arms length transaction between informed and willing parties. Where
relevant market prices are available, these have been used to determine fair values. In other cases, fair values have been calculated using quotations from
independent financial institutions, or by using valuation techniques consistent with general market practice applicable to the instrument.
(a) The fair values of cash, short term borrowings and loans to joint ventures and associates approximate to their carrying values, as a result of their
short maturity or because they carry floating rates of interest.
(b) The fair values of medium and long term borrowings is calculated as the present value of the estimated future cash flows using an appropriate market based
yield curve. The carrying value of the borrowings is amortised cost.
(c) Derivative financial assets and liabilities are carried at fair value based on published price quotations for the period for which a a liquid active
market exists. Beyond this period, the Groups own assumptions
are used.
The fair values of the various derivative instruments used for hedging purposes are disclosed in note 34. Movements on the hedging reserve are disclosed
within note 30.
(v) Impairment of financial assets
Available-for-sale financial assets
The group assesses at each statement of financial position date whether there is objective evidence that a financial asset or a group of financial assets is
impaired. In the case of equity securities classified as available for sale, an evaluation is made as to whether a decline in fair value is significant or
prolonged based on an analysis of indicators such as significant adverse changes in the technological, market, economic or legal environment in which the
company invested in operates.
If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation)
and its current fair value, less any impairment loss previously recognised in the income statement is transferred from equity to the income statement.
Reversals in respect of equity instruments classified as available-for-sale are not recognised in the income statement. Reversals of impairment losses on
debt instruments are reversed through the income statement, if the increase in fair value of the instrument can be objectively related to an event occurring
after the impairment loss was recognised.
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(vi) De-recognition of financial assets and liabilities
Financial assets
A financial asset is derecognised when its contractual rights to the cash flows that comprise the financial asset expire or substantially all the risks and
rewards of the asset are transferred.
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expired. Gains and losses on derecognition are
recognised within finance income and finance costs respectively.
Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new
liability, and the difference in the respective carrying amounts is recognised in the income statement.
(vii) Trade receivables
Trade receivables are recognised initially at fair value and are subsequently measured at amortised cost reduced by any provision for impairment. A provision
for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due. Indicators of
impairment would include financial difficulties of the debtor, likelihood of the debtors insolvency, default in payment or a significant deterioration in
credit worthiness. Any impairment is recognised in the income statement within net operating costs. When a trade receivable is uncollectable, it is written
off against the allowance account. Subsequent recoveries of amounts previously written off are credited against net operating costs in the income statement.
(viii) Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
(q)
Share based payments
The fair value of cash-settled share plans is recognised as a liability over the vesting period of the awards. Movements in that liability between accounting
dates are recognised as an expense. The grant date fair value of the awards is determined from the market value of the shares at the date of award and
adjusted for any market based vesting conditions attached to the award e.g. relative Total Shareholder Return (TSR) performance. Fair values are
subsequently re-measured at each accounting date to reflect the market value of shares at the measurement date and, where relevant, the number of awards
expected to vest based on the current and anticipated TSR performance. If any awards are ultimately settled in shares, the liability is transferred directly
to equity as part of the consideration for the equity instruments issued.
The Groups equity-settled share plans are settled either by the issue of shares by the relevant parent company, by the purchase of shares on market or by the
use of shares previously acquired as part of a share buyback. The fair value of the share plans is recognised as an expense over the expected vesting period
with a corresponding entry to retained earnings for Rio Tinto plc plans and to other reserves for Rio Tinto Limited plans. If the cost of shares acquired to
satisfy the plans exceeds the expense charged, the excess is taken to the appropriate reserve. The fair value of the share plans is determined at the date of
grant, taking into account any market based vesting conditions attached to the award (eg TSR). The Group uses fair values provided by independent
actuaries calculated using a lattice based option valuation model.
Non market based vesting conditions (e.g. earnings per share targets) are taken into account in estimating the number of awards likely to vest. The estimate
of the number of awards likely to vest is reviewed at each statement of financial position date up to the vesting date, at which point the estimate is
adjusted to reflect the actual awards issued. No adjustment is made after the vesting date even if the awards are forfeited or not exercised.
Further information about the treatment of individual share based
payment plans is provided in note 49.
(r)
Contingencies
Contingent liabilities are not recognised in the financial statements but are disclosed by way of note unless their occurrence is remote.
Contingent assets are not recognised in the financial statement but they are disclosed by way of note if they are deemed probable.
(s)
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net
of tax, from the proceeds.
Where any group company purchases the Groups equity share capital (treasury shares), the consideration paid, including any directly attributable incremental
costs (net of income taxes) is deducted from equity attributable to Rio Tintos equity shareholders. Where such shares are subsequently reissued, any
consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to
Rio Tintos equity shareholders.
Critical accounting policies and estimates
(i)
Dual listed company reporting
As explained in detail in the Outline of Dual Listed Companies Structure and basis of financial statements section on page A-8 the
consolidated financial statements of the Rio Tinto Group deal with the results, assets and liabilities of both of the dual listed companies, Rio
Tinto plc and Rio Tinto Limited, and their subsidiaries. In other words, Rio Tinto plc and Rio Tinto Limited are viewed as a single parent company with their
respective shareholders being the shareholders in that single company.
The
2009 Annual report
satisfies the obligations of Rio Tinto Limited to prepare consolidated accounts under Australian company law, as amended by an order
issued by the Australian Securities and Investments Commission on 27
January 2006 (as amended on 22 December 2006). The 2009 Financial statements disclose the
effect of the adjustments to consolidated IFRS profit, consolidated total comprehensive income and consolidated shareholders funds for the Group that would
be required under the version of IFRS that is applicable in Australia (Australian IFRS).
The US dollar is the presentation currency used in these financial statements, as it most reliably reflects the Groups global business performance.
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(ii)
Asset carrying values
Events or changes in circumstances can give rise to significant impairment charges or reversals of impairment provisions in a particular year.
When such events or changes in circumstances impact on a particular asset or cash generating unit, its carrying value is assessed by reference to its
recoverable amount, being the higher of fair value less costs to sell and value in use (being the net present value of expected future cash flows of the
relevant cash generating unit). This is often estimated using discounted cash flow techniques.
Where the recoverable amounts of Group cash-generating units are assessed by analyses of discounted cash flows, the resulting valuations are particularly
sensitive to changes in long term commodity prices; exchange rates; operating costs; discount rates.
The great majority of the Groups sales are based on prices denominated in US dollars. To the extent that the currencies of countries in which the Group
produces commodities strengthen against the US dollar without commodity price offset; cash flows and, therefore, net present values are reduced. Management
considers that over the long term, there is a tendency for movements in commodity prices to compensate to some extent for movements in the value of the US
dollar (and vice versa). However, such compensating changes are not synchronised and do not fully offset each other.
Reviews of carrying values relate to cash generating units
which, in accordance with IAS 36 Impairment of Assets, are identified as the smallest identifiable
group of assets that generates cash inflows, which are largely independent of the cash inflows
from other assets. In some cases, the business units within the product groups consist of several operations with independent cash generating streams, which
therefore constitute separate cash generating units.
Goodwill acquired through business combinations has been allocated to groups of cash generating units that are being managed as a combined business. These
groups of cash-generating units represent the lowest level within the Group at which goodwill is monitored for internal management purposes and these groups are
not larger than the Groups reporting segments, which are its product groups.
The cash flow forecasts are based on best estimates of expected future revenues and costs. These may include net cash flows expected to be realised from
extraction, processing and sale of mineralised material that does not currently qualify for inclusion in proven or probable ore reserves. Such non reserve
material is included where there is a high degree of confidence in its economic extraction. This expectation is usually based on preliminary drilling and
sampling of areas of mineralisation that are contiguous with existing reserves. Typically, the additional evaluation to achieve reserve status for such material
has not yet been done because this would involve incurring costs earlier than is required for the efficient planning and operation of the mine.
Where the recoverable amount of a cash generating unit is dependent on the life of its associated ore body, expected future cash flows reflect long term mine
plans, which are based on detailed research, analysis and iterative modelling to optimise the level of return from investment, output and sequence of
extraction. The mine plan takes account of all relevant characteristics of the ore body, including waste to ore ratios, ore grades, haul distances, chemical and
metallurgical properties of the ore impacting on process recoveries and capacities of processing equipment that can be used. The mine plan is therefore the
basis for forecasting production output in each future year and for forecasting production costs.
Rio Tintos cash flow forecasts are based on assessments of expected long term commodity prices, which for most commodities are derived from an analysis of the
marginal costs of the producers of the relevant commodities. These assessments often differ from current price levels and are updated regularly.
In some cases, prices applying to some part of the future sales volumes of a cash generating unit are predetermined by existing sales contracts. The effects of
such contracts are taken into account in forecasting future cash flows.
As denoted above, cost levels incorporated in the cash flow forecasts are based on the current long term mine plan or long term production plan for the cash
generating unit. For value in use calculations used in impairment reviews, recent cost levels are considered, together with expected changes in costs that are
compatible with the current condition of the business. Because future cash flows are estimates for the asset in its current condition, value in use does not
reflect future cash flows associated with improving or enhancing an assets performance.
The useful lives of the major assets of a cash generating
unit are often dependent on the life of the orebody to which they relate. Where this is the case, the
lives of mining properties, and their associated refineries, concentrators and other long lived processing equipment generally relate to the expected life of
the orebody. The life of the orebody, in turn, is estimated on the basis of the long term mine plan. Where the major assets of a cash generating unit are not
dependent on the life of a related orebody, management applies
judgement in estimating the remaining service potential of long lived assets. In the case of
smelters, factors affecting the remaining service potential include smelter technology and electricity contracts when the power is not sourced
from the companys own electricity generating capacity.
Forecast cash flows are discounted to present values using Rio Tintos weighted average cost of capital with appropriate adjustment for
the risks associated with the relevant cash flows, to the extent that such risks are not reflected in the forecast cash flows. For final feasibility
studies and ore reserve estimation, internal hurdle rates are used which are generally higher than the weighted average cost of capital.
Value in use and ore reserve estimates are based on the exchange rates current at the time of the evaluation. In final feasibility studies and
estimates of fair value, a forecast of the long term exchange rate is made having regard to spot exchange rates, historical data and external
forecasts.
Table of Contents
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Principal accounting policies
continued
Forecast cash flows for ore reserve estimation for JORC purposes and for impairment testing are generally based on Rio Tintos long term
price forecasts.
All goodwill and intangible assets that are not yet ready for use or have an indefinite life are tested annually for impairment regardless of
whether there has been any change in events or circumstances.
Further details are contained within note
11.
(iii)
Asset lives
Intangible assets are considered to have indefinite lives when, based on an analysis of all of the relevant factors, there is no foreseeable
limit to the period over which the asset is expected to generate cash flows for the Group. The factors considered in making this
determination include the existence of contractual rights for unlimited terms; or evidence that renewal of the contractual rights without
significant incremental cost can be expected for indefinite periods into the future in view of the Groups future investment intentions.
The life cycles of the products and processes that depend on the asset are also considered. A change in the prospectus for
renewal of the contractual rights without a significant incremental cost could impact on the Groups depreciation and
amotisation rates and asset carrying values.
(iv)
Ore reserve estimates
Rio Tinto estimates its ore reserves and mineral resources based on information compiled by Competent Persons as defined in
accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves of December 2004 (the
JORC code). The amounts presented under IFRS and Australian IFRS are based on the reserves, and in some cases mineral resources,
determined under the JORC code.
For the purposes of this combined Annual report on Form 20-F estimates of ore reserves have been computed in accordance with the
SECs Industry Guide 7, rather than in accordance with the JORC code, and are shown on pages 29 to 38. Ore reserves presented in
accordance with SEC Industry Guide 7 do not exceed the quantities that, it is estimated, could be extracted economically if future prices
were to be in line with the average of historical prices for the three years to 30 June 2009, or contracted prices where applicable. For this
purpose, contracted prices are applied only to future sales volumes for which the price predetermined by an existing contract; and the
average of historical prices is applied to expected sales volumes in excess of such amounts. Moreover, reported ore reserve estimates
have not been increased above the levels expected to be economic based on Rio Tintos own long term price assumptions. Therefore, a
reduction in commodity prices from the three year average historical price levels would not necessarily give rise to a reduction in reported
ore reserves.
There are numerous uncertainties inherent in estimating ore reserves and assumptions that are valid at the time of estimation may
change significantly when new information becomes available.
Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic status of
reserves and may, ultimately, result in the reserves being restated. Such changes in reserves could impact on depreciation and
amortisation rates, asset carrying values, deferred stripping calculations and provisions for close down, restoration and environmental
clean up costs.
(v)
Close down, restoration and clean up obligations
Provision is made for environmental remediation costs when the related environmental disturbance occurs, based on the net present
value of estimated future costs.
Close down and restoration costs are a normal consequence of mining, and the majority of close down and restoration expenditure is
incurred at the end of the life of the mine. The costs are estimated on the basis of a closure plan. The cost estimates are calculated
annually during the life of the operation to reflect known developments, e.g. updated cost estimates and revisions to the estimated lives of
operations, and are subject to formal review at regular intervals. Although the ultimate cost to be incurred is uncertain, the Groups
businesses estimate their respective costs based on feasibility and engineering studies using current restoration standards and
techniques. The initial closure provisions together with changes, other than those arising from the unwind of the discount applied in
establishing the net present value of the provision, are capitalised within property, plant and equipment and depreciated over the lives
of the assets to which they relate.
Clean up costs result from environmental damage that was not a necessary consequence of mining, including remediation,
compensation and penalties. These costs are charged to the income statement. Provisions are recognised at the time the damage,
remediation process and estimated remediation costs become known. Remediation procedures may commence soon after this point in
time but may continue for many years depending on the nature of the disturbance and the remediation techniques.
As noted above, the ultimate cost of environmental disturbance is uncertain and cost estimates can vary in response to many
factors including changes to the relevant legal requirements, the emergence of new restoration techniques or experience at other mine
sites.
The expected timing of expenditure can also change, for example in response to changes in ore reserves or production rates or
economic conditions. As a result there could be significant adjustments to the provision for close down and restoration and environmental
clean up, which would affect future financial results.
(vi)
Overburden removal costs
In open pit mining operations, it is necessary to remove overburden and other barren waste materials to access ore from which
minerals can economically be extracted. The process of mining overburden and waste materials is referred to as stripping. During the
development of a mine, before production commences, it is generally
accepted that stripping costs are capitalised as part of the investment in construction of the mine.
Where a mine operates several open pits that are regarded as separate operations for the purpose of mine planning, stripping costs
are accounted for separately by reference to the ore from each separate pit. If, however, the pits are highly integrated for the purpose of
mine planning, the second and subsequent pits are regarded as extensions of the first pit in accounting for stripping costs. In such cases,
the initial stripping of the second and subsequent pits is considered to be production phase stripping relating to the combined operation.
Stripping of waste materials continues during the production stage of the mine or pit. Some mining companies expense these production
stage stripping costs as incurred, while others defer such stripping costs. In operations that experience material fluctuations in the ratio of
Table of Contents
1
Principal accounting policies
continued
waste materials to ore or contained minerals on a year to year basis over the life of the mine or pit, deferral of stripping costs reduces the
volatility of the cost of stripping expensed in individual reporting periods. Those mining companies that expense stripping costs as incurred
will therefore report greater volatility in the results of their operations from period to period.
Rio Tinto defers production stage stripping costs for those operations where this is the most appropriate basis for matching costs with the
related economic benefits and the effect is material. Stripping costs incurred in the period are deferred to the extent that the current period
ratio exceeds the life of mine or pit ratio. Such deferred costs are then charged against reported profits to the extent that, in subsequent
periods, the ratio falls short of the life of mine or pit ratio. The life of mine or pit ratio is based on the proven and probable reserves of the
mine or pit and is obtained by dividing the tonnage of waste mined either by the quantity of ore mined or by the quantity of minerals
contained in the ore. In some operations, the quantity of ore is a more practical basis for matching costs with the related economic
benefits where there are important co-products or where the grade of the ore is relatively stable from year to year.
The life of mine or pit waste-to-ore ratio is a function of an individual mines pit design and therefore changes to that design will
generally result in changes to the ratio. Changes in other technical or economic parameters that impact on reserves will also have
an impact on the life of mine or pit ratio even if they do not affect the pit design. Changes to the life of mine or pit ratio are accounted for
prospectively.
In the production stage of some operations, further development of the mine requires a phase of unusually high overburden removal
activity that is similar in nature to preproduction mine development. The costs of such unusually high overburden removal activity
are deferred and charged against reported profits in subsequent periods on a units-of-production basis. This accounting treatment is
consistent with that for stripping costs incurred during the development phase of a mine or pit, before production commences.
Deferred stripping costs are included in property, plant and equipment or in investment in equity accounted units, as appropriate.
These form part of the total investment in the relevant cash generating unit, which is reviewed for impairment if events or changes in
circumstances indicate that the carrying value may not be recoverable. Amortisation of deferred stripping costs is included in operating
costs or in the Groups share of the results of its jointly controlled entities and associates as appropriate.
During 2009, production stage stripping costs incurred by subsidiaries and equity accounted operations were US$174 million higher
than the amounts charged against pre tax profit (2008: production stage costs exceeded the amounts charged against pre-tax profit
by US$175 million). In addition, US$59 million of deferred stripping has been written off in 2009 as part of the Diamonds businesses
impairment.
The net book value carried forward in property, plant and equipment and in investments in jointly controlled entities and associates
at 31 December 2009 was US$1,171 million (2008: US$1,026 million).
Information about the stripping ratios of the business units, including equity accounted units that account for the majority of the
deferred stripping balance at 31 December 2009, along with the year in which deferred stripping is expected to be fully amortised, is set out
in the following table:
Actual stripping ratio for year
Life of mine stripping ratio
2009
2008
2007
2009
2008
2007
2.13
1.98
1.99
1.21
1.24
1.32
3.42
3.27
3.47
3.00
2.87
3.05
1.17
1.23
0.42
1.02
1.20
0.91
0.11
0.12
0.07
0.14
0.10
0.10
Notes
(a)
Stripping ratios shown are waste to ore.
(b)
Diaviks stripping ratio is disclosed as bench cubic metre per carat. The 2009 deferred stripping ratio is based on a dual pit commercial
production (A154 and A418) with the A154 open pit scheduled to end commercial production in the first quarter of 2010 and the A418 open
pit scheduled to end commercial production in the third quarter of 2012.
(c)
Escondidas stripping ratio is based on waste tonnes to pounds of copper mined.
Rio Tinto Borax capitalised stripping costs as part of a distinct period of new development during the production stage of the mine.
Capitalisation stopped in 2004. The capitalised costs will be fully amortised in 2034.
(vii)
Deferred tax on fair value adjustments
On transition to IFRS with effect from 1 January 2004, deferred tax was provided in respect of fair value adjustments on acquisitions in
previous years. No other adjustments were made to the assets and liabilities recognised in such prior year acquisitions and, accordingly,
shareholders funds were reduced by US$720 million on transition to IFRS primarily as a result of deferred tax on fair value adjustments
to mining rights. In general, these mining rights are not eligible for income tax allowances. In such cases, the provision for deferred tax was
based on the difference between their carrying value and their nil income tax base. The existence of a tax base for capital gains tax
purposes was not taken into account in determining the deferred tax provision relating to such mineral rights because it is expected that the
carrying amount will be recovered primarily through use and not from the disposal of the mineral rights. Also, the Group is only entitled to a
deduction for capital gains tax purposes if the mineral rights are sold or formally relinquished.
For acquisitions after 1 January 2004 provision for such deferred tax on acquisition results in a corresponding increase in the amounts
attributed to acquired assets and/or goodwill under IFRS.
(viii)
Exploration
Under the Groups accounting policy, exploration and evaluation expenditure is not capitalised until the point is reached at which there
is a high degree of confidence in the projects viability and it
is considered probable that future economic benefits will flow to the
Group.
The carrying values of exploration and evaluation assets are reviewed twice per annum by management and the results of these reviews
are reported to the Audit committee. In the case of undeveloped
projects, there may only be mineralisation to form a basis for the
impairment review. The review is based on a status report regarding the Groups intentions for development of the undeveloped project. In
some cases, the undeveloped projects are regarded as successors to ore bodies, smelters or refineries currently in production and may
therefore benefit from existing infrastructure and equipment.
Table of Contents
1
Principal accounting policies
continued
(ix)
Functional currency
The determination of functional currency affects the carrying value of non current assets included in the statement of financial position and,
as a consequence, the amortisation of those assets included in the income statement. It also impacts exchange gains and losses
included in the income statement.
The functional currency for each entity in the Group, and for jointly controlled entities and associates, is the currency of the primary
economic environment in which it operates. For many of Rio Tintos entities, this is the currency of the country in which each operates.
Transactions denominated in currencies other than the functional currency are converted to the functional currency at the exchange
rate ruling at the date of the transaction unless hedge accounting applies. Monetary assets and liabilities denominated in foreign
currencies are retranslated at year end exchange rates.
The US dollar is the currency in which the Groups financial statements are presented, as it most reliably reflects the global business
performance of the Group as a whole.
On consolidation, income statement items are translated into US dollars at average rates of exchange. Statement of financial position
items are translated into US dollars at year end exchange rates. Exchange differences on the translation of the net assets of entities with
functional currencies other than the US dollar, and any offsetting exchange differences on net debt hedging those net assets, are
recognised directly in the foreign currency translation reserve. Exchange gains and losses which arise on balances between Group entities
are taken to the foreign currency translation reserve where the intragroup balance is, in substance, part of the Groups net investment in the
entity.
The balance of the foreign currency translation reserve relating to an operation that is disposed of is transferred to the income
statement at the time of the disposal.
The Group finances its operations primarily in US dollars but part of the Groups US dollar debt is located in subsidiaries having functional
currencies other than the US dollar. Except as noted above, exchange gains and losses relating to such US dollar debt are charged or
credited to the Groups income statement in the year in which they arise. This means that the impact of financing in US dollars on the
Groups income statement is dependent on the functional currency of the particular subsidiary where the debt is located.
With the above exceptions, and except for derivative contracts which qualify as cash flow hedges, exchange differences are charged
or credited to the income statement in the year in which they arise.
(x)
Underlying earnings
The Group presents Underlying earnings as an additional measure to provide greater understanding of the underlying business
performance of its operations. The adjustments made to net earnings
to arrive at underlying earnings are explained in note 2.
(xi)
Post retirement benefits
The difference between the fair value of the plan assets (if any) of post retirement plans and the present value of the plan obligations is
recognised as an asset or liability on the statement of financial position. The Group has adopted the option under IAS 19 to record actuarial
gains and losses directly in the Groups statement of comprehensive income.
The most significant assumptions used in accounting for post retirement plans are the long term rate of return on plan assets, the
discount rate, the expected rate of long term inflation and the mortality assumptions.
The long term rate of return on plan assets is used to calculate interest income on pension assets, which is credited to the Groups
income statement. The mortality assumption is used to project the length of time for which future pension payments will be made and the
inflation assumption is used in projecting future increases in those payments. The discount rate is used to determine the net present value
of those future payments and each year the unwinding of the discount on those liabilities is charged to the Groups income statement.
Valuations are carried out using the projected unit method. The expected rate of return on pension plan assets is determined as
managements best estimate of the long term return on the major asset classes, i.e. equity, debt, property and other, weighted by the
actual allocation of assets among the categories at the measurement date. The expected rate of return is calculated using geometric
averaging.
The sources used to determine managements best estimate of long term returns are numerous and include country specific bond
yields, which may be derived from the market using local bond indices or by analysis of the local bond market, and country specific
inflation and investment market expectations derived from market data and analysts or governments expectations as applicable.
In particular, the Group estimates long term expected returns on equity based on the economic outlook, analysts views and those of
other market commentators. This is the most subjective of the assumptions used and it is reviewed regularly to ensure that it remains
consistent with best practice.
The discount rate used in determining the service cost and interest cost charged to income is the market yield at the start of the year
on high quality corporate bonds. For countries where there is no deep market in such bonds the yield on government bonds is used.
For determining the present value of obligations shown on the statement of financial position, market yields at the statement of financial
position date are used.
Details of the key assumptions are set out in note 50.
For 2009 the charge against income for post retirement benefits net of tax and minorities was US$383 million. This charge included both
pension and post retirement healthcare benefits. The charge is net of the expected return on assets which was US$396 million after tax
and minorities.
In calculating the 2009 expense the average future increase in compensation levels was assumed to be three per cent and this will
increase to 3.6 per cent for 2010 reflecting higher assumed inflation in most territories. The average discount rate used for the Groups
plans in 2009 was 6.2 per cent and the average discount rate used in 2010 will be 5.8 per cent reflecting the net impact of changes in
corporate bond yields in the regions where the Group has pension obligations.
The weighted average expected long term rate of return on assets used to determine 2009 pension cost was 5.9 per cent. This will
Table of Contents
1
Principal accounting policies
continued
increase to 6.4 per cent for 2010. This improvement results mainly from higher government bond
yields in most territories which drives assured return on other asset
classes
Based on the known changes in assumptions noted above and
other expected circumstances, the impact of post retirement costs on the
Groups IFRS net earnings in 2010 would be an expected decrease of some US$40
million to US$423 million. This decrease is mainly attributable to higher
expected return on assets. The actual charge may be impacted by other factors
that cannot be predicted, such as the effect of changes in benefits and
exchange rates.
The table below sets out the potential change in the Groups
2009 net earnings (after tax and outside interests) that would result from
hypothetical changes to post retirement assumptions and estimates. The
sensitivities are viewed for each assumption in isolation although a change in
one assumption is likely to result in some offset elsewhere.
The figures in the below table only show the impact on underlying and net earnings. Changing the
assumptions would also have an impact on the statement of financial position.
IFRS
US$m
65
(65
)
3
(2
)
(9
)
8
15
(15
)
(xii)
Deferred tax potentially recoverable on Group tax losses
The Group has carried forward losses; mainly in the UK, French and Canadian tax
groups; that have the potential to reduce tax charges in future years. Deferred tax assets have
been recognised on these tax losses to the extent their recovery is probable, having regard to the
projected future taxable profits of the relevant tax groups.
The possible tax assets on these losses totalled US$1,882 million at 31 December 2009
(2008: US$1,000 million). Of these, US$1,286 million have been recognised as deferred tax assets (2008: US$899
million), leaving US$596 million (2008: US$101 million) unrecognised, as recovery is not considered
probable. This amount excludes unrecognised capital losses which can only be recovered against
future capital gains.
Within the UK tax group, US$303 million in tax losses have been recognised as
deferred tax assets (2008: US$246 million), with no amounts unrecognised. Within the French tax
group, US$419 million in tax losses have been recognised as deferred tax assets (2008: US$309
million) with US$503 million unrecognised. Within the Canadian tax group, US$393 million in tax
losses have been recognised as deferred tax assets (2008: US$172 million), with no amounts
unrecognised.
(xiii)
Contingencies
Disclosure is made of material contingent liabilities
unless the possibility of any loss arising is considered remote. Contingencies are disclosed in
note 35.
(xiv)
Acquisition accounting
On the acquisition of a subsidiary, the purchase
method of accounting is used whereby the purchase consideration is allocated to the identifiable
assets, liabilities and contingent liabilities (identifiable net assets) on the basis of fair value
at the date of acquisition.
Rio Tinto acquired Alcan Inc during 2007. The Group commissioned
expert valuation consultants to advise on the fair values and asset lives of Alcans assets. The
residue of the purchase price not allocated to specific assets and liabilities has been attributed
to goodwill. The provisional values and asset lives incorporated in the 2007 Financial statements
have been revised in 2008 (within 12 months of the date of acquisition) as permitted by IFRS 3
Business Combinations.
(xv)
Temporary differences related to closure costs and finance
leases
Under the initial recognition rules in paragraphs 15 and
24 of IAS 12 Income Taxes, deferred tax is not provided on the initial recognition of an asset
or liability in a transaction that does not affect accounting profit or taxable profit and is not a
business combination. The Groups interpretation of these initial recognition rules has the result
that no deferred tax asset is provided on the recognition of a provision for close down and
restoration costs and the related asset, or on recognition of assets held under finance leases and
the associated lease liability, except where these are recognised as a consequence of business
combinations.
On creation of a closure provision, for instance, there is no
effect on accounting or taxable profit because the cost is capitalised. As a result, the initial
recognition rules would appear to prevent the recognition of a deferred tax asset in respect of the
provision and of a deferred tax liability in respect of the related capitalised amount.
The temporary differences will reverse in future periods
as the closure asset is depreciated and when tax deductible payments are made that are charged
against the provision. Paragraph 22 of IAS 12 extends the initial recognition rules to the reversal
of temporary differences on assets and liabilities to which the initial recognition rules apply.
Therefore, deferred tax is not recognised on the changes in the carrying amount of the asset which
result from depreciation or from the changes in the provision resulting from expenditure. When tax
relief on expenditure is received this will be credited to the income statement as part of the
current tax charge.
The unwinding of the discount applied in establishing the
present value of the closure costs does affect accounting profit. Therefore, this unwinding of
discount results in the recognition of deferred tax assets.
The application of this initial recognition exemption has
given rise to diversity in practice: some companies do provide for deferred tax on closure cost
provisions and the related capitalised amounts.
The Exposure Draft on Income Tax released
by the IASB in 2009 would require the Group to provide for deferred
tax on closure cost provisions.
If the Group were to provide for deferred
tax on closure costs and finance leases under IFRS the benefit to
Underlying and Net earnings would have been US$41 million (2008: US$39
million) and to equity would have been US$232 million (2008: US$182
million).
Table of Contents
Notes to the 2009 Financial statements
2
Reconciliation of Net earnings to Underlying earnings
Outside
Discontinued
Net
Net
Net
Pre-tax(i)
Taxation
interests
operations(i)
amount
amount
amount
2009
2009
2009
2009
2009
2008
2007
Exclusions from Underlying earnings
US$m
US$m
US$m
US$m
US$m
US$m
US$m
692
(193
)
499
1,470
1
(1,573
)
445
25
(1,103
)
(7,579
)
(113
)
(449
)
(449
)
(827
)
368
(438
)
14
(56
)
960
156
(21
)
12
18
9
(22
)
34
181
(106
)
75
(95
)
(195
)
13
(182
)
(321
)
90
(231
)
(57
)
(56
)
86
(18
)
12
(477
)
(209
)
(925
)
(91
)
39
(449
)
(1,426
)
(6,627
)
(131
)
7,860
(2,076
)
(463
)
(449
)
4,872
3,676
7,312
8,785
(1,985
)
(502
)
6,298
10,303
7,443
Underlying earnings is an alternative measure of earnings, which is reported by Rio Tinto to provide greater understanding of the underlying
business performance of its operations. Underlying earnings and Net earnings both represent amounts attributable to Rio Tinto shareholders.
Items (a) to (h) below are excluded from Net earnings in arriving at Underlying earnings.
(a)
Profits arising on the disposal of interests in businesses in 2009 relate principally to sales of the Corumba iron ore mine in Brazil, the Jacobs
Ranch coal mine, the sale of 52 per cent of Rio Tintos interest in Cloud Peak Energy Resources LLC (CPER) and are partially offset by a loss
from the sale of Alcan Composites.
Profits arising on the disposal of interests in businesses in 2008 relate principally to the sales of the Cortez gold mine and the Greens Creek mine.
Profits arising on the disposal of interests in undeveloped projects which in 2009 includes gains on disposal of undeveloped potash assets in Argentina
and Canada amounting to US$797 million, net of tax, are not excluded from Underlying earnings. The 2008 profits relate principally to the disposal
of the undeveloped Kintyre uranium project in Western Australia.
(b)
Charges relating to impairment of goodwill and other non-current assets other than undeveloped projects but including discontinued operations.
The impairment charges of US$1,103 million for the year ended 31 December 2009 related mainly to Alcan Engineered Products: US$500
million, the Groups aluminium businesses: US$212 million, the Groups diamond businesses: US$348 million and US$43 million in other
impairments. All impairments have been measured based upon an assessment of fair value.
An impairment of US$318 million (31 December 2008: US$960 million; 31 December 2007: nil) relating to the Alcan Packaging business has been recognised
during the year ended 31 December 2009, and is included in Loss after tax from discontinued operations. This impairment is based on an estimate of
fair value less costs to sell, which is based on the Groups best estimate of expected proceeds to be realised on sale of Alcan Packaging, less
an estimate of remaining costs to sell. Loss after tax from discontinued operations of US$449 million (31 December 2008: US$827
million) also includes a US$131 million tax charge (31 December 2008: US$133 million tax benefit) relating to an increase in the Groups estimate of
the tax to be paid on sale of the Alcan Packaging business.
The weak economic environment continued to put downward pressure on the sales prices for these divestment businesses and resulted in the
impairment of the Alcan Packaging businesses and Alcan Engineered Products businesses. The impairment charge related to the Groups
aluminium businesses related mainly to the planned closure of certain smelters and was caused by a decrease in short term price assumptions
at the date of the impairment review.
The impairment to the Groups diamond business was caused by weak demand for luxury items and increased input costs.
The impairment charge of US$7,579 million for the year ended 31 December 2008 related mainly to the Groups aluminium businesses:
US$6,127 million and Alcan Engineered Products: US$980 million. This includes amounts relating to equity accounted units of US$15 million (2007: nil).
(c)
Exchange gains and losses on US dollar debt and intragroup balances.
The 2009 tax on exchange gains and losses on external debt and intragroup balances includes tax charges on gains on US dollar denominated
debt. However, a significant proportion of the pre-tax losses on intragroup balances are not subject to tax.
The 2008 tax on exchange gains and losses on external debt and intragroup balances included a benefit of US$254 million through recovery of
tax relating to prior years. It also included a tax relief for losses on US dollar denominated debt. The gains on intragroup balances were largely
not subject to tax.
(d)
Valuation changes on currency and interest rate derivatives which are ineligible for hedge accounting, other than those embedded in commercial
contracts.
(e)
The currency revaluation of embedded US dollar derivatives contained in contracts held by entities whose functional currency is not the
US dollar.
(f)
Valuation changes on commodity derivatives, including those embedded in commercial contracts, that are ineligible for hedge accounting, but for
which there will be an offsetting change in future Group earnings.
(g)
During 2009, the Group incurred further restructuring costs relating to the cost saving measures announced in December 2008.
Table of Contents
Notes to the 2009 Financial statements
2
Reconciliation of Net earnings to Underlying earnings
continued
(h)
Other credits and charges that, individually, or in aggregate if of a similar type, are of a nature or size to require exclusion in order to provide
additional insight into underlying business performance.
During 2008, the Group incurred advisory and other costs related to the rejection by the Board of the pre-conditional takeover proposal
from BHP Billiton, which was withdrawn in November 2008. These costs totalled US$270 million (net of tax) in 2008 and have been excluded from
Underlying earnings. Other charges excluded from Underlying earnings in 2008 and 2009 comprise of costs relating to acquisitions, disposals
and similar corporate projects.
(i)
Exclusions from Underlying earnings relating to equity accounted units and discontinued operations are stated after tax.
3
Net operating costs
2009
2008
2007
Note
US$m
US$m
US$m
11,501
16,248
6,096
12
387
429
114
13
3,040
3,046
2,001
4
6,198
6,603
3,827
1,771
1,960
1,393
1,828
2,495
1,874
756
815
509
517
(163
)
110
1,539
1,946
1,093
2,420
2,473
1,362
123
(379
)
(45
)
3,127
2,230
2,391
27
930
265
308
193
307
69
(136
)
(259
)
(78
)
(376
)
(375
)
(272
)
33,818
37,641
20,752
(a)
Amounts charged by jointly controlled entities mainly relate to toll processing but also include purchases from jointly controlled entities of bauxite
and aluminium which are then processed by the product group or sold to third parties. Generally, purchases are in proportion to the Groups share of the jointly
controlled entity but in 2009, US$491 million (2008 and 2007: nil) related to purchases of the other venturers share of production.
Information on auditors remuneration is included in note 43.
4
Employment costs
2009
2008
2007
Note
US$m
US$m
US$m
6,130
6,414
3,618
101
113
106
50
524
502
240
49
177
(22
)
220
6,932
7,007
4,184
(734
)
(404
)
(357
)
3
6,198
6,603
3,827
(a)
Post retirement costs include the aggregate service and interest cost of providing post retirement benefits under defined benefit plans, net of
the related expected return on plan assets. Additional detail of the amount charged to the income statement in respect of post retirement plans,
and the treatment of actuarial gains and losses, is shown in note 50.
(b)
Further details of the Groups share options and other share based payment plans are given in note 49.
5
Impairment charges
Outside
Net
Net
Net
Pre-tax
Taxation
interests
amount
amount
amount
2009
2009
2009
2009
2008
2007
US$m
US$m
US$m
US$m
US$m
US$m
(304
)
67
25
(212
)
(6,127
)
(687
)
187
(500
)
(980
)
(525
)
177
(348
)
(107
)
(328
)
(182
)
100
134
(57
)
14
(43
)
(168
)
(19
)
(1,573
)
445
25
(1,103
)
(7,564
)
(113
)
(a)
The majority of the 2009 pre-tax impairment charge relates to property, plant and equipment (US$1,290 million) and intangible assets (US$179 million),
with the remainder relating to investments in equity accounted units. The majority of the 2008 impairment charge related to goodwill
(US$6,621 million), property, plant and equipment (US$1,222 million) and intangible assets (US$129 million), with the remainder relating to
investments in equity accounted units.
(b)
The 2009 impairment charge related mainly to the planned closure of certain smelters, and was caused by a decrease in short term price assumptions
at the date of the impairment review. The recoverable amount was based on fair value less costs to sell, and was assessed in line with the policy in note 1(i).
The 2008 impairment charge related mainly to the write down of goodwill resulting from the annual impairment review, due to the deferral of growth projects
following significant weakening in economic and market circumstances, and increases in input costs.
(c)
Alcan Engineered Products is part of the Alcan group that was acquired in October 2007, and forms part of Other Operations. It manufactures
engineered or fabricated aluminum products.
Table of Contents
Notes to the 2009 Financial statements
5
Impairment charges
continued
On 1 December 2009, Rio Tinto announced that it had completed the sale of Alcan Composites for US$349 million. The Groups intention is to sell
the remaining businesses relating to Alcan Engineered Products. As such, the recoverable amount has been based on fair value less costs to sell,
which represents the Groups best estimate of the expected proceeds to be realised from the sale of the remaining Alcan Engineered Products businesses,
less an estimate of remaining costs to sell. The estimated proceeds are assessed in line with the policy in note 1(i).
The weak economic environment continued to put downward pressure on the sales prices for these divestment businesses and resulted in the
impairment of the property, plant and equipment relating to the Alcan Engineered Products businesses.
(d)
The specific details of the impairment review relating to Alcan Packaging are set out in note 19.
(e)
The impairment to the Groups Diamonds business during 2009 was caused by weak demand for luxury items and higher input costs. Impairment
of property, plant and equipment was assessed by reference to the fair value less costs to sell of the cash generating units (CGUs). The determination
of fair value less costs to sell was based on the policy in note 1(i). This estimate was derived from discounting projections of cash flows, using
valuation assumptions that a buyer might be expected to apply.
Large increases in the estimated capital cost of Argyles underground project triggered an assessment of its recoverable amount during 2007. Impairment of
property, plant and equipment was assessed by reference to fair value less costs to sell. The determination of fair value less costs to sell was based on the
estimated amount that would be obtained from sale in an arms length transaction between knowledgeable and willing parties. This estimate was derived from
discounting projections of cash flows, using valuation assumptions that a buyer might be expected to apply.
(f)
In 2008, full provision was made against the carrying value of the HIsmelt operation, which is within the Iron ore product group. Operations at the
Kwinana plant have been suspended and the Groups future role in developing this technology is under review, leading to doubt about the
recoverability of the amount invested.
(g)
An increase in the Groups long term copper price assumption triggered an assessment of the recoverable amount of Palabora during 2007. The value in use was
based on cash flows forecast in real terms and discounted at a
pre-tax rate of 12 per cent. This led to a full reversal of the
remainder of the impairment provision previously
recognised.
(h)
An announcement of the sale of Tarong led to full reversal in 2007 of the remainder of the impairment provision previously recognised.
(i)
Total impairment charges in 2008, excluded from Underlying earnings, includes US$15 million relating to equity accounted units, which is not
included in the table above.
6
Share of profit after tax of equity accounted units
2009
2008
2007
US$m
US$m
US$m
3,020
3,801
3,818
(1,717
)
(2,158
)
(1,261
)
1,303
1,643
2,557
4
37
7
9
(19
)
(5
)
(55
)
(45
)
(49
)
(7
)
(17
)
(9
)
23
36
1,277
1,635
2,501
(491
)
(596
)
(917
)
786
1,039
1,584
(a)
The sales revenue of equity accounted units excludes charges by jointly controlled entities to Group subsidiaries.
7
Interest receivable and payable
2009
2008
2007
Note
US$m
US$m
US$m
36
43
28
66
107
101
102
150
129
18
54
5
120
204
134
(1,127
)
(1,821
)
(660
)
13
198
203
122
(929
)
(1,618
)
(538
)
(a)
Interest income from other investments comprises US$45 million (2008: US$72 million; 2007: US$80 million) of interest income from bank deposits and
US$21 million (2008: US$35 million; 2007: US$21 million) from other financial assets.
(b)
Interest payable and similar charges relates to interest on bank loans and other borrowings. This includes a fair value loss on the interest rate swaps
designated as hedges of US$59 million and an offseting fair value gain on bank borrowings attributable to interest rate risk of US$59 million (2008: fair value
gain on the interest rate swaps of US$669 million and a US$655 million fair value loss on bank borrowings attributable to interest rate risk; 2007: fair value gain
on the interest rate swaps of US$35 million and a US$38 million fair value loss on bank borrowings attributable to interest rate risk).
Table of Contents
Notes to the 2009 Financial statements
8
Tax on profit
2009
2008
2007
Note
US$m
US$m
US$m
1
(46
)
(150
)
1
(46
)
(150
)
1,829
3,005
1,396
391
(812
)
(18
)
2,220
2,193
1,378
763
1,711
897
(908
)
(116
)
(35
)
(145
)
1,595
862
2,593
4,716
2,293
18
(517
)
(974
)
(203
)
2,076
3,742
2,090
2009
2008
2007
Prima facie tax reconciliation
US$m
US$m
US$m
7,860
9,178
9,836
(786
)
(1,039
)
(1,584
)
7,074
8,139
8,252
1,981
2,279
2,476
136
226
347
919
(28
)
(22
)
(25
)
(392
)
113
206
271
(132
)
(129
)
(173
)
(55
)
(72
)
(81
)
(36
)
(160
)
105
163
70
(167
)
197
11
73
95
46
(208
)
(59
)
43
(110
)
2,076
3,742
2,090
(a)
An analysis of the impact on the tax reconciliation of items excluded in arriving at Underlying earnings is given below:
2009
2008
2007
US$m
US$m
US$m
(5
)
1,806
(1
)
136
332
(723
)
11
(332
)
(33
)
25
(19
)
3
(5
)
51
(8
)
347
919
(28
)
(b)
The non taxable gains on asset disposals relate to undeveloped potash assets in Argentina.
(c)
This tax reconciliation relates to the parent companies, subsidiaries and proportionally consolidated units. The Groups share of profit of equity
accounted units is net of tax charges of US$491 million (2008: US$596 million; 2007: US$917 million).
Table of Contents
Notes to the 2009 Financial statements
8
Tax on profit
continued
(d)
The tax credit/(charge) relating to components of other comprehensive income is as follows:
2009
Attributable to
shareholders
Outside
of Rio Tinto
interests
Total
US$m
US$m
US$m
62
35
97
(10
)
(10
)
(20
)
(1
)
(1
)
1
1
233
(1
)
232
50
50
335
24
359
(38
)
(38
)
297
24
321
2008
Attributable to
shareholders
Outside
of Rio Tinto
interests
Total
US$m
US$m
US$m
99
99
(11
)
(8
)
(19
)
(77
)
(35
)
(112
)
10
10
457
7
464
(179
)
(179
)
299
(36
)
263
(19
)
(19
)
280
(36
)
244
2007
Attributable to
shareholders
Outside
of Rio Tinto
interests
Total
US$m
US$m
US$m
13
13
99
67
166
(28
)
(25
)
(53
)
(9
)
(9
)
2
2
(42
)
(2
)
(44
)
118
118
153
40
193
6
6
159
40
199
(a)
This includes US$319 million (2008: US$205 million) of deferred tax and US$2 million (2008: US$39 million; 2007: US$(4) million) of current tax. See note 18.
Table of Contents
Notes to the 2009 Financial statements
9
Earnings/(loss) per ordinary share
2009
Weighted
2009
average
Per share
2009
number of
amount
Earnings
shares
(a)
US$m
(millions)
(cents)
5,321
1,763.6
301.7
(449
)
1,763.6
(25.5
)
4,872
1,763.6
276.2
5,321
1,769.6
300.7
(449
)
1,769.6
(25.4
)
4,872
1,769.6
275.3
6,298
1,763.6
357.1
6,298
1,769.6
355.9
2008
Weighted
2008
average
Per share
2008
number of
amount
Earnings
shares
(a)
US$m
(millions)
(cents)
4,503
1,570.1
286.8
(827
)
1,570.1
(52.7
)
3,676
1,570.1
234.1
4,503
1,577.3
285.5
(827
)
1,577.3
(52.4
)
3,676
1,577.3
233.1
10,303
1,570.1
656.2
10,303
1,577.3
653.2
2007
Weighted
2007
average
Per share
2007
number of
amount
Earnings
shares
(a)
US$m
(millions)
(cents)
7,312
1,572.9
464.9
1,572.9
7,312
1,572.9
464.9
7,312
1,579.6
462.9
1,579.6
7,312
1,579.6
462.9
7,443
1,572.9
473.2
7,443
1,579.6
471.2
(a)
The rights issues were at a discount to the then market price. Accordingly, earnings per share for all periods up to the date on which the shares were
issued have been adjusted for the bonus element of the issues. The bonus factor for Rio Tinto plc was 1.2105 and for Rio Tinto Limited was 1.2679.
The 2008 and 2007 comparatives have been restated accordingly. Other information relating to the rights issues is shown in note 46.
(b)
The weighted average number of shares is calculated as the average number of Rio Tinto plc shares outstanding not held as treasury shares
of 1,366.1 million (2008 restated: 1,207.8 million; 2007 restated: 1,210.6 million) plus the average number of Rio Tinto Limited shares outstanding not held by Rio
Tinto plc of 397.5 million (2008 and 2007 restated: 362.3 million).
(c)
For the purposes of calculating diluted earnings per share,
the effect of dilutive securities of 6.0 million shares in 2009
(2008 restated: 7.2 million shares; 2007 restated: 6.7 million shares)
is added to the weighted average number of shares described in (b) above. This effect is calculated under the treasury stock method. The Groups only
potential dilutive ordinary shares are share options for which terms and conditions are described in note 49.
(d)
Underlying earnings per share is calculated from Underlying earnings, detailed information on which is given in note 2.
Table of Contents
Notes to the 2009 Financial statements
10
Dividends
2009
2008
2007
US$m
US$m
US$m
670
838
646
679
518
206
228
198
188
145
876
1,933
1,507
55.6c
124.3c
94.8c
45.0c
55.6c
68.7c
Restated
Restated
Restated
dividends
dividends
dividends
per share
per share
per share
2009
2008
2007
37.85p
35.27p
26.69p
29.64p
20.93p
82.97c
76.08c
67.75c
63.25c
49.64c
Restated
Restated
Restated
number
number
number
of shares
of shares
of shares
2009
2008
2007
(millions)
(millions)
(millions)
1,208.4
1,207.8
1,219.3
1,208.2
1,206.5
362.3
362.3
362.3
362.3
362.3
The dividends paid in 2009 are based on the following US cents per share amounts: 2008 final (restated) 55.6 cents, 2009 interim nil (2008 dividends
paid: 2007 final (restated) 68.7 cents, 2008 interim (restated) 55.6 cents; 2007 dividends paid: 2006 final (restated) 52.3 cents, 2007 interim (restated) 42.5
cents). The 2008 and 2007 dividends per share have been restated using a number of shares which reflects the discounted price of the 2009 July rights issue
(the bonus factor). Refer to note 46 for further details.
The number of shares on which the Rio Tinto Limited dividends are based excludes those shares held by Rio Tinto plc, in order that the dividends
shown represent those paid to public shareholders. The number of shares on which Rio Tinto plc dividends are based excludes those held
as treasury shares.
In addition, the Directors of Rio Tinto announced a final dividend of 45.0 cents per share on 11 February 2010. This is expected to result in
payments of US$882 million (Rio Tinto plc: US$686 million, Rio Tinto Limited US$196 million). The dividends will be paid on 1 April 2010 to
Rio Tinto plc shareholders on the register at the close of business on 26 February 2010 and to Rio Tinto Limited shareholders on the register at the
close of business on 2 March 2010.
The proposed Rio Tinto Limited dividends will be franked out of existing franking credits or out of franking credits arising from the payment of
income tax during 2010.
The approximate amount of the Rio Tinto Limited consolidated tax groups retained profits and reserves that could be distributed as dividends and
franked out of credits, that arose from net payments of income tax in respect of periods up to 31 December 2009 (after deducting franking credits
expected to be utilised on the 2009 final dividend declared), is US$13,035 million.
11
Goodwill
2009
2008
US$m
US$m
14,296
21,105
156
(196
)
8
(184
)
(6,621
)
14,268
14,296
20,854
21,123
(6,586
)
(6,827
)
21,123
21,366
(6,827
)
(261
)
Impairment tests for goodwill
At 31 December 2009, goodwill has been allocated as follows:
2009
2008
US$m
US$m
13,691
13,563
446
345
131
388
14,268
14,296
Table of Contents
Notes to the 2009 Financial statements
11
Goodwill
continued
Aluminium
The majority of the Groups goodwill has been allocated to cash generating units within the Aluminium group of cash generating units
(Aluminium), which includes both Alcan and the aluminium businesses previously owned by Rio Tinto, which are now managed as a single
business. A large component of Aluminiums carrying value relates to the former Alcan businesses purchased in 2007.
Aluminiums annual impairment review resulted in no impairment charge for 2009 (2008: US$6,127 million after taxation). The recoverable
amount has been assessed by reference to fair value less costs to sell, using discounted cash flows, in line with the policy in note 1(i).
In arriving at fair value less costs to sell, a post-tax discount rate of 6.8 per cent has been applied to the post-tax cash flows expressed in real
terms. Fair value less costs to sell was determined by estimating cash flows for a period of twelve years. The cash flow projections are based on
long term production plans. These cash flows are then aggregated with a terminal value. The terminal value represents the value of cash flows
beyond the twelfth year, incorporating an annual real term growth rate of one and a half percent, with a corresponding increase in capital expenditure
to support the real term growth rate. Aluminium benefits from a global marketplace with substantial barriers to entry and there are a limited number
of competitors who are able to access effectively the key resources necessary to make aluminium. In addition, continued global industrialisation
is expected to support demand for aluminium. The operating cost levels included in the fair value assessment are calculated based on Aluminiums long term
production plans. Price assumptions for inputs into the aluminium smelting process are based on analysis of market fundamentals and are made
consistent with related output price assumptions. Approximately, 80 per cent of Aluminiums production is located in the first half of the industry cost curve.
Aluminiums intention is to maintain and, where possible, improve its relative position on the industry cash cost curve.
The key assumptions to which the calculation of fair value less costs to sell for Aluminium is most sensitive are the long term aluminium price;
the Canadian dollar and Australian dollar exchange rates against the US dollar; operating costs; and discount rates. Cash flows for the periods
included in the projections were translated into the functional currency using the Groups estimate of future exchange rates. Future selling prices
and operating costs have been estimated in line with the policy in note 1(i). Management believes that, currently, there are no reasonably possible changes in
any of the key assumptions, that would lead to the recoverable amount being below the carrying amount, except for the long term aluminium price.
The long term aluminium price used in the terminal year of the fair value calculations include a component to reflect the impact of carbon pricing. The Groups
price without this carbon element is within the range of market consensus of US$2,014 to US$2,578 per tonne, with an average of US$2,347 per tonne, in real
terms. The carbon element within the long term price used in the fair value calculations is based on a price per tonne of carbon dioxide (CO
2
) emissions.
The price is also comparable to the range published by market commentators of between US$10 and US$35 per tonne of carbon dioxide emissions in real
terms. The relationship between the price per tonne of carbon dioxide emissions and the price per tonne of aluminium is dependent on how many tonnes of
carbon dioxide are used per tonne of aluminium produced by marginal cost smelters. Industry data show that emissions for all producers range from about
two tonnes to in excess of 15 tonnes of CO
2
per tonne of aluminium produced, depending on the primary energy source used to generate the consumed
electric power. The weighted industry average for all producers is approximately 8-10 tonnes of CO
2
per tonne of aluminium. The assumptions used in the
Groups long term aluminium price used in the terminal year imply a carbon emission intensity for the marginal producers above the weighted industry
average but below the top end of the industry range.
Based on the assessment of fair value less costs to sell, the recoverable amount exceeds the carrying value by approximately 21 per cent. The calculation
is highly sensitive to changes in the long term aluminium price, and an eight per cent decrease in the long term aluminium price, in isolation, would lead
to the fair value less costs to sell of Aluminium being equal to its carrying amount. However, management believe that a decrease in the long term
aluminium price would have an associated beneficial impact on input costs which would, to a certain extent, offset the impact of the change in the long term
aluminium price. In addition, the assumed relationship between the long term aluminium price and the Australian and Canadian currencies provides further
natural protection in the long term (see also note 33 Financial risk management).
Australian Iron Ore
The recoverable amount of the goodwill relating to Australian Iron Ore has been assessed by reference to fair value less costs to sell. Valuations are based
on cash flow projections that incorporate best estimates of selling prices, ore grades, production rates, future sustaining capital expenditure and production
costs over the life of each mine. In line with normal practice in the mining industry, the cash flow projections are based on long term mine plans
covering the expected life of each operation. Therefore, the projections generally cover periods well in excess of five years.
Assumptions about selling prices, operating costs, exchange rates, and discount rates are particularly important in these valuations.
Future selling prices and operating costs have been estimated in line with the policy in note 1(i). Long term average selling prices are forecast taking
account of estimates of the costs of producers of each commodity. Forecasts of operating costs are based on detailed mine plans which take account
of all relevant characteristics of the ore body.
Goodwill relating to Australian Iron Ore has been reviewed applying a discount rate of 6.8 per cent to the post-tax cash flows expressed in real terms.
If assessed based on pre-tax cash flows expressed in real terms, the equivalent pre-tax discount rate would be around 9.5 per cent.
There are no reasonably possible changes in key assumptions, which would cause the goodwill allocated to Australian Iron Ore to be impaired.
Other
The recoverability of the remaining goodwill, which is included within Other in the table above, has been assessed by reference to fair value,
using assumptions consistent with those described above. The recoverable amounts were determined to be in excess of carrying
value, and there are no reasonably possible changes in key assumptions that would cause the remaining goodwill to be impaired by a significant
amount.
Table of Contents
Trademarks,
Contract
Exploration
patented and
based
Other
and
non patented
intangible
intangible
evaluation (a)
technology
assets (b)
assets
Total
Year ended 31 December 2009
US$m
US$m
US$m
US$m
US$m
133
444
5,208
500
6,285
10
6
2
71
89
2
53
55
(25
)
(188
)
(174
)
(387
)
(23
)
(156
)
(179
)
(2
)
(2
)
(113
)
(54
)
(167
)
(10
)
46
36
145
289
4,802
494
5,730
145
398
5,445
1,062
7,050
(109
)
(643
)
(568
)
(1,320
)
Trademarks,
Contract
Exploration
patented and
based
Other
and
non patented
intangible
intangible
evaluation (a)
technology
assets (b)
assets
Total
Year ended 31 December 2008
US$m
US$m
US$m
US$m
US$m
152
568
5,500
584
6,804
(10
)
(9
)
(6
)
(69
)
(94
)
105
105
(44
)
(230
)
(155
)
(429
)
(57
)
(69
)
(3
)
(129
)
(9
)
(14
)
13
38
28
133
444
5,208
500
6,285
133
565
5,532
829
7,059
(121
)
(324
)
(329
)
(774
)
152
576
5,529
820
7,077
(8
)
(29
)
(236
)
(273
)
(a)
Exploration and evaluation: useful life not determined until transferred to property, plant &
equipment.
(b)
The Group benefits from certain intangible assets acquired with Alcan including power supply
contracts, customer contracts and water rights.
The water rights are expected to contribute to the efficiency and cost effectiveness of
operations for the foreseeable future: accordingly, these rights are considered to have indefinite
lives and are not subject to amortisation. These water rights constitute the majority of the
amounts in the column of the above table entitled Contract based intangible assets.
Intangible assets with indefinite lives were provisionally valued at acquisition based on the
advice of expert valuation consultants and, subsequently this
valuation was finalised in 2008.
The carrying values are reviewed for impairment annually or at any time an indicator of impairment
is considered to exist. They are reviewed for impairment as part of the cash generating units to
which they relate. The water rights have been allocated to cash generating units within Aluminium.
In 2009, the recoverable amount of these cash generating units was determined based on fair
value less costs to sell, using a methodology and assumptions consistent with those described in
note 1(i) and note 11. No impairment of these indefinite-lived intangible assets was recognised
during 2009, as the fair value less costs to sell of the related cash generating units was in
excess of their carrying amounts.
In 2008, the recoverable amount of these cash generating units was determined based on value
in use, using a methodology and assumptions consistent with those described in note 1(i). No impairment of these indefinite-lived
intangible assets was recognised during 2008, as the value in use of the related cash generating
units was in excess of their carrying amounts.
(c)
There are no intangible assets either pledged as security or held under restriction of title.
2009
2008
2007
US$m
US$m
US$m
486
(440
)
(576
)
(104
)
(205
)
61
(2
)
194
380
(645
)
(321
)
(514
)
(1,134
)
(574
)
894
489
253
380
(645
)
(321
)
Table of Contents
Mining
Land
Plant
Capital
properties
and
and
works in
and leases (a)
buildings (b)
equipment
progress
Total
Year ended 31 December 2009
US$m
US$m
US$m
US$m
US$m
6,118
5,706
22,112
7,817
41,753
1,130
349
2,890
1,257
5,626
268
268
8
9
181
198
242
115
1,346
3,108
4,811
(412
)
(364
)
(2,264
)
(3,040
)
(170
)
(308
)
(473
)
(321
)
(1,272
)
4
(16
)
(49
)
(21
)
(82
)
(250
)
(156
)
(476
)
(349
)
(1,231
)
(319
)
(184
)
(503
)
(6
)
(1,012
)
119
816
3,003
(4,154
)
(216
)
6,738
5,958
25,595
7,512
45,803
11,028
8,973
41,990
8,154
70,145
(4,290
)
(3,015
)
(16,395
)
(642
)
(24,342
)
21
67
88
6
15
1,703
27
1,751
Mining
Land
Plant
Capital
properties
and
and
works in
and leases (a)
buildings (b)
equipment
progress
Total
Year ended 31 December 2008
US$m
US$m
US$m
US$m
US$m
7,131
5,384
23,955
5,498
41,968
(1,075
)
(374
)
(2,787
)
(1,050
)
(5,286
)
380
13
393
13
190
203
234
296
1,861
6,581
8,972
(517
)
(336
)
(2,178
)
(15
)
(3,046
)
(99
)
(219
)
(792
)
(112
)
(1,222
)
(16
)
(64
)
(15
)
(95
)
(48
)
(4
)
(56
)
(6
)
(114
)
99
975
2,173
(3,267
)
(20
)
6,118
5,706
22,112
7,817
41,753
9,496
7,894
35,140
8,091
60,621
(3,378
)
(2,188
)
(13,028
)
(274
)
(18,868
)
10,911
7,347
36,265
5,858
60,381
(3,780
)
(1,963
)
(12,310
)
(360
)
(18,413
)
21
19
40
20
1,400
7
1,427
(a)
Mining properties include deferred stripping costs of US$900 million (2008: US$820 million).
Amortisation of deferred stripping costs of US$3 million (2008: US$35 million; 2007: US$34 million) is included within Depreciation for
the year. There was also US$59 million (2008 and 2007: nil) impairment of deferred stripping costs charged to the income statement.
(b)
At 31 December 2009, the net balance sheet amount for land and buildings includes freehold
US$5,834 million (2008: US$5,557 million); long leasehold US$83 million (2008: US$76 million); and short leasehold US$41 million (2008:
US$73 million).
(c)
Interest is capitalised at a rate based on the Groups cost of borrowing or at the rate on
project specific debt, where applicable. The Groups average borrowing rate used for capitalisation of interest is 4.2 per cent (2008: 3.9 per cent, 2007:
5.0 per cent).
(d)
Transfers and other movements includes reclassifications between categories.
(e)
The finance leases under which these assets are held are disclosed in note 23.
(f)
Excludes assets held under finance leases. Fixed assets pledged as security represent amounts
pledged as collateral against US$224 million (2008: US$234 million) of loans, which are included in note 22.
2009
2008
Summary balance sheet (Rio Tinto share)
US$m
US$m
9,707
7,733
2,329
1,921
12,036
9,654
(1,089
)
(1,551
)
(4,212
)
(3,050
)
(5,301
)
(4,601
)
6,735
5,053
(a)
Further details of investments in jointly controlled entities and associates are set out in
notes 38 and 39.
At 31 December 2009, the quoted value of the Groups share in associates having shares listed
on recognised stock exchanges was US$1,230 million (2008: US$149 million).
Investments in equity accounted units at 31 December 2009 include goodwill of US$1,782
million (2008: US$1,582 million).
Table of Contents
Rio Tinto
Rio Tinto
Group
share of
Group
share of
interest
net debt
interest
net debt
2009
2009
2008
2008
%
US$m
%
US$m
30.0
226
30.0
427
20.0
343
20.0
336
80.0
18
80.0
(13
)
45.0
37
45.0
28
50.0
45
37.0
199
50.0
50
19.7
(58
)
9.9
(10
)
27.6
225
27.6
184
12.0
36
12.0
29
48.3
170
(99
)
(83
)
1,097
993
(a)
In accordance with IAS 28 and IAS 31, the Group includes its net investment in equity accounted
units in its consolidated statement of financial position. This investment is net of the Groups
share of the net debt of such units, which is set out above. Further details of investments in
jointly controlled entities and associates are set out in notes 38 and 39.
(b)
Some of the debt of equity accounted units is subject to financial and general covenants.
(c)
None of the debt shown above is with recourse to Rio Tinto at 31 December 2009 (2008: US$292
million).
(d)
On 9 December, an agreement was signed with a Broad-Based Black Economic Empowerment (BBBEE)
Consortium transferring 26 per cent of the Groups interest in Richards Bay Minerals (RBM) to a
group comprising local communities, investors and RBM employees. At the same time, the Groups
interest in RBM was restructured such that the 2009 net debt balance relates to the restructured
holding in RBM which includes Tisand (Pty) Limited. The 2008 balance relates only to Tisand (Pty)
Limited.
2009
2008
US$m
US$m
1,120
1,100
1,278
1,108
1,410
1,800
1,365
1,765
5,173
5,773
4,889
5,607
284
166
5,173
5,773
Non current
Current
Non current
Current
2009
2009
2008
2008
US$m
US$m
US$m
US$m
14
3,442
3,792
(62
)
(71
)
14
3,380
3,721
320
197
253
247
641
166
962
15
2
137
23
424
435
355
227
373
442
1,375
4,447
1,111
5,401
(a)
Rio Tinto Aluminium has made certain prepayments to jointly controlled entities for toll
processing of bauxite and alumina. These prepayments will be charged to Group operating costs as
processing takes place.
There is no material element of trade and other receivables that is interest bearing.
Due to their short term maturities, the fair value of trade and other receivables approximates
their carrying value.
At 31 December 2009, trade and other receivables of US$62 million (2008: US$71 million) were
impaired. The majority of these receivables were more than 90 days overdue.
Table of Contents
2009
2008
US$m
US$m
262
242
93
101
18
40
81
44
454
427
2009
2008
US$m
US$m
2,687
4,327
297
(287
)
(517
)
(974
)
(319
)
(205
)
(82
)
(14
)
(190
)
211
(174
)
2,073
2,687
4,304
4,054
(2,231
)
(1,367
)
UK
Australian
Other
countries
Total
Total
tax
tax
tax
2009
2008
US$m
US$m
US$m
US$m
US$m
94
1,750
4,138
5,982
6,468
29
616
616
340
47
37
84
493
1
347
246
594
161
95
2,144
5,037
7,276
7,491
(48
)
(15
)
(63
)
(202
)
(71
)
(737
)
(1,100
)
(1,908
)
(1,468
)
(167
)
(30
)
(1,359
)
(1,556
)
(1,129
)
(303
)
(132
)
(851
)
(1,286
)
(899
)
(149
)
(149
)
(1,076
)
(11
)
(95
)
(135
)
(241
)
(30
)
(552
)
(1,191
)
(3,460
)
(5,203
)
(4,804
)
(11
)
177
(554
)
(388
)
(132
)
(32
)
(231
)
35
(228
)
203
11
8
(13
)
6
100
15
(119
)
(344
)
(448
)
20
4
(22
)
(18
)
22
577
41
618
(1,039
)
17
(25
)
(51
)
(59
)
(148
)
391
(908
)
(517
)
(974
)
Table of Contents
(a)
The amounts credited directly to the Statement of comprehensive income relate to tax relief on
share options, provisions for tax on exchange differences on intragroup loans qualifying for
reporting as part of the net investment in subsidiaries, on cash flow hedges and on actuarial
gains and losses on pension schemes and post retirement healthcare plans.
(b)
Other movements include deferred tax relating to tax payable recognised by subsidiary
holding companies on the profits of the equity accounted units to which it relates, as well as the
movements in the estimated tax accrual relating to the divestment of the Alcan Packaging
businesses.
(c)
The deferred tax liability of US$4,304 million (2008: US$4,054 million) includes US$4,091
million (2008: US$3,866 million) due in more than one year. The deferred tax asset of US$2,231
million (2008: US$1,367 million) includes US$2,109 million (2008: US$594 million) receivable in
more than one year.
(d)
US$1,426 million (2008: US$1,311 million) of potential deferred tax assets have not been
recognised as assets in these accounts. There is a time limit for the recovery of US$20 million of
these potential assets (2008: US$32 million). US$620 million (2008: US$1,067 million) of the
potential assets relates to realised or unrealised capital losses, recovery of which depends on
the existence of capital gains in future years. US$503 million (2008: US$543 million) of the
potential assets relates to trading losses in France, which were acquired as part of the Alcan
acquisition.
(e)
Deferred tax is not recognised on the unremitted earnings of subsidiaries and jointly
controlled entities where the Group is able to control the timing of the remittance and it is
probable that there will be no remittance in the foreseeable future. If these earnings were
remitted, tax of US$888 million (2008: US$1,130 million) would be payable. The reduction from
prior year is due to the introduction of an exemption from taxation for foreign dividends in the
UK in 2009.
(f)
There is a limited time period for the recovery of US$401 million (2008:US$187 million) of tax
losses which have been recognised as deferred tax assets in the financial statements.
Non current
Current
Non current
Current
2009
2009
2008
2008
US$m
US$m
US$m
US$m
8
38
60
65
226
87
439
219
150
111
337
168
478
2
73
4
841
694
666
264
(a)
Derivatives and embedded derivatives not designated as hedges include amounts of US$65 million
(2008: US$21 million) which mature beyond one year.
Detailed information relating to other financial assets is given in note 34.
2009
2008
US$m
US$m
831
629
3,402
552
4,233
1,181
(91
)
(147
)
4,142
1,034
Table of Contents
Non-current
Current
Non-current
Current
2009
2009
2008
2008
Borrowings at 31 December
Note
US$m
US$m
US$m
US$m
8,480
19,050
8,846
582
90
23
104
19
61
28
100
100
2,622
2,664
1,878
1,953
871
912
1,967
1,449
23
23
9
69
5
100
406
410
494
497
486
481
495
493
485
496
109
109
437
439
737
737
281
281
322
295
325
63
310
10
337
347
313
322
22,155
756
29,724
9,887
(a)
In support of its acquisition of Alcan Inc. in 2007, the Group arranged for US$40 billion in
term loans and revolving credit facilities, which were fully underwritten and subsequently
syndicated (the Syndicated bank loans). The Syndicated bank loans were divided into four
facilities, as follows:
Facility A
Facility B
Facility C
Facility D
Facility amount (US$ billions)
15
10
5
10
Type
Term Loan
Revolving
Revolving
Term Loan
Due
October 2009
October 2010
October 2012
December 2012
Repayment
Bullet
Bullet
Bullet
Bullet
Total
8.5
8.5
28.0
8.9
9.1
10.0
2.1
5.0
0.9
5.0
The amounts outstanding under these facilities are shown net of the unamortised costs of
obtaining the facilities. In addition to the syndicated bank loan facilities shown above, there are
US$2.3 billion of unused committed bilateral banking facilities of which US$1.0 billion matures
December 2011 and US$1.3 billion matures December 2012.
Facilities A and B were subject to mandatory prepayment and cancellation to the extent of the net
proceeds from disposals of assets and from the raising of funds through equity or capital markets,
subject to specific thresholds and conditions. All of Facilities A and B have been repaid from the
proceeds of the rights issues and disposal proceeds in 2009. The mandatory prepayments also reduced
the available limit on Facility B to US$2.1 billion at 31 December 2009. Refer to note 48 for
partial repayment of Facility D and cancellation of Facility B subsequent to year end.
The main financial covenant to which the Group is subject is the covenant contained in the Alcan
facilities which requires it to maintain a ratio of net borrowings to EBITDA of no greater than 4.5
times. A compliance certificate must be produced for this ratio on a semi annual basis. In
addition, the Facility Agreement contains restrictions on the Group, including that it be required
to observe certain customary covenants including but not limited to (i) maintenance of
authorisations; (ii) compliance with laws; (iii) change of business; (iv) negative pledge (subject
to certain carve outs); (v) environmental laws and licences; and (vi) subsidiaries incurring
financial indebtedness. At 31 December 2009, the Group is in compliance with the covenants
contained in the Alcan facilities.
(b)
Rio Tinto has a US$10 billion (2008: US$10 billion) European Medium Term Note (EMTN) programme
for the issuance of debt, of which approximately US$0.3 billion was outstanding at 31 December 2009
(2008: US$0.3 billion). The Groups EMTNs are swapped to US dollars. The fair value of currency
swap liabilities at 31 December 2009 was US$68 million (2008: US$99 million). These are included in
other financial liabilities in the statement of financial position. Details of the major currency
swaps are shown in
note 34-B(d).
(c)
As at 31 December 2009, US$5 billion of the fixed rate borrowings shown were swapped to
floating rates (2008: none). The fair value of interest rate swap liabilities at 31 December 2009
was US$97 million (2008: nil). These are included in other financial liabilities in the statement
of financial position. Details of the major interest rate swaps are shown in note 34 - B (d). In December 2008, the Group unwound interest rate swaps with a principal of US$5.9 billion to take advantage of market conditions. US$5.0 billion of this amount was designated
as a fair value hedge. As a consequence, the fair value adjustments which had been made to the
hedged debt are being amortised to the income statement over the remaining life of the debt. At 31
December 2009, the carrying value of the debt was US$506 million (2008: US$565 million) higher than
the principal as a result of the unamortised fair value adjustment.
(d)
The Groups borrowings of US$22.9 billion (2008: US$39.6 billion) include some US$4.6 billion
(2008: US$4.6 billion) which relates to borrowings of subsidiaries that are without recourse to the
Group, some of which are subject to various financial and general covenants with which the
respective borrowers were in compliance as at 31 December 2009.
Table of Contents
2009
2008
US$m
US$m
131
97
(8
)
(8
)
123
89
19
28
40
11
29
10
35
40
123
89
2009
2008
US$m
US$m
(38,672
)
(45,191
)
(2,265
)
1,296
2,222
(1,701
)
20
105
19,909
6,864
(75
)
(45
)
(18,861
)
(38,672
)
(22,911
)
(39,611
)
(91
)
(147
)
4,233
1,181
73
4
(165
)
(99
)
(18,861
)
(38,672
)
2009
2008
US$m
US$m
2,211
(1,675
)
(1,912
)
1,523
36
(36
)
30
12
365
(176
)
(a)
Exchange gains/(losses) taken to the income statement include amounts taken to Underlying
earnings.
Further information relating to the currency and interest rate exposures arising from net debt and
related derivatives is given in
note
34-B(d)
on Financial Instruments.
Non current
Current
Non current
Current
2009
2009
2008
2008
US$m
US$m
US$m
US$m
1,959
2,875
197
205
11
269
128
512
243
641
856
770
325
471
125
1,865
79
2,130
141
37
119
41
591
5,759
452
7,197
(a)
Other creditors include deferred consideration of US$119 million (2008: US$318 million)
relating to certain assets acquired. The deferred consideration is included at its net present
value. The amortisation of the discount applied in establishing the
net present value is treated as a finance cost. All other accounts payable and accruals are non interest bearing.
Due to their short term maturities, the fair value of trade and other payables approximates their
carrying value.
Non current
Current
Non current
Current
2009
2009
2008
2008
US$m
US$m
US$m
US$m
371
128
173
84
97
68
95
4
133
167
355
49
37
601
412
268
480
Table of Contents
Close down
Pensions
and
and post
Other
restoration/
retirement
employee
environmental
Total
Total
healthcare(a)
entitlements(b)
(c),(d),(e)
Other(f)
2009
2008
US$m
US$m
US$m
US$m
US$m
US$m
3,713
523
6,011
686
10,933
11,101
123
103
638
49
913
(959
)
268
268
393
(1
)
(94
)
(12
)
(107
)
(42
)
(16
)
(260
)
(1
)
(277
)
23
1
38
62
53
326
356
57
30
769
629
(23
)
(26
)
(33
)
(82
)
(144
)
5
169
7
181
(273
)
1
244
10
255
297
(470
)
(155
)
(123
)
(85
)
(833
)
(912
)
693
693
809
774
774
7
(37
)
31
144
145
(19
)
5,150
795
6,916
833
13,694
10,933
157
465
211
349
1,182
826
4,993
330
6,705
484
12,512
10,107
5,150
795
6,916
833
13,694
10,933
(a)
The main assumptions used to determine the provision for pensions and post retirement healthcare, and other information, including
the expected level of future funding payments in respect of those arrangements, are given in note 50.
(b)
The provision for other employee entitlements includes a provision for long service leave of
US$205 million (2008: US$142 million), based on the relevant entitlements in certain Group
operations. It also includes the provisions relating to the Groups cash-settled share based
payment plans of US$111 million (2008: US$43 million), which are described in note 49.
Furthermore, this includes US$229 million (2008: US$118 million) of provision for redundancy and
severance payments.
(c)
The Groups policy on close down and restoration costs is described in note 1(k). Close down
and restoration costs are a normal consequence of mining, and the majority of close down and
restoration expenditure is incurred at the end of the relevant operation. Remaining lives of
mines and infrastructure range from one to over 50 years with an average, weighted by closure
provision, of around 23 years (2008: 18 years). Although the ultimate cost to be incurred is
uncertain, the Groups businesses estimate their respective costs based on feasibility and
engineering studies using current restoration standards and techniques. Provisions of US$6,916
million (2008: US$6,011 million) for close down and restoration costs and environmental clean up
obligations, include estimates of the effect of future inflation and have been adjusted to reflect
risk. These estimates have been discounted to their present value at an average rate of
approximately four per cent per annum, being an estimate of the long term, risk free, pre-tax
cost of borrowing. Excluding the effects of future inflation, and before discounting, this
provision is equivalent to some US$10.1 billion (2008: US$8.2 billion).
(d)
Some US$505 million (2008: US$495 million) of environmental clean up expenditure is expected
to take place within the next five years. The remainder includes amounts for the operation and
maintenance of remediation facilities in later years. The provision for environmental clean up
expenditure includes the issue described in (e) below.
(e)
In 1995, Kennecott Utah Copper (KUC) agreed with the US Environmental Protection Agency
(EPA) and the State of Utah to complete certain source control projects and perform specific
environmental studies regarding contamination of ground water in the vicinity of the Bingham
Canyon mine. A remedial investigation and feasibility study on the South Zone ground water
contamination, completed in March 1998, identified a range of alternative measures to address this
issue. Additional studies were conducted to refine the workable alternatives. A remedial design
document was completed in 2002. A joint proposal and related agreements with the State of Utah
Natural Resource Damage Trustee, the State of Utah and the Jordan Valley Water Conservancy
District were approved in 2004. KUC entered into a formal agreement with the EPA in 2007 on the
remedial action. In September 2008, the EPA withdrew its proposal to list the Kennecott South
Zone Site on the Superfund National Priorities List. This action recognises that soil clean up
work is complete and that groundwater cleanup is adequately initiated and financial assurance is
in place to assure completion of the work.
(f)
Other provisions deal with a variety of issues and include US$101 million (2008: US$103
million) relating to the Rio Tinto Alcan Foundation commitment in Canada made at the time of the
Alcan acquisition. This involves payments of C$200 million over a five year period.
Table of Contents
2009
Number
2008
Number
2007
Number
2009
2008
2007
(million)
(million)
(million)
US$m
US$m
US$m
1,004.10
1,071.80
1,071.49
160
172
172
524.90
0.18
0.31
86
(67.88
)
(12
)
1,529.00
1,004.10
1,071.80
246
160
172
1 only
1 only
1 only
1 only
1 only
1 only
5.03
5.91
74.55
1,523.97
998.19
997.25
998.19
997.25
1,023.67
524.90
0.18
0.31
0.88
0.76
0.97
(27.70
)
1,523.97
998.19
997.25
171.00
417.13
349.43
27
63
51
1 only
1 only
1 only
1,700.00
1,421.23
1,421.23
273
223
223
(a)
524,460,478 Ordinary shares were issued in July 2009 as a result of the Rio Tinto plc rights
issue. Further details on the rights issues are provided in note 46. 440,018 Ordinary shares were
issued, and 874,925 Ordinary shares reissued from treasury during the year resulting from the
exercise of options under Rio Tinto plc employee share based payment plans with exercise prices
between £7.98p and £29.38p per share (2008: 183,714 shares issued, and 763,919 shares reissued from
treasury with exercise prices between £8.09p and £35.57p per share; 2007: 1,280,893 shares issued
with exercise prices between £8.09p and £27.99p per share).
(b)
The authority for the Company to buy back its Ordinary shares was renewed at the 2008 annual
general meeting. No shares were bought back and held in treasury during 2009 (2008: nil; 2007:
27,700,000 shares at an average buy back price of £30.05p per share).
During 2008, as part of the Groups internal capital management programme, Rio Tinto undertook a
series of transactions, whereby 67,880,000 shares held by Rio Tinto plc in treasury were sold to
Rio Tinto Limited at market value, before being immediately repurchased by Rio Tinto plc for a
nominal amount, pursuant to the share purchase approval granted by Rio Tinto plc shareholders at
the 2008 Rio Tinto plc annual general meeting. The shares were then cancelled upon their repurchase
by Rio Tinto plc.
(c)
The aggregate gross consideration received for new shares issued arising from the right issue
during 2009 was US$12.0 billion (2008 and 2007: nil). The difference between the nominal value and
issue price of the shares issued was credited to merger reserve and expenses associated with the
rights issue were charged against the share premium account.
The aggregate consideration received for treasury shares reissued was US$3 million (2008: US$25
million; 2007: US$24 million) and US$32 million (2008:US$6 million; 2007: US$13 million) for new shares issued resulting from the exercise of options
under Rio Tinto plc employee share based payment plans.
(d)
The Special Voting Share was issued to facilitate the joint voting by shareholders of Rio
Tinto plc and Rio Tinto Limited on Joint Decisions, following the DLC merger. Directors have the
ability to issue an Equalisation Share if that is required under the terms of the DLC Merger
Sharing Agreement. The DLC Dividend Share was issued to facilitate the efficient management of
funds within the DLC structure.
During 2009, US$17 million of shares were purchased by the Employee Share Ownership Trust on behalf
of Rio Tinto plc to satisfy future share options and awards as they vest (2008 and 2007: nil).
Information relating to share options and other share based incentive schemes is given in note 49
on share based payments.
2009
Number
2008
Number
2007
Number
2009
2008
2007
(million)
(million)
(million)
US$m
US$m
US$m
285.75
285.75
285.75
961
1,219
1,099
710
(258
)
120
150.01
3,253
435.76
285.75
285.75
4,924
961
1,219
171.07
171.07
171.07
1 only
1 only
1 only
1 only
1 only
1 only
606.83
456.82
456.82
(a)
150,015,297 Ordinary shares were issued during 2009 as a result of the Rio Tinto Limited rights
issue. The aggregate gross consideration received for new shares issued during 2009 was US$3.2
billion. Further details on the rights issue are provided in note 46.
(b)
The Special Voting Share was issued to facilitate the joint voting by shareholders of Rio
Tinto Limited and Rio Tinto plc on Joint Decisions following the DLC merger. Directors have the
ability to issue an Equalisation Share if that is required under the terms of the DLC Merger
Sharing Agreement.The DLC Dividend Share was issued to facilitate the efficient management of funds within the DLC
structure.
(c)
The authority for the Company to buy back shares was renewed at the 2008 annual general meeting. No
shares were bought back during 2009 (2008 and 2007 nil).
(d)
Share options exercised during the year to 31 December 2009 under various Rio Tinto Limited
employee share option schemes were satisfied by the on-market purchase of Rio Tinto Limited shares
by a third party on the Groups behalf.
(e)
Information relating to share options and other share based incentive schemes is given in note 49
on share based payments.
Table of Contents
2009
2008
2007
US$m
US$m
US$m
12
12
12
12
14
(174
)
(133
)
(206
)
28
(197
)
(7
)
3
(4
)
16
245
89
7
(4
)
52
(88
)
71
(128
)
14
(174
)
(107
)
57
31
357
(173
)
49
(3
)
(1
)
(16
)
10
(7
)
247
(107
)
57
(169
)
19
8
(35
)
(128
)
(64
)
30
27
20
11,936
14
(87
)
55
11,776
(169
)
19
(2,072
)
2,514
735
3,745
(4,168
)
1,795
456
(300
)
1
(13
)
(215
)
(30
)
(13
)
(2
)
99
13
2,103
(2,072
)
2,514
14,010
(2,322
)
2,416
2009
2008
2007
US$m
US$m
US$m
17,134
19,033
14,401
4,497
3,879
7,058
375
(203
)
254
(973
)
(1,299
)
135
269
365
21
4,168
2,742
7,468
(876
)
(1,933
)
(1,507
)
(2,767
)
(1,372
)
(17
)
3
25
24
65
34
19
20,477
17,134
19,033
(a)
The capital redemption reserve was set up to comply with section 170 of the Companies Act
1985, when shares of a company are redeemed or purchased wholly out of the companys profits. The
amount at 31 December 2009 reflects the amount by which the Companys issued share capital is
diminished in accordance with section 733 of the Companies Act 2006.
(b)
The hedging reserve records gains or losses on cash flow hedges that are recognised initially
in equity, as described in note 1(p.iii).
(c)
The available for sale revaluation reserves record fair value gains or losses relating to
available for sale securities, as described in note 1(p.i).
(d)
Other reserves record the cumulative amount recognised under IFRS 2 in respect of options
granted but not exercised to acquire shares in Rio Tinto Limited, less, where applicable, the cost
of shares purchased to satisfy share options exercised. The cumulative amount recognised under
IFRS 2 in respect of options granted but not exercised to acquire shares in Rio Tinto plc is
recorded in retained earnings.
Other reserves includes US$11,936 million which represents the difference between the nominal
value and issue price of the shares issued arising from Rio Tinto plcs rights issue. No share
premium was recorded in the Rio Tinto plc financial statements through the operation of the merger
relief provisions of the Companies Act 1985.
(e)
Exchange differences arising on the translation of the Groups net investment in foreign
controlled companies are taken to the foreign currency translation reserve, as described in note
1(d). The cumulative differences relating to an investment are transferred to the income statement
when the investment is disposed of.
(f)
Retained profit and movements in reserves of subsidiaries include those arising from the
Groups share of proportionally consolidated units.
(g)
This includes actuarial losses relating to equity accounted units of US$126 million (2008:
US$5 million; 2007: US$4 million).
(h)
Includes IFRS 2 charges arising from a Broad Based Black Economic Empowerment (BBBEE)
transaction. The discount to fair value arising from this transaction is treated as a share based
payment in accordance with IFRIC 8 Scope of IFRS 2 (Share based Payments) and AC 503 Accounting
for BEE Transactions.
Table of Contents
2009
2008
2007
Sales revenue (a)
US$m
US$m
US$m
12,598
16,527
9,193
12,038
18,297
6,200
6,206
5,748
8,163
6,709
8,018
4,650
2,618
3,820
3,773
4,743
7,378
1,598
44,912
59,788
33,577
(876
)
(1,723
)
(59
)
44,036
58,065
33,518
(2,211
)
(3,801
)
(3,818
)
41,825
54,264
29,700
4,126
6,017
2,664
(578
)
1,271
1,051
1,866
1,597
3,373
1,420
2,581
498
800
474
475
(188
)
(133
)
167
7,446
11,807
8,228
(28
)
25
(547
)
(366
)
(540
)
5
(133
)
20
(578
)
(1,030
)
(265
)
6,298
10,303
7,443
(1,426
)
(6,627
)
(131
)
4,872
3,676
7,312
763
705
567
1,551
1,543
564
541
442
437
395
415
359
290
361
361
216
332
80
3,756
3,798
2,368
111
91
57
(440
)
(414
)
(310
)
3,427
3,475
2,115
1,868
2,869
1,202
(565
)
875
(73
)
582
261
845
646
1,016
214
37
287
179
(55
)
(68
)
36
2,513
5,240
2,403
(270
)
(99
)
(157
)
(30
)
(31
)
35
(228
)
(380
)
(131
)
1,985
4,730
2,150
91
(988
)
(60
)
2,076
3,742
2,090
2,034
3,494
1,487
2,206
828
836
718
1,206
478
1,379
227
470
5,772
9,591
81
179
(497
)
(1,282
)
5,356
8,488
32
90
(4
)
5,388
8,574
Table of Contents
At 31
At 31
December
December
2009
2008
Operating assets (f)
US$m
US$m
11,263
7,632
35,992
34,735
5,028
4,223
2,538
2,665
4,612
4,287
1,756
3,375
61,189
56,917
3,462
3,204
(1,959
)
(811
)
62,692
59,310
1,320
2,121
6,350
7,649
1,628
1,892
4,304
4,054
848
649
13,694
10,933
4,233
1,181
73
4
2,094
1,823
34,544
30,306
97,236
89,616
Table of Contents
Year ended
Year ended
31 December
31 December
2009
2008
US$m
US$m
(198
)
(203
)
(268
)
(393
)
595
(503
)
(8
)
(412
)
(29
)
(109
)
(10
)
(50
)
(73
)
(32
)
(90
)
4
(497
)
(1,282
)
2009
2008
2007
2009
2008
2007
Gross sales revenue by destination (a)
%
%
%
US$m
US$m
US$m
24.3
18.8
18.2
10,691
10,934
6,115
23.1
22.4
22.6
10,190
12,984
7,582
14.4
20.7
17.9
6,337
12,015
6,012
13.5
15.2
16.8
5,921
8,825
5,633
13.2
11.1
12.0
5,822
6,453
4,011
3.1
3.0
5.2
1,373
1,737
1,742
2.6
3.6
1.9
1,161
2,112
629
5.8
5.2
5.4
2,541
3,005
1,794
100.0
100.0
100.0
44,036
58,065
33,518
(2,211
)
(3,801
)
(3,818
)
41,825
54,264
29,700
(a)
Sales by geographical destination are based on the ultimate country of destination of the
product if known. If the eventual destination of the product sold through
traders is not known, then revenue is allocated to the location of the product at the time when the
risks and rewards of ownership are passed. Rio Tinto is
domiciled in both the United Kingdom and Australia.
(b)
The United States of America and Canada have been combined to form the North America
geographical segment, having regard to the similarity of economic and political conditions in these countries.
2009
2008
2007
US$m
US$m
US$m
12,096
15,975
8,799
11,126
16,542
7,309
5,683
7,011
3,832
4,775
4,495
6,158
2,677
3,388
3,011
972
379
922
450
840
1,020
6,257
9,435
2,467
44,036
58,065
33,518
(2,211
)
(3,801
)
(3,818
)
41,825
54,264
29,700
Table of Contents
32
Operating segments additional information
continued
Non current assets other than financial instruments and deferred tax assets
The total of non-current assets other than financial instruments, deferred tax assets, post-employment benefit assets and assets held for sale
by location is shown below. This is allocated based on the location of the business units holding the assets.
2009
2008
US$m
US$m
31,543
24,080
928
1,034
29,486
32,197
2,298
2,507
2,041
2,813
2,419
1,882
1,665
1,731
587
555
1,212
961
72,179
67,760
2,231
1,367
85
220
841
666
1,593
862
593
306
77,522
71,181
(a)
Includes investments in equity accounted units totalling US$5,312 million (2008: US$4,455
million) which represents the Groups share of net assets
excluding quasi equity loans shown separately within Loans to equity accounted units above.
(b)
The United States of America and Canada have been combined to form the North America
geographical segment, having regard to the similarity of economic and political conditions in these countries.
(c)
Loans to equity accounted units comprise quasi equity loans of US$1,423 million (2008:
US$598million) included in Investments in equity accounted units on the face of the statement of financial position and non-quasi equity loans of
US$170 million (2008: US$264 million) shown separately.
Table of Contents
Notes to the 2009 Financial statements
33
Financial risk management
The Groups policies with regard to financial risk management are clearly defined and consistently
applied. They are a fundamental part of the Groups long term strategy covering areas such as
foreign exchange risk, interest rate risk, commodity price risk, credit risk, liquidity risk and
capital management.
Generally, the Group only sells commodities it has produced but also enters into third party direct
transactions and physical swaps on Alumina to balance the regional positions and to balance the
loading on production facilities. In the long term, natural hedges operate in a number of ways to
help protect and stabilise earnings and cash flow.
The Group has a diverse portfolio of commodities and markets, which have varying responses to the
economic cycle. The relationship between commodity prices and the currencies of most of the
countries in which the Group operates provides further natural protection in the long term.
Production of minerals is an important contributor to the Gross Domestic Products of Australia and
Canada, countries in which the Group has a large presence. As a consequence, the Australian and
Canadian currencies have historically tended to strengthen when commodity prices are high. In
addition, the Groups policy of borrowing primarily at floating US dollar interest rates helps to
counteract the effect of economic and commodity price cycles. These natural hedges significantly
reduce the necessity for using derivatives or other forms of synthetic hedging. Such hedging is
therefore undertaken to a strictly limited degree, as described below.
Treasury operates as a service to the business of the Rio Tinto Group and not as a profit centre.
Strict limits on the size and type of transaction permitted are laid down by the Rio Tinto board
and are subject to rigorous internal controls. Senior management is advised of corporate debt and
currency, commodity and interest rate derivatives through a monthly reporting framework.
Rio Tinto does not acquire or issue derivative financial instruments for trading or speculative
purposes; nor does it believe that it has material exposure to such trading or speculative holdings
through its investments in joint ventures and associates. Derivatives are used to separate funding
and cash management decisions from currency exposure and interest rate management. The Group uses
interest rate and cross currency interest rate swaps in conjunction with longer term funds raised
in the capital markets to achieve a predominantly floating rate obligation which is consistent with
the Groups interest and exchange rate policies, ie. primarily US dollar LIBOR. However, the group
reserves the right to realise swap
positions to take advantage of favourable market conditions and to manage counterparty credit risk.
No material exposure is considered to exist by virtue of the possible non performance of the
counterparties to financial instruments held by the Group.
Derivative contracts are carried at fair value based on published quotations for the period for
which a liquid active market exists. Beyond this period, Rio Tintos own assumptions are used.
(i) Foreign exchange risk
Rio Tintos shareholders equity, earnings and cash flows are influenced by a wide variety of
currencies due to the geographic diversity of the Groups sales and the countries in which it
operates. The US dollar, however, is the currency in which the great majority of the Groups sales
are denominated. Operating costs are influenced by the currencies of those countries where the
Groups mines and processing plants are located and also by those currencies in which the costs of
imported equipment and services are determined. The Australian and Canadian dollars and the Euro
are the most important currencies (apart from the US dollar) influencing costs. In any particular
year, currency fluctuations may have a significant impact on Rio Tintos financial results. A
strengthening of the US dollar against the currencies in which the Groups costs are partly
determined has a positive effect on Rio Tintos Underlying earnings.
Given the dominant role of the US currency in the Groups affairs, the US dollar is the currency in
which financial results are presented both internally and externally. It is also the most
appropriate currency for borrowing and holding surplus cash, although a portion of surplus cash may
also be held in other currencies, most notably Australian dollars, Canadian dollars and the Euro.
This cash is held in order to meet short term operational and capital commitments and, for the
Australian dollar, dividend payments. The Group finances its operations primarily in US dollars,
either directly or using cross currency interest rate swaps. A substantial part of the Groups US
dollar debt is located in subsidiaries having a US dollar functional currency.
However, certain US dollar debt and other financial assets and liabilities including intragroup
balances are not held in the functional currency of the relevant subsidiary. This results in an
accounting exposure to exchange gains and losses as the financial assets and liabilities are
translated into the functional currency of the subsidiary that accounts for those assets and
liabilities. These exchange gains and losses are recorded in the Groups income statement except to
the extent that they can be taken to equity under the Groups accounting policy which is explained
in note 1(d). Gains and losses on US dollar net debt and on intragroup balances are excluded from
Underlying earnings. Other exchange gains and losses are included in Underlying earnings.
As noted above, Rio Tinto hedges interest rate and currency risk on most of its foreign currency
borrowings by entering into cross currency interest rate swaps, and/or interest rate swaps when
required. These have the economic effect of converting fixed rate foreign currency borrowings to
floating rate US dollar borrowings. See section B (d) of note 34 Financial instruments for the
details of currency and interest rate contracts relating to borrowings.
After taking into account relevant swap instruments, almost all of the Groups net debt is either
denominated in US dollars or in the functional currency of the entity holding the debt. The table
below summarises the net debt by currency.
2009
2008
Net (debt)/funds by currency
US$m
US$m
(18,466
)
(38,111
)
(232
)
(351
)
60
52
(35
)
(34
)
(140
)
(77
)
(137
)
(122
)
89
(29
)
(18,861
)
(38,672
)
Table of Contents
Notes to the 2009 Financial statements
33
Financial risk management
continued
Currency hedging
Under normal market conditions, the Group does not generally believe that active currency hedging
of transactions would provide long term benefits to shareholders. The Group reviews on a regular
basis its exposure and reserves the right to enter into hedges to maintain financial stability.
Currency protection measures may be deemed appropriate in specific commercial circumstances and are
subject to strict limits laid down by the Rio Tinto board, typically hedging of capital
expenditures and other significant financial items such as tax and dividends. There is a legacy of
currency forward contracts used to hedge operating cash flow exposures which was acquired with the
North companies. Refer to section B ((a) to (d)) of note 34
- Financial instruments for the currency forward and option contracts used to manage the currency
risk exposures of the Group at 31 December 2009.
Foreign exchange sensitivity: Risks associated with exposure to financial instruments
The sensitivities below give the estimated effect of a ten per cent strengthening in the full year
closing US dollar exchange rate on the value of financial instruments. The impact is expressed in
terms of the effect on net earnings, Underlying earnings and equity, assuming that each exchange
rate moves in isolation. The sensitivities are based on financial assets and liabilities held at
31 December 2009, where balances are not denominated in the functional currency of the subsidiary
and exclude financial assets and liabilities held by equity accounted
units (see note b below). They also exclude
exchange movements on local currency deferred tax balances and provisions. These balances will not
remain constant throughout 2010, and therefore these numbers should be used with care.
At 31 December 2009
Gains/(losses) associated with 10% strengthening of the US dollar
Of which
amount
Closing
Effect on
impacting
exchange
net
Underlying
Impact directly
rate
earnings
earnings
on equity
Currency Exposure
US cents
US$m
US$m
US$m
89
178
66
(1
)
95
5
61
14
13
2
(42
)
144
252
13
73
2
At 31 December 2008
Gains/(losses) associated with 10% strengthening of the US dollar
Of which
amount
Closing
Effect on
impacting
exchange
net
Underlying
Impact directly
rate
earnings
earnings
on equity
Currency Exposure
US cents
US$m
US$m
US$m
69
(27
)
63
3
82
53
99
11
13
19
141
239
18
58
21
2
(a)
The sensitivities show the net sensitivity of US$ exposures in A$ functional currency
companies, for example, and A$ exposures in US$ functional currency companies.
(b)
The sensitivities presented are on financial assets and liabilities of subsidiaries and
proportionally consolidated entities, and do not include non-financial instruments such as
provisions or post retirement benefits, or sensitivities arising from financial assets and
liabilities within equity accounted units. The impact of reflecting these items primarily impacts
the Canadian dollar sensitivity, with a US$69 million reduction in net earnings (2008: US$9 million
reduction), a US$67 million reduction in Underlying earnings (2008: US$21 million reduction), and a
US$114 million increase recorded directly in equity (2008: US$56 million increase).
(c)
Rio Tinto Alcan Inc., which has a US functional currency for accounting purposes, has a
significant amount of US dollar denominated external and intragroup debt held in Canada and is
taxed on a Canadian currency basis. The above sensitivities as at 31 December 2009 for a 10 per
cent strengthening of the US dollar do not include any tax benefit related to this debt because the
capital losses generated would not be recognised. If the US dollar weakened below 97 Canadian cents
then tax charges would begin to be recognised at 15 per cent.
Similarly at 31 December 2008, the above sensitivities for a 10 per cent strengthening of the US
dollar did not include any tax benefit related to this debt because the capital losses generated
would not have been recognised. If the US dollar had weakened below 97 Canadian cents then tax
charges would have begun to be recognised at 15 per cent.
(ii) Interest rate risk
Interest rate risk refers to the risk that the value of a financial instrument or cash flows
associated with the instruments will fluctuate due to changes in market interest rates. Rio
Tintos interest rate management policy is generally to borrow and invest at floating interest
rates. This approach is based on historical correlation between interest rates and commodity
prices. In some circumstances, an element of fixed rate funding may be considered appropriate. As
noted above, Rio Tinto hedges interest rate and currency risk on most of its foreign currency
borrowings by entering into cross currency interest rate swaps in order to convert fixed rate
foreign currency borrowings to floating rate US dollar borrowings. The market value of these
interest rate and cross currency interest rate swaps moves in alignment with the market and at
times can act as alternative sources of funding. The Group reviews the positions on a regular basis
and may act to either monetise in-the-money value or achieve lower costs of funding. See section B
(d) of note 34 Financial instruments for the details of currency and interest rate contracts
relating to borrowings. At the end of 2009, US$8.3 billion (2008: US$10.6 billion) of the Groups
debt was at fixed rates after taking into account interest rate swaps and finance leases, making
the fixed to floating debt ratio 36 per cent fixed to 64 per cent floating.
A monthly Treasury report is provided to senior management which summarises corporate debt exposed
to currency risks and, where applicable, the offsetting derivatives. See section B (d) of note 34
- Financial instruments for the details of currency and interest rate contracts relating to
borrowings. See note 22 Borrowings for the details of debt outstanding at 31 December 2009.
Based on the Groups net debt and other floating rate financial instruments outstanding as at 31
December 2009, the effect on net earnings of a half percentage point increase in US dollar LIBOR
interest rates, with all other variables held constant, would be a reduction of US$37 million
(2008: US$100 million). These balances will not remain constant throughout 2010, however, and
therefore these numbers should be used with care.
Table of Contents
Notes to the 2009 Financial statements
33
Financial risk management
continued
(iii) Commodity price risk
The Groups normal policy is to sell its products at prevailing market prices. Exceptions to this
rule are subject to strict limits laid down by the Rio Tinto board and to rigid internal controls.
Rio Tintos exposure to commodity prices is diversified by virtue of its broad commodity base and
the Group does not generally believe commodity price hedging would provide long term benefit to
shareholders. The Group may hedge certain commitments with some of its customers or suppliers.
Details of commodity derivatives held at 31 December 2009 are set out in note 34 B a) to c)
Financial instruments.
Metals such as copper and aluminium are generally sold under contract, often long term, at prices
determined by reference to prevailing
market prices on terminal markets, such as the London Metal Exchange (LME) and COMEX in New York,
usually at the time of delivery.
Prices fluctuate widely in response to changing levels of supply and demand but, in the long run,
prices are related to the marginal cost of
supply. Gold is also priced in an active market in which prices respond to daily changes in
quantities offered and sought. Newly mined
gold is only one source of supply; investment and disinvestment can be important elements of supply
and demand. Contract prices for
many other natural resource products including iron ore and coal are generally agreed annually or
for longer periods with customers,
although volume commitments vary by product.
Certain products, predominantly copper concentrate, are provisionally priced, ie the selling
price is subject to final adjustment at the end of a
period normally ranging from 30 to 180 days after delivery to the customer, based on the market
price at the relevant quotation point stipulated
in the contract. Revenue on provisionally priced sales is recognised based on estimates of fair
value of the consideration receivable based
on forward market prices. At each reporting date provisionally priced metal is marked to market
based on the forward selling price for the period
stipulated in the contract. For this purpose, the selling price can be measured reliably for those
products, such as copper for which there
exists an active and freely traded commodity market such as the London Metal Exchange and the value
of product sold by the Group is directly
linked to the form in which it is traded on that market.
The marking to market of provisionally priced sales contracts is recorded as an adjustment to sales
revenue.
At the end of 2009, the Group had 267 million pounds of copper sales (2008: 183 million pounds)
that were provisionally priced at US 335 cents
per pound (2008: US 133 cents per pound). The final price of these sales will be determined during
the first half of 2010. A ten per cent
change in the price of copper realised on the provisionally priced sales would increase or reduce
net earnings by US$55 million (2008:
US$15 million).
Approximately 27 per cent of Rio Tintos 2009 Underlying earnings from operating businesses came
from products whose prices were terminal
market related and the remainder came from products priced by direct negotiation.
Commodity price sensitivity: Risks associated with derivatives
The table below summarises the impact of changes in the market price on the following commodity
derivatives including those aluminium forward
and option contracts embedded in electricity purchase contracts outstanding at 31 December 2009,
but excluding the impact of commodity and
embedded derivatives held by equity accounted units (see note a). The impact is expressed in terms
of the resulting change in the Groups net earnings for the
year or, where applicable, the change in equity. The sensitivities are based on the assumption
that the market price increases by ten per cent with all
other variables held constant. The Groups own use contracts are excluded from the sensitivity
analysis below as they are outside the scope of IAS 39.
Such contracts to buy or sell non financial items can be net settled but were entered into and
continue to be held for the purpose of the receipt or
delivery of the non financial item in accordance with the business units expected purchase, sale or
usage requirements.
These sensitivities should be used with care. The relationship between currencies and commodity
prices is a complex one; changes in exchange
rates can influence commodity prices and vice versa.
At 31 December 2009
Gains/(losses) associated with 10% increase from year end price
Effect on
Effect directly on equity
net earnings
attributable to Rio Tinto
Products
US$m
US$m
(1
)
(18
)
(19
)
(24
)
3
(17
)
(42
)
At 31 December 2008
Gains/(losses) associated with 10% increase from year end price
Effect on
Effect directly on equity
net earnings
attributable to Rio Tinto
Products
US$m
US$m
(13
)
(8
)
21
(16
)
21
(37
)
(a)
The sensitivities presented do not include those arising from balances within equity accounted
units. The impact of reflecting equity accounted units primarily
relates to the aluminium sensitivity, with a US$55 million reduction in net earnings (2008:US$83
million reduction).
Table of Contents
Notes to the 2009 Financial statements
33
Financial risk management
continued
(iv) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial
instrument or customer contract, leading to a financial loss.
The Group is exposed to credit risk from its operating activities (primarily from customer
receivables) and from its financing activities, including
deposits with banks and financial institutions, foreign exchange transactions and other financial
instruments.
Credit risks related to receivables
Customer credit risk is managed by each business unit subject to Rio Tintos established policy,
procedures and controls relating to customer
credit risk management. Credit limits are established for all customers based on internal or
external rating criteria. Where customers are
rated by an independent credit rating agency, these ratings are used to set credit limits. In
circumstances where no independent credit
rating exists, the credit quality of the customer is assessed based on an extensive credit rating
scorecard. Outstanding customer receivables
are regularly monitored and any credit concerns highlighted to senior management. High risk
shipments to major customers are generally
covered by letters of credit or other forms of credit insurance.
At 31 December 2009, the Group had approximately 70 customers (2008: 86 customers) that owed the
Group more than US$5 million
each and these balances accounted for approximately 52 per cent (2008: 75 per cent) of all
receivables owing. There were 17 customers (2008:
21 customers) with balances greater than US$20 million accounting for just over 30 per cent (2008:
49 per cent) of total amounts receivable.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of
financial assets mentioned on page A-55.
The Group does not hold collateral as security for any trade receivables.
Credit risk related to financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by Group Treasury in
accordance with a Board approved policy.
Investments of surplus funds are made only with approved counterparties and within credit limits
assigned to each counterparty.
Counterparty credit limits are reviewed by the Rio Tinto Board on an annual basis, and may be
updated throughout the year subject to
approval of the Rio Tinto Finance Committee. The limits are set to minimise the concentration of
risks and therefore mitigate the potential for
financial loss through counterparty failure.
No material exposure is considered to exist by virtue of the possible non performance of the
counterparties to financial instruments.
(v) Liquidity and Capital risk management
The Groups total capital is defined as Rio Tintos shareholders funds plus funds attributable to
outside equity shareholders plus net debt,
and amounted to US$65 billion at 31 December 2009 (2008: US$61 billion).
The Groups over-riding objectives when managing capital are to safeguard the business as a going
concern; to maximise returns for
shareholders and benefits for other stakeholders and to maintain an optimal capital structure in
order to provide a high degree of financial
flexibility at the lowest cost of capital.
The unified credit status of the Group is maintained through cross guarantees whereby contractual
obligations of Rio Tinto plc and Rio
Tinto Limited are automatically guaranteed by the other. Following the successful US$15.2 billion
rights issues in July 2009, Moodys and Standard & Poors
(S&P) improved the Groups credit rating. S&P
upgraded the long term rating to BBB+ from BBB and
its short term credit ratings to A-2 from A-3, the outlook
improved from negative to stable. Moodys affirmed the long term rating of Baa1 and short-term
corporate credit rating of P-2 also with a stable outlook.
Credit ratings are not a recommendation to purchase, hold or
sell securities, and are subject to revision or withdrawal at any
time by the rating organization.
In 2007, Rio Tinto acquired Alcan which was financed using a US$40 billion syndicated bank
facility. As at 31 December 2009, there was US$8.5 billion
drawn on this facility compared to US$28 billion at 31 December 2008. The facility had two term
facilities (Facilities A and D) of which Facility A was
fully repaid in 2009 and US$8.5 billion remained on Facility D at 31 December 2009. Revolving
Facility B had an initial capacity of US$10 billion. As at 31
December 2009, only US$2.1 billion of the facility remained available to draw upon. The maturity
date for Facility B is October 2010. Revolving Facility C is for
an amount of up to US$5 billion, all of which is undrawn. The maturity date for Facility C is
October 2012. The maturity date for Facility D is December 2012.
Advances under each Facility generally bear interest at rates per annum equal to the margin for
that Facility plus LIBOR and any mandatory costs. Refer to note
48 Events after the statement of financial position date for the partial repayment of Facility D
and cancellation of Facility B post year end.
The Groups back-up facilities consist of revolving tranches of the syndicated bank facility and a
series of standby bi-lateral bank facilites. These standby
bi-lateral bank facilities contain no financial covenants and are not affected to any material
extent by a change in the Groups credit rating. The syndicated
bank facility contains a financial covenant requiring the maintenance of a ratio of no greater than
4.5 times of net borrowings to EBITDA.
At 31 December 2009, the Group has available committed financing of US$5.0 billion under Alcan
Facility C, US$2.1 billion under Facility B and US$2.3
billion unused committed bilateral banking facilities. Refer to note 22 Borrowings for further
details. Refer to note 48 Events after the statement of financial position
date for the partial repayment of Facility D and cancellation of Facility B post year end.
The Groups net debt as a percentage of total capital was 29 per cent at 31 December 2009 (2008: 63
per cent).
Table of Contents
Trade
Borrowings
Expected
Derivatives
Other
Total
and other
before
future interest
related to
financial
financial
payables
swaps
payments (a)
net debt
liabilities
liabilities
US$m
US$m
US$m
US$m
US$m
US$m
(4,416
)
(878
)
(942
)
(52
)
(365
)
(6,653
)
(463
)
(884
)
(203
)
(1,550
)
(9,087
)
(910
)
2
(204
)
(10,199
)
(3,269
)
(840
)
(177
)
(4,286
)
(2,767
)
(591
)
(58
)
(3,416
)
(6,725
)
(3,857
)
(162
)
(54
)
(10,798
)
(4,416
)
(23,189
)
(8,024
)
(212
)
(1,061
)
(36,902
)
At 31 December 2008
Trade
Borrowings
Expected
Derivatives
Other
Total
and other
before
future interest
related to
financial
financial
payables
swaps
payments (a)
net debt
liabilities
liabilities
US$m
US$m
US$m
US$m
US$m
US$m
(5,478
)
(10,079
)
(1,375
)
(414
)
(17,346
)
(9,485
)
(1,139
)
(85
)
(129
)
(10,838
)
(417
)
(914
)
(130
)
(1,461
)
(10,525
)
(744
)
(113
)
(11,382
)
(3,112
)
(486
)
(106
)
(3,704
)
(5,760
)
(3,366
)
(123
)
(9,249
)
(5,478
)
(39,378
)
(8,024
)
(85
)
(1,015
)
(53,980
)
(a)
Interest payments have been projected using interest rates applicable at 31 December, including the impact of interest rate swap agreements,
where appropriate. Much of the debt is subject to variable interest rates. Future interest payments are therefore subject to change in line with
market rates.
34
Financial instruments
Except where stated, the information given below relates to the financial instruments of the parent companies and their subsidiaries and
proportionally consolidated units, and excludes those of equity accounted units. The information is grouped in the following sections:
A Financial assets and liabilities by categories
B Derivative financial instruments
C Fair values
(A) Financial assets and liabilities by categories
At 31 December 2009
Other
Available
financial
Loans and
for sale
Held at
assets and
Total
receivables
securities
fair value
liabilities
US$m
US$m
US$m
US$m
US$m
4,233
4,233
4,739
4,739
658
658
505
270
77
158
73
73
8
8
291
291
1,761
1,761
12,268
11,003
735
457
73
(4,416
)
(4,416
)
(847
)
(847
)
(22,155
)
(22,155
)
(119
)
(119
)
(499
)
(499
)
(165
)
(165
)
(300
)
(300
)
(49
)
(49
)
(28,550
)
(964
)
(27,586
)
Table of Contents
Other
Available
financial
Loans and
for sale
Held at
assets and
Total
receivables
securities
fair value
liabilities
US$m
US$m
US$m
US$m
US$m
1,181
1,181
5,054
5,054
261
261
480
480
4
4
98
98
87
87
1,113
1,113
8,278
7,828
261
87
102
(5,478
)
(5,478
)
(10,034
)
(10,034
)
(29,724
)
(29,724
)
(318
)
(318
)
(257
)
(257
)
(99
)
(99
)
(355
)
(355
)
(37
)
(37
)
(46,302
)
(454
)
(45,848
)
Total fair
Total fair
value
value
2009
2008
Buy Australian dollar; sell US dollar
US$m
US$m
8
7
2
8
9
12
8
21
The above currency forward contracts were acquired with companies purchased in 2000 and were entered into by those companies in order to
reduce their exposure to the US dollar through forecast sales.
Aluminium price exposures embedded in electricity purchase contracts
6
36
42
Coal forward contracts
35
35
77
8
98
Coal commodity contracts have been entered into in order to reduce exposure to movements in the coal price.
Table of Contents
Total fair
Total fair
value
value
2009
2008
Copper forward contracts
US$m
US$m
(118
)
(34
)
(317
)
(146
)
(435
)
(180
)
Coal (API #2) forward contracts
(4
)
(18
)
(4
)
(4
)
(22
)
Coal (GC NewC) forward contracts
(31
)
(31
)
Aluminium forward contracts embedded in electricity purchase contracts
(4
)
(443
)
(233
)
Total
Total
fair value
fair value
2009
2008
Aluminium options embedded in electricity purchase contracts
US$m
US$m
(6
)
(1
)
(50
)
(23
)
(56
)
(24
)
Embedded options exist within an electricity purchase contract for a smelter. These derivatives reduce the Groups exposure
to movements in the aluminium price. A number of put and call options were combined to form synthetic forward contracts that were designated
as hedges of variable priced aluminium sales.
Reconciliation to statement of financial position categories for derivatives designated as hedges
2009
2008
US$m
US$m
38
8
60
(128
)
(84
)
(371
)
(173
)
(491
)
(159
)
The hedged forecast transactions denominated in foreign currencies and the hedged commodity purchase or sales contracts are expected
to occur in line with the maturity dates of the derivatives hedging these particular exposures. Gains and losses recognised in equity for these cash
flow hedges will be recycled into the income statement in the period during which the hedged transaction affects the income statement. Where the
hedged transaction relates to capital expenditures, the gain or loss on the derivative will be recognised in the income statement within depreciation
as the fixed asset is amortised.
Gains and losses recognised in the hedging reserve in equity, net of tax and outside interests, for the year to 31 December 2009, comprised
cash flow hedge fair value losses of US$151 million including equity accounted units (2008: gains of US$20 million) and net cash flow hedge losses
reclassified from equity and included in the income statement for the period amounted to US$13 million (2008: US$168 million; 2007: US$61 million).
The ineffective portion arising from cash flow hedges recognised in the income statement was US$2 million (2008: US$6 million; 2007: US$(1) million).
Table of Contents
Notes to the 2009 Financial statements
34
Financial instruments
continued
c) Forward and option contracts relating to operating transactions: not designated as hedges
Total
Total
Assets
fair value
fair value
Forward contracts
2009
2008
Buy New Zealand dollar; sell US dollar
US$m
US$m
35
15
15
35
30
The above currency forward contracts relating to the New Zealand dollar were taken out to manage exposures impacting on operating costs.
Total
Total
fair value
fair value
2009
2008
Aluminium forward contracts
US$m
US$m
153
63
216
The above aluminium forward contracts were taken out to manage exposure to movements in the aluminium price.
Total
Total
fair value
fair value
Option contracts
2009
2008
Aluminium options embedded in electricity purchase contracts
US$m
US$m
1
26
18
45
The above aluminium options embedded in electricity purchase contracts reduce exposure to movements in the aluminium price.
Others:
Less than 1 year
6
12
2
26
4
2
40
12
291
87
Total fair
Total fair
Liabilities
value
value
Forward contracts
2009
2008
Aluminium forward contracts
US$m
US$m
(44
)
(158
)
(3
)
(7
)
(47
)
(165
)
The above aluminium forward contracts were taken out to manage exposure to movements in the aluminium price. These contracts are
not designated as hedges as they are predominantly offset by other aluminium forward contracts.
Total fair
Total fair
value
value
Option contracts
2009
2008
Aluminium options embedded in electricity purchase contracts
US$m
US$m
(29
)
(10
)
(103
)
(79
)
(14
)
(73
)
(146
)
(162
)
The above aluminium options embedded in electricity purchase contracts reduce exposure to movements in the aluminium price.
Others:
Less than 1 year
(3
)
(87
)
(20
)
(7
)
(5
)
(11
)
(2
)
(107
)
(28
)
(300
)
(355
)
Table of Contents
Notes to the 2009 Financial statements
34
Financial instruments
continued
Reconciliation to statement of financial position categories for derivatives not designated as hedges
2009
2008
US$m
US$m
65
226
87
(167
)
(133
)
(355
)
(9
)
(268
)
Total fair
Total fair
value
value
2009
2008
US$m
US$m
(68
)
(95
)
(4
)
(68
)
(99
)
(8
)
(89
)
(97
)
(165
)
(99
)
(165
)
(99
)
2009
2008
US$m
US$m
(68
)
(4
)
(97
)
(95
)
(165
)
(99
)
31 December 2009
31 December 2008
Carrying
Fair
Carrying
Fair
value
value
value
value
US$m
US$m
US$m
US$m
658
658
261
261
505
505
480
480
4,233
4,233
1,181
1,181
73
73
4
4
(847
)
(847
)
(10,034
)
(10,059
)
(22,155
)
(23,318
)
(29,724
)
(29,752
)
1,761
1,761
1,113
1,113
(119
)
(119
)
(318
)
(318
)
(49
)
(49
)
(37
)
(37
)
(15,940
)
(17,103
)
(37,074
)
(37,127
)
(435
)
(435
)
(135
)
(135
)
(56
)
(56
)
(24
)
(24
)
(9
)
(9
)
(268
)
(268
)
(68
)
(68
)
(99
)
(99
)
(97
)
(97
)
(16,605
)
(17,768
)
(37,600
)
(37,653
)
Table of Contents
Notes to the 2009 Financial statements
34
Financial instruments
continued
Valuation hierarchy
The table below shows the financial instruments carried at fair value by valuation method at 31 December 2009.
Not held
Total
Level 1
(a)
Level 2
(b)
Level 3
(c)
at fair value
658
644
14
505
129
106
270
4,233
4,233
73
73
1,761
1,761
(847
)
(847
)
(22,155
)
(22,155
)
(119
)
(119
)
(49
)
(49
)
(15,940
)
773
14
106
(16,833
)
(435
)
(430
)
(5
)
(56
)
(56
)
(9
)
132
(141
)
(68
)
(68
)
(97
)
(97
)
(16,605
)
773
(449
)
(96
)
(16,833
)
(a)
Valuation is based on unadjusted quoted prices in active markets for identical financial instruments. This category includes listed equity shares and other
quoted funds.
(b)
Valuation is based on inputs that are observable for the financial instruments which includes quoted prices for similar instruments or identical
instruments in markets which are not considered to be active or either directly or indirectly based on observable market data.
(c)
Valuation is based on inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Level 3 Financial assets and Financial liabilities
The table below shows the summary of changes in the fair value of the Groups level 3 financial assets and financial liabilities for the year ended
31 December 2009.
Level 3 financial assets
and financial liabilities
(50
)
(1
)
24
(35
)
(66
)
38
(6
)
(96
)
(31
)
Table of Contents
Notes to the 2009 Financial statements
35
Contingent liabilities and commitments
(a)
Included in the above table is other commitments of US$117 million (2008: US$18 million). Capital commitments incurred by the Group relating to
joint ventures and associates amount to US$261 million (2008: US$376 million). Capital commitments incurred jointly with other venturers (Rio Tinto share)
relating to joint ventures amount to US$539 million (2008: US$713 million).
Operating leases
The aggregate amount of minimum lease payments under non cancellable operating leases are as follows:
2009
2008
US$m
US$m
484
336
628
565
287
345
451
315
1,850
1,561
2009
2008
US$m
US$m
1,339
1,245
1,054
870
1,113
773
1,006
648
891
505
7,404
6,304
12,807
10,345
2009
2008
US$m
US$m
316
329
5
233
187
73
67
(a)
Amounts disclosed include those arising as a result of the Groups investments in both jointly controlled assets and jointly controlled entities.
(b)
There are a number of legal claims currently outstanding against the Group. No material loss to the Group is expected to result from these claims.
Table of Contents
Notes to the 2009 Financial statements
36
Average number of employees
Subsidiaries and proportionally
consolidated units
2009
2008
2007
17,537
17,875
14,065
21,787
23,167
13,363
6,539
6,329
5,548
16,965
16,909
4,623
2,039
2,909
1,348
2,165
2,206
2,125
844
942
286
27,732
28,386
5,680
95,608
98,723
47,038
Equity accounted units
(Rio Tinto share) (a)
2009
2008
2007
2,355
2,471
2,289
580
370
376
1,673
1,980
585
274
520
367
1,148
1,116
905
356
605
117
6,386
7,062
4,639
Group Total
2009
2008
2007
19,892
20,346
16,354
22,367
23,537
13,739
8,212
8,309
6,133
17,239
17,429
4,990
3,187
4,025
2,253
2,165
2,206
2,125
1,200
1,547
403
27,732
28,386
5,680
101,994
105,785
51,677
Table of Contents
Notes to the 2009 Financial statements
37
Principal subsidiaries
At 31 December 2009
Company and country of
Class of
Proportion of
Group
incorporation/operation
Principal activities
shares held
class held (%)
interest (%)
Mining and processing of diamonds
(a)
100
100
Coal mining
Ordinary
75.71
75.71
Salt production
Ordinary
68.40
68.40
Uranium mining
Class A
68.39
68.39
Iron ore mining
Ordinary
100
100
Coal mining
Ordinary
100
100
Limited
Bauxite mining; alumina production;
primary aluminium smelting
Ordinary
100
100
Iron ore mining; iron ore pellets
Series A, E & F
58.72
58.72
Titanium dioxide feedstock; high purity iron and steel
Common shares
100
100
Class B preference shares
100
100
Bauxite mining; alumina refining;
production of specialty alumina;
aluminium smelting, manufacturing
and recycling; engineered products;
flexible and specialty packaging
Common shares
100
100
Mining, refining and marketing of talc
Ordinary 15.25
100
100
Gold mining (now in close down phase)
Ordinary US$1
90
90
Ilmenite mining
Common shares
80
80
Uranium mining
B N$1
71.16
68.58
C N10c
70.59
Copper and gold mining
Ordinary 1 Kina
53.58
53.58
Copper mining, smelting and refining
R1
72.03
57.67
Copper and gold mining,
smelting and refining, land
development and exploration
activities
Common US$0.01
100
100
Mining, refining and marketing
of borates
Common US$0.10
100
100
(a)
This entity is unincorporated.
(b)
Queensland Coal Pty Limited is the main legal entity that owns the shares shown in note 40 of Hail Creek, Blair Athol and Kestrel.
(c)
The Groups shareholding in Rössing Uranium Limited carries 35.54 per cent of the total voting rights. Rössing is consolidated by virtue
of Board control.
(d)
The results of Bougainville Copper Limited are not consolidated. See note 47.
(e)
The Group comprises a large number of companies and it is not practical to include all of them in this list. The list therefore only includes those
companies that have a more significant impact on the profit or assets of the Group.
(f)
The Groups principal subsidiaries are held by intermediate holding companies and not directly by Rio Tinto plc or Rio Tinto Limited.
(g)
Companies operate mainly in the countries in which they are incorporated.
Table of Contents
Notes to the 2009 Financial statements
38
Principal jointly controlled entities
At 31 December 2009
Company and country of
Number of
Class of
Proportion of
Group
incorporation/operation
Principal activities
shares held
shares held
class held (%)
interest (%)
| | | | |
Aluminium smelting
153,679,560
Ordinary
59.4
59.4
Coal mining
20,115,000
Ordinary
44.7
44.7
Alumina production
1,769,600
Ordinary
80
80
Copper mining and refining
30
30
Aluminium smelting
24,998,400
Ordinary
79.4
79.4
Aluminium smelting
500,000
Ordinary
50
50
Aluminium smelting /
37,500
OMR1
20
20
power generation
Ilmenite, rutile and zircon mining
Preferred Ordinary
A Ordinary
37.7
150,960
B Ordinary
51
A Preference
140,046
B Preference
51
38.5
Ilmenite, rutile and zircon mining
Preferred Ordinary
A Ordinary
36.3
36,260
B Ordinary
49
A Preference
31,335
B Preference
49
37.0
Aluminium smelting
13,387,500
Ordinary £1
51
51
(e)
4,500
Common
45
45
(f)
100
Common
50
50.3
1
Preferred
100
Alternative energy
50.0
The Group has joint control of the above operations which, except as disclosed in note (d) below, are independent legal entities. It therefore
includes them in its accounts using the equity accounting method.
The Group comprises a large number of operations and it is not practical to include all of them in this list. The list therefore only includes those
jointly controlled entities that have a more significant impact on the profit or operating assets of the Group.
The Groups principal jointly controlled entities are held by intermediate holding companies and not directly by Rio Tinto plc or Rio Tinto
Limited.
With the exception of (e) and (f) above, all jointly controlled entities operate mainly in the countries in which they are
incorporated.
(a)
While the Group holds more than a 50 per cent interest in these entities, other participants have veto rights over operating, financing and
strategic decision making. Accordingly, the Group does not have the ability to unilaterally control, and therefore does not consolidate these
entities.
(b)
Leichhardt has a 31.4 per cent interest in the Blair Athol joint venture. As a result, the Group has a further beneficial interest of 14 per cent in
addition to its direct interest of 57.2 per cent, which is owned via a subsidiary of Rio Tinto Limited. The Blair Athol joint venture is disclosed
as a jointly controlled asset in note 40.
(c)
The year end of Minera Escondida Limitada is 30 June. However, the amounts included in the consolidated financial statements of Rio Tinto are
based on accounts of Minera Escondida Limitada that are coterminous with those of the Group.
(d)
On 9 December, an agreement was signed with a Broad-Based Black Economic Empowerment (BBBEE) Consortium transferring 26 per cent of the
Groups interest in Richards Bay Minerals (RBM) to a group comprising local communities, investors and RBM employees. At the same time an
agreement was signed with the joint venture partner BHP Billiton, to restructure the joint venture while maintaining the Groups remaining interest in
RBM.
This transaction has reduced the Groups interest from 50 per cent to 37 per cent allocated between two entities.
(e)
Halco has a 51 per cent indirect interest in Compagnie des Bauxites de Guinée, a bauxite mine, the core assets of which are located in
Guinea.
(f)
Pechiney Reynolds Quebec has a 50.1 per cent interest in the Aluminerie de Becancour aluminium smelter, which is located in
Canada.
(g)
This entity has been incorporated but its capital has not been divided into shares.
Table of Contents
Notes to the 2009 Financial statements
39
Principal associates
At 31 December 2009
Company and country of
Number of
Class of
Proportion of
Group
incorporation/operation
Principal activities
shares held
shares held
class held (%)
interest (%)
Bauxite mining
25,000,000
Ordinary
12.5
12
47,000,000
Preferred
11.8
Aluminium smelting
1,623,127
XAF
46.7
46.7
Copper and gold mining
83,638,128
Common
19.7
19.7
Coal mining
29,400,000
(c
)
48.3
48.3
The Groups principal associates are held by intermediate holding companies and not directly by Rio Tinto plc or Rio Tinto Limited.
The Group comprises a large number of operations and it is not practical to include all of them in this list. The list therefore only includes those
associates that have a more significant impact on the profit or operating assets of the Group.
With the exception of Ivanhoe Mines Ltd, the core assets of which are located in Mongolia, all associates operate mainly in the countries in which
they are incorporated.
(a)
Mineração Rio do Norte SA is accounted for as an associated company because the Group has significant influence through representation on its
Board of Directors.
(b)
Ivanhoe Mines Ltd is accounted for as an associated company because the Group has significant influence through representation on its Board
of Directors and participation in the technical committee that is responsible for its Oyu Tolgoi project. On 28 October 2009, Rio Tinto completed
the second tranche of its private placement investment in Ivanhoe Mines Ltd, increasing its ownership by 9.8 per cent to 19.7 per cent of Ivanhoes
common shares. The second tranche consisted of 46,304,473 common shares at a subscription price of US$8.38 per share for a total consideration
of US$388 million. If Rio Tinto were to exercise and convert all of its remaining warrants and securities of Ivanhoe, it would own 257,931,578 common
shares of Ivanhoe representing 43.1 per cent of Ivanhoes common shares. Refer to note 48- Events after the statement of financial position date.
(c)
Through its holdings in Rio Tinto Energy America Inc. and Kennecott Management Services Company, the Group holds 48 per cent of membership
interest in Cloud Peak Energy Resources LLC. The remaining 52 per cent ownership interest is held by Cloud Peak Energy Inc., whose stock is traded
on the New York Stock Exchange.
40
Principal jointly controlled assets and other proportionally consolidated units
At 31 December 2009
Name and country
Group
of operation
Principal activities
interest (%)
Aluminium smelting
51.6
Coal mining
30.3
Coal mining
71.2
Coal mining
82
Coal mining
80
Coal mining
60.6
Coal mining
42.1
Copper/gold mining and processing
80
Power generation
42.1
Iron ore mining
53
Iron ore mining
50
Iron technology
60
Alumina production
10
Aluminium production
40
Mining and processing of diamonds
60
Copper and gold mining
40
The Group comprises a large number of operations, and it is not practical to include all of them in this list. The list therefore only includes those
proportionally consolidated units that have a more significant impact on the profit or operating assets of the Group.
The Groups proportionally consolidated units are held by intermediate holding companies and not directly by Rio Tinto plc or Rio Tinto Limited.
(a)
The Group owns a 40 per cent interest in Bengalla through its 75.71 per cent investment in Coal and Allied, giving a beneficial interest
to the Group of 30.3 per cent.
(b)
The Group has a direct interest of 57.2 per cent in Blair Athol Coal, and an additional 14 per cent interest through its investment in
Leichhardt Coal Pty Limited, which is disclosed as a jointly controlled entity in note 38.
(c)
The Group owns an 80 per cent interest in Mount Thorley through its 75.71 per cent investment in Coal and Allied, giving a beneficial interest
to the Group of 60.6 per cent.
Table of Contents
Provisional
Final
fair value
Further
fair value
to Group
adjustments
to Group
At 23 October 2007
US$m
US$m
US$m
7,467
(1,106
)
6,361
18,282
(3,679
)
14,603
4,185
(1,294
)
2,891
2,856
15
2,871
6,984
6,984
991
991
228
228
4,584
156
4,740
(5,465
)
(42
)
(5,507
)
(2,642
)
(2,642
)
(4,182
)
1,574
(2,608
)
(4,638
)
(1,083
)
(5,721
)
(4,476
)
(180
)
(4,656
)
(55
)
31
(24
)
14,533
5,608
20,141
38,652
38,652
37,996
74
132
450
38,652
54
38,706
38,706
(991
)
(132
)
(57
)
37,526
-
The fair value of the Engineered Products business was reduced based on a further assessment of
the amount for which such businesses could be sold at the date of the acquisition.
-
The fair value attributed to the facilities within Bauxite & Alumina was reduced based on further
analysis of the operating capability of related expansion projects.
-
Provisions for environmental clean up and closure obligations were increased following a detailed
assessment of the costs and timing of closure of smelters, refineries and mines. The timing of closure was assessed
having regard to the prospects for continued access to economic sources of power beyond the term of existing contracts.
-
The value attributed to water rights in Canada was reduced after a further assessment of the
capital investment, which will be required to benefit from these sources of hydro-electric power.
Table of Contents
Restated
31 December
2007
US$m
45,590
7,473
2009
US$m
184
169
2,021
11
288
251
(12
)
(82
)
(796
)
(1
)
2,033
80
(359
)
(18
)
1,736
2,424
46
(42
)
2,428
692
2,424
(396
)
2,028
(a)
Cash proceeds were stated net of US$20 million cash and cash equivalents transferred on sale of subsidiaries
Table of Contents
41
Purchases and sales of subsidiaries, joint ventures, associates and other interests in businesses
continued
2008 Disposals
On 5 March 2008, the Group completed the sale of its interest (Rio Tinto share 40 per cent) in the Cortez gold mine (previously in the Copper product group)
for a sales price which included cash consideration of US$1,695 million. The Group benefits from a deferred bonus payment in the event of a significant
discovery of additional reserves and mineralisation at the Cortez mine and also retains a contingent royalty interest in the future production of the property.
On 16 April 2008, the Group completed the sale of its joint venture interest (Rio Tinto share 70.3 per cent) in the Greens Creek mine to Hecla Mining
Company. Greens Creek, which mines silver, gold, zinc and lead, was previously part of the Copper product group. The sale price was US$750 million,
comprising a cash component of US$700 million with the balance in the common stock of Hecla Mining Company.
The aggregate profit on disposal of interests in businesses (including investments) in 2008 was US$2,231 million (US$1,470 million net of tax).
These gains have been excluded from Underlying earnings, as shown in note 2.
The Cash flow statement includes US$2,563 million in Net disposals/(acquisitions) of subsidiaries, joint ventures & associates, comprising
US$2,572 million in disposal proceeds, net of US$9 million paid for acquisitions. In accordance with IAS 7, these proceeds were stated net of
US$5 million cash and cash equivalents transferred on sale of subsidiaries.
Non-cash disposal proceeds of US$88 million were received during the year.
2007 Disposals
There were no significant disposals in 2007.
42
Directors and key management remuneration
Aggregate remuneration, calculated in accordance with the Companies Act 2006, of the directors of the parent companies
was as follows:
2009
2008
2007
US$000
US$000
US$'000
18,021
10,620
11,103
3,092
2,647
9,573
21,113
13,267
20,676
389
338
130
20
The aggregate remuneration incurred by Rio Tinto plc in respect of its directors was US$17,784,000 (2008: US$13,214,000; 2007: US$13,678,000). The aggregate
pension contribution to defined contribution plans was US$342,000 (2008: US$338,000; 2007: US$56,000). The aggregate remuneration, including pension
contributions and other retirement benefits, incurred by Rio Tinto Limited in respect of its directors was US$3,718,000 (2008: US$391,000; 2007: US$7,128,500).
The aggregate pension contribution to defined contribution plans was US$47,000 (2008: US$43,000; 2007: US$74,000).
During 2009, three directors (2008: two; 2007: three) accrued retirement benefits under defined benefit arrangements, and two directors (2008 and 2007: one)
accrued retirement benefits under defined contribution arrangements.
Emoluments included in the table above have been translated from local currency at the average rate for the year with the exception of bonus
payments which, together with amounts payable under long term incentive plans, have been translated at the year end rate.
Detailed information concerning directors remuneration, shareholdings and options is shown in the
Remuneration report
, including
Tables 1 to 5, on pages 101 to 133.
Aggregate compensation, representing the expense recognised under IFRS, of the Groups key management, including directors,
was as follows:
2009
2008
2007
US$000
US$000
US$000
35,881
21,086
25,826
3,692
3,664
4,480
2,537
1,357
817
34,476
(5,360
)
41,540
75,406
19,390
75,200
The figures shown above include employment costs which comprise of social security and accident premiums in the UK and US and payroll
taxes in Australia paid by the employer as a direct additional cost of hire. In total, they amount to US$2,269,000 (2008: US$1,389,000; 2007: US$2,481,000) and
although disclosed here, are not included in Table 1 of the
Remuneration report
.
More detailed information concerning the remuneration of key management is shown in the
Remuneration report
, including Tables 1 to 5 on
pages 101 to 133.
Table of Contents
43
Auditors remuneration
2009
2008
2007
US$m
US$m
US$m
2.3
3.2
3.0
20.9
26.5
27.7
22.0
24.4
2.8
45.2
54.1
33.5
4.2
9.4
2.5
8.4
25.8
0.9
2.1
3.3
0.8
2.2
2.6
4.0
16.9
41.1
8.2
62.1
95.2
41.7
0.5
0.2
0.4
9.1
15.8
3.7
0.2
0.3
8.4
7.1
4.4
0.1
0.1
12.2
42.0
7.0
30.3
65.3
15.9
0.1
0.3
0.3
30.4
65.6
16.2
92.5
160.8
57.9
(a)
The remuneration payable to PricewaterhouseCoopers, the Group Auditors, is approved by the Audit committee. The committee sets the
policy for the award of non audit work to the auditors and approves the nature and extent of such work, and the amount of the related fees,
to ensure that independence is maintained. The fees disclosed above consolidate all payments made to PricewaterhouseCoopers by the
Companies and their subsidiaries, together with the Groups share of the payments made by proportionally consolidated units. Non-audit
services arise largely from assurance and/or regulation related work.
(b)
Fees payable for the audit of the accounts of the Groups subsidiaries includes the statutory audit of subsidiaries and other audit work
performed to support the audit of the Group financial statements.
(c)
Taxation services includes tax compliance and advisory services. Tax compliance involves the preparation or review of returns for corporation,
income, sales and excise taxes. Tax advisory services includes advice on non recurring acquisitions and disposals, advice on transfer pricing and
advice on employee global mobility.
(d)
Remuneration payable to other accounting firms does not include fees for similar services payable to suppliers of consultancy services
other than accountancy firms.
(e)
Other services in 2009 and 2008 in respect of other accounting firms includes costs relating to capital raising, divestments and similar corporate
services, pension fund and payroll administration, advice on accounting matters, secondments of accounting firms staff, forensic audit and other consultancy.
Other services in 2008 in respect of other accounting firms includes one off costs related to the rejection by the Board of the pre-conditional takeover proposal
from BHP Billiton which was withdrawn in November 2008.
(f)
Audit services represent assurance provided in respect of carve-out financial statements.
Table of Contents
44
Related party transactions
Information about material related party transactions of the Rio Tinto Group is set out below:
Subsidiary companies and proportionally consolidated units
Details of investments in principal subsidiary companies are disclosed in note 37.
Information relating to proportionally consolidated units can be found in
note 40.
Equity accounted units
Transactions and balances with equity accounted units are summarised below. Purchases relate largely to amounts charged by jointly controlled
entities for toll processing of bauxite and alumina. Sales relate largely to charges for supply of coal to jointly controlled marketing entities for
onward sale to third party customers.
2009
2008
2007
Income statement items
US$m
US$m
US$m
(2,558
)
(2,770
)
(1,538
)
2,088
3,011
1,338
2009
2008
Balance sheet items
US$m
US$m
6,735
5,053
338
515
(157
)
(195
)
941
688
(402
)
(280
)
Cash flow statement items
US$m
US$m
US$m
(265
)
(334
)
(216
)
(a)
Further information about investments in equity accounted units is set out in notes 38 and 39.
In November 2009, as part of the disposal process of Cloud Peak, Rio Tinto Energy America Inc. and Cloud Peak Energy Resources LLC (CPER) agreed
for existing Rio Tinto plc guaranteed surety bonds and letters of credit, principally securing the reclamation obligations for the Cloud Peak business, to
continue for a transition period. The surety bonds are expected to be replaced by CPER during the first half of 2010. The amount outstanding on these
guarantees at the year end is US$449 million.
Pension funds
Information relating to pension fund arrangements is disclosed in note 50.
Directors and key management
Details of directors and key management remuneration are set out in note 42 and in the Remuneration report on pages 101 to 133.
45
Exchange rates in US$
The principal exchange rates used in the preparation of the 2009 financial statements are:
Annual average
Year end
2009
2008
2007
2009
2008
2007
1.57
1.86
2.00
1.61
1.44
1.99
0.79
0.86
0.84
0.89
0.69
0.88
0.88
0.94
0.93
0.95
0.82
1.01
0.12
0.12
0.14
0.14
0.11
0.15
1.39
1.47
1.37
1.44
1.41
1.47
46
Rights issues
The terms of the rights issues were 21 New Rio Tinto plc Shares offered for every 40 existing shares at 1,400 pence per share and 21 New Rio Tinto
Limited Shares offered for every 40 existing shares at A$28.29 per share. The rights issues were fully underwritten and were completed on 2 July 2009
and 3 July 2009 respectively. The net proceeds from the rights issues of US$14.8 billion were used to pay down Group borrowings.
Although Rio Tinto plcs functional currency is the US dollar, the UK element of the rights issue was denominated in Sterling. At the time the Group
announced its half year results, the offer of rights was treated as a derivative financial liability under IFRS prevailing at that time because the company
was not issuing a fixed number of shares for a fixed amount of US dollars (Rio Tinto Limiteds functional currency is the Australian dollar and the
Australian element of the rights issue was denominated in Australian dollars so there was no equivalent issue for Rio Tinto Limited). This gave rise to a
gain of US$827 million in the Groups half year income statement. In October 2009, the IASB approved an amendment to IAS 32 which allows the
offer of rights to be treated as an equity instrument, provided they are offered pro rata to all shareholders. The EU endorsed this amendment in
January 2010 and the gain of US$827 million was therefore reversed in the second half of 2009.
Both Rio Tinto plc and Rio Tinto Limited entered into a series of forward US dollar derivative exchange contracts to minimise exposure to foreign
exchange rates and to provide confidence in the absolute dollar proceeds from the rights issues. Proceeds from the rights issues were used for a partial
prepayment of the US dollar denominated Alcan acquisition facility. The forward contracts taken out by both companies are accounted for as derivatives.
The contracts entered into by Rio Tinto plc to fix the Sterling proceeds in US dollars, which is the companys functional currency, are considered to be,
in substance, share issue costs and accordingly, the losses on these contracts from inception to receipt of proceeds have been recognised in equity,
within share premium. Rio Tinto Limiteds functional currency is the Australian dollar and, therefore, the losses on the contracts entered into by Rio Tinto
Limited have been recognised in the income statement and excluded from Underlying earnings. The losses on Rio Tinto plc and Rio Tinto Limited
contracts are included within Other investing cash flows in the statement of cash flow.
The rights issues were at a discount to the then market price. Accordingly, earnings per share for all periods up to the date on which the shares were
issued have been adjusted for the bonus element of the rights issues. The bonus factor for Rio Tinto plc was 1.2105 and for Rio Tinto Limited was
1.2679. 2008 comparatives for both earnings per share and ordinary dividends per share have been restated accordingly.
Table of Contents
47
Bougainville Copper Limited (BCL)
Mining has been suspended at the Panguna mine since 1989. Safe mine access by company employees has not been possible since that time and an
accurate assessment of the condition of the assets cannot therefore be made. Considerable funding would be required to recommence operations to the
level which applied at the time of the mines closure in 1989. An Order of Magnitude study undertaken in 2008 indicates that costs in a range of
US$2 billion to US$4 billion would be required to reopen the mine assuming all site infrastructure is replaced. The directors consider that the Group
does not currently realise a benefit from its interest in BCL and therefore BCL information continues to be excluded from the financial statements.
BCL reported a net profit of US$3 million for the financial year (2008: net loss of US$2 million; 2007: net profit of US$1 million). This is based upon actual transactions for the financial year. The aggregate amount of capital and reserves reported by BCL as at 31 December 2009 was US$138 million (2008:
US$113 million). The Group owns 214,887,966 shares in BCL, representing 53.6 per cent of the issued share capital. The investment of US$195 million was
fully provided against in 1991. At 31 December 2009, the number of shares in BCL held by the Group, multiplied by the share price, resulted in an amount of
US$114 million (2008: US$101 million).
48
Events after the statement of financial position date
On 29 January 2010, US$2.0 billion of Facility D of the Alcan facility was paid. An additional US$2.0 billion was paid on 26 February 2010,
and a further US$1.0 billion was paid on both 31 March 2010 and 30
April 2010,
leaving US$2.5 billion outstanding on the facility.
All of Tranches A and B of the Alcan facility have now been repaid. Facility B of the acquisition facility is a revolving facility of which
US$2.1 billion was undrawn at 31 December 2009. On 5 February 2010, in accordance with the acquisition facility agreement, proceeds from
the sale of the majority of Alcan Packaging to Amcor were used to cancel US$2.0 billion of the outstanding capacity. At the same time, the
Group voluntarily surrendered the remaining US$0.1 billion of the facility.
Rio Tinto completed the sale of Alcan Packaging global pharmaceuticals, global tobacco, food Europe and food Asia divisions to Amcor for
a total consideration of US$1,948 million on 1 February 2010. The consideration has been adjusted to exclude the Medical Flexibles operations
and to reflect the actual business performance over the past six months. The final consideration remains subject to certain customary post-close
adjustments.
The sale of Maules Creek to Aston Resources was completed on 18 February 2010.
The sale of the Alcan Packaging Food Americas division to Bemis Company Inc., for a total all-cash consideration of US$1.2 billion was completed
on 1 March 2010.
These divestments have not been reflected in the 2009 results, and will be reflected in the period in which the sales are completed.
On 1 March 2010, Rio Tinto announced that it has agreed to acquire 15 million shares in Ivanhoe Mines Ltd. at a subscription price of
Cdn$16.31 per share, increasing its ownership in Ivanhoe Mines by 2.7 per cent to 22.4 per cent. The total consideration for this acquisition
is Cdn$244.7 million (US$241 million). The shares are being issued to Rio Tinto in satisfaction of an agreement with Ivanhoe Mines in 2008 to finance equipment
for the Oyu Tolgoi copper-gold complex in Mongolias South Gobi region. After the completion of the acquisition, Rio Tinto will own 98.6 million shares
of Ivanhoe Mines. If Rio Tinto were to execute all of its shares purchase warrants and convert its US$350 million loan into shares it would
own approximately 267.6 million shares of Ivanhoe Mines representing 44.0 per cent of Ivanhoe Mines.
On 19 March 2010, Rio Tinto signed a memorandum of
understanding with Chinalco to establish a joint venture covering the
development and operation of the Simandou iron ore project in Guinea
of which Rio Tinto currently own 95 per cent. Chinalco will acquire a
47 per cent interest in the new joint venture by providing US$1.35
billion on an earn-in basis through sole funding of ongoing
development work over the next two to three years. Once the funding
is complete Rio Tinto and Chinalcos effective interests in the
Simandou project will be 50.35 per cent and 44.65 per cent
respectively.
On 31 March 2010, Rio Tinto announced that it had received a binding offer from Sun Capital Partners to acquire the Alcan Beauty Packaging business. The terms of the offer are
confidential. A period of exclusivity with Sun Capital Partners has been agreed, and Rio Tinto will respond to this binding offer following consultation with the relevant European works councils. Alcan Beauty Packaging is the only part of Alcan Packaging
still owned by Rio Tinto, with the exception of the Medical Flexible operations in the US which are the subject of an agreed transaction with Amcor
that is currently under review by the US Department of Justice.
On April 22, 2010 the European Court of Justice issued a judgment that effectively results in Rio
Tintos plant in Lynemouth not meeting emission requirements set out in the Large Combustion Plant
Directive (LCPD) (2001/80/EC). The result of the ruling requires the United Kingdom to ensure
Lynemouth is included in the implementation of the directive with a revised National Emission
Reduction Plan to be provided by 22 June 2010. The group is currently assessing a number of
different available options and therefore the economic impact is
uncertain.
Table of Contents
Charge/(credit)
Liability at the
recognised for the year
end of the year
2009
2008
2007
2009
2008
US$m
US$m
US$m
US$m
US$m
76
61
39
101
(83
)
181
111
43
177
(22
)
220
111
43
Weighted
Weighted
average
Aggregate
average
remaining
intrinsic
exercise price
contractual
value
per option
life
2009
Options outstanding at 31 December 2009
Number
£ / A$
Years
US$m
1,474,390
20.90
2.2
31
2,139,259
48.17
3.2
51
5,902,934
17.60
5.9
161
2,439,297
42.04
6.4
73
11,955,880
316
3,523,088
14.19
4.2
112
1,383,290
36.66
5.0
47
4,906,378
159
Table of Contents
Risk-free
Expected
Dividend
Forfeiture
Cancellation
Implied
interest rate
volatility
yield
rates
rates (a)
lifetime
%
%
%
%
%
Years
1.5-2.8
47.0
1.8
5.0
5.0
2.2-5.2
5.4-5.6
38.0
1.5
5.0
5.0
3.2-5.2
(a)
In addition to the regular cancellation rates above it is assumed that on the anniversary of date of grant a proportion of employees will cancel their awards in favour of new awards if the then share price is less than the exercise price. The proportion assumed is
a sliding scale from 20 per cent cancelling if the then share price equals the exercise price to 100 per cent cancelling if the then share
price is 75 per cent of the exercise price or less.
Weighted
Weighted
Weighted
average
average
average
exercise
exercise
exercise
price
price
price
2009
2009
2008
2008
2007
2007
Number
£
Number
£
Number
£
1,661,006
18.88
1,718,565
15.20
1,812,679
11.78
453,616
22.20
532,423
22.98
392,408
25.17
(57,375
)
20.32
(45,695
)
16.13
(39,363
)
11.82
(269,227
)
12.02
(465,378
)
9.96
(377,020
)
9.79
(160,546
)
23.93
(66,597
)
22.10
(43,669
)
16.63
(153,084
)
15.53
(12,312
)
12.80
(26,470
)
8.56
1,474,390
20.90
1,661,006
18.88
1,718,565
15.20
2009
2008
2007
£
£
£
9.27
1.55
10.87
29.72
16.94
34.13
18.29
39.45
23.58
Weighted
Weighted
Weighted
average
average
average
exercise
exercise
exercise
price
price
price
2009
2009
2008
2008
2007
2007
Number
A$
Number
A$
Number
A$
1,901,417
43.40
2,634,607
30.25
2,748,026
19.89
1,183,090
48.73
413,271
66.08
548,549
63.16
(95,677
)
51.17
(285,641
)
43.31
(121,590
)
20.94
(340,646
)
20.96
(797,744
)
11.25
(480,955
)
11.64
(374,471
)
58.39
(46,602
)
64.05
(39,126
)
25.65
(134,454
)
23.94
(16,474
)
9.46
(20,297
)
11.61
2,139,259
48.17
1,901,417
43.40
2,634,607
30.25
2009
2008
2007
A$
A$
A$
20.89
5.15
34.13
64.68
52.06
83.82
46.43
101.10
63.99
Table of Contents
Risk-free
Expected
Dividend
Turnover
Implied
interest rate
volatility
yield
rates
lifetime
%
%
%
%
Years
2.3
46.0
4.6
3.0
4.4
3.8
36.0
4.1
3.0
4.6
year ended 31 December 2009, is presented below.
Weighted
Weighted
Weighted
average
average
average
exercise
exercise
exercise
price
price
price
2009
2009
2008
2008
2007
2007
Number
£
Number
£
Number
£
5,647,992
17.25
6,004,326
15.49
6,277,468
13.49
1,284,749
16.53
332,519
47.28
951,455
22.55
(112,917
)
17.30
(152,870
)
26.59
(51,096
)
20.43
(916,890
)
14.03
(535,983
)
13.47
(1,173,501
)
10.33
5,902,934
17.60
5,647,992
17.25
6,004,326
15.49
2009
2008
2007
£
£
£
5.49
17.04
5.16
17.44
46.21
22.70
26.89
42.26
32.43
Weighted
Weighted
Weighted
average
average
average
exercise
exercise
exercise
price
price
price
2009
2009
2008
2008
2007
2007
Number
A$
Number
A$
Number
A$
2,711,678
38.82
3,351,754
34.73
3,540,588
27.42
540,422
33.45
63,633
118.07
568,638
59.02
(43,559
)
40.24
(45,231
)
80.12
(20,504
)
55.46
(769,244
)
24.73
(658,478
)
22.83
(736,968
)
15.77
2,439,297
42.04
2,711,678
38.82
3,351,754
34.73
2009
2008
2007
A$
A$
A$
13.35
44.04
14.37
40.03
103.48
59.60
54.35
108.92
80.48
Table of Contents
Weighted
Weighted
Weighted
average
average
average
fair value
fair value
fair value
at grant
at grant
at grant
date
date
date
2009
2009
2008
2008
2007
2007
Number
£
Number
£
Number
£
3,148,648
12.21
3,847,057
7.11
3,362,011
6.08
191,887
13.56
471,804
39.71
871,437
10.41
(31,116
)
16.19
(173,640
)
13.43
(54,920
)
8.59
(145,215
)
5.81
(534,881
)
5.33
(268,315
)
5.17
(840,023
)
5.81
(461,692
)
5.33
(63,156
)
5.17
2,324,181
14.98
3,148,648
12.21
3,847,057
7.11
16.13
45.38
23.12
2009
2008
2007
£000
£000
£000
4,801
6,486
457
9,236
14,628
1,003
2009
2008
2007
292,719
141,146
19,774
Weighted
Weighted
Weighted
average
average
average
fair value
fair value
fair value
at grant
at grant
at grant
date
date
date
2009
2009
2008
2008
2007
2007
Number
A$
Number
A$
Number
A$
2,162,867
26.97
2,674,827
19.03
2,296,328
15.99
32,284
32.74
209,521
88.42
645,469
28.84
(36,541
)
35.13
(40,807
)
45.31
(48,166
)
25.90
(87,442
)
15.03
(384,978
)
13.58
(180,418
)
14.46
(555,525
)
15.03
(295,696
)
13.58
(38,386
)
14.53
1,515,643
31.97
2,162,867
26.97
2,674,827
19.03
39.80
108.13
61.48
2009
2008
2007
A$000
A$000
A$000
7,261
14,706
879
17,088
19,217
1,604
141
2009
2008
2007
175,916
129,845
13,648
Table of Contents
Weighted
Weighted
Weighted
average
average
average
fair value
fair value
fair value
at grant
at grant
at grant
date
date
date
2009
2009
2008
2008
2007
2007
Number
£
Number
£
Number
£
862,850
36.89
416,673
24.95
1,593,271
17.84
533,569
45.56
442,644
24.85
(196,816
)
25.77
(57,603
)
33.30
(23,462
)
23.41
(127,497
)
31.50
(29,789
)
32.15
(2,509
)
22.43
2,131,808
24.00
862,850
36.89
416,673
24.95
Weighted
Weighted
Weighted
average
average
average
share price
share price
share price
2009
2009
2008
2008
2007
2007
Number
£
Number
£
Number
£
127,497
22.77
4,605
40.19
2,508
36.14
Weighted
Weighted
Weighted
average
average
average
fair value
fair value
fair value
at grant
at grant
at grant
date
date
date
2009
2009
2008
2008
2007
2007
Number
A$
Number
A$
Number
A$
511,643
84.06
328,288
67.65
735,282
43.30
222,542
106.87
342,045
67.45
(119,565
)
65.25
(35,123
)
77.18
(12,072
)
62.80
(36,557
)
71.77
(4,064
)
67.51
(1,685
)
61.83
1,090,803
59.06
511,643
84.06
328,288
67.65
Weighted
Weighted
Weighted
average
average
average
share price
share price
share price
2009
2009
2008
2008
2007
2007
Number
A$
Number
A$
Number
A$
36,557
50.42
3,503
95.27
1,685
77.83
Table of Contents
Weighted
average
fair value
at grant
date
2009
2009
Number
£
536,149
17.32
(4,907
)
17.32
(43,329
)
17.32
487,913
17.32
Weighted
average
share price
at grant
date
2009
2009
Number
£
9,171
29.75
Weighted
average
fair value
at grant
date
2009
2009
Number
A$
278,405
41.75
(13,460
)
41.75
(13,006
)
41.75
251,939
41.75
Weighted
average
share price
at grant
date
2009
2009
Number
A$
9,714
53.13
Table of Contents
Notes to the 2009 Financial statements
50
Post retirement benefits
Description of plans
The Group operates a number of pension and post retirement healthcare plans around the world. Some of these plans are defined contribution
and some are defined benefit, with assets held in separate trusts, foundations and similar entities. Valuations of these plans are produced and
updated annually to 31 December by qualified actuaries. Plans that were previously sponsored by the Alcan Packaging business were
previously excluded from this note and reflected in the value of the assets held for sale. Any plans that are not now expected to be sold with these
businesses are now reflected in this note rather than within Assets held for sale.
Rio Tinto has a number of retirement plans which, within the same legal arrangement, have sections providing benefits on a defined benefit basis
and sections providing benefits on a defined contribution basis. In prior years these arrangements were presented as a defined benefit plan
only, although they had characteristics of both types of plan. Those sections providing benefits on a defined contribution basis are now presented
as defined contribution plans. The comparative information in all of the tables in this note has been adjusted to conform to the current year
presentation. The comparative statements of financial position, income statements and statements of comprehensive income were not
affected by this change.
Pension plans
The majority of the Groups pension obligations are in Canada, the UK, the US, Switzerland and the Eurozone. There are some defined benefit
obligations in Australia but the retirement arrangements there are predominantly defined contribution. In general the Group has a policy of
moving towards defined contribution provision.
There are a number of pension arrangements in the UK. The defined benefit sections of these arrangements are linked to final pay and are closed
to new members, with new employees being admitted to defined contribution sections.
In Australia, the main arrangements are principally defined contribution in nature but there are sections providing defined benefits
linked to final pay, typically paid in lump sum form.
A number of defined benefit pension plans are sponsored by the US and Canadian entities. The main plans are two Canadian plans for
salaried and bargaining employees. Benefits for salaried staff are generally linked to final average pay, while benefits for bargaining
employees are reviewed in negotiation with unions.
In Europe, there are defined benefit plans in Switzerland, the Netherlands, Germany and France. The largest single plan is in
Switzerland and provides benefits linked to final average pay.
The Group also operates a number of unfunded defined benefit plans, which are included in the figures below.
Post retirement healthcare plans
Certain subsidiaries of the Group, mainly in the US and Canada, provide health and life insurance benefits to retired employees and in
some cases to their beneficiaries and covered dependants. Eligibility for cover is dependent upon certain age and service criteria. These
arrangements are unfunded, and are included in the figures below.
Plan assets
The proportions of the total fair value of assets in the pension plans for each asset class at the balance sheet date were:
2009
2008 (a)
54.9
%
51.3
%
33.6
%
36.6
%
5.5
%
7.1
%
6.0
%
5.0
%
100.0
%
100.0
%
(a)
Prior year comparatives have been adjusted to conform to the current year presentation. The sections providing benefits on a defined
contribution basis are now presented as defined contribution plans. Further details are provided above.
The assets of the plans are generally managed on a day-to-day basis by external specialist fund managers. These managers may
invest in the Groups securities subject to limits imposed by the relevant fiduciary committees and local legislation. The approximate
total holding of Group securities within the plans is US$19 million (2008: $6 million).
Main assumptions (rates per annum)
The main assumptions for the valuations of the plans under IAS 19 are set out below. Information on the sensitivity of the results to the main
assumptions is set out in the sensitivity section on page A-77.
Other
(mainly
UK
Australia(a)
US
Canada
Eurozone
Switzerland
Africa)(b)
| | | | | | |
5.0
%
4.1
%
4.0
%
3.5
%
2.4
%
2.7
%
7.7
%
3.4
%
2.4
%
0.8
%
1.5
%
5.7
%
5.5
%
4.8
%
5.9
%
6.5
%
5.2
%
2.9
%
8.9
%
3.5
%
2.4
%
2.5
%
2.3
%
2.1
%
1.5
%
5.7
%
4.4
%
3.9
%
3.0
%
2.7
%
2.4
%
2.7
%
6.2
%
2.7
%
1.5
%
0.4
%
1.6
%
4.2
%
6.3
%
3.3
%
6.1
%
7.4
%
5.6
%
3.3
%
7.3
%
2.8
%
2.0
%
1.5
%
1.4
%
1.8
%
1.5
%
4.2
%
(a)
The discount rate shown for Australia is after tax.
(b)
The assumptions vary by location for the Other plans. Assumptions shown are for Southern Africa.
The main financial assumptions used for the healthcare plans,
which are predominantly in the US and Canada, were: discount rate: 6.0 per cent (2008: 6.5 per cent), medical trend rate: 7.5 per cent reducing to 5.1 per cent by the year 2015 broadly on a straight line basis (2008: 7.0 per cent,
reducing to 5.0 per cent by the year 2015), claims costs based on individual company experience.
For both the pension and healthcare arrangements the post retirement mortality assumptions allow for future improvements in longevity.
The mortality tables used imply that a man aged 60 at the balance sheet date has a weighted average expected future lifetime of 24 years
(2008: 24 years) and that a man aged 60 in 2029 would have a weighted average expected future lifetime of 26 years (2008: 26 years).
Table of Contents
Notes to the 2009 Financial statements
50
Post retirement benefits
continued
Other
(mainly
UK
Australia
US
Canada
Eurozone
Switzerland
Africa)(a)
7.4
%
7.0
%
7.6
%
7.2
%
7.4
%
6.5
%
11.1
%
4.5
%
3.9
%
4.0
%
5.2
%
3.8
%
3.1
%
7.1
%
5.5
%
5.0
%
5.1
%
5.2
%
5.4
%
4.5
%
9.1
%
3.6
%
2.4
%
2.3
%
2.2
%
2.5
%
2.4
%
5.0
%
7.7
%
9.1
%
7.7
%
7.4
%
7.7
%
6.6
%
11.4
%
4.9
%
5.9
%
5.0
%
4.4
%
4.5
%
3.4
%
7.9
%
6.0
%
7.2
%
6.0
%
5.7
%
6.0
%
4.9
%
9.7
%
4.2
%
3.7
%
3.2
%
3.0
%
3.0
%
2.3
%
6.3
%
(a)
The assumptions vary by location for the Other plans. Assumptions shown are for Southern Africa.
The expected rate of return on pension plan assets is determined as managements best estimate of the long term returns of the major
asset classes equities, bonds, property and other weighted by the allocation of assets among the categories at the
measurement date. The expected rate of return is calculated using geometric averaging. The expected rates of return shown
have been reduced to allow for plan expenses including, where appropriate, taxes incurred within pension plans on investment returns.
Based on the assumptions made and the distribution of assets the weighted average expected return on assets as at 1 January 2009 was
5.9 per cent (2008: 6.4 per cent) and is expected to be 6.4 per cent as at 1 January 2010.
The sources used to determine managements best estimate of long term returns are numerous and include country-specific bond
yields, which may be derived from the market using local bond indices or by analysis of the local bond market, and country-specific
inflation and investment market expectations derived from market data and analysts or governments expectations as applicable.
Total expense recognised in the income statement
2009
2008
2007
Pension
Other
Total
Total
Total
benefits
benefits
US$m
US$m
US$m
(178
)
(15
)
(193
)
(285
)
(251
)
(771
)
(55
)
(826
)
(882
)
(402
)
581
581
857
436
(15
)
4
(11
)
(3
)
17
72
52
124
5
(311
)
(14
)
(325
)
(308
)
(200
)
(199
)
(199
)
(194
)
(40
)
(510
)
(14
)
(524
)
(502
)
(240
)
The above expense amounts are included as an employee cost within net operating costs. In 2009, US$61 million (pre-tax) of curtailment and
settlement gains relating to the sale of businesses have been excluded from Underlying earnings (2008 and 2007: nil).
Total amount recognised in other comprehensive income before tax
2009
2008
2007
US$m
US$m
US$m
(919
)
(1,666
)
141
(70
)
321
19
26
(970
)
(1,319
)
141
(1,800
)
(830
)
489
(a)
Actuarial loss includes US$126 million loss related to equity accounted units (2008: US$5 million loss; 2007: US$4 million loss).
(Deficits)/surpluses in the plans
The following amounts were measured in accordance with IAS 19 at 31 December:
2009
2008(a)
2007(a)
2006(a)
2005(a)
Pension
Other
Total
Total
Total
Total
Total
benefits
benefits
US$m
US$m
US$m
US$m
US$m
12,406
1
12,407
9,306
14,350
4,656
4,069
(15,138
)
(10
)
(15,148
)
(11,044
)
(14,822
)
(4,472
)
(4,269
)
(1,071
)
(1,314
)
(2,385
)
(1,784
)
(2,089
)
(597
)
(596
)
(16,209
)
(1,324
)
(17,533
)
(12,828
)
(16,911
)
(5,069
)
(4,865
)
(7
)
(7
)
(12
)
(2
)
3
(19
)
(45
)
(3,803
)
(1,330
)
(5,133
)
(3,553
)
(2,608
)
(410
)
(796
)
(3,820
)
(1,330
)
(5,150
)
(3,713
)
(3,313
)
(770
)
(996
)
17
17
160
705
360
200
(3,803
)
(3,803
)
(2,648
)
(1,519
)
48
(324
)
(1,330
)
(1,330
)
(905
)
(1,089
)
(458
)
(472
)
(a)
Prior year comparatives have been adjusted to conform to the current year presentation. The sections providing benefits on a defined
contribution basis are now presented as defined contribution plans.
Further details are provided on page A-74.
The surplus amounts shown above are included in the statement of financial position as Trade and other receivables. See note 17.
Deficits are shown in the statement of financial position as Post retirement benefits. See note 27.
Table of Contents
50
Post retirement benefits
continued
Contributions to plans
Contributions to defined benefit pension plans during 2009 totalled US$560 million (2008: US$421 million; 2007: US$90 million). Contributions of
US$190 million (2008: US$184 million; 2007: US$146 million) were made to defined contribution arrangements and US$9 million (2008: US$10
million; 2007: US$10 million) to industry-wide plans; these are charged against profits and are included in the figures for defined contribution current
employer service costs shown above.
Contributions for other benefits totalled US$46 million (2008: US$53 million; 2007: US$30 million).
Contributions to defined benefit pension plans for 2010 are estimated to be around US$200 million higher than for 2009. The increase relates to UK,
Canada and the US where the impact of the global financial crisis is now included in the funding valuations. Furthermore, the inclusion of plans which
were previously classified within Assets and liabilities held for sale contributed to the increase. Healthcare plans are generally unfunded and
contributions for future years will be equal to benefit payments and therefore cannot be predetermined.
Movements in the present value of the defined benefit
obligation and in the fair value of assets
The amounts shown below include, where appropriate, 100 per cent of the costs, contributions, gains and losses in respect of
employees who participate in the plans and who are employed in operations that are proportionally consolidated or equity
accounted. Consequently, the costs, contributions, gains and losses do not correspond directly to the amounts disclosed above in
respect of the Group. Defined contribution plans and industry-wide plans are excluded from the movements below.
2009
2008(a)
Pension
Other
Total
Total
benefits
benefits
US$m
US$m
(11,935
)
(893
)
(12,828
)
(16,911
)
(189
)
(15
)
(204
)
(285
)
(771
)
(55
)
(826
)
(882
)
(119
)
(2
)
(121
)
(93
)
(155
)
16
(139
)
(37
)
(1,601
)
(70
)
(1,671
)
1,684
903
48
951
1,014
(1,291
)
(365
)
(1,656
)
(3
)
(3
)
(3
)
21
21
(15
)
4
(11
)
8
48
32
80
6
161
20
181
28
(1,245
)
(62
)
(1,307
)
2,643
(16,209
)
(1,324
)
(17,533
)
(12,828
)
Gains and losses on obligations
2009
2008(a)
2007(a)
2006(a)
2005(a)
(139
)
(37
)
(41
)
(7
)
246
(1
)%
0
%
0
%
0
%
6
%
(1,671
)
1,684
315
124
(180
)
(a)
Prior year comparatives have been adjusted to conform to the current year presentation. The sections providing benefits on a defined contribution
basis are now presented as defined contribution plans. Further
details are provided on page A-74.
(b)
Plans that were previously sponsored by the Rio Tinto Alcan Packaging business were previously excluded from this note and reflected in the
value of the assets and liabilities held for sale. Any plans that are not now expected to be sold with these businesses are now reflected in this note
rather than within Assets held for sale.
2009
2008(a)
Pension
Other
Total
Total
benefits
benefits
US$m
US$m
9,306
9,306
14,350
581
581
857
891
891
(3,308
)
119
2
121
93
581
46
627
482
(903
)
(48
)
(951
)
(1,014
)
881
1
882
8
(27
)
(27
)
(137
)
(137
)
(29
)
1,114
1,114
(2,133
)
12,406
1
12,407
9,306
1,472
(2,451
)
2009
2008(a)
2007(a)
2006(a)
2005(a)
891
(3,308
)
(129
)
256
116
7
%
(36
%)
(1
%)
5
%
3
%
(a)
Prior year comparatives have been adjusted to conform to the current year presentation. The sections providing benefits on a defined
contribution basis are now presented as defined contribution plans. Further details are provided on page A-74.
(b)
Plans that were previously sponsored by the Rio Tinto Alcan Packaging business were previously excluded from this note and reflected in the
value of the assets and liabilities held for sale. Any plans that are not now expected to be sold with these businesses are now reflected in this note
rather than within Assets and liabilities held for sale.
Table of Contents
Notes to the 2005 Financial statements
Approximate decrease/
(increase) in obligations
Pensions
Other
Assumption
Change in assumption
US$m
US$m
increase of 0.5 percentage points
892
70
decrease of 0.5 percentage points
(949
)
(74
)
increase of 0.5 percentage points
(540
)
(51
)
decrease of 0.5 percentage points
513
43
increase of 0.5 percentage points
(120
)
(2
)
decrease of 0.5 percentage points
116
2
improvements in longevity
participants assumed to have the mortality rates of
individuals who are one year older
356
27
participants assumed to have the mortality rates of
individuals who are one year younger
(356
)
(27
)
Post retirement healthcare sensitivity to changes in assumptions
An increase of one per cent in the assumed medical cost trend rates would increase the aggregate of the current service cost and interest
cost components of the post retirement healthcare expense by US$6 million (2008: US$8 million; 2007: US$5 million), and increase the benefit
obligation for these plans by US$98 million (2008:US$85 million; 2007: US$89 million). A decrease of one per cent in the assumed medical cost trend
rates would decrease the aggregate of the current service cost and interest cost components of the post retirement healthcare expense by
US$5 million (2008:US$7 million; 2007: US$5 million), and decrease the benefit obligation for these plans by US$83 million (2008: US$75 million;
2007: US$77 million).
Table of Contents
Notes to the 2009 Financial statements
51
Rio Tinto Financial information by business unit
Years ended 31 December
US$ millions
Rio Tinto
interest
Gross Revenue
EBITDA (b)
Net earnings(c)
%
2009
2008
2007
2009
2008
2007
2009
2008
2007
100.0
8,874
11,006
6,155
5,190
7,038
3,427
3,283
4,642
2,151
53.0
2,186
2,728
1,640
1,422
1,983
991
718
1,062
503
58.7
1,006
2,065
943
344
1,251
298
112
443
104
(f
)
30
176
61
(15
)
73
(1
)
(19
)
44
(12
)
68.4
453
377
269
203
95
51
88
40
13
12,549
16,352
9,068
7,144
10,440
4,766
4,182
6,231
2,759
49
175
125
(32
)
(228
)
(98
)
(56
)
(214
)
(95
)
12,598
16,527
9,193
7,112
10,212
4,668
4,126
6,017
2,664
(g
)
11,992
18,253
6,150
582
4,023
1,607
(587
)
1,342
1,073
46
44
50
12
(87
)
(28
)
9
(71
)
(22
)
12,038
18,297
6,200
594
3,936
1,579
(578
)
1,271
1,051
100.0
2,368
2,609
3,539
1,449
1,587
2,614
818
998
1,649
30.0
2,039
2,402
3,103
1,327
1,464
2,510
748
836
1,525
(h
)
991
53
461
706
38
296
385
4
159
57.7
635
560
689
123
167
202
17
49
58
80.0
173
124
371
98
(1
)
212
53
(12
)
137
6,206
5,748
8,163
3,703
3,255
5,834
2,021
1,875
3,528
(229
)
(395
)
(200
)
(155
)
(278
)
(155
)
6,206
5,748
8,163
3,474
2,860
5,634
1,866
1,597
3,373
(i
)
1,813
1,869
1,560
497
397
331
257
147
132
(j
)
3,870
5,142
2,272
1,799
2,900
510
1,013
1,721
246
68.6
403
548
486
83
260
235
24
101
95
68.4
620
418
303
358
352
135
138
141
38
6,706
7,977
4,621
2,737
3,909
1,211
1,432
2,110
511
3
41
29
(15
)
461
(29
)
(12
)
471
(13
)
6,709
8,018
4,650
2,722
4,370
1,182
1,420
2,581
498
(k
)
450
840
1,020
(7
)
395
539
(68
)
137
280
(l
)
1,284
1,919
1,673
209
755
471
(9
)
295
164
(m
)
882
1,061
965
187
183
176
78
86
71
2,616
3,820
3,658
389
1,333
1,186
1
518
515
2
115
820
(41
)
(46
)
799
(44
)
(40
)
2,618
3,820
3,773
1,209
1,292
1,140
800
474
475
4,743
7,378
1,598
(30
)
127
327
(188
)
(133
)
167
(876
)
(1,723
)
(59
)
(28
)
58
(28
)
25
(719
)
(378
)
(635
)
(547
)
(366
)
(540
)
(22
)
(160
)
25
5
(133
)
20
(578
)
(1,030
)
(265
)
44,036
58,065
33,518
14,312
22,317
13,920
6,298
10,303
7,443
159
1,553
(309
)
(1,426
)
(6,627
)
(131
)
Less share of equity accounted units sales revenue
(2,211
)
(3,801
)
(3,818
)
41,825
54,264
29,700
14,471
23,870
13,611
4,872
3,676
7,312
Depreciation and amortisation in subsidiaries
(3,427
)
(3,475
)
(2,115
)
(1,573
)
(8,030
)
(58
)
Depreciation and amortisation in equity accounted units
(440
)
(414
)
(310
)
Taxation and finance items in equity accounted units
(739
)
(718
)
(973
)
8,292
11,233
10,155
Refer to notes a) to m) on page A-79.
Table of Contents
51
Rio Tinto Financial information by business unit
continued
Years ended 31 December
Depreciation &
Operating
Rio Tinto
Capital expenditure (n)
Amortisation
assets (o)
Employees
interest
2009
2008
2007
2009
2008
2007
2009
2008
2009
2008
2007
%
US$m
US$m
US$m
US$m
US$m
US$m
US$m
US$m
Number
Number
Number
100.0
1,337
1,860
1,597
506
466
352
7,530
5,170
6,556
6,321
4,786
53.0
599
683
241
140
111
104
2,751
1,622
1,114
1,011
873
58.7
180
256
163
86
83
78
808
482
2,027
2,094
1,939
(f
)
11
146
30
3
14
9
5
207
666
841
657
68.4
21
27
20
18
21
21
179
154
405
394
376
24
34
10
10
3
(10
)
(3
)
607
448
375
2,148
2,996
2,085
763
705
567
11,263
7,632
11,375
11,109
9,006
(g
)
1,690
2,417
549
1,551
1,543
564
35,992
34,735
22,919
24,634
8,563
100.0
176
316
282
296
246
251
1,533
1,750
1,878
1,915
1,854
30.0
213
120
170
104
98
98
1,399
849
997
960
876
(h
)
79
32
76
47
25
24
378
426
2,162
2,185
2,047
57.7
16
40
27
67
57
41
(2
)
117
2,030
2,116
2,072
80.0
17
105
55
25
15
22
301
187
186
210
208
52
191
22
2
1
1
1,419
894
359
143
162
553
804
632
541
442
437
5,028
4,223
7,612
7,529
7,219
(i
)
176
204
226
99
150
131
(89
)
1,090
2,388
2,477
2,435
(j
)
456
449
226
205
194
165
2,040
1,134
3,289
3,206
2,832
68.6
24
73
57
27
20
13
324
229
1,415
1,307
1,175
68.4
30
144
80
64
51
50
263
212
521
448
365
686
870
589
395
415
359
2,538
2,665
7,613
7,438
6,807
(k
)
250
652
525
104
175
181
1,293
1,340
1,040
1,401
1,291
(l
)
247
563
494
129
118
119
2,626
2,125
4,121
4,105
3,854
(m
)
22
63
51
57
68
61
693
792
2,214
2,580
2,512
5
17
30
103
64
519
1,283
1,087
290
361
361
4,612
4,287
7,375
8,189
7,721
228
458
184
216
332
80
1,756
3,375
14,021
14,901
3,525
(p
)
3,462
3,204
27,732
28,386
5,680
54
151
144
111
91
57
(1,959
)
(811
)
3,347
3,599
3,156
(522
)
(491
)
(302
)
(440
)
(414
)
(310
)
5,356
8,488
4,968
3,427
3,475
2,115
62,692
59,310
101,994
105,785
51,677
(18,861
)
(38,672
)
43,831
20,638
(a)
Gross sales revenue includes 100 per cent of subsidiaries sales revenue and the Groups
share of the sales revenue of equity accounted units (after adjusting for intra-subsidiary/equity
accounted unit sales).
(b)
EBITDA of subsidiaries and the Groups share of EBITDA relating to equity accounted units
represents profit before: tax, net finance items, depreciation and amortisation.
Underlying EBITDA excludes the same items that are excluded from Underlying earnings
(c)
Net earnings represent profit after tax for the year attributable to the shareholders of
the Rio Tinto Group. Earnings of subsidiaries are stated before finance items but after the amortisation of discount related to provisions. Earnings attributable to equity accounted
units include interest charges and amortisation of discount except that, from 2009 onwards, RBM earnings are before charging interest on third party debt. Earnings attributed
to business units do not include amounts that are excluded in arriving at Underlying earnings.
(d)
Includes Rio Tintos interests in Hamersley (100 per cent) and HIsmelt(R) (60 per cent).
(e)
The Group holds 65 per cent of Robe River Iron Associates, of which 30 per cent is held
through a 60 per cent owned subsidiary. The Groups net beneficial interest is, therefore, 53 per cent, net of amounts attributable to outside equity shareholders.
(f)
Rio Tinto completed the sale of its 100 per cent interest in the Corumbá mine, effective 18 September 2009.
(g)
Includes the Alcan group acquired in 2007, excluding Alcan Packaging which is shown as an
Asset held for sale, and excluding Alcan Engineered
Products which is shown as part of Other Operations, together with the aluminium businesses previously owned by Rio Tinto.
(h)
Under the terms of a joint venture agreement, Rio Tinto is entitled to 40 per cent of
additional material mined as a consequence of expansions and developments of the Grasberg facilities since 1998.
(i)
As a result of the IPO of Cloud Peak Energy Inc., on 20 November 2009, Rio Tinto now holds
a 48.3 per cent interest in the Antelope, Cordero Rojo and Spring Creek mines and a 24.1 percent interest in the Decker mine. These interests were formerly reported under Rio
Tinto Energy America but are now managed by Cloud Peak Energy. Rio Tinto completed the sale of its 100 per cent interest in the Jacobs Ranch mine on 1 October 2009. US Coal also includes the Groups 100 per cent interest in Colowyo mine.
(j)
Includes Rio Tintos 75.7 per cent interest in Coal and Allied, which is managed by Rio
Tinto Coal Australia, a 100 per cent subsidiary of Rio Tinto. The Group owns a 40 per cent interest in Bengalla and an 80 per cent interest in Mount Thorley through its investment in
Coal and Allied, giving a beneficial interest in those companies to the Group of 30.3 per cent and 60.6 per cent, respectively.
(k)
Diamonds includes Rio Tintos interests in Argyle (100 per cent), Diavik (60 per cent) and Murowa (77.8 per cent).
(l)
Includes Rio Tintos interests in Rio Tinto Fer et Titane (RTFT) (100 per cent), QMM (80
per cent) and Richards Bay Minerals (RBM) (attributable interest of 37 per cent). RBMs net earnings for 2009 onwards exclude interest charges on third party debt and its operating assets are shown before deducting net debt.
(m)
Includes Rio Tintos interests in Rio Tinto Borax (100 per cent) and Luzenac Talc (100 per cent).
(n)
Capital expenditure comprises the net cash outflow on purchases less disposals of
property, plant and equipment, capitalised evaluation costs and purchases less disposals of other intangible assets. The details provided include 100 per cent of subsidiaries capital
expenditure and Rio Tintos share of the capital expenditure of equity accounted units. Amounts relating to equity accounted units not specifically funded by Rio Tinto are deducted
before arriving at total capital expenditure for the Group.
Table of Contents
(o)
Operating assets of subsidiaries comprise net assets excluding post retirement assets and
liabilities, net of tax, and are before deducting net debt. Operating assets are less outside shareholders interests, which are calculated by reference to the net assets of the
relevant companies (i.e. net of such companies debt). For equity accounted units, Rio Tintos net investment excluding post retirement assets and liabilities (net of tax), is shown.
(p)
Net assets held for sale include Alcan Packaging and other assets held for sale.
Table of Contents
Table of Contents
PricewaterhouseCoopers
Brisbane, Australia
15 April 2010
In respect of the Board of Directors and
Shareholders of Rio Tinto Limited
Table of Contents
and January 1, 2008 and for the years
ended December 31, 2009 and 2008
Table of Contents
Independent Auditors Report
A-85
Statements of Financial Position
A-88
Statements of Comprehensive Income
A-90
Statements of Changes in Members Equity
A-91
Statements of Cash Flows
A-92
Notes to the Financial Statements
A-93
ThUS$: Thousands of United States dollars
CLP$: Chilean pesos
Table of Contents
Page
A-88
A-90
A-91
A-92
A-93
A-93
A-95
A-109
A-110
A-119
A-120
A-120
A-121
A-123
A-124
A-127
A-127
A-128
A-131
A-132
A-132
A-133
A-134
A-134
A-138
A-139
A-140
A-141
A-142
A-142
A-143
A-143
A-144
A-144
A-144
A-145
Table of Contents
Page
A-145
A-145
A-146
Table of Contents
as at December 31, 2009, 2008 and January 1, 2008
As at December 31,
As at December 31,
As at January 1,
2009
2008
2008
Notes
ThUS$
ThUS$
ThUS$
7
289,775
112,127
26,941
17
126,281
223,665
85,187
10
1,328,021
304,657
1,007,455
11
73,403
34,483
29,889
12
1,074,788
741,941
433,290
16
77,270
391,684
18,161
18
14,711
402,111
72,713
2,984,249
2,210,668
1,673,636
17
4,517
87,971
6,975
10
25,671
11,909
16,563
15
3,268
3,540
14
4,940,872
4,650,728
4,364,997
18
9,848
139,439
97,409
4,984,176
4,893,587
4,485,944
7,968,425
7,104,255
6,159,580
Table of Contents
as at December 31, 2009, 2008 and January 1, 2008
As at December 31,
As at December 31,
As at January 1,
2009
2008
2008
Notes
ThUS$
ThUS$
ThUS$
20
176,250
728,200
85,000
21
96,936
737,128
99,210
19
352,963
723,371
250,884
11
89,022
113,037
99,756
22
158,697
111,239
112,841
16
37,018
141
874,009
2,412,975
684,709
20
588,750
765,000
850,000
21
2,457
92,533
6,874
19
35,652
41,230
46,380
11
194,000
242,000
290,000
22
145,026
131,267
132,788
13
559,941
250,255
226,796
1,525,826
1,522,285
1,552,838
2,399,835
3,935,260
2,237,547
23
731,242
647,902
647,902
4,837,348
2,521,093
3,274,131
5,568,590
3,168,995
3,922,033
7,968,425
7,104,255
6,159,580
Table of Contents
for the years ended December 31, 2009 and 2008
2009
2008
Notes
ThUS$
ThUS$
24
7,071,049
8,319,875
26
(2,520,750
)
(2,585,973
)
4,550,299
5,733,902
25
14,196
12,081
(26,057
)
(30,907
)
(154,061
)
(256,628
)
(124,302
)
(109,878
)
32
(109,446
)
(61,015
)
(147,259
)
(56,126
)
(54,264
)
37,048
28
75,645
(775,960
)
4,024,751
4,492,517
13
(825,156
)
(919,370
)
3,199,595
3,573,147
3,199,595
3,573,147
Table of Contents
for the years ended December 31, 2009 and 2008
Paid-in capital
Retained earnings
Members equity
ThUS$
ThUS$
ThUS$
647,902
2,521,093
3,168,995
3,199,595
3,199,595
(800,000
)
(800,000
)
83,340
(83,340
)
731,242
4,837,348
5,568,590
647,902
3,274,131
3,922,033
3,573,147
3,573,147
(4,326,185
)
(4,326,185
)
647,902
2,521,093
3,168,995
Table of Contents
for the years ended December 31, 2009 and 2008
2009
2008
Notes
ThUS$
ThUS$
6,206,104
9,273,332
(2,055,854
)
(2,454,908
)
(361,849
)
(273,629
)
(30,030
)
(28,484
)
635
3,600
(62,894
)
(67,697
)
(262,828
)
(1,236,079
)
(559,717
)
(319,199
)
8
2,873,567
4,896,936
14
(507,218
)
(416,914
)
14
(607,351
)
(570,464
)
15
(3,631
)
(1,114,569
)
(991,009
)
893,800
643,200
11
250,000
(1,622,000
)
(85,000
)
11
(298,000
)
(48,000
)
11
(800,000
)
(4,326,185
)
(5,150
)
(4,756
)
(1,581,350
)
(3,820,741
)
177,648
85,186
112,127
26,941
289,775
112,127
83,340
83,340
Table of Contents
(1)
Reporting Entity
Percentage of
Equity %
57.5
30.0
10.0
2.5
100.0
(2)
Basis of Preparation
(a)
Statement of Compliance
Table of Contents
(2)
Basis of Preparation, Continued
(a)
Statement of Compliance, Continued
As at the date of the present financial statements a number of new standards, amendments
to standards and interpretations are not yet effective for the year December 31, 2009,
and have not been applied in preparing these financial statements. None of these is
expected to have an effect on the financial statements of the Company, except for IFRS 9
Financial Instruments, which becomes mandatory for the Companys 2010 financial
statements and is expected to impact the classification and measurement of financial
assets. The extent of the impact has not been determined.
(b)
Managements Responsibility
The information contained in these financial statements is the responsibility of the
Companys Management, who expressly manifests an explicit and unreserved statements of
compliance with IFRS.
(c)
Basis of Measurement
The financial statements have been prepared on the historical cost basis, except for
derivative financial instruments, which are measured at fair value.
(d)
Functional and Presentation Currency
These financial statements are presented in United States of America dollars, which is
the Companys functional currency. All financial information presented in dollars has
been rounded to the nearest thousand. The Company maintains accounting records in
United States of America dollars as authorized by the Companys Foreign Investment
Contract with the Chilean government. Transactions in other currencies are recorded at
actual rates of the transaction date. Year-end balances in foreign currencies are
translated into US Dollars at the applicable closing exchange rates.
(e)
Uses of Estimates and Judgments
The preparation of the financial statements in accordance with IFRSs requires
management to make a number of estimates and assumptions relating to the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the period. Actual results could differ from those
estimates. Significant items subject to such estimation and assumptions include the
carrying amount of property, plant and equipment, mining property, exploration and
intangibles; valuation allowances for receivables, inventories and deferred income tax
assets; environmental liabilities; financial instruments and obligations related to
employee benefits. Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized in the period in which the
estimates are revised and in any future periods affected.
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(2)
Basis of Preparation, Continued
(e)
Uses of Estimates and Judgments, Continued
Information about critical estimates and judgments in applying accounting policies that
have the most significant effect on the amounts recognized in the financial statement
includes:
-
Mine development expenses
-
Rehabilitation and restoration provision
-
Intangible assets
-
Revenue recognition
(f)
Change in Accounting Policy
The Company has prepared these financial statements in compliance with International
Financial Reporting Standards (IFRS).
These are the first financial statements issued under IFRS, where the Companys
transition date is January 1, 2008.
(3)
Significant Accounting Policies
(a)
Inventories
Minerals in process (including stockpile inventory), copper concentrate and copper
cathodes are valued at the lower of cost and net realizable value. Mining and milling
costs and non cash costs are included in the value of the inventories, as well as the
allocated costs of central maintenance and engineering and the on-site general and
administrative costs including all essential infrastructure support. Materials and
supplies are also valued at the lower of average cost and estimated net realizable
value.
Stockpile costs are allocated using the average weighted cost method.
Net realizable value is the estimated selling price in the ordinary course of business,
less the estimated costs of completion and selling expenses.
The medium-grade ore stockpiled for future use is valued at the lower of average
production cost and net realizable value.
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(3)
Significant Accounting Policies, Continued
(b)
Property, Plant and Equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated
depreciation and accumulated impairment charges. Cost includes expenditure that is
directly attributable to the acquisition of the asset and capitalized interest incurred
during the construction and development period and during subsequent expansion periods.
The cost of self-constructed assets includes the cost of materials and direct labor, any
other costs directly attributable to bringing the assets to a working condition for
their intended use, the costs of dismantling and removing the items and restoring the
site on which they are located and capitalized borrowing costs for qualifying assets.
When parts of an item of property, plant and equipment have different useful lives, they
are accounted for as separate items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined
by comparing the proceeds from disposal with the carrying amount of property, plant and
equipment, and are recognized net within other income in profit or loss.
Plant and equipment with a useful life of less than the life of the mine are depreciated
on a straight-line basis over the respective useful lives, ranging from 3 to 11 years.
The remaining items of plant and equipment are depreciated on a units-of-production
basis over the life of the proven and probable mineral reserves.
Mine development is depreciated on a units-of-production basis over the life of the
proven and probable mineral reserves. Land is not subject to depreciation.
Changes in estimates are accounted for over the estimated remaining economic life or the
remaining commercial reserves of the mine as applicable.
Total depreciation and amortization for the years ended December 31, 2009 and 2008 is
included as a cost of the production of inventories.
Expenditures for replacements and improvements are capitalized when the assets standard
of performance is significantly enhanced or the expenditure represents a replacement of
a component of an overall tangible fixed asset which has been separately depreciated.
Other mineral assets comprise:
Capitalized exploration, evaluation and development expenditure (including
development stripping) for properties in production
Production stripping (as described below in overburden removal costs)
Mineral rights
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(3)
Significant Accounting Policies, Continued
(c)
Depreciation of Property, Plant and Equipment
The carrying amounts of property, plant and equipment (including initial and any
subsequent capital expenditure) are depreciated to their estimated residual value over
the estimated useful lives of the specific assets concerned, or the estimated life of
the associated mine. Estimates of residual values and useful lives are reassessed
annually and any change in estimate is taken into account in the determination of
remaining depreciation charges. Depreciation commences on the date of commissioning for
those assets that are depreciated on the basis of production unit; while for those
assets that apply the straight line method of depreciation, it begins when they are
available for use.
The major categories of property, plant and equipment are depreciated on a unit of
production and/or straight-line basis using estimated lives indicated below:
25 to 34 years (Life of Mine)
Not depreciated
3 to 30 years straight-line depreciation
Based on reserves of mineral on a unit of
production basis
Based on applicable reserves of mineral
on a unit of
production basis
(d)
Intangible Assets
Amounts paid for the acquisition of identifiable intangible assets, are capitalized at
the fair value of consideration paid and are measured at cost less accumulated
amortization and impairment charges. Identifiable intangible assets with a finite life
are amortized on a straight-line basis over their expected useful life, which is
typically no greater than ten years.
Subsequent expenditures are capitalized only when it increases the future economic
benefits embodied in the specific asset to which it relates. All other expenditure,
including expenditure on internally generated goodwill and brands, is recognized in
profit or loss as incurred.
The Company has no identifiable intangible assets for which the expected useful life is
indefinite.
Amortization is calculated over the cost of the asset, or other amount substituted for
cost, less its residual value.
Amortization is recognized in profit or loss on a straight-line basis over the
estimated useful lives of intangible assets, other than goodwill, from the date that
they are available for use, since this most closely reflects the expected pattern of
consumption of the future economic benefits embodied in the asset.
Amortization methods, useful lives and residual values are reviewed at each financial
year-end and adjusted if appropriate.
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(3)
Significant Accounting Policies, Continued
(e)
Leased Assets
Assets held under leases which result in the Company receiving substantially all the
risk and rewards of ownership of the asset (financial leases) are capitalized at the
lower of the fair value of the property, plant and equipment or the estimated present
value of the minimum lease payments. Subsequent expenditures to initial recognition
the asset is accounted for in accordance with the accounting policy applicable to that
asset.
Operating lease assets are not capitalized and rental payments are included in the
income statement on a straight-line basis over the lease term.
The Company maintains only operating leases at the date of this report.
(f)
Other Assets
Other assets consist of cash advances to operational and capital vendors; employee
advances for the school expenses reimbursement program and other prepayment related to
mineral permits; income tax and other prepaid.
(g)
Impairment of Assets
(i)
Financial assets (including receivables)
A financial asset not carried at fair value through profit or loss is assessed at
each reporting date to determine whether there is objective evidence that it is
impaired. A financial asset is impaired if objective evidence indicates that a
loss event has occurred after the initial recognition of the asset, and that the
loss event had a negative effect on the estimated future cash flows of that asset
that can be estimated reliably.
Objective evidence that financial assets are impaired can include default or
delinquency by a debtor, restructuring of an amount due to the Company on terms
that the Company would not consider otherwise, indications that a debtor or issuer
will enter bankruptcy, the disappearance of an active market for a security. In
addition, for an investment in an equity security, a significant or prolonged
decline in its fair value below its cost is objective evidence of impairment.
The Company considers evidence of impairment for receivables. No receivables have
been found to be specifically impaired.
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(3)
Significant Accounting Policies, Continued
(g)
Impairment of Assets, Continued
(ii)
Non-financial assets
The carrying amounts of the Companys non-financial assets, other than inventories
and deferred tax assets, are reviewed at each reporting date to determine whether
there is any indication of impairment. Formal impairment tests for all other
assets are performed when there is an indication of impairment. At each reporting
date, an assessment is made to determine whether there are any indications of
impairment. The Company conducts annually an internal review of asset values which
is used as a source of information to assess for any indications of impairment.
External factors, such as changes in expected future processes, commodity price,
costs and other market factors are also monitored to assess for indications of
impairment. If any indication of impairment exists an estimate of the assets
recoverable amount is calculated.
The recoverable value is the greater of its value in use and its fair value less
costs to sell. The air value is determined as the amount that would be obtained
from the sale of the asset in an arms length transaction between knowledgeable
and willing parties. Fair value for mineral assets is generally determined as the
present value of the estimated future cash flows expected to arise from the
continued use of the asset, including any expansion prospects, and its eventual
disposal, using assumptions that an independent market participant may take into
account. These cash flows are discounted by an appropriate discount rate to
arrive at a net present value of the asset.
Value in use is determined as the present value of the estimated future cash
flows expected to arise from the continued use of the company in its present form
and its eventual disposal. Value in use is determined by applying assumptions
specific to the Companys continued use and cannot take into account future
development. These assumptions are different to those used in calculating fair
value and consequently the value in use calculation is likely to give a different
result (usually lower) to a fair value calculation.
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(3)
Significant Accounting Policies, Continued
(g)
Impairment of Assets, Continued
Basis:
Current (forward) market exchange rates
Cost of capital risk adjusted for the risk specific to
the asset
(h)
Trade and Other Payables
These liabilities are initially accounted for at their fair value and, subsequently, at
their amortized cost according to the effective interest method. The items shown in the
financial statements as current liabilities are settled in a period less than 12 months.
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(3)
Significant Accounting Policies, Continued
(i)
Income Taxes and Deferred Income Taxes
Income tax expense comprises current and deferred income taxes and is recognized in
profit and loss except for items recognized directly in equity as other comprehensive
income. Current tax is the expected tax payable or receivable on the taxable income or
loss for the year using rates enacted or substantively enacted at the year end, and
includes any adjustment to tax payable in respect of previous years.
Deferred income taxes are provided using the balance sheet method, providing for the
tax effect of temporary differences between the carrying amount of assets and
liabilities for financial reporting purposes and the amounts used for taxation
purposes. Where an asset has no deductible or depreciable amount for income tax
purposes, but has a deductible amount on sale or abandonment for capital gains tax
purposes, that amount is included in the determination of temporary differences. The
amount of deferred tax recognized is based on the expected manner and timing of
realization or settlement of the carrying amount of assets and liabilities, using tax
rates enacted or substantively enacted at period end.
A deferred tax asset is recognized only to the extent that it is probable that future
taxable profits will be available against which the asset can be utilized. Deferred tax
assets are reviewed at each balance sheet date and adjusted to the extent that it is no
longer probable that the related tax benefit will be realized.
Mining specific tax is treated as taxation arrangements when they have the
characteristics of a tax. This is considered to be the case when they are imposed under
government authority and the amount payable is calculated by reference to revenue
derived (net of any allowable deductions) after adjustment for items comprising
temporary differences. For Chile specific mining tax, current and deferred tax is
provided on the same basis as described above for other forms of taxation. Obligations
arising from royalty arrangements that do not satisfy these criteria are recognized as
current provisions and included in expenses.
(j)
Provisions
A provision is recognized if, as a result of a past event, the Company has a present
legal or constructive obligation that can be estimated reliably, and it is probable that
an outflow of economic benefits will be required to settle the obligation. Provisions
are determined by discounting the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of money and the risks specific to
the liability. The unwinding of the discount is recognized as finance cost.
(i)
Restoration and rehabilitation
The mining, extraction and processing activities of the Company normally give
rise to obligations for site closure or rehabilitation. Closure and
rehabilitation works can include facility decommissioning and dismantling;
removal or treatment of waste materials; site and land rehabilitation. The extent
of work required and the associated costs are dependent on the requirements of
relevant authorities and the Companys environmental policies.
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(3)
Significant Accounting Policies, Continued
(j)
Provisions, Continued
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December 31, 2009 and 2008
(3)
Significant Accounting Policies, Continued
(j)
Provisions, Continued
Closure and rehabilitation provisions are also adjusted for changes in estimates.
Those adjustments are accounted for as a change in the corresponding capitalized
cost. Changes to the capitalized cost result in an adjustment to future
depreciation and financial charges. Adjustments to the estimated amount and timing
of future closure and rehabilitation cash flows are a normal occurrence in light
of the significant judgments and estimates involved. Factors influencing those
changes include:
Revisions to estimated reserves, resources and lives of operations,
Developments in technology,
Regulatory requirements and environmental management strategies,
Changes in the estimated costs of anticipated activities, including the
effects of inflation and movements in foreign exchange rates, and
Movements in interest rates affecting the discount rate applied.
(ii)
Employee benefit
The Company has an agreement with its employees providing for payment of severance
indemnities on termination of employment. Provision has been estimated based upon
ultimate severance remuneration to be incurred.
(k)
Foreign Currency Transactions
The Companys reporting currency and the functional currency is the United States of
America dollars as this assessed to be the principal currency of the economic
environments in which they operate. Transactions denominated in foreign currencies
(currencies other than the functional currency of an operation) are translated to the
respective functional currency at exchange rates ruling at the dates of the underlying
transactions.
(l)
Financial Instruments
(i)
Non-derivative financial assets
The Company initially recognizes loans and receivables and deposits on the date
that they are originated. Loans and receivables are financial assets with fixed
or determinable payments that are not quoted in an active market. Such assets are
recognized initially at fair value plus any directly attributable transaction
costs. Subsequent to initial recognition loans and receivables are measured at
amortized cost using the effective interest method, less any impairment losses.
Loans and receivables comprise trade and other receivables.
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December 31, 2009 and 2008
(3)
Significant Accounting Policies, Continued
(l)
Financial Instruments, Continued
Cash and cash equivalents comprise cash balances and call deposits with original
maturities of three months or less. Bank overdrafts that are repayable on demand
and form an integral part of the Companys cash management are included as a
component of cash and cash equivalents for the purpose of the statement of cash
flows.
All other financial assets (including assets designated at fair value through
profit or loss) are recognized initially on the trade date at which the Company
becomes a party to the contractual provisions of the instrument.
The Company derecognizes a financial asset when the contractual rights to the cash
flows from the asset expire, or it transfers the rights to receive the contractual
cash flows on the financial asset in a transaction in which substantially all the
risks and rewards of ownership of the financial asset are transferred. Any
interest in transferred financial assets that is created or retained by the
Company is recognized as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the
statement of financial position when, and only when, the Company has a legal right
to offset the amounts and intends either to settle on a net basis or to realize
the asset and settle the liability simultaneously.
(ii)
Non-derivative financial liabilities
The Company initially recognizes debt securities issued and subordinated
liabilities on the date that they are originated. All other financial liabilities
(including liabilities designated at fair value through profit or loss) are
recognized initially on the trade date at which the Company becomes a party to the
contractual provisions of the instrument.
The Company derecognizes a financial liability when its contractual obligations
are discharged or cancelled or expire.
Financial assets and liabilities are offset and the net amount presented in the
statement of financial position when, and only when, the Company has a legal right
to offset the amounts and intends either to settle on a net basis or to realize
the asset and settle the liability simultaneously.
The Company has the following non-derivative financial liabilities: interest
bearings liabilities and borrowings and trade and other payables.
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December 31, 2009 and 2008
(3)
Significant Accounting Policies, Continued
(l)
Financial Instruments, Continued
Such financial liabilities are recognized initially at fair value plus any
directly attributable transaction costs. Subsequent to initial recognition these
financial liabilities are measured at amortized cost.
(iii)
Derivative financial instruments
The Company accounts for derivatives and hedging activities in accordance with IAS
39,
Financial Instruments: Recognition and Measurements
as amended. Derivate
instruments are recorded on the statement of financial position at their
respective fair value. Upon initial recognition attributable transaction costs
are recognized in profit or loss as incurred.
Derivatives, including those embedded in other contractual arrangements but
separated for accounting purposes because they are not clearly and closely related
to the host contract, are initially recognized at fair value on the date the
contract is entered into and are subsequently remeasured at their fair value. The
resulting gain or loss on re-measurement is recognized in the statement of
comprehensive income. The measurement of fair value is based on quoted market
prices. Where no price information is available from a quoted market source,
alternative market mechanisms or recent comparable transactions, fair value is
estimated based on the Companys views on relevant prices.
The Companys financial instrument policy is designed to achieve sales at the
average annual London Metal Exchange (LME) price shifted forward by one month and
three to four months, for cathodes and concentrates, respectively, for all tonnes
of copper shipped in a given calendar year. In the case where copper is sold with
a different quotation period than our targeted standard price or shipments are not
distributed evenly over the year, derivates financial instruments are entered into
to achieve the average sales price and timing described immediately above.
Changes in the fair value of these financial instruments are recognized
immediately in profit and loss.
Other non-trading derivatives
When a derivative financial instrument is not held for trading, and is not
designated in a qualifying hedge relationship, all changes in its fair value are
recognized immediately in profit or loss.
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December 31, 2009 and 2008
(3)
Significant Accounting Policies, Continued
(m)
Revenue Recognition
Revenue from the sale of goods in the course of ordinary activities is measured at the
fair value of the consideration received or receivable. Revenue is recognized when
persuasive evidence, usually in the form of an executed sales agreement, or an
arrangement exists, indicating there has been a transfer of risk and rewards to the
customer, the quantity and quality of the goods has been determined with reasonable
accuracy, the price is fixed or determinable, and collectability is reasonably assured.
This is generally when title to copper concentrate and copper cathode passes to the
buyer when the ships depart from the loading port. The passing of title to the customer
is based on the terms of the sales contracts. These contracts provide for the Company to
issue a provisional invoice, with the final sales price to be determined and invoiced.
For the provisional sales the sales price is determined on a provisional basis at the
date of sale; adjustments to the sales price subsequently occurs based on movements in
quoted market or contractual prices up to the date of final pricing. The period between
provisional invoicing and final pricing is typically between 60 and 120 days. Revenue
on provisional priced sales is recognized based on the estimated fair value of the total
consideration receivable. The revenue adjustment mechanism embedded within provisionally
priced sales arrangements has the character of a commodity derivative. Accordingly, the
fair value of the final sales price adjustment is re-estimated continuously and changes
in fair value are recognized as an adjustment to revenue. In all cases, fair value is
estimated by reference to forward market prices.
Under the copper concentrate sales contracts with smelters, final prices are set on a
specified future quotation period, typically three months after the month of arrival.
For copper cathode sales contracts, final prices are typically one month after the month
of arrival. Revenues are recorded under these contracts at the time title passes to the
buyer based on the forward price for the expected settlement period. The contracts, in
general, provide for a provisional payment based upon provisional assays and quoted
metal prices. Final settlement is based on the average applicable price for a specified
future period, and generally occurs from four to six months after shipment of copper
concentrates and two months for copper cathodes. Final sales are settled using smelter
weights, settlement assays (average of assays exchanged and/or umpire assay results) and
are priced as specified in the smelter contract. The form of the material being sold,
after deduction for smelting and refining is in an identical form to that sold on the
London Bullion Market. The form of the product is metal in flotation concentrate, which
is the final process for which the Company is responsible.
For the concentrate mineral sales the refining treatment and shipping charges are netted
against operating revenues in accordance with industry practices. There is also an
embedded derivative regarding refining treatment price participation clauses in the
concentrate mineral sales contracts which does not qualify for hedge accounting.
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December 31, 2009 and 2008
(3)
Significant Accounting Policies, Continued
(n)
Overburden Removal Costs
Overburden and other mine waste materials are often removed during the initial
development of a mine site in order to access the mineral deposit. This activity is
referred to as development stripping. The directly attributable costs (inclusive of an
allocation of relevant overhead expenditure) are initially capitalized as assets under
construction. Capitalization of development stripping costs ceases at the time that
saleable material begins to be extracted from the mine. On completion of development,
all assets included in assets under construction are transferred to other mineral
assets.
Removal of waste material normally continues throughout the life of a mine. Production
stripping commences at the time that saleable materials begin to be extracted from the
mine. The costs of production stripping are charged to profit and loss as operating
costs when the ratio of waste material to ore extracted for an area of interest is
expected to be constant throughout its estimated life. When the ratio of waste to ore
is not expected to be constant, production stripping costs are accounted for as
follows:
All costs are initially charged to profit and loss and classified as operating
costs
When the current ratio of waste to ore is greater than the estimated
life-of-mine ratio, a portion of the stripping costs (inclusive of an allocation
of relevant overhead expenditure) is capitalized to other mineral assets
In subsequent years when the ratio of waste to ore is less than the estimated
life-of-mine ratio, a portion of capitalized stripping costs is charged to the
income statement as operating costs
The amount of production stripping costs capitalized or charged in a financial year is
determined so that the stripping expense for the financial year reflects the estimated
life-of-mine ratio. Changes to the estimated life of mine ratio are accounted for
prospectively from the date of the change.
(o)
Exploration and Evaluation Expenses
Exploration and evaluation activity involves the search for mineral and water resources,
the determination of technical feasibility and the assessment of commercial viability of
an identified resource.
Exploration and evaluation activity includes:
Researching and analyzing historical exploration data
Gathering exploration data through topographical, geochemical and geophysical
studies
Exploratory drilling, trenching and sampling
Determining and examining the volume and grade of the resource
Surveying transportation and infrastructure requirements
Conducting market and finance studies
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December 31, 2009 and 2008
(3)
Significant Accounting Policies, Continued
(o)
Exploration and Evaluation Expenses, Continued
Administration costs that are not directly attributable to a specific exploration area
are charged to profit and loss. License costs paid in connection with a right to explore
in an existing exploration area are capitalized and amortized over the term of the
permit.
Exploration and evaluation expenditure (including amortization of capitalized license
costs) is charged to profit and loss as incurred, except where the existence of a
commercially viable mineral deposit has been established.
(p)
Development Expenditure
When proved reserves are determined and development is sanctioned, capitalized
exploration and evaluation expenditure is reclassified as assets under construction,
and is disclosed as a component of property, plant and equipment. All subsequent
development expenditure is capitalized and classified as assets under construction.
Development expenditure is net of proceeds from the sale of ore extracted during the
development phase.
On completion of development, all assets included in assets under construction are
reclassified as either plant and equipment or other mineral assets in case of
deferred stripping.
(q)
Finance Income and Finance Cost
Finance income comprises interest income on funds invested. Interest income is
recognized as it accrues in profit or loss using the effective interest method.
Finance costs comprise interest expense on borrowings, unwinding of the discount on
provisions, impairment losses recognized on financial assets. Borrowing costs that are
not directly attributable to the acquisition, construction or production of a
qualifying asset are recognized in profit or loss using the effective interest method.
(r)
Rounding of Amounts
Amounts in this financial report have, unless otherwise indicated, been rounded to the
nearest thousand dollars.
(s)
Comparatives
Where applicable, comparatives have been adjusted to disclose them on the same basis as
current period figures.
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December 31, 2009 and 2008
(4)
Transition to IFRS
(a)
Explanation of transition to IFRSs
(i)
Applying IFRS 1
These financial statements prepared under the IFRS accounting basis as at and for
the year ended December 31, 2009 (including comparative financial information for
the year ended December 31, 2008) include disclosures applicable for entities
reporting their first application of IFRS. Such disclosures prescribed by
International Financial Reporting Standard 1 First-Time Adoption of
International Financial Reporting Standards (IFRS 1 First Time Adoption)
include; transition accounting policies and adjustments from the Companys
previously applied accounting basis, an opening statement of financial position as
at the earliest comparative period presented on the basis of IFRS, reconciliation
of equity and reported profit or loss as of the date of transition, adjustments to
presentations of cash flow statements and other matters.
As stated in note 2(a), these are the Companys first financial statement prepared
in accordance with IFRSs.
The accounting polices set out in note have been applied in preparing the
financial statement for the year ended 31 December 2009, the comparative
information presented in the financial statement for the year ended 31 December
2008 and in the preparation of an opening IFRS statement of financial position at
1 January 2008 (the Companys date transition).
In preparing its opening IFRS statement of financial position, the Company has
adjusted amounts report previously in financial statement prepared in accordance
with Chilean GAAP (previous GAAP). An explanation of how the transition from
previous GAAP to IFRSs has affected the Companys financial position, financial
performance and cash flows is set out in the following tables and the notes that
accompany the tables.
(b)
Reconciliation between IFRS and generally accepted accounting principles in Chile
(Chilean GAAP)
(i)
Members equity as at December 31, 2008 and January 1, 2008
The equity reconciliation of Company Chilean GAAP to IFRS is the following:
1-Jan-08
31-Dec-08
ThUS$
ThUS$
3,906,402
3,153,364
16,606
16,606
(975
)
(975
)
15,631
15,631
3,922,033
3,168,995
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December 31, 2009 and 2008
(4)
Transition to IFRS, Continued
(ii)
Members equity as at December 31, 2008 and January 1, 2008, Continued
Explanation of differences
(a)
The conversion adjustment as at the date of transition is
the result of the process of re-evaluation of the depreciation methods
adopted by the Company in order to achieve a better model to reflect
consumption of the future economic benefits of its fixed assets. Amounts are
presented net of tax effect.
(b)
These adjustments are the result of the re-calculation of
deferred taxes according to IAS 12 Income Taxes.
(iii)
Statement of comprehensive income as of December 31, 2008
31-Dec-08
ThUS$
3,570,290
2,857
3,573,147
(5)
Financial Risk Management
The financial risk arising from the Companys operations are credit risk, liquidity risk,
market risk and operational risk. These risks arise in the normal course of business, and the
Company manages its exposure to them in accordance with the BHP Billiton Groups portfolio
risk management strategy. The objective of the strategy is to support the delivery of the
Group and Companys financial targets, while protecting its future financial security and
flexibility by taking advantage of the Companys operations and activities.
A cash flow at risk (CFaR) framework is used to measure the aggregate and diversified impact
of financial risk upon the Companys financial targets. The CFaR is defined as the worst
expected loss relative to projected business plan cash flow over a one year horizon under
normal market conditions. The CFaR includes board-approved limits.
The Financial risk management as at December 31, 2009 and 2008 consists in the following:
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December 31, 2009 and 2008
(5)
Financial Risk Management, Continued
(a)
Exposure to credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty
to a financial instrument fails to meet its contractual obligations, and arises
principally from the Companys receivables from customers. To manage credit risk the
Company maintains group-wide procedures covering the application for credit approvals,
granting and renewal of counterparty limits and monitoring of exposures against these
limits. As pat of these processes the financial viability of all counterparties is
regularly monitored and assessed.
The Companys credit risk exposures are categorized under the following:
(i)
Counterparties
The Company conducts transactions with the following major types of
counterparties:
Receivables counterparties the majority of sales to the Companys
customers are made on open terms.
Derivate counterparties counterparties to derivative contracts consist
of a diverse number of financial institutions and industrial counterparties
in the relevant markets.
Cash investment counterparties the Company holds short-term cash
investment with approved financial institutions.
The Company has no significant concentration of credit risk with any single
counterparty or group of counterparties.
The Companys exposure to credit risk is influenced mainly by the individual
characteristics of each customer.
The Company has established a credit policy under which each new customer is
analyzed individually for creditworthiness before the Companys standard payment
and delivery terms and conditions are offered. The Companys review includes
external ratings, when available, and in some cases bank references. Purchase
limits are established for each customer, which represent the maximum open
amount, these limits are reviewed quarterly. Customers that fail to meet the
Companys benchmark creditworthiness may transact with the Company only on a
prepayment basis.
Goods are sold subject to retention of title clauses, so that in the event of
non-payment the Company may have a secured claim. The Company does not require
collateral in respect of trade and other receivables.
The carrying amount of financial assets represents the maximum credit exposure.
The maximum exposure to credit risk at the reporting date was:
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December 31, 2009 and 2008
(5)
Financial Risk Management, Continued
Book value
Book value
2009
2008
ThUS$
ThUS$
1,280,904
282,307
47,117
22,350
1,328,021
304,657
25,671
11,909
25,671
11,909
1,353,692
316,566
The balances of the trade receivables as at December 31, 2009 and 2008
include the provisional invoices issued for copper concentrate and copper cathode
shipments. Such invoices are based on the weight measured by the Company and on
the tests subject to review and final agreement by the clients. According to the
terms and conditions of the sale contracts, the final price received will also be
dependent on the copper prices quoted on global metal exchanges, including the
LME, during the future quotational periods applicable to each delivery. As at
December 31, 2009 and 2008, provisional invoicing agreement sales have been valued
according to the future prices. Refining, treatment, and shipment charges are
offset against operating income, in accordance with industry standards. The
Company has not recorded a provision for uncollectable accounts.
The aging of current and non-current trade and other receivables at the reporting
date was:
Gross
Impaired
Gross
Impaired
2009
2009
2008
2008
ThUS$
ThUS$
ThUS$
ThUS$
1,325,170
291,685
1,965
4,707
886
8,265
25,671
11,909
1,353,692
316,566
The Company believes that the unimpaired amounts that are past due by more than
30 days are collectible, based on historic payment behavior and analyses of the
underlying customer credit ratings.
Table of Contents
December 31, 2009 and 2008
Based on historic default rates, the Company believes that no impairment
allowance is necessary in respect of trade receivables.
During 2009 and 2008 no renegotiation of the terms of receivables has occurred.
(ii)
Investments
The Company does not invest in securities.
(iii)
Guarantees
The Company has not issued financial guarantees.
(b)
Exposure to liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the
obligations associated with its financial liabilities that are settled by delivering
cash or another financial asset. The Companys approach to managing liquidity is to
ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Companys reputation.
The Companys strong credit profile and diversified funding sources ensure that
sufficient liquid funds are maintained to meet its daily cash requirements. The
Companys policy on counterparty credit exposure ensures that only counterparties of a
high credit standing are used for the investment of any excess cash.
In addition, the Company maintains the BHP Billiton Groups support and procedures as
illustrated bellow:
The Company resists granting longer payment terms to customers and not granting
open credit terms to existing secure customers unless they are backed by strong
financial strength. The President of marketings approval will be sought before
extended payment term is granted.
Alerts have been set up to track latest updates of our key customers with open
credit.
Deliveries to customers will be suspended when we have unusual overdue.
Marketing will stay in frequent contact with customers to head off late payments
and obtain better understanding of their recent development with heightened focus
on operating cash flows.
Table of Contents
December 31, 2009 and 2008
The following are the contractual maturities of financial liabilities, including
estimated interest payments and excluding the impact of netting agreements at December
31, 2009:
Current
Contractual
6 months or
6-12
Over 5
amount
cash flow
less
months
1-2 years
2-5 years
years
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
THUS$
THUS$
388,615
(442,615
)
(388,615
)
(9,000
)
(27,000
)
(18,000
)
765,000
(780,603
)
(138,538
)
(54,117
)
(366,571
)
(151,921
)
(69,456
)
283,022
(315,992
)
(71,335
)
(29,687
)
(57,183
)
(135,838
)
(21,949
)
99,393
(99,393
)
(86,273
)
(10,663
)
(2,457
)
It is not expected that the cash flows included in the maturity analysis will occur
significantly earlier, or significantly later than the settlement date.
(c)
Exposure to market risk
Market risk is the risk that changes in market interest rates, commodity prices and
foreign exchange rates will affect the Companys income or the value of its holdings of
financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimizing the return.
In executing its strategy, financial instruments are potentially employed in three
distinct but related activities. The following table summarises these activities and the
key risk management process.
Table of Contents
December 31, 2009 and 2008
Activity
Key management processes
1. Risk mitigation
Primary responsibility for identification and control of financial risks, including
authorizing and monitoring the use of financial instruments for the above activities and
stipulating policy thereon, rests with the Financial Risk Management Committee under
authority delegated by the Company Management Committee.
(i)
Interest rate risk
The Company is exposed to interest rate risk on its outstanding borrowings from
the possibility that changes in interest rates will affect future cash flows or
the fair value of variable interest rate. The interest rate is effective from the
beginning of the financial year and fixed/floating mix and balances are constant
over the year.
Table of Contents
December 31, 2009 and 2008
Based on the net debt position as at December 31, 2009, it is estimated that one
percentage point increase in the LIBOR interest rate will decrease the Companys
profit after taxation and equity by US$12.2 million (2008: decrease of US$16.4
million). This assumes that the change in interest rates is effective from the
beginning of the financial year and the fixed/floating mix and the balances are
constant over the year.
A sensitivity analysis is illustrated bellow:
2009
2008
ThUS$
ThUS$
9,678
11,150
2,143
2,561
3,069
12,239
16,362
(ii)
Commodity price risk
Contracts for the sale of commodities are executed whenever possible on a pricing
basis to achieve a relevant index target. Where pricing terms deviate from the
index, derivative commodity contracts are used when available to return realized
prices to the index.
Financial instruments with commodity price risk included in the following table
are those entered into for the following activity:
-
Economic hedging of prices on commodity contracts as
described above:
2009
2008
Fair value of
Fair value of
Fair value of
Fair value of
asset
liability
asset
liability
Forward commodity
ThUS$
ThUS$
ThUS$
ThUS$
130,798
(97,165
)
311,636
(831,092
)
130,798
(97,165
)
311,636
(831,092
)
126,281
(94,708
)
223,665
(738,559
)
4,517
(2,457
)
87,971
(92,533
)
Table of Contents
December 31, 2009 and 2008
The Companys exposure at December 31, 2009 and 2008 to the impact of movements in
commodity markets upon the financial instruments is set out in the following
table:
2009
2008
Impact on equity and
Impact on equity and
profit of 10% movement
profit of 10% movement
Units of
Net exposure
in market price
Net exposure
in market price
exposure
receive/(deliver)
(post-tax)
receive/(deliver)
(post-tax)
ThUS$
ThUS$
´000 tons
380
215,910
232
56,218
(iii)
Foreign currency risk
The US dollar is the functional currency of the Company and as a result currency
exposures arise from transactions and balances in currencies other than US dollar.
The Companys potential currency exposures comprise transactional exposure in
respect of non-functional currency monetary items
Monetary items, including financial assets and liabilities, denominated in
currencies other than the functional currency of an operation are periodically
restated to US dollar equivalents, and the associated gain or loss is taken to
profit or loss.
The following table shows the foreign currency risk on the financial assets and
liabilities of the Companys operations denominated in currencies other than the
functional currency of the operations at December 31, 2009:
Net financial
Net financial
assets/(liabilities)
assets/(liabilities)
2009
2008
Functional currency - US dollar
ThUS$
ThUS$
3,970
657
6,974
53,349
(97,845
)
82,035
(68,572
)
(62,370
)
(56,160
)
(108,897
)
(211,633
)
(35,226
)
The Companys foreign currency risk is managed as part of the risk management
strategy within the overall CFaR limit.
Table of Contents
December 31, 2009 and 2008
The principal non-functional currencies to which the Company is exposed are the
Chilean Pesos. Based on the Companys net financial assets and liabilities as at
31 December 2009 and 2008, a weakening of the US dollar against these currencies
as illustrated in the table below, with all other variables held constant, would
have affected post-tax profit and equity as follow:
2009
2008
ThUS$
ThUS$
Post-tax
Post-tax
Currency movement
profit
Equity
profit
Equity
1,710
1,710
545
545
The foreign exchange rate used as of December 31, 2009 was CL$507.10 to US$1
(CL$636.45 to US$1 for 2008).
The Company does not account for any fixed rate financial assets and
liabilities at fair value through profit or loss, and the Company does not
designate derivatives as hedging instruments under a fair value hedge accounting
model. Therefore a change in interest rates at the reporting date would not affect
profit or loss.
The asset and liabilities fair value approximates the carrying value.
Operational risk is the risk of direct or indirect loss arising from a wide variety of
causes associated with the Companys processes, personnel, technology and
infrastructure, and from external factors other than credit, market and liquidity risks
such as those arising from legal and regulatory requirements and generally accepted
standards of corporate behavior. Operational risks arise from all of the Groups
operations.
The Companys objective is to manage operational risk so as to balance the avoidance of
financial losses and damage to the Companys reputation.
(i)
Capital management
The Companys capital management policy is exclusively restricted by the covenants
established in the loan agreements with foreign banks. The net worth of the
Company may not be less than US$900 million, measured upon completing the
corresponding 12-month fiscal period.
Table of Contents
December 31, 2009 and 2008
The return on capital is measured regularly and its interpretation is according to
the market scenario, production restrictions and LME copper prices, among other
variables.
The dividend policy is analyzed by Management according to the profitability of
the periods and cash flows requirements. These requirements are strongly impacted
by the Companys capital projects, normal debt to creditors and taxes.
Additionally, precautions must be adopted before any eventual commodity price
drops and their possible impact on a negative cash flow outcome that might force
payments to clients.
The financial debt/equity ratio, calculated by the Company at the end of the
balance period is illustrated bellow:
2009
2008
ThUS$
ThUS$
2,399,835
3,935,260
(289,775
)
(112,127
)
2,110,060
3,823,133
5,568,590
3,168,995
5,568,590
3,168,995
0.38
1.21
(i)
Derivatives
The fair value of forward sales commodity forward contracts is based on their listed
market price. Fair values reflect the credit risk of the instrument and include
adjustments to take account of the credit risk of the Company and counterparty when
appropriate.
(ii)
Restoration and rehabilitation provisions
Fair value, which is determined for disclosure purposes, is calculated based on the
present value of future principal and interest costs, discounted at a rate of interest
at the reporting date.
Table of Contents
December 31, 2009 and 2008
The mix of cash and cash equivalent is as follows:
Jan 1,
2009
2008
2008
ThUS$
ThUS$
ThUS$
5
7
8
1,245
766
840
288,525
111,354
26,093
289,775
112,127
26,941
Cash equivalents of ThUS$288,525, ThUS$111,354 and ThUS$26,093 at December 31, 2009, 2008 and
January 1, 2008, respectively, consist of short term investments with an initial term of less
than one month in financial instruments issued by Commercial Banks and Central Bank of Chile
Securities. For the purpose of the statement of cash flows, the Company considers all highly
liquid debt instruments with original maturities of three months or less to be cash
equivalents.
The reconciliation of cash flows from operating activities for the years ended December 31,
2009 and 2008 is as follows:
2009
2008
Note
ThUS$
ThUS$
3,199,595
3,573,147
14
336,374
320,807
15
272
91
14
85,512
42,867
4,320
7,365
(637
)
(3,601
)
13
825,156
919,370
14
486,488
415,651
4,937,080
5,275,697
Table of Contents
December 31, 2009 and 2008
2009
2008
ThUS$
ThUS$
(1,023,364
)
702,798
(332,847
)
(308,651
)
(38,920
)
(4,594
)
97,384
(138,478
)
(370,408
)
472,487
47,458
(1,602
)
(640,192
)
637,918
(24,015
)
13,281
484,219
(515,841
)
(262,828
)
(1,236,079
)
2,873,567
4,896,936
December 31, 2009
Other non-
Derivatives
financial assets
Totals
Assets
Note
ThUS$
ThUS$
ThUS$
17
130,798
130,798
10
1,353,692
1,353,692
11
73,403
73,403
7
289,775
289,775
130,798
1,716,870
1,847,668
Other non-
Derivatives
financial liabilities
Totals
Liabilities
Note
ThUS$
ThUS$
ThUS$
20
765,000
765,000
11
283,022
283,022
19
388,615
388,615
21
99,393
99,393
99,393
1,436,637
1,536,030
Table of Contents
December 31, 2009 and 2008
December 31, 2008
Other non-
Derivatives
financial assets
Totals
Assets
Note
ThUS$
ThUS$
ThUS$
17
311,636
311,636
10
316,566
316,566
11
34,483
34,483
7
112,127
112,127
311,636
463,176
774,812
Other non-
Derivatives
financial liabilities
Totals
Liabilities
Note
ThUS$
ThUS$
ThUS$
20
1,493,200
1,493,200
11
355,037
355,037
19
764,601
764,601
21
829,661
829,661
829,661
2,612,838
3,442,499
Other non-
Derivatives
financial assets
Totals
Assets
Note
ThUS$
ThUS$
ThUS$
17
92,162
92,162
10
1,024,018
1,024,018
11
29,889
29,889
7
26,941
26,941
92,162
1,080,848
1,173,010
Other non-
Derivatives
financial liabilities
Totals
Liabilities
Note
ThUS$
ThUS$
ThUS$
20
935,000
935,000
11
389,756
389,756
19
297,264
297,264
21
106,084
106,084
106,084
1,622,020
1,728,104
Table of Contents
December 31, 2009 and 2008
(10)
Trade and Other Receivables
The composition of the balance of trade and other receivables as at December 31, 2009, 2008
and January 1, 2008 is the following:
2009
2008
Jan 1, 2008
ThUS$
ThUS$
ThUS$
142,931
5,250
126,872
1,129,516
252,957
840,999
1,272,447
258,207
967,871
46,459
19,609
29,045
9,115
26,841
10,539
55,574
46,450
39,584
1,328,021
304,657
1,007,455
25,671
11,909
16,563
25,671
11,909
16,563
(*)
Other accounts receivable from the sale of scrap, unused warehouse articles and
other sales.
Table of Contents
December 31, 2009 and 2008
(11)
Balances and Transactions with Related Companies
(a)
The accounts receivable from related companies as at December 31, 2009, 2008 and
January 1, 2008 consist in the following:
Nature of the
2009
2008
Jan 1, 2008
Company
relationship
ThUS$
ThUS$
ThUS$
Common owners
49,071
29,534
29,810
Common owners
22,926
3,427
Common owners
404
1,040
52
Miscellaneous
1,002
482
27
73,403
34,483
29,889
(b)
The accounts payable to related companies as at December 31, 2009, 2008 and January
1, 2008 consist in the following:
Nature of the
2009
2008
Jan 1, 2008
Company
relationship
ThUS$
ThUS$
ThUS$
Common owners
15,040
25,279
32,557
Common owners
2,410
26,737
5,175
Common owners
671
8,600
7,084
Common owners
145
2,808
Common owners
22,378
187
Common owners
48,276
48,462
28,621
Common owners
14,748
Miscellaneous
102
964
11,571
89,022
113,037
99,756
Common owners
91,150
118,750
166,750
Common owners
72,600
87,000
87,000
Common owners
24,200
29,000
29,000
Common owners
6,050
7,250
7,250
194,000
242,000
290,000
Table of Contents
December 31, 2009 and 2008
(11)
Balances and Transactions with Related Companies, Continued
(c)
The significant transactions with the related companies are summarized as follows:
2009
2008
Jan 1, 2008
Effect on profit
Effect on profit
Effect on profit
Nature of the
Amount
(debit)/credit
Amount
(debit)/credit
Amount
(debit)/credit
Company
relationship
Transaction
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Common owners
Sales agency commissions
15,565
(15,565
)
19,446
(19,446
)
21,224
(21,224
)
Common owners
Freights
114,276
(114,276
)
211,716
(211,716
)
240,811
(240,811
)
Common owners
Sales
264,611
264,611
250,781
250,781
629,942
629,942
Common owners
Reimbursement of
expatriates salaries
and others
23,205
(23,205
)
4,547
(4,547
)
10,782
(10,782
)
Common owners
Financial services
2,674
(2,674
)
2,798
(2,798
)
5,187
(5,187
)
Common owners
Reimbursement of
capital project
46,218
(46,218
)
53,924
(53,924
)
19,631
(19,631
)
Common owners
Marketing services
1,800
(1,800
)
1,800
(1,800
)
1,800
(1,800
)
Common owners
Sales commissions
958
(958
)
2,766
(2,766
)
588
(588
)
Common owners
Debt interest
4,697
(4,697
)
Corporation
Common owners
Debt interest
9,201
(9,201
)
15,647
(15,647
)
20,561
](20,561
)
Minority ownership
Debt interest
7,523
(7,523
)
7,815
(7,815
)
10,727
(10,727
)
Minority ownership
Debt interest
2,418
(2,418
)
2,605
(2,605
)
3,576
(3,576
)
Minority ownership
Debt interest
604
(604
)
651
(651
)
894
(894
)
Common property
Loan obtained
143,750
Minority ownership
Loan obtained
75,000
Minority ownership
Loan obtained
25,000
Minority ownership
Loan obtained
6,250
Common property
Debt paid
143,750
Common property
Debt paid
27,600
27,600
27,600
Minority ownership
Debt paid
89,400
14,400
14,400
Minority ownership
Debt paid
29,800
4,800
4,800
Minority ownership
Debt paid
7,450
1,200
1,200
Common owners
Dividends paid
460,000
2,487,556
3,087,750
Minority ownership
Dividends paid
240,000
1,297,856
1,611,000
Minority ownership
Dividends paid
80,000
432,619
537,000
Minority ownership
Dividends paid
20,000
108,154
134,250
Common owners
Sales
21,042
21,042
16,680
16,680
48,401
48,401
Common owners
Sales
102,278
102,278
8,398
8,398
39,167
39,167
Common owners
Sales
3,829
3,829
The subordinated debt to members at December 31, 2009, 2008 and January 1, 2008, consist in
the following:
2009
2008
Jan 1, 2008
ThUS$
ThUS$
ThUS$
139,150
166,750
194,350
72,600
87,000
101,400
24,200
29,000
33,800
6,050
7,250
8,450
242,000
290,000
338,000
(48,000
)
(48,000
)
(48,000
)
194,000
242,000
290,000
Table of Contents
December 31, 2009 and 2008
(11)
Balances and Transactions with Related Companies, Continued
Draw downs of subordinated debt to members have been made as follows:
US$295 million during December 1998, payable in 30 semi-annual payments commencing on June 15, 1999. Interest accrues at LIBOR plus 4% and is payable semi-annually on June 15 and December 15.
US$200 million during May and June 2000, payable in 30 semi-annual payments commencing on December 15, 2000. Interest accrues at LIBOR plus 4% and is payable semi-annually on June 15 and December 15.
US $150 million on May 11, 2001, with a grace period of 5 years for principal payable in 20 semi-annual payments commencing on June 15, 2006. Interest accrues at LIBOR plus 4% and is payable semi-annually on June 15 and December 15.
US$250 million loan was obtained in 2009, which was fully repaid on September 2009.
Under the terms of the subordinated loan agreement, the borrower can elect to capitalize
interest due on each payment date to existing debt. Interest payable is shown as a current
liability until such time as the election is made or until such interest is paid. No interest
was capitalized for the years ended December 31, 2009 and 2008.
The subordinated debt to members is unsecured.
Scheduled principal payments on subordinated debt to members at December 31, 2009 are as
follows:
Subordinated
debt to
members
Principal payments following the year ending December 31, 2009
ThUS$
48,000
48,000
48,000
48,000
28,333
21,667
242,000
Table of Contents
December 31, 2009 and 2008
(12)
Inventories
The inventories as at December 31, 2009, 2008 and January 1, 2008 consist of the following:
2009
2008
Jan 1, 2008
ThUS$
ThUS$
ThUS$
363,415
299,150
173,888
670,368
375,913
223,913
46,262
72,577
42,585
(5,257
)
(5,699
)
(7,096
)
1,074,788
741,941
433,290
(13)
Income Taxes and Deferred Income Taxes
(a)
Income tax expenses
The expense (benefit) for income taxes for the years ended December 31, 2009 and 2008
consist of the following:
2009
2008
ThUS$
ThUS$
515,470
895,911
309,686
23,459
825,156
919,370
Reconciliation of effective tax rate:
2009
2008
%
ThUS$
%
ThUS$
4,024,751
4,492,517
20.32
817,829
20.32
912,879
0.18
7,327
0.14
6,491
20.50
825,156
20.46
919,370
Table of Contents
December 31, 2009 and 2008
(13)
Income Taxes and Deferred Income Taxes, Continued
(b)
Deferred income taxes
Deferred taxes at December 31, 2009, 2008 and January 1, 2008 consist of the following:
2009
2008
Jan 1, 2008
Net deferred tax
ThUS$
ThUS$
ThUS$
250,255
226,796
192,588
309,686
23,459
34,208
559,941
250,255
226,796
Deferred tax asset (liability) by type of temporary difference
2009
2008
Jan 1, 2008
ThUS$
ThUS$
ThUS$
(363,070
)
(318,206
)
(244,617
)
35,164
31,269
53,007
(178,756
)
(137,138
)
(91,467
)
(53,279
)
173,820
56,281
(559,941
)
(250,255
)
(226,796
)
(14)
Property, Plant and Equipment
Property, plant and equipment as at December 31, 2009, 2008 and January 1, 2008, consist of
the following:
2009
2008
Jan 1, 2008
ThUS$
ThUS$
ThUS$
281,814
357,948
620,682
364,833
334,415
317,421
3,332,267
3,196,915
2,896,051
961,958
761,450
530,843
4,940,872
4,650,728
4,364,997
Table of Contents
December 31, 2009 and 2008
(14)
Property, Plant and Equipment, Continued
Property, plant and equipment as at December 31, 2009 and 2008 and January 1, 2008, is as
follows:
Other
Land and
Plant and
mineral
Assets under
building
equipment
assets
construction
Total
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
515,821
5,498,126
984,792
357,948
7,356,687
204,812
507,218
712,030
(9,195
)
(9,195
)
54,846
528,506
(583,352
)
570,667
6,017,437
1,189,604
281,814
8,059,522
(181,406
)
(2,301,211
)
(223,342
)
(2,705,959
)
(24,428
)
(307,642
)
(4,304
)
(336,374
)
(76,317
)
(76,317
)
(205,834
)
(2,685,170
)
(227,646
)
(3,118,650
)
364,833
3,332,267
961,958
281,814
4,940,872
472,019
4,870,083
748,669
620,682
6,711,453
236,123
416,914
653,037
(4,171
)
(4,171
)
43,802
632,214
(679,648
)
(3,632
)
515,821
5,498,126
984,792
357,948
7,356,687
(154,598
)
(1,974,032
)
(217,826
)
(2,346,456
)
(26,808
)
(288,483
)
(5,516
)
(320,807
)
(38,696
)
(38,696
)
(181,406
)
(2,301,211
)
(223,342
)
(2,705,959
)
334,415
3,196,915
761,450
357,948
4,650,728
Depreciation and amortization for the year ended as at December 31, 2009 and 2008 are included
as stockpile production cost.
Table of Contents
December 31, 2009 and 2008
(14)
Property, Plant and Equipment, continued
(a)
Other mineral assets:
Other minerals assets as at December 31, 2009, 2008 and January 1, 2008 consist of the
following:
2009
2008
Jan 1, 2008
ThUS$
ThUS$
ThUS$
251,692
251,692
251,692
879,706
674,894
438,771
51,422
51,422
51,422
6,784
6,784
6,784
1,189,604
984,792
748,669
(173,424
)
(169,328
)
(164,080
)
(51,422
)
(51,422
)
(51,422
)
(2,800
)
(2,592
)
(2,324
)
(227,646
)
(223,342
)
(217,826
)
961,958
761,450
530,843
Deferred stripping at December 31, 2009, 2008 and January 1, 2008 consist of the
following:
2009
2008
Jan 1, 2008
ThUS$
ThUS$
ThUS
674,894
438,770
439,399
691,300
651,775
408,954
(486,488
)
(415,651
)
(409,582
)
879,706
674,894
438,771
Disbursements for the period includes cash cost and depreciation of ThUS$607,351 and
ThUS$83,949 for year ended at December 2009, ThUS$570,464 and ThUS$81,311 for year ended
at December 2008 and ThUS$357,004 and ThUS$51,950 for year ended at December 2007. Also
cost of product includes waste absorbed and depreciation of ThUS$424,760 and ThUS$61,728
for year ended at December 2009, ThUS$362,843 and ThUS$52,808 for year ended at December
2008.
Table of Contents
December 31, 2009 and 2008
(14)
Property, Plant and Equipment, Continued
(b)
Write-off and disposals:
During the years ended December 31, 2009, 2008 and 2007, the Company determined values
for non-recoverable fixed assets, for which a charge to profit and loss was recorded as
follows:
2009
2008
2007
ThUS$
ThUS$
ThUS$
19,270
9,349
10,077
76,317
76,317
38,696
9,195
4,171
85,512
42,867
(c)
Additional information of property, plant and equipment:
1
As at the date of the present financial statements, the Company does not have property, plant and equipment given in guarantee.
2
Escondida does not have any commitments for fixed asset acquisitions.
3
During the periods comprised in these financial statements, the Company has not revalued its property, plant and equipment.
4
As at December 31, 2009 and 2008, the Company does not have assets under financial lease.
(15)
Intangible Assets
Intangible assets as at December 31, 2009, 2008 and January 1, 2008, consist of the following:
Gross intangible assets
Accumulated amortization
Intangible assets net
2009
2008
Jan 1, 2008
2009
2008
Jan 1, 2008
2009
2008
Jan 1, 2008
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
3,631
3,631
363
91
3,268
3,540
Table of Contents
December 31, 2009 and 2008
(16)
Current Tax Assets and Liabilities
As at December 31, 2009, 2008 and January 1, 2008, the Company determined -pursuant to the tax
laws currently in effect- the expense provision corresponding to the income tax period and
specific to the mining activity, by publication in the Official Law N°20,097, to which the
monthly provisional income tax payments were applied, as follows:
2009
2008
Jan 1, 2008
ThUS$
ThUS$
ThUS$
(426,572
)
(525,485
)
(1,133,266
)
(115,795
)
(413,567
)
(318,311
)
470,026
1,008,258
1,139,637
122,848
233,944
274,922
50,507
303,150
(37,018
)
24,429
85,044
15,239
2,123
3,299
1,792
211
191
1,130
77,270
391,684
18,161
(17)
Other Financial Assets
Other financial assets as at December 31, 2009, 2008 and January 1, 2008, recorded at fair
value with changes to profit and loss, consist in the following:
2009
2008
Jan 1, 2008
ThUS$
ThUS$
ThUS$
126,281
223,665
85,187
126,281
223,665
85,187
4,517
87,971
6,975
4,517
87,971
6,975
The fair value of financial assets is calculated using the Black-Scholes model. This is a
recognized and generally accepted valuation model and, therefore, it is used in valuing these
securities. The input data of the Black-Scholes model is based on market data and requires
management judgment. The crucial data input of the Black-Scholes model is extracted from the
market. Specifically, the respective metal prices were obtained from the LME and the LME
at-the-money (AT), and the volatility of the prices was extracted from the Bloomberg terminal.
Table of Contents
December 31, 2009 and 2008
(18)
Other Assets
The Companys other assets as at December 31, 2009, 2008 and January 1, 2008, consist in the
following:
Jan 1
2009
2008
2008
ThUS$
ThUS$
ThUS$
14,711
23,548
72,713
378,563
14,711
402,111
72,713
5,656
99,871
91,308
34,251
4,192
5,317
6,101
9,848
139,439
97,409
(a)
Restricted assets
The Restricted asset concept is associated to cash deposits to cover positions
associated to the quotational period hedging program. As consequence of the 2008 copper
prices the Company was required to set aside these amounts as restricted cash.
(b)
Medium grade ore stockpiles
During mining operations the portion of ore mined below a specific copper content grade
is stockpiled in the medium-grade ore stockpile for future use. During 2009 these
stockpiles were consumed into the production process. This ore is valued as described
in Note 3(a).
(c)
Recoverable withholding taxes
The Chilean Internal Revenue Service allows the recovery of tax withholdings related to
technical service contracts. The non-current part of these withholding taxes has been
included under other assets.
Table of Contents
December 31, 2009 and 2008
(19)
Trade and Other Payables
Trade and other payables as at December 31, 2009, 2008 and January 1, 2008, consist of the
following:
Jan 1,
2009
2008
2008
ThUS$
ThUS$
ThUS$
332,599
297,152
224,963
4,005
14,040
15,410
16,359
412,179
10,511
352,963
723,371
250,884
35,652
41,230
46,380
35,652
41,230
46,380
(20)
Interest Bearing Liabilities
The balances of interest bearing liabilities are summarized as follows:
Jan 1,
2009
2008
2008
ThUS$
ThUS$
ThUS$
176,250
728,200
85,000
176,250
728,200
85,000
588,750
765,000
850,000
588,750
765,000
850,000
Table of Contents
December 31, 2009 and 2008
(20)
Interest Bearing Liabilities, Continued
The balances of bank loans without guarantees are summarized as follows:
(a)
Export loans
As at December 2009, 2008 and January 1, 2008, the Company shows the following export
loans:
Jan 1,
Bank or financial institution
2009
2008
2008
Current
ThUS$
ThUS$
ThUS$
50,310
50,389
50,406
100,364
15,130
15,037
10,019
100,915
85,684
36,088
39,356
30,152
15,064
35,110
13,047
647,071
643,200
Table of Contents
December 31, 2009 and 2008
(20)
Interest Bearing Liabilities, Continued
(b)
Unsecured bank loans
The balances of the unsecured bank loans are summarized as follows:
2008
Jan 1, 2008
2009
Non-
Non-
International banks
Current rate
Beginning
Total
Non-current
Current
Total
current
Current
Total
current
Current
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
(1) L+0.50
%
1998
275,000
275,000
275,000
275,000
275,000
275,000
(2) L+0.175
%
2001
25,000
25,000
50,000
25,000
25,000
(2) L+0.025
%
2001
140,000
105,000
35,000
175,000
140,000
35,000
210,000
175,000
35,000
(2) L+0.275
%
2001
50,000
25,000
25,000
75,000
50,000
25,000
100,000
75,000
25,000
(2) L+0.275
%
2005
90,000
90,000
90,000
90,000
90,000
90,000
(2) L+0.02
%
2005
210,000
183,750
26,250
210,000
210,000
210,000
210,000
765,000
588,750
176,250
850,000
765,000
85,000
935,000
850,000
85,000
643,200
643,200
765,000
588,750
176,250
1,493,200
765,000
728,200
935,000
850,000
85,000
(1)
L Monthly Libor
(2)
L Semi-annual Libor
2009
2008
Current
Non-
Non-
Jan 1, 2008
Debt with owners
rate
Beginning
Total
Current
Current
Total
current
Current
Total
Non-current
Current
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
1998
2000
(3) L+ 4
%
2001
139,150
111,550
27,600
166,750
139,150
27,600
194,350
166,750
27,600
1998
2000
(3) L+ 4
%
2001
72,600
58,200
14,400
87,000
72,600
14,400
101,400
87,000
14,400
1998
2000
(3) L+ 4
%
2001
24,200
19,400
4,800
29,000
24,200
4,800
33,800
29,000
4,800
1998
2000
(3) L+ 4
%
2001
6,050
4,850
1,200
7,250
6,050
1,200
8,450
7,250
1,200
242,000
194,000
48,000
290,000
242,000
48,000
338,000
290,000
48,000
1,007,000
782,750
224,250
1,783,200
1,007,000
776,200
1,273,000
1,140,000
133,000
(3)
Semi-annual LIBOR
(*)
These amounts correspond to the subordinated debt, which is disclosed under Note 11
(b).
Table of Contents
December 31, 2009 and 2008
(20)
Interest Bearing Liabilities, Continued
On June 12, 1998 the Company entered into an unsecured loan agreement for the amount of US$275
million with BNP Paribas. As at June 30, 2009 the interest rate is LIBOR + 0.50%. The loan is
due for repayment in June 2011 (full amount).
On September 14, 2001, the Company entered into an unsecured loan agreement for the amount of
US$500 million, of which US$350 million is with Japan Bank for International Cooperation, and
US$150 million with a syndicate of banks, with The Bank of Tokyo-Mitsubishi Ltd. being the
agent bank. At June 30, 2003, the total loan had been drawn down. The loan with Japan Bank
for International Cooperation is payable in 20 semi-annual payments commencing March 1, 2004
and bears interest at LIBOR (180 day) plus 0.25%. The syndicate loan with The Bank of
Tokyo-Mitsubishi Ltd. as lead bank is payable in 12 semi-annual payments commencing March 1,
2004, and at commencement bore interest at LIBOR (180 days) + 0.90%. On March 2006 the
interest rate was renegotiated and decreased to Libor (180 days) + 0.175%. The outstanding
balance as of December 31, 2009 amounted to US$140 million (December 31, 2008: US$200
million).
On September 14, 2001, the Company entered into an unsecured loan agreement for the amount of
US$200 million with Kreditanstalt für Wiederaufbau. The loan is payable in 16 semi-annual
payments commencing April 1, 2004. At commencement the loan bore interest at LIBOR (180 days)
+ 0.75%. On December 2005, the interest rate was renegotiated and decreased to a rate of LIBOR
(180 days) + 0.275%. The maturity of the loan did not change. The balance outstanding as of
December 31, 2009 amounted to US$50 million. (December 31, 2008: US$75 million).
On January 31, 2005, the Company entered into an unsecured loan agreement for the amount of
US$300 million of which US$210 million is with Japan Bank for International Cooperation and
US$90 million with a syndicate of banks, with The Bank of Tokyo-Mitsubishi UFJ Ltd being the
agent bank. The loan with Japan Bank for International Cooperation bears interest at LIBOR
(180 days) + 0.20% and will mature after 12 years commencing January 31, 2010. The syndicate
loan with The Bank of Tokyo-Mitsubishi Ltd. as lead bank bears interest at LIBOR (180 days) +
0.275% and will mature in 5 years. The balance outstanding as of December 31, 2009 was of
US$300 million (as of December 31, 2008: US$300 million).
Table of Contents
December 31, 2009 and 2008
(20)
Interest Bearing Liabilities, Continued
Scheduled principal payments on senior unsecured debt as at December 31, 2009 are as follows:
ThUS$
176,250
361,250
61,250
61,250
26,250
78,750
765,000
(c)
As at December 31, 2009, the Company does not maintain lines of credit with banks.
The above loans in (b) are subject to certain covenants, the most restrictive of which
require that:
(i)
The total debt to Earnings Before Interest, Tax, Depreciation and
Amortization (EBITDA) ratio being no greater than 2.75; and,
(ii)
The net worth of the Company may not be less than US$900 million.
The senior unsecured debt ranks pari passu with any other senior unsecured debt.
The Company was in compliance with all debt covenants as at December 31, 2009 and 2008.
(21)
Other Financial Liabilities
The other financial liabilities as at December 31, 2009, 2008 and January 1, 2008 consist in
the following:
2009
2008
Jan 1, 2008
ThUS$
ThUS$
ThUS$
94,708
738,559
60,899
2,228
(1,431
)
38,311
96,936
737,128
99,210
2,457
92,533
6,874
2,457
92,533
6,874
Other financial liabilities balances are related to quotational period hedging program and
the balances at mark to market at December 31, 2009, 2008 and January 1, 2008 as commodity
contracts. Other derivative contracts are related to certain sales contracts associated to
refining treatment price participation.
Table of Contents
December 31, 2009 and 2008
(22)
Provisions
The provisions as at December 31, 2009, 2008 and January 1, 2008 consist in the following:
2009
2008
Jan 1, 2008
ThUS$
ThUS$
ThUS$
85,905
61,326
63,800
70,393
47,571
47,131
2,399
2,342
1,910
158,697
111,239
112,841
143,313
130,676
127,423
1,713
591
5,365
145,026
131,267
132,788
(a)
Severance as at December 31, 2009, 2008 and January 1, 2008, consist of the
following:
Jan 1,
2009
2008
2008
ThUS$
ThUS$
ThUS$
61,326
63,800
39,932
14,759
16,858
17,639
(3,636
)
(11,567
)
(4,331
)
13,456
(7,765
)
10,560
85,905
61,326
63,800
(b)
Restoration and rehabilitation as at December 31, 2009, 2008 and January 1, 2008
consist of the following:
2009
2008
Jan 1, 2008
ThUS$
ThUS$
ThUS$
130,676
127,423
88,043
12,637
3,253
40,769
(1,389
)
143,313
130,676
127,423
Table of Contents
December 31, 2009 and 2008
(22)
Provisions, Continued
(i)
Increase as at December 31, 2009, 2008 and January 1, 2008 consists of
the following:
Jan 1,
2009
2008
2008
ThUS$
ThUS$
ThUS$
4,600
3,253
3,501
8,037
37,268
12,637
3,253
40,769
The estimated undiscounted value of the restoration and rehabilitation provision
is ThUS$377,590 and ThUS$367,435 as at December 31, 2009 and 2008, respectively.
The discount rate applied to the cash flows is 3.5% in both years and it is not
expected to require significant payments in the next five years.
The provision for restoration and rehabilitation includes the dismantling of all
the mine site facilities including Los Colorados and Laguna Seca plants, the
Cathode Oxide plant, Cathode Sulphide Leach plant, a portion of the Coloso port
facilities and the rehabilitation of the Salar de Punta Negra environment.
(23)
Paid-in Capital
Paid-in capital has been contributed as follows:
ThUS$
65,727
1,497
22,877
6,110
6,013
161,000
196,700
54,578
16,700
16,700
50,000
50,000
83,340
731,242
(*)
The Companys initial capital, of ThUS$65,727 was contributed by the former partners
of Minera Utah de Chile Inc. and Getty Mining (Chile) Inc., and relates to property,
plant and equipment, cash advances and exploration expenses
Table of Contents
December 31, 2009 and 2008
(23)
Paid-in Capital, Continued
According to the Foreign Investment Contract between the state of Chile and the Escondidas
owners, the financial debt / equity ratio must not be higher than 75% and lower than 25% by
the end of each calendar year. The compliance by the foreign investors with the referred
percentage is verified by the Executive Vice Presidency of the Chile Foreign Investment
Committee as of December 31 of each year. To comply with this legal requirement, the Company
has capitalized the retained earnings disclosed above.
The breakdown of the dividends distributed during 2009, 2008 and January 1, 2008, is the
following:
Ownership
Jan 1,
Share
2009
2008
2008
Owners
%
ThUS$
ThUS$
ThUS$
57.5
460,000
2,487,556
3,087,750
30.0
240,000
1,297,856
1,611,000
10.0
80,000
432,619
537,000
2.5
20,000
108,154
134,250
100.0
800,000
4,326,185
5,370,000
(24)
Revenue
The Company generates revenue from production and sales of the following products: copper
concentrate and copper cathode.
The copper concentrate also contains gold and silver quantities traded. These represent 6% in
2009 and 2% in 2008, of total copper concentrate revenue.
Revenue for the years ended December 31, 2009 and 2008 consists of the following:
2009
Copper
Copper
concentrate
cathodes
Total
ThUS$
ThUS$
ThUS$
5,200,581
1,377,531
6,578,112
101,177
101,177
391,760
391,760
5,200,581
1,870,468
7,071,049
Table of Contents
December 31, 2009 and 2008
2008
Copper
Copper
concentrate
cathodes
Total
ThUS$
ThUS$
ThUS$
6,393,543
1,399,358
7,792,901
251,115
251,115
275,859
275,859
6,393,543
1,926,332
8,319,875
2009
2008
ThUS$
ThUS$
13,374
11,196
822
885
14,196
12,081
2009
2008
Note
ThUS$
ThUS$
844,136
833,962
711,690
825,868
522,834
720,246
14
336,374
320,807
27
413,213
280,027
14
76,317
38,696
(383,814
)
(433,633
)
2,520,750
2,585,973
Table of Contents
December 31, 2009 and 2008
2009
2008
ThUS$
ThUS$
197,887
183,788
14,759
16,858
131,538
12,227
69,029
67,154
413,213
280,027
2009
2008
ThUS$
ThUS$
4,269
4,573
1,154
1,236
161
172
5,584
5,981
2009
2008
Note
ThUS$
ThUS$
29
(67,214
)
(75,062
)
33
142,222
(704,499
)
637
3,601
75,645
(775,960
)
Table of Contents
December 31, 2009 and 2008
2009
2008
ThUS$
ThUS$
48,862
52,685
14,032
15,012
4,730
4,470
(410
)
2,895
67,214
75,062
*
Related to unsecured bank loans.
2009
2008
ThUS$
ThUS$
30,801
31,318
68,874
45,315
45,414
47,156
37,844
49,552
32,192
34,153
450,896
497,175
660,021
704,669
Table of Contents
December 31, 2009 and 2008
2009
2008
ThUS$
ThUS$
104,380
54,926
5,066
6,089
109,446
61,015
2009
2008
ThUS$
ThUS$
(407,427
)
(160,395
)
549,649
(544,104
)
142,222
(704,499
)
(a)
Lease
The Company as at December 31, 2009 and 2008 does not maintain any assets under a
financial leasing system.
(b)
Operating leases
Those assets under operative leasing are not capitalized and their lease payments are
included in the profit and loss on a straight-line base throughout the leasing period.
For the years
2009 and 2008, the total operating leases expense amounted to ThUS$44,621 and
ThUS$27,646, respectively.
Table of Contents
December 31, 2009 and 2008
Operative leasing contract
2009
2008
ThUS$
ThUS$
88,431
44,621
44,900
75,238
43,758
38,442
28,441
37,532
3,281
25,328
3,281
208,811
224,442
Article No. | Page No. | |||||
Articles of Association
|
6 | |||||
Preliminary
|
6 | |||||
1 |
Table A not to apply
|
6 | ||||
2 |
Interpretation
|
6 | ||||
3 |
Income and Capital Rights
|
15 | ||||
Share Capital
|
20 | |||||
4 |
Liability of members is limited
|
20 | ||||
5 |
Consolidation, subdivision and cancellation
|
20 | ||||
6 |
Purchase of own shares
|
21 | ||||
7 |
Reduction of capital
|
22 | ||||
Shares
|
22 | |||||
8 |
Rights attaching to shares on issue
|
22 | ||||
8A |
DLC Dividend Share
|
22 | ||||
9 |
Directors power to allot
|
23 | ||||
10 |
Commissions on issue of shares
|
25 | ||||
11 |
Renunciation of allotment
|
25 | ||||
12 |
Trust etc. interests not recognised
|
25 | ||||
Share Certificates
|
25 | |||||
13 |
Issue of share certificates
|
25 | ||||
14 |
Form of share certificate
|
25 | ||||
15 |
Joint holders
|
26 | ||||
16 |
Replacement of share certificates
|
26 | ||||
Calls on Shares
|
26 | |||||
17 |
Power to make calls
|
26 | ||||
18 |
Liability for calls
|
26 | ||||
19 |
Interest on overdue amounts
|
27 | ||||
20 |
Other sums due on shares
|
27 | ||||
21 |
Power to differentiate between holders
|
27 | ||||
22 |
Payment of calls in advance
|
27 | ||||
Forfeiture and Lien
|
27 | |||||
23 |
Notice on failure to pay a call
|
27 | ||||
24 |
Forfeiture for non-compliance
|
28 | ||||
25 |
Disposal of forfeited shares
|
28 | ||||
26 |
Holder to remain liable despite forfeiture
|
28 | ||||
27 |
Tax liabilities
|
28 | ||||
28 |
Lien on partly-paid shares
|
29 | ||||
29 |
Sale of shares subject to lien
|
29 | ||||
30 |
Evidence of forfeiture
|
30 | ||||
Variation of Rights
|
30 | |||||
31 |
Evidence of forfeiture
|
30 | ||||
32 |
Matters not constituting variation of rights
|
31 | ||||
33 |
Separate approvals of Class Rights Actions
|
31 | ||||
Transfer of Shares
|
32 | |||||
34 |
Form of transfer
|
32 |
Article No. | Page No. | |||||
35 |
Balance certificate
|
33 | ||||
36 |
Right to refuse registration
|
33 | ||||
37 |
Retention of transfers
|
34 | ||||
38 |
No fee on registration
|
34 | ||||
39 |
Deleted
|
34 | ||||
40 |
Deleted
|
34 | ||||
Transmission of Shares
|
34 | |||||
41 |
Persons entitled on death
|
34 | ||||
42 |
Election by persons entitled by transmission
|
34 | ||||
43 |
Rights of persons entitled by transmission
|
34 | ||||
44 |
Deleted
|
35 | ||||
45 |
Untraced Shareholders
|
35 | ||||
General Meetings
|
35 | |||||
46 |
Annual General Meetings
|
35 | ||||
47 |
Convening and Location of General Meetings
|
36 | ||||
Notice of General Meetings
|
36 | |||||
48 |
Length of notice for General Meetings
|
36 | ||||
49 |
Contents of notice of General Meetings
|
37 | ||||
Proceedings at General Meetings
|
37 | |||||
50 |
Chairman
|
37 | ||||
51 |
Quorum
|
37 | ||||
52 |
Lack of quorum
|
37 | ||||
53 |
Conduct of meetings
|
38 | ||||
54 |
Adjournment and notice of adjourned meeting
|
38 | ||||
55 |
Amendments to resolutions
|
38 | ||||
Polls
|
39 | |||||
56 |
Demand for poll
|
39 | ||||
57 |
Procedure on a poll
|
39 | ||||
58 |
Voting on a poll
|
40 | ||||
59 |
Timing of poll
|
40 | ||||
Votes of Members
|
40 | |||||
60 |
Votes attaching to shares
|
40 | ||||
61 |
Votes of joint holders
|
41 | ||||
62 |
Deleted
|
41 | ||||
63 |
Restriction on voting in particular circumstances
|
41 | ||||
64 |
Change of control
|
43 | ||||
65 |
Voting by guardian
|
53 | ||||
66 |
Validity and result of vote
|
53 | ||||
Proxies
|
54 | |||||
67 |
Appointment of Proxies
|
54 | ||||
67A |
Multiple Proxies
|
54 | ||||
68 |
Form of proxy
|
54 | ||||
69 |
Deposit of form of proxy
|
55 | ||||
70 |
Rights of proxy
|
56 | ||||
71 |
Termination of proxys authority
|
56 | ||||
72 |
Corporations Acting by Representatives
|
57 | ||||
Directors
|
57 | |||||
73 |
Number of Directors
|
57 | ||||
74 |
Share qualification
|
57 | ||||
75 |
Directors remuneration
|
57 |
3
Article No. | Page No. | |||||
76 |
Other remuneration of Directors
|
58 | ||||
77 |
Directors expenses
|
58 | ||||
78 |
Directors pensions and other benefits
|
58 | ||||
79 |
Appointment and powers of executive Directors
|
58 | ||||
80 |
Alternate Directors
|
59 | ||||
Appointment and Retirement of Directors
|
60 | |||||
81 |
Deleted
|
60 | ||||
82 |
Retirement at Annual General Meeting
|
60 | ||||
83 |
Deleted
|
60 | ||||
84 |
Re-election of retiring Director
|
60 | ||||
85 |
Election of two or more Directors
|
61 | ||||
86 |
Nomination of Director for election
|
61 | ||||
87 |
Period for Nomination of Directors for election
|
61 | ||||
88 |
Election or appointment of additional Director
|
61 | ||||
89 |
Vacation of office
|
61 | ||||
90 |
Removal of Director
|
62 | ||||
Meetings and Proceedings of Directors
|
62 | |||||
91 |
Convening of meetings of Directors
|
62 | ||||
92 |
Quorum
|
63 | ||||
93 |
Chairman
|
63 | ||||
94 |
Casting vote
|
63 | ||||
95 |
Number of Directors below minimum
|
63 | ||||
96 |
Telephone Board Meetings
|
63 | ||||
97 |
Directors written resolutions
|
63 | ||||
98 |
Validity of proceedings
|
64 | ||||
Directors Interests
|
64 | |||||
99 |
Authorisation of Directors interests
|
64 | ||||
99A |
Directors may have interests
|
65 | ||||
100 |
Restrictions on quorum and voting
|
66 | ||||
100A |
Confidential information
|
68 | ||||
101 |
Directors interests general
|
68 | ||||
Committees of the Directors
|
69 | |||||
102 |
Appointment and constitution of committees
|
69 | ||||
103 |
Proceedings of committee meetings
|
69 | ||||
Powers of Directors
|
70 | |||||
104 |
General powers
|
70 | ||||
105 |
Powers and obligations in relation to the Sharing Agreement
|
70 | ||||
106 |
Deleted
|
70 | ||||
107 |
Appointment of attorney
|
70 | ||||
108 |
Signature on cheques etc.
|
71 | ||||
109 |
Borrowing powers
|
71 | ||||
110 |
Secretary
|
74 | ||||
111 |
The Seal
|
74 | ||||
112 |
Authentication of Documents
|
75 | ||||
Profits and Reserves
|
75 | |||||
113 |
Establishment of reserves
|
75 | ||||
114 |
Business bought as from past date
|
75 | ||||
Dividends
|
76 | |||||
115 |
Dividends
|
76 | ||||
116 |
Distribution in specie
|
76 |
4
Article No. | Page No. | |||||
117 |
No dividend except out of profits
|
76 | ||||
118 |
Ranking of shares for dividend
|
76 | ||||
119 |
Manner of payment of dividends
|
76 | ||||
120 |
Uncashed dividend cheques
|
77 | ||||
121 |
Joint holders
|
77 | ||||
122 |
Record date for dividends
|
77 | ||||
123 |
No interest on dividends
|
77 | ||||
124 |
Retention of dividends
|
77 | ||||
125 |
Unclaimed dividend
|
78 | ||||
126 |
Waiver of dividend
|
78 | ||||
127 |
Capitalisation of Profits and Reserves
|
78 | ||||
128 |
Scrip Dividends
|
79 | ||||
Accounts
|
80 | |||||
129 |
Accounting records
|
80 | ||||
130 |
Copies of accounts for members
|
80 | ||||
131 |
Validity of Auditors acts
|
81 | ||||
132 |
Auditors right to attend General Meetings
|
81 | ||||
Communications with Members
|
81 | |||||
133 |
Service of notices
|
81 | ||||
134 |
Joint holders
|
82 | ||||
135 |
Deceased and bankrupt members
|
82 | ||||
136 |
Overseas members
|
83 | ||||
137 |
Uncontactable members
|
83 | ||||
138 |
Suspension of postal services
|
83 | ||||
138A |
Signature or authentication of documents sent by electronic means
|
83 | ||||
139 |
Statutory provisions as to notices
|
83 | ||||
Winding Up
|
84 | |||||
140 |
Directors power to petition
|
84 | ||||
141 |
Distribution of assets in specie
|
84 | ||||
142 |
Destruction of Documents
|
84 | ||||
Directors Liabilities
|
85 | |||||
143 |
Indemnity
|
85 | ||||
143A |
Insurance
|
86 | ||||
143B |
Defence expenditure
|
86 | ||||
144 |
Further Provision on Shares in Uncertificated Form
|
87 |
5
1 | Neither the regulations in Table A in the Companies (Tables A to F) (Amendment) Regulations 1985 nor any other articles or regulations which may apply to companies under the Statutes, unless excluded or modified, shall apply to the Company. |
2 | In these Articles (if not inconsistent with the subject or context) the words and expressions set out in the first column below shall bear the meanings set opposite to them respectively:- |
Aggregate Publicly-held
Ordinary Shares
|
means all of the Publicly-held Rio Tinto Ordinary Shares and all of the Publicly-held RTL Ordinary Shares from time to time; | |
|
||
Alternate Director
|
means a person appointed from time to time as an Alternate Director in accordance with these Articles; | |
|
||
Applicable Regulation
|
means, in the case of RTL, applicable Australian law and regulations (including listing rules) and, in the case of the Company, applicable English laws and regulations (including listing rules and guidelines with which companies listed on the London Stock Exchange customarily comply), in each case for the time being in force and taking account of all waivers or variations from time to time applicable (in particular situations or generally) to RTL or, as the case may be, the Company; | |
|
||
Articles
|
means these Articles of Association as from time to time altered; | |
|
||
Associated Company
|
has the meaning given thereto by Section 256 of the Companies Act 2006; | |
|
||
Auditor
|
means the auditor or auditors appointed by the Company from time to time; | |
|
||
Australian dollars
|
means the lawful currency from time to time of Australia; | |
|
||
Australian Securities
|
means the ASX Limited (ACN 008 624 691) or any |
6
Exchange
|
successor to that body; | |
|
||
Board
|
means the board of Directors of the Company (or a duly appointed committee of that board) from time to time; | |
|
||
Board of RTL
|
means the board of directors of RTL (or a duly appointed committee of that board) from time to time; | |
|
||
Business Day
|
means a day on which banks are ordinarily open for business in both London and Melbourne, excluding Saturdays and Sundays; | |
|
||
Class Rights Action
|
means, in relation to the Company or RTL, any of the actions listed in Article 33(A); | |
|
||
Companies Act
Subsidiary
|
has the meaning ascribed to the term subsidiary in Section 1159 of the Companies Act 2006 and when used in relation to a company means any subsidiary of that company from time to time; | |
|
||
Corporations Act
|
means the Corporations Act 2001 (Cth) of Australia; | |
|
||
Corporations Act
Subsidiary
|
has the meaning given to subsidiary in Section 9 of the Corporations Act and when used in relation to a body corporate means any subsidiary of that body corporate from time to time; | |
|
||
Deed Poll Guarantee
|
means the deed executed by the Company for the benefit of certain present and future creditors of RTL as amended from time to time; | |
|
||
Director
|
means a person appointed or elected from time to time to the office of Director of the Company in accordance with these Articles and includes any Alternate Director duly acting as a Director; | |
|
||
DLC Dividend Share
|
means the dividend share of 10p in the Company, issued in accordance with Article 8A, until it is cancelled, redeemed or otherwise ceases to exist or until it converts to an Ordinary Share in accordance with these Articles; | |
|
||
Equalisation Fraction
|
means the Equalisation Ratio expressed as a fraction with the numerator being the number relating to the RTL Ordinary Shares and the denominator being the number relating to the Ordinary Shares; | |
|
||
Equalisation Ratio
|
means the ratio of the dividend, capital and voting rights per RTL Ordinary Share to the dividend, capital and voting rights per Ordinary Share as set out in the Sharing Agreement and as adjusted from time to time in accordance with the Sharing Agreement; | |
|
||
Equalisation Share
|
means the equalisation share of 10p in the Company; | |
|
||
Excluded RTL Holder
|
means any person who is a Relevant Person (other than a Permitted Person) both as defined in the RTL |
7
|
Constitution on whom a notice has been served by the Directors of RTL pursuant to Rule 145D of the RTL Constitution which has not been complied with to the satisfaction of the RTL directors or withdrawn; | |
in writing
|
means written or produced by any substitute for writing or partly one and partly another and shall include, except where otherwise expressly specified in these Articles or the context otherwise requires, and subject to any limitations, conditions or restrictions contained in or the provisions of the Statutes, any representation of words in some visible form, whether in a physical document or in an electronic communication or form or otherwise howsoever; | |
|
||
Joint Decision
|
means in relation to a General Meeting a resolution put to the vote of the meeting on a Joint Decision Matter; | |
|
||
Joint Decision Matter
|
means any of the following:- |
(i) | the appointment or removal of a Director of the Company and/or a director of RTL; | |
(ii) | the receipt or adoption of the annual accounts of the Company and/or RTL (if shareholders are to be asked to vote on the receipt or adoption of such accounts); | |
(iii) | a change of name by the Company and/or RTL; | |
(iv) | any proposed acquisition or disposal and any proposed transaction with a substantial shareholder, director or other related party which (in any case) is required under Applicable Regulation to be authorised by shareholders; | |
(v) | the appointment or removal of the Auditors of the Company and/or the auditors of RTL; | |
(vi) | the creation of a new class of shares (or securities convertible into, exchangeable for or granting rights to subscribe for or purchase shares of a new class) in the Company or RTL; | |
(vii) | a change of the corporate status of or reregistration of the Company or RTL; | |
(viii) | a matter referred to in Clause 9.2 of the Sharing Agreement; and | |
(ix) | any other matter which the Directors (or a |
8
|
duly constituted committee of the Directors) of the Company and the Board of RTL agree (generally or in a particular case) should be decided upon by Joint Decision; |
Limiting Restriction
|
refers to the limit (if any) on offers for cash (otherwise than pro rata by way of rights to existing holders of Ordinary Shares or RTL Ordinary Shares) of shares or other securities existing under restrictions for the time being applicable to RTL or the Company under Applicable Regulation, and for the purpose of ascertaining the most Limiting Restriction at any time in any situation:- |
(i) | a restriction applicable to RTL shall be treated as also applicable to the Company (converting the restrictions, expressed in terms of a number of RTL shares, into a number of shares in the Company by application of the Equalisation Ratio), and vice versa in relation to a restriction applicable to the Company; | |
(ii) | a restriction expressed in terms of a nominal amount of the Companys equity share capital shall be treated as if it related to the number of Ordinary Shares represented by that nominal amount and then converted into a number of RTL Ordinary Shares by application of the Equalisation Ratio and any restriction in relation to RTL shall be similarly treated; | |
(iii) | a restriction (when expressed as a number of RTL Ordinary Shares or Ordinary Shares) that, under Applicable Regulation, has been derived by application of a percentage to a number or nominal amount of RTL Ordinary Shares and/or number or nominal amount of Ordinary Shares rather than to the number of the Aggregate Publicly-held Ordinary Shares (taking into account the application of the Equalisation Ratio as described in (i) and (ii) above) shall be adjusted to the number that would have been derived from the application of such percentage to the number of the Aggregate Publicly-held Ordinary Shares (after so taking into account the application of Equalisation Ratio); and | |
(iv) | any restriction which under Applicable Regulation comes into force in relation to either RTL or the Company after the date of the Sharing Agreement which does not fall |
9
|
within (i), (ii) or (iii) above shall be applied to the Aggregate Publicly-held Ordinary Shares in the way which the Directors (or a duly constituted committee of the Directors) and the Board of RTL agree best reflects the rationale underlying paragraphs (i), (ii) and (iii) of this definition; |
Liquidation Exchange
Rate
|
means, as at any date, the closing mid-point spot Australian dollar-sterling exchange rate on the Business Day before such date (as shown in the London Edition of the Financial Times, or such other point of reference as the liquidator and the auditor (or, as the case may be, liquidator) of RTL may determine); | |
|
||
London Stock Exchange
|
means London Stock Exchange plc or any successor to that body; | |
|
||
Market Value
|
means, in respect of an issue of a relevant share or security, the weighted average sale price derived from the Australian Securities Exchange (in the case of RTL) and the middle market quotation derived from the London Stock Exchange Daily Official List (in the case of the Company) in each case on the dealing day immediately preceding the date on which any such issue is publicly announced except that in the case of an allotment of Ordinary Shares pursuant to Article 128 it shall mean the value of an Ordinary Share as defined in Article 128(D) and in the case of an allotment of RTL Ordinary Shares by way of dividend it shall mean the weighted average sale price of a RTL Ordinary Share derived from the Australian Securities Exchange over the five business days (being trading days on the Australian Securities Exchange) prior to the books closing date in respect of that dividend; | |
|
||
Matching Offers
|
means offers by way of rights either by both RTL and the Company to their respective ordinary shareholders or by RTL on its own or by the Company on its own to both the holders of Ordinary Shares and the holders of RTL Ordinary Shares which, so far as is practicable, take place contemporaneously and which the auditors of RTL have certified do not materially disadvantage a holder of a RTL Ordinary Share in comparison with a holder of an Ordinary Share and which the Auditors have certified do not materially disadvantage a holder of an Ordinary Share in comparison with a holder of a RTL Ordinary Share; | |
|
||
month
|
means calendar month; |
10
Office
|
means the registered office of the Company for the time being; | |
|
||
Operator
|
means Euroclear UK & Ireland Limited or such other person as may for the time being be approved by H.M. Treasury as Operator under the Regulations; | |
|
||
Operator-instruction
|
means a properly authenticated dematerialised instruction attributable to the Operator; | |
|
||
Ordinary Shares
|
means the ordinary shares of 10p each in the Company from time to time; | |
|
||
paid
|
means paid or credited as paid; | |
|
||
participating security
|
means a security title to units of which is permitted by the Operator to be transferred by means of a relevant system; | |
|
||
Publicly-held Ordinary
Shares |
means, in relation to the Company, Publicly-held Rio Tinto Ordinary Shares and, in relation to RTL, Publicly-held RTL Ordinary Shares; | |
|
||
Publicly-held Rio Tinto
Ordinary Shares |
means Ordinary Shares the beneficial owners of which are not members of the RTL Group; | |
|
||
Publicly-held RTL
Ordinary Shares |
means RTL Ordinary Shares the beneficial owners of which are not members of the Rio Tinto Group; | |
|
||
Register
|
means the register of members of the Company; | |
|
||
Regulations
|
means the Uncertificated Securities Regulations 2001 (SI 2001 No.2001/3755); | |
|
||
relevant period
|
when used in Article 33 refers to the period by reference to which any Limiting Restriction applies; | |
|
||
relevant system
|
means a computer-based system, and procedures, which enable title to units of a security to be evidenced and transferred without a written instrument pursuant to the Regulations; | |
|
||
Rio Tinto Entrenched
Provision |
means any of the following provisions of the Companys Articles of Association as in force at the date of adoption of these Articles: the definitions in this Article 2 of Aggregate Publicly-held Ordinary Shares, Applicable Regulation, Australian dollars, Board of RTL, Class Rights Action, Companies Act Subsidiary, Corporations Act, Corporations Act Subsidiary, RTL, RTL Deed Poll Guarantee, RTL Entrenched Provision, RTL Equalisation Share, RTL Group, RTL Constitution, RTL Ordinary Shares, RTL Shareholder SVC, RTL Shareholder Voting Agreement, RTL Special Voting Share, Deed Poll Guarantee, Equalisation Fraction, Equalisation Ratio, Equalisation Share, |
11
|
Excluded RTL Holder, Joint Decision, Joint Decision Matter, Limiting Restriction, Liquidation Exchange Rate, Market Value, Matching Offers, Ordinary Shares, Publicly-held RTL Ordinary Shares, Publicly-held Ordinary Shares, Publicly-held Rio Tinto Ordinary Shares, relevant period, Rio Tinto Entrenched Provision, Rio Tinto Group, RTP Shareholder SVC, RTP Shareholder Voting Agreement, Sharing Agreement, Special Voting Share and sterling and the paragraph defining procedural resolutions; the provisions of Article 3 (so far as it relates to the Special Voting Share or the Equalisation Share); Article 9(B)(iv)(a)(III); Article 31; Article 33; Article 36(C); Article 55; Article 56(A) (so far as it relates to or affects the rights of the holder of the Special Voting Share or the requirement that polls be held on matters on which such holder is entitled to vote); Article 59; Article 60; Article 64; Article 69; the second sentence of Article 80(A); Article 82; paragraph (D) and the following sentence of Article 84; Article 86(B) and the last sentence of Article 86; Article 88; Article 89(G); the proviso in brackets in Article 90; Article 97 and Article 105; | |
|
||
Rio Tinto Group
|
means the Company and its Companies Act Subsidiaries and a member of the Rio Tinto Group means any of them; | |
|
||
RTL
|
means Rio Tinto Limited (ACN 004 458 404), a company incorporated in Victoria, Australia; | |
|
||
RTL Constitution
|
means the Constitution of RTL as amended from time to time; | |
|
||
RTL Deed Poll Guarantee
|
means the deed executed by RTL for the benefit of certain present and future creditors of the Company as amended from time to time; | |
|
||
RTL Entrenched
Provision
|
has the meaning given to the term Rio Tinto Limited Entrenched Provision in the RTL Constitution; | |
|
||
RTL Equalisation Share
|
means the equalisation share in RTL; | |
|
||
RTL Group
|
means RTL and its Corporations Act Subsidiaries; | |
|
||
RTL Ordinary Shares
|
means the issued ordinary shares in RTL from time to time; | |
|
||
RTL Shareholder SVC
|
means RTL Shareholder SVC Limited, a company incorporated in England with registered number 3115178 or such other company as replaces RTL Shareholder SVC Limited pursuant to the RTL Shareholder Voting Agreement; |
12
RTL Shareholder Voting
Agreement
|
means the agreement entered into between RTL Shareholder SVC, The Law Debenture Trust Corporation p.l.c., RTL and the Company relating, inter alia , to how the Special Voting Share is to be voted, as amended from time to time; | |
|
||
RTL Special Voting
Share
|
means the special voting share in RTL; | |
|
||
RTP Shareholder SVC
|
means RTP Shareholder SVC Pty Limited (ACN 070 481 908), a company incorporated in Victoria, Australia or such other company as replaces RTP Shareholder SVC Pty Limited pursuant to the terms of the RTP Shareholder Voting Agreement; | |
|
||
RTP Shareholder Voting
Agreement
|
means the Agreement entered into between RTP Shareholder SVC, The Law Debenture Trust Corporation p.l.c., the Company, Rio Tinto Australian Holdings Limited and RTL relating, inter alia , to how the RTL Special Voting Share and the RTL Ordinary Shares held by Tinto Holdings Australia Pty Limited (ACN 004 327 922) or beneficially owned by any other member of the Rio Tinto Group are to be voted, as amended from time to time; | |
|
||
Seal
|
means the Common Seal of the Company; | |
|
||
Securities Seal
|
means an official seal kept by the Company by virtue of Section 50 of the Companies Act 2006; | |
|
||
Share Warrant
|
means a warrant to bearer issued by the Company in respect of its shares; | |
|
||
Sharing Agreement
|
means the agreement entered into between RTL and the Company headed DLC Merger Sharing Agreement as amended from time to time; | |
|
||
Special Voting Share
|
means the special voting share of 10p in the Company; | |
|
||
Statutes
|
means the Companies Acts, the Regulations and every other enactment for the time being in force applying to or concerning companies and affecting the Company; | |
|
||
sterling
|
means the lawful currency from time to time of the United Kingdom; | |
|
||
Transfer Office
|
means the place where the Register is situate for the time being; | |
|
||
UK Listing Authority
|
means the Financial Services Authority in its capacity as competent authority for official listing under Part VI of the Financial Services and Markets Act 2000; | |
|
||
United Kingdom
|
means Great Britain and Northern Ireland; | |
|
||
wholly owned
|
in relation to a body corporate, means a body |
13
subsidiary
|
corporate none of whose members is a person other than the first mentioned body corporate, a wholly owned subsidiary of the first mentioned body corporate or a nominee of the first mentioned body corporate or its wholly owned subsidiary; and | |
|
||
Year
|
means calendar year. |
14
3 | (A) Paragraph deleted . | |
(B) The rights, as regards participation in the profits of the Company, attaching to
the shares of the Company are as follows:-
|
(i) | Subject to the special rights for the time being attached to shares having a preferred right to participate as regards dividends up to but not beyond a specified amount in a distribution, but in priority to the payment of dividends on all other classes of share, the Special Voting Share shall entitle its holder to a fixed dividend of 1p per annum payable annually in arrears on the 1st day of July. | ||
(ii) | Subject to the special rights for the time being attached to shares having a preferred right to participate as regards dividends up to but not beyond a specified amount in a distribution and the Special Voting Share but in priority to the payment of any dividends on all |
15
other classes of share, the Equalisation Share shall carry such dividends as are declared or paid on the Equalisation Share in accordance with Schedule 1 and 2 to the Sharing Agreement. | |||
(iii) | Subject to the special rights for the time being attached to other classes of share, the profits of the Company available for distribution and resolved to be distributed shall subject to the provisions of the Statutes be distributed by way of dividend among the holders of the Ordinary Shares and the Equalisation Share. |
(i) | The liquidator of the Company shall determine as at the earliest date (the Reference Date) on which the liquidator is able to make a final distribution to members and creditors of the Company the gross amount which would be available for distribution to the holders of Ordinary Shares on the liquidation of the Company after payment in full of any amount standing to the credit of:- |
(a) | the holder of the Equalisation Share in any reserve set up in the books of the Company pursuant to paragraph 3.6.2(a) of Schedule 2 to the Sharing Agreement; and | ||
(b) | the holders of Ordinary Shares in any reserve set up in the books of the Company under paragraph 3.6.2(b) or 3.6.2(c) of Schedule 2 to the Sharing Agreement |
and to calculate the amount thereof available for distribution to holders of Publicly-held Rio Tinto Ordinary Shares or the amount (expressed as a negative sum) of the shortfall which would need to be obtained before the holders of Publicly-held Rio Tinto Ordinary Shares would receive any payment by way of distribution (in either case the Companys Own Distribution Amount), on the |
16
assumption that distribution to the Companys creditors and members took place on the Reference Date. The liquidator of the Company shall certify the result of such calculation to RTL. | |||
(ii) | Whether or not proceedings have been commenced for the liquidation of RTL, RTL shall be required under the Sharing Agreement to instruct the Relevant Officer for the time being of RTL to draw up accounts as at the Reference Date of all assets (valued as if RTL was in liquidation and those assets were to be realised by a liquidator of RTL in an orderly manner) and liabilities which would be admissible to proof if RTL were in liquidation on the Reference Date (other than the asset or liability represented by any Equalisation Payment as defined in paragraph 4.1 of Schedule 2 to the Sharing Agreement to be made in accordance with the Sharing Agreement or any payment on the RTL Equalisation Share under Rule 143(d)(v) or (vi) of the RTL Constitution) to show the gross amount which would be available for distribution to holders of RTL Ordinary Shares on the liquidation of RTL (if it were to occur on the Reference Date) after payment in full of any amount standing to the credit of:- |
(a) | the holder of the RTL Equalisation Share in any reserve set up in the books of RTL pursuant to paragraph 3.6.2(a) of Schedule 2 to the Sharing Agreement; or | ||
(b) | the holders of RTL Ordinary Shares in any reserve set up in the books of RTL under paragraph 3.6.2(b) or 3.6.2(c) of Schedule 2 to the Sharing Agreement |
and to calculate the amount thereof available for distribution to holders of Publicly-held RTL Ordinary Shares or the amount (expressed as a negative sum) of the shortfall which would need to be obtained before the holders of Publicly-held RTL Ordinary Shares would receive any payment by way of distribution (in either case, the RTL Own Distribution Amount), on the assumption that the distribution to RTLs creditors and members on liquidation took place on the Reference Date. RTL is obliged under the Sharing Agreement to instruct the Relevant Officer of RTL to certify the result of such calculation to the Company. | |||
(iii) | The liquidator of the Company shall make, and certify to RTL, the results of the following calculation as at the Reference Date and agree such calculation with the Relevant Officer of RTL, which calculation shall be expressed in sterling, with any Australian dollar amounts being converted to sterling at the Liquidation Exchange Rate as at the Reference Date:- |
(COD + RTLD) x COS | ||||
(RTLOS x EF) + COS |
where:- | |||
COD = the Companys Own Distribution Amount; | |||
RTLD = the RTL Own Distribution Amount; |
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COS = the number of Publicly-held Rio Tinto Ordinary Shares in issue on the Reference Date; | |||
RTLOS = the number of Publicly-held RTL Ordinary Shares in issue on the Reference Date; and | |||
EF = the Equalisation Fraction. | |||
The result of such calculation is referred to below as the Adjusted Company Distribution Amount. | |||
(iv) | If the Adjusted Company Distribution Amount is equal to or more than the Companys Own Distribution Amount, then the assets remaining available for distribution (which shall include any distribution made on the RTL Equalisation Share pursuant to Rule 143(d)(v) or (vi) of the RTL Constitution, any amounts paid by RTL under paragraph 4.1.4 of Schedule 2 to the Sharing Agreement and any amounts paid by RTL from reserves set up in the books of RTL under paragraph 3.6.2(a) of Schedule 2 to the Sharing Agreement) shall belong to and be distributed among the holders of Ordinary Shares rateably according to the numbers of Ordinary Shares held by them. | ||
(v) | If the Adjusted Company Distribution Amount is equal to or more than zero, but is less than the Companys Own Distribution Amount, the liquidator of the Company shall pay out of the assets available for distribution an amount by way of return of capital on the Equalisation Share in priority to any amounts payable to the holders of Ordinary Shares such that (taking account of any tax payable on the making or receipt of the distribution of that amount, after allowing for any offsetting tax credits, losses or deductions) the ratio of the amount available for distribution on each Publicly-held RTL Ordinary Share:- |
(a) | apart from in each case any undistributed amounts resulting from the payment by RTL to a member of the Rio Tinto Group or the Company to a member of the RTL Group of any reserves under paragraph 3.6.2(a) of Schedule 2 to the Sharing Agreement or any amounts credited to any reserve in the books of the Company for the benefit of holders of Ordinary Shares or any amounts credited to any reserve in the books of RTL for the benefit of holders of RTL Ordinary Shares, in each case under paragraphs 3.6.2(b) and 3.6.2(c) of Schedule 2 to the Sharing Agreement; and | ||
(b) | on the assumption that distribution to the Companys members and creditors and RTLs members and creditors took place on the Reference Date; and | ||
(c) | after taking into account the amounts available for distribution on each Publicly-held RTL Ordinary Share prior to such payment |
to the amount available for distribution on each Publicly-held Rio Tinto Ordinary Share (converting Australian dollar amounts to |
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sterling by application of the Liquidation Exchange Rate as at the Reference Date) is equal to the Equalisation Ratio (and the balance of the assets of the Company available for distribution remaining after any such payment on the Equalisation Share shall belong to and be distributed among the holders of Ordinary Shares rateably according to the numbers of Ordinary Shares held by them). | |||
(vi) | If the Adjusted Company Distribution Amount is zero or a negative amount and the Companys Own Distribution Amount is a positive amount then the liquidator of the Company shall pay out of the assets available for distribution an amount by way of return of capital on the Equalisation Share in priority to any amounts payable to the holders of Ordinary Shares such that (taking account of any tax payable on the making or receipt of the distribution of that amount after allowing for any offsetting tax credits, losses or deductions) the amount available for distribution to holders of Publicly-held Ordinary Shares, on the assumption that distribution to the Companys members and creditors took place on the Reference Date, is zero. | ||
(vii) | If the Companys Own Distribution Amount is zero or a negative amount and the RTL Own Distribution Amount is zero or a negative amount, then no distribution shall be made by the liquidator of the Company on the Equalisation Share or to holders of Ordinary Shares. | ||
(viii) | In making the calculations referred to in this paragraph (C), the Relevant Officer of RTL and the liquidator shall take into account the distributions which fall to be made on those Ordinary Shares and those RTL Ordinary Shares which are not Publicly-held Ordinary Shares it being acknowledged that for each company the per share distributions on the Publicly-held Ordinary Shares will be the same as the distributions on that companys non-Publicly-held Ordinary Shares. | ||
(ix) | In this paragraph Relevant Officer of RTL means the auditor of RTL or if RTL is in liquidation, the liquidator of RTL. | ||
(x) | In this paragraph the gross amount which would be available for distribution to shareholders means such amount ignoring any distribution on the Equalisation Share or RTL Equalisation Share or any Equalisation Payment (as defined in paragraph 4.1 of Schedule 2 to the Sharing Agreement) made in accordance with the Sharing Agreement and any tax payable on the making or receipt of the Equalisation Payment or distribution and both the gross amount which would be available for distribution and the amount available for distribution refer to such amount before deduction of any amount in respect of tax required to be deducted or withheld from the distribution to ordinary shareholders by or on behalf of the company paying or making the distribution but net of any tax payable by that company on the distribution to its ordinary shareholders. |
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(xi) | The certificates which the liquidator of the Company and the Relevant Officer of RTL are required to produce under this paragraph (C) and the Relevant Officer of RTL is required to produce under the Sharing Agreement (the Certificates) shall be in hard copy form and shall be produced within 6 weeks after the Reference Date and the Company shall procure that all necessary instructions are given to the liquidator to ensure that such certificates are produced within that time. The liquidator of the Company and the Relevant Officer of RTL shall then agree the calculations in such Certificates within 4 weeks of the date on which all such Certificates are produced. If the liquidator of the Company and the Relevant Officer of RTL are unable to agree to the calculations in the Certificates within such time, then the dispute shall be referred to an independent firm of accountants agreed by the liquidator of the Company with the Relevant Officer of RTL (or failing agreement within 7 days of the end of that 4 week period, appointed, on the application of either the Company or RTL, by the President for the time being of the Institute of Chartered Accountants in England). The firm so appointed shall act as experts and not as arbitrators and shall be instructed to make its determination within 4 weeks of its appointment. The costs of such firm are to be borne as such firm decides. Once the calculations in the Certificates have been agreed by the liquidator of the Company with the Relevant Officer of RTL or determined by the independent accountants, they shall be conclusive and binding. | ||
(xii) | If RTL shall go into liquidation after the Company has gone into liquidation but before the liquidator has made a distribution under any of paragraphs (v), (vi) or (vii), then the Reference Date shall be the later of (a) the earliest date on which the liquidator of RTL is able to make a final distribution to creditors and the members of RTL, and (b) the earliest date on which the liquidator of the Company is able to make a final distribution to creditors and members of the Company; and the Relevant Officer of RTL shall be the liquidator of RTL and not the auditor of RTL. |
4 | Liability of members is limited | |
The liability of members is limited to the amount, if any, unpaid on the shares held by them. | ||
5 | Consolidation, subdivision and cancellation |
(A) | The Company may by Ordinary Resolution:- |
(i) | consolidate and divide all or any of its share capital into shares of larger amount than its existing shares; |
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(ii) | cancel any shares which, at the date of the passing of the resolution, have not been taken, or agreed to be taken, by any person and diminish the amount of its capital by the amount of the shares so cancelled; | ||
(iii) | sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the Articles of Association (subject, nevertheless, to the provisions of the Statutes), and so that the resolution whereby any share is sub-divided may determine that, as between the holders of the shares resulting from such sub-division, one or more of the shares may, as compared with the others, have any such preferred, deferred or other special rights, or be subject to any such restrictions, as the Company has power to attach to unissued or new shares. |
(i) | sell the shares representing the fractions for the best price reasonably obtainable to any person (including, subject to the provisions of the Statutes, the Company); | ||
(ii) | distribute the net proceeds of sale in due proportion among those members; and | ||
(iii) | authorise some person to transfer the shares to, or in accordance with the directions of, the purchaser. |
(i) | treat shares of a member in certificated form and in uncertificated form as separate holdings in giving effect to subdivisions and/or consolidations; and | ||
(ii) | cause any shares arising on subdivision or consolidation and representing fractional entitlements to be entered in the Register as shares in certificated form where this is desirable to facilitate the sale thereof. |
6 | Purchase of own shares |
(A) | Subject to the provisions of the Statutes and the provisions of Article 33, the Company may purchase, or may enter into a contract under which it will or may purchase, any of its own shares of any class (including any redeemable shares) but so that if there shall be an issue any shares convertible into equity share capital of the Company of the class proposed to be purchased, then the Company shall not purchase, or enter into a contract under which it will or may purchase, such equity shares unless either: |
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(a) | the terms of issue of such convertible shares include provisions permitting the Company to purchase its own equity shares; or | ||
(b) | the purchase, or the contract, has first been approved by a Special Resolution passed at a separate meeting of the holders of such convertible shares. |
(B) | The Company may not exercise any right in respect of treasury shares held by it, including any right to attend or vote at meetings, to participate in any offer by the Company to shareholders or to receive any distribution (including in a winding-up), but without prejudice to its right to sell the treasury shares, to transfer the shares for the purposes of or pursuant to an employees share scheme, to receive an allotment of shares as fully paid bonus shares in respect of the treasury shares or to receive any amount payable on redemption of any redeemable treasury shares. |
7 | Reduction of capital | |
Subject to the provisions of the Statutes and the provisions of Article 33, the Company may by Special Resolution reduce its share capital, share premium account, capital redemption reserve or other undistributable reserve in any way. |
8 | Rights attaching to shares on issue | |
Without prejudice to any special rights previously conferred on the holders of any shares or class of shares for the time being issued, but subject to the provisions of Article 33, any share in the Company may be issued with such preferred, deferred or other special rights, or subject to such restrictions, whether as regards dividend, return of capital, voting or otherwise, as the Company may from time to time by Ordinary Resolution determine (or, in the absence of any such determination, as the Directors may determine) and subject to the provisions of the Statutes the Company may issue any shares which are, or at the option of the Company or the holder are liable, to be redeemed and the Directors may determine the terms, conditions and manner of redemption of any such shares. | ||
8A | DLC Dividend Share | |
Without limiting Article 8 but notwithstanding any other provision to the contrary in these Articles, the Directors may issue a DLC Dividend Share in the capital of the Company to RTL or a wholly owned subsidiary of RTL on the following terms: |
(A) | the DLC Dividend Share does not confer on its holder any right: |
(i) | to vote or to attend or be heard at any General Meeting; | ||
(ii) | to redemption or, in a winding-up, to repayment of capital; or | ||
(iii) | subject to Article 8A(B), to participate in assets or profits of the Company; or | ||
(iv) | to receive notices of any General Meeting; |
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(i) | the Directors in their absolute discretion resolve to pay the dividend on the DLC Dividend Share; | ||
(ii) | the legal and beneficial owner of the DLC Dividend Share at the time of payment and declaration of the dividend is RTL or a wholly owned subsidiary of RTL; | ||
(iii) | in the case of the first dividend to be paid on the DLC Dividend Share, there has been at least one dividend paid on Ordinary Shares since the date of issue of the DLC Dividend Share; and | ||
(iv) | in the case of subsequent dividends paid on the DLC Dividend Share, there has been at least one dividend paid on Ordinary Shares since the date of payment of the last dividend on the DLC Dividend Share |
(C) | upon the earlier of: |
(i) | the registration of a transfer of the DLC Dividend Share to a person other than RTL or a wholly owned subsidiary of RTL; and | ||
(ii) | a person other than RTL or a wholly owned subsidiary of RTL becoming the beneficial owner of the DLC Dividend Share, |
the DLC Dividend Share will convert to an Ordinary Share, and the Directors may, at their absolute discretion, issue such a DLC Dividend Share from time to time provided that, at any one time, there is only one DLC Dividend Share in the capital of the Company in issue. | ||
9 | Directors power to allot |
(A) | Subject to the provisions of the Statutes relating to authority, pre-emption rights and otherwise and of any resolution of the Company in General Meeting passed pursuant thereto, all unissued shares shall be at the disposal of the Directors and they may allot (with or without conferring a right of renunciation) grant options over or otherwise dispose of them to such persons, at such times and on such terms as they think proper. |
(B) |
(i) The Directors shall be generally and unconditionally authorised pursuant
to and in accordance with Section 551 of the Companies Act 2006 to exercise for each
prescribed period all the powers of the Company to allot relevant securities up to an
aggregate nominal amount equal to the Section 551 Amount.
|
(ii) | During each prescribed period the Directors shall be empowered to allot equity securities wholly for cash pursuant to and within the terms of the said authority and to sell treasury shares wholly for cash:- |
(a) | in connection with a rights issue; and |
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(b) | otherwise than in connection with a rights issue, up to an aggregate nominal amount equal to the Section 561 Amount; |
as if Section 561(1) of the Companies Act 2006 did not apply to any such allotment. | |||
(iii) | By such authority and power the Directors may during such period make offers or agreements which would or might require the allotment of securities after the expiry of such period. | ||
(iv) | For the purposes of this Article:- |
(a) | rights issue means an offer of securities open for acceptance for a period fixed by the Directors to (I) holders on a record date fixed by the Directors of registered Ordinary Shares in proportion to their respective holdings and (II) (if the Directors so decide but not otherwise) holders on a record date fixed by the Directors of RTL Ordinary Shares in proportion to their respective holdings of RTL Ordinary Shares and so that the ratio of the entitlement per RTL Ordinary Share to the entitlement per Ordinary Share shall (as nearly as practicable) equal the Equalisation Ratio and (III) other persons so entitled by virtue of the rights attaching to any other securities held by them, but subject in all such cases to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory; | ||
(b) | prescribed period means in the first instance the period from the date of the adoption of these Articles to the later of 15 April 2010 and the date of the Annual General Meeting in 2010, being no later than 30 June 2010, and shall thereafter mean any period (not exceeding 15 months on any occasion) for which the authority conferred by sub-paragraph (B)(i) above is renewed by Resolution of the Company stating the Section 80 Amount for such period; | ||
(c) | the Section 551 Amount shall for the first prescribed period be £32,948,000 and for any other prescribed period shall be that stated in the relevant Resolution renewing the authority conferred by sub-paragraph B(i) above or, in either case, any increased amount fixed by Resolution of the Company in General Meeting; | ||
(d) | the Section 561 Amount shall for the first prescribed period be £6,420,000 and for any other prescribed period shall be that stated in the relevant Special Resolution renewing the power conferred by sub-paragraph B(ii) above or, in either case, any increased amount fixed by Special Resolution; and |
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(e) | the nominal amount of any securities shall be taken to be, in the case of rights to subscribe for or to convert any securities into shares of the Company, the nominal amount of such shares which may be allotted pursuant to such rights. |
10 | Commissions on issue of shares | |
The Company may exercise the powers of paying commissions conferred by the Statutes to the full extent thereby permitted. The Company may also on any issue of shares pay such brokerage as may be lawful. | ||
11 | Renunciation of allotment | |
The Directors may at any time after the allotment of any share but before any person has been entered in the Register as the holder:- | ||
(A) recognise a renunciation thereof by the allottee in favour of some other person and may accord to any allottee of a share a right to effect such renunciation; and/or | ||
(B) allow the rights represented thereby to be one or more participating securities, | ||
in each case upon and subject to such terms and conditions as the Directors may think fit to impose. | ||
12 | Trust etc. interests not recognised | |
Except as required by law, no person shall be recognised by the Company as holding any share upon any trust, and the Company shall not be bound by or compelled in any way to recognise any equitable, contingent, future or partial interest in any share, or any interest in any fractional part of a share, or (except only as by these Articles or by law otherwise provided) any other right in respect of any share, except an absolute right to the entirety thereof in the holder. |
13 | Issue of share certificates | |
Every person (except a person to whom the Company is not required by law to issue a certificate) whose name is entered in the Register in respect of shares in certificated form shall upon the issue or transfer to him of such shares be entitled without payment to a certificate therefor (in the case of issue) within one month (or such longer period as the terms of issue shall provide) after allotment or (in the case of a transfer of fully-paid shares) within five business days after lodgement of the transfer or (in the case of a transfer of partly-paid shares) within two months after lodgement of the transfer (or in the case of the surrender of a share warrant for cancellation) within two months of the surrender of the warrant. | ||
14 | Form of share certificate | |
Every share certificate shall be executed by the Company in such manner as the Directors may decide (which may include use of the Seal or Securities Seal and/or manual or facsimile signatures by one or more Directors) and shall specify the number and class of shares to which it relates and the amount paid up thereon. No certificate shall be issued representing shares of more than one class. |
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manual or facsimile signatures by one or more Directors) and shall specify the number and class of shares to which it relates and the amount paid up thereon. No certificate shall be issued representing shares of more than one class. | ||
15 | Joint holders | |
In the case of a share held jointly by several persons in certificated form the Company shall not be bound to issue more than one certificate therefor and delivery of a certificate to one of the joint holders shall be sufficient delivery to all. | ||
16 | Replacement of share certificates | |
(A) Any two or more certificates representing shares of any one class held by any member may at his request be cancelled and a single new certificate for such shares issued in lieu without charge. | ||
(B) If any member shall surrender for cancellation a share certificate representing shares held by him and request the Company to issue in lieu two or more share certificates representing such shares in such proportions as he may specify, the Directors may, if they think fit, comply with such request. | ||
(C) If a share certificate shall be damaged or defaced or alleged to have been lost, stolen or destroyed, a new certificate representing the same shares may be issued to the holder upon request subject to delivery up of the old certificate or (if alleged to have been lost, stolen or destroyed) compliance with such conditions as to evidence and indemnity and the payment of any exceptional out-of-pocket expenses of the Company in connection with the request as the Directors may think fit. | ||
(D) In the case of shares held jointly by several persons any such request may be made by any one of the joint holders. |
17 | Power to make calls | |
The Directors may from time to time make calls upon the members in respect of any moneys unpaid on their shares (whether on account of the nominal value of the shares or, when permitted, by way of premium) but subject always to the terms of allotment of such shares. A call shall be deemed to have been made at the time when the resolution of the Directors authorising the call was passed and may be made payable by instalments. | ||
18 | Liability for calls | |
Each member shall (subject to receiving at least 14 days notice specifying the time or times and place of payment) pay to the Company at the time or times and place so specified the amount called on his shares. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof. A call may be revoked or postponed as the Directors may determine. |
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19 | Interest on overdue amounts | |
If a sum called in respect of a share is not paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest on the sum from the day appointed for payment thereof to the time of actual payment at such rate (not exceeding 15 per cent. per annum) as the Directors determine but the Directors shall be at liberty in any case or cases to waive payment of such interest wholly or in part. | ||
20 | Other sums due on shares | |
Any sum (whether on account of the nominal value of the share or by way of premium) which by the terms of allotment of a share becomes payable upon allotment or at any fixed date shall for all the purposes of these Articles be deemed to be a call duly made and payable on the date on which by the terms of allotment the same becomes payable. In case of non-payment all the relevant provisions of these Articles as to payment of interest and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified. | ||
21 | Power to differentiate between holders | |
The Directors may on the allotment of shares differentiate between the holders as to the amount of calls to be paid and the times of payment. | ||
22 | Payment of calls in advance | |
The Directors may if they think fit receive from any member willing to advance the same all or any part of the moneys (whether on account of the nominal value of the shares or by way of premium) uncalled and unpaid upon the shares held by him and such payment in advance of calls shall extinguish pro tanto the liability upon the shares in respect of which it is made and upon the money so received (until and to the extent that the same would but for such advance become payable) the Company may pay interest at such rate as the member paying such sum and the Directors may agree. |
23 | Notice on failure to pay a call | |
(A) If a member fails to pay in full any call or instalment of a call on or before the due date for payment thereof, the Directors may at any time thereafter serve a notice on him requiring payment of so much of the call or instalment as is unpaid together with any interest which may have accrued thereon and any expenses incurred by the Company by reason of such non-payment. | ||
(B) The notice shall name a further day (not being less than seven days from the date of service of the notice) on or before which and the place where the payment required by the notice is to be made, and shall state that in the event of non-payment in accordance therewith the shares on which the call has been made will be liable to be forfeited. |
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24 | Forfeiture for non-compliance | |
If the requirements of any such notice as aforesaid are not complied with, any share in respect of which such notice has been given may at any time thereafter, before payment of all calls and interest and expenses due in respect thereof has been made, be forfeited by a resolution of the Directors to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited share and not actually paid before forfeiture. The Directors may accept a surrender of any share liable to be forfeited hereunder. | ||
25 | Disposal of forfeited shares | |
A share so forfeited or surrendered shall become the property of the Company and may be sold, re-allotted or otherwise disposed of either to the person who was before such forfeiture or surrender the holder thereof or entitled thereto or to any other person upon such terms and in such manner as the Directors shall think fit and at any time before a sale, re-allotment or disposal the forfeiture or surrender may be cancelled on such terms as the Directors think fit. The Directors may, if necessary, authorise some person to transfer a forfeited or surrendered share to any such other person as aforesaid. | ||
26 | Holder to remain liable despite forfeiture | |
A member whose shares have been forfeited or surrendered shall cease to be a member in respect of the shares (and shall, in the case of shares held in certificated form, surrender to the Company for cancellation the certificate for such shares) but shall notwithstanding the forfeiture or surrender remain liable to pay to the Company all moneys which at the date of forfeiture or surrender were presently payable by him to the Company in respect of the shares with interest thereon at 15 per cent. per annum (or such lower rate as the Directors may determine) from the date of forfeiture or surrender until payment but the Directors may at their absolute discretion waive payment in whole or in part. | ||
27 | Tax liabilities | |
Whenever any law for the time being of any country, state or place imposes or purports to impose any immediate or future or possible liability upon the Company to make any payment or empowers any government or taxing authority or government official to require the Company to make any payment in respect of any shares registered in any of the Companys registers as held either jointly or solely by any member or in respect of any dividends, bonuses or other moneys due or payable or accruing due or which may become due or payable to such member by the Company on or in respect of any shares registered as aforesaid or for or on account or in respect of any member and whether in consequence of:- | ||
(A) the death of such member; | ||
(B) the non-payment of any income tax or other tax by such member; | ||
(C) the non-payment of any estate, probate, succession, death, stamp or other duty by the executor or administrator of such member or by or out of his estate; | ||
(D) any other act or thing; | ||
the Company in every such case:- |
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(i) | shall be fully indemnified by such member or his executor or administrator from all liability; | ||
(ii) | shall have a lien upon all dividends and other moneys payable in respect of the shares registered in any of the Companys registers as held either jointly or solely by such member for all moneys paid or payable by the Company in respect of the same shares or in respect of any dividends or other moneys aforesaid thereon or for or on account or in respect of such member under or in consequence of any such law together with interest at the rate of 15 per cent. per annum thereon from date of payment to date of repayment and may deduct or set off against any such dividends or other moneys payable as aforesaid any moneys paid or payable by the Company as aforesaid together with interest as aforesaid; | ||
(iii) | may recover as a debt due from such member or his executor or administrator wherever constituted any moneys paid by the Company under or in consequence of any such law and interest thereon at the rate and for the period aforesaid in excess of any dividends or other moneys as aforesaid then due or payable by the Company; | ||
(iv) | may if any such money is paid or payable by the Company under any such law as aforesaid refuse to register a transfer of any shares by any such member or his executor or administrator until such money and interest as aforesaid is set off or deducted as aforesaid or in case the same exceeds the amount of any such dividends or other moneys as aforesaid then due or payable by the Company until such excess is paid to the Company. |
Nothing herein contained shall prejudice or affect any right or remedy which any law may confer or purport to confer on the Company and as between the Company and every such member as aforesaid, his executor, administrator, and estate wheresoever constituted or situate, any right or remedy which such law shall confer or purport to confer on the Company shall be enforceable by the Company. | ||
28 | Lien on partly-paid shares | |
The Company shall have a first and paramount lien on every share (not being a fully-paid share) for all moneys (whether presently payable or not) called or payable at a fixed time in respect of such share and the Directors may waive any lien which has arisen and may resolve that any share shall for some limited period be exempt wholly or partially from the provisions of this Article. | ||
29 | Sale of shares subject to lien | |
(A) The Company may sell in such manner as the Directors think fit any share on which the Company has a lien, but no sale shall be made unless some sum in respect of which the lien exists is presently payable nor until the expiration of 14 days after a notice in writing demanding payment of the sum presently payable and giving notice of intention to sell the share in default of payment shall have been given to the holder for the time being of the share or the person entitled thereto by reason of his death or bankruptcy or otherwise by operation of law. |
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(B) The net proceeds of such sale after payment of the costs of such sale shall be applied in or towards payment or satisfaction of the amount in respect whereof the lien exists so far as the same is then payable and any residue shall, upon surrender, in the case of shares held in certificated form, to the Company for cancellation of the certificate for the shares sold and subject to a like lien for sums not presently payable as existed upon the shares prior to the sale, be paid to the person entitled to the shares at the time of the sale. For the purpose of giving effect to any such sale the Directors may authorise some person to transfer the shares sold to, or in accordance with the directions of, the purchaser. | ||
30 | Evidence of forfeiture | |
A statutory declaration in writing that the declarant is a Director or the Secretary and that a share has been duly forfeited or surrendered or sold to satisfy a lien of the Company on a date stated in the declaration shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share. Such declaration shall (subject to the relevant share transfer being made if the same be required) constitute a good title to the share and the person to whom the share is sold, re-allotted or disposed of shall not be bound to see to the application of the consideration (if any) nor shall his title to the share be affected by any irregularity or invalidity in the proceedings relating to the forfeiture, surrender, sale, re-allotment or disposal of the share. |
31 | Manner of variation of rights | |
(A) Whenever the share capital of the Company is divided into different classes of shares, the special rights attached to any class may, subject to the provisions of the Statutes and the provisions of Article 33, be varied or abrogated: |
(i) | with the consent in writing of the holders of three-fourths of the issued shares of the class; or | ||
(ii) | with the sanction of a Special Resolution passed at a separate meeting of the holders of the shares of the class (but not otherwise) |
and may be so varied or abrogated either whilst the Company is a going concern or during or in contemplation of a winding-up. | ||
(B) To every such separate meeting all the provisions of these Articles relating to General Meetings and to the proceedings thereat shall mutatis mutandis apply, except that: |
(i) | the necessary quorum at such separate meeting shall be two persons at least holding or representing by proxy at least one-third in nominal amount of the issued shares of the class; | ||
(ii) | at any adjourned meeting any holder of shares of the class present in person or by proxy shall be a quorum; | ||
(iii) | any holder of shares of the class present in person or by proxy may demand a poll; and |
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(iv) | every such holder shall on a poll have one vote for every share of the class held by him. |
(C) The foregoing provisions of this Article shall apply to the variation or abrogation of the special rights attached to some only of the shares of any class as if the shares concerned and the remaining shares of such class formed two separate classes the special rights whereof are in each case to be varied. | ||
32 | Matters not constituting variation of rights | |
The special rights attached to any class of shares having preferential rights shall not unless otherwise expressly provided by the terms of issue thereof be deemed to be varied by the creation or issue of further shares ranking as regards participation in the profits or assets of the Company in some or all respects pari passu therewith but in no respect in priority thereto or the purchase or redemption by the Company of its own shares. | ||
33 | Separate approvals of Class Rights Actions | |
(A) The following matters shall constitute Class Rights Actions if undertaken by either the Company or RTL:- |
(i) | the offer to holders of its existing ordinary shares generally of shares or other securities for subscription or purchase:- |
(a) | by way of rights (otherwise than by Matching Offers), where the proposed offer (when aggregated with (I) any previous offers by either company of shares or other securities for cash by way of rights or otherwise but not under Matching Offers, (II) any sales other than intra Rio Tinto Group sales by a member of the Rio Tinto Group of RTL Ordinary Shares and (III) any sales, other than intra RTL Group sales, by a member of the RTL Group of Ordinary Shares, in each case in the relevant period) exceeds the then most Limiting Restriction that for the time being would be applicable were shares or other securities of the description proposed to be offered in fact offered for cash otherwise than pro rata by way of rights to existing shareholders of the relevant class either by RTL or by the Company; or | ||
(b) | otherwise than by way of rights, at below Market Value; |
(ii) | the reduction or redemption of the companys ordinary share capital by way of a capital repayment to holders of its ordinary shares or a cancellation of unpaid ordinary share capital; | ||
(iii) | the purchase by the company of its own ordinary shares (except for such a purchase at, around or below prevailing market prices for those shares where the purchase occurs in accordance with Applicable Regulation); | ||
(iv) | the voluntary liquidation of the company; |
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(v) | an adjustment to the Equalisation Ratio otherwise than in accordance with paragraph 5 of Schedule 2 to the Sharing Agreement; | ||
(vi) | the amendment to the terms of, or termination of, the Sharing Agreement, the RTP Shareholder Voting Agreement or the RTL Shareholder Voting Agreement other than, in the case of the RTL Shareholder Voting Agreement or the RTP Shareholder Voting Agreement, an amendment to conform such agreement with the terms of the Sharing Agreement or, in any case, by way of formal or technical amendment which is not materially prejudicial to the interests of the shareholders of either company or is necessary to correct any inconsistency or manifest error or is by way of an amendment agreed between the companies pursuant to Clause 17.6 of the Sharing Agreement or the equivalent provisions of any other such document; | ||
(vii) | any amendment to, or removal of, or the alteration of the effect of (which for the avoidance of doubt shall be taken to include the ratification of any breach of), any Rio Tinto Entrenched Provision; | ||
(viii) | any amendment to, or removal of, or alteration of the effect of (which for the avoidance of doubt shall be taken to include the ratification of any breach of), any RTL Entrenched Provision; and | ||
(ix) | the doing of anything which the Directors of the Company (or a duly constituted committee of the Directors) and the Board of RTL agree (either in a particular case or generally) should be treated as a Class Rights Action. |
(B) Any Class Rights Action by the Company (apart from those specified in sub-paragraph (vii) of paragraph (A) of this Article) shall be deemed to be a variation of the rights of the Special Voting Share and shall accordingly be effective only with the consent in writing of the holder of the Special Voting Share and without such consent shall not be done or caused or permitted to be done. | ||
(C) Any Class Rights Action of a type specified in sub-paragraph (vii) of paragraph (A) of this Article shall be effective only with the approval of a Special Resolution on which the holder of the Special Voting Share shall be entitled, and bound, to vote in accordance with Article 60(B)(i) and the RTL Shareholder Voting Agreement. Any other Class Rights Action by the Company shall (in addition to the consent required under paragraph (B)) be effective only with such approval of the shareholders of the Company (apart from the holder of the Special Voting Share) as is required by Applicable Regulation and the Sharing Agreement. |
34 | Form of transfer | |
(A) All transfers of shares which are in certificated form may be effected by transfer in writing in any usual or common form or in any other form acceptable to |
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the Directors and may be under hand only. The instrument of transfer shall be signed by or on behalf of the transferor and (except in the case of fully-paid shares) by or on behalf of the transferee. The transferor shall remain the holder of the shares concerned until the name of the transferee is entered in the Register in respect thereof. | ||
(B) All transfers of shares which are in uncertificated form may be effected by means of a relevant system. | ||
35 | Balance certificate | |
Where some only of the shares comprised in a share certificate are transferred the old certificate shall be cancelled and, to the extent that the balance is to be held in certificated form, a new certificate for the balance of such shares issued in lieu without charge. | ||
36 | Right to refuse registration | |
(A) The Directors may decline to recognise any instrument of transfer relating to shares in certificated form unless: |
(i) | it is in respect of only one class of share; | ||
(ii) | it is lodged (duly stamped if required) at the Transfer Office accompanied by the relevant share certificate(s); and | ||
(iii) | when lodged it is accompanied by such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer or if the instrument of transfer is executed by some other person on his behalf, the authority of that person to do so. |
In the case of a transfer of shares in certificated form by a recognised clearing house or a nominee of a recognised clearing house or of a recognised investment exchange the lodgment of share certificates will only be necessary if and to the extent that certificates have been issued in respect of the shares in question. | ||
(B) The Directors may, in the case of securities in certificated form in their absolute discretion refuse to register any transfer of shares (not being fully-paid shares) provided that, where any such shares are admitted to the Official List maintained by the UK Listing Authority, such discretion may not be exercised in such a way as to prevent dealings in the shares of that class from taking place on an open and proper basis. The Directors may also refuse to register an allotment or transfer of shares (whether fully-paid or not) in favour of more than four persons jointly. If the Directors refuse to register an allotment or a transfer of shares they shall as soon as practicable and in any event within two months after the date on which: |
(i) | the letter of allotment or instrument of transfer was lodged with the Company (in the case of shares held in certificated form); or | ||
(ii) | the Operator-instruction was received by the Company (in the case of shares held in uncertificated form), |
send to the allottee or transferee notice in writing of the refusal giving reasons for the refusal. |
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(C) The Directors shall decline to register any transfer of the Special Voting Share unless the transfer is to a new RTL Shareholder SVC in accordance with the RTL Shareholder Voting Agreement. The Directors shall decline to register any transfer of the Equalisation Share unless the transfer is to a member of the RTL Group or a trustee for the benefit of a member or members of the RTL Group. | ||
37 | Retention of transfers | |
All instruments of transfer which are registered may be retained by the Company. | ||
38 | No fee on registration | |
No fee will be charged by the Company in respect of the registration of any transfer or other document relating to or affecting the title to any shares or otherwise for making any entry in the Register affecting the title to any shares. | ||
39 | Deleted | |
40 | Deleted |
41 | Persons entitled on death | |
In case of the death of a member, the survivors or survivor where the deceased was a joint holder, and the executors or administrators of the deceased where he was a sole or only surviving holder, shall be the only persons recognised by the Company as having any title to his interest in the shares, but nothing in this Article shall release the estate of a deceased member (whether sole or joint) from any liability in respect of any share held by him. | ||
42 | Election by persons entitled by transmission | |
A person becoming entitled to a share in consequence of the death or bankruptcy of a member or otherwise by operation of law may (subject as hereinafter provided) upon supplying to the Company such evidence as the Directors may reasonably require to show his title to the share either be registered himself as holder of the share upon giving to the Company notice in writing to that effect or transfer such share to some other person. All the limitations, restrictions and provisions of these Articles relating to the right to transfer and the registration of transfers of shares shall be applicable to any such notice or transfer as aforesaid as if the notice or transfer were a transfer made by the member registered as the holder of any such share. | ||
43 | Rights of persons entitled by transmission | |
Save as otherwise provided by or in accordance with these Articles, a person becoming entitled to a share in consequence of the death or bankruptcy of a member or otherwise by operation of law (upon supplying to the Company such evidence as the Directors may reasonably require to show his title to the share) shall be entitled to the same dividends and other advantages as those to which he would be entitled if he were the registered holder of the share except that he shall not be entitled in respect thereof (except with the authority of the Directors) to exercise any right conferred by membership in relation to shareholders meetings until he shall have been registered as a member in respect of the share. |
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44 | Deleted |
45 | (A) The Company shall be entitled to sell at the best price reasonably obtainable at the time of sale the shares of a member or the shares to which a person is entitled by virtue of transmission on death or bankruptcy or otherwise by operation of law if and provided that:- |
(i) | during the period of 12 years prior to the date of the publication of the advertisements referred to in paragraph (ii) below (or, if published on different dates, the first thereof) at least three dividends in respect of the shares have become payable and no dividend in respect of those shares has been claimed; and | ||
(ii) | the Company shall on expiry of such period of 12 years have inserted advertisements in both a national newspaper and in a newspaper circulating in the area in which the last known postal address of the member or the address at which service of notices may be effected under these Articles is located giving notice of its intention to sell the said shares; and | ||
(iii) | during the period of three months following the publication of such advertisements the Company shall have received no communication from or on behalf of such member or person. |
(B) To give effect to any such sale the Company may appoint any person to transfer, as transferor, the said shares and such transfer shall be as effective as if it had been carried out by the registered holder of or person entitled by transmission to such shares and the title of the transferee shall not be affected by any irregularity or invalidity in the proceedings relating thereto. The net proceeds of sale shall belong to the Company which shall be obliged to account to the former member or other person previously entitled as aforesaid for an amount equal to such proceeds and shall enter the name of such former member or other person in the books of the Company as a creditor for such amount which shall be a permanent debt of the Company. No trust shall be created in respect of the debt, no interest shall be payable in respect of the same and the Company shall not be required to account for any money earned on the net proceeds, which may be employed in the business of the Company or invested in such investments (other than shares of the Company or its holding company if any) as the Directors may from time to time think fit. |
46 | Annual General Meetings | |
An Annual General Meeting shall be held in each period of six months beginning with the day following the Companys accounting reference date, at such place, date and time as may be determined by the Directors. |
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47 | Convening and Location of General Meetings | |
(A) The Directors may whenever they think fit, and shall on requisition in accordance with the Statutes, proceed to convene a General Meeting. | ||
(B) In the case of any General Meeting the Directors or the chairman of the meeting may, notwithstanding the notice specifying the place of the meeting or adjourned meeting (the principal place), make arrangements for simultaneous attendance at and participation in (including by way of video link) the meeting or adjourned meeting at that or any other place by persons entitled to attend the meeting, provided that persons attending at any particular place shall be able to see and hear, and be seen and heard by, persons attending at the other place or places at which the meeting is convened. | ||
(C) The Directors may, from time to time, make such arrangements for the purpose of ensuring that the level of attendance at any place at which any General Meeting takes place is consistent with the orderly conduct of the meeting as they shall, in their absolute discretion, consider appropriate, and may from time to time vary any such arrangements or make any new arrangements in place of them, provided that the entitlement of a member to attend a meeting or adjourned meeting shall be satisfied by his being given the entitlement to attend at such place (fulfilling the conditions specified in paragraph (B) of this Article) as may be specified by the Directors for the purposes of this Article. | ||
(D) For the purposes of all other provisions of these Articles any such meeting shall be treated as being held and taking place at the principal place. |
48 | Length of notice for General Meetings | |
(A) An Annual General Meeting shall be called by notice of at least 21 days. | ||
(B) Any other General Meeting shall be called by notice of at least 14 days. | ||
(C) The period of notice shall in either case be exclusive of the day on which it is served or deemed to be served and of the day on which the meeting is to be held. | ||
(D) Notice shall be given to all members other than such as are not under the provisions of these Articles entitled to receive such notices from the Company. The Company may determine that only those persons entered on the Register at the close of business on a day determined by the Company, such day being no more than 21 days before the day that notice of the meeting is sent, shall be entitled to receive such a notice. | ||
(E) A General Meeting, notwithstanding that it has been called by a shorter notice than that specified above, shall be deemed to have been duly called if it is so agreed:- |
(i) | in the case of an Annual General Meeting, by all the members entitled to attend and vote thereat; and | ||
(ii) | in the case of any other General Meeting, by a majority in number of the members having a right to attend and vote thereat, being a |
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majority together holding not less than 95 per cent. in nominal value of the shares giving that right. |
49 | Contents of notice of General Meetings | |
(A) Every notice calling a General Meeting shall specify the place, date and time of the meeting. There shall appear with reasonable prominence in every such notice a statement that a member is entitled to appoint another person as his proxy to exercise all or any of his rights to attend and to speak and vote and that a proxy need not be a member of the Company. | ||
(B) The notice shall specify the general nature of the business to be transacted at the meeting; and if any resolution is to be proposed as a Special Resolution, the notice shall contain a statement to that effect. | ||
(C) In the case of an Annual General Meeting, the notice shall also specify the meeting as such. | ||
(D) For the purposes of determining which persons are entitled to attend or vote at a meeting, and how many votes such persons may cast, the Company may specify in the notice of the meeting a time, not more than 48 hours before the time fixed for the meeting, by which a person must be entered on the Register in order to have the right to attend or vote at the meeting. |
50 | Chairman | |
The Chairman of the Directors, failing whom a Deputy Chairman, shall preside as chairman at a General Meeting. If there is no such Chairman or Deputy Chairman, or if at any meeting neither is present within five minutes after the time appointed for holding the meeting and willing to act, the Directors present shall choose one of their number or, if no Director is present or if all the Directors present decline to take the chair, a member may be elected to be the chairman by a resolution of the Company passed at the meeting. | ||
51 | Quorum | |
No business other than the appointment of a chairman shall be transacted at any General Meeting unless a quorum is present at the time when the meeting proceeds to business. Three members present in person and entitled to vote shall be a quorum for all purposes. | ||
52 | Lack of quorum | |
If within five minutes from the time appointed for a General Meeting (or such longer interval as the chairman of the meeting may think fit to allow) a quorum is not present, or if during the meeting a quorum ceases to be present, the meeting, if convened on the requisition of members, shall be dissolved. In any other case it shall stand adjourned to such other day and such time and place as may have been specified for the purpose in the notice convening the meeting or (if not so specified) as the chairman of the meeting may determine, and if at such adjourned |
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meeting a quorum is not present within five minutes from the time appointed for holding the meeting, the members present in person or by proxy shall be a quorum. | ||
53 | Conduct of meetings | |
The chairman shall take such action as he thinks fit to promote the orderly conduct of the business of any General Meeting as laid down in the notice of the meeting and the chairmans decision, made in good faith, on matters of procedure or arising incidentally from the business of the meeting shall be final as shall be his determination, acting in good faith, as to whether any matter is of such a nature. | ||
54 | Adjournment and notice of adjourned meeting | |
(A) The chairman may at any time without the consent of the meeting adjourn any General Meeting at which a quorum is present either sine die or to another time or place where it appears to him that (i) the members wishing to attend cannot be conveniently accommodated in the place appointed for the meeting, or (ii) the conduct of persons present prevents or is likely to prevent the orderly continuation of business, or (iii) an adjournment is desirable in view of the timing of a general meeting or adjourned general meeting of RTL, or (iv) an adjournment is otherwise necessary so that the business of the meeting may be properly conducted. In addition, the chairman may at any time with the consent of any General Meeting at which a quorum is present (and shall if so directed by the meeting) adjourn the meeting either sine die or to another time and place. When a meeting is adjourned sine die the time and place for the adjourned meeting shall be fixed by the Directors. No business shall be transacted at any adjourned meeting except business which might properly have been transacted at the meeting had the adjournment not taken place. | ||
(B) When a meeting is adjourned for 30 days or more or sine die , not less than seven days notice of the adjourned meeting shall be given in like manner as in the case of the original meeting. | ||
(C) Save as hereinbefore expressly provided, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting. | ||
55 | Amendments to resolutions | |
If an amendment shall be proposed to any resolution under consideration but shall be ruled out of order by the chairman of the meeting, the proceedings on the substantive resolution shall not be invalidated by any error in the ruling. In the case of a resolution duly proposed as a Special Resolution, no amendment thereto (other than a mere clerical amendment to correct a patent error) may in any event be considered or voted upon. In the case of a resolution duly proposed as an ordinary resolution, no amendment thereto (other than a mere clerical amendment to correct a patent error or an amendment to conform such resolution to a resolution duly proposed at the nearly contemporaneous meeting of RTL) may be considered or voted upon unless written notice of such proposed amendment is given to the Office at least 48 hours prior to the time appointed for holding the relevant meeting or adjourned meeting or (in the absence of any such notice) the chairman of the meeting in his absolute discretion rules that the amendment shall be considered. |
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56 | Demand for poll |
(i) | the chairman of the meeting; | ||
(ii) | not less than five members present in person or by proxy and entitled to vote; | ||
(iii) | a member or members present in person or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; | ||
(iv) | a member or members present in person or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right; or | ||
(v) | the holder of the Special Voting Share. |
(i) | before the result of a show of hands is declared, the meeting shall continue as if the demand has not been made; or | ||
(ii) | after the result of a show of hands is declared, the demand shall not be taken to have invalidated the result of that show of hands. |
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58 | Voting on a poll |
59 | Timing of poll |
60 | Votes attaching to shares |
(i) | on a show of hands every member who is present in person (including by corporate representative) and every proxy present who has been duly appointed by a member entitled to vote on the resolution shall have one vote; and | ||
(ii) | on a poll every member who is present in person (including by corporate representative) or by proxy shall have one vote for every Ordinary Share of which he is the holder and the Specified Number (as defined in paragraph (B) below) of votes for the Special Voting Share of which he is the holder. |
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61 | Votes of joint holders |
62 | Deleted |
63 | Restriction on voting in particular circumstances |
41
(i) | the shares comprising the shareholding account in the Register which comprises or includes the shares in relation to which the default occurred (all or the relevant number as appropriate of such shares being the default shares, which expression shall include any further shares which are issued in respect of such shares); and | ||
(ii) | any other shares held by the member, |
(i) | any dividend or part thereof or other money which would otherwise be payable in respect of the default shares shall be retained by the Company without any liability to pay interest thereon when such dividend or other money is finally paid to the member and the member shall not be entitled to elect to receive shares in lieu of dividend; and/or | ||
(ii) | no transfer of any of the shares held by such member shall be registered unless the transfer is an approved transfer or:- |
(a) | the member is not himself in default as regards supplying the information required; and | ||
(b) | the transfer is of part only of the members holding and, when presented for registration, is accompanied by a certificate by the member in a form satisfactory to the Directors to the effect that after due and careful enquiry the member is satisfied that none of the shares the subject of the transfer are default shares |
provided that, in the case of shares in uncertificated form, the Directors may only exercise their discretion not to register a transfer if permitted to do so by the Regulations. |
(E) | (i) | Save as herein provided any direction notice shall have effect in accordance with its terms for so long as the default in respect of |
42
which the direction notice was issued continues and shall cease to have effect thereafter upon the Directors so determining (such determination to be made within a period of one week of the default being duly remedied, with written notice thereof being given forthwith to the member). | |||
(ii) | Any direction notice shall cease to have effect in relation to any shares which are transferred by such member by means of an approved transfer or in accordance with paragraph (C)(ii) above. |
(i) | a person shall be treated as appearing to be interested in any shares if the member holding such shares has been served with a notice under the said Section 793 and either (a) the member has named such person as being so interested or (b) (after taking into account the response of the member to the said notice and any other relevant information) the Company knows or has reasonable cause to believe that the person in question is or may be interested in the shares; and | ||
(ii) | a transfer of shares is an approved transfer if:- |
(a) | it is a transfer of shares to an offeror by way or in pursuance of acceptance of a takeover offer (as defined in Section 974 of the Companies Act 2006); or | ||
(b) | the Directors are satisfied that the transfer is made pursuant to a bona fide sale of the whole of the beneficial ownership of the shares to a party unconnected with the member or with any person appearing to be interested in such shares including any such sale made through the London Stock Exchange or any other stock exchange outside the United Kingdom on which the Companys shares are normally traded. For the purposes of this sub-paragraph any associate (as that term is defined in Section 435 of the Insolvency Act 1986) shall be included amongst the persons who are connected with the member or any person appearing to be interested in such shares. |
64 | Change of control |
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(i) | Accepting Shareholder means any person who has, in respect of the whole of that persons Interest in Ordinary Shares or Entitlement to RTL Shares, accepted or given irrevocable undertakings to accept offers made under a takeover offer which complies with the Code or under a takeover scheme or takeover announcement which complies with Chapter 6 of the Corporations Act (or both); | ||
(ii) | paragraph deleted | ||
(iii) | ADR Depositary means a custodian or depositary or his nominee, approved by the Directors, under contractual arrangements with the Company by which he or that nominee holds Ordinary Shares and he or another person issues American Depositary Receipts evidencing rights in relation to those shares or a right to receive them; | ||
(iv) | Associate means a person who is for the time being an associate of another person for the purposes of Chapter 6 of the Corporations Act as defined in Part 1.2 Division 2 of the Corporations Act; | ||
(v) | concert parties means persons for the time being acting in concert within the meaning of the Code; | ||
(vi) | Code means The City Code on Takeovers and Mergers as from time to time modified or replaced; | ||
(vii) | Entitlement in relation to shares in RTL means the Relevant Interest of a person or the persons Associates in those shares; | ||
(viii) | Holder is as defined in paragraph (K) below; | ||
(viiiA) | FSA Handbook means the United Kingdom Financial Services Authoritys Handbook of Rules and Guidance; | ||
(ix) | Interest in relation to shares in the Company, means any interest in Ordinary Shares within the meaning of Sections 820 to 825 of the Original Act (except that of a bare trustee), provided that: |
(a) | Section 820(4)(b) shall apply on the basis that the entitlement there referred to could arise under an agreement within the meaning of Sections 824(5) and (6); | ||
(b) | an interest in Ordinary Shares shall be disregarded if it is held by a market maker acting in that capacity, provided that such Ordinary Shares do not represent 10 per cent. or more of the votes generally exercisable at General Meetings (excluding any votes attaching to the Special Voting Share) and subject to the market maker satisfying the criteria and complying with the conditions and operating requirements referred to in paragraph (ixA) below; | ||
(c) | an interest in Ordinary Shares shall be disregarded where: |
(I) | in pursuance of arrangements made with the operator of a relevant system: |
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(aa) | securities of a particular aggregate value are on any day transferred by means of that system from a person ( A ) to another person ( B ); | ||
(bb) | the securities are of kinds and amounts determined by the operator-system; and | ||
(cc) | the securities, or securities of the same kinds and amounts, are on the following day transferred by means of the relevant system from B to A; and |
(II) | the securities comprise any Ordinary Shares, |
and for the purposes of this paragraph (c) any day which, in England and Wales, is a non-business day for the purposes of the Bills of Exchange Act 1882 is disregarded, and expressions which are used in the Regulations shall have the same meanings as in those Regulations; | |||
(d) | a person is not by virtue of Section 820(4)(b) of the Original Act to be taken to be interested in Ordinary Shares by reason only that he has been appointed a proxy to vote at a specified meeting of the Company or of any class of its members and at any adjournment of that meeting, or has been appointed by a corporation to act as its representative at any meeting of the Company or of any class of its members; |
and Interested shall be construed accordingly; |
(ixA) | market maker means a market maker, as such term is defined in the FSA Handbook, who is in compliance with the conditions and operating requirements set out in Rule 5.1.4 of the DTRs; | ||
(x) | the Original Act means the Companies Act 2006 as in force at the date of adoption of this Article and notwithstanding any repeal, modification or re-enactment thereof after that date (including for the avoidance of doubt, any amendment, replacement or repeal by regulations made by the Secretary of State pursuant to Section 828 of that Act to the definition of shares in Section 792 or to the provisions as to what is taken to be an interest in shares in Section 820), and the DTRs means the Disclosure and Transparency Rules of the UKLA as amended from time to time; | ||
(xi) | Permitted Holding means:- |
(a) | any Entitlement to RTL Ordinary Shares, arising as a result of two or more persons becoming Associates, in relation to the acquisition of which an exemption or declaration under Section 655A of the Corporations Act is in force, with the effect that the acquisition of such Entitlement would not breach Section 606 of the Corporations Act; |
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(b) | any Interest in shares in the Company or an Entitlement to RTL Ordinary Shares held solely by a person as a bare trustee or by a person who, if the incidents of that persons Interest or Entitlement were governed by the laws of England, would in the opinion of the Directors be regarded as a bare trustee in respect of that Interest or Entitlement; | ||
(c) | any Interest of a person in shares in the Company or any Entitlement of a person to any RTL Ordinary Shares which under arrangements approved by the Directors and the directors of RTL respectively have been allotted or issued with a view to that person (or purchasers from that person) offering the same to the public within a period not exceeding three months from the date of the relevant allotment or issue; | ||
(d) | any Interest of a person in shares in the Company or any Entitlement of a person to any RTL Ordinary Shares which the Directors are satisfied is held by virtue only of that person being entitled to exercise or control the exercise of 20 per cent. or more of the voting power at general meetings of another company which is a Permitted Person; | ||
(e) | any Interest or Entitlement of a Permitted Person, other than RTL Shareholder SVC or RTP Shareholder SVC; |
(xii) | Permitted Person means:- |
(a) | any member of the Rio Tinto Group; | ||
(b) | any member of the RTL Group; | ||
(c) | RTL Shareholder SVC; | ||
(d) | RTP Shareholder SVC; | ||
(e) | an ADR Depositary, acting in his capacity as such; | ||
(f) | The Depositary Trust Company or any successor and/or its nominee acting in the capacity of a clearing agency in respect of dealings in American Depositary Receipts; | ||
(g) | a clearing house or a nominee of a recognised clearing house or of a recognised investment exchange (a recognised person); | ||
(h) | a trustee (acting in that capacity) of any employees share scheme of the Company or of RTL; | ||
(i) | any person (an Offeror) who has made an offer to acquire all the outstanding RTL Ordinary Shares (other than those already owned by the Offeror) which may, if the Offeror so decides, be conditional upon an offer which has been made by the Offeror (or a subsidiary of, a parent company of, or a subsidiary of a parent company of the Offeror) on terms which satisfy each of subparagraphs (I), (II) and (III) of Rule 145(B)(x)(i) of the RTL Constitution) to acquire all the |
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outstanding Ordinary Shares (other than those already owned by the Offeror or such subsidiary, parent company or subsidiary of a parent company) becoming unconditional and shall:- |
(I) | be unconditional when made or contain only such conditions as any such offer must contain pursuant to the Corporations Act; | ||
(II) | disclose the highest price paid or value of consideration given for Ordinary Shares by the Offeror or its concert parties and for RTL Ordinary Shares by the Offeror and its Associates since the beginning of the period commencing 12 months before the date on which the Offeror or any of its Associates or concert parties became a Relevant Person and include a cash offer (or an offer with a cash alternative) to acquire all the RTL Ordinary Shares (other than those already directly or indirectly owned by the Offeror) at a price per RTL Ordinary Share which (subject to paragraph (xix) below) is not less than the higher of:- |
(aa) | the highest price paid or value of consideration given for Ordinary Shares by the Offeror or its Associates since the beginning of the period commencing 12 months before the date on which the Offeror or any of its concert parties became a Relevant Person multiplied by the Equalisation Fraction as at the date of the offer and converted into Australian dollars. Such conversion shall be made at the closing mid-point spot Australian dollar-sterling exchange rate, on the date on which the Offeror or any of its concert parties became a Relevant Person as published in the Financial Times; and | ||
(bb) | the highest price paid or value of consideration given for RTL Ordinary Shares by the Offeror (or its Associates) in Australian dollars (or equivalent, converted into Australian dollars by a method comparable to that set out in (aa) above) since the beginning of the period commencing 12 months before the date on which the Offeror or any of its Associates became a Relevant Person; |
provided that if no such shares have been acquired by the Offeror or any of its Associates or concert |
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parties during that period the price (subject to paragraph (xix)) shall be not less than the higher of:- |
(cc) | the middle market quotation derived from the London Stock Exchange Daily Official List in respect of Ordinary Shares on the dealing day preceding the date on which the offer is announced, multiplied by the Equalisation Ratio as at that day and converted into Australian dollars at the closing mid-point Australian dollar-sterling exchange rate as at such date as published in the Financial Times; and | ||
(dd) | the weighted average sale price derived from the Australian Securities Exchange in respect of RTL Ordinary Shares on the Business Day preceding the date on which the offer is announced; and |
(III) | comply with the provisions of the Corporations Act as if it were an offer made under the Corporations Act; |
provided that if the terms of any such offer would, at the time it would be required to be made, be illegal or contravene any applicable law or regulatory requirement (including the Corporations Act) then the offer shall be on such terms as may be necessary to comply with such applicable law or regulatory requirement but otherwise shall approximate as far as is possible the requirements set out in (I) to (III) above and provided further that references to the price paid for an Ordinary Share or a RTL Ordinary Share shall be deemed to include the price paid for an interest through an American Depositary Receipt representing such a share converted into sterling or Australian dollars as appropriate at the closing mid-point exchange rate of the purchase currency and sterling or Australian dollars (as appropriate) on the date of acquisition of such interest obtained from the Financial Times (in the case of Ordinary Shares) or from the Australian Financial Review in the case of RTL Ordinary Shares; | |||
(j) | any person who (i) owns directly or indirectly Publicly-held Rio Tinto Ordinary Shares which carry the right to cast more than 50 per cent. of the total votes attaching to all Publicly-held Rio Tinto Ordinary Shares capable of being cast on a poll at a General Meeting and (ii) owns directly or indirectly Publicly-held RTL Ordinary Shares which carry the right to cast more than 50 per cent. of the total votes attaching to all Publicly-held RTL Ordinary Shares capable of being cast on a poll at a general meeting of RTL, and has |
48
reached that level of ownership by receiving acceptances under offers to acquire all the outstanding Ordinary Shares and RTL Ordinary Shares (other than those already owned by that person) or as a result of a scheme of arrangement approved by the High Court or as a result of a compromise or arrangement approved by the relevant court of Australia under Part 5.1 of the Corporations Act or by any combination of these; |
(k) | any concert party or Associate of an Offeror; |
(xiii) | Relevant Holding means an Interest in shares in the Company or an Entitlement to RTL Ordinary Shares or both (disregarding any part of that Interest or Entitlement which is a Permitted Holding) which together would otherwise entitle their holder to cast on a poll (either directly as a member of the Company or through any votes which may be cast by the holder of the Special Voting Share to reflect votes which the holder of the Relevant Holding is entitled to cast in respect of RTL Ordinary Shares) 20 per cent. or more of the total votes attaching to all share capital of the Company of all classes on a Joint Decision (assuming that all the Publicly-held RTL Ordinary Shares including those comprised in such Entitlement were voted on the equivalent resolution at the nearly contemporaneous general meeting of RTL and counted in calculating the votes attached to the Special Voting Share on such decision) provided that if the Relevant Holding does not include any RTL Ordinary Shares, the Relevant Holding includes an Interest in shares in the Company (other than the Special Voting Share) which carry the right on a poll to cast 30 per cent. or more of the total votes attaching to all share capital of the Company of all Classes (apart from the Special Voting Share) taken as a whole and capable of being cast on a poll at a General Meeting; | ||
(xiiiA) | Relevant Interest means a relevant interest in respect of a share as that term is defined in the Corporations Act; | ||
(xiv) | Relevant Person means any person (whether or not identified) who has, or who appears to the Directors to have, a Relevant Holding or who is deemed for the purposes of this Article to be a Relevant Person; | ||
(xv) | Relevant Share Capital means shares of the Company to which Part 22 of the Original Act applies; | ||
(xvi) | Relevant Shares means all the shares in which a Relevant Person or an Excluded RTL Holder has, or appears to the Directors to have, an Interest or which are deemed for the purposes of this Article to be Relevant Shares; | ||
(xvii) | Required Disposal means a disposal or disposals of such a number of Relevant Shares (or interests therein) as will cause a Relevant Person to cease to be a Relevant Person, not being a disposal to another Relevant Person (other than a Permitted Person) or a |
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disposal which constitutes any other person (other than a Permitted Person) a Relevant Person; | |||
(xviii) | references to the Financial Times mean the London Edition, and includes, if that newspaper fails to be published or fails to publish the relevant information any other daily newspaper circulating in London nominated by the Board which does publish the relevant information and references to the Australian Financial Review include, if that newspaper ceases to be published or fails to publish the relevant information, any other daily newspaper circulating in Melbourne nominated by the Board which does publish the relevant information; | ||
(xix) | references in paragraph (xii)(i) to price or value of consideration mean such price or value:- |
(a) | adjusted to reflect the effect of any share consolidation or subdivision, allotment of shares, rights issue, issue of options, issue of convertible securities or reduction of capital which occurred after that price or consideration was paid or given and before the offer to acquire all the RTL Ordinary Shares referred to in that paragraph occurred; and | ||
(b) | adjusted to reflect the net amount of any dividend which had been declared or announced at the time the price or consideration was paid or given if the shares acquired were at that time trading cum-dividend and at the time of the offer the shares are trading ex-dividend or vice versa, | ||
and the certificate of the Auditors stating the appropriate amount of an adjustment required by (a) or (b) shall be conclusive, | |||
and, for the purposes of this Article, where the Directors resolve in good faith that they have made reasonable enquiries and that they are unable to determine:- | |||
(c) | whether or not a particular person has an Interest in any particular shares; or | ||
(d) | who is Interested in any particular shares, |
the shares concerned shall be deemed to be Relevant Shares and all persons interested in them to be Relevant Persons. |
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(i) | set out the restrictions referred to in paragraph (F) below; | ||
(ii) | state that the addressee of the notice is required to make a Required Disposal or procure that a Required Disposal is made by a time specified in the notice being such time as the Directors shall consider most appropriate not being less than 7 days nor more than 60 days after the date on which the notice is given to the addressee (the Specified Time) unless by that time either (I) the Relevant Person has become a Permitted Person, or (II) the Directors have resolved in good faith that either the person stated in the notice to be a Relevant Person is not a Relevant Person or that the addressee does not have an Interest in the shares which would otherwise have to be disposed of; and | ||
(iii) | set out such other requirements or restrictions as the Directors shall consider necessary to ensure that by the Specified Time there is no Relevant Person (other than a Permitted Person) in relation to the Relevant Shares concerned. |
(a) | a specified purchaser or purchasers (the Relevant Purchaser(s)) (excluding the ADR Depositary itself) or Holder or Holders (the Relevant Holder(s)), as the case may be, is or are believed or deemed to be Relevant Persons or is or are believed or deemed to be purchasers or Holders through which a Relevant Person or Relevant Persons has or have Interests in either case as specified in the notice; and | ||
(b) | the Directors believe that each Relevant Purchaser or Relevant Holder or the Relevant Person or Relevant Persons believed or deemed to have Interests through such Relevant Purchaser or Relevant Holder, as the case may be, is or are deemed to be Interested in a specific number of Relevant Shares. |
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(i) | to attend or vote at any general meeting of the Company or meeting of the holders of Relevant Share Capital or of any class thereof, or to exercise any other right conferred by membership in relation to any such meeting; | ||
(ii) | to receive any dividend or other money which would otherwise be payable in respect of a Relevant Share, which shall be retained by the Company without any liability to pay interest when the money is finally paid to the member; or | ||
(iii) | to elect to receive shares in lieu of any dividend referred to in (ii) above. |
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65 | Voting by guardian | |
Where in England or elsewhere a guardian, receiver or other person (by whatever name called) has been appointed by any court claiming jurisdiction in that behalf to exercise powers with respect to the property or affairs of any member on the ground (however formulated) of mental disorder, the Directors may in their absolute discretion, upon or subject to production of such evidence of the appointment as the Directors may require, permit such guardian, receiver or other person on behalf of such member to vote in person or by proxy at any shareholders meeting or to exercise any other right conferred by membership in relation to shareholders meetings. | ||
66 | Validity and result of vote |
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(i) | any objection shall be raised to the qualification of any voter; or | ||
(ii) | any votes have been counted which ought not to have been counted or which might have been rejected; or | ||
(iii) | any votes are not counted which ought to have been counted, |
(i) | has or has not been passed; or | ||
(ii) | passed with a particular majority, |
67 | Appointment of Proxies |
67A Multiple Proxies |
68 | Form of proxy |
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69 | Deposit of form of proxy |
(i) | in the case of a meeting or adjourned meeting, not less than 48 hours before the commencement of the meeting or adjourned meeting to which it relates; | ||
(ii) | in the case of a poll taken following the conclusion of a meeting or adjourned meeting, but not more than 48 hours after the poll was demanded, not less than 48 hours before the commencement of the meeting or adjourned meeting at which the poll was demanded; and | ||
(iii) | in the case of a poll taken more than 48 hours after it was demanded, not less than 24 hours before the time appointed for the taking of the poll, |
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70 | Rights of proxy |
71 | Termination of proxys authority |
(i) | in the case of a meeting or adjourned meeting, not less than one hour before the commencement of the meeting or adjourned meeting to which the proxy appointment relates; | ||
(ii) | in the case of a poll taken following the conclusion of a meeting or adjourned meeting, but not more than 48 hours after it was demanded, not less than one hour before the commencement of the meeting or adjourned meeting at which the poll was demanded; or | ||
(iii) | in the case of a poll taken more than 48 hours after it was demanded, not less than one hour before the time appointed for the taking of the poll. |
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72 | Subject to the Statutes, any corporation which is a member of the Company may by resolution of its directors or other governing body authorise a person or persons to act as its representative or representatives at any shareholders meeting. |
73 | Number of Directors | |
Subject as hereinafter provided the Directors shall not be less than five in number. The Company may by Ordinary Resolution from time to time vary the minimum number and/or fix and from time to time vary a maximum number of Directors. | ||
74 | Share qualification |
75 | Directors remuneration |
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76 | Other remuneration of Directors | |
Any Director who holds any executive office with the Company or RTL, or who performs services which in the opinion of the Directors are outside the scope of the ordinary duties of a Director, may be paid such extra remuneration or may receive such other benefits as the Directors may determine. | ||
77 | Directors expenses | |
The Directors may pay or reimburse any Director or Alternate Director out of the funds of the Company all such reasonable expenses as he may incur in attending and returning from meetings of the Directors or of any committee of the Directors or shareholders meetings or otherwise in connection with the business of the Company. | ||
78 | Directors pensions and other benefits | |
Subject to the aggregate maximum amount under Article 75(A) (but which limit shall for the avoidance of doubt not apply to remuneration or other benefits paid pursuant to Article 76), the Directors shall have the power to pay and agree to pay pensions or other retirement, superannuation, health, death or disability benefits to (or to any person in respect of) any Director or former Director (other than pensions, retirement or non-statutory superannuation benefits to (or to any person in respect of ) any Director who does not hold any executive office within the Company or RTL) and for the purpose of providing any such pensions or other benefits to contribute to any scheme or fund or to pay premiums (other than premiums or contributions to any scheme or fund for the purpose of providing pensions, retirement or non-statutory superannuation benefits to (or to any person in respect of ) any Director who does not hold any executive office within the Company or RTL). | ||
79 | Appointment and powers of executive Directors |
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80 | Alternate Directors |
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81 | Deleted | |
82 | Retirement at Annual General Meetings |
83 | Deleted | |
84 | Re-election of retiring Director | |
The Company at the meeting at which a Director retires under any provision of these Articles may by Ordinary Resolution fill the office being vacated by electing thereto the retiring Director (if eligible for re-election) or some other person eligible for election. In default the retiring Director shall be deemed to have been re-elected except in any of the following cases:- |
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85 | Election of two or more Directors | |
A resolution for the election of two or more persons as Directors by a single resolution shall not be moved at any General Meeting unless a resolution that it shall be so moved has first been agreed to by the meeting without any vote being given against it, and any resolution moved in contravention of this provision shall be void. | ||
86 | Nomination of Director for election | |
No person other than a Director retiring at the meeting shall, unless recommended by the Directors for election, be eligible for election as a Director at any General Meeting unless within the period referred to in Article 87 there has been lodged at the Office:- |
87 | Period for Nomination of Directors for election | |
The period within which the notices referred to in Article 86 must be lodged at the Office is not less than 45 Business Days nor more than 65 Business Days (inclusive of the date on which the notice is given) before the earlier of the dates appointed for: |
(A) | the general meeting of the Company; and | ||
(B) | the nearly contemporaneous general meeting of RTL, |
88 | Election or appointment of additional Director | |
The Company may by Ordinary Resolution elect, and without prejudice thereto the Directors shall have power at any time to appoint, any person to be a Director either to fill a casual vacancy or as an additional Director, but so that (i) the total number of Directors shall not thereby exceed the maximum number (if any) fixed by or in accordance with these Articles and (ii) the appointment of such Director shall not take effect before such Director has been duly appointed as a director of RTL. Any person so appointed by the Directors shall retire at the next Annual General Meeting and shall then be eligible for re-election. | ||
89 | Vacation of office | |
The office of a Director shall be vacated in any of the following events, namely:- |
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90 | Removal of Director | |
The Company may in accordance with and subject to the provisions of the Statutes by Ordinary Resolution of which special notice has been given remove any Director from office (notwithstanding any provision of these Articles or of any agreement between the Company and such Director, but without prejudice to any claim he may have for damages for breach of any such agreement) and elect another person in place of a Director so removed from office (provided that such person is also elected a director of RTL at the same time) . In default of such election the vacancy arising upon the removal of a Director from office may be filled as a casual vacancy. |
91 | Convening of meetings of Directors | |
Subject to the provisions of these Articles the Directors may meet together for the despatch of business, adjourn and otherwise regulate their proceedings as they think fit. At any time any Director may, and the Secretary at the request of a Director shall, summon a meeting of the Directors. It shall not be necessary to give notice of a meeting of Directors to any Director who is for the time being neither in the United Kingdom nor in Australia. Any Director may waive notice of any meeting and any such waiver may be retroactive. |
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92 | Quorum | |
The quorum necessary for the transaction of business of the Directors may be fixed from time to time by the Directors and unless so fixed at any other number (not being less than three) shall be three. A meeting of the Directors at which a quorum is present shall be competent to exercise all powers and discretions for the time being exercisable by the Directors. |
93 | Chairman |
94 | Casting vote | |
Questions arising at any meeting of the Directors shall be determined by a majority of votes. In the case of an equality of votes, the chairman of the meeting shall have a second or casting vote. | ||
95 | Number of Directors below minimum | |
The continuing Directors may act notwithstanding any vacancies, but if and so long as the number of Directors is reduced below the minimum number fixed by or in accordance with these Articles the continuing Directors or Director may act for the purpose of filling such vacancies or of summoning General Meetings, but not for any other purpose. If there be no Directors or Director able or willing to act, then any two members may summon a General Meeting for the purpose of appointing Directors. | ||
96 | Telephone Board Meetings | |
The Directors, and any committee of the Directors, shall be deemed to meet together if, being in separate locations, they are nonetheless linked by conference telephone or other communication equipment which allows those participating to hear and speak to each other. Such a meeting shall be deemed to take place at the place agreed upon by the Directors attending the meeting provided that at least one of the Directors present at the meeting was at that place for the duration of the meeting. | ||
97 | Directors written resolutions |
(i) | signed one or more copies of it, or |
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(ii) | otherwise indicated their agreement to it in writing. |
98 | Validity of proceedings | |
All acts done by any meeting of Directors, or of any committee or sub-committee of the Directors, or by any person acting as a member of any such committee or sub-committee, shall as regards all persons dealing in good faith with the Company, notwithstanding that there was some defect in the appointment of any Director or any of the persons acting as aforesaid, or that any such persons were disqualified or had vacated office, or were not entitled to vote, be as valid as if every such person had been duly appointed and was qualified and had continued to be a Director or member of the committee or sub-committee and had been entitled to vote. |
99 | Authorisation of Directors interests |
(i) | the matter in question shall have been proposed in writing for consideration at a meeting of the Directors, in accordance with the board of Directors normal procedures or in such other manner as the Directors may determine; | ||
(ii) | any requirement as to the quorum at the meeting of the Directors at which the matter is considered is met without counting the Director in question and any other interested Director (together the Interested Directors ); and | ||
(iii) | the matter was agreed to without the Interested Directors voting or would have been agreed to if the votes of the Interested Directors had not been counted. |
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(i) | where a Director (or a person connected with him) is a director or other officer of, or employed by, or otherwise interested (including by the holding of shares) in any Relevant Company; | ||
(ii) | where a Director (or a person connected with him) is a party to, or otherwise interested in, any contract, transaction or arrangement with a Relevant Company, or in which the Company is otherwise interested; | ||
(iii) | where the Director (or a person connected with him) acts (or any firm of which he is a partner, employee or member acts) in a professional capacity for any Relevant Company (other than as Auditor) whether or not he or it is remunerated therefore; | ||
(iv) | an interest which cannot reasonably be regarded as likely to give rise to a conflict of interest; | ||
(v) | an interest, or a transaction or arrangement giving rise to an interest, of which the Director is not aware; | ||
(vi) | any matter authorised under Article 99(A); or | ||
(vii) | any other interest authorised by Ordinary Resolution. |
(i) | falling within paragraph (iv), (v) or (vi) of paragraph (A) of this Article; | ||
(ii) | if, or to the extent that, the other Directors are already aware of such interest (and for this purpose the other Directors are treated as aware of anything of which they ought reasonably to be aware); or |
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(iii) | if, or to the extent that, it concerns the terms of his service contract (as defined in Section 227 of the Companies Act 2006) that have been or are to be considered by a meeting of the Directors, or by a committee of Directors appointed for the purpose under these Articles. |
(i) | the Company; | ||
(ii) | a subsidiary undertaking of the Company; | ||
(iii) | any holding company of the Company or a subsidiary undertaking of any such holding company; | ||
(iv) | any body corporate promoted by the Company; | ||
(v) | any body corporate in which the Company is otherwise interested; or | ||
(vi) | RTL and any controlled entity of RTL (within the meaning of the Corporations Act). |
100 | Restrictions on quorum and voting |
(i) | in which he has an interest of which he is not aware; | ||
(ii) | in which he has an interest which cannot reasonably be regarded as likely to give rise to a conflict of interest; | ||
(iii) | in which he has an interest only by virtue of interests in shares, debentures or other securities of the Company, or by reason of any other interest in or through the Company; | ||
(iv) | which involves the giving of any security, guarantee or indemnity to the Director or any other person in respect of:- |
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(a) | money lent or obligations incurred by him or by any other person at the request of or for the benefit of the Company or any of its subsidiary undertakings; or | ||
(b) | a debt or other obligation of the Company or any of its subsidiary undertakings for which he himself has assumed responsibility in whole or in part under a guarantee or indemnity or by the giving of security; |
(v) | concerning an offer of shares or debentures or other securities of or by the Company or any of its subsidiary undertakings (a) in which offer he is or may be entitled to participate as a holder of securities; or (b) in the underwriting or sub-underwriting of which he is to participate; | ||
(vi) | concerning any other body corporate in which he is interested, directly or indirectly and whether as an officer, shareholder, creditor, employee or otherwise, provided that he (together with persons connected with him) is not the holder of, or beneficially interested in, one per cent or more of the issued equity share capital of any class of such body corporate or of the voting rights available to members of the relevant body corporate; | ||
(vii) | relating to an arrangement for the benefit of the employees or former employees of the Company or any of its subsidiary undertakings which does not award him any privilege or benefit not generally awarded to the employees or former employees to whom such arrangement relates; | ||
(viii) | concerning the purchase or maintenance by the Company of insurance for any liability for the benefit of Directors or for the benefit of persons who include Directors; | ||
(ix) | concerning the giving of indemnities in favour of Directors; | ||
(x) | concerning the funding of expenditure by any Director or Directors on (a) defending criminal, civil or regulatory proceedings or actions against him or them, (b) in connection with an application to the court for relief, or (c) defending him or them in any regulatory investigations, | ||
(xi) | the doing anything to enable any Director or Directors to avoid incurring expenditure as described in paragraph (x); and | ||
(xii) | in respect of which his interest, or the interest of Directors generally, has been authorised by Ordinary Resolution. |
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100A | Confidential information |
(i) | to disclose such information to the Company or to the Directors, or to any Director, officer or employee of the Company; or | ||
(ii) | otherwise use or apply such confidential information for the purpose of or in connection with the performance of his duties as a Director. |
101 | Directors interests general |
(i) | an interest of a person who is connected with a Director shall be treated as an interest of the Director; and | ||
(ii) | Section 252 of the Companies Act 2006 shall determine whether a person is connected with a Director. |
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(i) | absenting himself from any meetings of the Directors at which the relevant situation or matter falls to be considered; and | ||
(ii) | not reviewing documents or information made available to the Directors generally in relation to such situation or matter and/or arranging for such documents or information to be reviewed by a professional adviser to ascertain the extent to which it might be appropriate for him to have access to such documents or information. |
102 | Appointment and constitution of committees | |
The Directors may delegate any of their powers or discretions (including without prejudice to the generality of the foregoing all powers and discretions whose exercise involves or may involve the payment of remuneration to or the conferring of any other benefit on all or any of the Directors) to committees. Any such committee shall, unless the Directors otherwise resolve, have power to sub-delegate to sub-committees any of the powers or discretions delegated to it. Any such committee or sub-committee shall consist of one or more Directors and (if thought fit) one or more other named persons or persons to be co-opted as hereinafter provided. Insofar as any such power or discretion is delegated to a committee or sub-committee, any reference in these Articles to the exercise by the Directors of the power or discretion so delegated shall be read and construed as if it were a reference to the exercise thereof by such committee or sub-committee. Any committee or sub-committee so formed shall in the exercise of the powers so delegated conform to any regulations which may from time to time be imposed by the Directors. Any such regulations may provide for or authorise the co-option to the committee or sub-committee of persons other than Directors and may provide for members who are not Directors to have voting rights as members of the committee or sub-committee but so that (a) the number of members who are not Directors shall be less than one-half of the total number of members of the committee or sub-committee and (b) no resolution of the committee or sub-committee shall be effective unless a majority of the members of the committee or sub-committee present throughout the meeting are Directors. | ||
103 | Proceedings of committee meetings | |
The meetings and proceedings of any such committee or sub-committee consisting of two or more persons shall be governed mutatis mutandis by the provisions of these Articles regulating the meetings and proceedings of the Directors, so far as the same are not superseded by any regulations made by the Directors under the last preceding Article. |
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104 | General powers | |
The business and affairs of the Company shall be managed by the Directors, who may exercise all such powers of the Company as are not by the Statutes or by these Articles required to be exercised by the Company in General Meeting subject nevertheless to any regulations of these Articles, to the provisions of the Statutes and to such regulations as may be prescribed by Special Resolution of the Company, but no regulation so made by the Company shall invalidate any prior act of the Directors which would have been valid if such regulation had not been made. The general powers given by this Article shall not be limited or restricted by any special authority or power given to the Directors by any other Article. |
105 | Powers and obligations in relation to the Sharing Agreement |
The Company having entered into the Sharing Agreement and the Deed Poll Guarantee, the Directors are authorised and directed to carry into effect the provisions of the Sharing Agreement and the Deed Poll Guarantee and any further or other agreements or arrangements contemplated by such Agreement and Guarantee and nothing done by any Director in good faith pursuant to such authority and obligations shall constitute a breach of the fiduciary duties of such Director to the Company or to the members of the Company. In particular, but without limitation to the generality of the foregoing (i) the Directors are authorised to provide RTL and any officer, employee or agent of RTL with any information relating to the Company; and (ii) subject to the terms of the Sharing Agreement, the Directors are authorised to enter into, operate, and carry into effect any further or other agreements or arrangements with or in connection with RTL and do all such things as in the opinion of the Directors of the Company are necessary or desirable for carrying into effect the provisions of the Sharing Agreement and the Deed Poll Guarantee or for the furtherance, maintenance or development of the relationship with RTL constituted by or arising out of any agreement mentioned in or made in accordance with this Article. |
106 | Deleted | |
107 | Appointment of attorney |
The Directors may from time to time and at any time by power of attorney or otherwise appoint any company, firm or person or any fluctuating body of persons, whether nominated directly or indirectly by the Directors, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as they may think fit, and any such appointment may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Directors may think fit, and may also authorise any such attorney to sub-delegate all or any of the powers, authorities and discretions vested in him. |
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108 | Signature on cheques etc. |
109 | Borrowing powers |
(i) | the expression Unified Group Share Capital and Reserves means at any time:- |
(a) | the amount standing to the credit of the unified share capital account (by whatever name called) of the Company and RTL; plus | ||
(b) | the aggregate amount standing to the credit of the unified reserves (including any share premium account or capital redemption reserve and the unified profit and loss account of the Company and its subsidiary undertakings and RTL and its controlled entities), all as shown in the latest published audited unified balance sheet of the Company and its subsidiary undertakings and RTL and its controlled entities, which in this Article shall have the meaning given to that expression in the Corporations Act but (i) adjusted as may be necessary and appropriate to take account of any |
71
increase in or reduction of the issued and paid-up share capital of the Company or RTL since the date to which the said unified balance sheet shall have been made up and any distributions (other than dividends paid out of profits earned since such date) in cash or in specie made from such reserves or profit and loss account since such date; (ii) excluding any sums set aside for taxation and any share capital or reserves derived from any writing-up by way of revaluation after the date of adoption of these Articles of the Company or any of its subsidiary undertakings or RTL or any of its controlled entities (or, in the case of a company becoming a subsidiary undertaking of the Company or a controlled entity of RTL after that date, the date on which such company became such a subsidiary undertaking or controlled entity) of the book values of any fixed assets; (iii) deducting any amount for goodwill or any other intangible asset shown as an asset in such unified balance sheet; (iv) not including any amounts attributable to minority interests in subsidiary undertakings of the Company or in controlled entities of RTL; and (v) after making such adjustments as the Auditors may consider appropriate (including without prejudice to the generality of the foregoing any adjustments considered appropriate in respect of any shares or other securities or any business or undertaking or part thereof acquired in whole or in part in exchange for or out of the proceeds of issue of any shares of the Company or RTL or in respect of any subsidiary undertaking of the Company or controlled entity of RTL not dealt with by the said unified balance sheet); |
(ii) | moneys borrowed for the purpose of and within four months applied in repaying other borrowed moneys falling to be taken into account shall not themselves be taken into account until such application; | ||
(iii) | there shall be excluded from moneys borrowed by any company in the Rio Tinto Group or any company in the RTL Group any such moneys borrowed which is a Project Finance Borrowing. The expression Project Finance Borrowing means moneys borrowed to finance a project:- |
(a) | which is borrowed by a single purpose company (being a company in the Rio Tinto Group or the RTL Group) whose principal assets and business are constituted by such project and whose liabilities in respect of such moneys borrowed are not the subject of a guarantee, indemnity or any other form of assurance, undertaking or financial support from another company in the Rio Tinto Group or the RTL Group except as expressly provided for in sub-paragraph (b)(3) below; or |
72
(b) | in respect of and in connection with which the lender or lenders making such moneys borrowed available to the relevant borrower (being a company in the Rio Tinto Group or the RTL Group) have no recourse whatsoever to a company in the Rio Tinto Group or the RTL Group for the repayment of or payment of any sum relating to such moneys borrowed other than:- |
(I) | recourse to the borrower for amounts limited to the aggregate cash flow or net cash flow (other than historic cash flow or historic net cash flow) from such project; and/or | ||
(II) | recourse to the borrower for the purpose only of enabling amounts to be claimed in respect of such moneys borrowed upon an enforcement of a security interest given by the borrower over the assets comprised in such project and/or by any shareholder or the like in the borrower over its shares or the like in the capital of the borrower to secure such moneys borrowed and/or any recourse permitted by (3) below, provided that (A) the extent of such recourse to the borrower is limited solely to the amount of any recoveries made on any such enforcement, and (B) such person or persons are not entitled, by virtue of any right or claim arising out of or in connection with such moneys borrowed, to commence proceedings for the winding-up or dissolution of the borrower or to appoint or procure the appointment of any receiver, trustee or similar person or official in respect of the borrower or any of its assets (save for the assets the subject of such security interest); and/or | ||
(III) | recourse to the borrower, or another company in the Rio Tinto Group or the RTL Group under a guarantee, indemnity or other form of assurance, undertaking or financial support, which in any case (A) is limited to a claim for damages for breach of an obligation (not being a payment obligation) of the person against whom such recourse is available, and/or (B) entitles the creditor for such moneys borrowed, upon default by the borrower, such person or any other person, to require a payment to be made (whether to or for the benefit of such creditor, the borrower or another person) provided that, in the case of (B), where such payment is capable of being for an amount which is material either alone or as a percentage of the moneys borrowed financing the project, such recourse is capable of being called on only during the period prior to practical completion |
73
of the project or of that proportion of the project being financed by such moneys borrowed; |
(iv) | the certificate of the Auditors as to the amount of the Unified Group Share Capital and Reserves at any time shall be conclusive and binding on all concerned. |
110 | The Secretary shall be appointed by the Directors on such terms and for such period as they may think fit. Any Secretary so appointed may at any time be removed from office by the Directors, but without prejudice to any claim for damages for breach of any contract of service between him and the Company. If thought fit two or more persons may be appointed as Joint Secretaries. The Directors may also appoint from time to time on such terms as they may think fit one or more Deputy and/or Assistant Secretaries. |
111 | (A) The Directors shall provide for the safe custody of the Seal and any Securities Seal and neither shall be used without the authority of the Directors or of a committee authorised by the Directors in that behalf. The Securities Seal shall be used only for sealing securities issued by the Company and documents creating or evidencing securities so issued. |
(i) | one Director and the Secretary; or | ||
(ii) | by two Directors; or | ||
(iii) | by a Director in the presence of a witness who attests the signature |
74
112 | Any Director or the Secretary or any person appointed by the Directors for the purpose shall have power to authenticate any document affecting the constitution of the Company and any resolution passed at a shareholders meeting or at a meeting of the Directors or any committee, and any book, record, document or account relating to the business of the Company, and to certify copies thereof or extracts therefrom as true copies or extracts; and where any book, record, document or account is elsewhere than at the Office the local manager or other officer of the Company having the custody thereof shall be deemed to be a person appointed by the Directors as aforesaid. A document purporting to be a copy of any such resolution, or an extract from the minutes of any such meeting, which is certified as aforesaid shall be conclusive evidence in favour of all persons dealing with the Company upon the faith thereof that such resolution has been duly passed or, as the case may be, that any minute so extracted is a true and accurate record of proceedings at a duly constituted meeting. |
113 | Establishment of reserves |
114 | Business bought as from past date |
75
115 | Dividends |
116 | Distribution in specie |
117 | No dividend except out of profits |
118 | Ranking of shares for dividend |
119 | Manner of payment of dividends |
76
120 | Uncashed dividend cheques |
121 | Joint holders |
122 | Record date for dividends |
123 | No interest on dividends |
124 | Retention of dividends |
(i) | in respect of which any person is entitled to become a member under the provisions as to the transmission of shares contained in these Articles, until such person shall become a member in respect of such shares; or | ||
(ii) | which any person is under those provisions entitled to transfer until such person shall transfer the same. |
77
125 | Unclaimed dividend |
126 | Waiver of dividend |
127 | (A) Subject to the provisions of Article 33, the Directors may, with the sanction of an Ordinary Resolution of the Company, capitalise any sum standing to the credit of any of the Companys reserve accounts (including any share premium account, capital redemption reserve or other undistributable reserve) or any sum standing to the credit of profit and loss account. |
78
128 | (A) Subject to the provisions of Article 33, and as hereinafter provided, the Directors may offer to shareholders the right to receive, in lieu of dividend (or part thereof), an allotment of new Ordinary Shares credited as fully paid. |
79
129 | Accounting records |
130 | Copies of accounts for members |
80
131 | Validity of Auditors acts |
132 | Auditors right to attend General Meetings |
133 | Service of notices |
81
134 | Joint holders |
135 | Deceased and bankrupt members |
(i) | such evidence as the Directors may reasonably require to show his title to the share; and | ||
(ii) | an address at which notices may be sent or supplied to such person, |
82
136 | Overseas members |
137 | Uncontactable members |
138 | Suspension of postal services |
138A Signature or authentication of documents sent by electronic means |
139 | Statutory provisions as to notices |
83
140 | Directors power to petition |
141 | Distribution of assets in specie |
142 | Subject to compliance with the requirements of any relevant system applicable to shares of the Company in uncertificated form, the Company shall be entitled to destroy:- |
84
(i) | the provisions aforesaid shall apply only to the destruction of a document in good faith and without notice of any claim (regardless of the parties thereto) to which the document might be relevant; | ||
(ii) | nothing herein contained shall be construed as imposing upon the Company any liability in respect of the destruction of any such document earlier than as aforesaid or in any other circumstances which would not attach to the Company in the absence of this Article; | ||
(iii) | references herein to the destruction of any document include references to the disposal thereof in any manner; and | ||
(iv) | the provisions aforesaid shall not apply so as to prevent the destruction of a document after the expiration of one year from the relevant date if a complete record of that document has been stored on a data storage medium, from which an exact reproduction of that document may in principle be obtained, and the records so stored are retained by the Company for at least the period imposed by the above provisions in respect of the original document. |
143 | Indemnity |
(i) | any liability incurred by or attaching to him in connection with any negligence, default, breach of duty or breach of trust by him in relation to the Company or any Associated Company of the Company other than: |
(a) | any liability to the Company or any Associated Company; | ||
(b) | any liability of the kind referred to in Section 234(3) of the Companies Act 2006; and |
(ii) | any other liability incurred by or attaching to him in the actual or purported execution and/or discharge of his duties and/or the exercise or purported exercise of his powers and/or otherwise in relation to or in connection with his duties, powers or office. |
85
143A Insurance |
(i) | any persons who are or were at any time Directors, officers (including any former officer) or employees of any Relevant Company (as defined in paragraph (B) of this Article); or | ||
(ii) | any persons who are or were at any time trustees of any pension fund or employees share scheme in which employees of any Relevant Company are interested, |
143B Defence expenditure |
(i) | may provide a Director, Secretary or other officer of the Company or any Associated Company of the Company (including any former officer) with funds to meet expenditure incurred or to be incurred by him in defending any criminal or civil proceedings in connection with any negligence, default, breach of duty or breach of trust by him in relation to the Company or an Associated Company of the Company or in connection with any application for relief under the provisions mentioned in Section 205(5) of the Companies Act 2006; and | ||
(ii) | may do anything to enable any such Director, Secretary or other officer (including any former officer) to avoid incurring such expenditure. |
86
(i) | may provide a Director, Secretary or other officer of the Company or any Associated Company of the Company (including any former officer) with funds to meet expenditure incurred or to be incurred by him in defending himself in an investigation by a regulatory authority or against action proposed to be taken by a regulatory authority in connection with any alleged negligence, default, breach of duty or breach of trust by him in relation to the Company or any Associated Company of the Company; and | ||
(ii) | may do anything to enable any such Director, Secretary or other officer (including any former officer) to avoid incurring such expenditure. |
144 | (A) Subject to the statutes and the rules (as defined in the Regulations), the Directors may determine that any class of shares may be held in uncertificated form and that title to such shares may be transferred by means of a relevant system or that shares of any class should cease to be held and transferred as aforesaid. |
(i) | the holding of shares of that class in uncertificated form; | ||
(ii) | the transfer of title to shares of that class by means of a relevant system; or | ||
(iii) | any provision of the Regulations. |
87
PRELIMINARY
|
2 | |||||||
|
||||||||
1. |
Replaceable rules do not apply
|
2 | ||||||
2. |
Interpretation
|
2 | ||||||
|
||||||||
BUSINESS
|
10 | |||||||
|
||||||||
3. |
[deleted October 2009]
|
10 | ||||||
|
||||||||
CAPITAL
|
10 | |||||||
|
||||||||
4. |
Share capital
|
10 | ||||||
|
||||||||
SHARES
|
11 | |||||||
|
||||||||
5. |
Issue of shares with special rights
|
11 | ||||||
5A |
DLC Dividend Share
|
11 | ||||||
6. |
Preference shares
|
12 | ||||||
7. |
Separate Approvals of Class Rights Actions
|
13 | ||||||
8. |
Dividends on Special Voting Share and Equalisation Share
|
16 | ||||||
9. |
Obligation for calls
|
16 | ||||||
10. |
Shares at the disposal of the Board
|
17 | ||||||
11. |
Directors may participate
|
17 | ||||||
12. |
Power to pay commission and brokerage
|
17 | ||||||
13. |
Surrender of shares
|
17 | ||||||
14. |
Joint holders
|
17 | ||||||
15. |
Non-recognition of equitable interests, etc.
|
18 | ||||||
|
||||||||
MODIFICATION OF RIGHTS
|
18 | |||||||
|
||||||||
16. |
How special rights may be varied
|
18 | ||||||
|
||||||||
SEALS
|
19 | |||||||
|
||||||||
17. |
Seals and their use
|
19 | ||||||
18. |
[deleted April 2009]
|
19 | ||||||
19. |
[deleted April 2009]
|
19 | ||||||
|
||||||||
CERTIFICATES FOR SECURITIES
|
19 | |||||||
|
||||||||
20. |
Uncertificated Holdings
|
19 | ||||||
21. |
Certificates
|
19 | ||||||
22. |
[deleted April 2009]
|
19 | ||||||
23. |
[deleted April 2009]
|
19 | ||||||
24. |
[deleted April 2009]
|
19 |
Page (i)
25. |
[deleted April 2009]
|
19 | ||||||
|
||||||||
CALLS
|
19 | |||||||
|
||||||||
26. |
Calls and notice of calls
|
19 | ||||||
27. |
When a call is made
|
19 | ||||||
28. |
Interest on the late payment of calls
|
20 | ||||||
29. |
Instalments
|
20 | ||||||
30. |
Payment in advance of calls
|
20 | ||||||
31. |
Non-receipt of notice of call
|
20 | ||||||
|
||||||||
TRANSFER AND TRANSMISSION OF SECURITIES
|
20 | |||||||
|
||||||||
32. |
Form of transfer
|
20 | ||||||
33. |
Effecting a transfer
|
20 | ||||||
34. |
Instrument of transfer and certificate to be left at Office
|
21 | ||||||
35. |
Board may refuse to register
|
21 | ||||||
36. |
Company to retain instrument of transfer
|
22 | ||||||
37. |
Closing Register
|
22 | ||||||
38. |
Cancellation of old certificate
|
22 | ||||||
39. |
Transmission upon death
|
22 | ||||||
40. |
Transmission by operation of law
|
23 | ||||||
41. |
Board may refuse registration of transmissions
|
23 | ||||||
|
||||||||
FORFEITURE AND LIEN
|
23 | |||||||
|
||||||||
42. |
Notice requiring payment of sums payable
|
23 | ||||||
43. |
Content of notice
|
23 | ||||||
44. |
Forfeiture on non-compliance with notice
|
23 | ||||||
45. |
Notice of forfeiture
|
23 | ||||||
46. |
Disposal of forfeited shares
|
24 | ||||||
47. |
Annulment of forfeiture
|
24 | ||||||
48. |
Liability notwithstanding forfeiture
|
24 | ||||||
49. |
Companys lien or charge
|
24 | ||||||
50. |
Sale of shares to enforce lien
|
24 | ||||||
51. |
Title of shares forfeited or sold to enforce lien
|
25 | ||||||
|
||||||||
INCREASE AND REDUCTION OF CAPITAL
|
26 | |||||||
|
||||||||
52. |
Power to alter or reduce share capital
|
26 | ||||||
53. |
Rights attached to subdivided shares
|
26 | ||||||
54. |
Board may give effect to alteration of share capital
|
26 |
Page ii
55. |
[deleted April 2009]
|
26 | ||||||
56. |
[deleted April 2009]
|
26 | ||||||
|
||||||||
GENERAL MEETINGS
|
26 | |||||||
|
||||||||
57. |
Annual general meetings
|
26 | ||||||
58. |
Notice of general meeting
|
26 | ||||||
59. |
Omission
to give and non-receipt of notice
|
26 | ||||||
|
||||||||
PROCEEDINGS OF MEETINGS
|
26 | |||||||
|
||||||||
60. |
Business of general meeting
|
26 | ||||||
61. |
Quorum
|
27 | ||||||
62. |
Adjournment in absence of quorum
|
27 | ||||||
63. |
Chairman
|
27 | ||||||
64. |
Acting Chairman
|
27 | ||||||
65. |
General conduct of meeting
|
28 | ||||||
66. |
Amendments to resolutions
|
28 | ||||||
67. |
Adjournment
|
28 | ||||||
68. |
Voting
|
29 | ||||||
69. |
Declaration of vote on a show of hands
|
29 | ||||||
70. |
Demand for poll
|
29 | ||||||
71. |
Taking a poll
|
29 | ||||||
72. |
Continuance of business after demand for poll
|
30 | ||||||
73. |
Notice of adjournment
|
30 | ||||||
|
||||||||
VOTES OF MEMBERS
|
30 | |||||||
|
||||||||
74. |
Voting rights of members
|
30 | ||||||
75. |
Voting rights of personal representatives, etc.
|
31 | ||||||
76. |
How votes may be given
|
32 | ||||||
77. |
Appointment of proxies
|
32 | ||||||
78. |
Form and execution of instrument of proxy
|
33 | ||||||
79. |
Board to issue forms of proxy
|
33 | ||||||
80. |
Attorneys of members
|
33 | ||||||
81. |
Validity of vote
|
33 | ||||||
82. |
Rights of member indebted to Company in respect of other shares
|
34 | ||||||
|
||||||||
DIRECTORS
|
34 | |||||||
|
||||||||
83. |
Number of Directors
|
34 | ||||||
84. |
Share qualification of Directors
|
34 |
Page iii
85. |
Election or appointment of additional Director
|
34 | ||||||
86. |
Continuing Directors to act in certain circumstances
|
34 | ||||||
87. |
Directors who are employees of the Company
|
35 | ||||||
88. |
Company Auditor may not act as Director
|
35 | ||||||
89. |
Directors Remuneration
|
35 | ||||||
90. |
Other remuneration of directors
|
35 | ||||||
91. |
[deleted April 2009]
|
35 | ||||||
92. |
Travelling and other expenses
|
35 | ||||||
93. |
Directors may contract with company
|
36 | ||||||
94. |
Director may hold other office under the Company
|
36 | ||||||
95. |
Directors may lend to the Company
|
36 | ||||||
|
||||||||
ELECTION OF DIRECTORS
|
37 | |||||||
|
||||||||
96. |
Retirement of Directors:
|
37 | ||||||
|
||||||||
ALTERNATE DIRECTORS
|
38 | |||||||
|
||||||||
97. |
Director may appoint Alternate Director
|
38 | ||||||
|
||||||||
VACATION OF OFFICE OF DIRECTOR
|
39 | |||||||
|
||||||||
98. |
Vacation of office by Director
|
39 | ||||||
|
||||||||
PROCEEDINGS OF DIRECTORS
|
40 | |||||||
|
||||||||
99. |
Procedures relating to Directors meetings
|
40 | ||||||
100. |
Meetings by telephone or other means of communication
|
40 | ||||||
101. |
Convening of meetings
|
40 | ||||||
102. |
Votes at meetings
|
40 | ||||||
103. |
Chairman
|
40 | ||||||
104. |
Powers of meetings
|
41 | ||||||
105. |
Delegation of powers to Committees
|
41 | ||||||
106. |
Proceedings of Committees
|
41 | ||||||
107. |
Validity of acts
|
41 | ||||||
108. |
Resolution in writing
|
41 | ||||||
109. |
Directors includes Alternate Directors
|
41 | ||||||
|
||||||||
POWERS OF THE BOARD
|
42 | |||||||
|
||||||||
110. |
General powers of the Board
|
42 | ||||||
111. |
Powers to give effect to Sharing Agreement
|
42 | ||||||
112. |
Boards power to borrow
|
42 | ||||||
113. |
Power to authorise debenture holders, etc, to make calls
|
42 |
Page iv
114. |
Management of the affairs of the Company
|
43 | ||||||
|
||||||||
EXECUTIVE OFFICERS
|
43 | |||||||
|
||||||||
115. |
Powers of executive officers
|
43 | ||||||
116. |
Delegation to executive director
|
44 | ||||||
|
||||||||
MINUTES
|
44 | |||||||
|
||||||||
117. |
Minutes
|
44 | ||||||
|
||||||||
DIVIDENDS AND RESERVES
|
44 | |||||||
|
||||||||
118. |
Declaration of dividend
|
44 | ||||||
118A. |
Waiver of dividend
|
45 | ||||||
119. |
Reserve fund
|
46 | ||||||
120. |
Investment of reserve funds:
|
46 | ||||||
121. |
Dividends
|
46 | ||||||
122. |
[deleted April 2009]
|
47 | ||||||
123. |
Dividend Plans
|
47 | ||||||
124. |
Transfer of shares
|
48 | ||||||
125. |
Retention of dividends
|
48 | ||||||
126. |
Dividends on which the Company has a charge
|
48 | ||||||
127. |
How dividends are payable
|
48 | ||||||
128. |
Notice of dividend
|
49 | ||||||
129. |
Unclaimed dividends
|
49 | ||||||
|
||||||||
CAPITALISATION OF PROFITS
|
49 | |||||||
|
||||||||
130. |
Power to capitalise profits
|
49 | ||||||
131. |
Employee Share Plan
|
49 | ||||||
132. |
Appropriation and application of amounts to be capitalised
|
50 | ||||||
|
||||||||
NOTICES
|
50 | |||||||
|
||||||||
133. |
Service of notices
|
50 | ||||||
134. |
Member may notify Company of address for service
|
50 | ||||||
135. |
Member not known at registered address
|
50 | ||||||
136. |
When notice deemed to be served
|
51 | ||||||
137. |
Reckoning of period of notice
|
51 | ||||||
138. |
Notice to transferor binds transferee
|
51 | ||||||
139. |
Service on deceased members
|
51 | ||||||
140. |
Authentication
of documents sent by electronic means
|
51 | ||||||
|
||||||||
PAYMENTS BY THE COMPANY
|
52 |
Page v
141. |
Payments by the Company
|
52 | ||||||
|
||||||||
WINDING UP
|
53 | |||||||
|
||||||||
142. |
Distribution in specie
|
53 | ||||||
143. |
Capital rights on a liquidation
|
53 | ||||||
|
||||||||
INDEMNITY
|
59 | |||||||
|
||||||||
144. |
Indemnity of officers
|
59 | ||||||
145. |
Change of control
|
60 | ||||||
146. |
Restricted securities
|
69 | ||||||
147. |
Unmarketable parcels
|
69 |
Page vi
Page 1
1. | The replaceable rules in the Corporations Act shall not apply to the Company. | |
2. | Interpretation |
(a) | In these Rules unless the context requires otherwise: |
(i) | Aggregate Publicly-held Ordinary Shares means all of the Publicly-held Rio Tinto Limited Ordinary Shares and all of the Publicly-held Rio Tinto plc Ordinary Shares; | ||
(ii) | Alternate Director means a person appointed from time to time as an Alternate Director in accordance with these Rules; | ||
(iii) | Applicable Regulation means, in the case of the Company, applicable Australian laws and regulations (including listing rules) and, in the case of Rio Tinto plc, applicable English laws and regulations (including listing rules and guidelines with which companies listed on the London Stock Exchange customarily comply), in each case for the time being in force and taking account of all waivers or variations from time to time applicable (in particular situations or generally) to the Company or, as the case may be, Rio Tinto plc; | ||
(iv) | Associate in relation to |
(A) | any Interest in Rio Tinto plc shall mean any person acting in concert as defined by the City Code on Takeovers and Mergers; and | ||
(B) | the Company is as defined for the purposes of Chapter 6 of the Corporations Act in Part 1.2 Division 2 of the Corporations Act; |
(v) | ASTC means ASX Settlement and Transfer Corporation Pty Ltd (ABN 49 008 504 532); | ||
(vi) | ASTC Settlement Rules means the operating rules of ASTC or of any relevant organisation which is an alternative or successor to, or replacement of, ASTC or of any applicable CS facility licensee; | ||
(vii) | Auditor means the auditor or auditors appointed by the Company from time to time; | ||
(viii) | Australian dollars means the lawful currency from time to time of Australia; |
Page 2
(ix) | Board means the board of Directors of the Company (or a duly appointed committee of that board) from time to time; | ||
(x) | Board of Rio Tinto plc means the board of directors of Rio Tinto plc (or a duly appointed committee of that board) from time to time; | ||
(xi) | [deleted April 2009] | ||
(xii) | [deleted April 2009] | ||
(xiii) | Business Day when used in the definition of Liquidation Exchange Rate means a day on which banks are ordinarily open for business in both London and Melbourne, excluding Saturdays and Sundays but for all other purposes has the meaning ascribed to it in the Listing Rules; | ||
(xiv) | call includes any instalment of a call and any amount due on allotment of any share; | ||
(xv) | capital means share capital; | ||
(xvi) | Chairman includes an Acting Chairman under Rule 64; | ||
(xvii) | Class Rights Action means, in relation to the Company or Rio Tinto plc, any of the actions listed in Rule 7(a); | ||
(xviii) | Committee means a Committee to which powers have been delegated by the Board pursuant to Rule 105; | ||
(xix) | [deleted April 2009] | ||
(xx) | Companies Act Subsidiary has the meaning ascribed to the term subsidiary in section 1159 of the Companies Act 2006 (UK) and when used in relation to a company means any such subsidiary of that company from time to time; | ||
(xxi) | the Company means Rio Tinto Limited; | ||
(xxii) | [deleted October 2009] | ||
(xxiii) | Corporations Act means the Corporations Act 2001 (Cth) and the Corporations Regulations; | ||
(xxiv) | Corporations Act Subsidiary has the meaning given to subsidiary in section 9 of the Corporations Act and when used in relation to a body corporate means any subsidiary of that body corporate from time to time; | ||
(xxv) | Deed Poll Guarantee means the deed executed by the Company for the benefit of certain present and future creditors of Rio Tinto plc (as amended from time to time); | ||
(xxvi) | Deputy Chairman means a person appointed to the office of Deputy Chairman in accordance with Rule 63; | ||
(xxvii) | Director means a person appointed or elected from time to time to the office of Director of the Company in accordance with these Rules and includes any Alternate Director duly acting as a Director; |
Page 3
(xxviii) | DLC Dividend Share means the DLC Dividend Share issued in accordance with Rule 5A until it is cancelled, redeemed or otherwise ceases to exist or until it converts to an Ordinary Share in accordance with these Rules or the Corporations Act; | ||
(xxix) | Entrenching Provision has the meaning ascribed to that term in Rule 7(e); | ||
(xxx) | Equalisation Fraction means the Equalisation Ratio expressed as a fraction with the numerator being the number relating to the Ordinary Shares of the Company and the denominator being the number relating to the Rio Tinto plc Ordinary Shares; | ||
(xxxi) | Equalisation Ratio means the ratio of the dividend, capital and voting rights per Ordinary Share to the dividend, capital and voting rights per Rio Tinto plc Ordinary Share as set out in the Sharing Agreement and as adjusted from time to time in accordance with the Sharing Agreement; | ||
(xxxii) | Equalisation Share means the equalisation share in the Company; | ||
(xxxiii) | Excluded Rio Tinto plc Holder means any person who is a Relevant Person (other than a Permitted Person) (both as defined in Article 64 of the Rio Tinto plc Articles) on whom a notice has been served under Article 64(E) of the Rio Tinto plc Articles or on whom a direction notice has been served under Article 63 of the Rio Tinto plc Articles which in either case has not been complied with to the satisfaction of the directors of Rio Tinto plc or withdrawn; | ||
(xxxiv) | Home Branch means the state office of ASX Limited designated to the Company by ASX Limited as its Home Branch for administrative purposes; | ||
(xxxv) | Joint Decision means, in relation to a general meeting, a resolution put to the vote of the meeting on a Joint Decision Matter; | ||
(xxxvi) | Joint Decision Matter means any of the following: |
(A) | the appointment or removal of a Director of the Company and/or a director of Rio Tinto plc; | ||
(B) | the receipt or adoption of the annual accounts of the Company and/or Rio Tinto plc (if shareholders are to be asked to vote on the receipt or adoption of such accounts); | ||
(C) | a change of name by the Company and/or Rio Tinto plc; | ||
(D) | any proposed acquisition or disposal and any proposed transaction with a substantial shareholder, director or other related party which (in any case) is required under Applicable Regulation to be authorised by shareholders; | ||
(E) | the appointment or removal of the Auditors of the Company and/or the auditors of Rio Tinto plc; |
Page 4
(F) | the creation of a new class of shares (or securities convertible into, exchangeable for or granting rights to subscribe for or purchase shares of a new class) in the Company or Rio Tinto plc; | ||
(G) | a change in the corporate status or reregistration of the Company or Rio Tinto plc; | ||
(H) | a matter referred to in Clause 9.2 of the Sharing Agreement; and | ||
(I) | any other matter which the Board and the Board of Rio Tinto plc each decide (generally or in a particular case) should be decided upon by Joint Decision; |
(xxxvii) | [deleted April 2009] | ||
(xxxviii) | Limiting Restriction has the meaning ascribed to it in Rule 2(b); | ||
(xxxix) | Liquidation Exchange Rate means, as at any date, the closing mid-point spot Australian dollar-sterling exchange rate on the Business Day before such date (as published in the London Edition of the Financial Times, or such other point of reference as the Auditor and the liquidator of Rio Tinto plc (or, as the case may be, the Auditor of Rio Tinto plc and the liquidator of the Company or the liquidators of both the Company and Rio Tinto plc) may determine); | ||
(xl) | the Listing Rules means the Listing Rules of ASX Limited; | ||
(xli) | London Stock Exchange means London Stock Exchange plc or any successor to that body; | ||
(xlii) | Market Value for the purposes of Rule 7 means, (in the case of the Company) in respect of an issue of a relevant share or security, the weighted average sale price derived from the Australian Securities Exchange and (in the case of Rio Tinto plc) the middle market quotation derived from the London Stock Exchange Daily Official List in each case on the dealing day immediately preceding the date on which any such issue is publicly announced except that in the case of an allotment of Ordinary Shares by way of dividend it shall mean the weighted average sale price of an Ordinary Share derived from the Australian Securities Exchange over the five Business Days prior to the books closing date in respect of that dividend and in the case of an allotment of Rio Tinto plc Ordinary Shares pursuant to Article 128 of the Rio Tinto plc Articles it shall mean the value of a Rio Tinto plc Ordinary Share as defined in Article 128(D) of the Rio Tinto plc Articles; | ||
(xliii) | Matching Offers means offers by way of rights either by both the Company and Rio Tinto plc to their respective holders of ordinary shares or by the Company on its own or by Rio Tinto plc on its own to both the holders of Ordinary Shares and the holders of Rio Tinto plc Ordinary Shares which, so far as is practicable, take place contemporaneously and which the Auditors have certified do not materially disadvantage a holder of |
Page 5
an Ordinary Share in comparison with a holder of a Rio Tinto plc Ordinary Share and which the auditors of Rio Tinto plc have certified do not materially disadvantage a holder of a Rio Tinto plc Ordinary Share in comparison with a holder of an Ordinary Share; |
(xliv) | member means a member of the Company in accordance with the Corporations Act; | ||
(xlv) | members present (or a member present) means members (or a member) present at a general meeting of the Company in person or by proxy, by attorney or, where the member is a body corporate, by representative; | ||
(xlvi) | [deleted October 2009] | ||
(xlvii) | Office means the registered office from time to time of the Company; | ||
(xlviii) | Ordinary Shares means the ordinary shares in the Company on issue from time to time; | ||
(xlix) | person and words importing persons shall include partnerships, associations and corporations, unincorporated and incorporated by Ordinance, Act of Parliament or registration as well as individuals; | ||
(l) | procedural resolution comprises any resolution put to a general meeting which was not included in the notice of such meeting but nevertheless falls to be considered by that meeting; | ||
(li) | proper ASTC transfer has the meaning given to that term in the Corporations Act; | ||
(lii) | Publicly-held Ordinary Shares means, in relation to the Company, Publicly-held Rio Tinto Limited Ordinary Shares and, in relation to Rio Tinto plc, Publicly-held Rio Tinto plc Ordinary Shares; | ||
(liii) | Publicly-held Rio Tinto Limited Ordinary Shares means Ordinary Shares the beneficial owners of which are not members of the Rio Tinto plc Group; | ||
(liv) | Publicly-held Rio Tinto plc Ordinary Shares means Rio Tinto plc Ordinary Shares the beneficial owners of which are not members of the Rio Tinto Limited Group; | ||
(lv) | [deleted April 2009] | ||
(lvi) | [deleted April 2009] | ||
(lvii) | Register means the Register of members of the Company to be kept pursuant to the Corporations Act; | ||
(lviii) | Rio Tinto Limited Entrenched Provision has the meaning ascribed to that term in Rule 7(a)(vii); | ||
(lix) | Rio Tinto Limited Group means the Company and its Corporations Act Subsidiaries from time to time and a member of the Rio Tinto Limited Group means any one of them; |
Page 6
(lx) | RTL Shareholder SVC means RTL Shareholder SVC Limited, a company incorporated in England with registered number 3115178, or such other company which replaces RTL Shareholder SVC Limited pursuant to the terms of the Rio Tinto Limited Shareholder Voting Agreement; | ||
(lxi) | Rio Tinto Limited Shareholder Voting Agreement means the agreement entered into between RTL Shareholder SVC, The Law Debenture Trust Corporation p.l.c., Rio Tinto plc and the Company relating, amongst other things, to how the Rio Tinto plc Special Voting Share is to be voted (as amended from time to time); | ||
(lxii) | Rio Tinto plc means Rio Tinto plc, a company incorporated in the United Kingdom with registered number 719885; | ||
(lxiii) | Rio Tinto plc Articles means the Articles of Association of Rio Tinto plc as amended from time to time; | ||
(lxiv) | Rio Tinto plc Deed Poll Guarantee means the deed executed by Rio Tinto plc for the benefit of certain present and future creditors of the Company (as amended from time to time); | ||
(lxv) | Rio Tinto plc Entrenched Provision has the meaning ascribed to the term Rio Tinto Entrenched Provision in the Rio Tinto plc Articles; | ||
(lxvi) | Rio Tinto plc Equalisation Share means the equalisation share of 10p in the capital of Rio Tinto plc the rights attaching to which are set out, inter alia, in Articles 3 and 60 of the Rio Tinto plc Articles; | ||
(lxvii) | Rio Tinto plc Group means Rio Tinto plc and its Companies Act Subsidiaries from time to time and a member of the Rio Tinto plc Group means any of them; | ||
(lxviii) | Rio Tinto plc Ordinary Shares means the ordinary shares of 10p each in Rio Tinto plc on issue from time to time; | ||
(lxix) | RTP Shareholder SVC means RTP Shareholder SVC Pty Limited (ACN 070 481 908) a company incorporated in Victoria or such other company which replaces RTP Shareholder SVC Pty Limited pursuant to the terms of the Rio Tinto plc Shareholder Voting Agreement; | ||
(lxx) | Rio Tinto plc Shareholder Voting Agreement means the agreement between the RTP Shareholder SVC, The Law Debenture Trust Corporation p.l.c., the Company, RTP Australian Holdings Limited and Rio Tinto plc relating, amongst other things, to how the Special Voting Share and the Ordinary Shares held by Tinto Holdings Australia Pty Limited (ACN 004 327 922) or beneficially owned by any other member of the Rio Tinto plc Group are to be voted (as amended from time to time); | ||
(lxxi) | Rio Tinto plc Special Voting Share means the special voting share of 10p in Rio Tinto plc; | ||
(lxxii) | [deleted April 2009] |
Page 7
(lxxiii) | [deleted April 2009] | ||
(lxxiv) | [deleted April 2009] | ||
(lxxv) | Seal means the common seal of the Company; | ||
(lxxvi) | Secretary means a person appointed as Secretary of the Company and includes any person appointed to perform the duties of Secretary; | ||
(lxxvii) | securities includes shares, rights to shares or stock, options to acquire shares and other securities with rights of conversion to equity and debentures, debenture stock, notes and other like obligations; | ||
(lxxviii) | Sharing Agreement means the agreement entered into between the Company and Rio Tinto plc entitled DLC Merger Sharing Agreement (as amended from time to time); | ||
(lxxix) | special resolution means a special resolution of the Company in accordance with the Corporations Act; | ||
(lxxx) | Special Voting Share means the special voting share in the Company described in Rules 7, 8 and 74; | ||
(lxxxi) | sterling means the lawful currency from time to time of the United Kingdom; | ||
(lxxxii) | these Rules means these Rules as altered or added to from time to time and any reference to a Rule by number is a reference to the Rule of that number in these Rules; | ||
(lxxxiii) | [deleted April 2009] | ||
(lxxxiv) | Uncertificated Securities Holding means securities of the Company which under the Corporations Act, the Listing Rules or any Uncertificated Transfer System may be held in uncertificated form; | ||
(lxxxv) | Uncertificated Transfer System means any system operated under the Corporations Act, the Listing Rules or the ASTC Settlement Rules which regulates the transfer or registration of, or the settlement of transactions affecting, securities of the Company in uncertificated form and includes CHESS (as defined in the ASTC Settlement Rules) as it applies to securities in certificated and uncertificated form; | ||
(lxxxvi) | wholly owned subsidiary, in relation to a body corporate, means a body corporate none of whose members is a person other than the first mentioned body corporate, a wholly owned subsidiary of the first mentioned body corporate or a nominee of the first mentioned body corporate or its wholly owned subsidiary; | ||
(lxxxvii) | writing and written includes printing, typing, lithography and other modes of reproducing words in a visible form including, without limitation, any representation of words in a physical document or in an electronic communication or form or otherwise. |
Page 8
(b) | A reference to Limiting Restriction refers to the limit (if any) on offers for cash (otherwise than pro-rata by way of rights to existing holders of Ordinary Shares or holders of Rio Tinto plc Ordinary Shares) of shares or other securities existing under restrictions for the time being applicable to the Company or Rio Tinto plc under Applicable Regulation, and for the purpose of ascertaining the most Limiting Restriction at any time in any situation: |
(i) | a restriction applicable to the Company shall be treated as also applicable to Rio Tinto plc (converting the restrictions, expressed in terms of a number of shares in the Company, into a number of Rio Tinto plc shares by application of the Equalisation Ratio), and vice versa in relation to a restriction applicable to Rio Tinto plc; | ||
(ii) | a restriction expressed in terms of a nominal amount of Rio Tinto plcs equity share capital shall be treated as if it related to the number of Rio Tinto plc Ordinary Shares represented by that nominal amount and then converted into a number of Ordinary Shares by application of the Equalisation Ratio and any restriction in relation to the Company shall be similarly treated; | ||
(iii) | a restriction (when expressed as a number of Ordinary Shares or Rio Tinto plc Ordinary Shares) that, under Applicable Regulation, has been derived by application of a percentage to a number or nominal amount of Ordinary Shares and/or number or nominal amount of Rio Tinto plc Ordinary Shares rather than to the number of the Aggregate Publicly-held Ordinary Shares (taking into account the application of the Equalisation Ratio as described in paragraphs (i) and (ii) above) shall be adjusted to the number that would have been derived from the application of such percentage to the number of the Aggregate Publicly-held Ordinary Shares (after so taking into account the application of the Equalisation Ratio); and | ||
(iv) | any restriction under Applicable Regulation which comes into force in relation to either the Company or Rio Tinto plc after the date of the Sharing Agreement which does not fall within (i), (ii) or (iii) above shall be applied to the Aggregate Publicly-held Ordinary Shares in the way in which the Board and the Board of Rio Tinto plc agree best reflects the rationale underlying paragraphs (i), (ii) and (iii) above. |
(c) | Any reference to an equivalent resolution considered by holders of Publicly-held Rio Tinto plc Ordinary Shares means the resolution considered at the most nearly contemporaneous general meeting of Rio Tinto plc which bears a close relationship to the relevant resolution being considered at a general meeting of the Company. For example, but without limitation, a resolution to appoint or remove an individual as a director of Rio Tinto plc, to appoint or remove the auditors of Rio Tinto plc or to receive and adopt the accounts of Rio Tinto plc would, if no resolution considering such matters in relation to the Company were put to the Rio Tinto plc general meeting, be the equivalent resolution to a resolution relating to the appointment or removal of the same individual as a Director of the Company, |
Page 9
the appointment or removal of the same international firm of auditors as the Auditors or the receipt or adoption of the Companys accounts as the case may be. | |||
(d) | References to offers by way of rights include offers which are subject to such exclusions or other arrangements as the Board or (where relevant) the Board of Rio Tinto plc may deem necessary or expedient in relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory. | ||
(e) | A reference to the Corporations Act or any other statute or regulations or to the City Code on Takeovers and Mergers is a reference to it as in force from time to time, including any modification or substitution of it, and a regulation or statutory instrument issued under it unless the context otherwise requires. | ||
(f) | A reference to the Listing Rules or to the ASTC Settlement Rules is to the Listing Rules or to the ASTC Settlement Rules (as the case may be) as are in force from time to time in relation to the Company after taking into account any waiver or exemption which is in force either generally or in relation to the Company. | ||
(g) | Unless otherwise defined in these Rules, words which are given a special meaning by the Corporations Act have the same meaning in these Rules. | ||
(h) | Except where the contrary intention appears, words in the singular include the plural and vice versa. | ||
(i) | Except where the contrary intention appears, words importing one gender include any other gender. | ||
(j) | The references to notices in Rules 133 to 140 (both inclusive) include not only formal notices of meeting but also all documents and other communications from the Company to the members but do not include cheques. | ||
(k) | A special resolution shall be effective for any purpose for which an ordinary resolution is expressed to be required under any provision of these Rules. | ||
(l) | The headings and sidenotes do not affect the construction of these Rules. |
3. | [deleted October 2009] |
4. | Share capital |
The share capital of the Company may, without limitation, be divided into ordinary shares, one Special Voting Share, one Equalisation Share and one DLC Dividend Share. |
Page 10
5. | Issue of shares with special rights |
Without prejudice to any special rights previously conferred on the holders of existing shares and subject to Rule 7, any shares in the capital of the Company (whether forming part of the original capital or not) may be issued with preferred, deferred or other special rights or restrictions, whether in regard to dividends, voting, return of share capital, payment of calls or otherwise, as the Board may from time to time determine provided that the rights attaching to shares of a class other than Ordinary Shares shall be expressed at the date of issue. |
5A | DLC Dividend Share |
Without limiting Rule 5, but notwithstanding anything else in this Constitution, the Board may issue a share (a DLC Dividend Share) in the capital of the Company to Rio Tinto plc or a wholly owned subsidiary of Rio Tinto plc on the following terms: |
(i) | the DLC Dividend Share does not confer on its holder any right: |
(A) | to vote or to attend or be heard at any general meeting; | ||
(B) | to redemption or, in a winding-up, to repayment of capital; or | ||
(C) | subject to Rule 5A(a)(ii), to participate in assets or profits of the Company; or | ||
(D) | to receive notices, reports, profit and loss accounts or balance sheets; |
(ii) | the holder of the DLC Dividend Share shall not be entitled to receive a dividend on the share unless and until the following conditions have been satisfied: |
(A) | the Board in its absolute discretion resolves to pay the dividend on the DLC Dividend Share; | ||
(B) | the legal and beneficial owner of the DLC Dividend Share at the time of declaration and payment of the dividend is Rio Tinto plc or a wholly owned subsidiary of Rio Tinto plc; | ||
(C) | in the case of the first dividend to be paid on the DLC Dividend Share, there has been at least one dividend paid on Ordinary Shares since the date of issue of the DLC Dividend Share; | ||
(D) | in the case of subsequent dividends paid on the DLC Dividend Share, there has been at least one dividend paid on Ordinary Shares since the date of payment of the last dividend on the DLC Dividend Share; and | ||
(E) | in the Companys financial year in which the dividend is to be paid, at least one dividend has been paid on Ordinary Shares, and |
Page 11
(iii) | upon the earlier of: |
(A) | the registration of a transfer of the DLC Dividend Share to a person other than Rio Tinto plc or a wholly owned subsidiary of Rio Tinto plc; and | ||
(B) | a person other than Rio Tinto plc or a wholly owned subsidiary of Rio Tinto plc becoming the beneficial owner of the DLC Dividend Share, | ||
the DLC Dividend Share will convert to an Ordinary Share, |
and the Board may, at its absolute discretion, issue such a DLC Dividend Share from time to time provided that, at any one time, there is only one DLC Dividend Share in the capital of the Company on issue. |
6. | Preference shares |
If the Company at any time proposes to create and issue any preference shares: |
(a) | the preference shares may be issued on the terms that they are, or at the option of the Company or the holder are, liable to be redeemed whether out of profits or otherwise; | ||
(b) | the preference shares confer on the holders the right to convert the preference shares into Ordinary Shares if and on the basis the Board determines at the time of issue of the preference shares; | ||
(c) |
(i) the preference shares confer on the holders a right to receive out of the
profits of the Company available for dividend a preferential dividend on the basis
determined by the Board at the time of issue of the preference
shares;
|
(ii) | in addition to the preferential dividend, the preference shares may participate with the Ordinary Shares in dividends declared by the Board if and to the extent the Board determines at the time of issue of the preference shares; and | ||
(iii) | the preferential dividend may be cumulative if and to the extent the Board determines at the time of issue of the preference shares; |
(d) | the preference shares are to confer on the holders: |
(i) | the right on redemption and in a winding up to payment in cash in priority to any other class of shares of: |
(A) | the amount paid or agreed to be considered as paid on each share; and | ||
(B) | the amount (if any) equal to the aggregate of any dividend accrued (whether declared or not) but unpaid and of any arrears of dividends; and |
(ii) | the right, in priority to any payment of dividend on any other class of shares, to the preferential dividend; |
Page 12
(e) | the preference shares do not confer on the holders any further rights to participate in assets or profits of the Company; | ||
(f) | the holders of the preference shares have the same rights as the holders of Ordinary Shares to receive notices, reports, profit and loss accounts and balance sheets and to attend and be heard at all general meetings, but are not to have the right to vote at general meetings except as follows: |
(i) | on any question considered at a general meeting if, at the date of the meeting, the dividend on the preference shares is in arrears; | ||
(ii) | on a proposal: |
(A) | to reduce the share capital of the Company; | ||
(B) | that affects rights attached to the preference shares; | ||
(C) | to wind up the Company; | ||
(D) | for the disposal of the whole of the property, business and undertaking of the Company; |
(iii) | on a resolution to approve the terms of a buy-back agreement; and | ||
(iv) | on any question during the winding up of the Company; and |
(g) | the Company may issue further preference shares ranking pari passu in all respects with (but not in priority to) other preference shares already issued and the rights of the issued preference shares are not to be deemed to have been varied by the further issue. |
7. | Separate Approvals of Class Rights Actions |
(a) | The following matters shall constitute Class Rights Actions if undertaken by either the Company or Rio Tinto plc: |
(i) | the offer to the holders of its existing ordinary shares generally of shares or other securities for subscription or purchase: |
(A) | by way of rights (otherwise than by Matching Offers), where the proposed offer (when aggregated with (1) any previous offers by either the Company or Rio Tinto plc of shares or other securities for cash by way of rights or otherwise, but not under Matching Offers, (2) any sales, other than intra Rio Tinto plc Group sales, by a member of the Rio Tinto plc Group of Ordinary Shares, and (3) any sales, other than intra Rio Tinto Limited Group sales, by a member of the Rio Tinto Limited Group of Rio Tinto plc Ordinary Shares, in each case in the relevant period) exceeds the then most Limiting Restriction that for the time being would be applicable were shares or other securities of the relevant description proposed to be offered in fact offered for cash otherwise than pro-rata by way of rights to existing shareholders of the relevant class either by the Company or by Rio Tinto plc; or | ||
(B) | otherwise than by way of rights, at below Market Value; |
Page 13
(ii) | the reduction or, if permitted by law, redemption of the companys ordinary share capital by way of a capital repayment to holders of its ordinary shares or a cancellation of unpaid ordinary share capital; | ||
(iii) | the purchase by the company of its own ordinary shares (except for such a purchase at, around or below prevailing market prices for those shares where the purchase occurs in accordance with Applicable Regulation); | ||
(iv) | the voluntary liquidation of the company; | ||
(v) | an adjustment to the Equalisation Ratio otherwise than in accordance with paragraph 5 of Schedule 2 to the Sharing Agreement; | ||
(vi) | the amendment to the terms of, or termination of, the Sharing Agreement, the Rio Tinto Limited Shareholder Voting Agreement or the Rio Tinto plc Shareholder Voting Agreement other than, in the case of the Rio Tinto Limited Shareholder Voting Agreement or the Rio Tinto plc Shareholder Voting Agreement, to conform such agreement with the terms of the Sharing Agreement or in any case, by way of formal or technical amendment which is not materially prejudicial to the interests of the shareholders of the Company or Rio Tinto plc or is necessary to correct any inconsistency or manifest error or is by way of an amendment agreed between the Company and Rio Tinto plc pursuant to Clause 17.6 of the Sharing Agreement or the equivalent provision of any such document; | ||
(vii) | any amendment to, or removal of, or the alteration of the effect of (which for the avoidance of doubt shall be taken to include the ratification of any breach of), all or any of the following (each of which is a Rio Tinto Limited Entrenched Provision): |
(A) | [deleted October 2009] | ||
(B) | the definitions in Rule 2(a) of Aggregate Publicly-held Ordinary Shares, Applicable Regulation, Associate, Australian dollars, Board of Rio Tinto plc, Class Rights Action, Companies Act Subsidiary, Corporations Act Subsidiary, Rio Tinto Limited Entrenched Provision, Rio Tinto Limited Group, RTL Shareholder SVC, Rio Tinto Limited Shareholder Voting Agreement, Deed Poll Guarantee, Entrenching Provision, Equalisation Fraction, Equalisation Ratio, Equalisation Share, Excluded Rio Tinto plc Holder, Joint Decision, Joint Decision Matter, Limiting Restriction, Liquidation Exchange Rate, Market Value, Matching Offers, Ordinary Shares, procedural resolution, Publicly-held Rio Tinto Limited Ordinary Shares, Publicly-held Ordinary Shares, Publicly-held Rio Tinto plc Ordinary Shares, Rio Tinto plc, Rio Tinto plc Articles, Rio Tinto plc Equalisation Share, Rio Tinto plc Deed Poll Guarantee, Rio Tinto plc Entrenched Provision, Rio Tinto plc Group, Rio Tinto plc Ordinary Shares, Rio Tinto plc Special Voting Share, RTP |
Page 14
Shareholder SVC, Rio Tinto plc Shareholder Voting Agreement, Sharing Agreement, Special Voting Share, and sterling; |
(C) | this Rule 7 (class rights actions); | ||
(D) | Rule 8 (dividends on Special Voting Share and Equalisation Share); | ||
(E) | Rule 16 (variation of class rights); | ||
(F) | Rule 35(c) (Refusal to register transfer of Special Voting Share and Equalisation Share); | ||
(G) | Rule 66 (amendments to resolutions); | ||
(H) | Rule 70 (demand for poll); | ||
(I) | Rule 71 (taking a poll); | ||
(J) | Rule 74 (voting rights of members); | ||
(K) | Rule 77 (appointment of proxies); | ||
(L) | Rule 85 (election or appointment of additional Director); | ||
(M) | Rule 96(a), (b), (c) the proviso in brackets in (d), (e)(ii), (g) and (h) (retirement and nomination of Directors); | ||
(N) | Rule 97(a), second sentence only (Alternate Directors); | ||
(O) | Rule 98(f) (vacation of office of Directors if ceasing to be a Rio Tinto plc director); | ||
(P) | Rule 108 (resolution of Directors in writing); | ||
(Q) | Rule 111 (giving effect to Sharing Agreement); | ||
(R) | Rule 143 (capital rights on a liquidation); and | ||
(S) | Rule 145 (change of control); |
(viii) | any amendment to, or removal of, or alteration of the effect of (which for the avoidance of doubt shall be taken to include the ratification of any breach of), any Rio Tinto plc Entrenched Provision; and | ||
(ix) | the doing of anything which the Board and the Board of Rio Tinto plc each decide (either in a particular case or generally) should be treated as a Class Rights Action. |
(b) | Any Class Rights Action by the Company (apart from those specified in sub-paragraph (vii) of paragraph (a) of this Rule) shall be deemed to be a variation of the rights of the Special Voting Share and shall accordingly be effective only with the consent in writing of the holder of the Special Voting Share and without such consent shall not be done or caused or permitted to be done. | ||
(c) | Any Class Rights Action by the Company comprising or including an amendment to any Rio Tinto Limited Entrenched Provision shall be effective only with the approval of a special resolution on which the holder of the Special Voting Share |
Page 15
shall be entitled to vote but only in accordance with Rule 74(c)(i) and the Rio Tinto plc Shareholder Voting Agreement. | |||
(d) | Without limiting paragraph (c), a special resolution altering or amending any Rio Tinto Limited Entrenched Provision does not have any effect unless and until the holder of the Special Voting Share has consented in writing to the alteration or amendment. A reference in this Rule to a special resolution altering or amending any Rio Tinto Limited Entrenched Provision includes a reference to any resolution of any type which has the effect of altering, adding to, or omitting any Rio Tinto Limited Entrenched Provision or any other effect which is equivalent or substantially similar to that effect (which for the avoidance of doubt shall be taken to include ratification of any breach of any such Rio Tinto Limited Entrenched Provision). | ||
(e) | A special resolution altering or amending Rule 111 or paragraph (d) or this paragraph (e) of this Rule 7 (each an Entrenching Provision) does not have any effect unless and until the holder of the Special Voting Share has consented in writing to the alteration or amendment. A reference in this paragraph to a special resolution altering or amending an Entrenching Provision includes a reference to any resolution of any type which has the effect of altering, adding to or omitting the Entrenching Provision or any other effect which is equivalent or substantially similar to that effect (which for the avoidance of doubt shall be taken to include ratification of any breach of any such Entrenching Provision). | ||
(f) | Any other Class Rights Action by the Company shall (in addition to the consent required under paragraph (b) of this Rule) be effective only with such approval of the shareholders of the Company (apart from the holder of the Special Voting Share) as is required by Applicable Regulation and the Sharing Agreement. |
8. | Dividends on Special Voting Share and Equalisation Share |
(a) | The Special Voting Share does not entitle its holder to any dividends. | ||
(b) | Subject to the special rights attached to any preference shares having a preferred right to participate as regards dividends up to but not beyond a specified amount in a distribution (but in priority to the payment of any dividends on other classes of share), the Equalisation Share shall carry such dividends as are declared or paid on the Equalisation Share in accordance with Schedule 1 and Schedule 2 to the Sharing Agreement. | ||
(c) | Subject to the special rights for the time being attached to other classes of share, the profits of the Company available for distribution and resolved to be distributed shall subject to the Corporations Act be distributed by way of dividend among the holders of Ordinary Shares. |
9. | Obligation for calls |
Without limiting the generality of Rule 5, the Board may make arrangements on the issue of shares for a difference between the holders of those shares in the amount of calls to be paid and the time of payment of those calls. |
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10. | Shares at the disposal of the Board | |
Except as provided by contract or these Rules to the contrary, the Board may issue and allot shares, grant options over or otherwise dispose of shares on the terms and conditions and for the consideration and for or at the time it thinks fit. | ||
11. | Directors may participate | |
Any Director or any person who is an associate of a Director for the purposes of the Listing Rules may participate in any issue by the Company of shares, rights to shares or options to acquire shares or other securities unless the Director is precluded from participating by the Listing Rules. | ||
12. | Power to pay commission and brokerage | |
The Company may at any time pay a commission to any person in consideration of that person subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in the Company or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in the Company. The commission may be paid or satisfied in cash or in shares, debentures or debenture stock of the Company or otherwise. The Company may in addition to or instead of commission pay any brokerage permitted by law. | ||
13. | Surrender of shares | |
The Board may, in its discretion, accept a surrender of shares by way of compromise of any question as to whether or not those shares have been validly issued or in any other case where the surrender is within the powers of the Company. Any shares surrendered may be sold or re-issued in the same manner as forfeited shares. | ||
14. | Joint holders | |
Where two or more persons are registered as the holders of any shares, they shall be deemed to hold the shares as joint tenants with benefits of survivorship subject to the following provisions: |
Number of Holders: |
(a) | the Company is not bound to register more than three persons as the holders of the shares (except in the case of trustees executors or administrators of a deceased shareholder); |
Liability for payments: |
(b) | the joint holders of the shares shall be liable severally as well as jointly in respect of all payments which ought to be made in respect of the shares; |
Death of joint holder: |
(c) | on the death of any one of the joint holders, the survivor or survivors shall be the only persons recognised by the Company as having any title to the shares but the Board may require evidence of death and the estate of the deceased joint holder is not released from any liability in respect of the shares; |
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Power to give receipt: |
(d) | any one of the joint holders may give a receipt for any dividend, bonus or return of capital payable to the joint holders; |
Notices to joint holders: |
(e) | only the person whose name stands first in the Register as one of the joint holders of the shares shall be entitled, if the Company is required by the Corporations Act or the Listing Rules to issue certificates for shares, to delivery of a certificate relating to the shares or to receive notices from the Company and any notice given to that person shall be deemed notice to all the joint holders; and |
Votes of joint holders: |
(f) | any one of the joint holders may vote at any meeting of the Company either personally (including by duly authorised representative, attorney or, where permitted under these Rules, by direct vote) or by proxy, in respect of the shares as if that joint holder was solely entitled to the shares. If more than one of the joint holders are present at any meeting personally or by proxy or attorney, the joint holder who is present whose name stands first in the Register in respect of the shares shall alone be entitled to vote in respect of the shares. |
15. | Non-recognition of equitable interests, etc | |
Except as otherwise provided in these Rules, the Company shall be entitled to treat the registered holder of any share as the absolute owner of the share and accordingly shall not, except as ordered by a Court of competent jurisdiction or as required by statute, be bound to recognise (even when having notice) any equitable or other claim to or interest in the share on the part of any other person. |
16. | How special rights may be varied | |
Subject to Rule 7, whenever the capital of the Company is divided into different classes of shares, all or any of the rights and privileges attached to any class may be varied or abrogated by a special resolution approving the proposed variation or abrogation passed at a special meeting of the holders of the issued shares of the class affected by a majority of not less than three-fourths of the holders present and voting either in person or by representative proxy or attorney or (if a quorum is not present at the special meeting or if the resolution is not passed by the necessary majority) by consent in writing signed by the holders of at least three-fourths of the issued shares of the class within two calendar months from the date of the special meeting. All the provisions in these Rules as to general meetings shall apply to the special meeting. |
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17. | Seals and their use | |
The Company may have a common seal and a duplicate common seal which are to be used by the Company as determined by the Board. |
18. | [deleted April 2009] |
19. | [deleted April 2009] |
20. | Uncertificated Holdings | |
If and for so long as dealings in securities of the Company take place under an Uncertificated Transfer System: |
(a) | the Company need not issue any certificate in respect of securities held as an Uncertificated Securities Holding; and | ||
(b) | the Register may distinguish between shares or other securities held in certificated form and securities held as an Uncertificated Securities Holding. |
21. | Certificates | |
Directors may determine to issue certificates for securities of the Company and to cancel any certificates on issue and to replace lost, destroyed or defaced certificates on issue on the basis and in the form they determine from time to time. |
22. | [deleted April 2009] |
23. | [deleted April 2009] |
24. | [deleted April 2009] |
25. | [deleted April 2009] |
26. | Calls and notice of calls | |
Subject to the terms upon which any shares may have been issued, the Board may, from time to time, makes calls as it thinks fit upon the members in respect of all moneys unpaid on their shares. Each member shall be liable to pay the amount of each call in the manner specified and at the time and place appointed by the Board. Calls may be made payable by instalments. |
27. | When a call is made | |
A call shall be deemed to have been made at the time when the resolution of the Board authorising the call was passed. Subject to the Listing Rules, the call may be revoked at the discretion of the Board at any time prior to the date on which payment in respect of any call is due. |
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28. | Interest on the late payment of calls | |
If any sum (or part of any sum) payable in respect of a call is not paid on or before the date appointed for payment, the member from whom the sum is due shall pay interest on the unpaid amount from the due date to the date of payment at the rate the Board from time to time determines. The Board may waive the whole or part of any interest paid or payable under this Rule. |
29. | Instalments | |
If, by the terms of an issue of shares, any amount is payable in respect of any shares by instalments, every instalment shall be payable as if it were a call duly made by the Board of which due notice had been given, and all provisions of these Rules with respect to the payment of calls and of interest or to the forfeiture of shares for non-payment of calls or with respect to liens or charges shall apply to the instalment and to the shares in respect of which it is payable. |
30. | Payment in advance of calls | |
The Board may, if it thinks fit, receive from any member all or any part of the moneys unpaid on all or any of the shares held by that member beyond the sums actually called up and then due and payable either as a loan repayable or as a payment in advance of calls. If it so elects the Company may pay interest on the moneys advanced at the rate and on the terms agreed by the Board and the member paying the sum in advance. |
31. | Non-receipt of notice of call | |
The non-receipt of a notice of any call by, or the accidental omission to give notice of any call to, any member shall not invalidate the call. |
32. | Form of transfer | |
No transfer of any securities shall be registered unless: |
(a) | a proper instrument of transfer, in writing in the usual or common form or in any form the Board may from time to time prescribe or in a particular case accept, duly stamped (if necessary), is delivered to the Company; | ||
(b) | the transfer is a proper ASTC transfer, which is to be in the form required or permitted by the Corporations Act or the ASTC Settlement Rules; or | ||
(c) | the transfer has been effected by any other electronic system in which the Company participates in accordance with the rules of that system. |
33. | Effecting a transfer |
(a) | If required by the Corporations Act, the Listing Rules or the Board, an instrument of transfer shall be signed by or on behalf of the transferor and the transferee. Except in the case of a proper ASTC transfer, the transferor shall be deemed to remain the holder of the securities transferred until the name of the transferee is entered in the Register. A proper ASTC transfer is taken to be recorded in the |
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Register, and the name of the transferee to be registered as the holder of the securities comprised in the proper ASTC transfer, at the time provided for in the ASTC Settlement Rules. | |||
(b) | The Board may take any action it determines to comply with the ASTC Settlement Rules and may request the ASTC to apply a holding lock to prevent the transfer of securities the subject of the ASTC Settlement Rules. | ||
(c) | The Company may do anything necessary or desirable to facilitate participation by the Company in any Uncertificated Transfer System or in any other uncertificated transfer system in which the Company participates. |
34. | Instrument of transfer and certificate to be left at Office | |
Every instrument of transfer shall be left for registration at the Office or any other place the Board determines from time to time. The instrument of transfer shall be accompanied by the certificate (if any) for the securities to be transferred and any other evidence which the Board may require to prove the title of the transferor, the transferors right to transfer the securities, due execution of the transfer or due compliance with the provisions of any law relating to stamp duty. The Board may waive the production of the certificate (if any) in any case which it considers appropriate. The preceding requirements of this Rule do not apply in respect of a proper ASTC transfer. |
35. | Board may refuse to register |
(a) | Subject to the Corporations Act, the Listing Rules and the ASTC Settlement Rules, the Board may refuse to register any transfer of securities: |
(i) | if the Company has a lien on the securities in accordance with the Listing Rules; | ||
(ii) | where it is permitted to do so by the Listing Rules; | ||
(iii) | [deleted April 2009] | ||
(iv) | where it is required to do so pursuant to a court order; or | ||
(v) | if the registration of the transfer would result in a contravention of, or failure to observe the provisions of, any applicable law or the Listing Rules. |
Notice of refusal of transfer |
(b) | Notwithstanding the preceding paragraph, the Board may not refuse to register any proper ASTC transfer except as permitted by the Corporations Act, the Listing Rules or the ASTC Settlement Rules. Subject to the Corporations Act and the Listing Rules, the decision of the Board relating to the registration of a transfer is absolute. If the Board refuses to register a transfer, the Board shall give the lodging party written notice of the refusal and the reasons for the refusal within the maximum period permitted by the Listing Rules. Failure to give notice of refusal to register any transfer as may be required under the Corporations Act or the Listing Rules does not invalidate the decision of the Board. |
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(c) | The Board shall refuse to register any transfer of: |
(i) | the Special Voting Share unless the transfer is to a new RTP Shareholder SVC in accordance with the terms of the Rio Tinto plc Shareholder Voting Agreement; or | ||
(ii) | the Equalisation Share unless the transfer is to a member of the Rio Tinto plc Group or a trustee for the benefit of a member or members of the Rio Tinto plc Group. |
(d) | The decision of the Board relating to the registration of such a transfer shall be absolute. |
36. | Company to retain instrument of transfer | |
Every instrument of transfer which is registered shall, for any period determined by the Board, be retained by the Company after which, the Company may destroy it provided that any instrument of transfer which the Board refuses to register shall (except in the case of fraud) be returned on demand to the person depositing it or to the transferee provided the demand is made within twelve calendar months after the giving of notice by the Company of its refusal to register the instrument of transfer. The preceding requirements of this Rule do not apply in respect of a proper ASTC transfer. |
37. | Closing Register | |
Subject to the Corporations Act, the Listing Rules and the ASTC Settlement Rules, the transfer books and the Register may be closed during such time as the Board thinks fit and the Board may specify a time by reference to which the entitlement of persons to vote at any general meeting of the Company is to be determined. |
38. | Cancellation of old certificate | |
Subject to Rule 34, and to the Corporations Act, the Listing Rules and the ASTC Settlement Rules, on every application to register the transfer of any shares or to register any person as a member in respect of any shares transmitted to that person by operation of law or otherwise, the certificate (if any) specifying the shares in respect of which registration is required shall be delivered up to the Company for cancellation and upon registration the certificate is considered to be cancelled. |
39. | Transmission upon death |
(a) | Where a member dies: |
(i) | the legal personal representatives of the deceased, where the member was a sole holder or a joint holder holding as a tenant in common; and | ||
(ii) | the survivor or survivors, where the member was a joint holder, |
are the only persons recognised by the Company as having any title to the members interest in the securities of the Company (as the case may be). |
(b) | Subject to the Corporations Act, the Board may require evidence of a members death as it determines. |
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(c) | This Rule does not release the estate of a deceased joint holder from any liability in respect of any security that had been jointly held by the holder with other persons. |
40. | Transmission by operation of law | |
Subject to the Corporations Act, the Listing Rules and the ASTC Settlement Rules, a person to whom the right to any shares has devolved by will or by operation of law, upon producing the certificate for shares (if any) and any other evidence the Board may require of title or that the person sustains the character in respect of which the person proposes to act under this Rule, may be registered as a member in respect of the shares or may (subject to the provisions in these Rules relating to transfers) transfer the shares. |
41. | Board may refuse registration of transmissions | |
The Board shall have the same right to refuse to register a person entitled by transmission to any shares or the persons nominee as if the person or the persons nominee were the transferee named in an ordinary transfer presented for registration. |
42. | Notice requiring payment of sums payable | |
If any member fails to pay any sum payable on or in respect of any shares, either for allotment money, calls or instalments, on or before the day appointed for payment, the Board may, at any time after the day specified for payment whilst any part of the sum remains unpaid, serve a notice on the member requiring that member to pay the sum or so much of the sum as remains unpaid together with interest accrued and all expenses incurred by the Company by reason of the non-payment. |
43. | Content of notice | |
The notice shall name a day on or before which the sum, interest and expenses (if any) are to be paid and the place or places where payment is to be made. The notice shall also state that, in the event of non-payment at or before the time and at the place appointed, the shares in respect of which the sum is payable will be liable to be forfeited, and such other information as required by the Corporations Act, the Listing Rules and ASTC Settlement Rules. |
44. | Forfeiture on non-compliance with notice | |
If there is non-compliance with the requirements of any notice given pursuant to Rule 42, any shares in respect of which notice has been given may, at any time after the day specified in the notice for payment whilst any part of allotment moneys, calls, instalments, interest and expenses (if any) remains unpaid, be forfeited by a resolution of the Board to that effect. The forfeiture shall include all dividends, interest and other moneys payable by the Company in respect of the forfeited shares and not actually paid before the forfeiture. |
45. | Notice of forfeiture | |
When any share is forfeited, notice of the resolution of the Board shall be given to the member in whose name it stood immediately prior to the forfeiture, and an entry of the forfeiture and the date of forfeiture shall be made in the Register as the case may be. |
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Failure to give notice or make the entry as required by this Rule shall not invalidate the forfeiture. |
46. | Disposal of forfeited shares | |
Any forfeited share shall be deemed to be the property of the Company and the Board may sell, re-allot or otherwise dispose of or deal with the share in any manner it thinks fit and, in the case of re-allotment, with or without any money paid on the share by any former holder being credited as paid up. |
47. | Annulment of forfeiture | |
The Board may, at any time before any forfeited share is sold, re-allotted or otherwise disposed of, annul the forfeiture of the share upon any condition it thinks fit. |
48. | Liability notwithstanding forfeiture | |
Any member whose shares have been forfeited shall, notwithstanding the forfeiture, be liable to pay and shall forthwith pay to the Company all sums of money owing upon or in respect of the forfeited shares at the time of forfeiture, together with interest from that time until payment at the rate the Board from time to time determines and expenses. The Board may enforce the payment or waive the whole or part of any sum paid or payable under this Rule as it thinks fit. |
49. | Companys lien or charge | |
The Company shall have a first and paramount lien or charge for unpaid calls, instalments and any amounts the Company is called upon by law to pay in respect of the shares of a member upon shares registered in the name of the member or joint members in respect of which the calls or instalments are due and unpaid (whether presently payable or not) or in respect of which the amounts are paid and upon the proceeds of sale of the shares. | ||
The lien or charge shall extend to all dividends and bonuses from time to time declared in respect of the shares; provided that if the Company registers a transfer of any shares upon which it has a lien or charge without giving the transferee notice of its claim, the shares shall be freed and discharged from the lien or charge of the Company. The Company may do all things necessary or appropriate under the ASTC Settlement Rules to protect or enforce any lien or charge. |
50. | Sale of shares to enforce lien |
(a) | Subject to paragraph (b), for the purpose of enforcing a lien or charge, the Board may sell the shares which are subject to the lien or charge in any manner it thinks fit, but no sale shall be made: |
(i) | until notice in writing of the intention to sell has been served on the member in whose name the shares are registered or the members representatives; and | ||
(ii) | default has been made in payment of the part of the amount in respect of which the lien exists as is presently payable for fourteen days after the giving of notice. |
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(b) | In respect of any shares which are CHESS approved securities, for the purpose of enforcing a lien or charge, the Board may sell the shares which are subject to the lien or charge in accordance with the ASTC Settlement Rules. | ||
(c) | The Board may authorise a person to do everything necessary to transfer the shares sold to the purchaser of the shares. |
51. | Title of shares forfeited or sold to enforce lien |
(a) | In the case of a sale or a re-allotment of forfeited shares or of the sale of shares to enforce a lien or charge, an entry in the minute book of the Board that the shares have been forfeited, sold or re-allotted in accordance with these Rules shall be sufficient evidence of that fact as against all persons entitled to the shares immediately before the forfeiture, sale or re-allotment of the shares. The Company may receive the purchase money or consideration (if any) given for the shares on any sale or re-allotment. | ||
(b) | In the case of re-allotment, a certificate signed by a Director or the Secretary to the effect that the shares have been forfeited and the receipt of the Company for the price of the shares shall constitute a good title to them. | ||
(c) | In the case of a sale, the Company may appoint a person to execute, or may otherwise effect, a transfer in favour of the person to whom the shares are sold. | ||
(d) | Upon the issue of the receipt or the transfer being executed or otherwise effected the person to whom the shares have been re-allotted or sold shall be registered as the holder of the shares, discharged from all calls or other money due in respect of the shares prior to the re-allotment or purchase and the person shall not be bound to see to the regularity of the proceedings or to the application of the purchase money or consideration; nor shall the persons title to the shares be affected by any irregularity or invalidity in the proceedings relating to the forfeiture, sale or re-allotment. | ||
(e) | The net proceeds of any sale or re-allotment shall be applied first in payment of all costs of or in relation to the enforcement of the lien or charge or the forfeiture (as the case may be) and of the sale or re-allotment, next in satisfaction of the amount in respect of which the lien exists as is then payable to the Company (including interest) and the residue (if any) paid to the person registered as the holder of the shares immediately prior to the sale or re-allotment or to the persons executors, administrators or assigns as the person or the persons executors, administrators or assigns shall direct upon the production of any evidence as to title required by the Board. | ||
(f) | [deleted April 2009] |
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52. | Power to alter or reduce share capital | |
Subject to Rule 7, the Company may reduce or alter its share capital in any manner provided for or permitted by the Corporations Act. |
53. | Rights attached to subdivided shares | |
Without limiting Rule 52, whenever any shares are subdivided, the Company may by special resolution determine that as between the holders of the shares resulting from the subdivision one or more of the shares shall have some preference or special advantage as regards dividends, capital, voting or otherwise as compared with the other shares. |
54. | Board may give effect to alteration of share capital | |
The Board may do all acts and things required to give effect to any resolution authorising alteration of the share capital of the Company and, without limitation, may make provision for the issue of fractional certificates or sale of fractions of shares and distribution of net proceeds as it thinks fit. |
55. | [deleted April 2009] |
56. | [deleted April 2009] |
57. | Annual general meetings | |
General meetings of the Company may be convened and held at the times and places (including at two or more venues using technology that gives members a reasonable opportunity to participate) and in the manner determined by the Board and in accordance with the requirements of the Corporations Act. The general meetings before which the annual accounts of the Company are to be laid shall be called annual general meetings. |
58. | Notice of general meeting | |
Notice of a general meeting may be given by the Board in the form and in the manner the Board thinks fit. |
59. | Omission to give and non-receipt of notice | |
The non-receipt of a notice of any general meeting by, or the accidental omission to give notice to, any person entitled to notice shall not invalidate any resolution passed at that meeting. |
60. | Business of general meeting | |
The business of an annual general meeting shall be to receive and consider the accounts and reports required by the Corporations Act to be laid before each annual general meeting, to elect Directors in the place of those retiring under these Rules, when relevant |
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to appoint an Auditor, and to transact any other business which, under these Rules, is required to be transacted at any annual general meeting. All other business transacted at an annual general meeting and all business transacted at other general meetings shall be deemed special. The Auditor shall be entitled to attend and be heard on any part of the business of a meeting which concerns the Auditor. |
61. | Quorum | |
The quorum for a general meeting shall be two members present. No business shall be transacted at any general meeting (other than an adjourned meeting under Rule 62) except the election of a chairman and the adjournment of the meeting unless the requisite quorum is present at the commencement of business. | ||
62. | Adjournment in absence of quorum | |
If, within 5 minutes from the time appointed for a general meeting (or such longer interval as the chairman of the meeting may think fit to allow), a quorum is not present, or if during the meeting a quorum ceases to be present, the meeting, if convened on the requisition of members, shall be dissolved. In any other case it shall stand adjourned to such other day and such time and place as may have been specified for that purpose in the notice convening the meeting or (if none was specified) as the chairman of the meeting may determine. If at such adjourned meeting a quorum is not present within 5 minutes from the time appointed for holding the meeting, the members present in person or by proxy shall be a quorum. | ||
63. | Chairman |
(a) | The person entitled to take the chair at any general meeting shall be the person who immediately before the general meeting is the Chairman of the Board or failing that person, a Deputy Chairman. | ||
(b) | If there is no such Chairman or Deputy Chairman, or if at any meeting neither is present within 5 minutes after the time appointed for holding the meeting and willing to act, the Directors present shall choose one of their number to be chairman of the meeting. If no Director is present or if all Directors present decline to take the chair, a member may be elected to be the chairman by a resolution of the Company passed at the meeting. |
64. | Acting Chairman | |
If during any general meeting the chairman appointed pursuant to Rule 63 is unwilling to act as chairman for any part of the proceedings, the chairman may withdraw as chairman during the relevant part of the proceedings and may nominate any person who immediately before the general meeting was a Director or who has been nominated for election as a Director at the meeting to be Acting Chairman of the meeting during the relevant part of the proceedings. Upon the conclusion of the relevant part of the proceedings the Acting Chairman shall withdraw and the chairman shall resume acting as chairman of the meeting. |
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65. | General conduct of meeting | |
The chairman of any general meeting shall be responsible for the general conduct of meetings of the Company and for the procedures to be adopted at those meetings. Except as otherwise required by the Corporations Act or by these Rules, the chairman of any general meeting may at any time the chairman considers it necessary or desirable for the proper and orderly conduct of the meeting demand the cessation of debate or discussion on any business, question, motion or resolution being considered by the meeting and require the business, question, motion or resolution to be put to a vote of the meeting. The chairman may require the adoption of any procedures which are in the chairmans opinion necessary or desirable for the proper and orderly casting or recording of votes at any general meeting of the Company, whether on a show of hands or on a poll. | ||
66. | Amendments to resolutions |
(a) | If an amendment is proposed to any resolution under consideration but is, in good faith, ruled out of order by the chairman of the meeting, the proceedings on the substantive resolution shall be not be invalidated by any error in such ruling. In the case of a resolution duly proposed as a special resolution, no amendment to that resolution (other than a mere clerical amendment to correct a patent error) may be considered or voted upon. | ||
(b) | In the case of any resolution duly proposed as an ordinary resolution, no amendment thereto (other than a mere clerical amendment to correct a patent error or an amendment to conform such resolution to a resolution duly proposed at the nearly contemporaneous general meeting of Rio Tinto plc) may be considered or voted upon unless written notice of the proposed amendment is received by the Company at least 48 hours prior to the time appointed for holding the relevant meeting or adjourned meeting or (in the absence of any such notice) the chairman of the meeting in the chairmans absolute discretion rules that the amendment shall be considered. |
67. | Adjournment | |
The Chairman of a general meeting or of an adjourned meeting may at any time during the course of the meeting adjourn from time to time and place to place the meeting or any business, motion, question or resolution being considered or remaining to be considered by the meeting or any debate or discussion and may adjourn any business, motion, question, resolution, debate or discussion either to a later time at the same meeting or to an adjourned meeting. If the Chairman exercises a right of adjournment of a meeting pursuant to this Rule, the Chairman shall have the sole discretion to decide whether to seek the approval of the meeting to the adjournment and, unless the Chairman exercises that discretion, no vote shall be taken by the meeting in respect of the adjournment. No business shall be transacted at any adjourned meeting other than the business which might properly have been transacted at the meeting from which the adjournment took place. Where a meeting is adjourned sine die, the time and place for the adjourned meeting shall be fixed by the Directors. |
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68. | Voting | |
Every question submitted to a general meeting shall be decided in the first instance by a show of hands of the members present and entitled to vote unless prior to that time a poll is properly demanded or required pursuant to Rule 70. | ||
69. | Declaration of vote on a show of hands | |
At any meeting, unless a poll is demanded, a declaration by the Chairman that a resolution has been passed or lost, having regard to the majority required, and an entry to that effect in the book to be kept of the proceedings of the Company, signed by the Chairman of that or the next succeeding meeting, shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of or against the resolution. | ||
70. | Demand for poll | |
Subject to Rule 71 at any general meeting, a resolution (other than a procedural resolution) put to the vote of the meeting on which the holder of the Special Voting Share is entitled to vote shall be decided on a poll. A poll may be demanded by: |
(i) | the chairman of the meeting; | ||
(ii) | shareholders in accordance with the Corporations Act; or | ||
(iii) | the holder of the Special Voting Share. |
71. | Taking a poll |
(a) | A poll on a resolution on which the holder of the Special Voting Share is entitled to vote shall be taken either immediately or at such subsequent time (not being more than 30 days from the date of the meeting) and place as the Chairman may direct and may remain open for so long as the Chairman may determine. Any poll may close at different times for different classes of shareholder or for different shareholders of the same class entitled to vote on the relevant resolution. | ||
(b) | A poll on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken either immediately or at such subsequent time (not being more than 30 days from the date of the meeting) and place as the Chairman may direct. No notice need be given of a poll not taken immediately. The demand for a poll or requirement that a poll be taken shall not prevent the continuance of the meeting for the transaction of any business other than the business on which the poll has been demanded, or is required. | ||
(c) | On a question of adjournment, a poll may only be demanded by the Chairman. | ||
(d) | A demand for a poll may, before the poll is taken, be withdrawn but only with the consent of the Chairman. If a demand for a poll is so withdrawn:- |
(i) | before the result of a show of hands is declared, the meeting shall continue as if the demand was not made; or | ||
(ii) | after the result of a show of hands is declared, the demand shall not be taken to have invalidated the result of that show of hands. |
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(e) | In the case of any dispute as to the admission or rejection of a vote, the Chairman shall determine the dispute and the Chairmans determination made in good faith shall be final and conclusive. | ||
(f) | On a poll, a person entitled to more than one vote need not use all that persons votes or cast all the votes that person has or uses in the same way. |
72. | Continuance of business after demand for poll | |
A demand for a poll or requirement that a poll be taken shall not prevent the continuance of a meeting for the transaction of any business other than the question on which a poll has been demanded or is required. | ||
73. | Notice of adjournment | |
When a meeting is adjourned for 30 days or more or sine die, not less than seven days notice of the adjourned meeting shall be given in like manner as in the case of the original meeting. |
74. | Voting rights of members |
(a) | (i) | Subject to the Listing Rules and provisions of these Rules with regard to any special rights or restrictions as to voting attached by or in accordance with these Rules to any class of shares, and subject to Rules 14 and 82: |
(A) | on a show of hands every member present who is entitled to vote shall have one vote; and | ||
(B) | on a poll every member present (or who is entitled to vote by direct vote as contemplated by Rule 76(b)) shall have one vote for every Ordinary Share of the Company of which that person is the holder and the Specified Number (as defined in paragraph (b) or (c) below) of votes for the Special Voting Share of which that person is the holder. |
(ii) | The Equalisation Share does not entitle its holder to attend or vote at any general meeting. |
(b) | The holder of the Special Voting Share shall be entitled to attend at any general meeting and, subject to the provisions below, to cast on a poll the Specified Number of votes (some of which may be cast for and others against any resolution in such numbers as the holder may determine). The Specified Number of votes in relation to a resolution of the Company on a Joint Decision shall be the total number of votes attaching to Publicly-held Rio Tinto plc Ordinary Shares which were cast on the poll on the equivalent resolution at the nearly contemporaneous general meeting of Rio Tinto plc (other than those cast by or on behalf of any Excluded Rio Tinto plc Holder or by any person on whom a notice pursuant to Rule 145(D) has been served and not withdrawn or complied with in accordance with these Rules) divided by the Equalisation Fraction, minus the number of votes |
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attached to the Ordinary Shares which are not Publicly-held Rio Tinto Limited Ordinary Shares and which are validly cast in accordance with the Rio Tinto plc Shareholder Voting Agreement. | |||
(c) | The Specified Number of votes which may be cast in relation to a resolution of the Company which is not a Joint Decision shall be zero except that: |
(i) | on any resolution to amend, remove or otherwise alter any Rio Tinto Limited Entrenched Provision, any Entrenching Provision or on any resolution to amend, remove or otherwise alter the effect of any provision of these Rules which the Board and the Board of Rio Tinto plc agree should be treated as a Class Rights Action, the Specified Number of votes shall be equal to 34% (rounded up to the next highest whole number) of the aggregate number of votes attaching to all other classes of issued shares in the Company which could be cast on such resolution, and such votes (if cast) may only be cast against such resolution; and | ||
(ii) | on any procedural resolution put to a general meeting at which a Joint Decision Matter is to be considered, the Specified Number of votes which may be cast shall be the maximum number of votes attached to the Publicly-held Rio Tinto plc Ordinary Shares (excluding any Publicly-held Rio Tinto plc Ordinary Shares which are held by or on behalf of any Excluded Rio Tinto plc Holder or by or on behalf of any person on whom a notice has been served pursuant to Rule 145(D) and not withdrawn or complied with in accordance with these Rules which was cast on a resolution on a Joint Decision Matter at the nearly contemporaneous general meeting of Rio Tinto plc (or, if the nearly contemporaneous general meeting of Rio Tinto plc has not been held and such votes counted by the beginning of the relevant general meeting of the Company, the maximum number of such votes as are authorised to be so cast upon proxies lodged with Rio Tinto plc) by such time as the Chairman may determine divided by the Equalisation Fraction and rounded up to the nearest whole number, minus the number of votes attached to the Ordinary Shares which are not Publicly-held Rio Tinto Limited Ordinary Shares and which are validly cast in accordance with the Rio Tinto plc Shareholder Voting Agreement. |
(d) | The Special Voting Share shall not entitle its holder to vote on any show of hands. |
75. | Voting rights of personal representatives, etc. | |
Any person entitled under Rules 39 or 40 to transfer any shares may vote at any general meeting in the same manner as if the person were the registered holder of the shares; provided that at least twenty-four hours before the time of holding the meeting at which the person proposes to vote the person has satisfied the Board of the persons right to transfer the shares, unless the Board has previously admitted the persons right to vote at the meeting in respect of the shares. |
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76. | How votes may be given |
(a) | Votes at a general meeting may be given personally (including by direct vote, if permitted in accordance with Rule 76(b)) by representative, proxy or attorney, as provided in these Rules. | ||
(b) | The Board may, subject to law, determine that at any general meeting, a member who is entitled to attend and vote on a resolution at that meeting is entitled to a direct vote in respect of that resolution. A direct vote includes a vote delivered to the Office (or any other place the Board may determine) by post, facsimile, electronic or other means approved by the Board. The Board may prescribe regulations, rules and procedures in relation to direct voting, including specifying the form, method and timing of giving a direct vote at a meeting in order for the vote to be valid. |
77. | Appointment of proxies |
(a) | Any member may appoint not more than two proxies to vote at a general meeting on that members behalf and may direct the proxy or proxies to vote either for or against each or any resolution. | ||
(b) | A proxy need not be a member of the Company. | ||
(c) | Where a member appoints two proxies, the appointment shall be of no effect unless each proxy is appointed to represent a specified proportion of the members voting rights. | ||
(d) | Except in relation to a proxy deposited by the holder of the Special Voting Share, the instrument appointing a proxy (and the power of attorney, if any, under which it is signed or proof of the power of attorney to the satisfaction of the Board) shall be deposited duly stamped (if necessary) at the Office or any other place the Board may determine or lodged by any electronic means authorised by the Board and permitted by the Corporations Act by the time specified in the Corporations Act (or such lesser period as the Directors may determine and stipulate in the notice of meeting). The Directors may determine and stipulate that the latest time by which a proxy may be validly deposited differs in relation to holders of the same class of share. | ||
(e) | No instrument appointing a proxy shall, except as provided in this Rule, be valid after the expiration of twelve months after the date of its execution. | ||
(f) | Any member who is or who intends to be absent or resident abroad may deposit at the Office an instrument duly stamped (if necessary) appointing a proxy and that appointment shall be valid for all meetings during the members absence or residence abroad and until revocation. | ||
(g) | A proxy received from the holder of the Special Voting Share will be valid if it is received before the close of the poll to which it relates. | ||
(h) | An instrument of proxy relating to more than one meeting (including any adjournment of a meeting) having once been delivered in accordance with this |
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Rule 77 for the purpose of any such meeting does not need to be delivered again for the purposes of any subsequent meeting to which it relates. | |||
(i) | When two or more valid but differing instruments of proxy are executed in respect of the same share for use at the same meeting, the one which is last executed shall be treated as replacing and revoking the others as regards that share. If the Company is unable to determine which was last executed none of them shall be treated as valid in respect of that share. |
78. | Form and execution of instrument of proxy | |
An instrument appointing a proxy shall be in writing under the hand of the appointor or the attorney of the appointor or, if the appointor is a corporation, under its common seal or under the hand of a duly authorised officer or may be signed by any method authorised by the Board and permitted by the Corporations Act and may be in the usual or common form or in such other form (including electronic) as the Board may from time to time prescribe or accept. The instrument of proxy shall be deemed to include the right to demand or join in demanding a poll and shall (except to the extent to which the proxy is specially directed to vote for or against any proposal) include power to the proxy to act generally at the meeting for the person giving the proxy. An instrument appointing a proxy shall, unless the contrary is stated, be valid for any adjournment of the meeting as well as for the meeting to which it relates and need not be witnessed. | ||
79. | Board to issue forms of proxy | |
The Board shall, at the cost of the Company, issue with every notice of general meeting of members or any class of members forms of proxy for use by the members. Each form shall leave blank the name of the first proxy to be appointed but may include the names of any of the Directors or of any other persons as suggested proxies. The forms may be worded so that a proxy may be directed to vote either for or against each or any of the resolutions to be proposed. | ||
80. | Attorneys of members | |
Any member may, by duly executed power of attorney, appoint an attorney to act on that members behalf at all or certain specified meetings of the Company. Before the attorney is entitled to act under the power of attorney, the power of attorney or proof of the power of attorney to the satisfaction of the Board shall be produced for inspection at the Office or such other place as the Board may determine from time to time together, with evidence of the due execution of the power of attorney as required by the Board. The attorney may be authorised to appoint a proxy for the member granting the power of attorney. | ||
81. | Validity of vote | |
A vote given in accordance with the terms of an instrument of proxy or power of attorney shall be valid notwithstanding the previous death or unsoundness of mind of the principal or revocation of the instrument of proxy or power of attorney or transfer of the shares in respect of which the vote is given, provided no notice in writing of the death, unsoundness of mind, revocation or transfer has been received at the Office before the meeting. A proxy shall not be revoked by the principal attending and taking part in the meeting, unless the |
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principal actually votes at the meeting on the resolution for which the proxy is proposed to be used. | ||
82. | Rights of member indebted to Company in respect of other shares | |
Subject to any restrictions from time to time affecting the right of any member or class of members to attend any meeting, a member holding a share or shares in respect of which for the time being no moneys are due and payable to the Company shall be entitled to be present at any general meeting and to vote and be reckoned in a quorum notwithstanding that moneys are then due and payable to the Company by that member in respect of other shares held by that member; provided that, upon a poll, a member shall only be entitled to vote in respect of shares held by the member upon which, at the time when the poll is taken, no moneys are due and payable to the Company. |
83. | Number of Directors | |
The number of Directors (not including Alternate Directors) shall not be less than three nor more than the number the Board may from time to time determine. All Directors shall be natural persons. | ||
84. | Share qualification of Directors | |
Unless otherwise determined by the Company in general meeting, a Director shall not be required to hold any share qualification. A Director who is not a member of the Company shall nevertheless be entitled to attend and speak at general meetings. | ||
85. | Election or appointment of additional Director | |
The Company may by ordinary resolution elect (and the Directors shall also have power at any time to appoint) any person to be a Director either to fill a casual vacancy or as an additional Director, but so that: |
(i) | the total number of Directors shall not as a result of such appointment exceed the maximum number (if any) fixed by or in accordance with these Rules; and | ||
(ii) | the appointment of such Director shall not take effect before such Director has been duly appointed as a director of Rio Tinto plc. |
Any person so appointed by the Directors shall hold office only until the next annual general meeting and shall then be eligible for election. | ||
86. | Continuing Directors to act in certain circumstances | |
If at any time the number of Directors falls below the minimum number fixed by these Rules, the continuing Directors may, except in an emergency, only act for the purpose of increasing the number of Directors to the minimum number or of calling a general meeting of the Company. |
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87. | Directors who are employees of the Company | |
The office of a Director who is an employee of the Company or of any related corporation shall become vacant upon that Director ceasing to be an employee of the Company or any related corporation provided that any such person shall be eligible for reappointment or re-election as a Director of the Company. | ||
88. | Company Auditor may not act as Director | |
No person may be appointed as a Director or Alternate Director if the appointment would result in a person who, or a firm which, is then the Auditor becoming prohibited by the Corporations Act from acting as an Auditor of the Company. | ||
89. | Directors Remuneration |
(a) | Each Director may be paid or provided remuneration for services. Subject to Rule 90, the remuneration of the Directors shall from time to time be determined by the Directors except that the maximum aggregate remuneration paid or provided to the Directors by the Company in their capacity as Directors in respect of any year shall not (when aggregated with any remuneration paid or provided by Rio Tinto plc to the Directors in their capacity as Directors of Rio Tinto plc, any fees received by Directors for serving on any committee of the Directors of the Company or Rio Tinto plc, and any travel allowances received by Directors for attending meetings of Directors of the Company or Rio Tinto plc or meetings of any committee of Directors of the Company or Rio Tinto plc, in each case in respect of that year) exceed £3,000,000 or such higher amount as may from time to time be determined by ordinary resolution of the Company and shall (unless such resolution otherwise provides) be divisible among the Directors as they may agree, or in default of such agreement, equally. | ||
(b) | Remuneration under Rule 89 will accrue from day to day and be paid or provided by or on behalf of the Company at the time and in the manner (including by way of non-cash benefit or by way of a contribution to a superannuation fund) decided by the Board. | ||
(c) | In calculating the aggregate annual remuneration paid or provided to the Directors in any year for the purposes of Rule 89(a), no regard shall be had to payments made or non-cash benefits received under Rules 90, 92 or 144. |
90. | Other remuneration of directors | |
Any Director who holds any executive office with the Company or Rio Tinto plc, or who performs services which in the opinion of the Directors are outside the scope of the ordinary duties of a Director, may be paid such extra remuneration or may receive such other benefits as the Directors may determine. | ||
91. | [deleted April 2009] | |
92. | Travelling and other expenses | |
Every Director shall, in addition to any other remuneration provided for in these Rules, be entitled to be paid from Company funds all reasonable travel, accommodation and other expenses incurred by the Director in attending meetings of the Company or of the Board or |
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of any Committees or while engaged on the business of the Company or in the execution of any other duties as Director. | ||
93. | Directors may contract with company |
(a) | A Director shall not be disqualified by the office of Director from contracting or entering into any arrangement with the Company either as vendor, purchaser or otherwise and no contract or arrangement entered into with the Company by a Director nor any contract or arrangement entered into by or on behalf of the Company in which a Director is in any way interested shall be avoided for that reason. A Director shall not be liable to account to the Company for any profit realised by any contract or arrangement, by reason of holding the office of Director or of the fiduciary relationship established by the office. | ||
(b) | Except where a Director is constrained by the Corporations Act, a Director may be present at a meeting of the Board while a matter in which the Director has a material personal interest is being considered and may vote in respect of that matter. | ||
(c) | A Director who is interested in any contract or arrangement may, notwithstanding the interest, participate in the execution of any document evidencing or otherwise connected with the contract or arrangement. |
94. | Director may hold other office under the Company | |
A Director may hold any other office or position under the Company (except that of Auditor) in conjunction with the office of Director, on terms and at a remuneration in addition to remuneration (if any) as a Director, as the Board shall approve. A Director may be or become a director of or hold any other office or position under any corporation promoted by the Company, or in which it may be interested, whether as a vendor or shareholder or otherwise, and the Director shall not be accountable for any benefits received as a Director or member of or holder of any other office or position under that corporation. The Board may exercise the voting power conferred by the shares in any corporation held or owned by the Company as the Board thinks fit (including the exercise of the voting power in favour of any resolution appointing the Directors or any of the directors of that corporation or voting or providing for the payment of remuneration to the directors of that corporation) and a Director of the Company may vote in favour of the exercise of those voting rights notwithstanding that the Director is, or may be about to be appointed, a director of that other corporation and may be interested in the exercise of those voting rights. | ||
95. | Directors may lend to the Company | |
Any Director may lend money to the Company at interest with or without security or may, for a commission or profit, guarantee the repayment of any money borrowed by the Company and underwrite or guarantee the subscription of shares or securities of the Company or of any corporation in which the Company may be interested without being disqualified in respect of the office of Director and without being liable to account to the Company for the commission or profit. |
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Subject to Rule 85 the following provisions shall apply to all the Directors: | ||
96. | Retirement of Directors: |
(a) | Each Director shall retire at the annual general meeting held in the third calendar year following the year in which he was elected or last re-elected by the Company. If no Director would otherwise be required to submit for election or re-election but the Listing Rules require that an election of Directors be held, the Director to retire at the annual general meeting is the Director who has been longest in office since their last election, but, as between persons who were last elected on the same day, the Director to retire is (unless they otherwise agree among themselves) determined by ballot. |
Retiring Directors |
(b) | A Director who retires at any annual general meeting shall be eligible for election or re-election and such a Director who stands for election or re-election shall retain office until the announcement of the result of the poll on the resolution to reappoint that Director. | ||
(c) | Notwithstanding anything contained elsewhere in these Rules, a Director shall retire from office at an annual general meeting if the Director is required by Applicable Regulation to retire from office as a Director or is required to retire as director of Rio Tinto plc at the nearly contemporaneous annual general meeting of Rio Tinto plc, though in either case, nothing in this paragraph prevents the Director from standing for election or re-election. |
Removal of Director whilst in office |
(d) | The Company in general meeting may at any time by resolution remove any appointed or elected Director before the expiration of that Directors period of office and, if desired, elect another person by way of replacement (provided that such person is also elected as a director of Rio Tinto plc at the same time). |
Nomination of Directors |
(e) | No person other than a Director retiring at the meeting shall, unless recommended by the Directors for election, be eligible for election as a Director at any general meeting unless within the period referred to in paragraph (f) of this Rule 96 there has been lodged at the Office, notices in writing: |
(i) | signed or authenticated in accordance with Rule 140 by a member, other than the person to be proposed, duly qualified to attend and vote at the relevant meeting of that members intention to propose a person for election; and | ||
(ii) | signed or authenticated in accordance with Rule 140 by the person to be proposed of that persons willingness to be elected as a Director of the Company and as a director of Rio Tinto plc. |
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(f) | The period within which the notices referred to in paragraph (e) of this Rule 96 must be lodged at the Office is not less than 45 Business Days nor more than 65 Business Days (inclusive of the date on which the notice is given) before the earlier of the dates appointed for: |
(i) | the general meeting of the Company; and | ||
(ii) | the nearly contemporaneous general meeting of Rio Tinto plc. |
(g) | The Directors shall nominate for election as a Director at a general meeting of the Company any person duly nominated for election at the nearly contemporaneous general meeting of Rio Tinto plc. | ||
(h) | The Company at the meeting at which a Director retires under any provision of these Rules may by ordinary resolution fill the office being vacated by electing the retiring Director or some other person eligible for election. In default the retiring Director shall be deemed to have been elected or re-elected except in any of the following cases: |
A | where at such meeting it is expressly resolved not to fill such office or a resolution for the election or re-election of such Director is put to the meeting and lost; | ||
B | where such Director has given notice in writing to the Company that such Director is unwilling to be elected or re-elected; | ||
C | [deleted April 2009] | ||
D | [deleted April 2009] | ||
E | where such Director has not been, or is not deemed to have been, elected or re-elected as a director of Rio Tinto plc. |
97. | Director may appoint Alternate Director |
(a) | Any Director may at any time by notice in writing deposited at the Office, or delivered at a meeting of the Board, appoint any person (including another Director) to act as an Alternate Director in the Directors place and may in like manner at any time terminate such appointment. Such appointment, unless previously approved by the Directors or unless the appointee is another Director, shall have effect only upon and subject to being so approved and upon the appointment by the same person as an Alternate Director of Rio Tinto plc becoming effective. | ||
(b) | The appointment of an Alternate Director shall determine on the happening of any event which if the Alternate Director were a Director would cause the Alternate Director to vacate such office or if the appointing Director ceases to be a Director, otherwise than by retirement at a general meeting at which the Director is re-elected. |
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(c) | An Alternate Director shall (except any Alternate Director who is for the time being neither in the United Kingdom nor in Australia) be entitled to receive notices of meetings of the Board and shall be entitled to attend and vote as a Director at any such meeting at which the appointing Director is not personally present and generally at such meeting to perform all functions of the appointing Director as a Director and for the purposes of the proceedings at such meeting the provisions of these Rules shall apply as if the Alternate Director (instead of the appointing Director) were a Director. If the Alternate Director is a Director or shall attend any such meeting as an alternate for more than one Director, the Alternate Directors voting rights shall be cumulative but the Alternate Director shall not be counted more than once for the purposes of the quorum. If the appointing Director is for the time being neither in the United Kingdom nor in Australia or temporarily unable to act through ill health or disability the Alternate Directors signature to any resolution in writing of the Board shall be as effective as the signature of the appointing Director. To such extent as the Directors may from time to time determine in relation to any committees of the Board the foregoing provisions of this paragraph shall also apply mutatis mutandis to any meeting of such committee of which the appointing Director is a member. An Alternate Director shall not (save as aforesaid) have the power to act as a Director, nor shall the Alternate Director be deemed to be a Director for the purposes of these Rules, nor shall the Alternate Director be deemed to be the agent of the appointing Director. | ||
(d) | An Alternate Director shall be entitled to contract and be interested in and benefit from contracts or arrangements or transactions and to be repaid expenses and to be indemnified to the same extent mutatis mutandis as if the Alternate Director were a Director but the Alternate Director shall not be entitled to receive from the Company in respect of the appointment as Alternate Director any remuneration except only such part (if any) of the remuneration otherwise payable to the appointing Director as such appointing Director may by notice in writing to the Company from time to time direct. |
98. | Vacation of office by Director | |
The office of a Director shall be vacated: |
(a) | if the Director becomes an insolvent under administration, suspends payment generally to creditors or compounds with or assigns the Directors estate for the benefit of creditors; | ||
(b) | if the Director becomes of unsound mind or a person whose person or estate is liable to be dealt with in any way under the laws relating to mental health; | ||
(c) | if the Director resigns office by notice in writing to the Company addressed to it at the Office; | ||
(d) | if the Director is removed from office pursuant to paragraph (d) of Rule 96; |
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(e) | if the Director is removed from office pursuant to the Corporations Act; | ||
(f) | if the Director ceases to be a director of Rio Tinto plc; | ||
(g) | if the Director is prohibited from being a Director by reason of the operation of the Corporations Act; or | ||
(h) | if without the approval of the Board, neither the Director nor any Alternate Director appointed by that Director is present at meetings of the Board for six consecutive months and the remaining Directors for the time being in Australia have not within seven days of having been personally served by the Secretary with a notice giving particulars of the absence resolved that special leave of absence be granted. |
99. | Procedures relating to Directors meetings | |
Subject to the provisions of these Rules, the Board may meet together for the dispatch of business, adjourn and otherwise regulate its meetings as it thinks fit. Until otherwise determined by the Board, three Directors shall form a quorum. It shall not be necessary to give notice of a meeting of Directors to any Director who is for the time being neither in Australia nor in the United Kingdom. Any Director may waive notice of any meeting and any such waiver may be retroactive. | ||
100. | Meetings by telephone or other means of communication | |
The Directors may meet either in person or by telephone or by other means of communication by which all persons participating in the meeting are able to hear the entire meeting and to be heard by all other persons attending the meeting. A meeting conducted by telephone or other means of communication shall be deemed to be held at the place agreed upon by the Directors attending the meeting, provided that at least one of the Directors present at the meeting was at that place for the duration of the meeting. | ||
101. | Convening of meetings | |
The Board may at any time and the Secretary, upon the request of a Director, shall, convene a meeting of the Board. | ||
102. | Votes at meetings | |
Questions arising at any meeting of the Board shall be decided by a majority of votes, and, in the case of an equality of votes, the Chairman shall (except when only two Directors are competent to vote on the question then at issue) have a second or casting vote. | ||
103. | Chairman |
(a) | The Board may elect from their number a Chairman and a Deputy Chairman (or two or more Deputy Chairmen) and determine the period for which each is to hold office. If no Chairman or Deputy Chairman shall have been appointed or if at any meeting of the Directors, no Chairman or Deputy Chairman is present within 5 minutes after the time appointed for holding the meeting, the Directors present may choose one of their number to be the Chairman of the meeting. |
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(b) | If at any time there is more than one Deputy Chairman the right in the absence of the Chairman to preside at a meeting of the Board or of the Company shall be determined as between the Deputy Chairmen present (if more than one) by seniority in length of appointment or otherwise as resolved by the Board. |
104. | Powers of meetings | |
A meeting of the Board at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions for the time being vested in or exercisable by the Board generally by or under these Rules. | ||
105. | Delegation of powers to Committees | |
The Board may, by resolution or by power of attorney or writing under the Seal, delegate any of its powers to Committees consisting of Directors or any other person or persons as the Board thinks fit to act either in Australia or elsewhere. Any Committee formed or person or persons appointed to the Committee shall, in the exercise of the powers delegated, conform to any regulations that may from time to time be imposed by the Board. A delegate of the Board may be authorised to sub-delegate any of the powers for the time being vested in the delegate. | ||
106. | Proceedings of Committees | |
The meetings and proceedings of any Committee shall be governed by the provisions of these Rules for regulating the meetings and proceedings of the Board so far as they are applicable and are not superseded by any regulations made by the Board under Rule 105. | ||
107. | Validity of acts | |
All acts done at any meeting of the Board or by a Committee or by any person acting as a member of any Committee shall, notwithstanding that it is afterwards discovered that there was some defect in the appointment of any Director or the Committee or that they or any of them were disqualified, be as valid as if every person had been duly appointed and was qualified, and continued to be a Director or a member of the Committee (as the case may be). | ||
108. | Resolution in writing | |
A resolution in writing of which notice has been given to all Directors and which is signed by a majority of the Directors shall be as valid and effectual as a resolution duly passed at a meeting of the Directors and may consist of several documents in the like form each signed by one or more Directors. A facsimile transmission or other document produced by mechanical or electronic means and bearing a signature of a Director printed with that Directors authority by mechanical or electronic means or otherwise indicating that Directors agreement to the resolution shall for the purposes of this Rule 108 be deemed to be a document in writing signed by the Director. | ||
109. | Directors includes Alternate Directors | |
For the purposes of Rule 108 the references to Directors include any Alternate Director for the time being present in Australia or the United Kingdom who is appointed by a Director not for the time being present in Australia or the United Kingdom or who is unable |
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by reason of illness to sign the resolution in question but do not include any other Alternate Director. |
110. | General powers of the Board | |
The management and control of the business and affairs of the Company shall be vested in the Board, which may exercise all powers and do all acts and things as are not by these Rules or by law directed or required to be exercised or done by the Company in general meeting. | ||
111. | Powers to give effect to Sharing Agreement | |
The Company having entered into the Sharing Agreement and the Deed Poll Guarantee, it is, and the Directors are, authorised and directed to operate and carry into effect the provisions of the Sharing Agreement, the Deed Poll Guarantee and any further or other agreements or arrangements with or in connection with Rio Tinto plc. Subject to the Corporations Act, nothing done by any Director in good faith pursuant to such authority and obligations shall constitute a breach of the fiduciary duties of such Director to the Company or members of the Company. In particular, but without limitation: |
(i) | the Directors are authorised to agree to enter into a guarantee on behalf of the Company in relation to indebtedness of any member of the Rio Tinto plc Group; | ||
(ii) | the Directors are authorised to provide Rio Tinto plc and any officer, employee or agent of Rio Tinto plc with any information relating to the Company; | ||
(iii) | subject to the terms of the Sharing Agreement, the Directors are authorised to do all such things as in the opinion of the Directors are necessary or desirable for the furtherance of any matter referred to in this Rule or for the furtherance, maintenance or development of the relationship with Rio Tinto plc constituted by or arising out of any agreement or arrangement mentioned in or made in accordance with this Rule; and | ||
(iv) | the Directors are authorised to agree to any amendment or termination or abrogation of all or any of the terms of the Sharing Agreement or Deed Poll Guarantee in accordance with their terms. |
112. | Boards power to borrow | |
Without limiting the generality of Rule 110, the Board may exercise all the powers of the Company to borrow money, to charge any property or business of the Company or all or any of its uncalled capital and to issue debentures or give any other security for a debt, liability or obligation of the Company or of any other person. | ||
113. | Power to authorise debenture holders, etc, to make calls | |
Without limiting the generality of Rule 110, if any uncalled capital of the Company is included in or charged by any debenture, mortgage or other security, the Board may, by |
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instrument under the Seal, authorise the person in whose favour the debenture, mortgage or other security is executed or any other person in trust for that person to make calls on the members in respect of that uncalled capital and to sue in the name of the Company or otherwise for the recovery of moneys becoming due in respect of calls made and to give valid receipts for those moneys, and that authority shall subsist during the continuance of the debenture, mortgage or other security, notwithstanding any change in the Directors, and shall be assignable if expressed to be. | ||
114. | Management of the affairs of the Company |
(a) | The Board may from time to time provide for the management of the affairs of the Company in the manner it thinks fit and the provisions contained in paragraphs (b) and (c) of this Rule shall be without prejudice to the general powers conferred by this paragraph. |
Powers of attorney |
(b) | The Board may at any time by power of attorney under the Seal appoint any persons to be attorneys of the Company for the purposes and with the powers, authorities and discretions (not exceeding those vested in or exercisable by the Board under these Rules) and for the period and subject to the conditions the Board thinks fit, and any appointment may (if the Board thinks fit) be made in favour of the members or any of the members of any Committee or agency established or in favour of any company or of the members, directors, nominees or managers of any company or firm or otherwise in favour of any fluctuating body of persons whether nominated directly or indirectly by the Board. Any power of attorney may contain provisions for the protection or convenience of persons dealing with the attorneys as the Board thinks fit. |
Sub-delegation: |
(c) | A delegate or attorney may be authorised by the Board to sub-delegate all or any of the powers, authorities and discretions for the time being vested in that delegate or attorney. | ||
(d) | [deleted April 2009] | ||
(e) | [deleted April 2009] |
115. | Powers of executive officers |
(a) | Subject to the Corporations Act, the Directors may from time to time appoint any one or more of their body to be the holder of any executive office (including, where considered appropriate, the office of Chairman or Deputy Chairman) on such terms and for such period as they may determine. Subject to the terms of any contract entered into in any particular case, the Directors may at any time revoke or vary the terms of any such appointment. |
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(b) | The appointment of any Director to the office of Chairman or Deputy Chairman or Chief Executive or Deputy Chief Executive or Managing or Joint Managing or Deputy or Assistant Managing Director shall automatically determine if that person ceases to be a Director (but without prejudice to any claim for damages for breach of any contract of service between that person and the Company). | ||
(c) | The appointment of any Director to any other executive office shall not automatically determine if that person ceases from any cause to be a Director, unless the contract or resolution under which that person holds office shall expressly state otherwise, in which case that determination shall be without prejudice to any claim for damages for breach of any contract of service between that person and the Company. |
116. | Delegation to executive director | |
The Directors may delegate to any Director holding any executive office any of the powers exercisable by them as Directors upon such terms and conditions and with such restrictions as they think fit, and either collaterally with or to the exclusion of their own powers, and may from time to time revoke, withdraw, alter or vary all or any of such powers. |
117. | Minutes | |
The Board shall cause minutes to be duly entered in books provided for that purpose or (provided reasonable precautions are taken for guarding against falsification and for facilitating its discovery) to be duly recorded in any other manner: |
(a) | of the names of the Directors present at each meeting of the Board and of any Committees; | ||
(b) | of all orders made by the Board and any Committees; and | ||
(c) | of all resolutions and proceedings of general meetings of the Company and of meetings of the Board and any Committees; |
and the minutes of any meeting of the Board or of any Committee or of the Company, if purporting to be signed by the chairman of the meeting or by the chairman of the next succeeding meeting, shall be prima facie evidence of the matters stated in the minutes. |
118. | Declaration of dividend |
(a) | The Board may from time to time declare or determine dividends to be paid to the members and the Board may fix the time for payment of any dividend. No dividend shall carry interest as against the Company. No dividend shall (unless permitted by the Corporations Act) be payable otherwise than out of profits and a declaration |
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by the Board as to the amount of the profits available for dividend shall be conclusive. | |||
(b) | The dividend shall (subject to the Listing Rules, Rule 118A, Rule 123(a)(iii) and the rights of or any restrictions on the holders of the Equalisation Share and any other shares created or raised under any special arrangements as to dividend) be payable on all shares in proportion to the amount of capital for the time being and from time to time paid up in respect of the shares and may be declared at a rate per annum in respect of a specified period; provided that (for the purposes of this Rule only) no amount paid on a share in advance of calls or the due date for the payment of any instalment shall be treated as paid on that share. The Board may declare or determine to pay one dividend on all shares of any one class or may declare or determine to pay at any one meeting of the Board two or more dividends so that each dividend is declared on any shares of that class to the exclusion of any other shares but so that the amount payable (out of the total of the amount of all dividends declared or determined to be paid at that meeting) on all shares of the relevant class is (subject as mentioned above) in the proportions specified above. | ||
(c) | Dividends shall be declared or determined in Australian currency, but the Board may determine that any dividend payable to some or all of the members shall be paid in a currency or currencies other than Australian currency and for that purpose the Board may (in its absolute discretion) stipulate a date on which it shall determine the rate or rates at which the amount of dividend in Australian currency shall be converted into the other currency or currencies for the purpose of the payment. Payment in another currency or currencies of the amount of any dividend converted pursuant to this Rule shall be deemed as between the Company and any member to whom payment is made, and as against all other members, to be an adequate and proper payment of the amount of the dividend. | ||
(d) | Provided the Directors act in good faith they shall not incur any liability to the holders of any shares of any class for any loss they may suffer by the lawful payment, on any other class of shares having rights ranking after or pari passu with those shares, of any such dividend as aforesaid. |
118A. Waiver of dividend |
(a) | A member may request prior to the declaration or determination of a dividend by the Company ( Relevant Dividend ) that the Relevant Dividend should not be declared and paid in respect of all or any of the shares registered in the name of the member ( Relevant Shares ). | ||
(b) | No such request shall be effective in relation to a Relevant Dividend unless: |
(i) | the request is in writing signed or authenticated in accordance with Rule 140 by or on behalf of the member; | ||
(ii) | the request specifies the shares to which it shall apply; | ||
(iii) | the request is delivered to the Company and approved by the Board prior to (and not after) declaration of the Relevant Dividend, |
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and the Board may give or withhold approval in its absolute discretion. |
(c) | Subject to paragraph (d) of this Rule 118A, if a request is effective in relation to a Relevant Dividend then, notwithstanding any other Rule, the Relevant Dividend shall not be declared and shall not be payable in respect of the Relevant Shares to which the request applies, and the member shall not be entitled to have the Relevant Dividend declared and paid on those shares, and in respect of those shares the member shall have no debt or claim or other right or entitlement of any kind whatsoever to the Relevant Dividend against the Company. | ||
(d) | If prior to transfer books close for the Relevant Dividend any shares to which an effective request applies are sold or transferred by a member to another person, or otherwise become registered in the name of another person, the request shall cease to apply upon the earlier of: |
(A) | the Company receiving notice in writing of the sale; or | ||
(B) | the other person being registered as the new holder of the shares |
to the intent that the transferee of such shares shall be entitled to the declaration and payment of such Relevant Dividend. |
119. | Reserve fund | |
The Board may create a reserve or reserves out of profits of the Company or may create any reserve or reserves contemplated by the Sharing Agreement by setting aside, in priority to any dividend, any sum it thinks fit for the purpose of meeting contingencies, equalising dividends and providing a reserve for any purpose for which the profits of the Company may be applied, and may divide any of the sums set aside into special accounts as it thinks fit and may (subject to the Sharing Agreement) at any time resort to that reserve for dividends or bonuses. | ||
120. | Investment of reserve funds: |
(a) | The Board may invest any sums representing the whole or any part of any reserve as a fund in shares or securities or other investments as in its absolute discretion it thinks fit and may from time to time deal with, vary or dispose of the whole or any part of the investment for the benefit of the Company. Any income derived from or accretions to those shares, securities or other investments may either be carried to the credit of the reserve fund represented by those shares, securities or other investments or be dealt with as profits arising from the business of the Company. | ||
(b) | The Board shall have full power to employ in the business of the Company the whole or part of any reserve not invested as a fund and without being bound to keep the representative assets separate from other assets of the Company. |
121. | Dividends | |
In respect of a dividend, the Board may: |
(a) | direct payment of the dividend wholly or in part by the distribution of specific assets or documents of title and, in particular, of fully paid up shares, debentures or debenture stock of the Company or any other corporation. Where any difficulty |
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arises in regard to the distribution, the Board may settle that difficulty as it thinks expedient and in particular may issue fractional certificates and may fix the value for distribution of those specific assets and may determine that cash payments shall be made to any members upon the basis of the value fixed in order to adjust the rights of all parties and may vest any specific assets in trustees upon trusts for the persons entitled to the dividend as the Board considers expedient; | |||
(b) | direct that the dividend be payable to all or particular shareholders or on all or particular shares wholly or partly out of any one or more particular funds or reserves or out of profits derived from any one or more particular sources and to any remaining shareholders or on any remaining shares wholly or partly out of any other one or more particular funds or reserves or out of profits derived from any other one or more particular sources and may make the direction notwithstanding that by doing so the dividend (or part of it) may form part of the assessable income for taxation purposes of some or all shareholders and may not form part of the assessable income of others; and/or | ||
(c) | determine and announce that each member entitled to participate in the dividend may elect to have the payment of the dividend applied and satisfied in respect of all, or a number of shares less than all, of the shares held by the member in accordance with a Company dividend reinvestment plan. |
122. | [deleted April 2009] | |
123. | Dividend Plans |
(a) | The Board may establish and maintain one or more dividend plans (including the establishment of rules) pursuant to which some or all members may elect with respect to some or all of their shares (subject to the rules of the relevant plan): |
(i) | to reinvest either in whole or in part dividends paid or payable or which may become payable by the Company to the member in cash by, in accordance with the rules of the relevant plan, subscribing for and/or purchasing shares in the capital of the Company; | ||
(ii) | to receive a dividend from the company by way of the allotment of shares paid up from the Companys capital account or by way of the allotment of shares issued directly to members as fully paid ordinary shares for whose issue no consideration is payable to the Company; | ||
(iii) | that the dividends from the Company not be declared or paid and that instead a payment or distribution other than a dividend be made by the Company; | ||
(iv) | that the cash dividends from the Company not be paid and that instead a cash dividend be received from a related corporation nominated by the Board; or | ||
(v) | to participate in a dividend selection plan, including not limited to a plan pursuant to which members may elect to receive a dividend from the Company or any related corporation which is less in amount but franked to |
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a greater extent than the ordinary cash dividend declared by the Company or any related corporation or to receive a dividend from the Company or any related corporation which is greater in amount but franked to a lesser extent than the ordinary cash dividend declared by the Company or any related corporation. |
(b) | Pursuant to a dividend plan established in accordance with paragraph (a) of this Rule, any member may elect for a specified period or for a period to be determined by specified notice (in either case determined by the Directors and prescribed in the rules of the plan) that all (or, where the rules of the plan permit, some) of the Ordinary Shares held by that member and designated by the member in accordance with the rules of the plan (the designated shares) will participate in the dividend plan. During that period the designated shares will be entitled to participate in the dividend plan subject to the rules of the dividend plan. | ||
(c) | In the event of any inconsistency between any dividend plan established in accordance with paragraph (a) of this Rule or the rules of any dividend plan and these Rules these Rules shall prevail. | ||
(d) | The Directors are authorised to do all things which they consider to be desirable or necessary for the purpose of implementing every dividend plan established in accordance with paragraph (a) of this Rule. | ||
(e) | The Directors are authorised to vary the rules of any dividend plan established in accordance with paragraph (a) of this Rule at their discretion and to suspend or terminate any dividend plan at their discretion. Any dividend plan may also be suspended, terminated or varied by resolution of a general meeting of the Company. |
124. | Transfer of shares | |
Subject to the Corporations Act and the ASTC Settlement Rules, a transfer of shares which is registered after the transfer books close for dividend purposes but before a dividend is payable shall not pass the right to any dividend declared before the books are closed. | ||
125. | Retention of dividends | |
The Board may retain the dividends payable on shares which any person is under Rules 39 or 40 entitled to transfer until that person becomes registered as a member in respect of those shares or duly transfers them. | ||
126. | Dividends on which the Company has a charge | |
The Board may retain any dividends payable on shares over which the Company has a lien or charge and may apply the dividend in or towards satisfaction of the calls, instalments or sums owing in respect of the shares over which the lien or charge exists. | ||
127. | How dividends are payable | |
Payment of any dividend may be made in any manner and by any means as determined by the Board at the sole risk of the member. Without prejudice to any other method of payment which the Board may adopt any dividend may be paid by cheque mailed to the address of the member as shown in the Register (or in the case of joint holders to the |
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address shown in the Register as the address of the member whose name stands first in the Register) or any other address as the member or joint holders in writing direct or by electronic funds transfer to an account with a bank or other financial institution nominated by the member or joint holders in writing and acceptable to the Company. | ||
128. | Notice of dividend | |
Notice of the declaration of any dividend shall be given to members in any manner the Board may determine. | ||
129. | Unclaimed dividends | |
All unclaimed dividends may be invested or otherwise made use of by the Board for the benefit of the Company until claimed or otherwise disposed of according to law. |
130. | Power to capitalise profits | |
The Board may, subject to Rule 7, resolve that the whole or any portion of any sum forming part of the undivided profits of the Company or standing to the credit of any reserve or other account (including without limitation any capital account) and available for distribution or capitalisation be capitalised and that the amount capitalised be appropriated to the members (subject to Rule 141 and Rule 143) in the respective proportions in which they would be entitled to receive it if distributed by way of dividend and be applied on their behalf either in paying up the amounts for the time being unpaid on any issued shares held by them, or in paying up in full unissued shares or other securities of the Company (of an aggregate nominal amount equal to the amount capitalised) to be issued to them accordingly, or partly in one way and partly in the other. | ||
131. | Employee Share Plan |
(a) | The Board may, subject to the Listing Rules: |
(i) | implement one or more employee share plans (on the terms they determine) under which securities of the Company or of Rio Tinto plc or of a related body corporate of either may be issued, transferred or otherwise provided to or for the benefit of any officer (including any Director) or employee of the Company or of a related body corporate or affiliate of the Company or to a relative of that officer or employee or to a company, trust or other entity or arrangement in which that officer or employee or a relative of that officer or employee has an interest; | ||
(ii) | amend, suspend or terminate any employee share plan implemented by them; and | ||
(iii) | give financial assistance in connection with the acquisition of securities of the Company or of a related body corporate under any employee share plan in any manner permitted by the Corporations Act. |
(b) | Rule 131 does not limit the Boards powers to establish an employee share plan or limit the scope or structure of any such plan. |
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132. | Appropriation and application of amounts to be capitalised | |
The Board may specify the manner in which any fractional entitlements and any difficulties relating to distribution are to be dealt with and, without limiting the generality of the foregoing, may specify that fractions are to be disregarded or that any fractional entitlements are to be increased to the next whole number or that payments in cash in lieu of fractional entitlements be made. The Board shall make all necessary appropriations and applications of the amount to be capitalised pursuant to Rules 130 and 131 and all necessary allotments and issues of fully paid up shares or debentures. Where required, the Board may appoint a person to sign a contract on behalf of the members entitled upon a capitalisation to any shares or debentures, which provides for the issue to them, credited as fully paid up of any further shares or debentures, or for the payment up by the Company on their behalf of the amounts or any part of the amounts remaining unpaid on their existing shares by the application of their respective proportions of the sum resolved to be capitalised. |
133. | Service of notices | |
Subject to the Corporations Act and the Listing Rules, a notice may be given by the Company to any member, or in the case of joint holders to the member whose name stands first in the Register, personally, by leaving it at the members registered address or by sending it by prepaid post to the members registered address or by sending it to a facsimile number, or by other electronic means determined by the Board (including by making a notice available on a website) to an electronic mail address, nominated by the member. | ||
134. | Member may notify Company of address for service | |
A registered holder of shares may notify the Company of an address (or, where the Board determines to accept electronic mail addresses for this purpose, an electronic mail address) as a place at which the member will accept service of notices, which shall be deemed to be the members registered place of address. | ||
135. | Member not known at registered address | |
Where a member does not have a registered place of address or where the Company has a bona fide reason to believe that a member is not known at the members registered address and the Company has subsequently made an enquiry at the registered address of the member as to the whereabouts of the member, and the enquiry either elicits no response or a response indicating that the member or the members present whereabouts are unknown, all future notices shall be deemed to be given to the member if the notice is exhibited in the Office for a period (not including weekends and public holidays) of forty-eight hours (and shall be deemed to be duly served at the commencement of that period) unless and until the member informs the Company of a registered place of address or that the member has resumed residence at the members registered place of address or notifies the Company of a new address to which the Company may send the member notices (which new address shall be deemed to be the members registered place of address). |
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136. | When notice deemed to be served | |
Any notice sent by post shall be deemed to have been served at the expiration of twenty-four hours after the envelope containing the notice is posted and, in proving service, it shall be sufficient to prove that the envelope containing the notice was properly addressed and posted. Any notice served on a member personally or left at the members registered place of address shall be deemed to have been served at the time of service. Any notice served on a member by facsimile or other electronic transmission is deemed to have been served when the transmission is sent. Subject to the Corporations Act and Listing Rules, any notice made available on a website shall be deemed to have been served at the time it was first made available on the website, or, if later, when the member was served (or is deemed to have been served) notice that the notice was available on the website (including by providing a Uniform Resource Locator or other link to the notice). | ||
137. | Reckoning of period of notice | |
Where a given number of days notice or notice extending over any other period is required to be given, the period of notice shall in each case be exclusive of the day on which it is served or deemed to be served and of the day on which the meeting is to be held. | ||
138. | Notice to transferor binds transferee | |
Every person who, by operation of law, transfer or any other means becomes entitled to be registered as the holder of any shares shall be bound by every notice which, prior to the persons name and address being entered in the Register in respect of those shares, was duly given to the person from whom the person derives title to those shares. | ||
139. | Service on deceased members | |
A notice delivered or sent by post to the registered place of address of a member pursuant to these Rules shall (notwithstanding that the member be then dead and whether or not the Company has notice of the members death) be deemed to have been duly served in respect of any registered shares, whether held solely or jointly with other persons by that member, until some other person is registered in the members stead as the holder or joint holder and the service shall for all purposes be deemed to be sufficient service of the notice or document on the members heirs, executors or administrators and all persons (if any) jointly interested with the member in the shares. | ||
140. | Authentication of documents sent by electronic means | |
Where these Rules require a notice or other document to be signed or authenticated by a member or other person then any notice or other document sent or supplied by electronic means is sufficiently authenticated in any manner authorised or approved by the Board. The Board may designate mechanisms for validating any such notice or other document, and any such notice or other document not so validated by use of such mechanisms shall be deemed not to have been received by the Company. |
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141. | Payments by the Company | |
Whenever any law for the time being of any country, state, territory or place imposes or purports to impose any immediate or future or possible liability on the Company to make any payment or empowers any government or taxing authority or government official to require the Company to make any payment in respect of any shares, rights to shares or options to acquire shares registered in the Register as held either jointly or solely by any member or in respect of any transfer of those shares, rights to shares or options to acquire shares or in respect of any interest, dividends, bonuses or other moneys due or payable or accruing due or which may become due or payable to that member by the Company on or in respect of any shares, rights to shares or options to acquire shares or for or on account or in respect of any member, whether in consequence of: |
(a) | the death of that member; | ||
(b) | the non-payment of any income tax or other tax by that member; | ||
(c) | the non-payment of any estate, probate, succession, death, stamp or other duty by the member or the trustee, executor or administrator of that member or by or out of the members estate; | ||
(d) | any assessment of income tax against the Company in respect of interest or dividends paid or payable to that member; | ||
(e) | or any other act or thing, the Company in every case: |
(i) | shall be fully indemnified from all liability by that member or that members trustee, executor or administrator and by any person who becomes registered as the holder of the shares on the distribution of the deceased members estate; | ||
(ii) | shall have a lien or charge upon the shares for all moneys paid by the Company in respect of the shares under or in consequence of any law; | ||
(iii) | shall have a lien upon all dividends, bonuses and other moneys payable in respect of the shares registered in the Register as held either jointly or solely by that member for all moneys paid or payable by the Company in respect of the shares under or in consequence of any law, together with interest at a rate the Board may determine from time to time from the date of payment to the date of repayment, and may deduct or set off against any dividend, bonus or other moneys payable any moneys paid or payable by the Company together with interest; | ||
(iv) | may recover as a debt due from that member or that members trustee, executor or administrator or any person who becomes registered as the holder of the shares on the distribution of the deceased members estate wherever constituted or situated, any moneys paid by the Company under or in consequence of any law which exceed any dividend, bonus or other money then due or payable by the Company to that member together with |
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interest at a rate the Board may determine from time to time from the date of payment to the date of repayment; and | |||
(v) | except in the case of a proper ASTC transfer, may, if any money is paid or payable by the Company under any law, refuse to register a transfer of any securities by the holder or the holders trustee, executor or administrator until the money and interest is set off or deducted or, in case the money and interest exceeds the amount of any dividend, bonus or other money then due or payable by the Company to the holder, until the excess is paid to the Company but notwithstanding the foregoing the Company may not refuse to register any proper ASTC transfer except as permitted by the Corporations Act, the Listing Rules or the ASTC Settlement Rules. |
Nothing contained in this Rule shall prejudice or affect any right or remedy which any law confers or purports to confer on the Company, and, as between the Company and every member, every members trustee, executor, administrator and estate, any right or remedy which that law confers or purports to confer on the Company shall be enforceable by the Company. |
142. | Distribution in specie |
(a) | If the Company is wound up, whether voluntarily or otherwise, with the sanction of a special resolution, the liquidators may divide among the contributories in specie or kind any part of the assets of the Company, and may vest any part of the assets of the Company in trustees upon any trusts for the benefit of the contributories or any of them as the liquidators shall think fit. |
Liability to calls |
(b) | If any shares to be divided in accordance with Rule 142(a) involve a liability to calls or otherwise, any person entitled under the division to any of the shares may by notice in writing within ten days after the passing of the special resolution, direct the liquidators to sell that persons proportion and pay that person the net proceeds and the liquidators shall, if practicable, act accordingly. |
Ratification of payment of fee to liquidators |
(c) | No commission or fee shall be payable to the liquidators in a voluntary liquidation, unless the payment of the commission or fee has been ratified by a general meeting of the Company and the amount of the proposed payment has been specified in the notice calling the meeting. |
143. | Capital rights on a liquidation | |
On a return of assets on liquidation, the assets of the Company remaining available for distribution among members, after giving effect to preferential rights attached to any preference shares issued by the Company and to the rights of other shares having a |
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preferred right to participate as regards capital up to but not beyond a specified amount in a distribution, and to any provision of the Corporations Act, shall be applied: |
(a) | first in paying to the holder of the Equalisation Share (if any) the nominal amount paid up on such share and then in paying amounts (if any) standing to the credit of the holder of the Equalisation Share in any reserve set up in the books of the Company pursuant to paragraph 3.6.2(a) of Schedule 2 to the Sharing Agreement; and | ||
(b) | then in paying to relevant holders of the Ordinary Shares any amounts standing to the credit of any reserve for their benefit set up in the books of the Company pursuant to paragraphs 3.6.2(b) or (c) of Schedule 2 of the Sharing Agreement; and | ||
(c) | then in paying to the holder of the Special Voting Share the nominal amount paid up on such share; and | ||
(d) | any surplus remaining after application of the assets in accordance with the preceding paragraphs shall be applied in making payments to the holder of the Equalisation Share and/or the holders of Ordinary Shares in accordance with their entitlements, which shall be determined as follows:- |
(i) | The liquidator of the Company shall draw up accounts as at earliest date (the Reference Date) on which the liquidator is able to make a final distribution to creditors and members of the Company to show the gross amount which would be available for distribution to the holders of Ordinary Shares on the liquidation of the Company after payment in full of any amount standing to the credit of: |
(A) | the holder of the Equalisation Share in any reserve set up in the books of the Company pursuant to paragraph 3.6.2(a) of Schedule 2 to the Sharing Agreement; and | ||
(B) | the holders of Ordinary Shares in any reserve set up in the books of the Company under paragraphs 3.6.2(b) or 3.6.2(c) of Schedule 2 to the Sharing Agreement |
and to calculate the amount thereof available for distribution to holders of Publicly-held Rio Tinto Limited Ordinary Shares or the amount (expressed as a negative sum) of the shortfall which would need to be obtained before the holders of Publicly-held Rio Tinto Limited Ordinary Shares would receive any payment by way of distribution (in either case the Companys Own Distribution Amount), on the assumption that distribution to the Companys creditors and members on liquidation took place on the Reference Date. The liquidator of the Company shall certify the result of such calculation to Rio Tinto plc. | |||
(ii) | Whether or not proceedings have been commenced for the liquidation of Rio Tinto plc, Rio Tinto plc shall be required under the Sharing Agreement to instruct the Relevant Officer for the time being of Rio Tinto plc to draw up accounts as at the Reference Date of all assets (valued as if Rio Tinto |
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plc was in liquidation and those assets were to be realised by a liquidator of Rio Tinto plc in an orderly manner) and liabilities which would be admissible to proof if Rio Tinto plc was in liquidation at the Reference Date (other than the asset or liability represented by any Equalisation Payment (as defined in paragraph 4.2 of Schedule 2 to the Sharing Agreement) to be made in accordance with the Sharing Agreement or any payment on the Rio Tinto plc Equalisation Share under Article 3(C)(e) or 3(C)(f) of the Rio Tinto plc Articles) to show the gross amount which would be available for distribution to holders of Rio Tinto plc Ordinary Shares on the liquidation of Rio Tinto plc (if it were to occur on the Reference Date) after payment in full of any amount standing to the credit of: |
(A) | the holder of the Rio Tinto plc Equalisation Share in any reserve set up in the books of Rio Tinto plc pursuant to paragraph 3.6.2(a) of Schedule 2 to the Sharing Agreement; or | ||
(B) | the holders of Rio Tinto plc Ordinary Shares in any reserve set up in the books of Rio Tinto plc under paragraphs 3.6.2(b) or 3.6.2(c) of Schedule 2 to the Sharing Agreement |
and to calculate the amount thereof available for distribution to holders of Publicly-held Rio Tinto plc Ordinary Shares or the amount (expressed as a negative sum) of the shortfall which would need to be obtained before the holders of Publicly-held Rio Tinto plc Ordinary Shares would receive any payment by way of distribution (in either case, the Rio Tinto plc Own Distribution Amount) on the assumption that the distribution to Rio Tinto plcs creditors and members on liquidation took place on the Reference Date. Rio Tinto plc is obliged under the Sharing Agreement to instruct the Relevant Officer of Rio Tinto plc to certify the result of such calculation to the Company. | |||
(iii) | The liquidator of the Company shall make and certify to Rio Tinto plc the results of the following calculation as at the Reference Date and agree such calculation with the Relevant Officer of Rio Tinto plc, which calculation shall be expressed in Australian dollars, with any sterling amounts being converted to Australian dollars at the Liquidation Exchange Rate as at the Reference Date: |
(COD + Rio Tinto plcOD) x | COS | ||||
(Rio Tinto plcOS ÷ EF) + COS |
where: | |||
COD = the Companys Own Distribution Amount; | |||
COS = the number of Publicly-held Rio Tinto Limited Ordinary Shares in issue on the Reference Date; | |||
EF = the Equalisation Fraction; | |||
Rio Tinto plcOD = the Rio Tinto plc Own Distribution Amount; and |
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Rio Tinto plcOS = the number of Publicly-held Rio Tinto plc Ordinary Shares in issue on the Reference Date. | |||
The result of such calculation is referred to below as the Adjusted Company Distribution Amount. | |||
(iv) | If the Adjusted Company Distribution Amount is equal to or more than the Companys Own Distribution Amount then the assets remaining available for distribution (which shall include any distribution made on the Rio Tinto plc Equalisation Share pursuant to Article 3(C)(e) or 3(C)(f) of the Rio Tinto plc Articles, any amounts paid by Rio Tinto plc under paragraph 4.2.4 of Schedule 2 to the Sharing Agreement and any amounts paid by Rio Tinto plc from reserves set up in the books of Rio Tinto plc under paragraph 3.6.2(a) of Schedule 2 to the Sharing Agreement) shall belong to and be distributed among the holders of Ordinary Shares rateably according to the numbers of Ordinary Shares held by them. | ||
(v) | If the Adjusted Company Distribution Amount is equal to or more than zero, but is less than the Companys Own Distribution Amount, the liquidator of the Company shall pay out of the assets available for distribution an amount by way of return of capital on the Equalisation Share in priority to any amounts payable to the holders of Ordinary Shares such that (taking account of any tax payable on the making or receipt of the distribution of that amount, after allowing for any offsetting tax credits, losses or deductions) the ratio of the amount available for distribution on each Publicly-held Rio Tinto Limited Ordinary Share: |
(1) | apart from in each case any undistributed amounts resulting from the payment by Rio Tinto plc to a member of the Rio Tinto Limited Group or the Company to a member of the Rio Tinto plc Group of any reserves under paragraph 3.6.2(a) of Schedule 2 to the Sharing Agreement or any amounts credited to any reserve in the books of the Company for the benefit of holders of Ordinary Shares or any amounts credited to any reserve in the books of Rio Tinto plc for the benefit of holders of Rio Tinto plc Ordinary Shares, in each case under paragraphs 3.6.2(b) and 3.6.2(c) of Schedule 2 to the Sharing Agreement; and | ||
(2) | on the assumption that distribution to the Companys members and creditors and Rio Tinto plcs members and creditors took place on the Reference Date; and | ||
(3) | after taking into account the amounts available for distribution on each Publicly-held Rio Tinto plc Ordinary Share prior to such payment |
to the amount available for distribution on each Publicly-held Rio Tinto plc Ordinary Share (converting sterling amounts to Australian dollar amounts by application of the Liquidation Exchange Rate as at the Reference Date) |
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is equal to the Equalisation Ratio (and the balance of the assets of the Company available for distribution remaining after any such payment on the Equalisation Share, shall belong to and be distributed among the holders of Ordinary Shares rateably according to the numbers of Ordinary Shares held by them). | |||
(vi) | If the Adjusted Company Distribution Amount is zero or a negative amount and the Companys Own Distribution Amount is a positive amount then the liquidator of the Company shall pay out of the assets available for distribution an amount by way of return of capital on the Equalisation Share in priority to any amounts payable to the holders of Ordinary Shares such that (taking account of any tax payable on the making or receipt of the distribution of that amount, after allowing for any offsetting tax credits, losses or deductions) the amount available for distribution to holders of Publicly-held Rio Tinto Limited Ordinary Shares on the assumption that distribution to the Companys members and creditors took place on the Reference Date, is zero. | ||
(vii) | If the Companys Own Distribution Amount is zero or a negative amount and the Rio Tinto plc Own Distribution Amount is zero or a negative amount, then no distribution shall be made by the liquidator of the Company on the Equalisation Share or to holders of Ordinary Shares. | ||
(viii) | In making the calculations referred to in this paragraph (d), the Relevant Officer of Rio Tinto plc and the liquidator of the Company shall: |
(A) | in relation to the Company, take into account the distributions which fall to be made on Ordinary Shares which are not Publicly-held Rio Tinto Limited Ordinary Shares it being acknowledged that the per share distributions on the Publicly-held Rio Tinto Limited Ordinary Shares will be the same as the distributions on the non Publicly-held Rio Tinto Limited Ordinary Shares; | ||
(B) | in relation to Rio Tinto plc, take into account the distributions which fall to be made on Rio Tinto plc Ordinary Shares which are not Publicly-held Rio Tinto plc Ordinary Shares it being acknowledged that the per share distributions on the Publicly-held Rio Tinto plc Ordinary Shares will be the same as the distributions on the non Publicly-held Rio Tinto plc Ordinary Shares. |
(ix) | In this paragraph (d) Relevant Officer of Rio Tinto plc shall mean the auditor of Rio Tinto plc or if Rio Tinto plc is in liquidation, the liquidator of Rio Tinto plc. | ||
(x) | In this paragraph (d) the gross amount which would be available for distribution to shareholders means such amount ignoring any distribution on the Equalisation Share or Rio Tinto plc Equalisation Share or any Equalisation Payment (as defined in paragraph 4.2 of Schedule 2 to the Sharing Agreement) made in accordance with the Sharing Agreement and |
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any tax payable on the making of the Equalisation Payment or distribution and both the gross amount which would be available for distribution and the amount available for distribution refer to such amount before deduction of any amount in respect of tax required to be deducted or withheld from the distribution to ordinary shareholders by or on behalf of the company paying or making the distribution but net of any tax payable by that company on the distribution to its ordinary shareholders. | |||
(xi) | The certificates which the liquidator of the Company is required to produce under this paragraph (d) and the Relevant Officer of Rio Tinto plc is required to produce under the Sharing Agreement (the Certificates) shall be produced within 6 weeks after the Reference Date and the Company shall procure that all necessary instructions are given to the liquidator of the Company to ensure that such certificates are produced within that time. The liquidator of the Company and the Relevant Officer of Rio Tinto plc shall then agree the calculations in such Certificates within 4 weeks of the date on which all such Certificates are produced. If the liquidator of the Company and the Relevant Officer of Rio Tinto plc are unable to agree to the calculations in the Certificates within such time, then the dispute shall be referred to an independent firm of accountants agreed by the liquidator of the Company with the Relevant Officer of Rio Tinto plc (or failing agreement within 7 days of the end of that 4 week period, appointed, on the application of either the Company or Rio Tinto plc, by the President for the time being of the Institute of Chartered Accountants in England). The firm so appointed shall act as experts and not as arbitrators and shall be instructed to make its determination within 4 weeks of its appointment. The costs of such firm are to be borne as such firm decides. Once the calculations in the Certificates have been agreed by the liquidator of the Company with the Relevant Officer of Rio Tinto plc or determined by the independent accountants, they shall be conclusive and binding. | ||
(xii) | If Rio Tinto plc goes into liquidation after the Company has gone into liquidation but before the liquidator of the Company has made a distribution under any of paragraphs (v) or (vi) then the Reference Date shall be the later of: |
(A) | the earliest date on which the liquidator of Rio Tinto plc is able to make a final distribution to creditors and members of Rio Tinto plc; or | ||
(B) | the earliest date on which the liquidator of the Company is able to make a final distribution to creditors and members of the Company; |
and the Relevant Officer of Rio Tinto plc shall be the liquidator of Rio Tinto plc and not the auditor of Rio Tinto plc. |
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144. | Indemnity of officers |
(1) | The Company shall indemnify each officer of the Company and each officer of each wholly owned subsidiary of the Company out of the assets of the Company to the relevant extent against any liability incurred by the officer in the conduct of the business of the Company or in the conduct of the business of such wholly owned subsidiary of the Company (as the case may be) or in the actual or purported execution or discharge of the duties of the officer. | ||
(2) | Where the Directors consider it appropriate, the Company may execute a documentary indemnity in any form in favour of any officer of the Company or any officer of any wholly owned subsidiary of the Company. | ||
(3) | To the extent permitted by law, the Company may: |
(a) | pay amounts by way of premium in respect of any contract effecting insurance on behalf or in respect of an officer or employee of any relevant company, including (without limitation) insurance against liability incurred by the officer or employee in the conduct of the business of the relevant company or in the actual or purported execution or discharge of the duties of the officer or employee; and | ||
(b) | bind itself in any contract or deed with any officer or employee of any relevant company to pay those amounts. |
(4) | Where the Directors consider it appropriate, the Company may: |
(a) | give a former Director access to certain papers, including documents provided or available to the Directors and other papers referred to in those documents; and | ||
(b) | bind itself in any contract with a Director or former Director to give the access. |
(5) | In this Rule: |
(a) | officer means: |
(i) | a director, secretary or officer, or | ||
(ii) | a person appointed as a trustee by, or acting as a trustee at the express request of, the Company or a wholly owned subsidiary of the Company, |
and includes a former officer. | |||
(b) | duties includes duties and powers arising by reason of, or otherwise in connection with the appointment or nomination of the person by the Company or any relevant company to any other corporation. | ||
(c) | liability means all costs, charges, losses, damages, expenses, penalties and liabilities of any kind including, in particular, legal costs incurred in defending any proceedings (whether criminal, civil, administrative or |
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judicial) or appearing before any court, tribunal, government authority or other body. | |||
(d) | to the relevant extent means: |
(i) | to the extent the Company is not precluded by law from doing so; | ||
(ii) | where the liability is incurred in the conduct of the business of another corporation or in the discharge of the duties of the officer in relation to another corporation, to the extent and for the amount that the officer is not entitled to be indemnified and is not actually indemnified out of the assets of that corporation; and | ||
(iii) | to the extent and for the amount that the officer is not otherwise entitled to be indemnified and is not actually indemnified by another person (including, but without limitation, a subsidiary or an insurer under any insurance policy). |
(e) | relevant company means the Company, any holding company of the Company, any body (whether or not incorporated) in which the Company or such holding company (or any predecessors of the Company or such holding company of the Company) has or had any interest (whether direct or indirect), any body that is in any way allied to or associated with the Company, and Rio Tinto plc and any of its subsidiaries. |
145. | Change of control | |
A. | The purpose of this Rule is to place restrictions upon any person (other than a Permitted Person as defined below) who is entitled to or interested in shares in the Company or Rio Tinto plc or both which would otherwise enable such person to cast on a poll (directly, or indirectly through the Special Voting Share and Ordinary Shares held by any member of the Rio Tinto plc Group) 20 per cent or more of the votes generally exercisable on a Joint Decision at general meetings of the Company. If the person is only entitled to or interested in shares of one of Rio Tinto plc or Rio Tinto Limited, the restrictions only apply if that person is able to cast on a poll 30 per cent or more of the votes generally exercisable at general meetings of that company (excluding any votes attaching to the Special Voting Share or the Rio Tinto plc Special Voting Share). | |
The restrictions include suspension of rights to attend and vote at general meetings, and suspension of the right to receive dividends and distributions. In certain circumstances the Board can compel divestment of the shares. | ||
B. | In this Rule: |
(i) | Accepting Shareholder means any person who has, in respect of the whole of that persons Entitlement to Ordinary Shares or Interest in Rio Tinto plc Ordinary Shares or both, accepted or given irrevocable undertakings to accept offers made under a takeover bid which complies with Chapter 6 of the Corporations Act or under a takeover offer which complies with the City Code on Takeovers and Mergers (or both); |
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(ii) | [deleted April 2009] | ||
(iii) | ADR Depositary means a custodian or depositary or that persons nominee, approved by the Directors, under contractual arrangements with the Company by which such person or nominee holds Ordinary Shares and such person or another person issues American Depositary Receipts evidencing rights in relation to those shares or a right to receive them; | ||
(iv) | concert parties means persons acting in concert within the meaning of the City Code on Takeovers and Mergers from time to time; | ||
(v) | Entitlement means, in respect of shares, the Relevant Interest of a person or the persons Associates in those shares; | ||
(vi) | Holder is as defined in paragraph (I) below; | ||
(vii) | Interest in relation to shares in Rio Tinto plc, means any interest in Rio Tinto plc Ordinary Shares within the meaning of Sections 820 to 825 of the Original Act (except that of a bare trustee), provided that: |
(a) | Section 820(4)(b) shall apply on the basis that the entitlement there referred to could arise under an agreement within the meaning of Sections 824(5) and (6); | ||
(b) | an interest in Rio Tinto plc Ordinary Shares shall be disregarded if it is held by a market maker acting in that capacity, provided that such Rio Tinto plc Ordinary Shares do not represent 10 per cent or more of the votes generally exerciseable at general meetings of Rio Tinto plc (excluding any votes attaching to the Rio Tinto plc Special Voting Share) and subject to the market maker satisfying the criteria and complying with the conditions and operating requirements referred to in paragraph (viiA) below; | ||
(c) | an interest in Rio Tinto plc Ordinary Shares shall be disregarded where: |
(I) | in pursuance of arrangements made with the operator of a relevant system: |
(aa) | securities of a particular aggregate value are on any day transferred by means of that system from a person ( A ) to another person ( B ); | ||
(bb) | the securities are of kinds and amounts determined by the operator-system; and | ||
(cc) | the securities, or securities of the same kinds and amounts, are on the following day transferred by means of the relevant system from B to A; and |
(II) | the securities comprise any Rio Tinto plc Ordinary Shares |
and for the purposes of this paragraph (c) any day which, in England and Wales, is a non-business day for the purposes of the Bills of Exchange Act 1882 of the United Kingdom is disregarded, and expressions which are |
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used in the Uncertificated Securities Regulations 2001 (United Kingdom) shall have the same meanings as in those Regulations; | |||
(d) | a person is not by virtue of Section 820(4)(b) of the Original Act to be taken to be interested in Rio Tinto plc Ordinary Shares by reason only that he has been appointed a proxy to vote at a specified meeting of Rio Tinto plc or of any class of its members and at any adjournment of that meeting, or has been appointed by a corporation to act as its representative at any meeting of Rio Tinto plc or of any class of its members; |
and Interested shall be construed accordingly. |
(viiA) | market maker means a market maker, as such term is defined in the United Kingdom Financial Services Authoritys Handbook of Rules and Guidance, who is in compliance with the conditions and operating requirements set out in Rule 5.1.4 of the DTRs; | ||
(viii) | the Original Act means the Companies Act 2006 of the United Kingdom as in force at the date of adoption of Article 64 of the Rio Tinto plc Articles and notwithstanding any repeal, modification or re-enactment thereof after that date (including for the avoidance of doubt, any amendment, replacement or repeal by regulations made by the Secretary of State pursuant to section 828 of that Act to the definition of shares in section 792 or to the provisions as to what is taken to be an interest in shares in section 820), and the DTRs means the Disclosure and Transparency Rules of the UK Listing Authority as amended from time to time. | ||
(ix) | Permitted Holding means: |
(a) | any Entitlement to Ordinary Shares, arising as a result of two or more persons becoming Associates, in relation to the acquisition of which an exemption or declaration under section 655A of the Corporations Act is in force, with the effect that the acquisition of such Entitlement would not breach section 606 of the Corporations Act; | ||
(b) | any Entitlement to shares in the Company or any Interest in Rio Tinto plc Ordinary Shares held solely by a person as a bare trustee or by a person who, if the incidents of that persons Entitlement or Interest were governed by the laws of Australia, would in the opinion of the Directors be regarded as a bare trustee in respect of that Entitlement or Interest; | ||
(c) | any Entitlement of a person to shares in the Company or any Interest of a person in any Rio Tinto plc Ordinary Shares which under arrangements approved by the Directors of the Company and directors of Rio Tinto plc respectively have been allotted or issued with a view to that person (or purchasers from that person) offering the same to the public within a period not exceeding three months from the date of the relevant allotment or issue; | ||
(d) | any Entitlement of a person to shares in the Company or any Interest of a person in any Rio Tinto plc Ordinary Shares which the Directors are satisfied is held by virtue only of that person being entitled to exercise or |
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control the exercise of 20% or more of the voting power at general meetings of another company which is a Permitted Person; and | |||
(e) | any Entitlement or Interest of a Permitted Person, other than RTL Shareholder SVC or RTP Shareholder SVC; |
(x) | Permitted Person means: |
(a) | any member of the Rio Tinto Limited Group; | ||
(b) | any member of the Rio Tinto plc Group; | ||
(c) | RTL Shareholder SVC; | ||
(d) | RTP Shareholder SVC; | ||
(e) | an ADR Depositary, acting in that capacity; | ||
(f) | The Depositary Trust Company or any successor and/or the nominee of either of them acting in the capacity of a clearing agency in respect of dealings in American Depositary Receipts; | ||
(g) | a Recognised Person; | ||
(h) | a trustee (acting in that capacity) of any employee incentive scheme of the Company or of Rio Tinto plc; | ||
(i) | any person (an Offeror) who has made an offer to acquire all the outstanding Rio Tinto plc Ordinary Shares (other than those already owned by the Offeror) which may, if the Offeror so decides, be conditional upon an offer which has been made by the Offeror or by a related entity (as defined in the Corporations Act) of the Offeror (on terms which satisfy each of sub-paragraphs (I), (II) and (III) of Article 64(B)(xii)(i) of the Rio Tinto plc Articles) to acquire all the outstanding Ordinary Shares (other than those already owned by the Offeror) becoming unconditional and shall: |
(I) | be unconditional when made or contain only such conditions as are mandatory under the City Code on Takeovers and Mergers; | ||
(II) | disclose the highest price or value of consideration given for Ordinary Shares by the Offeror or its Associates and for Rio Tinto plc Ordinary Shares by the Offeror and its concert parties since the beginning of the period commencing 12 months before the date on which the Offeror became a Relevant Person and include a cash offer (or an offer with a cash alternative) to acquire all the Rio Tinto plc Ordinary Shares (other than those already directly or indirectly owned by the Offeror) at a price per Rio Tinto plc Ordinary Share which (subject to paragraph (xviii)) is not less than the higher of: |
(aa) | the highest price or value of consideration paid or given for Ordinary Shares by the Offeror or its Associates since the beginning of the period commencing 12 months before the date on which the Offeror became a Relevant Person divided by the Equalisation Fraction as at the date of the |
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offer and converted into sterling. Such conversion shall be made at the closing mid-point spot sterling-Australian dollars exchange rate on the date on which the Offeror became a Relevant Person as published in the Financial Times; and | |||
(bb) | the highest price or value of consideration paid or given for Rio Tinto plc Ordinary Shares by the Offeror or its concert parties in sterling (or equivalent, converted into sterling by a method comparable to that set out in sub-paragraph (aa)) since the beginning of the period commencing 12 months before the date on which the Offeror or any of its Associates or concert parties became a Relevant Person, |
provided that if no such shares have been acquired by the Offeror or any of its Associates or concert parties during that period the price (subject to paragraph (xviii)) shall be not less than the higher of: |
(cc) | the weighted average sale price derived from the Australian Securities Exchange in respect of Ordinary Shares on the Business Day preceding the date on which the offer is announced divided by the Equalisation Ratio as at that Business Day and converted into sterling at the closing mid-point spot sterling-Australian dollar exchange rate as at such date as published in the Financial Times; and | ||
(dd) | the middle market quotation derived from the London Stock Exchange Daily Official List in respect of a Rio Tinto plc Ordinary Share on the dealing day preceding the date on which the offer is announced; and |
(III) | comply with the provisions of the City Code on Takeovers and Mergers as if it were an offer made under Rule 9 of that Code; |
provided that if the terms of any such offer would, at the time it would be required to be made, be illegal or contravene any applicable law or regulatory requirements (including the Corporations Act) then the offer shall be on such terms as may be necessary to comply with such applicable law or regulatory requirement but otherwise shall approximate as far as is possible the requirements set out in (I) to (III) above and provided further that references to the price paid for an Ordinary Share or a Rio Tinto plc Ordinary Share shall be deemed to include the price paid for an interest through an American Depositary Receipt representing such a share converted into sterling or Australian dollars as appropriate at the closing mid point exchange rate of the purchase currency and sterling or Australian dollars (as appropriate) on the date of acquisition of such interest obtained from the Financial Times (in the case of Rio Tinto plc |
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Ordinary Shares) or from the Australian Financial Review (in the case of Ordinary Shares); |
(j) | any person who: |
(I) | owns directly or indirectly Publicly-held Rio Tinto Limited Ordinary Shares which carry the right to cast more than 50 per cent of the total votes attaching to all Publicly-held Rio Tinto Limited Ordinary Shares capable of being cast on a poll at a General Meeting; and | ||
(II) | owns directly or indirectly Publicly-held Rio Tinto plc Ordinary Shares which carry the right to cast more than 50 per cent of the total votes attaching to all Publicly-held Rio Tinto plc Ordinary Shares capable of being cast on a poll at a general meeting of Rio Tinto plc, |
and has reached that level of ownership either by receiving acceptances under an offer to acquire all the outstanding Ordinary Shares and Rio Tinto plc Ordinary Shares (other than those already owned by that person) or as a result of a compromise or arrangement approved by the Court under Part 5.1 of the Corporations Act or a scheme of arrangement approved by the High Court of England or by any combination of these; |
(k) | any concert party or Associate of an Offeror; |
(xi) | Recognised Person means a clearing house or a nominee of a recognised clearing house or of a recognised investment exchange; | ||
(xii) | Relevant Holding means an Interest in Rio Tinto plc Ordinary Shares or an Entitlement to Ordinary Shares or both (disregarding any part of that Interest or Entitlement which is a Permitted Holding) which together would otherwise enable its holder to cast on a poll (either directly as a member of the Company or through any votes which may be cast by the holder of the Special Voting Share to reflect votes which such holder is entitled to cast at a general meeting of Rio Tinto plc in respect of Rio Tinto plc Ordinary Shares) 20 per cent or more of the total votes attaching to all share capital of the Company of all classes on a Joint Decision (assuming that all the Publicly-held Rio Tinto plc Ordinary Shares including those comprised in such Interest were voted on the equivalent resolution at the nearly contemporaneous general meeting of Rio Tinto plc and counted in calculating the votes attached to the Special Voting Share on such decision), AND IN ADDITION if the Interest or Entitlement is in one company only then: |
(a) | if it does not include any Interest in Rio Tinto plc Ordinary Shares, the Entitlement to Ordinary Shares or other shares of the Company (other than the Special Voting Share) carry the right on a poll to cast 30 per cent or more of the total votes attaching to all share capital of the Company of all classes (apart from the Special Voting Share) taken as a whole and capable of being cast on a poll at a general meeting of the Company; or | ||
(b) | if it does not include any Entitlement to Ordinary Shares, the Interest in Rio Tinto plc Ordinary Shares (other than the Rio Tinto plc Special Voting |
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Share) carry the right on a poll to cast 30 per cent or more of the total votes attaching to all share capital of Rio Tinto plc of all classes (apart from the Rio Tinto plc Special Voting Share) taken as a whole and capable of being cast at a general meeting of Rio Tinto plc; |
(xiii) | Relevant Interest means a relevant interest in respect of a share as that term is defined by the Corporations Act; | ||
(xiv) | Relevant Person means any person (whether or not identified) who has a Relevant Holding or any Excluded Rio Tinto plc Holder; | ||
(xv) | Relevant Shares means all the Ordinary Shares to which a Relevant Person or an Excluded Rio Tinto plc Holder has an Entitlement; | ||
(xvi) | Required Disposal means a disposal or disposals of such a number of Relevant Shares (or interests therein) as will cause a Relevant Person to cease to be a Relevant Person, not being a disposal to another Relevant Person (other than a Permitted Person) or a disposal which constitutes any other person (other than a Permitted Person) a Relevant Person; | ||
(xvii) | references to the Australian Financial Review include, if that newspaper ceases to be published or fails to publish the relevant information, any other daily newspaper circulating in Melbourne nominated by the Board which does publish the relevant information, and references to the Financial Times means the London Edition and includes, if that newspaper ceases to be published or fails to publish the relevant information, any other daily newspaper circulating in London nominated by the Board which does publish the relevant information; | ||
(xviii) | references in paragraphs (aa), (bb), (cc) and (dd) of paragraph (B)(x)(i)(II) to price or value of consideration mean such price or value: |
(a) | adjusted to reflect the effect of any share consolidation or subdivision, allotment of shares, rights issue, issue of options, issue of convertible securities or reduction of capital which occurred after that price or consideration was paid or given and before the offer to acquire all the Rio Tinto plc Ordinary Shares referred to in paragraph (B)(x)(i)(II) occurred; and | ||
(b) | adjusted to reflect the net amount of any dividend which had been declared or announced at the time the price or consideration was paid or given if the shares acquired were at that time trading cum-dividend and at the time of the offer the shares are trading ex-dividend or vice versa, |
and the certificate of the Auditor stating the appropriate amount of an adjustment required by (a) or (b) shall be conclusive. |
C. | [deleted April 2009] | |
D. | If, to the knowledge of the Directors, any person other than a Permitted Person is or becomes a Relevant Person (including, without limitation, by virtue of being deemed to be one), the Directors shall (except as provided otherwise by paragraph (E) or (G) below) give notice to that Relevant Person and to any other person who appears to the Directors to |
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have Entitlements to the Relevant Shares and, if different, to the registered holders of those shares. The notice shall: |
(i) | set out the restrictions referred to in paragraph (E) below; | ||
(ii) | state that the addressee of the notice is required to make a Required Disposal or procure that a Required Disposal is made by a time specified in the notice being such time as the Directors shall consider most appropriate not being less than 7 days nor more than 60 days after the date on which the notice is given to the addressee (the Specified Time) unless by that time either: |
(a) | the Relevant Person has become a Permitted Person; or | ||
(b) | the Directors have resolved in good faith that either the person stated in the notice to be a Relevant Person is not a Relevant Person or the addressee does not have an Entitlement to the shares which would otherwise have to be disposed of; and |
(iii) | set out such other requirements or restrictions as the Directors shall consider necessary to ensure that by the Specified Time there is no Relevant Person (other than a Permitted Person) in relation to the Relevant Shares concerned. |
If the Relevant Shares are held by an ADR Depositary, the notice shall also state that: |
(a) | a specified purchaser or purchasers (the Relevant Purchaser(s)) (excluding the ADR Depositary itself) or Holder or Holders (the Relevant Holder(s)), as the case may be, is or are believed or deemed to be Relevant Persons or is or are believed or deemed to be purchasers or Holders through which a Relevant Person or Relevant Persons has or have an Entitlement in either case as specified in the notice; and | ||
(b) | the Directors believe that each Relevant Purchaser or Relevant Holder or the Relevant Person or Relevant Persons believed or deemed to have an Entitlement through such Relevant Purchaser or Relevant Holder, as the case may be, is or are deemed to have an Entitlement in a specific number of Relevant Shares. |
The Directors may extend the period in which any such notice is required to be complied with by up to 30 days and may withdraw any such notice (whether before or after the expiration of the period referred to) if it appears to them that there is no Relevant Person in relation to the shares concerned. |
E. | A holder of a Relevant Share on whom a notice has been served in accordance with paragraph (D) above shall not in respect of that share be entitled, until such time as the Directors are satisfied that no Relevant Person has an Entitlement to that share or the notice has been withdrawn: |
(a) | to attend or vote at any general meeting of the Company or meeting of any class of shares of the Company, or to exercise any other right conferred by membership in relation to any such meeting (this restriction being in addition to the provisions of Rule 74(b)); | ||
(b) | to receive any dividend or other distribution which would otherwise be payable in respect of a Relevant Share, which shall be retained by the Company without any |
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liability to pay interest when the money or distribution is finally paid or given to the member; or | |||
(c) | to elect to receive shares in lieu of any dividend or distribution referred to in (b) above. |
If the requirements of any notice under paragraph (D) above have not been complied with by the Specified Time (or such later time as may be permitted pursuant to that paragraph) then the Directors shall take such action as is within their power to ensure that a Required Disposal is made as soon as is reasonably practicable and, for this purpose, they shall make such arrangements as they deem appropriate including, without limitation, appointing any person on behalf of the holder or holders of the Relevant Shares to execute any documents, to take such other action as that person may deem necessary or expedient and to receive and give good discharge for the purchase price. Brokerage, stamp duty and any other costs of the transfer shall be paid out of the sale proceeds. The net proceeds of any sale under this paragraph shall be paid to the shareholder who held the Relevant Shares sold under this paragraph provided that the shareholder has delivered to the Company such documents or information as may be reasonably required by the Directors. Upon the name of the purchaser being entered in the Register in purported exercise of the powers under this paragraph, the validity of the sale by way of a Required Disposal shall not be challenged by any person. The Directors may not authorise a Required Disposal of any Ordinary Shares held by an Accepting Shareholder during a period in which offers for both Ordinary Shares and Rio Tinto plc Voting Shares remain open for acceptance and are not required to give notice under paragraph (D) above in respect of the Ordinary Shares of such an Accepting Shareholder. |
F. | Without prejudice to the provisions of the Corporations Act, the Directors may assume without enquiry that a person is not a Relevant Person unless the information contained in the registers kept by the Company under the Corporations Act appear to the Directors to indicate to the contrary or the Directors have reason to believe otherwise, in which circumstances the Directors shall make reasonable enquiries to discover whether any person is a Relevant Person. | |
G. | The Directors shall not be obliged to give any notice required under this Rule to be given to any person if they do not know either that persons identity or address. The absence of such a notice in those circumstances and any accidental error in or failure to give any notice to any person to whom notice is required to be given under this Rule shall not prevent the implementation of, or invalidate, any procedure under this Rule. | |
H. | If any Director has reason to believe that a person (not being a Permitted Person) is a Relevant Person, the Director shall inform the other Directors. | |
I. | A person (a Holder) who has an Entitlement evidenced by an American Depositary Receipt shall be deemed for the purposes of this Rule to have an Entitlement to the number of shares in the Company in respect of which rights are evidenced by such Receipt and not (in the absence of any other reason why the Holder would be so treated) in the remainder of the shares in the Company held by the ADR Depositary. |
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J. | Where a Recognised Person has an Entitlement in that capacity under arrangements recognised by the Company for the purposes of this Rule any person who has rights in relation to shares in the Company in which such a Recognised Person has an Entitlement shall be deemed to have an Entitlement in the number of shares in the Company for which such a Recognised Person is or may become liable to account to that person and any Entitlement which (by virtue of being a tenant in common in relation to an interest in shares in the Company so held by such a Recognised Person) that person would otherwise be treated for the purposes of this Rule as having in a larger number of shares in the Company shall (in the absence of any other reason) be disregarded. | |
K. | This Rule shall apply notwithstanding any provision in any other of these Rules which is inconsistent with or contrary to it. | |
146. | Restricted securities |
(a) | If the Company at any time has on issue share capital classified by the Home Branch as restricted securities, the Company must refuse to acknowledge, deal with, accept or register any sale, assignment or transfer of those restricted securities which is or might be in breach of the Listing Rules or any escrow agreement entered into by the Company under the Listing Rules in relation to those restricted securities. | ||
(b) | If there is a breach of any escrow agreement entered into by the Company under the Listing Rules in relation to shares classified by the Home Branch as restricted securities, the holder of the shares in question ceases to be entitled to any dividends and to any voting rights in respect of those shares for so long as the breach subsists, despite any rights attached to those shares. | ||
(c) | The holders of shares which are classified by the Home Branch as restricted securities and which are subject to escrow restrictions at the commencement of the winding up of the Company rank on a return of capital behind all other shares in the Company. |
147. | Unmarketable parcels | |
147.1 | Application of this Rule | |
The provisions of this Rule 147 have effect notwithstanding any provision in this Constitution to the contrary. | ||
147.2 | Definitions | |
For the purposes of this Rule 147 the following definitions apply, unless the context requires otherwise: |
(a) | Divestment Notice has the meaning set out in Rule 147.3. | ||
(b) | Notified Member means a member who has been sent a Divestment Notice. | ||
(c) | Prescribed Member means a member who holds less than a Marketable Parcel of shares in the Company but does not include a Prescribed New Member. | ||
(d) | Prescribed New Member means a member who holds less than a Marketable Parcel of shares in the Company where: |
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(i) | that holding is a new holding created by the transfer of a parcel of shares that was less than a Marketable Parcel at the time a proper ASTC transfer was initiated or a paper based transfer was lodged; and | ||
(ii) | the transfer referred to in paragraph (i) occurred after the date on which this Rule came into effect. |
(e) | Specified Period has the meaning set out in Rule 147.3. | ||
(f) | The terms Marketable Parcel and Takeover have the same meaning as they are given in the Listing Rules and the terms Certificated Holding, CHESS Holding, Holding Adjustment and Issuer Sponsored Holding have the same meaning as they are given in the ASTC Settlement Rules. | ||
(g) | Where, under this Rule 147, powers are conferred on the Secretary, such powers may be exercised either by the Secretary or by any person nominated by the Secretary. |
147.3 | Service of a Divestment Notice |
(a) | If the Secretary determines that a member is a Prescribed Member or a Prescribed New Member, the Secretary may, by notice in writing (a Divestment Notice ), notify the member that the member is a Prescribed New Member or a Prescribed Member (as the case may be). | ||
(b) | A Divestment Notice must state that the Company intends to dispose of the Notified Members shares in accordance with this Rule 147 after the expiry of the time period specified in the Divestment Notice (the Specified Period ). The Specified Period must be: |
(i) | in the case of a Divestment Notice notifying the member that the member is a Prescribed Member at least six weeks from the date the Divestment Notice was sent; and | ||
(ii) | in the case of a Divestment Notice notifying the member that the member is a Prescribed New Member at least seven days from the date the Divestment Notice was sent. |
(c) | Subject to 147.3(d), each Notified Member is deemed irrevocably to have appointed the Company as the members agent to sell all of their shares to an arms length purchaser, following the end of the Specified Period in the relevant Divestment Notice, and to receive the sale proceeds on behalf of the member, though nothing in this Rule obliges the Company to sell those shares. For the purposes of such a sale, the Company may initiate a Holding Adjustment to move all shares held by a member from a CHESS Holding to an Issuer Sponsored Holding or a Certificated Holding or take any other action the Company considers necessary or desirable to effect the sale and transfer of the shares. | ||
(d) | Where a Prescribed Member gives written notice to the Company before the end of the Specified Period in the relevant Divestment Notice that the member desires its shareholding to be exempted from this Rule 147, the Company must not sell that shareholding as a result of that Divestment Notice. |
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(e) | The Secretary may, in respect of any sale of a members shares in the Company under this Rule 147: |
(i) | execute on behalf of such member an instrument of transfer of all of the members shares in the Company in such manner and form as the Secretary considers necessary and to deliver such share transfer to the purchaser; and | ||
(ii) | take any other action on behalf of any such member or the Company as the Secretary considers necessary to effect the sale and transfer of those shares. |
(f) | Notwithstanding any other provision of this Rule 147, none of the provisions of this Rule 147 shall apply in respect of any of the Equalisation Share, the Special Voting Share or the DLC Dividend Share. |
147.4 | Rights of purchaser |
(a) | A certificate under the hand of the Secretary to the effect that shares sold under this Rule 147 have been duly sold will discharge the purchaser from all liability in respect of the purchase of those shares. | ||
(b) | A purchaser of shares sold under this Rule 147 will, upon being entered in the Register as the holder of the shares, have title to the shares which is not affected by any irregularity or invalidity in the actions of the Company pursuant to this Rule 147 and will not be bound to see to the application of the purchase money or other consideration. |
147.5 | Sale proceeds to members |
(a) | Subject to paragraph 147.5(b), if: |
(i) | a members shares in the Company are sold by the Company on the members behalf under this Rule 147; and | ||
(ii) | any certificate relating to the shares the subject of the sale has been received by the Company (or the Company is satisfied that the certificate has been lost or destroyed), |
the Company must, within 60 days after completion of the sale, cause the proceeds of sale to be sent to the member entitled to those proceeds (or, in the case of joint holders, to that one whose name stands first in the Register in respect of the joint holding). Payment may be made in any manner and by means as determined by the Board and is at the risk of the former member. | |||
(b) | In the case of a sale of Prescribed New Members shares in accordance with this Rule 147, the Company is entitled to deduct (and keep) from the proceeds of sale, the costs of the sale as determined by the Company. In any other case, the Company or a purchaser must bear the costs of sale. The costs of sale include all stamp duty, brokerage and government taxes and charges (except for tax on income or capital gains of the member) payable by the transferor. |
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147.6 | Members remedy | |
The remedy of any member to whom this Rule 147 applies in respect of the sale of that members shares is hereby expressly limited to a right of action in damages against the Company to the exclusion of any other right, remedy or relief against any other person. | ||
147.7 | Suspension of rights | |
Unless the Directors determine otherwise, where a Divestment Notice is sent to a Prescribed New Member in accordance with Rule 147.3, then, notwithstanding any other provision in this Constitution, the rights to receive dividends and to vote attaching to the shares of the member the subject of the Divestment Notice are suspended until the shares are transferred to a new holder or the member ceases to be a Prescribed New Member. Any dividends that would, but for this Rule 147.7, have been paid to a member must be held by the Company and paid to the member within 60 days after the later of the date the shares of the member are transferred or the date the member ceases to be a Prescribed New Member. | ||
147.8 | Determination binding | |
Any determination made by or on behalf of the Company (including any determination made by the Secretary) under this Rule 147, shall be binding on, and conclusive against (in the absence of a manifest error), a member. | ||
147.9 | Companys power to sell | |
Notwithstanding anything else: |
(a) | subject to paragraph 147.9(b), the provisions of this Rule 147 may be invoked in respect of Prescribed Members only once in any 12 month period; and | ||
(b) | from the date on which there is publicly announced a Takeover in respect of the Companys shares until the close of the offers under that Takeover, the Companys powers under this Rule 147 to sell the shares of a Prescribed Member cease to have any force or effect. |
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(1) | Rio Tinto Limited (ACN 004 458 404), formerly CRA Limited 1 , a company incorporated in Victoria, Australia whose registered office is at Level 33, 120 Collins Street, Melbourne, 3000, Victoria, Australia ( RTL ); and | |
(2) | Rio Tinto plc , formerly The RTZ Corporation plc 1 , a company incorporated in England with registered number 719885 whose registered office is at 2 Eastbourne Terrace, London W2 6LG, England ( RTP ). |
(A) | Following announcements made on 9 October 1995, RTL and RTP entered into an Implementation Agreement on 3 November 1995 pursuant to which RTL and RTP have agreed to do certain acts and things to implement the DLC Merger of RTL and RTP. | |
(B) | RTL Shareholder SVC has agreed to exercise the voting rights attached to the RTP Special Voting Share in accordance with the RTL Shareholder Voting Agreement and RTP Shareholder SVC and RTAH have agreed that RTAH shall procure that Tinto Holdings Australia Pty Limited shall vote any RTL Ordinary Shares it holds and that RTP Shareholder SVC shall vote the RTL Special Voting Share in accordance with the RTP Shareholder Voting Agreement. | |
(C) | RTL and RTP wish to agree upon the terms of the ongoing relationship between them following the DLC Merger, including the implementation of the principles relating to distributions to be made by RTL and RTP in accordance with Schedules 1 and 2 to this Agreement. |
1 | The RTZ Corporation PLC changed its name to Rio Tinto plc and CRA Limited changed its name to Rio Tinto Limited in each case with effect from 2 June 1997. |
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2
3
4
5
6
5.1.1 | If either RTL or RTP proposes to take any of the following actions: |
(a) | to offer to the holders of its existing Ordinary Shares generally shares or other securities for subscription or purchase: |
(i) | by way of rights (otherwise than by Matching Offers), where the proposed offer (when aggregated with (A) any previous offers by either company of shares or other securities for cash by way of rights or otherwise, but not under Matching Offers, (B) any sales, other than intra RTP Group sales, by a member of the RTP Group of RTL Ordinary Shares, and (C) any sales, other than intra RTL Group sales, by a member of the RTL Group of RTP Ordinary Shares, in each case in the relevant period) exceeds the then most Limiting Restriction that for the time being would be applicable were shares or other securities of the relevant description proposed to be offered in fact offered for cash otherwise than pro-rata by way of rights to existing shareholders of the relevant class either by RTL or by RTP; or | ||
(ii) | otherwise than by way of rights, at below Market Value; or |
(b) | to do anything, other than actions listed in Clause 5.1.2, 5.1.3 or 5.1.4, which the Board of RTL and the Board of RTP agree (either in a particular case or generally) should be treated as a Class Rights Action under this Clause 5.1.1, | ||
each of them agrees with the other that it shall only take such action after it has been approved by: |
(i) | the consent in writing of the holder of the Special Voting Share in the company proposing the action, which consent shall only be given following the passing of an ordinary resolution approving the action by the holders of Publicly-held Shares of the other company; and | ||
(ii) | such ordinary or special resolutions (if any) as are required by Applicable Regulation of the company proposing to take such action on which only holders of Publicly-held Shares in that company have voted. |
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(a) | a restriction applicable to RTL shall be treated as also applicable to RTP (converting the restrictions, expressed in terms of a number of RTL shares, into a number of RTP shares by application of the Equalisation Ratio), and vice versa in relation to a restriction applicable to RTP; | ||
(b) | a restriction expressed in terms of a nominal amount of RTPs equity share capital shall be treated as if it related to the number of RTP Ordinary Shares represented by that nominal amount and then converted into a number of RTL Ordinary Shares by application of the Equalisation Ratio and any restriction in relation to RTL shall be similarly treated; | ||
(c) | a restriction (when expressed as a number of RTL Ordinary Shares or RTP Ordinary Shares) that, under Applicable Regulation, has been derived by application of a percentage to a number or nominal amount of RTL Ordinary Shares and/or number or nominal amount of RTP Ordinary Shares rather than to the number of the Aggregate Publicly-held Ordinary Shares (taking into account the application of the Equalisation Ratio as described in paragraphs (a) and (b) above) shall be adjusted to the number that would have been derived from the application of such percentage to the number of the Aggregate Publicly-held Ordinary Shares (after so taking into account the application of the Equalisation Ratio); and | ||
(d) | any restriction under Applicable Regulation which comes into force in relation to either RTL or RTP after the date hereof which does not fall within (a), (b) or (c) above shall be applied to the Aggregate Publicly-held Ordinary Shares in the way in which the Board of RTL and the Board of RTP agree best reflects the rationale underlying paragraphs (a), (b) and (c) above, |
5.1.2 | If either RTL or RTP proposes to take any of the following actions: |
(a) | to reduce or redeem its own Ordinary Share capital by way of a capital repayment to the holders of its Ordinary Shares or a cancellation of unpaid Ordinary Share capital; | ||
(b) | to purchase its own Ordinary Shares (except for such a purchase at, around or below prevailing market prices for those shares where the purchase occurs in accordance with Applicable Regulation); 2 | ||
(c) | to go into voluntary liquidation; | ||
(d) | to adjust the Equalisation Ratio otherwise than in accordance with paragraph 5 of Schedule 2; |
2 | At the Annual General Meetings of RTP and RTL held on 13 May and 27 May 1998 respectively special resolutions were passed providing that any future purchases of shares in either company by itself and any purchases of shares in RTP by RTL (or any of its subsidiaries) will require no future renewal of shareholder approval (for the purposes of the Sharing Agreement and the Articles of Association of RTP and RTL) except to the extent required by relevant UK or Australian law and Stock Exchange Rules and provided that such purchases are made at or around the prevailing market price. In 2005 the wording was further extended to cover purchases at below market price. |
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(e) | to amend the terms of, or terminate, this Agreement, the RTL Shareholder Voting Agreement or the RTP Shareholder Voting Agreement other than, in the case of the RTL Shareholder Voting Agreement or the RTP Shareholder Voting Agreement an amendment to conform such agreement with the terms of this Agreement or, in any case, by way of formal or technical amendment which is not materially prejudicial to the interests of the shareholders of either party or is necessary to correct any inconsistency or manifest error or is by way of an amendment agreed between the parties pursuant to Clause 17.6 or the equivalent provision of any other such document; | ||
(f) | to do anything, other than actions listed in Clause 5.1.3 or 5.1.4, which the Board of RTL and the Board of RTP agree (either in a particular case or generally) should be treated as a Class Rights Action under this Clause 5.1.2 |
1. | the consent in writing of the holder of the Special Voting Share in the company proposing the action, which consent shall only be given following the passing of a special resolution approving the action by the holders of Publicly-held Shares of the other company; and | ||
2. | a special resolution of the holders of Publicly-held Shares in the company proposing the action. |
5.1.3 | If it is proposed to amend, remove or alter the effect of (which for the avoidance of doubt shall be taken to include the ratification of any breach of) any RTP Entrenched Provision or to amend, remove or alter the effect of any other provision of the RTP Memorandum and Articles which amendment, removal or alteration the Board of RTL and the Board of RTP agree should be treated as subject to this Clause 5.1.3, then such action shall require approval by a special resolution of the shareholders of RTP (on which no member of the RTL Group has cast a vote or on which any votes cast by a member of the RTL Group have been disregarded) on which, if the proposed amendment, removal or alteration has not, by the time of the closing of the poll on such resolution, been approved by a special resolution of the holders of Publicly-held RTL Ordinary Shares, the voting rights of the RTP Special Voting Share shall be increased to such extent as is necessary to defeat the resolution (and in that event the holder of the RTP Special Voting Share shall be bound to vote such Share to defeat the resolution). The holder of the RTP Special Voting Share shall otherwise not be entitled to vote on such a resolution. | ||
5.1.4 | If it is proposed to amend, remove or alter the effect of (which for the avoidance of doubt shall be taken to include the ratification of any breach of) any RTL Entrenched Provision or to amend, remove or alter the effect of any other provision of the RTL Memorandum and Articles which amendment, removal or alteration the Board of RTL and the Board of RTP agree should be treated as subject to this Clause 5.1.4, then such action shall require: |
(a) | the consent in writing of the holder of the RTL Special Voting Share (which shall be given if the proposed amendment, removal or alteration has been |
9
approved by a special resolution of the holders of Publicly-held RTP Ordinary Shares, and otherwise shall be withheld); and |
(b) | approval by a special resolution of the shareholders of RTL (on which no member of the RTP Group has cast a vote or on which any votes cast by a member of the RTP Group have been disregarded) on which, if the proposed amendment, removal or alteration has not, by the time of the closing of the poll on such resolution, been approved by a special resolution of the holders of Publicly-held RTP Ordinary Shares, the voting rights of the RTL Special Voting Share shall be increased to such extent as is necessary to defeat the resolution (and in that event the holder of the RTL Special Voting Share shall be bound to vote such share to defeat the resolution). The holder of the RTL Special Voting Share shall otherwise not be entitled to vote on such a resolution. |
(a) | the appointment or removal of a director of RTL and/or RTP; | ||
(b) | the receipt or adoption of the annual accounts of RTL and/or RTP (if shareholders are to be asked to vote on the receipt or adoption of such accounts); | ||
(c) | a change of name by RTL and/or RTP; | ||
(d) | any proposed acquisition or disposal and any proposed transaction with a substantial shareholder, director or other related party which (in any case) is required under Applicable Regulation to be authorised by shareholders; | ||
(e) | the appointment or removal of the auditors of RTL and/or RTP; | ||
(f) | the creation of a new class of shares (or securities convertible into, exchangeable for or granting rights to subscribe for or purchase shares of a new class) in RTL or RTP; | ||
(g) | a change of the corporate status or reregistration of RTL or RTP; | ||
(h) | a matter referred to in Clause 9.2; and |
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(i) | any other matter which both the Board of RTL and the Board of RTP decide (either in a particular case or generally) should be decided upon by Joint Decision. |
6.4.1 | RTL agrees with RTP that any poll on which the RTL Special Voting Share is or may be entitled to vote shall (as regards the RTL Special Voting Share and any RTL Ordinary Shares held by any member of the RTP Group) be kept open for such time as to allow a general meeting of RTP to be held and for the votes attaching to any RTL Ordinary Shares held by any member of the RTP Group and the RTL Special Voting Share to be calculated and cast on such poll, although such poll may be closed earlier in respect of shares of other classes and/or RTL Ordinary Shares held by persons other than any member of the RTP Group. | ||
6.4.2 | RTP agrees with RTL that any poll on which the RTP Special Voting Share is entitled to vote shall (as regards the RTP Special Voting Share) be kept open for such time as to allow a general meeting of RTL to be held and for the votes attaching to the RTP Special Voting Share to be cast on such poll, although such poll may be closed earlier in respect of shares of other classes. |
(a) | the Board of RTL and the Board of RTP may by agreement decide to seek the approval of such majority of the shareholders (or any class of shareholders) of either or both of RTL and RTP on any matter which would not otherwise require such an approval (or such a high approval threshold); and | ||
(b) | on any matter which by Applicable Regulation or by virtue of the provisions of the RTL Memorandum and Articles or the RTP Memorandum and Articles requires approval of the shareholders of either or both of RTL and RTP (apart from those matters for which express provision is made in this Agreement), the Board of RTL and the Board of RTP may by agreement decide that such matter shall be deemed to be a Class Rights Action requiring approval in accordance with Clause 5.1.1 or |
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(a) | to obtain a waiver of any relevant obligation owed to a third party to the extent that such obligation would prevent disclosure to the other of any information; or | ||
(b) | to obtain the third partys acceptance that members of the RTL Group or members of the RTP Group, as the case may be, are to be treated as permitted recipients under the terms of the relevant confidentiality agreement. |
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(a) | so far as may be permitted by law, to adopt the same accounting policies and apply the same accounting practices; | ||
(b) | to ensure that each of their Financial Periods ends on the same date; and | ||
(c) | unless and until the shareholders decide otherwise by Joint Decision, that each of their auditors shall be part of the same international accounting firm. |
11.1 | On the termination of this Agreement howsoever arising (otherwise than on the final winding up of RTL or RTP), each party will instruct a merchant bank of international repute to certify, within 6 weeks after being instructed to do so, the value of the net assets of such party as at the date of termination, and within a further 4 weeks thereafter to approve the value of the net assets of the other party as so certified. The Board of RTL and the Board of RTP shall ensure that the same principles of valuation are adopted in respect of the valuation of each company by such merchant banks. If within such 4 week period such merchant banks are unable to agree the value of the net assets of either or both parties, then the dispute shall be referred to a third merchant bank of international repute (which shall act as expert and not as arbitrator) appointed by agreement between the parties, or failing such agreement within 7 days of the end of that 4 week period by the President for the time being of the Law Society in England and Wales, and such third merchant bank will be instructed by the parties to finish its determination within a further 4 weeks of being appointed (or such longer period as the parties may agree). The agreement of the merchant banks appointed by the parties, or as the case may be the decision of the third merchant bank, shall be final and binding on the parties. | |
11.2 | If the ratio of the values determined in accordance with Clause 11.1 (applying the Liquidation Exchange Rate or such other rate as such merchant bank or banks shall determine or agree) of the net assets per Publicly-held RTL Ordinary Share to the net assets per Publicly-held RTP Ordinary Share does not equal the Equalisation Ratio at the date of termination of this Agreement, then a payment will be made by one party to the other of such amount as will result in that ratio after such payment (and after making provision for any tax in respect of the receipt or making of such payment and after taking account of any offsetting tax credits or losses having regard to the proposed method of making the payment) being equal to the Equalisation Ratio at such date. | |
11.3 | Termination of this Agreement shall be without prejudice to the rights and obligations of the parties under this Clause 11. | |
11.4 | The costs of any third merchant bank appointed pursuant to Clause 11.1 are to be borne as it decides. |
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(a) | sell, dispose, purchase or otherwise deal in shares or other equity securities of the other party; or | ||
(b) | take any action which will result in a change to the number of shares or other equity securities of the other party held by the first partys Group, |
(a) | any sale or disposal by either party to its Subsidiary or by a Subsidiary of either party to that party or to another Subsidiary of that party, to any disposal permitted |
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(b) | taking up all or any part of an entitlement on a rights issue by the other party, receiving any bonus issue by the other party or taking up shares under a dividend re-investment plan of the other party; and | ||
(c) | the purchase by either party and/or any of its Subsidiaries of any Ordinary Shares in the other party which would have been permitted under this Agreement if such purchase had been made by the other party itself. |
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to RTL:
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Level 33 | ||
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120 Collins Street | ||
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Melbourne 3000 | ||
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Victoria, Australia | ||
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Tel: (613) 9283 3333 | ||
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Fax: (613) 9283 3707 | ||
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Attention: The Company Secretary | ||
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to RTP:
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2 Eastbourne Terrace | ||
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London W2 6LG | ||
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England | ||
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Tel: (44) (0) 20 7781 2000 | ||
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Fax: (44) (0) 20 7781 1800 | ||
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Attention: The Company Secretary |
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} | |||
THE COMMON SEAL of RIO TINTO
LIMITED
(ACN 004 458 404 was hereunto affixed in the presence of: |
/s/ Guy Elliot
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/s/ Ben Mathews
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Leon A Davis
Director |
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IAN LESLIE FALCONER
Secretary |
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} | |||
SIGNED by Guy Elliot for and on behalf
of RIO TINTO PLC in the presence of: |
/s/ Guy Elliot
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PDS KING
Solicitor |
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1 | Dividends | |
1.1 | Except in relation to dividends in respect of 1995 and except in the circumstances set out in paragraphs 3.3 and 3.4 of Schedule 2, dividends and other distributions will be paid or made on the Ordinary Shares of RTL and RTP on the basis that the ratio of the Net Dividend Amount on one RTL Ordinary Share, to the Net Dividend Amount on one RTP Ordinary Share converted using the Applicable Exchange Rate, will be the Equalisation Ratio or as close to the Equalisation Ratio as is reasonably practicable. In this regard, a Net Dividend Amount may be rounded provided the Net Dividend Amount as rounded is within a 2% tolerance of the exact Net Dividend Amount that would result from the ratio of the Net Dividend Amount on one RTL Ordinary Share to the Net Dividend Amount on one RTP Ordinary Share converted using the Applicable Exchange Rate being exactly equal to the Equalisation Ratio. For the avoidance of any doubt and by way of example using a notional exchange rate of A$2:£1 and an Equalisation Ratio of 1:1 (and, with the exception of (g) below, under Applicable Regulations as in force at the date of this Agreement), it is agreed that: |
(a) | where RTP pays a dividend of 15 pence per share, whether this is a dividend in respect of which advance corporation tax of 3.75 pence is due under the Income and Corporation Taxes Act 1988 of the United Kingdom (ICTA) or the dividend is a foreign income dividend, as defined in ICTA or a combination of the two, then the Net Dividend Amount is 15 pence per share; and | ||
(b) | where RTL pays a franked dividend of 30 cents per share carrying under Australian law an Australian Franking Credit of 16.875 cents per share, then the Net Dividend Amount is 30 cents per share; or | ||
(c) | where RTL pays an unfranked dividend of 30 cents per share carrying no Australian Franking Credit, then the Net Dividend Amount is 30 cents per share; or | ||
(d) | where RTL pays an unfranked dividend of 30 cents per share to a non-resident and dividend withholding tax is deducted at 15 per cent (that is, 4.5 cents is deducted from the 30 cents so that the shareholder receives a cash amount of 25.5 cents per share), then the Net Dividend Amount is 30 cents per share; or | ||
(e) | where RTL pays an unfranked dividend of 30 cents per share to a non-resident which is exempt from dividend withholding tax, because the foreign dividend declaration amount in respect of the dividend is 30 cents per share under Section 128TC of the Income Tax Assessment Act, then the Net Dividend Amount is 30 cents per share; or | ||
(f) | where RTL pays a dividend (franked or unfranked) of 30 cents per share to another Australian company which is eligible for a rebate of tax under Section 46 of the Income Tax Assessment Act, then the Net Dividend Amount is 30 cents per share; or | ||
(g) | where RTL pays a dividend to an Australian resident of 30 cents per share and, because of a change in Australian law subsequent to the date of this Agreement, the dividend does not carry any Australian Franking Credit but RTL is required by |
20
law to withhold 10 per cent of the amount of the dividend (so that the shareholder receives a cash amount of 27 cents per share) then, whether or not the shareholder is entitled to recover or obtain credit for the amount withheld, the Net Dividend Amount is 30 cents per share. |
1.2 | If either party (the first party ) does not have sufficient distributable reserves to pay or make any dividend or other distribution as resolved by its directors, the other party (to the extent that it has sufficient distributable reserves after making allowance for the dividend or other distribution to be made to its own shareholders and after making provision for any tax in respect of the making of such payment or distribution (taking into account any offsetting tax credits, losses or deductions)) will make a payment to the first party or a distribution on its Equalisation Share (if it has been issued and if its Board so decides), so far as it is practicable to do so, in order to ensure that the first partys distributable reserves are sufficient to pay or make such dividend or other distribution (and account for any tax payable, after taking into account any offsetting tax credits, losses or deductions with respect to the receipt of the payment or distribution or the payment of such dividend or the making of such other distribution) as will satisfy the provisions of paragraph 1.1. | |
2 | Distributions of Capital | |
On the bases and assumptions and subject to the exceptions set out or referred to in Schedule 2, distributions of capital by each party will be made on the principle that the ratio of the interests of the holders of Publicly-held RTL Ordinary Shares on a per share basis in the aggregate underlying capital of RTL and RTP taken as a whole (the Aggregate Capital) to the interests of the holders of the Publicly-held RTP Ordinary Shares on a per share basis in the Aggregate Capital will equal the Equalisation Ratio. | ||
3 | Purchases of Ordinary Shares | |
For the avoidance of doubt, but without prejudice to Clauses 5 and 15 of this Agreement, nothing in this Agreement shall operate: |
(a) | to require that any purchase by either party (the first party) of Ordinary Shares or other shares in itself shall be accompanied by or imply any obligation to make a purchase of Ordinary Shares or other shares in the other party either by the first party or by the other party or any of its Subsidiaries; | ||
(b) | to require that any purchase by either party (the first party) and/or any of its Subsidiaries of Ordinary Shares or other shares in the other party shall be accompanied by or imply any obligation to make a purchase of Ordinary Shares or other shares in the first party by the first party or by the other party or any of its Subsidiaries; | ||
(c) | to restrict in any way the purchase by either party or any of its Subsidiaries of Ordinary Shares or other shares in itself or in the other party |
and no purchase made in accordance with this paragraph 3 at, around or below prevailing market prices for the shares being purchased shall require any adjustment to the |
21
Equalisation Ratio providing that the price paid shall not exceed the maximum from time to time specified by Applicable Regulation. 3 |
3 | At the Annual General Meetings of RTP and RTL held on 13 May and 27 May 1998 respectively special resolutions were passed providing that any future purchases of shares in either company by itself and any purchases of shares in RTP by RTL (or any of its subsidiaries) will require no future renewal of shareholder approval (for the purposes of the Sharing Agreement and the Articles of Association of RTP and RTL) except to the extent required by relevant UK or Australian law and Stock Exchange Rules and provided that such purchases are made at or around the prevailing market price. In 2005 this was further extended to cover purchases at below market price. |
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1 | General | |
The parties will keep under review (and amend, or propose to amend, where necessary) the detailed arrangements for equalisation embodied in this Schedule 2 and the RTL Memorandum and Articles and the RTP Memorandum and Articles with a view to ensuring that such arrangements work in conformity with the principles stated in Schedule 1. | ||
2 | Timing of Distributions | |
The parties agree: | ||
2.1 | that the Boards of RTL and RTP shall resolve to pay dividends or make other distributions at Board meetings, summoned so that they are held as close in time to each other as is practicable; | |
2.2 | to co-operate with a view to announcing their dividends and any other distributions, as far as practicable, simultaneously; and | |
2.3 | to co-operate so far as practicable in co-ordinating the timing of all other aspects of dividend payment or the making of other distributions. | |
3 | Equalisation of Net Distributions | |
The parties agree to procure that their respective Boards observe the following provisions: | ||
3.1 | In relation to each proposed dividend payment or other distribution the Board of RTL and the Board of RTP shall agree at the Board meetings referred to in paragraph 2.1 the Net Dividend Amount in respect of the dividends or other distributions to be paid or made by them respectively. | |
3.2 | Subject (in the case of dividends) to paragraphs 3.3 and 3.4, the Board of RTL and the Board of RTP shall resolve to pay dividends or make distributions of such an amount that, in relation to any proposed dividend payment or the making of any distribution, the ratio of the Net Dividend Amount in respect of one RTL Ordinary Share to the Net Dividend Amount in respect of one RTP Ordinary Share, calculated using the Applicable Exchange Rate, is the Equalisation Ratio. | |
3.3 | Notwithstanding paragraph 3.2, either the Board of RTL or the Board of RTP may, after consulting the other Board, resolve to pay a dividend which is lower than the amount that would be implied by the Equalisation Ratio if it considers that payment of a dividend by RTL or RTP, as appropriate, according to the Equalisation Ratio would result in the payment of a dividend which it would be contrary to Applicable Regulation to pay. | |
3.4 | In addition, RTL and RTP acknowledge that, in relation to any proposed dividend payment, the amounts resolved to be paid by the Board of RTL or the Board of RTP may not reflect the Equalisation Ratio where, following the reduction by one party of its dividend payment to shareholders in accordance with paragraph 3.3, subsequent compensatory payments are to be made to the relevant shareholders in respect of the relevant shares as contemplated in paragraph 3.6. |
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3.5 | Where, for any of the reasons stated in paragraphs 3.3 or 3.4, either the Board of RTL or the Board of RTP decides not to pay a dividend according to the Equalisation Ratio, RTL and RTP shall make available to their shareholders, together with and in the same manner as the announcement of the dividend, a statement explaining why dividends have been or will be paid which are not in accordance with the Equalisation Ratio and the implications of that fact for future dividends (in so far as they are known). | |
3.6 | RTL and RTP agree that: |
3.6.1 | Where, in accordance with paragraph 3.3, the Board of RTL or the Board of RTP has resolved to pay a dividend lower than the amount that would be implied by the Equalisation Ratio, any future compensatory dividends may be paid at the same time as routine dividend payments by RTL and RTP. | ||
3.6.2 | In the following circumstances, the following reserves shall be established: |
(a) | Inability to equalise in whole or in part | ||
If the whole or any part of the amount that would otherwise be payable to one party in accordance with paragraph 1.2 of Schedule 1 or distributable in accordance with that paragraph on the RTL Equalisation Share or the RTP Equalisation Share held by the party entitled to the relevant dividend payment (in either case the affected party) cannot be paid for any reason, then an amount equal to the difference between (i) the amount which should have been paid in accordance with paragraph 1.2 of Schedule 1 and (ii) the amount actually paid shall be credited to a separate reserve in the books of the other party (in sterling if the other party is RTP or in Australian dollars if the other party is RTL) and shall be preserved by such party so as to be available for payment to the affected party when circumstances permit such payment to be made and RTL and RTP shall agree arrangements to protect their respective shareholders against significant prejudice caused by currency fluctuations affecting the value of the separate reserve measured in terms of the currency in which payment of the compensatory payment or dividend will be made or paid. This reserve will be recorded in the books of the relevant company as a reserve for the benefit of the holder of the Equalisation Share (if it has been issued) and shall otherwise be recorded as a debt due to the party entitled to the payment under paragraph 1.2 of Schedule 1; | |||
(b) | Cap on own distributions notwithstanding equalisation | ||
If the whole or any part of the relevant amount payable in accordance with paragraph 1.2 of Schedule 1 or distributable in accordance with that paragraph on either the RTP Equalisation Share or the RTL Equalisation Share to the affected party is paid or distributed notwithstanding the fact that the affected party (or if the affected party is not RTP or RTL, whichever of RTP or RTL is the ultimate parent of the affected party) will (for any of the reasons specified in sub-paragraph (c) below) pay a lesser Net Dividend Amount to its shareholders than the amount which will be paid by the other party (taking into account the Equalisation Ratio), the affected party (or if the affected party is not RTP or RTL, whichever of RTP or RTL is the ultimate parent of the affected party) shall, for the benefit of the holders from time to time of its Ordinary Shares (the Reserve Shares) in issue at |
24
the time that the inability to pay occurs, establish a reserve in its own books of the amount so received which it is unable to distribute to its shareholders (which, in the case of RTL, will be in Australian dollars and, in the case of RTP, will be in sterling); and | |||
(c) | Cap on own distributions when no equalisation required | ||
A reserve shall be established for the benefit of the holders of the Reserve Shares of either party in the books of that party representing any amounts which, although available to that party (out of the accumulated distributable reserves of that party), are by reason of Applicable Regulation not permitted to be paid to the holders of Reserve Shares of that party and which should have been paid to the holders of Reserve Shares of that party in order to satisfy the requirements of paragraph 1.2 of Schedule 1. |
3.6.3 | The reserves established pursuant to paragraph 3.6.2 shall be: |
(a) | reduced proportionately to any decrease in the issued share capital of the affected party (or if the affected party is not RTP or RTL, whichever of RTP or RTL is the ultimate parent of the affected party); and | ||
(b) | adjusted to compensate for changes in the taxation regime applicable to the affected party or the party establishing the relevant reserve in either case under paragraph 3.6.2(a) so as to ensure that the same net amount is received by the affected party which would have been received had the circumstances in paragraph 3.3 not arisen. |
3.6.4 | There shall be added to the reserves established pursuant to paragraph 3.6.2 such amount of notional interest or other compensation to reflect the delay in receipt as RTL and RTP may agree. | ||
3.6.5 | Any amounts standing to the credit of any reserve established pursuant to paragraph 3.6.2 shall be paid to the persons entitled to them as soon as Applicable Regulation so permits. |
3.7 | For the purposes of Article 3(B) of the RTP Memorandum and Articles, Article 8 of the RTL Memorandum and Articles and paragraph 1.2 of Schedule 1 the dividends to be paid or distributions made to shareholders and the payments to be made under paragraph 1.2 of Schedule 1 or distributions to be made on the RTL Equalisation Share or on the RTP Equalisation Share under that paragraph shall be calculated ignoring the possibility of any requirement or decision to pay a different amount by reason of any of the circumstances described in paragraph 3.3. | |
4 | Capital | |
4.1 | Liquidation of RTP | |
The parties agree that, if RTP shall go into liquidation whether compulsory or voluntary and whether or not proceedings have been commenced for the liquidation of RTL, then, unless the relevant party has issued an Equalisation Share and pursuant to the terms of issue thereof is required or elects to make a distribution on its Equalisation Share of an equivalent amount, a payment (the Equalisation Payment) shall be made by RTL to RTP or, as the case may be, by RTP to RTL if either party would have surplus assets available |
25
for distribution to the holders of its Ordinary Shares after the payment to all creditors and holders of prior ranking classes of share of the amounts due to them and the ratio of the surplus (if any) attributable to each Publicly-held RTL Ordinary Share to the surplus (if any) attributable to each Publicly-held RTP Ordinary Share would otherwise not equal the Equalisation Ratio. The amount of the Equalisation Payment shall be calculated as set out in paragraphs 4.1.1 to 4.1.10. In making such calculation a reserve shall be made for the following amounts due in respect of shares in or reserves of the relevant party, so that the Equalisation Payment shall not be made by the party from which it would otherwise be due unless after making such payment there will remain available to such party sufficient funds to pay the following amounts due on a return of assets on a liquidation: |
I. | In the case of RTP: |
(a) | in respect of any statutory entitlements ranking ahead of the entitlements of the shareholders on a liquidation of RTP, the amounts due in accordance with the relevant statute; | ||
(b) | to the holders of the Preference Shares (as defined in the RTP Memorandum and Articles) and to the holders of all other classes of share (apart from those listed below) having rights to participate on a return of capital in priority to the RTP Ordinary Shares, the amount payable on a return of capital on such shares; | ||
(c) | to the holder of the RTP Special Voting Share, the nominal amount paid up on such Share; | ||
(d) | to: |
(i) | the holder of the RTP Equalisation Share (if any), the nominal amount paid up thereon and any amounts standing to the credit of the holder of that share; and | ||
(ii) | RTL, any amount standing to the credit of RTL, |
in either case in any reserve set up in the books of RTP pursuant to paragraph 3.6.2(a); and |
(e) | to holders of RTP Ordinary Shares any amounts standing to the credit of any reserve for their benefit set up in the books of RTP pursuant to paragraph 3.6.2(b) or 3.6.2(c). |
II. | In the case of RTL: |
(a) | In respect of any statutory entitlements ranking ahead of the entitlements of the shareholders of RTL on a liquidation of RTL, the amounts due in accordance with the relevant statute; | ||
(b) | to the holders of all classes of share (apart from those listed below) having rights to participate on a return of capital in priority to the RTL Ordinary Shares, the amount payable on a return of capital on such shares; | ||
(c) | to: |
(i) | the holder of the RTL Equalisation Share (if any), the nominal amount paid up thereon and any amounts standing to the credit of the holder of that share; and | ||
(ii) | RTP, any amount standing to the credit of RTP, |
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(d) | to holders of RTL Ordinary Shares any amounts standing to the credit of any reserve for their benefit set up in the books of RTL pursuant to paragraph 3.6.2(b) or 3.6.2(c); and | ||
(e) | to the holder of the RTL Special Voting Share, the nominal amount paid up on such share. | ||
4.1.1 | For the purpose of calculating the Equalisation Payment, the liquidator of RTP shall draw up accounts as at the earliest date (the Reference Date) on which the liquidator is able to make a final distribution to creditors and members of RTP to show the gross amount which would be available for distribution to the holders of RTP Ordinary Shares on the liquidation of RTP after payment in full of any amount standing to the credit of: | ||
(a) | any member of the RTL Group in any reserve set up in the books of RTP pursuant to paragraph 3.6.2(a); and | ||
(b) | the holders of RTP Ordinary Shares in any reserve set up in the books of RTP under paragraph 3.6.2(b) or 3.6.2(c) |
4.1.2 | Unless RTL is in liquidation at the Reference Date (in which case paragraph 4.2.1 shall apply instead of this paragraph 4.1.2), for the purpose of calculating the Equalisation Payment, the Relevant Officer (as defined in paragraph 4.5) for the time being of RTL shall draw up accounts as at the Reference Date of all assets (valued as if RTL was in liquidation and those assets were to be realised by a liquidator of RTL in an orderly manner) and liabilities which would be admissible to proof if RTL was in liquidation at the Reference Date (other than the asset or liability represented by the Equalisation Payment) to show the gross amount which would be available for distribution to holders of RTL Ordinary Shares on the liquidation of RTL (if it were to occur on the Reference Date) after payment in full of any amount standing to the credit of: |
(a) | any member of the RTP Group in any reserve set up in the books of RTL pursuant to paragraph 3.6.2 (a); and | ||
(b) | the holders of RTL Ordinary Shares in any reserve set up in the books of RTL under paragraph 3.6.2(b) or 3.6.2(c) |
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4.1.3 | The liquidator of RTP for the time being shall make, and certify to RTL, the results of the following calculation as at the Reference Date and agree such calculation with the Relevant Officer of RTL, which calculation will be expressed in sterling, with any Australian dollar amounts being converted to sterling at the Liquidation Exchange Rate as at the Reference Date: |
|
(RTPOD+RTLOD)× |
RTPOS
|
4.1.4 | If the Adjusted RTP Distribution Amount is equal to or more than the RTP Own Distribution Amount, then (a) if the RTL Own Distribution Amount is a positive amount, RTL shall pay, out of the assets otherwise available to holders of RTL Ordinary Shares, an amount to RTP being the lesser of an amount equal to the value of those assets and an amount such that (taking account of any tax payable on the making or receipt of that payment, after allowing for any offsetting tax credits, losses or deductions) the ratio of the amount available for distribution on each Publicly-held RTL Ordinary Share to the amount available for distribution on each Publicly-held RTP Ordinary Share: |
(i) | apart from any undistributed amounts resulting from the payment by RTL to a member of the RTP Group, or by RTP to a member of the RTL Group of any reserves under paragraph 3.6.2(a) or any amounts credited to any reserve in the books of RTP for the benefit of holders of RTP Ordinary Shares or any amounts credited to any reserve in the books of RTL for the benefit of holders of RTL Ordinary Shares, in either case under paragraphs 3.6.2(b) or 3.6.2(c); and | ||
(ii) | on the assumption that such distribution to RTPs members and creditors and RTLs members and creditors took place on the Reference Date; and | ||
(iii) | after taking into account the amount available for distribution on each Publicly-held RTP Ordinary Share prior to such payment, |
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4.1.5 | If the Adjusted RTP Distribution Amount is equal to or more than zero, but is less than the RTP Own Distribution Amount, the liquidator of RTP shall pay out of the assets otherwise available for distribution to holders of RTP Ordinary Shares an amount to RTL such that (taking account of any tax payable on the making or receipt of that payment, after allowing for any offsetting tax credits, losses or deductions) the ratio of the amount available for distribution on each Publicly-held RTL Ordinary Share: |
(i) | apart from any undistributed amounts resulting from the payment by RTP to a member of the RTL Group or by RTL to a member of the RTP Group of any reserves under paragraph 3.6.2(a) or any amounts credited to any reserve in the books of RTL for the benefit of holders of RTL Ordinary Shares or any amounts credited to any reserve in the books of RTP for the benefit of holders of RTP Ordinary Shares, in either case under paragraphs 3.6.2 (b) or 3.6.2(c); and | ||
(ii) | on the assumption that such distribution to RTPs members and creditors and RTLs members and creditors took place on the Reference Date; and | ||
(iii) | after taking into account the amount available for distribution on each Publicly-held RTL Ordinary Share prior to such payment |
4.1.6 | If the Adjusted RTP Distribution Amount is zero or a negative amount and the RTP Own Distribution Amount is a positive amount then the liquidator of RTP shall pay out of the assets otherwise available for distribution to the holders of RTP Ordinary Shares an amount to RTL such that (taking account of any tax payable on the making of that payment, after allowing for any offsetting tax credits, losses or deductions) the amount available for distribution to holders of Publicly-held RTP Ordinary Shares on the assumption that distribution to RTPs members and creditors took place on the Reference Date is zero. | ||
4.1.7 | If the RTP Own Distribution Amount is zero or a negative amount and the RTL Own Distribution Amount is zero or a negative amount, then no payment is required to be made by the liquidator of RTP to RTL or by RTL to RTP and the amount available for distribution to holders of Publicly-held RTP Ordinary Shares is zero. | ||
4.1.8 | In making the calculations referred to in this paragraph 4.1, the Relevant Officer of RTL and the liquidator of RTP shall take into account the distributions which fall to be made on those RTP Ordinary Shares which are not Publicly-held RTP Ordinary Shares and those RTL Ordinary Shares which are not Publicly-held RTL Ordinary Shares, it being acknowledged that for each company the per share distributions |
29
on its Publicly-held Ordinary Shares and its non Publicly-held Ordinary Shares will be the same. |
4.1.9 | The certificates which the Relevant Officers of RTL and RTP are required to produce under paragraphs 4.1.1, 4.1.2 and 4.1.3 (the Certificates ) shall be produced within 6 weeks after the Reference Date and the parties shall procure that all necessary instructions are given to the Relevant Officers of each company to ensure that such certificates are produced within that time. The Relevant Officers of each company shall then agree the calculations in such Certificates within 4 weeks of the date on which all such Certificates are produced. If they are unable to agree the calculations in the Certificates within such time, then the dispute shall be referred to an independent firm of accountants agreed by the parties (or failing agreement within 7 days of the end of that 4 week period, appointed, on the application of either party, by the President for the time being of the Institute of Chartered Accountants in England). The firm so appointed shall act as experts and not as arbitrators and shall be instructed to make its determination within 4 weeks of its appointment. The costs of such firm are to be borne as such firm decides. Once the calculations in the Certificates have been agreed by the Relevant Officers of the parties or determined by the independent accountants, they shall be conclusive and binding on the parties. | ||
4.1.10 | The parties shall jointly give such instructions as may be necessary to procure the making of any calculations or certifications required by this Clause 4.1. |
I. In the case of RTL: |
(a) | In respect of any statutory entitlements ranking ahead of the entitlements of the shareholders of RTL on a liquidation of RTL, the amounts due in accordance with the relevant statute; |
30
(b) | to the holders of all classes of shares (apart from those listed below) having rights to participate on a return of capital in priority to the RTL Ordinary Shares, the amount payable on a return of capital on such shares; | ||
(c) | to: |
(i) | the holder of the RTL Equalisation Share (if any), the nominal amount paid up thereon and any amounts standing to the credit of the holder of that share; and | ||
(ii) | RTP, any amount standing to the credit of RTP, |
(d) | to holders of RTL Ordinary Shares any amounts standing to the credit of any reserve for their benefit set up in the books of RTL pursuant to paragraph 3.6.2(b) or 3.6.2(c); and | ||
(e) | to the holder of the RTL Special Voting Share, the nominal amount paid up on such share. |
(a) | In respect of any statutory entitlements ranking ahead of the entitlements of the shareholders of RTP on a liquidation of RTP, the amounts due in accordance with the relevant statute; | ||
(b) | to the holders of the Preference Shares (as defined in the RTP Memorandum and Articles) and to the holders of all other classes of share (apart from those listed below) having rights to participate on a return of capital in priority to the RTP Ordinary Shares, the amount payable on a return of capital on such shares; | ||
(c) | to the holder of the RTP Special Voting Share, the nominal amount paid up on such share; | ||
(d) | to: |
(i) | the holder of the RTP Equalisation Share (if any), the nominal amount paid up thereon and any amounts standing to the credit of the holder of that share; and | ||
(ii) | RTL, any amount standing to the credit of RTL, |
(e) | to holders of RTP Ordinary Shares any amounts standing to the credit of any reserve for their benefit set up in the books of RTP pursuant to paragraph 3.6.2(b) or 3.6.2(c). | ||
4.2.1 | For the purpose of calculating the Equalisation Payment, the liquidator of RTL shall draw up accounts as at the earliest date (the Reference Date) on which the liquidator is able to make a final distribution to creditors and members of RTL to show the gross amount which would be available for distribution to the holders of RTL Ordinary Shares on the liquidation of RTL after payment in full of any amount standing to the credit of: |
31
(a) | any member of the RTP Group in any reserve set up in the books of RTL pursuant to paragraph 3.6.2(a); and | ||
(b) | the holders of RTL Ordinary Shares in any reserve set up in the books of RTL under paragraph 3.6.2(b) or 3.6.2(c) |
4.2.2 | Unless RTP is in liquidation at the Reference Date (in which case paragraph 4.1.1 shall apply instead of this paragraph 4.2.2), for the purpose of calculating the Equalisation Payment, the Relevant Officer (as defined in paragraph 4.5) for the time being of RTP shall draw up accounts as at the Reference Date of all assets (valued as if RTP was in liquidation and those assets were to be realised by a liquidator of RTP in an orderly manner) and liabilities which would be admissible to proof if RTP was in liquidation at the Reference Date (other than the asset or liability represented by the Equalisation Payment) to show the gross amount which would be available for distribution to holders of RTP Ordinary Shares on the liquidation of RTP (if it were to occur on the Reference Date) after payment in full of any amount standing to the credit of: |
(a) | any member of the RTL Group in any reserve set up in the books of RTP pursuant to paragraph 3.6.2 (a); and | ||
(b) | the holders of RTP Ordinary Shares in any reserve set up in the books of RTP under paragraph 3.6.2(b) or 3.6.2(c) |
and to calculate the amount thereof available for distribution to holders of Publicly-held RTP Ordinary Shares or the amount (expressed as a negative sum) of the shortfall which would need to be obtained before the holders of the Publicly-held RTP Ordinary Shares would receive any payment by way of distribution (in either case, the RTP Own Distribution Amount), on the assumption that the distribution to RTPs creditors and members on liquidation took place on the Reference Date. The Relevant Officer of RTP shall certify the result of such calculation to RTL. |
4.2.3 | The liquidator of RTL for the time being shall make, and certify, the results of the following calculation as at the Reference Date and agree such calculation with the Relevant Officer of RTP, which calculation will be expressed in Australian dollars, with any sterling amounts being converted to Australian dollars at the Liquidation Exchange Rate as at the Reference Date: |
|
(RTLOD + RTPOD)× |
RTLOS
|
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(i) | apart from any undistributed amounts resulting from the payment by RTP to a member of the RTL Group, or from RTL to a member of the RTP Group of any reserves under paragraph 3.6.2(a) or any amounts credited to any reserve in the books of RTL for the benefit of holders of RTL Ordinary Shares or any amounts credited to any reserve in the books of RTP for the benefit of holders of RTP Ordinary Shares, in either case under paragraphs 3.6.2(b) or 3.6.2(c); and | ||
(ii) | on the assumption that distribution to RTLs members and creditors and RTPs members and creditors took place on the Reference Date; and | ||
(iii) | after taking into account the amount available for distribution on each Publicly-held RTL Ordinary Share prior to such payment, |
is equal to the Equalisation Ratio, converting Australian dollar amounts to sterling by application of the Liquidation Exchange Rate at the Reference Date and (b) in any case, the assets of RTP available for distribution, which shall include any distribution made on the RTL Equalisation Share or any other payment pursuant to this Agreement or the RTL Memorandum and Articles, shall belong to and be distributed among the holders of RTP Ordinary Shares rateably according to the numbers of RTP Ordinary Shares held by them. | |||
4.2.5 | If the Adjusted RTL Distribution Amount is equal to or more than zero, but is less than the RTL Own Distribution Amount, the liquidator of RTL shall pay out of the assets otherwise available for distribution to holders of RTL Ordinary Shares an amount to RTP such that (taking account of any tax payable on the making or receipt of that payment, after allowing for any offsetting tax credits, losses or deductions) the ratio of the amount available for distribution on each Publicly-held RTL Ordinary Share, |
(i) | apart from any undistributed amounts resulting from the payment by RTL to a member of the RTP Group or RTP to a member of the RTL Group of any reserves under paragraph 3.6.2(a) or any amounts credited to any reserve |
33
in the books of RTP for the benefit of holders of RTP Ordinary Shares or any amounts credited to any reserves in the books of RTL for the benefit of holders of RTL Ordinary Shares, in either case under paragraphs 3.6.2(b) or 3.6.2(c); and | |||
(ii) | on the assumption that such distribution to RTLs members and creditors and RTPs members and creditors took place on the Reference Date; and | ||
(iii) | after taking into account the amount available for distribution on each Publicly-held RTP Ordinary Share prior to such payment, |
to the amount available for distribution on each Publicly-held RTP Ordinary Share, converting Australian dollar amounts to sterling by application of the Liquidation Exchange Rate on the Reference Date, is the Equalisation Ratio (and the balance of the assets (if any) of RTL available for distribution to the holders of RTL Ordinary Shares remaining after any such payment to RTP shall belong to and be distributed among the holders of RTL Ordinary Shares rateably according to the numbers of RTL Ordinary Shares held by them). | |||
4.2.6 | If the Adjusted RTL Distribution Amount is zero or a negative amount and the RTL Own Distribution Amount is a positive amount then the liquidator of RTL shall pay out of the assets otherwise available for distribution to the holders of RTL Ordinary Shares an amount to RTP such that (taking account of any tax payable on the making of that payment, after allowing for any offsetting tax credits, losses or deductions) the amount available for distribution to holders of Publicly-held RTL Ordinary Shares on the assumption that distribution to RTLs members and creditors took place on the Reference Date is zero. | ||
4.2.7 | If the RTL Own Distribution Amount is zero or a negative amount and the RTP Own Distribution Amount is zero or a negative amount, then no payment is required to be made by the liquidator of RTL to RTP or by RTP to RTL and the amount available for distribution to holders of Publicly-held RTL Ordinary Shares is zero. | ||
4.2.8 | In making the calculations referred to in this paragraph 4.2, the Relevant Officer of RTP and the liquidator of RTL shall take into account the distributions which fall to be made on those RTL Ordinary Shares which are not Publicly-held RTL Ordinary Shares and those RTP Ordinary Shares which are not Publicly-held RTP Ordinary Shares it being acknowledged that for each company the per share distributions on the Publicly-held Ordinary Shares and the non Publicly-held Ordinary Shares will be the same. | ||
4.2.9 | The certificates which the Relevant Officers of RTL and RTP are required to produce under paragraphs 4.2.1, 4.2.2 and 4.2.3 (the Certificates ) shall be produced within 6 weeks after the Reference Date and the parties shall procure that all necessary instructions are given to the Relevant Officers of each company to ensure that such certificates are produced within that time. The Relevant Officers of each company shall then agree the calculations in such Certificates within 4 weeks of the date on which the Certificates are produced. If they are unable to agree the calculations in the Certificates within such time, then the dispute shall be referred to an independent firm of accountants agreed by the parties (or failing agreement within 7 days of the end of that 4 week period, appointed, on the application of either party, by the President for the time being of the Institute of Chartered Accountants in England). The firm so appointed shall act |
34
as experts and not as arbitrators and shall be instructed to make its determination within 4 weeks of its appointment. The costs of such firm shall be borne by the parties as such firm decides. Once the calculations in the Certificates have been agreed by the Relevant Officers of the parties or determined by the independent accountants, they shall be conclusive and binding on the parties. | |||
4.2.10 | The parties shall jointly give such instructions as may be necessary to procure the making of any calculations or certifications required by this paragraph 4.2. |
4.3 | To the extent that the provisions of this Schedule constitute either party (the first party) a creditor of the other party (where the other party is in liquidation), the first party will be fully subordinated to all other creditors of the other party and to the holders of shares in the other party which rank in priority to the Ordinary Shares in the other party. |
4.4 | In this Schedule, the gross amount which would be available for distribution to shareholders means such amount ignoring any Equalisation Payment or distribution on the Equalisation Share and any tax payable on the making of the Equalisation Payment or distribution, and both the gross amount which would be available for distribution and the amount available for distribution refer to such amount before deduction of any amount in respect of tax required to be deducted or withheld from the distribution to holders of Ordinary Shares by or on behalf of the company paying or making the distribution but net of any tax payable by that company on the distribution to holders of its Ordinary Shares. |
4.5 | In this Schedule, Relevant Officer of a company shall mean the auditor of that company or, if that company is in liquidation, the liquidator of that company. |
4.6 | The parties will co-operate to ensure that any calculation or certificate required under the Articles of Association of either party in connection with a distribution on the Equalisation Share shall promptly be produced and agreed in accordance with the relevant article. |
4.7 | If either party (the second liquidating party ) shall go into liquidation during the period between the other party (the first liquidating party ) going into liquidation and the making of the Equalisation Payment pursuant to paragraph 4.1 (if the first liquidating party is RTP) or paragraph 4.2 (if the first liquidating party is RTL) then the Reference Date for both parties shall be delayed until the later of the Reference Date of the first liquidating party and the Reference Date of the second liquidating party and the Relevant Officer of the second liquidating party shall be that partys liquidator (and not its auditor). | |
5 | Adjustments to the Equalisation Ratio | |
5.1 | Agreed Adjustments | |
RTL and RTP agree with each other as follows: |
5.1.1 | Rights Issues of Ordinary Shares |
If either RTL or RTP shall offer its Ordinary Shares to the holders of its Ordinary Shares as a class by way of rights or to the holders of its Publicly-held Ordinary Shares by way of rights (whether or not in any of such cases by way of Matching Offers), the Equalisation Ratio shall be adjusted by multiplying the element of the Equalisation Ratio relating to the Ordinary Shares of the issuing company by the following fraction: |
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|
X + Z
|
where : | |||
X is the number of Ordinary Shares of the issuing company which rank for the relevant offer; | |||
Y is the number of Ordinary Shares being offered to the holders of Ordinary Shares or the holders of Publicly-held Ordinary Shares (as the case may be) of the issuing company; and | |||
Z is the number of Ordinary Shares of the issuing company which the aggregate amount (if any) payable for the Ordinary Shares offered by way of rights would purchase at the Current Market Price per Ordinary Share determined on the dealing day last preceding the date on which such shares are first traded ex-rights. | |||
Such adjustment shall become effective from the time at which the Ordinary Shares of the issuing company are first traded ex-rights. | |||
For the purpose of this paragraph an offer by a member of the RTP Group of RTL Ordinary Shares owned by it to holders of Publicly-held RTL Ordinary Shares by way of rights shall be treated as an offer and issue by RTL of such shares. | |||
5.1.2 | Rights Issues of other securities | ||
If either RTL or RTP shall offer any securities (other than an offer falling within paragraph 5.1.1) to the holders of its Ordinary Shares, or to the holders of the Ordinary Shares of the other, as a class by way of rights, or to the holders of its Publicly-held Ordinary Shares, or those of the other, by way of rights (whether or not in any of such cases by way of Matching Offers), or grant to such holders of Ordinary Shares, or to such holders of Publicly-held Ordinary Shares, as a class by way of rights (whether or not in any of such cases by way of Matching Offers) any options, warrants or other rights to subscribe for or purchase any securities, the Equalisation Ratio shall be adjusted by multiplying the element of the Equalisation Ratio relating to the Ordinary Shares of the company the shareholders of which are to receive such offer or grant (the Relevant Company) by the following fraction: |
|
X Y
|
where : | |||
X is the Current Market Price of one Ordinary Share of the Relevant Company determined on the dealing day last preceding the date such shares are first traded ex-rights; and | |||
Y is the average fair market value of the portion of the rights attributable to one Ordinary Share of the Relevant Company over the five dealing days last preceding the date on which such shares are first traded ex-rights as determined by a merchant bank of international repute appointed by agreement between the Board of RTP and the Board of RTL, acting as expert and not as arbitrator and whose determination shall be final and binding on the parties and on all others affected thereby. |
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Such adjustment shall become effective from the time at which the Ordinary Shares of the Relevant Company are first traded ex-rights, ex-options or ex-warrants. | |||
5.1.3 | Alternative adjustment | ||
If the Board of RTL and the Board of RTP agree that an adjustment in accordance with paragraph 5.1.1 or 5.1.2 would be inequitable as between the holders of RTL Ordinary Shares and the holders of RTP Ordinary Shares, then they may calculate the adjustment on some other basis which they agree to be appropriate. In these circumstances the calculation shall be referred to the auditors of RTL and the auditors of RTP for them jointly to certify that the adjustment so calculated means that the relevant offer does not materially disadvantage a holder of a RTL Ordinary Share in comparison with a holder of an RTP Ordinary Share and vice versa. In making such certification the auditors of RTL and the auditors of RTP shall act as experts and not as arbitrators and their certificate shall be final and binding on the parties and on all others affected thereby. | |||
5.1.4 | Subdivisions and Consolidations of Shares | ||
If there shall be a consolidation or subdivision in relation to the Ordinary Shares of either RTL or RTP, the Equalisation Ratio shall be adjusted by multiplying the element of the Equalisation Ratio relating to the Ordinary Shares of the company undertaking the consolidation or subdivision by the following fraction: |
|
X
|
where: | |||
X is the aggregate number of Ordinary Shares of such company in issue immediately before such consolidation or subdivision; and | |||
Y is the aggregate number of Ordinary Shares of such company in issue immediately after, and as a result of, such consolidation or subdivision. | |||
Such adjustment shall become effective immediately after the consolidation or subdivision, as the case may be, takes effect. | |||
5.1.5 | Bonus Issues | ||
If either RTL or RTP shall issue any Ordinary Shares credited as fully paid to ordinary shareholders as a bonus issue including by way of capitalisation of profits or reserves (including any share premium account or capital redemption reserve) other than by way of a scrip dividend, the Equalisation Ratio shall be adjusted by multiplying the element of the Equalisation Ratio relating to the Ordinary Shares of the issuing company by the following fraction: |
|
X
|
where: |
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X is the aggregate number of Ordinary Shares of the issuing company in issue immediately before the issue; and | |||
Y is the aggregate number of Ordinary Shares of the issuing company in issue immediately after such issue. | |||
Such adjustment shall become effective from the time of issue of such Ordinary Shares. | |||
5.1.6 | Definition |
(a) | For the purposes of this paragraph 5.1 Current Market Price means, in respect of an Ordinary Share in RTL or RTP at a particular date, the average value of one such Ordinary Share (being an Ordinary Share carrying full entitlement to dividend) for or by reference to the period of 5 consecutive dealing days ending on such date determined on such basis as the Board of RTP and the Board of RTL agree to be appropriate. | ||
(b) | For the purposes of the definition of Y in paragraph 5.1.2 the fair market value of the portion of the rights attributable to one Ordinary Share shall be calculated on a basis consistent with the calculation of the Current Market Price in the definition of X in the same paragraph. |
5.2 | Certification | |
The auditors for the time being of RTL and RTP shall jointly certify the arithmetical adjustment to be made to the Equalisation Ratio in the circumstances set out in paragraph 5.1 and in any other circumstances where an adjustment is made to such Equalisation Ratio and any adjustments so certified shall, in the absence of manifest error, be final and binding on the parties and on all others affected thereby. RTL and RTP agree with each other to make and co-ordinate such public announcements as are appropriate in relation to any such adjustments, subject to any regulatory requirements. |
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(1) | RIO TINTO PLC , a company incorporated in England with registered number 719885, whose registered office is at 2 Eastbourne Terrace, London W2 6LG ( RTP ); | ||
(2) | RTP SHAREHOLDER SVC PTY LIMITED (ACN 070 481 908), a company incorporated in Victoria, Australia ( RTP Shareholder SVC ); | ||
(3) | RIO TINTO LIMITED (ACN 004 458 404), a company incorporated in Victoria, Australia, whose registered office is at Level 33, 120 Collins Street, Melbourne 3000, Victoria, Australia ( RTL ); | ||
(4) | RIO TINTO AUSTRALIAN HOLDINGS LIMITED , a company incorporated in England with registered number 464176, whose registered office is at 2 Eastbourne Terrace, London W2 6LG ( RTAH ); and | ||
(5) | THE LAW DEBENTURE TRUST CORPORATION p.l.c. , a company incorporated in England with registered number 1675231, whose registered office is at Fifth floor, 100 Wood Street, London EC2V 7EX ( Law Debenture ). |
(A) | Following announcements made on 9 October 1995, RTL and RTP entered into an Implementation Agreement on 3 November 1995 pursuant to which RTL and RTP have agreed to do certain acts and things to implement the DLC Merger of RTL and RTP. | |
(B) | RTP Shareholder SVC and RTAH have agreed that RTAH shall procure that Tinto Holdings Australia Pty Limited shall vote any RTL Ordinary Shares it holds and that RTP Shareholder SVC shall vote the RTL Special Voting Share in accordance with this Agreement. |
1 | Definitions and Interpretation | |
(A) | In this Agreement, unless the context shall otherwise require, the following expressions shall have the following meanings: | |
Australian dollars means the lawful currency from time to time of Australia; | ||
Business Day means a day on which banks are ordinarily open for business in both London and Melbourne, excluding Saturdays and Sundays; | ||
Class Rights Action means any of the actions listed in Article 7(a) of the RTL Memorandum and Articles, if undertaken or to be undertaken by RTL; | ||
Companies Act Subsidiary has the meaning ascribed to the term subsidiary in Section 1159 of the Companies Act 2006 and shall mean when used in reference to a company any subsidiary of that company from time to time; | ||
Completion means the time at which the steps set out in Clause 5 of the Implementation Agreement have been completed; | ||
Corporations Act means the Corporations Act 2001 (Commonwealth of Australia) and includes a reference to the Corporations Regulations made under that Act; |
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Corporations Act Subsidiary has the meaning ascribed to the term subsidiary in Section 9 of the Corporations Act and when used in reference to a body corporate shall mean any subsidiary of that body corporate from time to time; | ||
DLC Merger means the merger of RTP and RTL so that, inter alia , RTL and RTP have a unified management structure and so that the businesses of both the RTL Group and the RTP Group are run on a unified basis; | ||
Equalisation Fraction means the Equalisation Ratio expressed as a fraction with the numerator being the number relating to the RTL Ordinary Shares and the denominator being the number relating to the RTP Ordinary Shares; | ||
Equalisation Ratio means the ratio of the dividend, capital and voting rights per RTL Ordinary Share to the dividend, capital and voting rights per RTP Ordinary Share (which will be 1:1 immediately following the RTL Bonus Issue), which shall be subject to adjustment in accordance with Clause 5.1.2(d) of the Sharing Agreement and paragraph 5 of Schedule 2 to the Sharing Agreement; | ||
Excluded RTL Holder means a Relevant Person (who is not a Permitted Person) (both as defined in the RTL Memorandum and Articles) and on whom a notice has been served under Article 145D of the RTL Memorandum and Articles which has not been complied with to the satisfaction of the RTL directors or withdrawn; | ||
Excluded RTP Holder means a Relevant Person (who is not a Permitted Person) (both as defined in the RTP Memorandum and Articles) and on whom a notice has been served under Article 64(E) of the RTP Memorandum and Articles or on whom a direction notice has been served under Article 63 of the RTP Memorandum and Articles which in either case has not been complied with to the satisfaction of the RTP directors or withdrawn; | ||
Implementation Agreement means the Agreement headed DLC Merger Implementation Agreement entered into between RTL and RTP on 3 November 1995; | ||
Joint Decision has the meaning given to it in the Sharing Agreement; | ||
Joint Decision Matter has the meaning given to it in the Sharing Agreement; | ||
Ordinary Resolution of the Publicly-held RTL Ordinary Shares means a resolution passed on a poll by a simple majority of the votes cast thereon at a general meeting of RTL or a separate general meeting of the holders of RTL Ordinary Shares of which notice specifying the intention to propose such resolution as an ordinary resolution has been duly given and on which in either case only votes attaching to Publicly-held RTL Ordinary Shares (other than shares held by an Excluded RTL Holder or by an Excluded RTP Holder) have been cast or on which votes attaching to non Publicly-held Shares have been disregarded; | ||
Ordinary Resolution of the Publicly-held RTP Ordinary Shares means a resolution passed on a poll by a simple majority of the votes cast thereon at a general meeting of RTP or a separate general meeting of the holders of RTP Ordinary Shares of which notice specifying the intention to propose such resolution as an ordinary resolution has been duly given and on which in either case only votes attaching to Publicly-held RTP Ordinary Shares (other than shares held by an Excluded RTP Holder or by an Excluded RTL Holder) have been cast or on which votes attaching to non Publicly-held Shares have been disregarded; |
2
Parallel General Meeting in relation to RTL or RTP means the general meeting of the shareholders of that company which is most nearly contemporaneous with the general meeting of the shareholders of the other company and at which some or all of the same matters or some or all equivalent matters are considered; | ||
Publicly-held Ordinary Shares means, in relation to RTL, Publicly-held RTL Ordinary Shares and, in relation to RTP, Publicly-held RTP Ordinary Shares; | ||
Publicly-held RTL Ordinary Shares means RTL Ordinary Shares the beneficial owners of which are not members of the RTP Group; | ||
Publicly-held RTP Ordinary Shares means RTP Ordinary Shares the beneficial owners of which are not members of the RTL Group; | ||
Publicly-held Shares means, in relation to RTL, Publicly-held RTL Ordinary Shares and, in relation to RTP, Publicly-held RTP Ordinary Shares; | ||
Relevant RTL Constitutional Amendment means the amendment, removal or alteration of the effect of (or ratification of any breach of) any RTL Entrenched Provision or any Entrenching Provision (as those terms are defined in the RTL Memorandum and Articles) or the amendment, removal or alteration of the effect of any other provision of the RTL Memorandum and Articles which amendment, removal or alteration is treated as subject to Clause 5.1.4 of the Sharing Agreement pursuant to that Clause 5.1.4; | ||
RTL Bonus Issue means the bonus issue of 7.5 RTL Ordinary Shares for each 100 RTL Ordinary Shares to take place following Completion; | ||
RTL Group means RTL and its Subsidiaries from time to time; | ||
RTL Memorandum and Articles means the Memorandum and Articles of Association of RTL which will be in effect immediately following Completion, as amended from time to time; | ||
RTL Ordinary Shares means the issued ordinary shares in RTL from time to time; | ||
RTL Special Voting Share means the special voting share in RTL; | ||
RTP Group means RTP and its Subsidiaries from time to time; | ||
RTP Memorandum and Articles means the Memorandum and Articles of Association of RTP which will be in effect immediately following Completion, as amended from time to time; | ||
RTP Ordinary Shares means the issued ordinary shares of 10p each in RTP from time to time; | ||
RTP Shareholder SVC Shares means the two issued shares in RTP Shareholder SVC; | ||
RTP Shareholder SVC Trust Deed means the Trust Deed of even date herewith entered into between RTP Shareholder SVC, RTP and Law Debenture; | ||
RTP Special Voting Share means the special voting share of 10p in RTP; | ||
Sharing Agreement means the Agreement of even date herewith headed DLC Merger Sharing Agreement between RTL and RTP as amended from time to time; | ||
Special Resolution of the Publicly-held RTL Ordinary Shares means a resolution passed on a poll by not less than a three-fourths majority of the votes cast thereon at a |
3
general meeting of RTL or at a separate general meeting of the holders of RTL Ordinary Shares of which notice specifying the intention to propose such resolution as a special resolution has been duly given and on which in either case only votes attaching to Publicly-held RTL Ordinary Shares (other than shares held by an Excluded RTL Holder or by an Excluded RTP Holder) have been cast or on which votes attaching to non Publicly-held Shares have been disregarded; | ||
Special Resolution of the Publicly-held RTP Ordinary Shares means a resolution passed on a poll by not less than a three-fourths majority of the votes cast thereon at a general meeting of RTP or at a separate general meeting of the holders of RTP Ordinary Shares of which notice specifying the intention to propose the resolution as a special resolution has been duly given and on which in either case only votes attaching to Publicly-held RTP Ordinary Shares (other than shares held by an Excluded RTP Holder or by an Excluded RTL Holder) have been cast or on which votes attaching to non Publicly-held Shares have been disregarded; | ||
Specified Number of Tinto Shares to be Voted means the lesser of the number of the Tinto Shares and the Total Specified Number; | ||
Specified Number of Votes attaching to the RTL Special Voting Share means the Total Specified Number less the Specified Number of Tinto Shares to be Voted, if a positive number and, if not, zero; | ||
sterling means the lawful currency from time to time of the United Kingdom; | ||
Subsidiary means, in the case of RTL, a Corporations Act Subsidiary, and in the case of RTP, a Companies Act Subsidiary; | ||
Tinto Holdings Australia means Tinto Holdings Australia Pty Limited (ACN 004 327 922), a company incorporated in New South Wales, Australia whose registered office is at Level 33, 120 Collins Street, Melbourne, Victoria, Australia; | ||
Tinto Shares means the RTL Ordinary Shares from time to time held by Tinto Holdings Australia or beneficially owned by any other member of the RTP Group; | ||
Total Specified Number means, in relation to a resolution on a Joint Decision Matter at a general meeting of RTL, the number of votes attaching to Publicly-held RTP Ordinary Shares cast in relation to the equivalent resolution on the poll at the Parallel General Meeting of RTP (other than those cast by any Excluded RTP Holder or by an Excluded RTL Holder) divided by the Equalisation Fraction rounded up to the nearest whole number of votes. |
(B) |
(i) | References in this Agreement to A$ are to Australian dollars and references in this Agreement to £ and p are to pounds sterling and to pence sterling or to such other currencies for the time being of Australia and the United Kingdom respectively. | ||
(ii) | Words denoting the singular number only shall include the plural number also and vice versa, words denoting one gender shall include the other genders and words denoting individuals only shall include firms and corporations and vice versa. | ||
(iii) | Unless the context otherwise requires, words or expressions used in this Agreement in relation to RTP shall bear the same meanings as in the Companies |
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Act 2006 and words or expressions used in this Agreement in relation to RTL shall bear the same meanings as in the Corporations Act. | |||
(iv) | In this Agreement unless the context otherwise requires references to Clauses and paragraphs shall be construed as references to Clauses and paragraphs of this Agreement respectively. | ||
(v) | References to resolutions of the holders of Publicly-held Shares of either RTL or RTP shall be deemed to include resolutions of the members or the relevant class of members of the party concerned on which only holders of Publicly-held Shares have cast their votes. | ||
(vi) | References to procedural resolutions comprise all resolutions put to a general meeting which were not included in the notice of such meeting but nevertheless fall to be considered by that meeting. | ||
(vii) | In this Agreement references to an equivalent resolution considered by holders of Publicly-held RTP Ordinary Shares mean the resolution considered at the most nearly contemporaneous general meeting of RTP which bears a close relationship to the relevant resolution being considered at a RTL general meeting. For example, but without limitation, a resolution to appoint or remove an individual as a director of RTP, to appoint or remove the auditors of RTP or to receive and adopt the accounts of RTP would, if no resolution considering such matters in relation to RTL were put to the RTP general meeting, be the equivalent resolution to a resolution relating to the appointment or removal of the same individual as a director of RTL, the appointment or removal of the same international firm of auditors as RTLs auditors or the receipt or adoption of RTLs accounts as the case may be and references to a meeting of RTL considering equivalent matters to those considered at a meeting of RTP shall be similarly construed. | ||
(viii) | References to the votes attaching to non Publicly-held Shares being disregarded in respect of any resolution shall mean that the resolution in question would have been duly passed (or not passed as the case may be) if the votes attaching to the non Publicly-held Shares had not been cast. |
(C) | The Clause headings are inserted herein only for convenience and shall not affect the construction hereof. |
2 | Joint Decisions. Restrictions on Voting of the Tinto Shares and the RTL Special Voting Share | |
2.1 | Each of RTL and RTP agrees with the other, RTAH and RTP Shareholder SVC that any Joint Decision Matter shall be submitted for approval by a resolution of the company affected by the matter and by an equivalent resolution of the other company, each by the same majority (i.e. both by ordinary or both by special resolution) to separate meetings of the shareholders of both RTL and RTP, whether or not such approval is required by law, the rules of any relevant stock exchange or otherwise. | |
2.2 | Each of RTL and RTP agrees with the other, RTAH and RTP Shareholder SVC that, if a matter requires a Joint Decision, it shall do all acts and things necessary to ensure that the relevant annual or extraordinary general meetings, as appropriate, are held on the same day or as closely in time to each other as practicable (taking into account the fact that some or all of the directors of RTP and RTL may wish to attend both meetings). |
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2.3 | Each of RTL and RTP agrees with the other, RTAH and RTP Shareholder SVC that any resolution put to its general meeting in relation to which the RTL Special Voting Share is or may be entitled to vote pursuant to Clause 5.1 or Clause 6.1 of the Sharing Agreement shall be decided on by a poll. | |
2.4 | RTL agrees with RTP, RTAH and RTP Shareholder SVC that any poll on which the RTL Special Voting Share is or may be entitled to vote taken at its general meeting shall (as regards the RTL Special Voting Share and the Tinto Shares) be kept open for such time as to allow the Parallel General Meeting of RTP to be held and for the votes attaching to the Tinto Shares and the RTL Special Voting Share to be calculated and cast on such poll, although such poll may be closed earlier in respect of shares of other classes and/or RTL Ordinary Shares apart from the Tinto Shares. | |
2.5 | RTAH agrees with RTP Shareholder SVC (but not with RTP or RTL) that it will procure that Tinto Holdings Australia shall not exercise any of the votes attached to the Tinto Shares, and RTP agrees with RTP Shareholder SVC (but not with RTL) that it will procure that any RTL Ordinary Shares beneficially owned by any other member of the RTP Group shall not be voted except in both cases on a resolution approving a Joint Decision or a procedural resolution in accordance with Clause 2.7. | |
2.6 | RTP Shareholder SVC agrees with RTAH (but not with RTP or RTL) that it will not exercise any of the votes attached to the RTL Special Voting Share except in accordance with Clauses 2.8, 4, 5 and 6. | |
2.7 | Unless the number of Tinto Shares is zero, RTAH agrees with RTP Shareholder SVC (but not with RTP or RTL) that it will procure that Tinto Holdings Australia shall at each general meeting of RTL at which any Joint Decision Matter is to be considered give a proxy to the chairman of the meeting in respect of a number of votes which is equal to the lesser of: |
(i) | the maximum number of votes attached to the Publicly-held RTP Ordinary Shares (excluding any Publicly-held RTP Ordinary Shares which are held by or on behalf of any Excluded RTP Holder or any Excluded RTL Holder) which was cast on a Joint Decision Matter at the Parallel General Meeting of RTP (or, if the Parallel General Meeting of RTP has not been held and such votes counted by the beginning of the relevant RTL general meeting, the maximum number of such votes as are authorised to be so cast upon proxies lodged with RTP by such time as the chairman of the relevant RTL general meeting may determine) divided by the Equalisation Fraction and rounded up to the nearest whole number; and | ||
(ii) | the number of Tinto Shares |
so that such votes can be cast on procedural resolutions at that meeting as the chairman may determine. | ||
2.8 | RTP Shareholder SVC agrees with RTAH and RTP that at each general meeting of RTL at which any Joint Decision Matter is to be considered it shall procure that a proxy is given to the chairman of the meeting in respect of the number of votes equal to the maximum number of votes attached to the Publicly-held RTP Ordinary Shares (excluding any Publicly-held RTP Ordinary Shares which are held by or on behalf of any Excluded RTP Holder or any Excluded RTL Holder) which was cast on a Joint Decision Matter at the Parallel General Meeting of RTP (or, if the Parallel General Meeting of RTP has not been held and such votes counted by the beginning of the relevant RTL general meeting, the maximum number of such votes as are authorised to be so cast upon proxies lodged with |
6
RTP by such time as the chairman of the relevant RTL general meeting may determine) divided by the Equalisation Fraction rounded up to the nearest whole number minus the number of votes on any proxy given by Tinto Holdings Australia in accordance with Clause 2.7 and notified to RTP Shareholder SVC in accordance with Clause 3.2 so that such votes can be cast on procedural resolutions at that meeting as the chairman may determine. | ||
3 | Notification of Votes Cast on Joint Decisions at Parallel General Meeting. Calculation of Specified Numbers | |
3.1 | RTP agrees with RTP Shareholder SVC, RTAH and RTL that, in relation to each general meeting of RTL at which any Joint Decision Matter is to be considered, RTP shall, as soon as possible after it knows how the holders of Publicly-held RTP Ordinary Shares voted on any equivalent resolution or resolutions at the Parallel General Meeting of RTP, inform RTP Shareholder SVC, RTAH and RTL by notice in accordance with Clause 18 and inform Tinto Holdings Australia of: |
(a) | how many votes attaching to the RTP Ordinary Shares were cast at the Parallel General Meeting of RTP in favour of each resolution equivalent to a resolution related to a Joint Decision Matter proposed at that general meeting of RTL and how many were cast against; and | ||
(b) | its calculations of the Total Specified Number, Specified Number of Tinto Shares to be Voted and Specified Number of Votes attaching to the RTL Special Voting Share in relation to each of the resolutions on such Joint Decision Matters and of the way in which RTP Shareholder SVC is required to exercise the Specified Number of Votes attaching to the RTL Special Voting Share in relation to each such resolution under Clause 4.3 and of the way in which RTAH is required to procure that Tinto Holdings Australia exercises the Specified Number of Tinto Shares to be Voted in relation to each such resolution under Clause 4.3. |
3.2 | RTP agrees with RTP Shareholder SVC, RTL and RTAH that, prior to the commencement of any RTL general meeting on which a Joint Decision Matter is to be considered, it shall inform RTAH and RTP Shareholder SVC by notice in accordance with Clause 18 of its calculation of the number of votes in respect of which the proxies referred to in Clauses 2.7 and 2.8 shall be given and shall also inform Tinto Holdings Australia of its calculation by notice to its registered office. | |
3.3 | If the number of Tinto Shares is zero, notice need not be given to RTAH and Tinto Holdings Australia under Clause 3.1 or 3.2. | |
4 | Exercise of Votes Attaching to the Tinto Shares and the RTL Special Voting Share on Joint Decisions | |
In relation to every general meeting of RTL at which any Joint Decision Matter is to be considered: | ||
4.1 | RTP Shareholder SVC agrees with RTAH (but not with RTP or RTL) to be present by its corporate representative appointed in accordance with subsection 250D(1) of the Corporations Act or by proxy or proxies; | |
4.2 | Unless the number of Tinto Shares is zero, RTAH agrees with RTP Shareholder SVC (but not with RTP or RTL) to procure that Tinto Holdings Australia is present by its corporate |
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representative appointed in accordance with subsection 250D(1) of the Corporations Act or by proxy or proxies; | ||
4.3 | Provided that RTP has complied with all of its obligations under Clause 3, then, on any resolution relating to a Joint Decision Matter, RTP Shareholder SVC agrees with RTAH (but not with RTP or RTL) to exercise the Specified Number of Votes attaching to the RTL Special Voting Share and RTAH agrees with RTP Shareholder SVC (but not with RTP or RTL) to procure that Tinto Holdings Australia exercises the votes on the Specified Number of Tinto Shares to be Voted (if any), in each case in accordance with the following provisions: |
(a) | the Total Specified Number of votes only shall be cast on the resolution by use of the votes on the Specified Number of Tinto Shares to be Voted and the Specified Number of Votes attaching to the RTL Special Voting Share; | ||
(b) | such number of the Total Specified Number of votes shall be cast in favour of the resolution as equals the number of votes attached to Publicly-held RTP Ordinary Shares which were exercised in favour of the equivalent resolution on the poll at the Parallel General Meeting of RTP (other than those cast by Excluded RTP Holders or by persons on whom a notice has been served under Article 145D of the RTL Memorandum and Articles) divided by the Equalisation Fraction and rounded up to the nearest whole number, and the remainder of the Total Specified Number of votes shall be cast against the resolution; and | ||
(c) | RTAH shall procure that Tinto Holdings Australia exercises the votes on the Specified Number of Tinto Shares to be Voted (if any) in such a way as to reflect as nearly as possible the proportion of votes cast in favour and against the resolution referred to in paragraph (b) and RTP Shareholder SVC shall exercise the Specified Number of Votes attaching to the RTL Special Voting Share (if any) in such a way as to ensure that, taking into account the way in which the Specified Number of Tinto Shares to be Voted have been voted (if applicable), the provisions of paragraph (b) will be satisfied. |
4.4 | If RTP shall not have complied with all of its obligations under Clause 3 or RTAH shall not have complied with all of its obligations under Clauses 4.2 and 4.3, RTP Shareholder SVC shall not be obliged to cast any of the votes attaching to the RTL Special Voting Share on a Joint Decision Matter. | |
5 | Relevant RTL Constitutional Amendments | |
5.1 | Each of RTL and RTP agrees with the other and RTP Shareholder SVC that any Relevant RTL Constitutional Amendment shall be submitted for approval to a separate general meeting of holders of RTP Ordinary Shares and to a general meeting of RTL shareholders at which RTP Shareholder SVC shall vote or abstain from voting in accordance with the provisions of this Clause 5. | |
5.2 | Each of RTL and RTP agrees with the other and RTP Shareholder SVC that if a Relevant RTL Constitutional Amendment is to be considered, it shall do all such acts and things necessary to ensure that the relevant general meeting of RTLs shareholders and separate general meeting of holders of RTP Ordinary Shares are held on the same day, or as closely in time to each other as practicable (taking into account the fact that some or all of the directors of RTP and RTL may wish to attend both meetings). |
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5.3 | Each of RTL and RTP agrees with the other and RTP Shareholder SVC that any resolution put to such RTL general meeting and RTP separate general meeting shall be decided on by a poll in each case. | |
5.4 | RTL agrees with RTP and RTP Shareholder SVC that any poll at a general meeting of shareholders of RTL relating to a Relevant RTL Constitutional Amendment shall be kept open for such time as to allow the separate general meeting of holders of RTP Ordinary Shares to be held and for the votes attaching to the RTL Special Voting Share (if any) to be calculated and cast on such poll, although such poll may be closed earlier in respect of shares of other classes. | |
5.5 | RTP agrees with RTL and RTP Shareholder SVC that, in relation to each general meeting of RTLs shareholders at which a Relevant RTL Constitutional Amendment is to be considered, RTP shall, as soon as possible after it knows how the holders of RTP Ordinary Shares voted at the separate general meeting of such holders, inform RTP Shareholder SVC and RTL by notice in accordance with Clause 18 of whether or not such equivalent resolution or resolutions were passed as Special Resolutions of the Publicly-held RTP Ordinary Shares. | |
5.6 | In relation to every general meeting of RTL at which any Relevant RTL Constitutional Amendment is to be considered, RTP Shareholder SVC agrees with RTP and RTL to be present by its corporate representative appointed in accordance with subsection 250D(1) of the Corporations Act or by proxy or proxies, and on any resolution relating to a Relevant RTL Constitutional Amendment: |
(a) | as soon as practicable after it has been informed by RTP that any Relevant RTL Constitutional Amendment has been approved by a Special Resolution of the Publicly-held RTP Ordinary Shares, to give its consent to the Relevant RTL Constitutional Amendment in accordance with Article 7(d) or Article 7(e) of the RTL Memorandum and Articles (as applicable) and not to cast any votes attaching to the RTL Special Voting Share in relation to the Relevant RTL Constitutional Amendment; and | ||
(b) | to withhold its consent to any Relevant RTL Constitutional Amendment in accordance with Article 7(d) or Article 7(e) of the RTL Memorandum and Articles (as applicable) and to exercise all of the votes attaching to the RTL Special Voting Share in such a way as to defeat any resolution to make any Relevant RTL Constitutional Amendment which it has been informed by RTP has not been approved by a Special Resolution of the Publicly-held RTP Ordinary Shares. By exercising all of the votes attaching to the RTL Special Voting Share in such manner, RTP Shareholder SVC will be deemed not to consent to the Relevant RTL Constitutional Amendment. |
5.7 | If RTP shall not have complied with all its obligations under this Clause 5, RTP Shareholder SVC shall not be obliged to give its consent to, or to cast any of the votes attaching to the RTL Special Voting Share on, a Relevant RTL Constitutional Amendment. | |
6 | Class Rights of the RTL Special Voting Share | |
6.1 | RTP Shareholder SVC, as holder of the RTL Special Voting Share, agrees with RTL and RTP to give its consent to a variation or abrogation or deemed variation or abrogation of the rights of the RTL Special Voting Share pursuant to Article 7 of the RTL Memorandum |
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and Articles whenever, but only if, RTP has informed it that the variation or abrogation or deemed variation or abrogation (as the case may be) has been approved by: |
(a) | in the case of the Class Rights Actions listed in Clause 5.1.1 of the Sharing Agreement, an Ordinary Resolution of the Publicly-held RTP Ordinary Shares; and | ||
(b) | in the case of the Class Rights Actions listed in Clause 5.1.2 of the Sharing Agreement, a Special Resolution of the Publicly-held RTP Ordinary Shares. |
6.2 | RTP agrees with RTP Shareholder SVC and RTL that, whenever a variation or abrogation or deemed variation or abrogation pursuant to Article 7 of the RTL Memorandum and Articles of the rights of the RTL Special Voting Share is proposed, a separate general meeting of the holders of RTP Ordinary Shares shall be convened for the purpose of considering the relevant resolution under Clause 6.1(a) or 6.1(b) approving such variation or abrogation or deemed variation or abrogation, and RTP shall, as soon as it knows how the holders of Publicly-held RTP Ordinary Shares voted on such resolution, inform RTP Shareholder SVC and RTL by notice in accordance with Clause 18 of the result. | |
6.3 | RTP Shareholder SVC agrees with RTL and RTP that it shall, as soon as reasonably practicable and in any event within one Business Day of being informed of the result of the resolution referred to in Clause 6.2 give or refuse its consent in writing to the variation or abrogation or deemed variation or abrogation of the rights of the RTL Special Voting Share in question and shall send such consent or refusal to RTL (with a copy to RTP) as a notice in accordance with Clause 18. | |
7 | Transfer of RTL Special Voting Share | |
RTP Shareholder SVC agrees with RTL and RTP that except in the circumstances set out in Clauses 17.1 and 17.2, it shall not transfer the RTL Special Voting Share to any other person unless both: |
(a) | a Special Resolution of the Publicly-held RTL Ordinary Shares consenting to the transfer to that person shall have been passed; and | ||
(b) | a Special Resolution of the Publicly-held RTP Ordinary Shares consenting to the transfer to that person shall have been passed. |
8 | Obligations Subject to Applicable Laws and Regulations | |
Each of the obligations of the parties hereunder will be subject to any applicable law and regulation of any relevant regulatory body. | ||
9 | Default by RTP, RTAH or RTL | |
9.1 | If at any time default is made by RTL, RTAH or RTP in the performance or observance of any obligation or other provision binding on it under or pursuant to this Agreement and owed to RTP Shareholder SVC, RTP Shareholder SVC shall institute such proceedings as it may reasonably consider to be appropriate in relation to any such default and shall not be obliged to give notice of its intention to do so. | |
9.2 | For the removal of doubt, neither RTL nor RTP is entitled to institute proceedings to enforce a covenant made under this Agreement which is not given in its favour. |
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10 | Supply of Information; Confidentiality | |
10.1 | So long as RTP Shareholder SVC is registered as the holder of the RTL Special Voting Share, RTL shall give to RTP Shareholder SVC or any person approved by RTL and RTP and appointed in writing by RTP Shareholder SVC such information as it or he shall reasonably require (other than information which is of a price-sensitive nature and not generally available) for the purpose of the discharge of the powers, duties and discretions vested in it under this Agreement. | |
10.2 | So long as RTP Shareholder SVC is registered as the holder of the RTL Special Voting Share, RTP shall give to RTP Shareholder SVC or any person approved by RTL and RTP and appointed in writing by RTP Shareholder SVC such information as it or he shall reasonably require (other than any information which is of a price-sensitive nature and not generally available) for the purpose of the discharge of the powers, duties and discretions vested in it under this Agreement. | |
10.3 | RTP Shareholder SVC undertakes, and agrees to use its best endeavours to procure that any person appointed in writing by it in accordance with Clause 10.1 or 10.2 shall undertake to RTL and RTP not to divulge any information given to it pursuant to Clause 10.1 or 10.2 which is confidential to the party which gave it the information unless prior written approval is given by the party which gave it the information or unless required by applicable law or any regulatory authority. | |
11 | Remuneration and Expenses of RTP Shareholder SVC | |
11.1 | RTP shall pay or procure that payment is made to RTP Shareholder SVC or its nominee of such fees and expenses as may be agreed from time to time between RTP, Law Debenture and RTP Shareholder SVC. | |
11.2 | The remuneration referred to in Clause 11.1 shall continue to be payable until RTP Shareholder SVC shall cease to be registered as the holder of the RTL Special Voting Share. | |
11.3 | In the event of RTP Shareholder SVC finding it expedient or necessary or being required to undertake any exceptional duties in relation to the performance of its obligations and the exercise of the powers, authorities and discretions vested in it under this Agreement RTP shall pay RTP Shareholder SVC such special remuneration in addition to that referred to in Clause 11.1 as shall be mutually agreed. | |
11.4 | RTP shall pay the remuneration referred to in Clause 11.1 and any additional special remuneration under Clause 11.3 exclusive of any applicable value added tax (or any Australian equivalent) which shall be added at the rate applicable in the circumstances and paid by RTP. | |
11.5 | RTP shall in addition pay all travelling and other costs, charges and expenses including legal costs and other professional fees (including, where applicable, value added tax or any Australian equivalent) which the RTP Shareholder SVC may properly incur in relation to the performance of its obligations and the exercise of the powers, authorities and discretions vested in it under this Agreement. |
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12 | Powers etc. of RTP Shareholder SVC | |
12.1 | RTP Shareholder SVC may in relation to this Agreement act on the opinion or advice of or information obtained from any lawyer, valuer, banker, accountant, the registrars for the time being of RTL or RTP or other expert, whether obtained by RTL or RTP or by RTP Shareholder SVC or otherwise, and in any such case, provided that RTP Shareholder SVC shall have acted reasonably in its choice of any such person, RTP Shareholder SVC shall not be responsible for any losses, liabilities, costs, claims, actions, damages, expenses or demands which it may incur or which may be made against it in connection with or occasioned by so acting. Any such opinion, advice or information may be sought or obtained by letter, facsimile, telegram, telex or cable and RTP Shareholder SVC shall not be liable for acting on any opinion, advice or information or for acting on, implementing and giving effect to any decision, determination or adjustment purporting to be conveyed by any such letter, facsimile, telegram, telex or cable appearing on its face to be authentic although the same shall contain an error or shall not be authentic. | |
12.2 | RTP Shareholder SVC shall have all requisite powers, authorities and discretions as shall be necessary or appropriate to enable it to take all and any such actions as it is contemplated by the other provisions of this Agreement and the provisions of Articles 7 and 74 of the RTL Memorandum and Articles that RTP Shareholder SVC should take. | |
12.3 | Save as otherwise expressly provided in this Agreement RTP Shareholder SVC shall, as regards all powers, authorities and discretions vested in it under this Agreement, have absolute and uncontrolled discretion as to the exercise or non-exercise thereof and, provided it shall have acted honestly and reasonably, it shall be in no way responsible for any losses, costs, damages, expenses, liabilities, actions, demands or inconveniences that may result from the exercise or non-exercise thereof. | |
12.4 | RTP Shareholder SVC shall not be responsible for having acted upon or having implemented or given effect to any resolution purporting to have been passed as an Ordinary Resolution of the Publicly-held RTP Ordinary Shares or a Special Resolution of the Publicly-held RTP Ordinary Shares at any meeting of the holders of RTP Ordinary Shares in respect whereof minutes have been made and signed (or in respect of which it has been informed by a director or the secretary of RTL or RTP or other duly authorised person that the resolution has been passed) even though it may subsequently be found that there was some defect in the constitution of the meeting or the passing of the resolution or that for any reason the resolution was not valid or binding upon the holders of the relevant shares or (as the case may be) was not in accordance with this Agreement. | |
12.5 | Each of Law Debenture and RTP Shareholder SVC shall be at liberty to accept a notice given under Clause 18 signed or purporting to be signed by any director or the secretary of RTL or RTP as appropriate and shall otherwise be at liberty to accept a certificate signed or purporting to be signed by any two of the directors of RTL or RTP or other duly authorised person as to any fact or matter upon which Law Debenture or, as the case may be, RTP Shareholder SVC may in the performance of any of its obligations and the exercise of any of the powers, authorities and discretions under this Agreement require to be satisfied or to have information or a statement to the effect that in the opinion of the persons so certifying any particular dealing, transaction, step or thing is expedient and neither Law Debenture nor RTP Shareholder SVC shall be in any way bound to call for further evidence nor to verify the accuracy of the contents thereof nor be responsible for any losses, liabilities, costs, damages, actions, demands or expenses or for any breach of |
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any of the provisions of this Agreement that may be occasioned by accepting or acting or relying on any such certificate or notice. | ||
12.6 | RTP Shareholder SVC shall not be bound to take any steps to ascertain whether any breach of any of the provisions of this Agreement has occurred and, until it shall have actual knowledge to the contrary, RTP Shareholder SVC shall be entitled to assume that no such breach has occurred. | |
12.7 | Notwithstanding any other provision of this Agreement, RTP Shareholder SVC may refrain from acting if it has not been supplied with such information as it considers necessary to enable it to comply with the terms of this Agreement, having requested such information. | |
13 | Indemnities | |
13.1 | Subject to Clause 13.2, RTP agrees with RTP Shareholder SVC to indemnify it, its directors, officers, employees, controlling persons and every attorney, manager, agent, delegate or other person appointed by it under this Agreement against all liabilities and expenses incurred by it or him in the execution or purported execution of its obligations under this Agreement and of any powers, authorities or discretions vested in it or him pursuant to this Agreement and against all actions, proceedings, costs, claims, damages, expenses and demands in respect of any matter or thing done or omitted in any way relating to this Agreement, including, without limitation, any consent required to be given by RTP Shareholder SVC in accordance with Clause 6.1 or the institution by RTP Shareholder SVC of any proceedings pursuant to Clause 9 in respect of any default by RTL, RTAH or RTP. | |
13.2 | Nothing contained in this Agreement shall, in any case in which RTP Shareholder SVC or, as the case may be, any attorney, manager, agent, delegate or other person appointed by RTP Shareholder SVC under this Agreement has been guilty of fraud or gross negligence in the performance of any of its duties hereunder exempt RTP Shareholder SVC or, as the case may be, such attorney, manager, agent, delegate or other person appointed by RTP Shareholder SVC under this Agreement from or indemnify him or it against any liability for breach of contract or any liability which by virtue of any rule of law would otherwise attach to him or it in respect of any negligence, default or breach of duty of which he or it may be guilty in relation to his or its duties under this Agreement. | |
14 | RTP Shareholder SVCS Activities | |
For as long as RTP Shareholder SVC shall be registered as the holder of the RTL Special Voting Share: |
(a) | RTP Shareholder SVC agrees that the only activities carried out by RTP Shareholder SVC (unless both RTL and RTP expressly agree in writing) shall be such activities as are necessary or expedient in order for RTP Shareholder SVC to perform its obligations and exercise its powers, authorities and discretions pursuant to this Agreement and enforce the performance by each of RTL, RTP and RTAH of its obligations hereunder; and | ||
(b) | Law Debenture agrees to procure so far as it is able as Trustee under the RTP Shareholder SVC Trust Deed that RTP Shareholder SVC shall not breach the undertaking given by it in (a) above and that no changes shall be made to the |
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Memorandum and Articles of Association of RTP Shareholder SVC unless both RTL and RTP expressly agree thereto in writing. |
15 | Ownership and Directors of RTP Shareholder SVC | |
15.1 | For as long as RTP Shareholder SVC shall be registered as the holder of the RTL Special Voting Share, Law Debenture agrees with each of RTL and RTP (subject to the RTP Shareholder SVC Trust Deed) (i) that it or (with the consent of RTP and RTL) its nominee shall remain the registered holder of the RTP Shareholder SVC Shares; and (ii) that Law Debenture shall not create or allow to subsist any lien, charge or encumbrance over any RTP Shareholder SVC Shares. | |
15.2 | For as long as RTP Shareholder SVC shall be registered as the holder of the RTL Special Voting Share, RTP Shareholder SVC agrees with each of RTL and RTP, and Law Debenture agrees with each of RTL and RTP to procure (so far as it is able as Trustee under the RTP Shareholder SVC Trust Deed), that RTP Shareholder SVC will not create, allot or issue any shares or securities or grant any right to, or take any action which might require, the creation, allotment or issue of any such shares or securities or increase, repay, redeem or reduce any of its share capital. | |
15.3 | For as long as RTP Shareholder SVC shall be the registered holder of the RTL Special Voting Share, Law Debenture agrees to procure (so far as it is able as Trustee under the RTP Shareholder SVC Trust Deed) that the only directors (including any alternate directors) of RTP Shareholder SVC shall be persons who are not directors or employees of RTP, RTL or any of their respective Subsidiaries provided that Law Debenture shall not thereby assume any obligation to procure that an appropriate number of persons are available for appointment as directors of RTP Shareholder SVC. | |
16 | Amendments to this Agreement | |
RTP Shareholder SVC, RTAH and Law Debenture shall at any time concur with RTP and RTL in making any modifications to the provisions of this Agreement which: |
(a) | are formal or technical amendments and which RTL and RTP inform it are not materially prejudicial to the interests of either RTP or RTL shareholders; | ||
(b) | are necessary to correct manifest errors in this Agreement or inconsistencies between provisions of this Agreement or between provisions of this Agreement and the Sharing Agreement; | ||
(c) | are by way of an amendment agreed between the parties pursuant to Clause 21.4; or | ||
(d) | have previously been sanctioned by a Special Resolution of the Publicly-held RTL Ordinary Shares and a Special Resolution of the Publicly-held RTP Ordinary Shares, |
provided in each case that such modification does not affect the obligations or rights of RTP Shareholder SVC or Law Debenture under this Agreement or any provision affecting the performance by either of them of its obligations under this Agreement. |
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17 | Transfer of the RTL Special Voting Share by RTP Shareholder SVC | |
17.1 | Each of the parties agrees with each of the others that RTP Shareholder SVC may transfer the RTL Special Voting Share to another party at any time upon giving to RTL and RTP not less than three months written notice without assigning any reason, provided that no such transfer shall take effect unless and until a transferee of the RTL Special Voting Share satisfactory to both RTL and RTP shall have been found which has agreed to be bound by this Agreement or an agreement on equivalent terms. | |
17.2 | Each of the parties agrees with each of the others that RTL and RTP together may require RTP Shareholder SVC to transfer the RTL Special Voting Share to a transferee of their choice: |
(a) | by notice in writing effective forthwith if RTP Shareholder SVC or Law Debenture shall be in breach of any of the terms of this Agreement; and | ||
(b) | by two months notice in writing without assigning any reason following the passing of a Special Resolution of the Publicly-held RTP Ordinary Shares and a Special Resolution of the Publicly-held RTL Ordinary Shares to the effect that RTP Shareholder SVC should transfer the RTL Special Voting Share. |
17.3 | Upon the transfer by RTP Shareholder SVC of the RTL Special Voting Share in accordance with this Clause 17: |
(a) | this Agreement (apart from this Clause) shall be terminated as regards RTP Shareholder SVC and Law Debenture; | ||
(b) | RTP shall pay to RTP Shareholder SVC any accrued remuneration and any other sums payable to it under Clause 11 or 13 and no further sums; and | ||
(c) | no further liabilities on the part of or to RTP Shareholder SVC or Law Debenture shall arise under this Agreement except for any liabilities which had already accrued at the time of such transfer. |
18 | Notices | |
18.1 | Any notice, demand, consent or other communication to RTP Shareholder SVC, Law Debenture, RTAH, RTL or RTP required to be given, made or served for any purposes under this Agreement shall be given to, made or served on a party by hand, by email or by facsimile transmission as follows: |
18.1.1 | by delivering it by hand to the address(es) set out below (or to such other address(es) as may have been notified to the other parties in accordance with this Clause 18): |
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to RTP Shareholder SVC: | Fifth Floor | ||
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100 Wood Street | |||
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London EC2V 7EX | |||
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England | |||
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Attention: The Company Secretary The Law Debenture | |||
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Trust Corporation p.l.c. | |||
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and |
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27th Floor | |||
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530 Collins Street | |||
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Melbourne | |||
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Victoria 3000 | |||
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Australia | |||
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Attention: The Company Secretary, RTP Shareholder SVC | |||
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to Law Debenture: | Fifth Floor | ||
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100 Wood Street | |||
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London EC2V 7EX | |||
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England | |||
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Attention: The Secretary | |||
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to RTAH: | 2 Eastbourne Terrace | ||
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London W2 6LG | |||
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England | |||
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Attention: The Company Secretary | |||
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to RTL: | 33rd Floor | ||
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120 Collins Street | |||
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Melbourne 3000 | |||
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Victoria, Australia | |||
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Attention: The Company Secretary | |||
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to RTP: | 2 Eastbourne Terrace | ||
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London W2 6LG | |||
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England | |||
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Attention: The Company Secretary |
18.1.2 | by sending it by facsimile to the facsimile number(s) set out below (or to such other facsimile number(s) as may from time to time have been notified to the other parties in accordance with this Clause 18): |
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to RTP Shareholder SVC: | (44) 207 606 0643 (for the attention of The Company | ||
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Secretary The Law Debenture Trust Corporation p.l.c.) | |||
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and | |||
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(61) 3 9614 4661 (for the attention of The Company Secretary, RTP Shareholder SVC); | |||
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to Law Debenture: | (44) 207 606 0643 (for the attention of The Secretary) | ||
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to RTAH: | (44) 20 7781 1827 (for the attention of The Company Secretary) | ||
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to RTL: | (613) 9283 3707 (for the attention of The Company Secretary) |
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to RTP: | (44) 20 7781 1827 (for the attention of The Company Secretary) |
18.1.3 | by sending it by email to the email address(es) set out below (or such other email address(es) as may from time to time have been notified to the other parties in accordance with this Clause 18): |
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to RTP Shareholder SVC: | cosec@lawdeb.co.uk (for the attention of The Company Secretary The Law Debenture Trust Corporation p.l.c.) | ||
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and | |||
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doyle815@bigpond.com (for the attention of The Company Secretary, RTP Shareholder SVC) | |||
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and | |||
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robwilliams@homechoice.co.uk (for the attention of The Company Secretary, RTP Shareholder SVC) | |||
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and | |||
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richard.spurio@aar.com.au (for the attention of The Company Secretary, RTP Shareholder SVC); | |||
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to Law Debenture: | cosec@lawdeb.co.uk (for the attention of The Secretary) | ||
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to RTAH: | matthew.whyte@riotinto.com (for the attention of The Company Secretary) | ||
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to RTL: | stephen.consedine@riotinto.com (for the attention of The Company Secretary) | ||
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to RTP: | matthew.whyte@riotinto.com (for the attention of The Company Secretary) |
(i) | if delivered by hand, at the time of delivery; | ||
(ii) | if sent by facsimile, on receipt of a transmission record indicating successful transmission to the correct number; and | ||
(iii) | if sent by email, at the time the email enters the Designated Information System of the intended recipient provided that no error message indicating failure to deliver has been received by the sender. For the purposes of this Clause, Designated Information System means the Information System designated by a party hereunder to receive electronic notices to this Agreement as identified by the email address specified in Clause 18.1.3 above and Information System means a system for generating, sending, receiving, storing or otherwise processing electronic communications. |
18.2 | Any notice to RTP Shareholder SVC shall be copied to Law Debenture. |
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19 | Submission to Jurisdiction | |
19.1 | Each of RTL and RTP Shareholder SVC hereby submit to the non-exclusive jurisdiction of the English courts in any proceedings brought against it by any of the others in respect of this Agreement and for such purposes RTL hereby irrevocably appoints Trusec Limited of 2 Lambs Passage, London EC1Y 8BB and RTP Shareholder SVC irrevocably appoints Law Debenture Trustees Limited of Fifth Floor, 100 Wood Street, London EC2V 7EX, England as its agent to receive service of any proceedings in such courts. | |
19.2 | Each of Law Debenture, RTAH and RTP hereby submit to the non-exclusive jurisdiction of the courts of Australia in any proceedings brought against it by any of the others in respect of this Agreement and for such purposes each of RTP and RTAH hereby irrevocably appoints Allens Arthur Robinson Corporate Pty Ltd. (ACN 001 314 512) of Level 5, Deutsche Bank Place, 126 Phillip Street, Sydney NSW 2000 and Law Debenture hereby irrevocably appoints Allens Arthur Robinson Operations Pty Ltd (ACN 004 992 607) of Level 5, Deutsche Bank Place, 126 Phillip Street, Sydney NSW 2000 as its agent to receive service of any proceedings in such courts. | |
20 | Damages not Adequate Remedy | |
Each of Law Debenture, RTP Shareholder SVC, RTAH, RTL and RTP hereby acknowledge and agree with each other that damages would not be an adequate remedy for the breach of any provision of this Agreement and, accordingly, each shall be entitled (to the extent entitled to institute proceedings in relation to the breach) to the remedies of injunction, specific performance and other equitable remedy for any such threatened or actual breach. | ||
21 | Miscellaneous | |
21.1 | No assignment | |
Except as expressly otherwise provided herein, none of the parties may assign any of its rights or obligations under this Agreement in whole or in part without the approval of each of the others. | ||
21.2 | No waiver | |
No waiver by a party of a failure or failures by any of the other parties to perform any provision of this Agreement shall operate or be construed as a waiver in respect of any other or further failure whether of a like or different character. | ||
21.3 | No partnership or agency | |
Nothing in this Agreement (or in any of the arrangements contemplated hereby) shall be deemed to constitute a partnership between any of the parties to this Agreement, nor constitute any party as agent of any other party for any purpose. | ||
21.4 | Severance | |
If any of the provisions of this Agreement is or becomes invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired. Notwithstanding the foregoing, the parties shall thereupon negotiate in good faith in order to agree the terms of a mutually satisfactory provision, achieving as |
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nearly as possible the same commercial effect, to be substituted for the provision found to be invalid, illegal or unenforceable. | ||
21.5 | Whole Agreement | |
This Agreement supersedes any previous written or oral agreement between the parties in relation to the matters dealt with in this Agreement and contains the whole agreement between the parties relating to the subject matter of this Agreement at the date hereof to the exclusion of any terms implied by law which may be excluded by contract. The parties acknowledge that they have not been induced to enter into this Agreement by any representation, warranty or undertaking not expressly incorporated into it. So far as permitted by law and except in the case of fraud, the parties agree and acknowledge that their only rights and remedies in relation to any representation, warranty or undertaking made or given in connection with this Agreement shall be for breach of the terms of this Agreement, to the exclusion of all other rights and remedies (including those in tort or arising under statute). In this Clause this Agreement includes all documents entered into pursuant to this Agreement. | ||
21.6 | Counterparts | |
This Agreement may be entered into in any number of counterparts, all of which taken together shall constitute one and the same instrument. Any party may enter into this Agreement by signing any such counterpart. | ||
22 | Governing Law | |
This Agreement shall be governed by, and construed in accordance with, the laws of England. |
SIGNED by
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} | /s/ Guy Elliot | |||
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for and on behalf of RIO TINTO PLC in the presence of:
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Guy Elliot | ||||
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SIGNED by
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} | /s/ Rob Williams | |||
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for and on behalf of RTP
SHAREHOLDER SVC PTY LIMITED (ACN 070 481 908) in the presence of: |
Rob Williams | ||||
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/s/ David Doyle | ||||
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David Doyle | ||||
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THE COMMON SEAL of RIO TINTO LIMITED
(ACN 004 458 404) was |
} | /s/ Guy Elliot | |||
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hereunto affixed in the presence of:
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Guy Elliot | ||||
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/s/ Ben Mathews | ||||
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Ben Mathews |
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SIGNED by
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/s/ Matthew Whyte | ||
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for and on behalf of RIO TINTO AUSTRALIAN HOLDINGS
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Matthew Whyte | ||
LIMITED in the presence of:
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THE COMMON SEAL of THE LAW DEBENTURE TRUST
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/s/ Caroline Banszky | ||
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CORPORATION p.l.c. was hereunto affixed in the
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Caroline Banszky | ||
presence of:
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(1) | RIO TINTO LIMITED (ACN 004 458 404), a company incorporated in Victoria, Australia, whose registered office is at Level 33, 120 Collins Street, Melbourne, 3000, Victoria, Australia ( RTL ); | |
(2) | RTL SHAREHOLDER SVC LIMITED , a company incorporated in England with registered number 3115178, whose registered office is at Fifth floor, 100 Wood Street, London EC2V 7EX ( RTL Shareholder SVC ); | |
(3) | RIO TINTO PLC , a company incorporated in England with registered number 719885, whose registered office is at 2 Eastbourne Terrace, London W2 6LG ( RTP ); and | |
(4) | THE LAW DEBENTURE TRUST CORPORATION p.l.c. , a company incorporated in England with registered number 1675231, whose registered office is at Fifth floor, 100 Wood Street, London EC2V 7EX ( Law Debenture ). |
(A) | Following announcements made on 9 October 1995, RTL and RTP entered into an Implementation Agreement on 3 November 1995 pursuant to which RTL and RTP have agreed to do certain acts and things to implement the DLC Merger of RTL and RTP. | |
(B) | RTL Shareholder SVC has agreed to vote the RTP Special Voting Share in accordance with the provisions of this Agreement. |
1 | Definitions and Interpretation |
(A) | In this Agreement, unless the context shall otherwise require, the following expressions shall have the following meanings: | |
Australian dollars means the lawful currency from time to time of Australia; | ||
Business Day means a day on which banks are ordinarily open for business in both London and Melbourne, excluding Saturdays and Sundays; | ||
Class Rights Action means any of the actions listed in Article 33(A) of the RTP Memorandum and Articles, if undertaken or to be undertaken by RTP; | ||
Companies Act Subsidiary has the meaning ascribed to the term subsidiary in Section 1159 of the Companies Act 2006 and shall mean when used in reference to a company any subsidiary of that company from time to time; | ||
Completion means the time at which the steps set out in Clause 5 of the Implementation Agreement have been completed; | ||
Corporations Act means the Corporations Act 2001 (Commonwealth of Australia) and includes a reference to the Corporations Regulations made under that Act; | ||
Corporations Act Subsidiary has the meaning ascribed to the term subsidiary in Section 9 of the Corporations Act and when used in reference to a body corporate shall mean any subsidiary of that body corporate from time to time; |
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DLC Merger means the merger of RTP and RTL so that, inter alia , RTL and RTP have a unified management structure and so that the business of both the RTL Group and the RTP Group are run on a unified basis; | ||
Equalisation Fraction means the Equalisation Ratio expressed as a fraction with the numerator being the number relating to the RTL Ordinary Shares and the denominator being the number relating to the RTP Ordinary Shares; | ||
Equalisation Ratio means the ratio of the dividend, capital and voting rights per RTL Ordinary Share to the dividend, capital and voting rights per RTP Ordinary Share (which will be 1:1 immediately following the RTL Bonus Issue), which shall be subject to adjustment in accordance with Clause 5.1.2(d) of the Sharing Agreement and paragraph 5 of Schedule 2 of the Sharing Agreement; | ||
Excluded RTL Holder means a Relevant Person (who is not a Permitted Person) (both as defined in the RTL Memorandum and Articles) and on whom a notice has been served under Article 145D of the RTL Memorandum and Articles which has not been complied with to the satisfaction of the RTL directors or withdrawn; | ||
Excluded RTP Holder means a Relevant Person (who is not a Permitted Person) (both as defined in the RTP Memorandum and Articles) and on whom a notice has been served under Article 64(E) of the RTP Memorandum and Articles or on whom a direction notice has been served under Article 63 of the RTP Memorandum and Articles which in either case has not been complied with to the satisfaction of the RTP directors or withdrawn; | ||
Implementation Agreement means the Agreement headed DLC Merger Implementation Agreement entered into between RTL and RTP on 3 November 1995; | ||
Joint Decision has the meaning given to it in the Sharing Agreement; | ||
Joint Decision Matter has the meaning given to it in the Sharing Agreement; | ||
Ordinary Resolution of the Publicly-held RTL Ordinary Shares means a resolution passed on a poll by a simple majority of the votes cast thereon at a general meeting of RTL or a separate general meeting of the holders of RTL Ordinary Shares of which notice specifying the intention to propose such resolution as an ordinary resolution has been duly given and on which in either case only votes attaching to Publicly-held RTL Ordinary Shares (other than shares held by an Excluded RTL Holder or by an Excluded RTP Holder) have been cast or on which votes attaching to non Publicly-held Shares have been disregarded; | ||
Ordinary Resolution of the Publicly-held RTP Ordinary Shares means a resolution passed on a poll by a simple majority of the votes cast thereon at a general meeting of RTP or a separate general meeting of the holders of RTP Ordinary Shares of which notice specifying the intention to propose such resolution as an ordinary resolution has been duly given and on which in either case only votes attaching to Publicly-held RTP Ordinary Shares (other than shares held by an Excluded RTP Holder or by an Excluded RTL Holder) have been cast or on which votes attaching to non Publicly-held Shares have been disregarded; | ||
Parallel General Meeting in relation to RTL or RTP means the general meeting of the shareholders of that company which is most nearly contemporaneous with the general meeting of the shareholders of the other company and at which some or all of the same matters or some or all equivalent matters are considered; |
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Publicly-held Ordinary Shares means in relation to RTL, Publicly-held RTL Ordinary Shares and, in relation to RTP, Publicly-held RTP Ordinary Shares; | ||
Publicly-held RTL Ordinary Shares means RTL Ordinary Shares the beneficial owners of which are not members of the RTP Group; | ||
Publicly-held RTP Ordinary Shares means RTP Ordinary Shares the beneficial owners of which are not members of the RTL Group; | ||
Publicly-held Shares means, in relation to RTL, Publicly-held RTL Ordinary Shares and, in relation to RTP, Publicly-held RTP Ordinary Shares; | ||
Relevant RTP Constitutional Amendment means the amendment, removal, alteration of the effect of (or ratification of any breach of) any RTP Entrenched Provision (as that term is defined in the RTP Memorandum and Articles) or the amendment, removal or alteration of the effect of any other provision of the RTP Memorandum and Articles which amendment, removal or alteration is treated as subject to Clause 5.1.3 of the Sharing Agreement pursuant to that Clause 5.1.3; | ||
RTL Bonus Issue means the bonus issue of 7.5 RTL Ordinary Shares for each 100 RTL Ordinary Shares to take place following Completion; | ||
RTL Group means RTL and its Subsidiaries from time to time; | ||
RTL Memorandum and Articles means the Memorandum and Articles of Association of RTL which will be in effect immediately following Completion, as amended from time to time; | ||
RTL Ordinary Shares means the issued ordinary shares in RTL from time to time; | ||
RTL Special Voting Share means the special voting share in RTL; | ||
RTL Shareholder SVC Share means the 1 issued share of £1 in the capital of RTL Shareholder SVC; | ||
RTP Group means RTP and its Subsidiaries from time to time; | ||
RTP Memorandum and Articles means the Memorandum and Articles of Association of RTP which will be in effect immediately following Completion, as amended from time to time; | ||
RTP Ordinary Shares means the issued ordinary shares of 10p each in RTP from time to time; | ||
RTP Special Voting Share means the special voting share of 10p in the capital of RTP; | ||
Sharing Agreement means the Agreement of even date herewith headed DLC Merger Sharing Agreement between RTL and RTP as amended from time to time; | ||
Special Resolution of the Publicly-held RTL Ordinary Shares means a resolution passed on a poll by not less than a three-fourths majority of the votes cast thereon at a general meeting of RTL or at a separate general meeting of the holders of RTL Ordinary Shares of which notice specifying the intention to propose such resolution as a special resolution has been duly given and on which in either case only votes attaching to Publicly-held RTL Ordinary Shares (other than shares held by an Excluded RTL Holder or by an Excluded RTP Holder) have been cast or on which votes attaching to non Publicly-held Shares have been disregarded; |
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Special Resolution of the Publicly-held RTP Ordinary Shares means a resolution passed on a poll by not less than a three-fourths majority of the votes cast thereon at a general meeting of RTP or at a separate general meeting of the holders of RTP Ordinary Shares of which notice specifying the intention to propose the resolution as a special resolution has been duly given and on which in either case only votes attaching to Publicly-held RTP Ordinary Shares (other than shares held by an Excluded RTP Holder or by an Excluded RTL Holder) have been cast or on which votes attaching to non Publicly-held Shares have been disregarded; | ||
sterling means the lawful currency from time to time of the United Kingdom; | ||
Subsidiary means, in the case of RTL, a Corporations Act Subsidiary, and in the case of RTP, a Companies Act Subsidiary; | ||
Total Specified Number means in relation to a resolution on a Joint Decision Matter at a general meeting of RTP, the number of votes attaching to Publicly-held RTL Ordinary Shares cast in relation to the equivalent resolution on the poll at the Parallel General Meeting of RTL (other than those cast by any Excluded RTL Holder or by an Excluded RTP Holder) multiplied by the Equalisation Fraction rounded up to the nearest whole number of votes. |
(i) | References in this Agreement to A$ are to Australian dollars and references in this Agreement to £ and p are to pounds sterling and to pence sterling or to such other currencies for the time being of Australia and the United Kingdom respectively | ||
(ii) | Words denoting the singular number only shall include the plural number also and vice versa, words denoting one gender shall include the other genders and words denoting individuals only shall include firms and corporations and vice versa. | ||
(iii) | Unless the context otherwise requires, words or expressions used in this Agreement in relation to RTP shall bear the same meanings as in the Companies Act 2006 and words or expressions used in this Agreement in relation to RTL shall bear the same meanings as in the Corporations Act. | ||
(iv) | In this Agreement unless the context otherwise requires references to Clauses and paragraphs shall be construed as references to Clauses and paragraphs of this Agreement respectively. | ||
(v) | References to resolutions of the holders of Publicly-held Shares of either RTL or RTP shall be deemed to include resolutions of the members of the relevant class of members of the party concerned on which only holders of Publicly-held Shares have cast their votes. | ||
(vi) | References to procedural resolutions comprise all resolutions put to a general meeting which were not included in the notice of such meeting but nevertheless fall to be considered by that meeting. | ||
(vii) | In this Agreement references to an equivalent resolution considered by holders of Publicly-held RTL Ordinary Shares mean the resolution considered at the most nearly contemporaneous general meeting of RTL which bears a close relationship to the relevant resolution being considered at a RTP general meeting. For example, but without limitation, a resolution to appoint or remove an individual as a |
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director of RTL, to appoint or remove the auditors of RTL or to receive and adopt the accounts of RTL would, if no resolution considering such matters in relation to RTP were put to the RTL general meeting, be the equivalent resolution to a resolution relating to the appointment or removal of the same individual as a director of RTP or the appointment or removal of the same international firm of auditors as RTPs auditors or the receipt or adoption of RTPs accounts as the case may be and references to a meeting of RTP considering equivalent matters to those considered at a meeting of RTL shall be similarly construed. | |||
(viii) | References to the votes attaching to non Publicly-held Shares being disregarded in respect of any resolution shall mean that the resolution in question would have been duly passed (or not passed as the case may be) if the votes attaching to the non Publicly-held Shares had not been cast. |
(C) | The Clause headings are inserted herein only for convenience and shall not affect the construction hereof. | |
2 | Joint Decisions. Restrictions on Voting of the RTP Special Voting Share | |
2.1 | Each of RTL and RTP agrees with the other and with RTL Shareholder SVC that any Joint Decision Matter shall be submitted for approval by a resolution of the company affected by the matter and by an equivalent resolution of the other company, each by the same majority (i.e. both by ordinary or both by special resolution) to separate meetings of the shareholders of both RTL and RTP, whether or not such approval is required by law, the rules of any relevant stock exchange or otherwise. | |
2.2 | Each of RTL and RTP agrees with the other and with RTL Shareholder SVC that, if a matter requires a Joint Decision, it shall do all acts and things necessary to ensure that the relevant annual or extraordinary general meetings, as appropriate, are held on the same day or as closely in time to each other as practicable (taking into account the fact that some or all of the directors of RTP and RTL may wish to attend both meetings). | |
2.3 | Each of RTL and RTP agrees with the other and with RTL Shareholder SVC that any resolution put to its general meeting in relation to which the RTP Special Voting Share is or may be entitled to vote pursuant to Clause 5.1 or Clause 6.1 of the Sharing Agreement shall be decided on by a poll. | |
2.4 | RTP agrees with RTL and with RTL Shareholder SVC that any poll on which the RTP Special Voting Share is or may be entitled to vote taken at its general meeting shall be kept open for such time as to allow the Parallel General Meeting of RTL to be held and for the votes attaching to the RTP Special Voting Share to be calculated and cast on such poll although such poll may be closed earlier in respect of shares of other classes. | |
2.5 | RTL agrees with RTL Shareholder SVC that it will procure that any RTP Ordinary Shares beneficially owned by any member of the RTL Group shall not be voted. | |
2.6 | RTL Shareholder SVC agrees with RTL (but not with RTP) that it will not exercise any of the votes attached to the RTP Special Voting Share except in accordance with Clauses 2.7, 4, 5 and 6. | |
2.7 | RTL Shareholder SVC agrees with RTL that at each general meeting of RTP at which any Joint Decision Matter is to be considered it shall procure that a proxy is given to the chairman of the meeting in respect of an aggregate number of votes equal to the Specified |
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Number of votes (referred to in Article 60(B)(ii) of the RTP Memorandum and Articles and notified to RTL Shareholder SVC in accordance with Clause 3.2) so that such votes can be cast on procedural resolutions at that meeting as the chairman may determine. | ||
3 | Notification of Votes Cast on Joint Decisions at Parallel General Meeting. Calculation of Specified Number | |
3.1 | RTL agrees with RTL Shareholder SVC and RTP that, in relation to each general meeting of RTP at which any Joint Decision Matter is to be considered, RTL shall, as soon as possible after it knows how the holders of Publicly-held RTL Ordinary Shares voted on any equivalent resolution or resolutions at the Parallel General Meeting of RTL, inform RTL Shareholder SVC and RTP by notice in accordance with Clause 18 of: |
(a) | how many votes attaching to Publicly-held RTL Ordinary Shares were cast at the Parallel General Meeting of RTL in favour of each resolution equivalent to a resolution related to a Joint Decision Matter proposed at that general meeting of RTP and how many were cast against; and | ||
(b) | its calculation of the Total Specified Number of votes which the RTP Special Voting Share will have in relation to each of the resolutions on such Joint Decision Matters and of the way in which RTL Shareholder SVC is required to exercise the Total Specified Number of votes attaching to the RTP Special Voting Share in relation to each such resolution under Clause 4.2. |
3.2 | RTL agrees with RTL Shareholder SVC and RTP that, prior to the commencement of any RTP general meeting on which a Joint Decision Matter is to be considered, it shall inform RTL Shareholder SVC by notice in accordance with Clause 18 of its calculation of the number of votes in respect of which the proxy referred to in Clause 2.7 shall be given. | |
4 | Exercise of Votes Attaching to the RTP Special Voting Share | |
RTL Shareholder SVC agrees with RTL that, at every general meeting of RTP at which any Joint Decision Matters are to be considered: | ||
4.1 | RTL Shareholder SVC shall be present by its corporate representative appointed in accordance with Section 323 of the Companies Act 2006 or by proxy or proxies; | |
4.2 | Provided that RTL has complied with its obligations under Clause 3, then, on any resolution relating to a Joint Decision Matter, RTL Shareholder SVC shall cast such number of the Total Specified Number of votes in favour of the resolution as equals the number of votes attaching to Publicly-held RTL Ordinary Shares which were cast in favour of the equivalent resolution on the poll at the Parallel General Meeting of RTL (other than those cast by Excluded RTL Holders or by Excluded RTP Holders) multiplied by the Equalisation Fraction and rounded up to the nearest whole number, and shall cast the remainder of the Total Specified Number of votes against the resolution; and | |
4.3 | If RTL shall not have complied with its obligations under Clause 3, RTL Shareholder SVC shall not be obliged to cast any of the votes attaching to the RTP Special Voting Share on a Joint Decision Matter. |
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5 | Relevant RTP Constitutional Amendments | |
5.1 | Each of RTL and RTP agrees with the other and RTL Shareholder SVC that any Relevant RTP Constitutional Amendment shall be submitted for approval to a separate general meeting of holders of RTL Ordinary Shares and to a general meeting of RTP shareholders at which RTL Shareholder SVC shall vote or abstain from voting in accordance with the provisions of this Clause 5. | |
5.2 | Each of RTL and RTP agrees with the other and RTL Shareholder SVC that if a Relevant RTP Constitutional Amendment is to be considered, it shall do all such acts and things necessary to ensure that the relevant general meeting of RTPs shareholders and separate general meeting of holders of RTL Ordinary Shares are held on the same day, or as closely in time to each other as practicable (taking into account the fact that some or all of the directors of RTP and RTL may wish to attend both meetings). | |
5.3 | Each of RTL and RTP agrees with the other and RTL Shareholder SVC that any resolution put to such RTP general meeting and RTL separate general meeting shall be decided on by a poll in each case. | |
5.4 | RTP agrees with RTL and RTL Shareholder SVC that any poll at a general meeting of shareholders of RTP relating to a Relevant RTP Constitutional Amendment shall be kept open for such time as to allow the separate general meeting of holders of RTL Ordinary Shares to be held and for the votes attaching to the RTP Special Voting Share (if any) to be calculated and cast on such poll, although such poll may be closed earlier in respect of shares of other classes. | |
5.5 | RTL agrees with RTP and RTL Shareholder SVC that, in relation to each general meeting of RTPs shareholders at which a Relevant RTP Constitutional Amendment is to be considered, RTL shall, as soon as possible after it knows how the holders of RTL Ordinary Shares voted at the separate general meeting of such holders, inform RTL Shareholder SVC and RTP by notice in accordance with Clause 18 of whether or not such equivalent resolution or resolutions were passed as Special Resolutions of the Publicly-held RTL Ordinary Shares. | |
5.6 | In relation to every general meeting of RTP at which any Relevant RTP Constitutional Amendment is to be considered, RTL Shareholder SVC agrees with RTP and RTL to be present by its corporate representative appointed in accordance with Section 323 of the Companies Act 2006 or by proxy or proxies, and on any resolution relating to a Relevant RTP Constitutional Amendment: |
(i) | not to cast any votes attaching to the RTP Special Voting Share in relation to any Relevant RTP Constitutional Amendment which it shall have been informed by RTL has been approved by a Special Resolution of the Publicly-held RTL Ordinary Shares; and | ||
(ii) | to exercise all of the votes attaching to the RTP Special Voting Share in such a way as to defeat any resolution to make any Relevant RTP Constitutional Amendment which it has been informed by RTL has not been approved by a Special Resolution of the Publicly-held RTL Ordinary Shares. |
5.7 | If RTL shall not have complied with all its obligations under this Clause 5, RTL Shareholder SVC shall not be obliged to cast any of the votes attaching to the RTP Special Voting Share on a Relevant RTP Constitutional Amendment. |
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6 | Class Rights of the RTP Special Voting Share | |
6.1 | RTL Shareholder SVC, as holder of the RTP Special Voting Share, agrees with RTL and RTP to give its consent to a variation or abrogation or deemed variation or abrogation of the rights of the RTP Special Voting Share pursuant to Article 33 of the RTP Memorandum and Articles whenever, but only if RTL has informed it that the variation or abrogation or deemed variation or abrogation (as the case may be) has been approved by: |
(a) | in the case of the Class Rights Actions listed in Clause 5.1.1 of the Sharing Agreement, an Ordinary Resolution of the Publicly-held RTL Ordinary Shares; and | ||
(b) | in the case of the Class Rights Actions listed in Clause 5.1.2 of the Sharing Agreement, a Special Resolution of the Publicly-held RTL Ordinary Shares. |
6.2 | RTL agrees with RTL Shareholder SVC and RTP that, whenever a variation or abrogation or deemed variation or abrogation pursuant to Article 33 of the RTP Memorandum and Articles of the rights of the RTP Special Voting Share is proposed, a separate general meeting of the holders of RTL Ordinary Shares shall be convened for the purpose of considering the relevant resolution under Clause 6.1(a) or 6.1(b) approving such variation or abrogation or deemed variation or abrogation, and RTL shall, as soon as it knows how the holders of Publicly-held RTL Ordinary Shares voted on such resolution, inform RTL Shareholder SVC and RTP by notice in accordance with Clause 18 of the result. | |
6.3 | RTL Shareholder SVC agrees with RTL and RTP that it shall, as soon as reasonably practicable and in any event within one Business Day of being informed of the result of the resolution referred to in Clause 6.2 give or refuse its consent in writing to the variation or abrogation or deemed variation or abrogation of the rights of the RTP Special Voting Share in question and shall send such consent or refusal to RTP (with a copy to RTL) as a notice in accordance with Clause 18. | |
7 | Transfer of RTP Special Voting Share | |
RTL Shareholder SVC agrees with RTL and RTP that except in the circumstances set out in Clauses 17.1 and 17.2, it shall not transfer the RTP Special Voting Share to any other person unless both: |
(a) | a Special Resolution of the Publicly-held RTL Ordinary Shares consenting to the transfer to that person shall have been passed; and | ||
(b) | a Special Resolution of the Publicly-held RTP Ordinary Shares consenting to the transfer to that person shall have been passed. |
8 | Obligations Subject to Applicable Laws and Regulations | |
Each of the obligations of the parties hereunder will be subject to any applicable law and regulation of any relevant regulatory body. | ||
9 | Default by RTP or RTL | |
If at any time default is made by RTP or RTL in the performance or observance of any obligation or other provision binding on it under or pursuant to this Agreement and owed to RTL Shareholder SVC, RTL Shareholder SVC shall institute such proceedings as it may |
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reasonably consider to be appropriate in relation to any such default and shall not be obliged to give notice of its intention to do so. | ||
10 | Supply of Information; Confidentiality | |
10.1 | So long as RTL Shareholder SVC is registered as the holder of the RTP Special Voting Share, RTP shall give to RTL Shareholder SVC or any person approved by RTL and RTP and appointed in writing by RTL Shareholder SVC such information as it or he shall reasonably require (other than information which is of a price-sensitive nature and not generally available) for the purpose of the discharge of the powers, duties and discretions vested in it under this Agreement. | |
10.2 | So long as RTL Shareholder SVC is registered as the holder of the RTP Special Voting Share, RTL shall give to RTL Shareholder SVC or any person approved by RTL and RTP and appointed in writing by RTL Shareholder SVC such information as it or he shall reasonably require (other than any information which is of a price-sensitive nature and not generally available) for the purpose of the discharge of the powers, duties and discretions vested in it under this Agreement. | |
10.3 | RTL Shareholder SVC undertakes, and agrees to use its best endeavours to procure that any person appointed in writing by it in accordance with Clause 10.1 or 10.2 shall undertake, to RTL and RTP not to divulge any information given to it pursuant to Clause 10.1 or 10.2 which is confidential to the party which gave it the information unless prior written approval is given by the party which gave it the information or unless required by applicable law or any regulatory authority. | |
11 | Remuneration and Expenses of RTL Shareholder SVC | |
11.1 | RTL shall pay or procure that payment is made to RTL Shareholder SVC or its nominee of such fees and expenses as may be agreed from time to time between RTL, Law Debenture and of RTL Shareholder SVC. | |
11.2 | The remuneration referred to in Clause 11.1 shall continue to be payable until RTL Shareholder SVC shall cease to be registered as the holder of the RTP Special Voting Share. | |
11.3 | In the event of RTL Shareholder SVC finding it expedient or necessary or being required to undertake any exceptional duties in relation to the performance of its obligations and the exercise of the powers, authorities and discretions vested in it under this Agreement RTL shall pay such RTL Shareholder SVC special remuneration in addition to that referred to in Clause 11.1 as shall be mutually agreed. | |
11.4 | RTL shall pay the remuneration referred to in Clause 11.1 and any additional special remuneration under Clause 11.3 exclusive of any applicable value added tax which shall be added at the rate applicable in the circumstances and paid by RTL. | |
11.5 | RTL shall in addition pay all travelling and other costs, charges and expenses including legal costs and other professional fees (including, where applicable, value added tax) which RTL Shareholder SVC may properly incur in relation to the performance of its obligations and the exercise of the powers, authorities and discretions vested in it under this Agreement. |
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12 | Powers etc. of RTL Shareholder SVC | |
12.1 | RTL Shareholder SVC may in relation to this Agreement act on the opinion or advice of or information obtained from any lawyer, valuer, banker, accountant, the registrars for the time being of RTP or RTL or other expert, whether obtained by RTP or RTL or by RTL Shareholder SVC or otherwise, and in any such case, provided that RTL Shareholder SVC shall have acted reasonably in its choice of any such person, RTL Shareholder SVC shall not be responsible for any losses, liabilities, costs, claims, actions, damages, expenses or demands which it may incur or which may be made against it in connection with or occasioned by so acting. Any such opinion, advice or information may be sought or obtained by letter, facsimile, telegram, telex or cable and RTL Shareholder SVC shall not be liable for acting on any opinion, advice or information or for acting on, implementing and giving effect to any decision, determination or adjustment purporting to be conveyed by any such letter, facsimile, telegram, telex or cable appearing on its face to be authentic although the same shall contain an error or shall not be authentic. | |
12.2 | RTL Shareholder SVC shall have all requisite powers, authorities and discretions as shall be necessary or appropriate to enable it to take all and any such actions as it is contemplated by the other provisions of this Agreement and the provisions of Articles 33 and 60 of the RTP Articles of Association that RTL Shareholder SVC should take. | |
12.3 | Save as otherwise expressly provided in this Agreement RTL Shareholder SVC shall, as regards all powers, authorities and discretions vested in it under this Agreement, have absolute and uncontrolled discretion as to the exercise or non-exercise thereof and, provided it shall have acted honestly and reasonably, it shall be in no way responsible for any losses, costs, damages, expenses, liabilities, actions, demands or inconveniences that may result from the exercise or non-exercise thereof. | |
12.4 | RTL Shareholder SVC shall not be responsible for having acted upon or having implemented or given effect to any resolution purporting to have been passed as an Ordinary Resolution of the Publicly-held RTL Ordinary Shares or a Special Resolution of the Publicly-held RTL Ordinary Shares at any meeting of the holders of RTL Ordinary Shares in respect whereof minutes have been made and signed (or in respect of which it has been informed by a director or the secretary of RTL or RTP or other duly authorised person that the resolution has been passed) even though it may subsequently be found that there was some defect in the constitution of the meeting or the passing of the resolution or that for any reason the resolution was not valid or binding upon the holders of the relevant shares or (as the case may be) was not in accordance with this Agreement. | |
12.5 | Each of Law Debenture and RTL Shareholder SVC shall be at liberty to accept a notice given under Clause 18 signed or purporting to be signed by any director or the secretary of RTL or RTP as appropriate and shall otherwise be at liberty to accept a certificate signed or purporting to be signed by any two of the directors of RTL or RTP or other duly authorised person as to any fact or matter upon which Law Debenture or, as the case may be, RTL Shareholder SVC may in the performance of any of its obligations and the exercise of any of the powers, authorities and discretions under this Agreement require to be satisfied or to have information or a statement to the effect that in the opinion of the persons so certifying any particular dealing, transaction, step or thing is expedient and neither Law Debenture nor RTL Shareholder SVC shall be in any way bound to call for further evidence nor to verify the accuracy of the contents thereof nor be responsible for any losses, liabilities, costs, damages, actions, demands or expenses or for any breach of |
10
any of the provisions of this Agreement that may be occasioned by accepting or acting or relying on any such certificate. | ||
12.6 | RTL Shareholder SVC shall not be bound to take any steps to ascertain whether any breach of any of the provisions of this Agreement has occurred and, until it shall have actual knowledge to the contrary, RTL Shareholder SVC shall be entitled to assume that no such breach has occurred. | |
12.7 | Notwithstanding any other provision of this Agreement, RTL Shareholder SVC may refrain from acting if it has not been supplied with such information as it considers necessary to enable it to comply with the terms of this Agreement having requested such information. | |
13 | Indemnities | |
13.1 | Subject to Clause 13.2, RTL agrees with RTL Shareholder SVC to indemnify it, its directors, officers, employees, controlling persons and every attorney, manager, agent, delegate or other person appointed by it under this Agreement against all liabilities and expenses incurred by it or him in the execution or purported execution of its obligations under this Agreement and of any powers, authorities or discretions vested in it or him pursuant to this Agreement and against all actions, proceedings, costs, claims, damages, expenses and demands in respect of any matter or thing done or omitted in any way relating to this Agreement, including, without limitation, any consent required to be given by RTL Shareholder SVC in accordance with Clause 6.1 or the institution by RTL Shareholder SVC of any proceedings pursuant to Clause 9 in respect of any default by RTP or RTL. | |
13.2 | Nothing contained in this Agreement shall, in any case in which RTL Shareholder SVC or, as the case may be, any attorney, manager, agent, delegate or other person appointed by RTL Shareholder SVC under this Agreement has been guilty of fraud or gross negligence in the performance of any of its duties hereunder exempt RTL Shareholder SVC or, as the case may be, such attorney, manager, agent, delegate or other person appointed by RTL Shareholder SVC under this Agreement from or indemnify him or it against any liability for breach of contract or any liability which by virtue of any rule of law would otherwise attach to him or it in respect of any negligence, default or breach of duty of which he or it may be guilty in relation to his or its duties under this Agreement. | |
14 | RTL Shareholder SVCs Activities | |
For as long as RTL Shareholder SVC shall be registered as the holder of the RTP Special Voting Share: |
(a) | RTL Shareholder SVC agrees that the only activities carried out by RTL Shareholder SVC (unless both RTP and RTL expressly agree in writing) shall be such activities as are necessary or expedient in order for RTL Shareholder SVC to perform its obligations and exercise its powers, authorities and discretions pursuant to this Agreement and enforce the performance by each of RTP and RTL of its obligations hereunder; and | ||
(b) | Law Debenture agrees to procure that RTL Shareholder SVC shall not breach the undertaking given by it in (a) above and that no changes are made to the Memorandum and Articles of Association of RTL Shareholder SVC unless both RTL and RTP expressly agree thereto in writing. |
11
15 | Ownership and Directors of RTL Shareholder SVC | |
15.1 | For as long as RTL Shareholder SVC shall be registered as the holder of the RTP Special Voting Share, Law Debenture agrees with each of RTL and RTP (i) that it shall remain the registered and beneficial holder of the RTL Shareholder SVC Share; and (ii) that Law Debenture shall not create or allow to subsist any lien, charge or encumbrance over the RTL Shareholder SVC Share without the prior written consent of RTL. | |
15.2 | For as long as RTL Shareholder SVC shall be registered as the holder of the RTP Special Voting Share, RTL Shareholder SVC agrees with each of RTL and RTP, and Law Debenture agrees with each of RTL and RTP to procure, that RTL Shareholder SVC will not create, allot or issue any shares or securities or grant any right to, or take any action which might require, the creation, allotment or issue of any such shares or securities or increase, repay, redeem or reduce any of its share capital. | |
15.3 | For as long as RTL Shareholder SVC shall be the registered holder of the RTP Special Voting Share, Law Debenture agrees to procure that the only directors (including any alternate directors) of RTL Shareholder SVC shall be persons who are not directors or employees of RTP, RTL or any of their respective Subsidiaries provided that Law Debenture shall not thereby assume any obligation to procure that an appropriate number of persons are available for appointment as directors of RTL Shareholder SVC. | |
16 | Amendments to this Agreement | |
RTL Shareholder SVC and Law Debenture shall at any time concur with RTP and RTL in making any modifications to the provisions of this Agreement which: |
(a) | are formal or technical amendments and which RTL and RTP inform it are not materially prejudicial to the interests of either RTP or RTL shareholders; | ||
(b) | are necessary to correct manifest errors in this Agreement or inconsistencies between provisions of this Agreement or between provisions of this Agreement and the Sharing Agreement; | ||
(c) | are by way of an amendment agreed between the parties pursuant to Clause 21.4; or | ||
(d) | have previously been sanctioned by Special Resolution of the Publicly-held RTL Ordinary Shares and a Special Resolution of the Publicly-held RTP Ordinary Shares, |
provided in each case that such modification does not affect the obligations or rights of RTL Shareholder SVC or Law Debenture under this Agreement or any provision affecting the performance by either of them of its obligations under this Agreement. | ||
17 | Transfer of the RTP Special Voting Share by RTL Shareholder SVC | |
17.1 | Each of the parties agrees with each of the others that RTL Shareholder SVC may transfer the RTP Special Voting Share to another party at any time upon giving to RTP and RTL not less than three months written notice without assigning any reason, provided that no such transfer shall take effect unless and until a transferee of the RTP Special Voting Share satisfactory to both RTP and RTL shall have been found which has agreed to be bound by this Agreement or an agreement on equivalent terms. |
12
17.2 | Each of the parties agrees with each of the others that RTP and RTL together may require RTL Shareholder SVC to transfer the RTP Special Voting Share to a transferee of their choice: |
(a) | by notice in writing effective forthwith if RTL Shareholder SVC or Law Debenture shall be in breach of any of the terms of this Agreement; and | ||
(b) | by two months notice in writing without assigning any reason following the passing of a Special Resolution of the Publicly-held RTP Ordinary Shares and a Special Resolution of the Publicly-held RTL Ordinary Shares to the effect that RTL Shareholder SVC should transfer the RTP Special Voting Share. |
17.3 | Upon the transfer of the RTP Special Voting Share in accordance with this Clause 17: |
(a) | this Agreement (apart from this Clause) shall be terminated as regards RTL Shareholder SVC and Law Debenture; | ||
(b) | RTL shall pay to RTL Shareholder SVC any accrued remuneration and any other sums payable to it under Clause 11 or 13 and no further sums; and | ||
(c) | no further liabilities on the part of or to RTL Shareholder SVC or Law Debenture shall arise under this Agreement except for any liabilities which had already accrued prior to such transfer. |
18 | Notices |
18.1 | Any notice, demand, consent or other communication to RTL Shareholder SVC, Law Debenture, RTP or RTL required to be given, made or served for any purposes under this Agreement shall be given to, made or served on a party by hand, by email or by facsimile transmission as follows: |
18.1.1 | by delivering it by hand to the address(es) set out below (or to such other address(es) as may have been notified to the other parties in accordance with this Clause 18): |
|
to RTL Shareholder SVC: | Fifth floor | ||
|
100 Wood Street | |||
|
London EC2V 7EX | |||
|
England | |||
|
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|
Attention: The Company Secretary The Law Debenture Trust Corporation p.l.c. | |||
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|
and | |||
|
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|
27th Floor, | |||
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530 Collins Street | |||
|
Melbourne Vic 3000 | |||
|
Australia | |||
|
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|
Attention: The Company Secretary, RTP Shareholder SVC | |||
|
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|
to Law Debenture: | Fifth Floor | ||
|
100 Wood Street | |||
|
London EC2V 7EX |
13
|
England | |||
|
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|
Attention: The Secretary | |||
|
||||
|
to RTL: | 33rd Floor | ||
|
120 Collins Street | |||
|
Melbourne 3000 | |||
|
Victoria, Australia | |||
|
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|
Attention: The Company Secretary | |||
|
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|
to RTP: | 2 Eastbourne Terrace | ||
|
London W2 6LG | |||
|
England | |||
|
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|
Attention: The Company Secretary |
or |
18.1.2 | by sending it by facsimile to the facsimile number(s) set out below (or to such other facsimile number(s) as may from time to time have been notified to the other parties in accordance with this Clause 18): |
|
to RTL Shareholder SVC: | (44) 207 606 0643 (for the attention of The Company Secretary The Law Debenture Trust Corporation p.l.c.) | ||
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and | |||
|
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(61) 3 9614 4661 (for the attention of The Company Secretary, RTP Shareholder SVC); | |||
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|
to Law Debenture: | (44) 207 606 0643 (for the attention of The Secretary) | ||
|
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to RTL: | (613) 9283 3707 (for the attention of The Company Secretary) | ||
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|
to RTP: | (44) 20 7781 1827 (for the attention of The Company Secretary) |
or |
18.1.3 | by sending it by email to the email address(es) set out below (or such other email address(es) as may from time to time have been notified to the other parties in accordance with this Clause 18): |
|
to RTL Shareholder SVC: | cosec@lawdeb.co.uk (for the attention of The Company Secretary The Law Debenture Trust Corporation p.l.c.) | ||
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|
and | |||
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doyle815@bigpond.com (for the attention of The Company Secretary, RTP Shareholder SVC) | |||
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|
and | |||
|
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|
robwilliams@homechoice.co.uk (for the attention of The Company Secretary, RTL Shareholder SVC) |
14
|
and | |||
|
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richard.spurio@aar.com.au (for the attention of The Company Secretary, RTP Shareholder SVC); | |||
|
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|
to Law Debenture: | cosec@lawdeb.co.uk (for the attention of The Secretary) | ||
|
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|
to RTL: | stephen.consedine@riotinto.com (for the attention of The Company Secretary) | ||
|
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|
to RTP: | matthew.whyte@riotinto.com (for the attention of The Company Secretary) |
and any such notice, demand, consent or other communication shall be deemed to have been given, made or served: |
(i) | if delivered by hand, at the time of delivery; | ||
(ii) | if sent by facsimile, on receipt of a transmission record indicating successful transmission to the correct number; and | ||
(iii) | if sent by email, at the time the email enters the Designated Information System of the intended recipient provided that no error message indicating failure to deliver has been received by the sender. For the purposes of this Clause, Designated Information System means the Information System designated by a party hereunder to receive electronic notices to this Agreement as identified by the email address specified in Clause 18.1.3 above and Information System means a system for generating, sending, receiving, storing or otherwise processing electronic communications. |
18.2 | Any notice to RTL Shareholder SVC shall be copied to Law Debenture. | |
19 | Submission to Jurisdiction | |
19.1 | RTL hereby submits to the non-exclusive jurisdiction of the English courts in any proceedings brought against it by any of the others in respect of this Agreement and for such purposes RTL hereby irrevocably appoints Trusec Limited of 2 Lambs Passage, London EC1Y 8BB as its agent to receive service of any proceedings in such courts. | |
19.2 | Each of Law Debenture, RTL Shareholder SVC and RTP hereby submits to the non-exclusive jurisdiction of the courts of Australia in any proceedings brought against it by any of the others in respect of this Agreement and for such purposes RTP hereby irrevocably appoints Allens Arthur Robinson Corporate Pty Ltd. (ACN 001 314 512) of Level 5, Deutsche Bank Place, 126 Phillip Street, Sydney NSW 2000 and each of RTL Shareholder SVC and Law Debenture hereby irrevocably appoints Allens Arthur Robinson Operations Pty Ltd (ACN 004 992 607) of Level 5, Deutsche Bank Place, 126 Phillip Street, Sydney NSW 2000, as its agent to receive service of any proceedings in such courts. | |
20 | Damages not Adequate Remedy | |
Each of Law Debenture, RTL Shareholder SVC, RTP and RTL hereby acknowledges and agrees with each other that damages would not be an adequate remedy for the breach of any provision of this Agreement and, accordingly, each shall be entitled to the remedies of |
15
injunction, specific performance and other equitable remedy for any such threatened or actual breach. | ||
21 | Miscellaneous | |
21.1 | No assignment | |
Except as expressly otherwise provided herein, none of the parties may assign any of its rights or obligations under this Agreement in whole or in part without the approval of each of the others. | ||
21.2 | No waiver | |
No waiver by a party of a failure or failures by any of the other parties to perform any provision of this Agreement shall operate or be construed as a waiver in respect of any other or further failure whether of a like or different character. | ||
21.3 | No partnership or agency | |
Nothing in this Agreement (or in any of the arrangements contemplated hereby) shall be deemed to constitute a partnership between any of the parties to this Agreement, nor constitute any party as agent of any other party for any purpose. | ||
21.4 | Severance | |
If any of the provisions of this Agreement is or becomes invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired. Notwithstanding the foregoing, the parties shall thereupon negotiate in good faith in order to agree the terms of a mutually satisfactory provision, achieving as nearly as possible the same commercial effect, to be substituted for the provision found to be invalid, illegal or unenforceable. | ||
21.5 | Whole Agreement | |
This Agreement supersedes any previous written or oral agreement between the parties in relation to the matters dealt with in this Agreement and contains the whole agreement between the parties relating to the subject matter of this Agreement at the date hereof to the exclusion of any terms implied by law which may be excluded by contract. The parties acknowledge that they have not been induced to enter into this Agreement by any representation, warranty or undertaking not expressly incorporated into it. So far as permitted by law and except in the case of fraud, the parties agree and acknowledge that their only rights and remedies in relation to any representation, warranty or undertaking made or given in connection with this Agreement shall be for breach of the terms of this Agreement, to the exclusion of all other rights and remedies (including those in tort or arising under statute). In this Clause this Agreement includes all documents entered into pursuant to this Agreement. | ||
21.6 | Counterparts | |
This Agreement may be entered into in any number of counterparts, all of which taken together shall constitute one and the same instrument. Any party may enter into this Agreement by signing any such counterpart. |
16
22 | Governing Law | |
This Agreement shall be governed by, and construed in accordance with, the laws of England. | ||
In witness whereof this Agreement has been executed on the date stated at the beginning. |
THE COMMON SEAL of RIO TINTO
LIMITED (ACN 004458 404) was hereunto affixed in the presence of: |
} |
/s/ Guy Elliot
|
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|
/s/ Ben Mathews
|
|||||
|
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SIGNED by
for and on behalf of RTL SHAREHOLDER SVC LIMITED in the presence of: |
} |
/s/ Rob Williams
|
17
SIGNED by
for and on behalf of RIO TINTO PLC in the presence of: |
} |
/s/ Guy Elliot
|
||||
|
||||||
THE COMMON SEAL of THE LAW
DEBENTURE TRUST CORPORATION p.l.c. was hereunto affixed in the presence of: |
} |
/s/ Caroline Banszky
|
18
1. | Definitions and Interpretation | 2 | ||||||
|
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|
1.1 | Definitions | 2 | |||||
|
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1.2 | Interpretation | 2 | |||||
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2. | Conditions Precedent | 2 | ||||||
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2.1 | Conditions Precedent | 2 | |||||
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2.2 | Benefit and waiver of Conditions Precedent | 3 | |||||
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2.3 | Obligation to achieve satisfaction of Conditions Precedent | 4 | |||||
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2.4 | Obligation to obtain consent | 6 | |||||
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2.5 | End Date | 6 | |||||
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3. | Conduct prior to Completion | 6 | ||||||
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3.1 | Business conduct prior to Completion | 6 | |||||
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3.2 | Consequences of an Event | 7 | |||||
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3.3 | Capital Expenditure prior to JV Commencement Date | 9 | |||||
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3.4 | RGP5 warranty | 10 | |||||
|
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3.5 | Pre-Completion obligations | 11 | |||||
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3.6 | Implementation Management Committee | 12 | |||||
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3.7 | Implementation Oversight Committee | 15 | |||||
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3.8 | * * * | 16 | |||||
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4. | Shareholder Meetings and shareholder approval materials | 16 | ||||||
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4.1 | Shareholder Meetings | 16 | |||||
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4.2 | Form and Content | 16 | |||||
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4.3 | Supply and use of information | 16 | |||||
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4.4 | Responsibility for own information | 17 | |||||
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5. | Reorganisation | 18 | ||||||
|
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5.1 | Incorporation of the Manager | 18 | |||||
|
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5.2 | Constitutions of JV Entities | 18 | |||||
|
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5.3 | Obligations to undertake pre-Completion reorganisations | 18 | |||||
|
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5.4 | Other reorganisation steps | 19 | |||||
|
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|
5.5 | Additional reorganisation steps | 20 | |||||
|
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5.6 | Corporate structure | 20 | |||||
|
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5.7 | Conditions precedent to pre-Completion reorganisations | 20 | |||||
|
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5.8 | Conditions precedent to other reorganisations | 20 | |||||
|
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5.9 | Duty on earlier reorganisations | 21 | |||||
|
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6. | Completion | 22 | ||||||
|
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6.1 | Timing of Completion | 22 | |||||
|
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6.2 | Obligations at Completion | 22 | |||||
|
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|
6.3 | Inter-dependency | 23 | |||||
|
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|
6.4 | WA Iron Ore JV commencement | 23 | |||||
|
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7. | Subscription for Debentures | 24 | ||||||
|
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|
7.1 | Subscription for Debentures on Completion | 24 | |||||
|
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|
7.2 | Subscription Price payable by Rio Tinto and BHP Billiton opening cash amounts | 24 | |||||
|
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|
7.3 | Subscription Price payable by BHP Billiton and Rio Tinto opening cash amounts | 24 |
Page i
|
7.4 | Subscription for Debentures after Completion | 25 | |||||
|
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|
7.5 | Further subscription for Debentures after Completion | 25 | |||||
|
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|
7.6 | Method of payment of subscription price for Debentures | 26 | |||||
|
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8. | New Capital Expansion Projects, other capital expansion projects and studies | 26 | ||||||
|
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9. | Employment contract for CEO | 28 | ||||||
|
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10. | Historical Iron Ore Asset Information | 28 | ||||||
|
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|
10.1 | Availability of Historical Iron Ore Asset Information | 28 | |||||
|
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|
10.2 | Information within control of JV Entities | 29 | |||||
|
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11. | * * * | 29 | ||||||
|
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12. | WA Iron Ore JV Accounting Systems | 29 | ||||||
|
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13. | Undisclosed Liabilities | 30 | ||||||
|
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14. | Debt at JV Commencement Date | 32 | ||||||
|
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14.1 | * * * | 32 | |||||
|
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14.2 | Intra-group Debt | 32 | |||||
|
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|
14.3 | Existing JV Deposits | 33 | |||||
|
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15. | Indemnified Tax Liabilities | 33 | ||||||
|
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16. | Representations and warranties | 34 | ||||||
|
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|
16.1 | Warranties | 34 | |||||
|
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|
16.2 | Acknowledgement | 34 | |||||
|
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|
16.3 | Manager must notify Rio Tinto and BHP Billiton of breach | 34 | |||||
|
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|
16.4 | Rio Tinto indemnity | 34 | |||||
|
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|
16.5 | BHP Billiton indemnity | 34 | |||||
|
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|
16.6 | Limits on Claims | 35 | |||||
|
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17. | Public announcements and confidentiality | 35 | ||||||
|
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|
17.1 | Public announcements | 35 | |||||
|
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|
17.2 | Rio Tinto and BHP Billiton responsible for respective Related Corporations, officers and employees and professional advisers | 36 | |||||
|
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|
17.3 | Obligations of confidence | 36 | |||||
|
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|
17.4 | Permitted disclosure | 37 | |||||
|
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|
17.5 | Conditions to disclosure | 37 | |||||
|
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|
17.6 | Form of Disclosure | 38 | |||||
|
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|
17.7 | Other obligations of confidentiality | 38 | |||||
|
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|
17.8 | Termination | 38 | |||||
|
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18. | GST | 38 | ||||||
|
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|
18.1 | Definitions | 38 | |||||
|
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|
18.2 | Recovery of GST | 39 | |||||
|
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|
18.3 | Liability net of GST | 39 | |||||
|
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|
18.4 | Adjustments | 39 | |||||
|
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|
18.5 | Revenue exclusive of GST | 39 | |||||
|
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|
18.6 | Cost exclusive of GST | 39 |
Page ii
|
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19. | Termination | 39 | ||||||
|
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20. | Iron Ore JV Framework Agreement | 39 | ||||||
|
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21. | Governing law and jurisdiction | 40 | ||||||
|
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|
21.1 | Governing law | 40 | |||||
|
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|
21.2 | Final judgment conclusive and enforceable | 40 | |||||
|
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|
21.3 | Dispute Resolution | 40 | |||||
|
||||||||
|
21.4 | Service of process | 41 | |||||
|
||||||||
22. | Ancillary provisions | 41 | ||||||
|
||||||||
|
22.1 | Notices | 41 | |||||
|
||||||||
|
22.2 | Severability | 42 | |||||
|
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|
22.3 | Variation | 42 | |||||
|
||||||||
|
22.4 | No waiver | 42 | |||||
|
||||||||
|
22.5 | Remedies | 42 | |||||
|
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|
22.6 | No merger | 43 | |||||
|
||||||||
|
22.7 | Costs and expenses | 43 | |||||
|
||||||||
|
22.8 | Entire agreement | 43 | |||||
|
||||||||
|
22.9 | Further assurances | 43 | |||||
|
||||||||
|
22.10 | Change of Law | 43 | |||||
|
||||||||
|
22.11 | Enurement | 44 | |||||
|
||||||||
|
22.12 | Civil Liability Act 2002 | 44 | |||||
|
||||||||
|
22.13 | Counterparts | 44 | |||||
|
||||||||
Schedule 1 | 45 | |||||||
|
||||||||
Definitions and Interpretation | 45 | |||||||
|
||||||||
Schedule 2 | 77 | |||||||
|
||||||||
Competition Law Conditions Precedent | 77 | |||||||
|
||||||||
Schedule 3 | 81 | |||||||
|
||||||||
Part 1: Tax Conditions Precedent | 81 | |||||||
|
||||||||
Part 2: Stamp Duty Conditions Precedent | 82 | |||||||
|
||||||||
Schedule 4 | 84 | |||||||
|
||||||||
Identified Expansion Capital Projects | 84 | |||||||
|
||||||||
Schedule 5 | 85 | |||||||
|
||||||||
Part 1: RGP5 Handover Verification Process | 85 | |||||||
|
||||||||
* * * | 87 | |||||||
|
||||||||
* * * | 88 | |||||||
|
||||||||
Schedule 6 | 89 | |||||||
|
||||||||
Employees | 89 | |||||||
|
||||||||
Schedule 7 | 94 | |||||||
|
||||||||
Reorganisation Steps | 94 | |||||||
|
||||||||
Schedule 8 | 104 | |||||||
|
||||||||
Financial Adjustment Mechanism | 104 | |||||||
|
||||||||
Schedule 9 | 121 | |||||||
|
||||||||
Warranties | 121 |
Page iii
|
||||||||
Schedule 10 | 122 | |||||||
|
||||||||
Owners Council Completion Resolutions | 122 | |||||||
|
||||||||
Schedule 11 | 125 | |||||||
|
||||||||
Joint Venture Agreement | 125 |
Page i
Date
|
2009 | ||||||||
|
|||||||||
|
|||||||||
Parties
|
|||||||||
|
|||||||||
|
|||||||||
1. | Rio Tinto Limited (ABN 96 004 458 404), a company incorporated in Australia, of Level 33, 120 Collins Street, Melbourne, Victoria, Australia ( RTL ). | ||||||||
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2. | Rio Tinto plc (registration number 00719885), a company incorporated in England and Wales, of 2 Eastbourne Terrace, London, United Kingdom ( RTP and, together with RTL, Rio Tinto ). | ||||||||
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3. | BHP Billiton Limited (ABN 49 004 028 077), a company incorporated in Australia, of 180 Lonsdale Street, Melbourne, Victoria, Australia ( BHPBL ). | ||||||||
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4. | BHP Billiton plc (registration number 3196209), a company incorporated in England and Wales, of Neathouse Place, London, United Kingdom ( BHPBP and, together with BHPBL, BHP Billiton ). | ||||||||
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Recitals
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A. | On 5 June 2009, BHP Billiton and Rio Tinto entered into an Iron Ore JV Framework Agreement concerning a proposal to establish a 50:50 iron ore production joint venture in accordance with certain Core Principles agreed between them. | ||||||||
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B. | In accordance with clause 1 of the Iron Ore JV Framework Agreement, Rio Tinto and BHP Billiton have negotiated this Agreement, the Joint Venture Agreement and the other Transaction Documents for the establishment of the WA Iron Ore JV. | ||||||||
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C. | This Agreement prescribes: | ||||||||
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(a) | conditions precedent to establishment of the WA Iron Ore JV; | |||||||
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(b) | what Rio Tinto and BHP Billiton must do to prepare for establishment of the WA Iron Ore JV; and | |||||||
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(c) | the warranties that each of Rio Tinto and BHP Billiton must give to the other, as a basis for establishment of the WA Iron Ore JV. | |||||||
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Page 1
1. | Definitions and Interpretation |
1.1 | Definitions | |
In this Agreement, unless the subject matter or context requires otherwise, the terms defined in item 1.1 of Schedule 1 have the meaning given to them in that schedule. | ||
1.2 | Interpretation | |
The interpretation provisions in items 1.2 to 1.7 of Schedule 1 apply to the interpretation of this Agreement. |
2. | Conditions Precedent |
2.1 | Conditions Precedent | |
Completion is conditional on prior satisfaction of the following conditions precedent: |
(a) | ( Competition law approvals ): The competition law Conditions Precedent set out in Schedule 2. | ||
(b) | ( FIRB approval ): The Treasurer of the Commonwealth of Australia either: |
(i) | ceasing to be empowered to make an order under Part II of the Foreign Acquisitions and Takeovers Act 1975 (Cth) in respect of: |
(A) | Rio Tinto and BHP Billiton entering into the WA Iron Ore JV (and performing their obligations concerning the WA Iron Ore JV); and | ||
(B) | each of Rio Tinto and BHP Billiton implementing its respective reorganisation steps pursuant to clause 5.3, |
with no order being made; or | |||
(ii) | giving advice in writing of a decision by or on behalf of the Treasurer stating or to the effect that the Commonwealth Government of Australia has no objection in relation to: |
(A) | Rio Tinto and BHP Billiton entering into the WA Iron Ore JV (and performing their obligations concerning the WA Iron Ore JV); and | ||
(B) | each of Rio Tinto and BHP Billiton implementing its respective reorganisation steps pursuant to clause 5.3. |
(c) | ( Tax ): BHPBL (as Head Company of the BHP Billiton Consolidated Group) and RTL (as Head Company of the Rio Tinto Consolidated Group) obtaining the Private Rulings from the Commissioner of Taxation set out in Part 1 of Schedule 3. | ||
(d) | ( Stamp Duty ): To the extent that the ruling, advice or decision relates to: |
(i) | Rio Tinto: |
Page 2
(A) | a relevant entity in the Rio Tinto Group obtaining each ruling, advice or decision set out in item 1.1 of Part 2 of Schedule 3 from the applicable Commissioner of State Revenue or Commissioner of Territory Revenue; or |
(B) | if the relevant Commissioner will not issue such a ruling, advice or decision and item 1.2 of Part 2 of Schedule 3 expressly contemplates such a scenario, Rio Tinto, acting reasonably, being satisfied of the matters set out in item 1.2 of Part 2 of Schedule 3 in relation to the subject matter of that ruling, advice or decision; and |
(ii) | BHP Billiton: |
(A) | a relevant entity in the BHP Billiton Group obtaining each ruling, advice or decision set out in item 1.3 of Part 2 of Schedule 3 from the applicable Commissioner of State Revenue or Commissioner of Territory Revenue; or |
(B) | if the relevant Commissioner will not issue such a ruling, advice or decision and item 1.4 of Part 2 of Schedule 3 expressly contemplates such a scenario, BHP Billiton, acting reasonably, being satisfied of the matters set out in item 1.4 of Part 2 of Schedule 3 in relation to the subject matter of that ruling, advice or decision. |
(e) | ( Western Australian Government approvals ): |
(i) | * * * | ||
(ii) | * * * |
(f) | ( Shareholder approvals ): The necessary shareholder resolutions to approve the WA Iron Ore JV being passed by the members of each of Rio Tinto and BHP Billiton. | ||
(g) | ( Security and reorganisations ): |
(i) | the reorganisation steps to be implemented pursuant to clause 5.3 being completed; | ||
(ii) | the Parent Company Guarantees being given; | ||
(iii) | the Owner Cross Charges being granted; and | ||
(iv) | any Creditor Deed Poll required in respect of the Agreed Opening Iron Ore Loans and the Agreed Opening Excluded Loans being executed. |
2.2 | Benefit and waiver of Conditions Precedent |
(a) | The Conditions Precedent in clause 2.1 (other than paragraphs (c) and (d)) are for the benefit of each of Rio Tinto and BHP Billiton, and Rio Tinto and BHP Billiton may only jointly waive any non-fulfilment of any of those Conditions Precedent by giving their written consent. | ||
(b) | The Conditions Precedent in clause 2.1(c): |
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(i) | in respect of item 1.2 of Part 1 of Schedule 3 are for the benefit of Rio Tinto and only Rio Tinto may waive any non-fulfilment of any one or more of those Conditions Precedent by giving its written consent; and | ||
(ii) | in respect of item 1.3 of Part 1 of Schedule 3 are for the benefit of each of Rio Tinto and BHP Billiton, and Rio Tinto and BHP Billiton may only jointly waive any non-fulfilment of any of those Conditions Precedent by giving their written consent. |
(c) | The Conditions Precedent in clause 2.1(d)(i) are for the benefit of Rio Tinto and only Rio Tinto may waive any non-fulfilment of any one or more of those Conditions Precedent by giving its written consent, provided that Rio Tinto bears any Stamp Duty that may be payable in relation to the matters to which the relevant Condition Precedent relates (and, for the avoidance of doubt, the Stamp Duty must not be borne by a JV Entity). | ||
(d) | The Conditions Precedent in clause 2.1(d)(ii) are for the benefit of BHP Billiton and only BHP Billiton may waive any non-fulfilment of any one or more of those Conditions Precedent by giving its written consent, provided that BHP Billiton bears any Stamp Duty that may be payable in relation to the matters to which the relevant Condition Precedent relates (and, for the avoidance of doubt, the Stamp Duty must not be borne by a JV Entity). |
2.3 | Obligation to achieve satisfaction of Conditions Precedent |
(a) | Each of Rio Tinto and BHP Billiton must use its reasonable endeavours to achieve satisfaction of the Conditions Precedent as soon as practicable. | ||
(b) | In complying with paragraph (a), each of Rio Tinto and BHP Billiton must: |
(i) | cooperate with the other for the purposes of satisfying the Conditions Precedent; | ||
(ii) | to the extent permitted by the relevant Authority, use its reasonable endeavours to ensure that discussions or communications with an Authority relating substantially or primarily to the WA Iron Ore JV, including any notification or submission to the Authority in relation to the WA Iron Ore JV, occur on a joint basis; | ||
(iii) | where a joint submission to an Authority in relation to the WA Iron Ore JV is not permitted or practicable, use its reasonable endeavours to ensure that, to the extent permitted by law, drafts of its submission are provided to the other and the material content of each notification or submission is jointly agreed prior to lodgement; and | ||
(iv) | keep the other informed of: |
(A) | progress in respect of procuring the satisfaction of any Condition Precedent, including providing copies of any correspondence or lodgements with an Authority; | ||
(B) | any fact, matter or circumstance of which it becomes aware that it reasonably believes will result in any delay in the satisfaction of a Condition Precedent or a Condition Precedent not being satisfied in accordance with its terms; and |
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(C) | satisfaction of a Condition Precedent which applies to it, within two Business Days after becoming aware of the satisfaction of such Condition Precedent. |
(c) | In relation to any discussions with an Authority that are not conducted on a joint basis, each of Rio Tinto and BHP Billiton must: |
(i) | to the extent practicable, give the other prior notice of the discussion if it reasonably expects that matters of substance relating to the WA Iron Ore JV will arise; | ||
(ii) | to the extent practicable, use its reasonable endeavours to agree with the other a common position on matters relating to the WA Iron Ore JV and to present that position during any discussions with an Authority; | ||
(iii) | refrain from representing the views of the other and, where a common position has not been agreed and it knows the other holds a different view regarding matters relating to the WA Iron Ore JV, refrain from referring to or discussing that difference in view; and | ||
(iv) | if matters relating to the WA Iron Ore JV are discussed, inform the other of the substance of such discussions as soon as practicable after they have been held. |
(d) | Nothing in this Agreement requires Rio Tinto or BHP Billiton to: |
(i) | * * * |
(A) | * * * | ||
(B) | * * * |
(ii) | disclose any competitively sensitive or confidential information to the other. |
(e) | For the avoidance of doubt, if a Condition Precedent is satisfied on the basis of a condition or an undertaking that is accepted by Rio Tinto and BHP Billiton under clauses 2.3(d) and 1.1, that Condition Precedent will have been satisfied, | ||
(f) | Notwithstanding that a particular Condition Precedent under clause 2.1(c) or clause 2.1(d) has been satisfied, if, between the date of this Agreement and Completion, * * * |
(i) | BHP Billiton, in the case of the Conditions Precedent in clauses 2.1(c) (in respect of item 1.1 of Part 1 of Schedule 3) and 2.1(d)(ii); and | ||
(ii) | Rio Tinto, in the case of the Conditions Precedent in clauses 2.1(c) (in respect of item 1.2 of Part 1 of Schedule 3) and 2.1(d)(i); and | ||
(iii) | either BHP Billiton or Rio Tinto in the case of the Conditions Precedent in item 1.3 of Part 1 of Schedule 3, |
may give a notice to the other pursuant to this clause 2.3(f) and the relevant Condition Precedent will be deemed to be no longer satisfied until such time as notice is given to the contrary. |
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2.4 | Obligation to obtain consent | |
Where an Authority, as a condition of giving an Authorisation required to satisfy a Condition Precedent, requires BHP Billiton (or a BHP Billiton Group entity) or Rio Tinto (or a Rio Tinto Group entity) to provide an undertaking or agree to any condition, then BHP Billiton or Rio Tinto, as applicable, must first, before such undertaking or condition is agreed to, obtain the consent of the other, * * * |
(a) | * * * | ||
(b) | * * * |
No such undertaking or condition will affect the Participating Shares of the Owners as at the JV Commencement Date, as set out in clause 2.1(d) of the Joint Venture Agreement. | ||
2.5 | End Date | |
This Agreement, other than this clause 2 and clauses 1 (Definitions and Interpretation), 17 (Public announcements and confidentiality), 18 (GST), 20 (Iron Ore JV Framework Agreement), 21 (Governing law and jurisdiction) and 22 (Ancillary provisions), will immediately terminate and be of no further force or effect if the Conditions Precedent are not satisfied or waived by 31 December 2010 or such later date as Rio Tinto and BHP Billiton may agree in writing ( End Date ). Termination of this Agreement will be without prejudice to the rights of Rio Tinto or BHP Billiton that have arisen prior to termination, including any claim under the Iron Ore JV Framework Agreement. |
3. | Conduct prior to Completion |
3.1 | Business conduct prior to Completion |
(a) | Subject to this clause 3, except where otherwise agreed by Rio Tinto or BHP Billiton, from the date of this Agreement until the JV Commencement Date, each of BHP Billiton and Rio Tinto must, and must procure that each of its Related Corporations: |
(i) | operate its Relevant Period Iron Ore Assets in the ordinary course, independently of the other; but | ||
(ii) | not dispose of its Relevant Period Iron Ore Assets otherwise than in the ordinary course, and must not grant any Security Interest over its Relevant Period Iron Ore Assets other than a Security Interest that would be permitted under clause 11 of the Joint Venture Agreement if it were in force. |
(b) | Paragraph (a) does not restrict either BHP Billiton or Rio Tinto (or their respective Related Corporations) prior to Completion: |
(i) | marketing and selling Iron Ore Product; or | ||
(ii) | initiating or progressing: |
(A) | any expansion capital project in respect of any Relevant Period Iron Ore Asset that is not listed in Schedule 4; or | ||
(B) | any acquisition that falls within the definition of a New Opportunity. |
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3.2 | Consequences of an Event |
(a) | If a Relevant Period Iron Ore Asset (other than a construction project in progress) of any of a BHP Billiton JV Entity, other BHP Billiton Group entity, a Rio Tinto JV Entity or other Rio Tinto Group entity is, or has been, damaged or destroyed due to the happening of an event during the Relevant Period, BHP Billiton or Rio Tinto (as applicable) must reinstate, repair or replace (or must procure that the relevant JV Entity or BHP Billiton Group entity or Rio Tinto Group entity, as applicable, reinstates, repairs or replaces) such Relevant Period Iron Ore Assets to the same capacity and standard as prior to the damage or destruction as soon as practicable after the date of this Agreement, provided that such capacity or standard may be improved to the next highest level available where the original capacity or standard is no longer available or feasible. | ||
(b) | If a Relevant Period Iron Ore Asset is destroyed or damaged, and/or an event which would give rise to a business interruption claim under the Agreed Policy Terms (whether or not the event also involved the destruction of, or damage to, a Relevant Period Iron Ore Asset) occurs, during the Relevant Period (an Event ), whichever of BHP Billiton or Rio Tinto owns, or whose Related Corporation owns, the relevant Relevant Period Iron Ore Assets or would be entitled to make a business interruption claim under the Agreed Policy Terms must procure that the Adjuster assesses the loss arising from the business interruption in accordance with the Agreed Policy Terms. Any damage, destruction, loss or series of losses arising from substantially the same facts, matters or circumstances will be taken to relate to a single Event, regardless of the number of locations affected. | ||
(c) | If one or more JV Entities suffers loss as a result of an Event and those JV Entities do not, in aggregate, receive insurance proceeds and other recoveries (net of the costs of those recoveries and the amounts (if any) that the JV Entities have to remit to their insurers) (together, Recoveries ) that are not Excluded Assets, and are not amounts on account of GST, in respect of that Event equal to the aggregate of: |
(i) | the amount of the loss from business interruption assessed by the Adjusters pursuant to paragraph (b); and | ||
(ii) | the actual costs expended by the JV Entities or their Related Corporations in reinstating, repairing or replacing the relevant Relevant Period Iron Ore Assets ( PD Costs ), |
(together, the Assessed Loss ) within 24 months after the date of the Event (the Claim Period ), then: |
(iii) | whichever of BHP Billiton or Rio Tinto is a Related Corporation of the JV Entities that suffered the loss must bear the amount of the Assessed Loss in excess of the applicable Deductible (not to exceed the Maximum Amount) less all Recoveries in respect of the Assessed Loss received by the JV Entities during the Claim Period that do not constitute Excluded Assets and are not amounts on account of GST (the Shortfall ), by: |
(A) | to the extent that the Shortfall relates to PD Costs subscribing for Shares in the relevant Issuer or procuring that the relevant JV Entities |
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(B) | apply Excluded Assets, in amounts sufficient in aggregate to cover that element of the Shortfall; and | ||
(C) | to the extent that the Shortfall relates to loss from business interruption ( BI Loss ) - paying to whichever of BHP Billiton or Rio Tinto is not a Related Corporation of the relevant JV Entity an amount equal to half of that element of the Shortfall; and |
(iv) | any Recoveries with respect to the Event received by the relevant JV Entities after the Claim Period will constitute Excluded Assets. |
For the purposes of this paragraph (c): |
(v) | Deductible means: |
(A) | where the Event relates to, or arises from, damage to, or destruction of, a shiploader or wharf - * * * per Event; and | ||
(B) | in all other cases - * * * per Event; and |
(vi) | in determining the extent to which a Shortfall relates to PD Costs and to BI Loss respectively, any Recoveries received with respect to the relevant Event that are not Excluded Assets and the applicable Deductible are each taken to relate to PD Costs and BI Loss in the same proportion that the PD Costs and BI Loss respectively bear to the Assessed Loss. |
(d) | If one or more JV Entities suffers loss as a result of an Event, and such JV Entities receive (whether before or after the JV Commencement Date) insurance proceeds in respect of that Event in excess of the lesser of: |
(i) | the Assessed Loss; and | ||
(ii) | the Maximum Amount, |
the excess insurance proceeds will constitute Excluded Assets. | |||
(e) | If further PD Costs are expended after the Claim Period in relation to an Event, whichever of BHP Billiton or Rio Tinto is a Related Corporation of the JV Entity that expended those PD Costs must bear those additional PD Costs by, at the end of each six month period following the end of the Claim Period, subscribing for Shares in the relevant Issuer or procuring that the relevant JV Entity applies Excluded Assets, in amounts sufficient in aggregate to cover PD Costs for that six month period. | ||
(f) | Each of BHP Billiton and Rio Tinto must, and must procure that its relevant Related Corporations, take all reasonable actions to recover the maximum amount possible with respect to any Event from its insurers or any relevant third parties as soon as reasonably practicable. | ||
(g) | Each of BHP Billiton and Rio Tinto may, at its discretion, effect and maintain liability (including with respect to contract works), property damage and business interruption insurances (if any) in connection with its Relevant Period Iron Ore Assets during the Relevant Period. |
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(h) | Each of BHP Billiton and Rio Tinto may, at its discretion, effect and maintain contract works insurance in connection with any construction project relating to its Relevant Period Iron Ore Assets commenced or in progress during the Relevant Period. | ||
(i) | Whichever of BHP Billiton or Rio Tinto is a Related Corporation of a JV Entity that is the subject of a public liability claim (including in connection with contract works) after the JV Commencement Date in connection with an event that happened during the Relevant Period must bear any expenditure by the JV Entity in connection with the public liability claim by subscribing for Shares in the relevant Issuer or procuring that the relevant JV Entity applies Excluded Assets, in amounts sufficient in aggregate to cover that liability and associated costs. Any Recoveries by the JV Entity with respect to such expenditure received after the JV Commencement Date will constitute Excluded Assets. | ||
(j) | If a Relevant Period Iron Ore Asset that is a construction project in progress of a BHP Billiton JV Entity or other BHP Billiton Group entity or of a Rio Tinto JV Entity or other Rio Tinto Group entity, respectively, is damaged or destroyed due to the happening of an Event during the Relevant Period, BHP Billiton or Rio Tinto (as applicable) must reinstate, repair or replace (or must procure that the relevant JV Entity or BHP Billiton Group entity or Rio Tinto Group entity, as applicable, reinstates, repairs or replaces), such Relevant Period Iron Ore Asset to at least the same capacity and standard as prior to the loss or destruction as soon as practicable. | ||
(k) | Whichever of BHP Billiton or Rio Tinto is a Related Corporation of the JV Entity that owns a Relevant Period Iron Ore Asset that is a construction project in progress that is damaged or destroyed due to the happening of an Event during the Relevant Period must bear the full costs to the JV Entity of reinstating, repairing or replacing such Relevant Period Iron Ore Asset incurred after the JV Commencement Date by subscribing for Shares in the relevant Issuer or procuring that the relevant JV Entity applies Excluded Assets, in amounts sufficient in aggregate to cover those costs. Any Recoveries with respect to such costs received after the JV Commencement Date by the JV Entity that owns the relevant Relevant Period Iron Ore Asset (whether under a contract works insurance policy or otherwise) will constitute Excluded Assets. | ||
(l) | If a JV Entity receives a payment after the JV Commencement Date under any property damage and business interruption insurance policy in connection with an Event that happened during the Relevant Period, and the applicable deductible under the relevant insurance policy is less than the applicable Deductible under paragraph (c), then to the extent that the payment, when aggregated with any prior insurance payments received (whether before or after the JV Commencement Date) relating to the same Event under any property damage and business interruption insurance policy, does not exceed the difference between the applicable deductible under the relevant insurance policy and the applicable Deductible under paragraph (c), that payment will constitute an Excluded Asset. |
3.3 | Capital Expenditure prior to JV Commencement Date |
(a) | Each of Rio Tinto and BHP Billiton agrees to continue to invest in sustaining capital expenditure for its Relevant Period Iron Ore Assets in the ordinary course, between the date of this Agreement and the JV Commencement Date. |
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(b) | Schedule 4 identifies the Board sanctioned expansion capital projects in relation to Relevant Period Iron Ore Assets involving expected capital expenditure of US$250 million or more and publicly announced by Rio Tinto or BHP Billiton, respectively, as at the date of the Iron Ore JV Framework Agreement, which will form part of the Iron Ore Assets from the JV Commencement Date. * * * |
3.4 | RGP5 warranty |
(a) | BHP Billiton warrants that: |
(i) | RGP5 will be designed, constructed and commissioned for the purpose contemplated by, and in accordance with, the RGP5 Scope of Work provided to Rio Tinto by BHP Billiton; and | ||
(ii) | the entire costs (excluding the costs of prefeasibility and feasibility studies ( RGP5 study costs )) of procuring the completion of design, construction and commissioning of RGP5 in accordance with the RGP5 Scope of Work and achieving RGP5 Handover will not exceed US$4.8 billion (85% share). |
(b) | BHP Billiton will be liable for * * * and for all costs incurred above US$4.8 billion (85% share), excluding RGP5 study costs, in connection with the completion of design, construction and commissioning of RGP5 in accordance with the RGP5 Scope of Work (as varied from time to time in accordance with this clause 3.4) and achieving RGP5 Handover and these amounts will be funded in accordance with paragraph (d), and will not constitute JV Cash Costs. Until the JV Commencement Date, BHP Billiton must use all reasonable endeavours to ensure that RGP5 Handover is achieved by 31 December 2011. For the avoidance of doubt, all RGP5 Facilities which have been or are to be constructed or procured for the purposes of RGP5 will be Iron Ore Assets. | ||
(c) | After the JV Commencement Date, the Manager must ensure that RGP5 is designed, constructed and commissioned in accordance with the RGP5 Scope of Work and the Agreed Practice Standard, except as otherwise agreed by the Owners Council. | ||
(d) | In relation to all amounts for which BHP Billiton is liable under paragraph (b), BHP Billiton must procure that: |
(i) | the relevant BHP Billiton JV Entity applies funds which are Excluded Assets; or | ||
(ii) | the BHP Billiton Owner subscribes for Shares in the BHP Billiton Issuer, |
in amounts sufficient (in aggregate) to cover BHP Billitons liability. BHP Billiton must procure that the BHP Billiton Issuer applies all proceeds of subscription to meet the costs for which BHP Billiton is liable under paragraph (b). |
(e) | * * * | ||
(f) | * * * | ||
(g) | * * * | ||
(h) | * * * |
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3.5 | Pre-Completion obligations |
(a) | Each of Rio Tinto and BHP Billiton must negotiate in good faith for the purposes of agreeing Terms of Reference for the Audit Committee, the Remuneration Committee, the Technical Committee and the Sustainable Development Committee as soon as reasonably practicable after the date of this Agreement, and in any event no later than 90 days after the date of this Agreement. | ||
(b) | Each of Rio Tinto and BHP Billiton must use its reasonable endeavours to do the following things as soon as reasonably practicable after the date of this Agreement, and in any event no later than Completion: |
(i) | ( Common valuer ): |
(A) | identify and appoint a common valuer to determine any fair market valuations required by them in relation to the accounting treatment of the others Iron Ore Assets, subject to paragraph (B) and having regard to the tender process for the initial Auditor of the WA Iron Ore JV referred to in clause 3.6(b)(viii); but | ||
(B) | if either Rio Tinto or BHP Billiton, in its reasonable opinion, considers that it would contravene any Law to appoint a common valuer, individual valuers may be appointed; |
(ii) | ( AUP ): negotiate in good faith for the purposes of agreeing the AUPs to be undertaken by the Auditor; | ||
(iii) | ( Revised Accounting Policy ): |
(A) | negotiate in good faith for the purposes of agreeing a proposed Revised Accounting Policy which sets out all accounting policies to be applied in preparing JV Financial Information, and complies with paragraph (b) of this clause; and |
(B) | submit the Revised Accounting Policy to the Implementation Oversight Committee for consideration and approval and, if so agreed, procure that a representative of each of the Owners initials the Revised Accounting Policy at Completion; |
(iv) | ( Tax Allocation Methodology ): negotiate in good faith for the purposes of agreeing the appropriate Tax Allocation Methodology for attribution to Iron Ore Assets and Iron Ore Liabilities, and Excluded Assets and Excluded Liabilities, of: |
(A) | payments made and received in respect of: |
(1) | tax by the Head Company of the BHP Billiton Consolidated Group or the Rio Tinto Consolidated Group (as applicable); or | ||
(2) | any other taxes (including GST, payroll tax, land tax or like items) which are assessed or payable on a group basis; and |
(B) | payments made and received under any Tax Sharing Agreement or Tax Funding Agreement applicable to the Head Company of the BHP |
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Billiton Consolidated Group or the Rio Tinto Consolidated Group (as applicable), |
for the purposes of the Funding and Distribution Policy. The Tax Allocation Methodology must have regard to the general principles set out in items 8.2 and 8.6 of the Funding and Distribution Policy; | |||
(v) | ( Initial Agreed Interest Rate and Initial Agreed Term recommendation ): negotiate in good faith for the purposes of agreeing: |
(A) | the Initial Agreed Interest Rate for Participant Loans, Call Deposits, Term Deposits and Sole Risk Loans; and |
(B) | the Initial Agreed Term for Participant Loans and Term Deposits, |
which will apply under the Funding and Distribution Policy; | |||
(vi) | ( Infrastructure and Blending Principles ): negotiate in good faith for the purposes of agreeing legally binding agreements reflecting the principles set out in the Infrastructure and Blending Principles (the Infrastructure Sharing Agreement and the Blending Agreement ); and | ||
(vii) | ( Set-Off Agreement ): negotiate in good faith for the purposes of agreeing a legally binding Set-Off Agreement , which allows for the offsetting of amounts as contemplated by the Funding and Distribution Policy. |
(c) | The Revised Accounting Policy must: |
(i) | be consistent in all material respects with the policies referred to in item 8 of the Accounting Policy including, without limitation, the modifications to be applied to the accounting policies of the Rio Tinto Group and the BHP Billiton Group for the purposes of preparing JV Financial Information as set out in schedule 1 to the Accounting Policy; | ||
(ii) | subject to sub-paragraph (i) above, and to the extent that the accounting policies adopted by the Rio Tinto Group and the BHP Billiton Group are consistent with each other, be consistent with those accounting policies; and | ||
(iii) | subject to sub-paragraph (i) above, and to the extent that the accounting policies adopted by the Rio Tinto Group and the BHP Billiton Group are not consistent with each other, adopt the accounting policy that is expected to maximise the costs to be expensed and result in such costs being reported at the earliest possible time in the JV Financial Information. An accounting policy that is different from the policy used by either the Rio Tinto Group or the BHP Billiton Group may be adopted if it is expected to maximise the costs to be expensed and result in such costs being reported at the earliest possible time in the JV Financial Information, but having regard to the costs and benefits of adopting an accounting policy which is different from the accounting policies of both Owners. |
3.6 | Implementation Management Committee |
(a) | As soon as practicable after the date of this Agreement, Rio Tinto and BHP Billiton must establish an Implementation Management Committee made up of the future CEO, the |
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designated future members of the Senior Executive Team and other senior members of the future management team. The Implementation Management Committee must be drawn approximately equally from current employees of the Rio Tinto Group and the BHP Billiton Group and members will be appointed by agreement between Rio Tinto and BHP Billiton. | |||
(b) | The role of the Implementation Management Committee will, subject to antitrust Law, be to act as a forum for consultation and planning between Rio Tinto and BHP Billiton in relation to the implementation of the WA Iron Ore JV, and to make recommendations to the Implementation Oversight Committee as directed by the Implementation Oversight Committee or considered appropriate by the Implementation Management Committee, having regard in all cases to the provisions of the Joint Venture Agreement including the mandate given to the CEO under clause 4.7 of the Joint Venture Agreement to make the WA Iron Ore JV operationally stand-alone as soon as practicably possible. Recommendations will be made on subjects including without limitation the following: |
(i) | ( Related party transactions ): identification of all related party transactions between JV Entities and Affiliates, and whether they should cease on, or continue after, the JV Commencement Date; | ||
(ii) | ( Systems recommendation ): systems, standards and procedures to be adopted by the WA Iron Ore JV from the JV Commencement Date. Except as otherwise agreed between BHP Billiton and Rio Tinto (for example under the Transaction Documents), the WA Iron Ore JV will initially source systems, standards and procedures from the BHP Billiton Group and Rio Tinto Group selected by reference to their fitness for purpose in the overall context of the WA Iron Ore JV; | ||
(iii) | ( Transitional services recommendation ): identification of the transitional services to be provided by Rio Tinto, BHP Billiton or their Affiliates to the Manager from the JV Commencement Date, which are to be specified in the relevant schedule to the Transitional Services Agreement; | ||
(iv) | ( Support Assets recommendation ): in relation to assets in which the BHP Billiton Group or Rio Tinto Group has a legal, beneficial or economic interest, other than assets expressly referred to in the definition of Excluded Assets, that are used for functions that support Iron Ore Production Activities, the division of those assets into the following classes: |
(A) | assets that should form part of the WA Iron Ore JV, to be made available on the JV Commencement Date ( Support Assets ); and |
(B) | assets that should not form part of the WA Iron Ore JV ( Retained Assets ). |
In making the Support Assets recommendation, the Implementation Management Committee must apply the following principles: |
(C) | assets primarily used in connection with BHP Billiton or Rio Tintos Iron Ore Production Activities should generally be Support Assets; and |
(D) | assets not primarily used in connection with BHP Billiton or Rio Tintos Iron Ore Production Activities should generally be Retained Assets; |
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(v) | ( First Business Plan ): the First Business Plan, which must be prepared in compliance with the requirements of clause 3.10 of the Joint Venture Agreement; | ||
(vi) | ( First Budget ): the First Budget, which must be prepared in compliance with the requirements of clause 3.10 of the Joint Venture Agreement (including the First Synergies Capture Plan as a discrete component); | ||
(vii) | ( First Synergies Capture Plan) : the First Synergies Capture Plan, which must: |
(A) | reflect the Expected JV Synergies; |
(B) | include details of the synergies the WA Iron Ore JV is expected to achieve, which will form a baseline against which synergy capture can be measured; and |
(C) | be prepared in compliance with the requirements of clause 3.10 of the Joint Venture Agreement. |
(viii) | ( Initial Auditor and internal auditor recommendation ): a recommendation as to the identity of the initial Auditor and of the internal auditor of the WA Iron Ore JV. The Implementation Management Committee must make the initial Auditor recommendation prior to Completion, having first conducted a tender process in relation to the initial Auditor. The Implementation Management Committee must make the initial internal auditor recommendation prior to Completion, in accordance with the resourcing model for the internal auditor determined by the Implementation Oversight Committee and having first conducted such selection process as the Implementation Oversight Committee agrees (which may include a tender process); | ||
(ix) | ( Workforce recommendations ): in relation to the WA Iron Ore JVs workforce: |
(A) | subject to clause 4.5(e) of the Joint Venture Agreement, organisation design principles applicable for the WA Iron Ore JV workforce at all levels and for all functions, including for the Senior Executive Team, consistent with the Workforce Principles; | ||
(B) | offers of employment and associated recruitment processes for employees and contractors, which must be designed in accordance with the Workforce Principles and items 2 and 6 of Schedule 6; | ||
(C) | subject to clause 4.6(a) of the Joint Venture Agreement, remuneration and benefit principles, which must be developed in accordance with the Workforce Principles and item 3 of Schedule 6; | ||
(D) | long-term incentive arrangements for eligible employees, which must be designed in accordance with the Workforce Principles and item 3 of Schedule 6; | ||
(E) | defined contribution and, where applicable, defined benefit superannuation arrangements, which must be developed in accordance with the Workforce Principles and item 4 of Schedule 6; and |
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(F) | subject to clause 4.15 of the Joint Venture Agreement, workers compensation insurance arrangements, which must be developed in accordance with the Workforce Principles and item 5 of Schedule 6; |
(x) | ( Procurement model recommendation ): the procurement arrangements and procedures to apply to the WA Iron Ore JV from the JV Commencement Date; and |
(xi) | ( Hedging Policy ): the hedging policy to apply to the WA Iron Ore JV from the JV Commencement Date. |
(c) | The Implementation Management Committee must prepare and provide to each of Rio Tinto and BHP Billiton one month prior to the expected date of Completion * * * in relation to the period from the JV Commencement Date to the end of that Half Year. At Completion each Owner must provide * * * in relation to the period from the JV Commencement Date to the end of that Half Year. |
(d) | The employees of the BHP Billiton Group on the Implementation Management Committee will collectively have one vote and the employees of the Rio Tinto Group on the Implementation Management Committee will collectively have one vote. Decisions of the Implementation Management Committee relating to recommendations must be unanimous. Where the Implementation Management Committee is unable to make a unanimous decision, it must provide the Implementation Oversight Committee with: |
(i) | a description of the reasons why the decision was not unanimous; and |
(ii) | the applicable alternative proposals proposed by members of the Implementation Management Committee. |
3.7 | Implementation Oversight Committee |
(a) | As soon as practicable after the date of this Agreement, Rio Tinto and BHP Billiton must establish an Implementation Oversight Committee made up of the designated future Owners Council Representatives. |
(b) | The role of the Implementation Oversight Committee will, subject to antitrust Law, be to: |
(i) | oversee the implementation of the WA Iron Ore JV, including directing the Implementation Management Committee and subject to paragraph (c) approving (with or without variations) recommendations, proposals or draft documents submitted by the Implementation Management Committee under clause 3.6(b) and matters referred to in clause 3.5(b)(iii); and |
(ii) | identify and agree any decisions to be taken by the Owners Council immediately following Completion (in addition to the adoption of the Owners Council Completion Resolutions), including the adoption of the Revised Accounting Policy as the Accounting Policy pursuant to clause 3.13 of the Joint Venture Agreement, subject only to such amendments to the Revised Accounting Policy as the Implementation Oversight Committee or the Owners Council agree are necessary to ensure that the Revised Accounting Policy complies with clause 3.5(c). |
(c) | All decisions of the Implementation Oversight Committee must be unanimous. The representatives of the BHP Billiton Group on the Implementation Oversight Committee |
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will collectively have one vote and the representatives of the Rio Tinto Group on the Implementation Oversight Committee will collectively have one vote. |
3.8 | * * * |
(a) | * * * |
(b) | * * * |
(i) | * * * |
(A) | * * * |
(B) | * * * |
(ii) | * * * |
(A) | * * * |
(B) | * * * |
4. | Shareholder Meetings and shareholder approval materials |
4.1 | Shareholder Meetings | |
As soon as practicable after the conditions precedent in clauses 2.1(a) to 2.1(e) (inclusive) have been satisfied or waived, each of BHP Billiton and Rio Tinto must convene its Shareholder Meetings to be held at the earliest practicable date. |
4.2 | Form and Content |
(a) | Each of BHP Billiton and Rio Tinto agree to consult with each other in good faith in relation to the form and content of their respective Shareholder Circulars and to take into account reasonable comments of the other. |
(b) | Where common content (eg description of synergies) is to be included in each of the Shareholder Circulars, each of BHP Billiton and Rio Tinto must use their reasonable endeavours to agree such content. |
(c) | Each of BHP Billiton and Rio Tinto must prepare its Shareholder Circular in compliance with the requirements (if any) imposed by applicable Laws. |
4.3 | Supply and use of information |
(a) | Each of BHP Billiton and Rio Tinto must, to the extent permitted by Law and as expeditiously as practicable: |
(i) | supply to the other information related to the BHP Billiton Group ( BHP Billiton Information ) and Rio Tinto Group ( Rio Tinto Information ), respectively; and |
(ii) | assist in adapting that information, |
as reasonably required by the other to ensure that the others Shareholder Circular complies with all applicable Laws, in reasonable time to allow the other to prepare the relevant documentation. |
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(b) | Until the Shareholder Meetings are held, each of BHP Billiton and Rio Tinto must notify the other if it becomes aware that any information provided pursuant to paragraph (a) is, or has become, misleading or deceptive or contains any material omissions and must provide any further information reasonably required by the other to ensure such information is no longer misleading or deceptive and does not contain any material omissions. |
(c) | Each of BHP Billiton and Rio Tinto must obtain the consent of the other (which must not be unreasonably withheld) to the inclusion of Rio Tinto Information or BHP Billiton Information, respectively, in its Shareholder Circular and related materials and to the context in which such information appears. |
(d) | Each of BHP Billiton and Rio Tinto must ensure that any Rio Tinto Information or BHP Billiton Information, respectively, provided to it pursuant to paragraph (a), is not used by it or any of its Related Corporations for any purpose other than the preparation of its Shareholder Circular and related materials. |
4.4 | Responsibility for own information |
(a) | Each of BHP Billiton and Rio Tinto: |
(i) | must ensure that, at the time it is supplied and at the date of publication of the Shareholder Circulars, the BHP Billiton Information and the Rio Tinto Information, respectively, is not misleading or deceptive in any material respect (whether by omission or otherwise); and |
(ii) | will rely on the other to verify the information supplied by the other for inclusion in the Shareholder Circulars and related materials. |
(b) | Rio Tinto must indemnify BHP Billiton, in its own right and as trustee for its Related Corporations, its officers and employees, and the officers and employees of its Related Corporations, (the BHP Billiton Indemnified Parties ) against any costs or liability suffered or incurred by any BHP Billiton Indemnified Party arising from the Rio Tinto Information containing any material statement which is false or misleading (including because of any material omission). |
(c) | BHP Billiton must indemnify Rio Tinto, in its own right and as trustee for its Related Corporations, its officers and employees, and the officers and employees of its Related Corporations, (the Rio Tinto Indemnified Parties ) against any costs or liability suffered or incurred by any Rio Tinto Indemnified Party arising from the BHP Billiton Information containing any material statement which is false or misleading (including because of any material omission). |
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5. | Reorganisation |
5.1 | Incorporation of the Manager |
At or before Completion, each of Rio Tinto and BHP Billiton must: |
(a) | jointly with the other, procure the incorporation of the Manager; |
(b) | procure that each of BHP Billiton Minerals Pty Ltd and Hamersley Holdings Limited subscribes for or acquires half the issued shares of the Manager and causes the Manager to adopt a constitution agreed and initialled by Rio Tinto and BHP Billiton; and |
(c) | nominate and procure the appointment of directors of the Manager in accordance with clause 4.4 of the Joint Venture Agreement. |
5.2 | Constitutions of JV Entities |
At or before Completion, each of Rio Tinto and BHP Billiton must procure that each JV Entity which is its wholly owned Subsidiary has the following provisions in its constitution: |
(a) | a provision which permits the directors to act in the best interests of the holding company of the JV Entity if: |
(i) | the director acts in good faith in the best interests of the holding company; and |
(ii) | the JV Entity is not insolvent at the time the director acts and does not become insolvent because of the directors act; and |
(b) | a provision that provides that if a director, or a person who appointed the director, has an interest or a duty to an Owner and its Related Corporations in relation to a matter that relates to the affairs of the JV Entity, and the director complies with section 191 of the Corporations Act, then (subject to the Corporations Act): |
(i) | the director may be counted in a quorum at a board meeting that considers, and is entitled to vote on, any matter that relates to the interest or duty; |
(ii) | the JV Entity may proceed with any transaction that relates to the interest or duty and the director may participate in the execution of any relevant document by or on behalf of the JV Entity; and |
(iii) | the JV Entity cannot avoid the transaction merely because of the existence of the interest or duty. |
5.3 | Obligations to undertake pre-Completion reorganisations |
Before Completion: |
(a) | * * * |
(i) | Rio Tinto must, subject to clause 5.7(a), implement and complete the reorganisation steps set out in item 1.1 of Part 1 of Schedule 7; and |
(ii) | BHP Billiton must, subject to clause 5.7(b), implement and complete the reorganisation steps set out in item 2.1 of Part 2 of Schedule 7. |
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(b) | Each of Rio Tinto and BHP Billiton must keep the other informed on a reasonably regular basis in respect of the actions taken by it to implement and complete reorganisation steps and the progress achieved. |
5.4 | Other reorganisation steps |
(a) | As soon as practicable after the date of this Agreement * * * |
(i) | Rio Tinto must, subject to clause 5.8(a), use its reasonable endeavours to implement and complete the reorganisation steps set out in item 1.2 of Part 1 of Schedule 7; and |
(ii) | BHP Billiton must: |
(A) | subject to clause 5.8(b) use its reasonable endeavours to implement and complete the reorganisation steps set out in items 2.2(a) and 2.2(b) of Part 2 of Schedule 7; and |
(B) | subject to clause 5.8(c), use its reasonable endeavours to cause * * * to be made available to the WA Iron Ore JV * * * |
(b) | Each of Rio Tinto and BHP Billiton acknowledges that the obligations in paragraphs (a)(i) and (a)(ii), respectively, * * * |
(c) | Each of Rio Tinto and BHP Billiton must keep the other informed on a reasonably regular basis in respect of the actions taken to implement and complete reorganisation steps and the progress achieved. |
(d) | BHP Billiton must bear any loss or liability suffered or incurred by any Rio Tinto Indemnified Party: |
(i) | * * * |
(ii) | * * * |
and such loss or liability will be an Excluded Liability. |
(e) | Where: |
(i) | * * * |
(ii) | * * * |
BHP Billiton must ensure that * * *and all costs incurred in discharging this obligation will be Excluded Liabilities. |
(f) | In relation to all amounts for which BHP Billiton is liable under paragraphs (d) and (e), BHP Billiton must procure that: |
(i) | the relevant BHP Billiton JV Entity applies funds which are Excluded Assets; or |
(ii) | the BHP Billiton Owner subscribes for Shares in the BHP Billiton Issuer, |
in amounts sufficient (in aggregate) to cover BHP Billitons liability. BHP Billiton must procure that the BHP Billiton Issuer applies all proceeds of subscription to meet the costs for which BHP Billiton is liable under paragraphs (d) and (e). |
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5.5 | Additional reorganisation steps |
(a) | Without limiting the operation of clause 3.6(b)(iv), if Rio Tinto or BHP Billiton * * * Rio Tinto or BHP Billiton (as applicable) must: |
(i) | promptly inform the other * * *; and |
(ii) | subject to clause 5.8, * * * as soon as is reasonably practicable, in the manner agreed with the other. |
(b) | * * * |
5.6 | Corporate structure |
Each of Rio Tinto and BHP Billiton agrees that, except as contemplated by the Transaction Documents, * * *without the prior consent of the other. |
5.7 | Conditions precedent to pre-Completion reorganisations |
Each of Rio Tinto and BHP Billiton acknowledges and agrees that: |
(a) | Rio Tinto will only be required pursuant to clause 5.3(a)(i) to implement and complete the reorganisation steps set out in item 1.1 of Part 1 of Schedule 7; and |
(b) | BHP Billiton will only be required pursuant to clause 5.3(a)(ii) to implement and complete the reorganisation steps set out in item 2.1 of Part 2 of Schedule 7, |
once each Condition Precedent in clauses 2.1(a) to 2.1(f) has been fulfilled in accordance with clause 2.1 or its non-fulfilment has been waived in accordance with clause 2.2. |
5.8 | Conditions precedent to other reorganisations |
(a) | Rio Tinto will only be required to implement and complete the other reorganisation steps pursuant to clause 5.4(a)(i) and any reorganisation steps identified pursuant to clause 5.5: |
(i) | where the reorganisation step involves * * * at the time the reorganisation step is implemented; |
(ii) | once it receives the written consent of: |
(A) | * * * |
(B) | * * * |
(iii) | once the Treasurer of the Commonwealth of Australia either: |
(A) | ceases to be empowered to make an order under Part II of the Foreign Acquisitions and Takeovers Act 1975 (Cth) in respect of Rio Tinto implementing its other reorganisation steps pursuant to clause 5.4(a)(i), with no order being made; or |
(B) | gives advice in writing of a decision by or on behalf of the Treasurer stating or to the effect that the Commonwealth Government of Australia has no objection and that advice does not impose any conditions in relation to Rio Tinto implementing its other reorganisation steps pursuant to clause 5.4(a)(i); and |
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(iv) | to the extent that the completion of the reorganisation step or steps would not result in any Rio Tinto Group entity incurring any income tax or capital gains tax, land tax or any ad valorem Stamp Duty. |
(b) | BHP Billiton will only be required to implement and complete the other reorganisation steps pursuant to clause 5.4(a)(ii)(A) and any reorganisation steps identified pursuant to clause 5.5: |
(i) | where the reorganisation step involves * * *at the time the reorganisation step is implemented; |
(ii) | once it receives the written consent (if required) of: |
(A) | * * * |
(B) | * * * |
(iii) | once the Treasurer of the Commonwealth of Australia either: |
(A) | ceases to be empowered to make an order under Part II of the Foreign Acquisitions and Takeovers Act 1975 (Cth) in respect of BHP Billiton implementing its other reorganisation steps pursuant to clause 5.4(a)(ii)(A), with no order being made; or |
(B) | gives advice in writing of a decision by or on behalf of the Treasurer stating or to the effect that the Commonwealth Government of Australia has no objection and that advice does not impose any conditions in relation to BHP Billiton implementing its other reorganisation steps pursuant to clause 5.4(a)(ii)(A); and |
(iv) | to the extent that the completion of the reorganisation step or steps would not result in any BHP Billiton Group entity incurring any income tax or capital gains tax, land tax or any ad valorem Stamp Duty; and |
(c) | BHP Billiton will only be required to cause * * * to the extent that doing so would not result in any BHP Billiton Group entity incurring any income tax or capital gains tax, land tax or any ad valorem Stamp Duty. |
5.9 | Duty on earlier reorganisations |
(a) | ( Rio Tinto ) To the extent that: |
(i) | any reorganisation step set out in Schedule 7, or any additional reorganisation step identified pursuant to clause 5.5, that Rio Tinto is required to implement and complete results in the revocation of, or assessment or reassessment in relation to, any connected entity exemption or corporate reconstruction relief from the payment of Stamp Duty in any jurisdiction, or otherwise results in Stamp Duty; or |
(ii) | the issue of Debentures by the Rio Tinto Issuer results in the revocation of, or assessment or reassessment in relation to, any connected entity exemption or corporate reconstruction relief from the payment of Stamp Duty in any jurisdiction, |
Rio Tinto must bear any Stamp Duty that may be payable (and, for the avoidance of doubt, such Stamp Duty must not be borne by a JV Entity); and |
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(b) | ( BHP Billiton ) To the extent that: |
(i) | any reorganisation step set out in Schedule 7, or any additional reorganisation step identified pursuant to clause 5.5, that BHP Billiton is required to implement and complete results in the revocation of, or assessment or reassessment in relation to, any connected entity exemption or corporate reconstruction relief from the payment of Stamp Duty in any jurisdiction, or otherwise results in Stamp Duty; or |
(ii) | the issue of Debentures by the BHP Billiton Issuer results in the revocation of, or assessment or reassessment in relation to, any connected entity exemption or corporate reconstruction relief from the payment of Stamp Duty in any jurisdiction, |
BHP Billiton must bear any Stamp Duty that may be payable (and, for the avoidance of doubt, such Stamp Duty must not be borne by a JV Entity). |
6. | Completion |
6.1 | Timing of Completion |
(a) | Completion must occur on the third Business Day after the date on which the last of the Conditions Precedent referred to in clause 2.1(a) to (f) (inclusive) is satisfied or waived or such other date as Rio Tinto and BHP Billiton may agree (provided that date is before the End Date) (the Completion Date ). |
(b) | On the Completion Date, Completion will not occur until each of the Conditions Precedent referred to in clause 2.1(g) is satisfied or waived. |
6.2 | Obligations at Completion |
At Completion each of Rio Tinto and BHP Billiton must: |
(a) | execute, deliver and, where relevant, complete the Completion Documents (other than any previously executed and delivered under clause 2.1(g)) (and cause any Rio Tinto Group entity or BHP Billiton Group entity named as a party to a Completion Document to execute, deliver and, where relevant, complete it (as applicable) (other than any previously executed and delivered under clause 2.1(g)); |
(b) | procure that BHP Billiton Minerals Pty Ltd and Hamersley Holdings Limited cause the Manager to execute, deliver and, where relevant, complete the Completion Documents to which it is a party; |
(c) | as Proposing Party , provide a notice (the Capital Projects Notice ) to the other (the Receiving Party ) specifying any New Capital Expansion Project , being: |
(i) | any expansion capital project in respect of a Relevant Period Iron Ore Asset that is not listed in Schedule 4 which is in execution at the time of Completion (an Additional Capital Project ), including a copy of the completed Feasibility Study relating to that project (together with, subject to antitrust Law, the financial model, study reports and supporting information that were generated by the Proposing Party in connection with the Feasibility Study); or |
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(ii) | * * * |
(d) | discharge all of its other obligations arising on Completion under any Transaction Document; |
(e) | procure that: |
(i) | each of the Rio Tinto Owner and the BHP Billiton Owner subscribes for Debentures; and |
(ii) | each of the BHP Billiton Issuer and the Rio Tinto Issuer issues Debentures, |
in accordance with clauses 7.1 to 7.3 (inclusive); and |
(f) | establish the Owners Council pursuant to clause 3.1 of the Joint Venture Agreement and ensure that a duly convened Owners Council meeting is held at which a quorum is present for the purposes of passing the Owners Council Completion Resolutions. |
6.3 | Inter-dependency |
(a) | The obligations of Rio Tinto and BHP Billiton at Completion, as outlined in clause 6.2, are inter-dependent. |
(b) | Each of Rio Tinto and BHP Billiton agrees it must discharge its obligations under clause 6.2 in the following order: |
(i) | execute, deliver and, where relevant, complete each Debenture Deed Poll (and cause any Rio Tinto Group entity or BHP Billiton Group entity named as a party to each Debenture Deed Poll to execute, deliver and, where relevant, complete it (as applicable)) and procure that: |
(A) | each of the Rio Tinto Owner and the BHP Billiton Owner subscribes for Debentures; and |
(B) | each of the BHP Billiton Issuer and the Rio Tinto Issuer issues Debentures, |
in accordance with clauses 7.1 to 7.3 (inclusive); |
(ii) | execute, deliver and, where relevant, complete the Joint Venture Agreement (and cause any Rio Tinto Group entity or BHP Billiton Group entity named as a party to the Joint Venture Agreement to execute, deliver and, where relevant, complete it (as applicable)); and |
(iii) | execute, deliver and, where relevant, complete each Ore Sales Agreement (and cause any Rio Tinto Group entity or BHP Billiton Group entity named as a party to each Ore Sales Agreement to execute, deliver and, where relevant, complete it (as applicable)), |
followed by all other obligations under clause 6.2, which will thereafter be performed simultaneously. |
6.4 | WA Iron Ore JV commencement |
If Completion occurs, on and from the JV Commencement Date the WA Iron Ore JV will be deemed to be established. |
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7. | Subscription for Debentures |
7.1 | Subscription for Debentures on Completion |
On Completion, for the purpose of financing the Rio Tinto JV Entities and the BHP Billiton JV Entities, Rio Tinto and BHP Billiton, respectively, must procure that: |
(a) | the Rio Tinto Owner subscribes for, and the BHP Billiton Issuer issues to the Rio Tinto Owner, Debentures with a face value of A$10,000 each for a total subscription price determined in accordance with clause 7.2; and |
(b) | the BHP Billiton Owner subscribes for, and the Rio Tinto Issuer issues to the BHP Billiton Owner, Debentures with a face value of A$10,000 each for a total subscription price determined in accordance with clause 7.3. |
7.2 | Subscription Price payable by Rio Tinto and BHP Billiton opening cash amounts |
(a) | The subscription price for the Debentures to be issued to the Rio Tinto Owner will equal 50% of the BHP Billiton JV Entities estimated cash requirements for the first month after the JV Commencement Date, as identified in the First Budget, which amount will be payable in Australian dollars by the Rio Tinto Owner on Completion. |
(b) | BHP Billiton must ensure that at Completion, the BHP Billiton JV Entities have cash on hand (contributed as equity or by application of Existing JV Deposits) equal to 50% of the BHP Billiton JV Entities estimated cash requirements for the first month after the JV Commencement Date, as identified in the First Budget. |
(c) | The cash amounts referred to in paragraphs (a) and (b) will be Iron Ore Assets and will be available to discharge JV Cash Costs of the BHP Billiton JV Entities arising on or after the JV Commencement Date in accordance with the Funding and Distribution Policy. Any cash amounts held by a BHP Billiton JV Entity at Completion that are additional to the amounts referred to in paragraphs (a) and (b) will be Excluded Assets. |
(d) | The cash amounts referred to in paragraphs (a) and (b) will be placed on Call Deposit in equal shares with the Rio Tinto Owner and the BHP Billiton Owner (or their Designated Finance Companies) in accordance with item 2.8 of the Funding and Distribution Policy. |
7.3 | Subscription Price payable by BHP Billiton and Rio Tinto opening cash amounts |
(a) | The subscription price for the Debentures to be issued to the BHP Billiton Owner will equal: |
(i) | 50% of the Rio Tinto JV Entities estimated cash requirements for the first month after the JV Commencement Date, as identified in the First Budget, which amount will be payable in Australian dollars by the BHP Billiton Owner on Completion; plus |
(ii) | the BHP Billiton Equalisation Investment, determined in accordance with item 1 of Schedule 8, which amount will be payable in US dollars by the BHP Billiton Owner on Completion. The number of Debentures to be subscribed for will be determined by converting the BHP Billiton Equalisation Investment into |
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Australian dollars using the applicable Bloomberg Fix exchange rate (code: BFIX) reported by Bloomberg at 4pm (Sydney time) on the Completion Date. |
(b) | Rio Tinto must ensure that at Completion, the Rio Tinto JV Entities have cash on hand (contributed as equity or by application of Existing JV Deposits) equal to 50% of the Rio Tinto JV Entities estimated cash requirements for the first month after the JV Commencement Date, as identified in the First Budget. |
(c) | The cash amounts referred to in paragraphs (a) and (b) will be Iron Ore Assets and will be available to discharge: |
(i) | JV Cash Costs of the Rio Tinto JV Entities arising on or after the JV Commencement Date in accordance with the Funding and Distribution Policy; and |
(ii) | the Agreed Opening Iron Ore Loans of the Rio Tinto Issuer. |
Any cash amounts held by a Rio Tinto JV Entity at Completion, after satisfaction of Agreed Opening Iron Ore Loans, that are additional to the amounts referred to in paragraphs (a) and (b) will be Excluded Assets. |
(d) | The cash amounts referred to in paragraphs (a) and (b), minus an amount equal to the Agreed Opening Iron Ore Loans, will be placed on Call Deposit in equal shares with the Rio Tinto Owner and the BHP Billiton Owner (or their Designated Finance Companies) in accordance with item 2.8 of the Funding and Distribution Policy. |
7.4 | Subscription for Debentures after Completion |
(a) | For the purpose of financing the Rio Tinto JV Entities and the BHP Billiton JV Entities, each of Rio Tinto and BHP Billiton, respectively, must procure that: |
(i) | if the Adjustment Amount determined in accordance with Schedule 8 is positive, the Rio Tinto Owner subscribes for, and the BHP Billiton Issuer issues to the Rio Tinto Owner, further Debentures with a face value of A$10,000 each for a subscription price equal to the Adjustment Amount; or |
(ii) | if the Adjustment Amount determined in accordance with Schedule 8 is negative, the BHP Billiton Owner subscribes for, and the Rio Tinto Issuer issues to the BHP Billiton Owner, further Debentures with a face value of A$10,000 each for a subscription price equal to the Adjustment Amount, |
on the fifth Business Day after finalisation of the Final Completion Accounts under Schedule 8. |
(b) | For the purpose of this clause 7.4, the subscription price will be payable in US dollars. The number of Debentures to be subscribed for will be determined by converting the Adjustment Amount into Australian dollars using the applicable Bloomberg Fix exchange rate (code: BFIX) reported by Bloomberg at 4pm (Sydney time) on the subscription date. |
(c) | Any cash amounts subscribed for Debentures under this clause 7.4 will be Excluded Assets. |
7.5 | Further subscription for Debentures after Completion |
(a) | If, after Completion, item 2.6(b) or item 6 of Schedule 8 requires: |
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(i) | the BHP Billiton Owner to subscribe for further Debentures, BHP Billiton must procure that the BHP Billiton Owner subscribes for, and Rio Tinto must procure that the Rio Tinto Issuer issues, further Debentures with a face value of A$10,000 each for a subscription price equal to the amount required by items 2.6(b) or 6 of Schedule 8 (as applicable); or |
(ii) | the Rio Tinto Owner to subscribe for further Debentures, Rio Tinto must procure that the Rio Tinto Owner subscribes for, and BHP Billiton must procure that the BHP Billiton Issuer issues, further Debentures with a face value of A$10,000 each for a subscription price equal to the amount required by items 2.6(b) or 6 of Schedule 8 (as applicable). |
(b) | For the purpose of this clause 7.5, the subscription price will be payable in US dollars. The number of Debentures to be subscribed for will be determined by converting the amount required by items 2.6(b) or 6 of Schedule 8 (as applicable) into Australian dollars using the applicable Bloomberg Fix exchange rate (code: BFIX) reported by Bloomberg at 4pm (Sydney time) on the subscription date. |
(c) | Any cash amounts subscribed for Debentures under this clause 7.5 will be Excluded Assets. |
7.6 | Method of payment of subscription price for Debentures |
All payments required to be made under this clause 1 must be made in accordance with item 1.5 of Schedule 1. |
8. | New Capital Expansion Projects, other capital expansion projects and studies |
(a) | If a Capital Projects Notice given pursuant to clause 6.2(c) concerns an Additional Capital Project involving capital expenditure of less than US$250 million, then that Additional Capital Project will be treated as within the scope of the WA Iron Ore JV on and from the JV Commencement Date and will be a JV New Capital Expansion Project. |
(b) | If a Capital Projects Notice given pursuant to clause 6.2(c) concerns: |
(i) | an Additional Capital Project * * *; or |
(ii) | an Additional Capital Project that the parties otherwise agree this clause 8(b) applies to, |
then that Additional Capital Project will be treated as within the scope of the WA Iron Ore JV on and from the JV Commencement Date and will be a JV New Capital Expansion Project. |
(c) | If a Capital Projects Notice is given pursuant to clause 6.2(c) which does not relate to an Additional Capital Project of the kind referred to in paragraphs (a) or (b): |
(i) | the New Capital Expansion Project will be treated as within the scope of the WA Iron Ore JV on and from the JV Commencement Date and will be a JV New Capital Expansion Project unless within 180 days of receipt of the Capital Projects Notice, the Receiving Party elects by written notice to the Proposing Party to exclude the New Capital Expansion Project from the scope of the WA Iron Ore |
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JV. If the Receiving Party so elects, the Proposing Party may, within 90 days after receiving the notice of election, elect by notice to the Receiving Party to undertake the New Capital Expansion Project, in which case it will be treated as a Sole Risk Development or a Sole Risk Opportunity (as applicable) pursuant to clause 8 of the Joint Venture Agreement on and from the JV Commencement Date, and any liabilities attaching to it (other than study costs) will be Sole Risk Liabilities, and the adjustment contemplated by item 2.6 of Schedule 8 and clause 7.5 must be determined and made ( Agreed Sole Risk Adjustment ); |
(ii) | until the election is made by the Receiving Party, or the period referred to in paragraph (c)(i) in which the Receiving Party may make the election expires: |
(A) | until the JV Commencement Date, the Proposing Party agrees to continue to implement all relevant Additional Capital Projects in the form described in the Capital Projects Notice (subject to the operation of Schedule 8) at its own cost; and |
(B) | from the JV Commencement Date, in accordance with clause 4.3(f) of the Joint Venture Agreement, the Manager will continue to implement all relevant Additional Capital Projects in the form described in the Capital Projects Notice and the Proposing Party must pay any amounts requested by the Manager to fund the Additional Capital Project ( NCEP Calls ) by way of loans to the Manager ( Post-Commencement NCEP Loans ) on the same terms as the Participant Loans (except that the interest rate on the Post-Commencement NCEP Loans, until converted to Participant Loans or Sole Risk Loans, will be the rate at which amounts are Escalated); |
(iii) | if no election is made to exclude the New Capital Expansion Project, or the period referred to in paragraph (c)(i) in which the Receiving Party may make the election expires, the Receiving Party must provide a Participant Loan for its Participating Share of the Escalated NCEP Calls relating to that project, and the proceeds of that Participant Loan must be applied to repay half of the relevant Post-Commencement NCEP Loans and the remaining balance of those Post-Commencement NCEP Loans will automatically convert to a Participant Loan; and |
(iv) | if an election is made by the Receiving Party under paragraph (c)(i) to exclude the New Capital Expansion Project, all NCEP Loans will automatically convert to Sole Risk Loans. |
(d) | Where a capital expansion project in relation to a Relevant Period Iron Ore Asset is not identified in Schedule 4 or in a Capital Projects Notice given pursuant to clause 6.2(c), then: |
(i) | if a study has been conducted that would fall within the definition of a Preliminary Study if conducted by the Manager for the WA Iron Ore JV, it will be treated as a Preliminary Study and clauses 8.2(a) to 8.2(c), inclusive, of the Joint Venture Agreement will apply to that project; |
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(ii) | if a study has been conducted that would fall within the definition of a Pre-Feasibility Study if conducted by the Manager for the WA Iron Ore JV, it will be treated as a Pre-Feasibility Study and clauses 8.2(d) to 8.2(f), inclusive, of the Joint Venture Agreement will apply to that project; |
(iii) | if a study has been conducted that would fall within the definition of a Feasibility Study if conducted by the Manager for the WA Iron Ore JV, it will be treated as a Feasibility Study and clauses 8.2(g) to 8.2(i) of the Joint Venture Agreement will apply to that project; and |
(iv) | if a definitive proposal has been developed for a New Opportunity, clause 8.4(c) of the Joint Venture Agreement will apply to it. |
(e) | Subject to Existing JV Arrangements, if a study is being conducted by a JV Entity at the JV Commencement Date which would fall within the definition of Preliminary Study, Pre-Feasibility Study or Feasibility Study if conducted by the Manager for the WA Iron Ore JV, the Manager must continue and complete that study as if it had been initiated by the Manager under the appropriate provisions in clause 8.2 of the Joint Venture Agreement. |
(f) | If at the JV Commencement Date either Rio Tinto or BHP Billiton is aware of a potential New Opportunity for which no definitive proposal has been developed but which it may wish to pursue, it must procure that the Rio Tinto Owner or the BHP Billiton Owner (as applicable) gives notice to the Manager under clause 8.4(a)(i) of the Joint Venture Agreement as soon as reasonably practicable after the JV Commencement Date and the provisions of clause 8.4 of the Joint Venture Agreement will apply to the New Opportunity which is the subject of the notice. |
9. | Employment contract for CEO |
Each of Rio Tinto and BHP Billiton acknowledges that the form of the employment contract for the CEO, initialled by Rio Tinto and BHP Billiton for the purposes of identification on the date of this Agreement, is in a form acceptable to it for presentation to the proposed CEO, and each must use reasonable endeavours to procure that the CEO is employed on the terms of that employment contract. |
10. | Historical Iron Ore Asset Information |
10.1 | Availability of Historical Iron Ore Asset Information |
(a) | Subject to antitrust Law, on and from Completion and until the JV Commencement Date, each of BHP Billiton and Rio Tinto must make available, and must procure that each of its Related Corporations makes available, to the Implementation Management Committee any Historical Iron Ore Asset Information requested by the Implementation Management Committee. |
(b) | On and from the JV Commencement Date, each Owner must make available to the Manager any Historical Iron Ore Asset Information requested by the Manager. |
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(c) | Where documents required to be made available under this clause contain both information falling within and information falling outside the definition of Historical Iron Ore Asset Information, information in the latter category may be excluded or redacted. |
10.2 | Information within control of JV Entities |
At any time, each of BHP Billiton and Rio Tinto may remove any information from the control of a BHP Billiton JV Entity or a Rio Tinto JV Entity, respectively, which does not constitute Historical Iron Ore Asset Information. |
11. | * * * |
* * * |
12. | WA Iron Ore JV Accounting Systems |
(a) | As soon as reasonably practicable, BHP Billiton and Rio Tinto: |
(i) | must jointly with the other, procure that WA Iron Ore JV accounting systems are established on a single integrated SAP system in compliance with clause 4.10(b) of the Joint Venture Agreement and the ERP Service and Licence Agreement ( WA Iron Ore JV Accounting Systems ); and |
(ii) | may conduct a detailed review of the WA Iron Ore JV Accounting Systems prior to their commencing operation, and to the extent necessary, each others accounting systems, for the purposes of satisfying themselves and the Manager that the systems are established in compliance with clause 4.10(b) of the Joint Venture Agreement and the ERP Service and Licence Agreement. |
(b) | If the WA Iron Ore Accounting Systems are not established by the JV Commencement Date, prior to the JV Commencement Date each Owner: |
(i) | must ensure that interim accounting rules, systems and procedures are established (which may rely on existing systems) which supply each of Rio Tinto and BHP Billiton and the Manager with the information required to prepare all accounting records and reports in respect of JV Operations after the JV Commencement Date in compliance with clause 4.10(b) of the Joint Venture Agreement and the ERP Service and Licence Agreement ( Interim Accounting Systems ); and |
(ii) | may conduct a detailed review of the Interim Accounting Systems, and to the extent necessary, the other Owners accounting systems, for the purposes of satisfying itself that the Interim Accounting Systems will supply each of Rio Tinto and BHP Billiton and the Manager with the information required to prepare all accounting records and reports in respect of JV Operations from the JV Commencement Date in compliance with clause 4.10(b) of the Joint Venture Agreement and the ERP Service and Licence Agreement. |
(c) | Following the review of the accounting systems pursuant to paragraphs (a) and (b), and prior to their establishment, Rio Tinto and BHP Billiton must consult in good faith to determine such adjustments, if any, as may need to be made to the systems so as to ensure |
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that they are compliant with clause 4.10(b) of the Joint Venture Agreement and the ERP Service and Licence Agreement, and the cost of those adjustments. |
(d) | The cost of making adjustments to the accounting systems agreed by Rio Tinto and BHP Billiton following a review will be borne by whichever of Rio Tinto or BHP Billitons systems are deficient, unless, following discussions in good faith, Rio Tinto and BHP Billiton agree otherwise. |
13. | Undisclosed Liabilities |
(a) | The WA Iron Ore JV will bear all Iron Ore Liabilities, except: |
(i) | Undisclosed Liabilities to the extent BHP Billiton or Rio Tinto must bear those liabilities pursuant to paragraph (b); and |
(ii) | as otherwise provided in the Transaction Documents. |
(b) | If Undisclosed Liabilities: |
(i) | attaching to Iron Ore Assets of the Rio Tinto JV Entities exceed US$300 million in aggregate, Rio Tinto will bear the amount of those Undisclosed Liabilities in excess of US$300 million, and that excess amount will be an Excluded Liability; or |
(ii) | attaching to Iron Ore Assets of the BHP Billiton JV Entities exceed US$300 million in aggregate, BHP Billiton will bear the amount of those Undisclosed Liabilities in excess of US$300 million, and that excess amount will be an Excluded Liability. |
To the extent that specific apportionment for a liability cannot be made by reference to specific events of causation, liabilities of a gradual or recurring nature which relate to periods both before and after the Effective Date will be borne on a time apportionment basis. |
(c) | For the purposes of paragraph (b), any individual Undisclosed Liability that is less than US$50 million (not being one of a number of claims arising from substantially the same facts, matters or circumstances, which, in aggregate, exceed US$50 million) will be disregarded for the purposes of determining whether Undisclosed Liabilities, when aggregated, exceed US$300 million. |
(d) | For the purposes of this clause 13, Undisclosed Liabilities will be calculated after allowing for any reduction in present or future Tax, Tax rebate or Tax credit received or receivable by the relevant JV Entity in relation to the Undisclosed Liability. |
(e) | The Manager in accordance with clause 4.3(f) of the Joint Venture Agreement and each of Rio Tinto and BHP Billiton must notify the others as soon as practicable after it becomes aware of any individual Undisclosed Liability which is a claim in the amount of US$50 million or more. |
(f) | If: |
(i) | Rio Tinto is required to bear Undisclosed Liabilities in accordance with paragraph (b)(i), then Rio Tinto must procure that: |
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(A) | the relevant Rio Tinto JV Entity applies funds which are Excluded Assets; or |
(B) | the Rio Tinto Owner subscribes for Shares in the Rio Tinto Issuer, |
in amounts sufficient (in aggregate) to cover Rio Tintos liability (ie the amount by which those Undisclosed Liabilities exceed US$300 million). Rio Tinto must procure that the Rio Tinto Issuer applies all proceeds of subscription to meet the amount of the excess; and |
(ii) | BHP Billiton is required to bear Undisclosed Liabilities in accordance with paragraph (b)(ii), then BHP Billiton must procure that: |
(A) | the relevant BHP Billiton JV Entity applies funds which are Excluded Assets; or |
(B) | the BHP Billiton Owner subscribes for Shares in the BHP Billiton Issuer, |
in amounts sufficient (in aggregate) to cover BHP Billitons liability (ie the amount by which those Undisclosed Liabilities exceed US$300 million). BHP Billiton must procure that the BHP Billiton Issuer applies all proceeds of subscription to meet the amount of the excess. |
Obligations under this paragraph must be discharged within 45 Business Days of notification of those Undisclosed Liabilities to Rio Tinto or BHP Billiton, as applicable, by the Manager. |
(g) | Where Rio Tinto or BHP Billiton, as applicable (the Responsible Party ), is required to bear Undisclosed Liabilities in accordance with paragraph (b), it must indemnify BHP Billiton or Rio Tinto, as applicable (the Indemnified Party ), against any loss or liability suffered or incurred by the Indemnified Party, as a result of the Responsible Party failing to ensure that the relevant Rio Tinto JV Entity or BHP Billiton JV Entity has sufficient funds to cover the amount of Undisclosed Liabilities it is required to bear in accordance with paragraph (b) ( an Indemnified Party Claim ). |
(h) | The Responsible Party: |
(i) | is responsible for conducting, negotiating, defending or settling any claim in relation to an Undisclosed Liability, to the extent that it is obliged to bear the majority of that Undisclosed Liability in accordance with this clause 13, at its own expense; and |
(ii) | must be consulted in the conduct, negotiation, defence or settlement of any claim in relation to any individual Undisclosed Liability, where the claim is in the amount of US$50 million or more. |
(i) | At the Responsible Partys expense, both the Manager, in accordance with clause 4.3(f) of the Joint Venture Agreement, and the Indemnified Party must provide such assistance in relation to the claim as the Responsible Party reasonably requests. |
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14. | Debt at JV Commencement Date |
14.1 | * * * |
* * * |
(a) | * * * |
(b) | * * * |
* * * |
(c) | * * * |
(d) | * * * |
14.2 | Intra-group Debt |
(a) | Each of BHP Billiton and Rio Tinto must procure that, as at the start of the JV Commencement Date: |
(i) | in the case of BHP Billiton, neither the BHP Billiton Issuer nor any of its subsidiaries which are BHP Billiton JV Entities or which directly or indirectly hold shares in BHP Billiton JV Entities; and |
(ii) | in the case of Rio Tinto, neither the Rio Tinto Issuer nor any of its subsidiaries which are Rio Tinto JV Entities or which directly or indirectly hold shares in Rio Tinto JV Entities, |
has any Intra-group Debt, except for: |
(iii) | any Agreed Opening Iron Ore Loans; | ||
(iv) | any Agreed Opening Excluded Loans; | ||
(v) | any obligation to counter-indemnify an Affiliate in respect of an Owner Guarantee; and | ||
(vi) | any Iron Ore Liabilities in respect of transactions approved by the Implementation Oversight Committee or agreed between Rio Tinto and BHP Billiton. |
(b) | Each of BHP Billiton and Rio Tinto must procure that, before the JV Commencement Date any Intra-group Debt that is not permitted by paragraphs (a)(iii) to (a)(vi) (inclusive) is either discharged and extinguished in full or is converted to equity, such discharge or conversion to equity to be done: |
(i) | in the case of a wholly-owned subsidiary, in such manner as to ensure that the relevant entity remains a wholly-owned subsidiary of the BHP Billiton Issuer or the Rio Tinto Issuer (as the case requires); and | ||
(ii) | in all cases, in such manner as to ensure that no Stamp Duty or other Tax liability arises. |
(c) | If after subscription for, and issue of, all Debentures at Completion pursuant to clause 7.3, any part of Rio Tintos or BHP Billitons Agreed Opening Iron Ore Loans remain |
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outstanding, the outstanding balance will be converted to an Excluded Loan of Rio Tinto or BHP Billiton (as applicable) from Completion. |
14.3 | Existing JV Deposits |
Amounts held on deposit by a JV Entity pursuant to an Existing JV Arrangement will constitute Excluded Assets of the Owner in relation to the JV Entity, except for: |
(a) | any amounts which BHP Billiton elects to have treated as part of the cash on hand of BHP Billiton JV Entities at Completion, pursuant to clause 7.2(b); and |
(b) | any amounts which Rio Tinto elects to have treated as part of the cash on hand of Rio Tinto JV Entities at Completion, pursuant to clause 7.3(b). |
15. | Indemnified Tax Liabilities |
(a) | Rio Tinto will bear all Indemnified Tax Liabilities of the Rio Tinto Group, and be entitled to the benefit of all Indemnity-related Tax Assets of the Rio Tinto Group. |
(b) | BHP Billiton will bear all Indemnified Tax Liabilities of the BHP Billiton Group, and be entitled to the benefit of all Indemnity-related Tax Assets of the BHP Billiton Group. |
(c) | If: |
(i) | a Rio Tinto JV Entity incurs an Indemnified Tax Liability which Rio Tinto is required to bear in accordance with paragraph (a), then Rio Tinto must either discharge the Indemnified Tax Liability directly, or ensure that the relevant Rio Tinto JV Entity has access to sufficient funds which are Excluded Assets, through a Permitted Funding Mechanism, to discharge the liability; and |
(ii) | a BHP Billiton JV Entity incurs an Indemnified Tax Liability which BHP Billiton is required to bear in accordance with paragraph (b), then BHP Billiton must either discharge the Indemnified Tax Liability directly, or ensure that the relevant BHP Billiton JV Entity has access to sufficient funds which are Excluded Assets, through a Permitted Funding Mechanism, to discharge the liability, |
so that in either case the Indemnified Tax Liability is discharged no later than the due date for payment of the Indemnified Tax Liability. |
(d) | Where Rio Tinto or BHP Billiton, as applicable, is the party required to bear an Indemnified Tax Liability in accordance with paragraph (a) or (b) (the Responsible Party ) , it must indemnify BHP Billiton or Rio Tinto, as applicable, (the Indemnified Party ) against any loss or liability suffered or incurred by the Indemnified Party, as a result of the Responsible Party failing to comply with paragraph (c). |
(e) | The Responsible Party is responsible for conducting, negotiating, defending or settling any claim in relation to an Indemnified Tax Liability or an Indemnity-related Tax Asset at its own expense. |
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16. | Representations and warranties |
16.1 | Warranties |
(a) | Each of Rio Tinto and BHP Billiton gives the other the warranties in Part 1 of Schedule 9 as at the date of this Agreement and as at the JV Commencement Date. |
(b) | BHP Billiton gives Rio Tinto the warranty in Part 3 of Schedule 9 as at the date of this Agreement. |
(c) | Rio Tinto gives BHP Billiton the warranty in Part 2 of Schedule 9 as at the date of this Agreement. |
16.2 | Acknowledgement |
(a) | Each of Rio Tinto and BHP Billiton acknowledges that the other has executed this Agreement and agreed to take part in the transactions that this Agreement contemplates in reliance on the warranties given by the other pursuant to clause 16.1. |
(b) | Each of Rio Tinto and BHP Billiton acknowledges that, except for the warranties given pursuant to clause 16.1, the other does not make any express or implied representation or warranty, including any representation or warranty as to the accuracy or completeness of the Due Diligence Materials. |
(c) | Each of Rio Tinto and BHP Billiton acknowledges that it has made its own assessment of the Due Diligence Materials provided by BHP Billiton or Rio Tinto, respectively, and has made use of these Due Diligence Materials solely at its own risk. |
(d) | To the full extent permitted by law, every condition, warranty, term, provision, representation or undertaking (whether express, implied, written, oral, collateral, statutory or otherwise), except for a warranty given pursuant to clause 16.1, is excluded. |
16.3 | Manager must notify Rio Tinto and BHP Billiton of breach |
The Manager, in accordance with clause 4.3(f) of the Joint Venture Agreement, must notify Rio Tinto and BHP Billiton as soon as reasonably practicable after it becomes aware of a breach or potential breach of any warranty given pursuant to clause 16.1. |
16.4 | Rio Tinto indemnity |
Rio Tinto must indemnify the BHP Billiton Indemnified Parties against any loss or liability suffered or incurred by any BHP Billiton Indemnified Party and arising from any warranty given by Rio Tinto not being true, complete and accurate. |
16.5 | BHP Billiton indemnity |
BHP Billiton must indemnify the Rio Tinto Indemnified Parties against any loss or liability suffered or incurred by any Rio Tinto Indemnified Party and arising from any warranty given by BHP Billiton not being true, complete and accurate. |
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16.6 | Limits on Claims | |
Rights to make any claim on the warranties under this clause 16 (a Claim ) are limited as follows: |
(a) | If either Rio Tinto or BHP Billiton makes a Claim it must give written notice of the Claim to the other (the Claim Recipient ) (setting out in reasonable detail the nature of the Claim and the damages sought to the extent the amount can reasonably be determined) as soon as reasonably practicable after it becomes aware of the facts, matters or circumstances on which the Claim is based and in any event within two years of the JV Commencement Date. |
(b) | No liability in respect of a Claim attaches to a Claim Recipient unless the aggregate amount of all Claims against it exceeds US$250 million. A Claim Recipient will be liable in respect of all such Claims and not merely the excess. A Claim Recipient will not be liable for any single Claim which is less than US$50 million and any single Claim less than US$50 million (not being one of a number of claims arising from substantially the same facts, matters or circumstances, which, in aggregate, exceed US$50 million) will be disregarded in calculating the aggregate amount of all Claims against a Claim Recipient. |
(c) | For the purpose of paragraph (b), the amount of a Claim will be calculated before allowing for any reduction in present or future Tax, Tax rebate or Tax credit received or receivable by the party in relation to the Claim. |
(d) | A Claim Recipient is not liable to the other party for any amount equal to any reduction in present or future Tax, Tax rebate or Tax credit received or receivable by it or by any of its Related Corporations in relation to the amount or matter the subject of the Claim. |
(e) | The respective liabilities of Rio Tinto and BHP Billiton in respect of Claims brought by them against each other will be netted off so that only the net amount, if any, by which the aggregate liability of one Claim Recipient for Claims exceeds the aggregate liability of the other for Claims, will be paid by the relevant Claim Recipient to the other. No payment will be made in respect of any Claims prior to the expiration of the two year period referred to in paragraph (a). If one Claim Recipients liability for Claims pursuant to paragraph (b) exceeds US$250 million but the others liability for Claims is US$250 million or less, then for the purposes of determining the net amount payable by one Claim Recipient to the other under this paragraph (e), a Claim Recipient will be deemed to be liable to make payments to the other under paragraph (b) even if the aggregate amount of its liability under paragraph (b) is US$250 million or less. |
(f) | Neither Rio Tinto nor BHP Billiton may make a Claim in respect of the amount of any Undisclosed Liabilities, which are to be borne in accordance with clause 13. |
17. | Public announcements and confidentiality |
17.1 | Public announcements |
(a) | Each of Rio Tinto and BHP Billiton must use its reasonable endeavours to agree the wording and timing of all public announcements and statements by both or either of them relating to the WA Iron Ore JV (including, subject to paragraph (b), any disclosure to any stock exchange) before any announcement or statement is made. Copies of any public |
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announcement or statement must be given to each other in the most expeditious manner reasonably available. |
(b) | Neither Rio Tinto nor BHP Billiton may make any public or press announcement concerning the WA Iron Ore JV without the prior approval of the other (such approval not to be unreasonably withheld or delayed), except to the extent required under any applicable legislation or other legal requirement or the rules or regulations of any recognised stock exchange which apply to it or any of its Related Corporations. |
17.2 | Rio Tinto and BHP Billiton responsible for respective Related Corporations, officers and employees and professional advisers |
(a) | Each of Rio Tinto and BHP Billiton must procure that its: |
(i) | Related Corporations; |
(ii) | directors, employees, officers and agents or of any of its Related Corporations (each an officer or an employee ); and |
(iii) | professional advisers (including legal advisers and consultants) ( professional advisers ), |
comply with this clause 17 as if they were parties to this Agreement. |
(b) | A breach of this clause 17 by a Related Corporation, officer or employee or professional adviser of Rio Tinto or BHP Billiton will be deemed to be a breach of this clause 17 by Rio Tinto or BHP Billiton, respectively. |
(c) | If a Related Corporation, officer or employee or professional adviser of Rio Tinto or BHP Billiton breaches this clause 17, the other will be entitled to all remedies available to it under this clause 17 or at Law as if the Related Corporation, officer or employee or professional adviser was a party. |
17.3 | Obligations of confidence |
(a) | For the purposes of this clause 17, Confidential Information means the terms and conditions of the Transaction Documents and negotiations between Rio Tinto and BHP Billiton in relation to the Transaction Documents. |
(b) | Each of Rio Tinto and BHP Billiton undertakes that it will not: |
(i) | disclose Confidential Information to any person or permit or cause any person to do anything that gives rise to or contributes to the creation of a requirement to disclose Confidential Information (other than as permitted by this clause 17 or as required by Law); or |
(ii) | use Confidential Information, |
except: |
(iii) | with the prior written approval of the other; | ||
(iv) | for the purposes of the Transaction Documents; or | ||
(v) | as otherwise permitted by this clause 17. |
(c) | Each of Rio Tinto and BHP Billiton undertakes that it will: |
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(i) | promptly do anything reasonably required by the other to prevent or restrain a breach or suspected breach of this clause 17 or any infringement or suspected infringement of the other whether by court proceedings or otherwise; and | ||
(ii) | inform the other immediately if it becomes aware that Confidential Information has been disclosed to an unauthorised third party. |
17.4 | Permitted disclosure | |
Subject to clauses 17.2, 17.3 and 17.5, each of Rio Tinto and BHP Billiton (each a Disclosing Party ) may disclose Confidential Information: |
(a) | ( Related Corporation ) to any of its Related Corporations; |
(b) | ( officers and employees ) to its officers and employees; |
(c) | ( professional advisers ) to its professional advisers; |
(d) | ( lenders and underwriters ) to a bank or other financial institution (and its professional advisers including legal advisers) in connection with any loan or other financial accommodation or application for a loan or financial accommodation to it or to any of its Related Corporations, or the provision of underwriting for any issue of securities; |
(e) | ( potential disposals ) in connection with any potential Disposal, Security Interest or investment; |
(f) | ( required Disclosures ) to the extent required under any applicable Law or the rules or regulations of any recognised securities exchange which apply to it or to any of its Related Corporations; |
(g) | ( legal proceedings ) if the disclosure is required for the purposes of any legal, administrative or other proceedings involving it or any of its Related Corporations; |
(h) | ( duties ) if and to the extent that it may be reasonably necessary in the discharge of its duties and obligations under the Transaction Documents; and |
(i) | ( Authority ) if and to the extent that it may be reasonably necessary or desirable to disclose the information to any Authority in connection with applications for any Authorisations. |
17.5 | Conditions to disclosure | |
Any disclosure: |
(a) | under clause 17.4(d) may only be made if the person to whom disclosure is to be made first agrees with the Disclosing Party, in a form enforceable by: |
(i) | BHP Billiton, where Rio Tinto is the Disclosing Party; or |
(ii) | Rio Tinto, where BHP Billiton is the Disclosing Party, |
and which is no less onerous than the requirements of this clause 17, that the information concerned must not be disclosed to any other person for any purpose, and such disclosure may only be made for the purposes of satisfying the person to whom disclosure is made as to the value and commercial viability of the proposed transaction; and |
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(b) | under clauses 17.4(a) to (c) (inclusive) and (i) may only be made if the person to whom disclosure is to be made is informed of the confidential nature of the information and required to, in the case of an Authority, to the extent possible, respect that confidentiality. |
17.6 | Form of Disclosure | |
To the extent possible without breaching any applicable Law and despite clause 17.1, a Disclosing Party which is required to disclose Confidential Information by Law must not disclose Confidential Information under clause 17.4 by means of a public announcement, public document, stock exchange release or otherwise without first obtaining the others consent to the form of that announcement, release or other disclosure, which consent must not be unreasonably withheld or delayed. | ||
17.7 | Other obligations of confidentiality | |
The confidentiality undertaking contained in this Agreement will be in addition to obligations of the parties under the Confidentiality Agreement and will in no way derogate from the obligations of Rio Tinto and BHP Billiton and the Manager in respect of secret and confidential information at law, in equity or under any statute or trade or professional custom or use. | ||
17.8 | Termination | |
This clause 17 will immediately terminate and be of no further force or effect when clause 14 of the Joint Venture Agreement becomes effective. Termination of this clause 17 will be without prejudice to the rights of each of BHP Billiton or Rio Tinto that have arisen prior to its termination. | ||
18. | GST |
18.1 | Definitions | |
For the purposes of this clause 18: |
(a) | Adjustment has the meaning given by the GST Law; |
(b) | Consideration has the meaning given by the GST Law; |
(c) | Input Tax Credit has the meaning given by the GST Law and a reference to an Input Tax Credit entitlement of a party includes an Input Tax Credit for an acquisition made by that party but to which the representative member of a GST Group or the Joint Venture Operator of a GST Joint Venture is entitled under GST Law; |
(d) | GST Amount means in relation to a Taxable Supply the amount of GST payable in respect of that Taxable Supply; |
(e) | GST Joint Venture has the meaning given by the GST Law; |
(f) | Joint Venture Operator has the meaning given by the GST Law; |
(g) | Tax Invoice has the meaning given by the GST Law; and |
(h) | Taxable Supply has the meaning given by the GST Law excluding the reference to Section 84-5 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth). |
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18.2 | Recovery of GST | |
If GST is payable on a Taxable Supply made under, by reference to or in connection with this Agreement, the party providing the Consideration for that Taxable Supply must also pay the GST Amount as additional Consideration. Subject to the prior receipt of a Tax Invoice, the GST Amount is payable at the same time that the other Consideration for the Taxable Supply is provided. This clause 18.2 does not apply to the extent that the Consideration for the Taxable Supply is expressly stated to be GST inclusive. | ||
18.3 | Liability net of GST | |
Any reference in the calculation of Consideration or of any indemnity, reimbursement or similar amount to a cost, expense or other liability incurred by a party must exclude the amount of any Input Tax Credit entitlement of that party in relation to the relevant cost, expense or other liability. A party will be assumed to have an entitlement to a full Input Tax Credit unless it demonstrates otherwise prior to the date on which the Consideration must be provided. | ||
18.4 | Adjustments | |
If an Adjustment occurs in relation to a Taxable Supply made under, by reference to or in connection with this Agreement, the GST Amount will be recalculated to reflect that Adjustment and an appropriate payment will be made between the parties. | ||
18.5 | Revenue exclusive of GST | |
Any reference in this Agreement to price, value, sales, revenue or a similar amount ( Revenue ), is a reference to that Revenue exclusive of GST. | ||
18.6 | Cost exclusive of GST | |
Any reference in this Agreement (other than in the calculation of Consideration or of any indemnity, reimbursement or similar amount) to cost, expense or other similar amount ( Cost ), is a reference to that Cost exclusive of any Input Tax Credit entitlement. | ||
19. | Termination |
In the event that the Iron Ore JV Framework Agreement is terminated under clauses 2.2 or 2.4 of that agreement, each party acknowledges and agrees that this Agreement, other than clauses 1 (Definitions and Interpretation), 17 (Public announcements and confidentiality), 18 (GST), 20 (Iron Ore JV Framework Agreement), 21 Governing law and jurisdiction and 22 (Ancillary Provisions), will immediately terminate and be of no further force or effect. Termination of this Agreement will be without prejudice to the rights of any of the parties that have arisen prior to termination, including any claim under the Iron Ore JV Framework Agreement. |
20. | Iron Ore JV Framework Agreement |
The parties acknowledge that the rights and obligations of the parties under clauses 2 (other than clause 2.1 and clause 2.3), 3, 4 and 5 of the Iron Ore JV Framework Agreement dated 5 June 2009 are not affected by this Agreement. |
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21. | Governing law and jurisdiction |
21.1 | Governing law |
(a) | This Agreement is governed by the laws in force in Western Australia. |
(b) | The parties irrevocably and unconditionally: |
(i) | submit to the non-exclusive jurisdiction of the courts of Western Australia; and |
(ii) | agree that they may not object to any suit, action or proceeding commenced under or in connection with this Agreement on the basis that the courts of Western Australia are not an appropriate forum. |
21.2 | Final judgment conclusive and enforceable | |
The parties agree that a final judgment in any suit, action or proceeding commenced under or in connection with this Agreement in any court of competent jurisdiction is conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. |
21.3 | Dispute Resolution |
(a) | Each of Rio Tinto and BHP Billiton must first seek to resolve any dispute under or in connection with this Agreement by discussions in good faith. |
(b) | Rio Tinto or BHP Billiton may, by notice to the other, require any dispute (other than a dispute to be determined in accordance with clauses 3.4(f) and 22.10(b), and item 6 of Schedule 8) arising under or in connection with this Agreement to be referred to the chief executive officers of BHP Billiton and Rio Tinto (the Chief Executives ). The Chief Executives must meet and seek in good faith to resolve the dispute within 30 days. |
(c) | If the Chief Executives are unable to resolve the dispute within 30 days of referral to them, either Rio Tinto or BHP Billiton may refer the dispute to the chairpersons of BHP Billiton and Rio Tinto (the Chairpersons ), who will meet and seek in good faith to resolve the dispute within 30 days. |
(d) | If the Chairpersons are unable to resolve the dispute within 30 days of referral to them, then either Rio Tinto or BHP Billiton may commence proceedings in any court of competent jurisdiction. |
(e) | Subject to paragraph (f), a party may not commence court proceedings in relation to any dispute arising out of or in connection with this Agreement until it has complied with the dispute resolution process set out in paragraphs (a) to (d). |
(f) | Nothing in this clause 21 prevents Rio Tinto or BHP Billiton seeking appropriate injunctive or interlocutory relief at any time to preserve property or rights or to avoid losses that are not compensable in damages. |
(g) | Each of Rio Tinto and BHP Billiton agrees that: |
(i) | it is responsible for its own costs in connection with the dispute resolution process; and |
(ii) | the costs of any suit, action or proceeding commenced under or in connection with this Agreement will be borne as between Rio Tinto and BHP Billiton as |
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determined by the court of competent jurisdiction that hears the suit, action or proceeding. |
21.4 | Service of process |
(a) | Each party agrees that service of all writs, process and summonses in any suit, action or proceeding under or in connection with this Agreement brought in Western Australia may be made on its registered or principal office for the time being in Australia. |
(b) | Nothing contained or implied in this Agreement will in any way be taken to limit the ability of a party to: |
(i) | serve any writs, process or summonses; or |
(ii) | obtain jurisdiction over a party in other jurisdictions, |
in any manner permitted by Law. |
22. | Ancillary provisions |
22.1 | Notices |
(a) | Any notice, demand, consent, certificate, approval, nomination, waiver or other similar communication given or made in connection with this Agreement (a notice ): |
(i) | must be in writing and signed by the sender or a person duly authorised by the sender; |
(ii) | must be addressed and delivered to the intended recipient at the address or fax number below or the address or fax number last notified by the intended recipient to the sender after the date of this Agreement: |
|
(A) | to Rio Tinto: | Rio Tinto plc | |||
|
2 Eastbourne Terrace | |||||
|
London W2 6LG | |||||
|
UNITED KINGDOM | |||||
|
Attention: Company Secretary | |||||
|
Fax +44 20 7781 1835 | |||||
|
||||||
|
and to | |||||
|
||||||
|
Rio Tinto Limited | |||||
|
Level 33, 120 Collins Street | |||||
|
Melbourne VIC 3000 | |||||
|
AUSTRALIA | |||||
|
Attention: Company Secretary | |||||
|
Fax +61 3 9283 3151 | |||||
|
||||||
|
(B) | to BHP Billiton: | BHP Billiton plc | |||
|
Neathouse Place, Victoria | |||||
|
London SW1V 1B | |||||
|
UNITED KINGDOM | |||||
|
Attention: Company Secretary |
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|
Fax +44 20 7802 4111 | |||||
|
||||||
|
and to | |||||
|
||||||
|
BHP Billiton Limited | |||||
|
BHP Billiton Centre | |||||
|
180 Lonsdale Street | |||||
|
Melbourne VIC 3000 | |||||
|
Attention: Company Secretary | |||||
|
Fax No: +61 3 9609 3015 |
(iii) | will be taken to be duly given or made when delivered, received or left at the above fax number or address. If delivery or receipt occurs on a day that is not a business day in the place to which the notice is sent or is later than 4pm (local time) at that place, it will be taken to have been duly given or made at the commencement of business on the next business day in that place. |
22.2 | Severability | |
If any provision of this Agreement is or becomes invalid, illegal or unenforceable, in whole or in part, under the law of any jurisdiction, the validity, legality or enforceability of such provision or part under the law of any other jurisdiction and the validity, legality and enforceability of the remaining provisions of this Agreement will not in any way be affected or impaired. If any provision of this Agreement, or its application to any person or entity or any circumstance, is invalid or unenforceable, each of Rio Tinto and BHP Billiton must make such suitable and equitable provision as is necessary in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision. | ||
22.3 | Variation | |
No variation, modification or amendment of all or any part of this Agreement, including the schedules to this Agreement, will be effective unless in writing and signed by or on behalf of each of Rio Tinto and BHP Billiton. | ||
22.4 | No waiver | |
No failure of any of the parties to exercise, or delay by it in exercising, any right, power or remedy in connection with this Agreement will operate as a waiver thereof, nor will any single or partial exercise of any right, power or remedy preclude any other or further exercise of such right, power or remedy or the exercise of any other right, power or remedy. | ||
22.5 | Remedies |
(a) | Except as otherwise provided for in this Agreement, the rights and remedies of the parties are cumulative and not exclusive of rights and remedies provided by Law. | ||
(b) | Without prejudice to any other rights and remedies which any party may have, each party acknowledges and agrees that damages would not be an adequate remedy for any breach by any party of the provisions of this Agreement and any party will be entitled to seek the remedies of injunction, specific performance and other equitable relief (and the parties will not contest the appropriateness or availability thereof), for any threatened or actual breach |
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of any provision of this Agreement by any party and no proof of special damages will be necessary for the enforcement by any party of the rights under this Agreement. |
22.6 | No merger | |
The rights and obligations of the parties: |
(a) | will not merge on the completion of any transaction contemplated by this Agreement; and |
(b) | will survive the execution and delivery of any assignment or other document entered into for the purpose of implementing a transaction. |
22.7 | Costs and expenses |
(a) | Each party must bear its own costs arising out of the negotiation, preparation and execution of this Agreement. | ||
(b) | All Stamp Duty (including fines, penalties and interest) payable by a party on or in connection with this Agreement will be borne by that party. |
22.8 | Entire agreement | |
Subject to clauses 19 and 20, this Agreement contains the entire agreement between the parties in relation to its subject matter and supersedes all agreements, undertakings, negotiations and discussions, whether oral or written, of the parties. | ||
22.9 | Further assurances | |
Each party agrees to do anything necessary or desirable (including executing agreements, deeds, transfers, instruments and documents) to give full effect to this Agreement and the transactions contemplated by it. | ||
22.10 | Change of Law |
(a) | If there is a change in law or change in accounting standards that materially affects the operation of the Transaction Documents to the detriment of either Rio Tinto or BHP Billiton or its Related Corporations, then it, by notice to the other, may require the other to enter into good faith negotiations to seek to agree such amendments to the Transaction Documents as may be appropriate to mitigate the detriment, to the extent practicable and reasonable, and in a manner which operates fairly between Rio Tinto and BHP Billiton. A failure to agree amendments is not a dispute that may be referred for resolution in accordance with clause 21.3. | ||
(b) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * | ||
(iv) | * * * |
* * * |
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22.11 | Enurement | |
Except as provided in this Agreement, the provisions of this Agreement will enure for the benefit of, and be binding on, the parties and their respective successors and permitted assigns. | ||
22.12 | Civil Liability Act 2002 | |
The parties agree that the Civil Liability Act 2002 (WA) is expressly excluded from application to this Agreement and the Transaction Documents, or any relevant dispute, claim, action or other matter whatsoever arising out of or in connection with this Agreement and the Transaction Documents pursuant to Section 4A of that Act. | ||
22.13 | Counterparts | |
This Agreement may be executed in any number of counterparts and by the parties on separate counterparts, each of which will be an original but all of which together will constitute one and the same instrument. This Agreement will not take effect until each party has executed at least one counterpart. |
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1. | Definitions and Interpretation |
1.1 | Definitions | |
The following definitions apply unless the context requires otherwise. | ||
1936 Tax Act means the Income Tax Assessment Act 1936 (Cth). | ||
1997 Tax Act means the Income Tax Assessment Act 1997 (Cth). | ||
ACCC means the Australian Competition and Consumer Commission. | ||
Accounting Policy means the accounting policy on the terms initialled by each of Rio Tinto and BHP Billiton for identification on or about the date of this Agreement, as amended by the Revised Accounting Policy. | ||
Additional Capital Project has the meaning given in clause 6.2(c)(i). | ||
Adjusters means * * *. | ||
Adjustment Amount means the adjustment amount determined in accordance with item 2.1 of Schedule 8. | ||
Affiliate means a Related Corporation, other than a Relevant JV Entity. | ||
Agreed Interest Rate has the meaning given in the Funding and Distribution Policy, and also includes the Initial Agreed Interest Rate. | ||
Agreed Opening Excluded Loans means: |
(a) | any loans: |
(i) | due to Rio Tinto or an Affiliate from the Rio Tinto Issuer or any of its subsidiaries which are Rio Tinto JV Entities or which directly or indirectly hold shares in Rio Tinto JV Entities; |
(ii) | not exceeding, in aggregate, the Maximum Permitted Excluded Loan Balance; and |
(iii) | each of which, other than any loan from an Owner, is subject to a Creditor Deed Poll; |
(b) | any loans: |
(i) | due to BHP Billiton or an Affiliate from the BHP Billiton Issuer or any of its subsidiaries which are BHP Billiton JV Entities or which directly or indirectly hold shares in BHP Billiton JV Entities; |
(ii) | not exceeding, in aggregate, the Maximum Permitted Excluded Loan Balance; and |
(iii) | each of which, other than any loan from an Owner, is subject to a Creditor Deed Poll; and |
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(c) | any Pre-Commencement NCEP Loans. |
Agreed Opening Iron Ore Loans means: |
(a) | the loan provided by Rio Tinto (or an Affiliate) to the Rio Tinto Issuer in the amount of not more than US$5.8 billion; and |
(b) | any other loans that Rio Tinto and BHP Billiton agree should constitute Agreed Opening Iron Ore Loans, |
each of which, other than any loan from an Owner, is subject to a Creditor Deed Poll. | ||
Agreed Policy Terms means the terms and conditions contained in the policy initialled by Rio Tinto and BHP Billiton for the purposes of identification on the date of this Agreement. | ||
Agreed Practice Standard means the performance standard specified in clause 4.3(b)(v) of the Joint Venture Agreement. | ||
Agreed Sole Risk Adjustment has the meaning given in item 2.6 of Schedule 8. | ||
Agreed Term has the meaning given in the Funding and Distribution Policy, and also includes the Initial Agreed Term. | ||
Approved JV Implementation Costs means JV Implementation Costs that: |
(a) | have been approved by the Implementation Oversight Committee; or |
(b) | are otherwise agreed between Rio Tinto and BHP Billiton. |
Assessed Loss has the meaning given in clause 3.2(c). | ||
Attributable means attributed, allocated or apportioned in accordance with the Attribution Principles. | ||
Attribution Principles means the principles in item 1.6 of the Funding and Distribution Policy on the assumption they applied during the Relevant Period in relation to Relevant Period Excluded Assets and Relevant Period Assets. | ||
Audit Committee has the meaning given in Schedule 10. | ||
Auditor has the meaning given in the Joint Venture Agreement. | ||
AUP means the set of procedures, agreed by the Implementation Oversight Committee (and each of BHP Billitons and Rio Tintos auditors), for the Auditor to undertake the reviews contemplated by Schedule 8. | ||
Authorisations means all permissions, licences, authorisations, approvals, consents, rulings, registrations, filings, lodgements, permits, franchises, agreements, notarisations, certificates, approvals, directions, declarations, authorities or exemptions from, by or with any Authority, including as may be required or obtained under the Mining Act or any State Agreement. | ||
Authority means any minister, government or representative of a government or any governmental, quasi-governmental, local government, statutory, judicial, administrative, fiscal, tax, competition or regulatory authority, entity or other body, department, concession, tribunal, self-regulatory organisation established pursuant to statute or rules of a recognised stock exchange, instrumentality, agency, statutory corporation or public authority. | ||
Bank Bill Rate in relation to any Month, means: |
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(a) | the average one month Australian bank bill rate by Reuters Monitor Service Page BBSY (rounded up, if necessary, to the nearest two decimal places) displayed at about 10:00 am (Melbourne time) on the first Business Day of that Month; or |
(b) | if no such rate is displayed for any Month, then the Bank Bill Rate for that month in respect of any unpaid amount will be the rate which is the average (rounded up, if necessary to the nearest two decimal places) of the rates quoted to the person to which the relevant amount is owed by each of three Australian banks selected by that person as the relevant banks buying rate as at 10:00 am (Melbourne time) on the first Business Day of that Month for bank-accepted bills of exchange having a term of 30 days. |
Bao-HI Joint Venture means the joint venture established by the Bao-HI Ranges Joint Venture Agreement dated 22 June 2002. | ||
Beasley Joint Venture means the joint venture to be established pursuant to clause 3.1 of the Beasley River Joint Venture Agreement dated 28 October 2004. | ||
BHP Billiton Consolidated Group means the Consolidated Group of which BHPBL is the Head Company. | ||
BHP Billiton Equalisation Investment means the estimated BHP Billiton Equalisation Investment determined in accordance with item 1.1 of Schedule 8. | ||
BHP Billiton Group means BHPBL, BHPBP and each of their Subsidiaries and BHP Billiton Group entity means an entity in the BHP Billiton Group. | ||
BHP Billiton Indemnified Parties has the meaning given in clause 4.4(b). | ||
BHP Billiton Issuer means the entity to be incorporated under clause 5.3(a)(ii) in accordance with item 2.1(c) of Part 2 of Schedule 7. | ||
BHP Billiton JV Entities means: |
(a) | as at the date of this Agreement, the BHP Billiton Issuer and the BHP Billiton Subsidiaries listed in, and which are engaged in the businesses described in, schedule 2 of the Joint Venture Agreement; and |
(b) | any other wholly-owned Subsidiary of the BHP Billiton Issuer that subsequently acquires an Iron Ore Asset under clause 2.4(c) of the Joint Venture Agreement. |
BHP Billiton JVs means: |
(a) | the Mt Newman Joint Venture; |
(b) | the Goldsworthy Joint Venture; |
(c) | the Yandi Joint Venture; |
(d) | the Wheelarra Joint Venture; |
(e) | the JW4 Joint Venture; |
(f) | the POSMAC Joint Venture; and |
(g) | any other joint venture that a BHP Billiton JV Entity enters into after the date of the Joint Venture Agreement within the scope of the WA Iron Ore JV. |
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BHP Billiton Marketing SPV means the entity to be incorporated under clause 5.3(a)(ii) in accordance with item 2.1(d) of Part 2 of Schedule 7. | ||
BHP Billiton Iron Ore Owned R&D IP has the meaning given in the Intellectual Property Management Agreement. | ||
BHP Billiton Owner means the entity to be incorporated under clause 5.3(a)(ii) in accordance with item 2.1(a) of Part 2 of Schedule 7. | ||
BHP Billiton R&D IP means the BHP Billiton Iron Ore Owned R&D IP and the BHP Billiton Iron Ore Relevant R&D IP. | ||
BHP Billiton Iron Ore Relevant R&D IP has the meaning given in the Intellectual Property Management Agreement. | ||
BHP Billiton RP Assets and Liabilities has the meaning given in item 1.5 of Schedule 8. | ||
BHP Billiton State Agreements means: |
(a) | the Iron Ore (Mount Newman) Agreement Act 1964 (WA); |
(b) | the Iron Ore (Mount Goldsworthy) Agreement Act 1964 (WA); |
(c) | the Iron Ore (Goldsworthy-Nimingarra) Agreement Act 1972 (WA); |
(d) | the Iron Ore (Marillana Creek) Agreement Act 1991 (WA); and |
(e) | the Iron Ore (McCameys Monster) Agreement Authorisation Act 197 3 (WA). |
BHP Billiton Tax Funding Agreement means the BHP Billiton Tax Contribution Deed dated 28 November 2003. | ||
Blending Agreement means the blending agreement to be negotiated by Rio Tinto and BHP Billiton in accordance with clause 3.5(b)(vi), to be signed by the parties to that agreement at Completion. | ||
Board means the board of directors of BHP Billiton or Rio Tinto, as applicable. | ||
* * * | ||
Budget has the meaning given in the Joint Venture Agreement, and also includes the First Budget. | ||
Budget Overrun Percentage has the meaning given in clause 3.10(l)(i) of the Joint Venture Agreement. | ||
Business Day means a day that is not a Saturday, Sunday or public holiday in Perth, Western Australia. | ||
Business Plan has the meaning given in the Joint Venture Agreement, and also includes the First Business Plan. | ||
Call Deposits has the meaning given in the Funding and Distribution Policy. | ||
* * * | ||
* * * | ||
Capital Projects Notic e has the meaning given in clause 6.2(c). | ||
Cash means all cash and cash equivalents within the meaning of the definition of Cash Flows. |
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Cash Flows means, as the case requires, all inflows and outflows of cash and cash equivalents from operating, financing and investing activities, as determined in accordance with IAS 7 and AASB 107. References to Cash inflows and Cash outflows have a corresponding meaning. | ||
Cashflow Adjustment Amount has the meaning given in item 2.2 of Schedule 8. | ||
CEO means the chief executive officer of the Manager. | ||
CFR has the meaning given in the International Rules for the Interpretation of Trade Terms of the International Chamber of Commerce (Incoterms) 2000 Edition, as replaced from time to time. | ||
Chairpersons has the meaning given in clause 21.3(c). | ||
Channar Joint Venture means the joint venture established by the Channar Mining Joint Venture Agreement dated 16 November 1987. | ||
Chief Executives has the meaning given in clause 21.3(b). | ||
Claim has the meaning given in clause 16.6. | ||
Claim Recipient has the meaning given in clause 16.6(a). | ||
Commissioner of Taxation means the Australian Federal Commissioner of Taxation. | ||
* * * | ||
Completion means completion in accordance with clause 6.2. | ||
Completion Date has the meaning given in clause 6.1. | ||
Completion Documents means: |
(a) | the Joint Venture Agreement, including the Funding and Distribution Policy; |
(b) | each Debenture Deed Poll; |
(c) | each Management Delegation Agreement; |
(d) | each Creditor Deed Poll required in respect of the Agreed Opening Iron Ore Loans and the Agreed Opening Excluded Loans to be executed at or about the Completion Date; |
(e) | each Owner Cross Charge; |
(f) | the Ore Sales Agreements on the terms initialled by each of Rio Tinto and BHP Billiton for identification on or about the date of this Agreement, to be signed by the parties to that agreement at Completion; |
(g) | the Infrastructure Sharing Agreement; |
(h) | the Blending Agreement; |
(i) | the Intellectual Property Management Agreement; |
(j) | the ERP Service and Licence Agreement; |
(k) | the Transitional Services Agreements; |
(l) | the Parent Company Guarantees; and |
(m) | the Set-Off Agreement. |
Conditions Precedent means the conditions precedent referred to in clause 2. |
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Confidential Information has the meaning given in clause 17.3. | ||
Confidentiality Agreement means the confidentiality agreement dated 1 July 2009 between Rio Tinto and BHP Billiton. | ||
Consolidated Group means a consolidated group as that term is defined in s.995-1(1) of the 1997 Tax Act. | ||
Core Principles means the core principles described in schedule 1 of the Iron Ore JV Framework Agreement. | ||
Corporations Act means the Corporations Act 2001 (Cth). | ||
Coupon has the meaning given in the Funding and Distribution Policy. | ||
CPI means the Australian All Groups Consumer Price Index Number (weighted average of eight capital cities) published by the Australian Bureau of Statistics. In this definition: |
(a) | the reference to the Australian All Groups Consumer Price Index Number (weighted average of eight capital cities) means: |
(i) | the same numbers but with different names at any time; and |
(ii) | the same numbers adjusted mathematically to take account of a change at any time in the base year provided that indices of the same base year are used throughout the calculation; and |
(b) | the reference to the Australia Bureau of Statistics includes a reference to: |
(i) | the Bureau but with a different name at any time; and |
(ii) | a governmental agency in Australia (in the absence of the Australian Bureau of Statistics) at any time having similar functions. |
Creditor Deed Poll means each deed poll in the form set out in schedule 13 of the Joint Venture Agreement. |
Cross Charge means: |
(a) | each Owner Cross Charge; and |
(b) | any other cross charge substantially in the form of part 2 of schedule 12 of the Joint Venture Agreement granted in accordance with clauses 11.5, 11.6, 11.7 and 11.8 of the Joint Venture Agreement. |
* * * | ||
Debenture means securities of that name issued or to be issued on the terms and conditions set out in the Debenture Deeds Poll. | ||
Debenture Deed Poll means a deed poll entered into by each Issuer in conjunction with the issue of the Debentures on the terms initialled by each of Rio Tinto and BHP Billiton for identification on or about the date of this Agreement, to be signed by the relevant Issuer at Completion. | ||
Deed of Accession means each deed of accession entered into by a Sole Risk Entity in the form set out in schedule 18 of the Joint Venture Agreement. |
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Dispose means, in relation to any asset, to sell, transfer, assign, declare oneself a trustee of, or part with the benefit of, or otherwise dispose of, the asset (or any interest in it, or any part of it) other than (in each case) by the creation of a Security Interest, and Disposal has a corresponding meaning. | ||
Distributable Earnings means all reserves that a company may lawfully distribute by way of dividends to its members. | ||
dmtu means dry metric tonne units. | ||
Due Diligence Materials means all information (in any form) disclosed by: |
(a) | BHP Billiton * * * and |
(b) | Rio Tinto * * * |
each as established and maintained pursuant to the due diligence scope, as agreed by BHP Billiton and Rio Tinto on 6 August 2009 and the due diligence scoping memorandum setting out the materiality threshold for information to be disclosed in the respective data rooms dated 30 July 2009, also as agreed between BHP Billiton and Rio Tinto. For the avoidance of doubt, Due Diligence Material includes any such material provided only to core team members as contemplated in the due diligence scope. | ||
Effective Date means 1 July 2009. | ||
Effective Date Balance Sheets has the meaning given in item 1.6(a) of Schedule 8. | ||
End Date has the meaning given in clause 2.5. | ||
ERP Service and Licence Agreement means the service and licence agreement to be entered into on the terms initialled by each of Rio Tinto and BHP Billiton for identification on or about the date of this Agreement, to be signed by the parties to that agreement at Completion. | ||
Escalated means escalated at a nominal rate of 6.5% per annum, compounded annually, using the following formula: |
A x (1 + 0.065) (x/365) | |||
where: |
A = the amount to be escalated; and | |||
x = the number of days that have lapsed during the period over which the amount is escalated. |
Escalated NCEP Calls equals the aggregate amount of the NCEP Calls paid by the Proposing Party with each NCEP Call being Escalated between the date on which the NCEP Call was paid and the date for payment of the Receiving Partys Participant Loan under clause 8(c)(iii). | ||
Estimated Adjusted Cashflows means the estimated adjusted cash flows of Rio Tinto or BHP Billiton, as applicable, as determined in accordance with item 1.4 of Schedule 8. | ||
Estimated Cashflow Difference has the meaning given in item 1.3(c) of Schedule 8. | ||
Estimated Monthly Difference has the meaning given in item 1.3(b)(iv) of Schedule 8. | ||
Event has the meaning given in clause 3.2(b). | ||
Excluded Assets means any assets of any Rio Tinto Group entity or BHP Billiton Group entity from time to time that are not Iron Ore Assets and includes: |
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(a) | assets used in Iron Ore Marketing Activities and not Iron Ore Production Activities ( Marketing Assets ) including: |
(i) | plant and equipment used in Iron Ore Marketing Activities and not Iron Ore Production Activities; |
(ii) | land (including fixtures) used in Iron Ore Marketing Activities and not Iron Ore Production Activities; |
(iii) | contracts and leases to the extent they relate to Iron Ore Marketing Activities, including contracts for the supply of iron ore produced by Iron Ore Production Activities to customers (other than Ore Sales Agreements); |
(iv) | Cash and receivables arising from Iron Ore Marketing Activities; |
(v) | iron ore to which a Rio Tinto Group entity or BHP Billiton Group entity is entitled that has been loaded on board a ship; and |
(vi) | all other assets of a Rio Tinto Group entity or BHP Billiton Group entity referable to Iron Ore Marketing Activities and not Iron Ore Production Activities; |
(b) | for Rio Tinto, its interests in each of the following companies and their existing and future assets: |
(i) | * * * |
(A) | * * * |
(B) | * * * |
(C) | * * * |
(D) | * * * |
(E) | * * * |
(F) | * * * |
(ii) | * * * | ||
(iii) | * * * | ||
(iv) | * * * | ||
(v) | * * * |
(vi) | * * * | ||
(vii) | * * * | ||
(viii) | * * * | ||
(ix) | * * * | ||
(x) | * * * | ||
(xi) | * * * |
(c) | for BHP Billiton, its existing and future interests in each of the following: |
(i) | * * * | ||
(ii) | * * * |
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(iii) | * * * |
(d) | any Secondary Processing facilities, other than the facilities expressly included in the definition of Iron Ore Assets; | ||
(e) | subject to clause 4.16 of the Joint Venture Agreement and the ERP Service and Licence Agreement, all intellectual property and technology of the Rio Tinto Group and the BHP Billiton Group used in Iron Ore Production Activities; | ||
(f) | any Retained Assets identified pursuant to the process established by clauses 3.6 and 3.7; | ||
(g) | Excluded Cash Flows, Excluded Distributable Earnings and Excluded Asset Surplus; | ||
(h) | Cash arising from Excluded Cash Flows, and any loan or deposit arising from use of such Cash; | ||
(i) | anything which is, or is deemed to be, an Excluded Asset or part of Excluded Assets under, or by operation of, the Transaction Documents; and | ||
(j) | anything that the Owners agree are Excluded Assets, |
and, for the avoidance of doubt, does not include Sole Risk Assets. | ||
Excluded Asset Surplus of an Issuer on an Insolvency Administration has the meaning given in the Funding and Distribution Policy. | ||
Excluded Cash Flows means Cash Flows that are not Iron Ore Cash Flows or Sole Risk Cash Flows. | ||
Excluded Distributable Earnings means Distributable Earnings that are not Iron Ore Distributable Earnings. | ||
Excluded Liabilities means any liabilities of any Rio Tinto Group entity or BHP Billiton Group entity, from time to time, that are not Iron Ore Liabilities or Sole Risk Liabilities and includes: |
(a) | any liabilities Attributable to Excluded Assets; |
(b) | any liabilities to the extent they arise from the conduct of the Iron Ore Marketing Activities ( Marketing Liabilities ); |
(c) | Excluded Loans; |
(d) | anything which is, or is deemed to be, an Excluded Liability under, or by operation of, the Transaction Documents; and |
(e) | anything that the Owners agree are Excluded Liabilities. |
Excluded Loans means any loans that are not Iron Ore Loans or Sole Risk Loans, and includes: |
(a) | Agreed Opening Excluded Loans; and |
(b) | Post-Commencement NCEP Loans. |
Excluded Marketing Operations means, in relation to a JV Entity, that part of its operations concerning the sale of Iron Ore Product to customers other than pursuant to an Ore Sales Agreement, and a reference to the Excluded Marketing Operations division of a JV Entity has a corresponding meaning. |
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Existing JV Arrangement means the agreements and other arrangements which constitute a Rio Tinto JV or BHP Billiton JV, from time to time, and includes: |
(a) | the arrangements between Rio Tinto Group entities and Robe in relation to Pilbara Iron infrastructure sharing and Pilbara Iron corporate shared services and mobile equipment, each as amended from time to time; and |
(b) | any terms implied under such agreements and other arrangements and any fiduciary, equitable or other obligation owed in relation to such agreements or other arrangements. |
Existing JV Cross Charge has the meaning given in the Joint Venture Agreement. | ||
Existing JV Deposits means cash held on deposit by a Rio Tinto Group entity or a BHP Billiton group entity, as applicable, under Existing JV Arrangements. | ||
Expected JV Synergies means the synergies expected to be realised through the WA Iron Ore JV, as agreed between Rio Tinto and BHP Billiton. | ||
Expenditure Category Overrun Amount has the meaning given in the Joint Venture Agreement. | ||
Feasibility Study has the meaning given in clause 8.2(h) of the Joint Venture Agreement. | ||
Final Adjusted Cashflows means the final adjusted cash flows of Rio Tinto or BHP Billiton, as applicable, as determined in accordance with item 2.4 of Schedule 8. | ||
Final Adjusted Cashflow Statements means the final adjusted cashflow statements of Rio Tinto or BHP Billiton, as applicable, to be prepared in accordance with item 5.4 of Schedule 8. | ||
Final Cashflow Difference has the meaning given in item 2.3 of Schedule 8. | ||
Final Completion Accounts means the Final Completion Balance Sheets and the Final Adjusted Cashflow Statements. | ||
Final Completion Balance Sheets has the meaning given in item 2.5(a) of Schedule 8. | ||
First Budget means the first Budget prepared under clause 3.6 and approved under clause 3.7. | ||
First Business Plan means the first Business Plan prepared under clause 3.6 and approved under clause 3.7. | ||
* * * | ||
First Synergies Capture Plan means the first Synergies Capture Plan prepared under clause 3.6 and approved under clause 3.7. | ||
FOB has the meaning given in the International Rules for the Interpretation of Trade Terms of the International Chamber of Commerce (Incoterms) 2000 Edition, as replaced from time to time. | ||
FOB Price means: |
(a) | where Iron Ore Product is sold on an FOB basis, the price (expressed in US$ per dmtu) for Iron Ore Product the subject of any shipment or sale which is payable by the third party end customer under the applicable FOB sales contract; or |
(b) | where Iron Ore Product is sold on a non-FOB basis, * * * |
(i) | * * * | ||
* * * |
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* * * | |||
* * * | |||
* * * | |||
* * * | |||
* * * | |||
* * * |
(ii) | * * * |
(A) | * * * |
(B) | * * * |
For the avoidance of doubt, the purpose of this definition is to allow Rio Tinto and BHP Billiton to determine the realised FOB price equivalent for each shipment or sale of Iron Ore Product and eliminating the non-FOB component of the price paid by the end customer on an arms length basis. |
Funding and Distribution Policy means the funding and distribution policy on the terms initialled by each of Rio Tinto and BHP Billiton for identification on or about the date of this Agreement. | ||
Goldsworthy Joint Venture means the joint venture carried on under the name Mt Goldsworthy Mining Associates Joint Venture as constituted from time to time pursuant to the Restated Mount Goldworthy Mining Associates Joint Venture agreement dated 7 September 1990. | ||
Grossed up for Tax means that, where either Rio Tinto or BHP Billiton (the Payer ) is liable to pay an amount to the other party (the Recipient ) by way of indemnity and that payment increases the Tax payable by Recipient or the Head Company of any Consolidated Group of which the Recipient is a member (collectively the Recipient Group ), then the payment must be grossed up by such amount as is necessary to ensure that the net amount retained by the Recipient Group after deduction of Tax or payment of the increased income tax equals the amount the Recipient Group would have retained had the Tax not been payable. | ||
GST has the meaning given by the GST Law. | ||
GST Group has the meaning given by the GST Law. | ||
GST Law has the meaning given by the A New Tax System (Goods & Services Tax) Act 1999 (Cth), or, if that Act does not exist means any Act imposing or relating to the imposition or administration of a goods and services tax in Australia and any regulation made under that Act. | ||
Guarantee means an obligation or offer to provide funds (including by subscription or purchase) or otherwise be responsible in respect of an obligation or indebtedness, or the financial condition or solvency, of another person. It includes a guarantee, indemnity, letter of credit or legally binding letter of comfort, or an obligation or offer to purchase an obligation or indebtedness of another person. | ||
Guidance Materials means the guidance materials prepared for the purposes of Schedule 8 initialled by each of Rio Tinto and BHP Billiton for identification on or about the date of this Agreement. | ||
Half Year means the six month periods commencing on 1 January and 1 July in each year. |
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HBI Beneficiation Plant means the assets marked purple and green on the aerial photograph in item 2.4 of Part 2 of Schedule 7 (but excluding all liabilities associated with them and arising from circumstances or events occurring prior * * * | ||
HBI Plant means all real property, plant and equipment and other assets situated at the hot briquetted iron processing facility at Boodarie, Western Australia (other than the HBI Beneficiation Plant) and all associated liabilities. | ||
Head Company has the meaning given by s.995-1(1) of the 1997 Tax Act. | ||
Hedging Policy means the policy referred to in clause 3.6(b)(xi), to be adopted on Completion pursuant to an Owners Council Completion Resolution. | ||
HIsmelt means all land, buildings, structures, offices, fixed and mobile equipment, roads, wharfs, loading and unloading facilities, stockpiles, storage facilities and associated facilities owned, leased or used by any Rio Tinto Group entity at Kwinana, Western Australia including the facility constructed by certain Rio Tinto Group entities in joint venture with third parties and all HIsmelt Technology. | ||
HIsmelt Technology means technology presently, or in future, owned by, or licensed to, any Rio Tinto Group entity relating to the high intensity direct smelting of iron, or the dimensioning, design, application, manufacture, erection, installation, testing, operation and maintenance of equipment designed or used for that purpose, including patents, know-how and other designs and copyright, technological and technical knowledge, expertise, experience, inventions, data, algorithms, codes, instructions, techniques, processes, drawings, specifications and other unpatented information. | ||
Historical Iron Ore Asset Information means, in relation to a JV Entity or a BHP Billiton Group entity or a Rio Tinto Group entity, as applicable, historical operational information that relates to Relevant Period Iron Ore Assets and is or may be relevant to JV Operations (including studies, whether complete or incomplete), excluding: |
(a) | information in relation to Excluded Assets; |
(b) | marketing information; and |
(c) | Board or senior management reports (including Iron Ore Executive Committee papers). |
For the avoidance of doubt, it does not include any information in relation to, or produced for the purposes of, actual or proposed parent company corporate or merger and acquisition activities, including the proposal to form the WA Iron Ore JV and any proposal for the combination of all or part of the Rio Tinto Group and the BHP Billiton Group. | ||
Hope Downs Joint Venture means the joint venture carried on pursuant to the Hope Downs Joint Venture Agreement dated 16 March 2006 as constituted from time to time. | ||
* * * | ||
* * * | ||
Implementation Management Committee has the meaning given in clause 3.6. | ||
Implementation Oversight Committee has the meaning given in clause 3.7. | ||
Indemnified Tax Liability means any Tax Liability of the Rio Tinto Group or the BHP Billiton Group, if and to the extent it is attributable to Relevant Period Iron Ore Assets, that relates to the |
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period before the Effective Date. A Tax Liability will be taken to relate to the period before the Effective Date: |
(a) | in the case of income tax (including any Tax under the 1936 Tax Act or the 1997 Tax Act): |
(i) | if it is an amount payable in respect of income tax on taxable income for any income year which ends before the Effective Date; or |
(ii) | if it is an amount payable in respect of income tax on taxable income for that part of any income year ending on or after the Effective Date as comprises the period before the Effective Date, |
to the extent the income tax is in respect of amounts that do not form part of the cash flow required by item 5 of Schedule 8 to be included in the Interim Adjusted Cashflow Statement or Final Adjusted Cashflow Statement; |
(b) | in the case of Stamp Duty, if and to the extent it arises by reason of any act, transaction or event occurring before the Effective Date, or by reason of any revocation or claw-back of Stamp Duty relief granted in respect of any act, transaction or event occurring before the Effective Date; |
(c) | in the case of GST, if the GST liability is attributable to a tax period ending before the Effective Date; or |
(d) | in the case of any other Tax, if and to the extent it arises by reason of any act, transaction or event occurring before the Effective Date. |
Indemnity-related Tax Asset means any Tax Asset of the Rio Tinto Group or the BHP Billiton Group, if and to the extent it is attributable to Relevant Period Iron Ore Assets, to the extent it relates to the period before the Effective Date. A Tax Asset will be taken to relate to the period before the Effective Date: |
(a) | in the case of income tax (including any Tax under the 1936 Tax Act or the 1997 Tax Act): |
(i) | if it is an amount receivable in respect of income tax on taxable income for any income year which ends before the Effective Date; or |
(ii) | if it is an amount receivable in respect of income tax on taxable income for that part of any income year ending on or after the Effective Date as comprises the period before the Effective Date, |
to the extent the income tax is in respect of amounts that do not form part of the cash flow that is required by item 5 of Schedule 8 to be included in the Interim Adjusted Cashflow Statement or Final Adjusted Cashflow Statement; |
(b) | in the case of Stamp Duty, if and to the extent it arises by reason of any act, transaction or event occurring before the Effective Date, or by reason of any revocation or claw-back of Stamp Duty relief granted on any act, transaction or event occurring before the Effective Date; |
(c) | in the case of GST, if the Input Tax Credit entitlement is attributable to a tax period ending before the Effective Date; or |
(d) | in the case of any other Tax, if and to the extent it arises by reason of any act, transaction or event occurring before the Effective Date. |
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Independent Engineer means the independent engineer nominated under paragraph (a) of Part 1 of Schedule 5. | ||
Independent Expert means a person appointed in accordance with clause 16 of the Joint Venture Agreement. | ||
Indexed means: |
(a) | prior to 31 December 2009, the relevant amount; and |
(b) | during any Half Year subsequent to that referred to in paragraph (a): |
The relevant amount X
|
CPI t-1 | |
CPI b |
where: | |||
CPI t-1 means the CPI number for the Quarter most recently published prior to the start of that Half Year; and | |||
CPI b means the CPI number for the Quarter ending on 30 June 2009. |
Infrastructure and Blending Principles means the Infrastructure and Blending Principles initialled by BHP Billiton and Rio Tinto for the purposes of identification on the date of this Agreement. | ||
Infrastructure Sharing Agreement means the infrastructure sharing agreement to be negotiated by Rio Tinto and BHP Billiton in accordance with clause 3.5(b)(vi), to be signed by the parties to that agreement at Completion. | ||
Initial Agreed Interest Rate means the initial Agreed Interest Rate determined under clause 3.6 and approved under clause 3.7. | ||
Initial Agreed Term means the initial Agreed Term determined under clause 3.6 and approved under clause 3.7. | ||
Input Tax Credit has the meaning given in clause 18.1. | ||
Insolvency Administration means, in relation to an Issuer, a winding up of the Issuer, or the appointment of an administrator to the Issuer pursuant to Part 5.3A of the Corporations Act 2001 (Cth). | ||
Insurance Protocol means the insurance protocol on the terms initialled by each of Rio Tinto and BHP Billiton for identification on or about the date of this Agreement, to be adopted on Completion pursuant to an Owners Council Completion Resolution. | ||
Intellectual Property Management Agreement means the intellectual property management agreement on the terms initialled by each of Rio Tinto and BHP Billiton for identification on or about the date of this Agreement, to be signed by the parties to that agreement at Completion. | ||
Interim Adjusted Cashflow Statements has the meaning given in item 1.6(b)(ii) of Schedule 8. | ||
Interim Completion Balance Sheets has the meaning given in item 1.6(b)(i) of Schedule 8. | ||
Interim Completion Accounts means the Interim Completion Balance Sheets and the Interim Adjusted Cashflow Statements. |
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Intra-group Debt means any indebtedness in respect of moneys borrowed or raised or other financial accommodation (including in respect of preference shares), whether actual or contingent, owing or payable to an Affiliate. | ||
Iron Ore Assets means the right, title or interest (whether directly or indirectly held) of any JV Entity from time to time in: |
(a) | plant and equipment and land (including fixtures) used in, or acquired for the purposes of, Iron Ore Production Activities, including mines, water bores, light and heavy mobile equipment, conveyors, processing plant (including crushing, screening, beneficiating, concentrating, washing and drying plant, tailings dams and associated infrastructure), rail infrastructure (including rail track, signalling and control systems), rolling stock (including locomotives, fuel cars and ore cars), communication systems, shipping terminals and port facilities (including stockyards, ore car dumpers, in-load and out-load circuits (including car-dumpers, conveyors, transfer stations, bins, stackers and reclaimers, stockpiles and yards, screening plant, berths, wharves, jetties, tugs)), power facilities (including generation, transmission and distribution networks), other associated infrastructure (such as housing and town infrastructure and pastoral stations, airstrips and associated infrastructure, water utilities, gas pipelines and fuel farms), and maintenance facilities and equipment (including administration offices and workshops); |
(b) | the beneficiation plant at Newman, and the HBI Beneficiation Plant to the extent that it is made available pursuant to clause 5.4(a)(ii)(B)); |
(c) | the Secondary Processing facilities at Tom Price; |
(d) | any other Secondary Processing facilities to the extent required to satisfy obligations under a future State Agreement or obligations not yet satisfied under a current State Agreement; |
(e) | any Support Assets identified pursuant to the process established by clauses 3.6 and 3.7; |
(f) | the JV Tenements; |
(g) | the State Agreements, together with the benefits of all associated Authorisations; |
(h) | contracts and leases to the extent they relate to Iron Ore Production Activities, other than, on and from the JV Commencement Date, contracts with Affiliates of Rio Tinto or BHP Billiton that have not been approved by the Implementation Oversight Committee or the Owners Council; |
(i) | iron ore produced by Iron Ore Production Activities but not yet loaded on board a ship; |
(j) | receivables arising from Iron Ore Production Activities, including any amount payable under the Ore Sales Agreements (but excluding any receivable arising from Iron Ore Marketing Activities); |
(k) | Iron Ore Cash Flows, Iron Ore Distributable Earnings and Iron Ore Asset Surplus; |
(l) | Cash arising from Iron Ore Cash Flows and any loan or deposit arising from use of such Cash; |
(m) | any other assets to the extent that they arise from Iron Ore Production Activities; |
(n) | anything which is, or is deemed to be, an Iron Ore Asset or part of Iron Ore Assets under, or by operation of, the Transaction Documents; and |
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(o) | anything that the Owners agree are Iron Ore Assets, |
but excluding any Excluded Assets and Sole Risk Assets. | ||
Iron Ore Asset Surplus of an Issuer on an Insolvency Administration has the meaning given in the Funding and Distribution Policy. | ||
Iron Ore Cash Flows means Cash Flows Attributable to Iron Ore Assets and Iron Ore Liabilities. | ||
Iron Ore Distributable Earnings means Distributable Earnings Attributable to Iron Ore Assets and Iron Ore Liabilities. | ||
Iron Ore JV Framework Agreement means the framework agreement dated 5 June 2009 between Rio Tinto and BHP Billiton. | ||
Iron Ore Liabilities means: |
(a) | any liabilities of any JV Entity from time to time: |
(i) | which are Attributable to Iron Ore Assets; |
(ii) | to the extent they arise from Iron Ore Production Activities; or |
(iii) | which are Iron Ore Loans, |
and also includes: |
(b) | anything which is, or is deemed to be, an Iron Ore Liability under, or by operation of, the Transaction Documents; and |
(c) | anything that the Owners agree are Iron Ore Liabilities, |
but excluding any Excluded Liabilities and Sole Risk Liabilities. |
Iron Ore Loans means: |
(a) | Agreed Opening Iron Ore Loans; |
(b) | Participant Loans; |
(c) | NDO Loans; and |
(d) | any loan that the Owners agree is an Iron Ore Loan. |
Iron Ore Marketing Activities means the activities carried on, and transactions entered into, by the Rio Tinto Group and BHP Billiton Group separately (whether before or after the JV Commencement Date) in relation to: |
(a) | marketing and selling iron ore produced from Iron Ore Production Activities and related activities (other than sales by JV Entities pursuant to Ore Sales Agreements), including Excluded Marketing Operations; and |
(b) | transporting iron ore produced from Iron Ore Production Activities from the ships rail in Western Australia to customers and related activities. |
Iron Ore Product means any finished iron ore product recovered, produced or purchased as part of the conduct of JV Operations, including any iron ore recovered, produced or purchased pursuant to an Existing JV Arrangement but does not include Sole Risk Iron Ore Product. |
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Iron Ore Production Activities means activities within the permitted scope of the WA Iron Ore JV: |
(a) | carried on by the Rio Tinto Group and the BHP Billiton Group separately prior to the JV Commencement Date; or |
(b) | carried on by the JV Entities or the Manager as JV Operations on and after the JV Commencement Date. |
Issuer means: |
(a) | in the case of Rio Tinto, the Rio Tinto Issuer; and |
(b) | in the case of BHP Billiton, the BHP Billiton Issuer. |
Issuer JV Subsidiary means a JV Entity which is a Subsidiary of an Issuer. |
Joint Venture Agreement means the joint venture agreement in respect of the WA Iron Ore JV on the terms set out in Schedule 11, to be signed by the parties to that agreement at Completion. |
JV Cash Costs means all cash amounts relating to costs and liabilities of the JV Entities and the Manager payable to any person in connection with the conduct of JV Operations, including capital expenditure, calls made on a JV Entity pursuant to an Existing JV Arrangement and taxes and penalties. It includes all amounts identified in the Transaction Documents as costs of the WA Iron Ore JV and Approved JV Implementation Costs. |
JV Commencement Date means the first day of the first Month that commences after Completion. | ||
JV Employees has the meaning given in the Joint Venture Agreement. | ||
JV Entity means: |
(a) | in the case of Rio Tinto, a Rio Tinto JV Entity; |
(b) | in the case of BHP Billiton, a BHP Billiton JV Entity; and |
(c) | any other entity jointly owned by the Owners carrying on JV Operations (other than the Manager). |
JV Financial Information has the meaning given in the Accounting Policy. |
JV Formation Costs means costs incurred by Rio Tinto or BHP Billiton in progressing the transaction to Completion, including any Stamp Duty imposed on the Transaction Documents or the transactions contemplated in the Transaction Documents and any costs incurred in preparing and agreeing the Transaction Documents and in taking any actions required to satisfy conditions precedent, including obtaining regulatory, government and shareholder approvals. |
JV Implementation Costs mean costs incurred by Rio Tinto or BHP Billiton outside the ordinary course of business in contemplation of the establishment of the WA Iron Ore JV, but does not include JV Formation Costs. |
JV New Capital Expansion Project means a New Capital Expansion Project that is treated as being within the scope of the WA Iron Ore JV in accordance with clause 8. |
JV Operations means all activities conducted by or on behalf of the JV Entities or the Manager within the scope of the WA Iron Ore JV pursuant to the Joint Venture Agreement on and from the JV Commencement Date, excluding, for the avoidance of doubt, Excluded Marketing Operations and any activities conducted in connection with Excluded Assets, and any Sole Risk Development |
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or Sole Risk Opportunity. A reference to the JV Operations division of a JV Entity means that part of its activities which comprise JV Operations. | ||
JV Tenement means a mining lease, exploration licence, retention licence, right of occupancy over temporary reserve, general purposes lease, miscellaneous licence, special lease or easement that: |
(a) | is held pursuant to a State Agreement and / or the Mining Act, Land Act 1933 (WA), Land Administration Act 1997 (WA), Port Authorities Act 1999 (WA) or Jetties Act 1926 (WA); and |
(b) | is held by or on behalf of a JV Entity, whether alone or in conjunction with Other JV Participants; and |
(c) | does not relate wholly or substantially to an Excluded Asset. |
JW4 Joint Venture means the joint venture carried on under the name JFE Western 4 Joint Venture as constituted from time to time pursuant to the JFE Western 4 Joint Venture Agreement dated 22 July 2005. | ||
Law includes statutes, regulations, rules of the common law, principles of equity, regulatory agency policies and guidelines and guidance and security exchange rules. | ||
Management Delegation Agreement means each agreement between the Manager and a JV Entity pursuant to which the JV Entity delegates or subcontracts to the Manager certain functions of the JV Entity, or pursuant to which the Manager provides services to the JV Entity, on the terms initialled by each of Rio Tinto and BHP Billiton for identification on or about the date of this Agreement, to be signed by the parties to that agreement at Completion. | ||
Manager means each entity appointed from time to time to manage the WA Iron Ore JV in accordance with clause 4.1 of the Joint Venture Agreement, being initially the manager incorporated in accordance with clause 5.1. | ||
Marketing Assets has the meaning given in the definition of Excluded Assets. | ||
Marketing Costs means those expenses incurred in the normal course of marketing, selling and distributing Iron Ore Product during the Relevant Period. For the avoidance of doubt, Marketing Costs do not include capital or other investment in long term marketing or distribution strategies, or other marketing costs incurred during the Relevant Period but not directly related to the sale of Iron Ore Product during the Relevant Period. | ||
Marketing Liabilities has the meaning given in the definition of Excluded Liabilities. | ||
Marketing SPV means: |
(a) | in the case of Rio Tinto or the Rio Tinto Owner, the Rio Tinto Marketing SPV; and |
(b) | in the case of BHP Billiton or the BHP Billiton Owner, the BHP Billiton Marketing SPV. |
Maximum Amount , in relation to a particular Event, means an amount of * * *, or such lesser maximum amount that would be recoverable in respect of that Event under the Agreed Policy Terms, having regard to any applicable Sub-limits (as identified in the Agreed Policy Terms), in excess of the applicable Deductible under clause 3.2(c). |
Maximum Permitted Excluded Loan Balance has the meaning given to it in the Funding and Distribution Policy. |
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(a) | * * * |
(b) | * * * |
(c) | * * * |
(d) | * * * |
* * * |
* * * |
Ore Sales Agreements means: |
(a) | the ore sales agreement between the Selling Entities and the Rio Tinto Marketing SPV; and |
(b) | the ore sales agreement between the Selling Entities and the BHP Billiton Marketing SPV, |
to be entered into on the terms initialled by each of Rio Tinto and BHP Billiton for identification on or about the date of this Agreement, to be signed by the parties to those agreements at Completion, and any other Ore Sales Agreement entered into pursuant to the operation of clause 10 and schedule 10 of the Joint Venture Agreement. |
Ore Sales Price has the meaning given in the Joint Venture Agreement. |
Other JV Participant means a participant in a Rio Tinto JV or BHP Billiton JV, whether unincorporated or incorporated, that is not a Related Corporation of Rio Tinto or BHP Billiton. |
Owner means: |
(a) | the Rio Tinto Owner; or |
(b) | the BHP Billiton Owner, |
and their respective permitted successors and assignees. |
Owner Cross Charge means the deeds of cross charge to be granted by each Owner in favour of the other Owner at or about the Completion Date substantially on the terms set out in part 1 of schedule 12 of the Joint Venture Agreement. |
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Owner Guarantee has the meaning given in the Joint Venture Agreement. | ||
Owner Loan has the meaning given in the Joint Venture Agreement. | ||
Owners Council means the decision-making body established pursuant to clause 3.1 of the Joint Venture Agreement. | ||
Owners Council Completion Resolutions means the resolutions set out in Schedule 10 as the same may be supplemented from time to time prior to Completion by the Implementation Oversight Committee in accordance with clause 3.7. | ||
Parent Company Guarantee means each of the guarantee to be given by Rio Tinto in respect of certain obligations of the Rio Tinto Owner and the guarantee to be given by BHP Billiton in respect of certain obligations of the BHP Billiton Owner, each in the form set out in schedule 16 to the Joint Venture Agreement, to be signed by the parties to that agreement at Completion. | ||
Participating Share means the percentage interest of an Owner in the WA Iron Ore JV initially as set out in clause 2.1(d) of the Joint Venture Agreement as may be varied from time to time pursuant to the terms and conditions of the Joint Venture Agreement. | ||
Participant Loans has the meaning given in the Funding and Distribution Policy. | ||
Permitted Funding Mechanism means, in relation to the discharge of a liability: |
(a) | Rio Tinto or BHP Billiton, as applicable, procuring that assets forming part of Excluded Assets are applied to discharge the liability; |
(b) | Rio Tinto or BHP Billiton, as applicable, providing funds by way of subscription for Shares in the Issuer to discharge the liability; or |
(c) | Rio Tinto or BHP Billiton, as applicable, providing, or procuring that an Affiliate provides, funds to discharge the liability by way of an Excluded Loan which: |
(i) | is without recourse to Iron Ore Assets or Sole Risk Assets; |
(ii) | unless the loan is provided by an Owner, is subject to a Creditor Deed Poll; and |
(iii) | does not cause the total Excluded Loans of the Issuer, the Subsidiaries of the Issuer which are JV Entities and Subsidiaries of the Issuer which directly or indirectly hold shares in JV Entities, to exceed the Maximum Permitted Excluded Loan Balance. |
Permitted Security Interest has the meaning given in the Joint Venture Agreement, | ||
Policies and Protocols means the policies and protocols referred to in clause 3.13(a) of the Joint Venture Agreement (including the policies and protocols referred to in the Owners Council Completion Resolutions to be adopted on Completion). | ||
POSMAC Joint Venture means the joint venture carried on under that name as constituted from time to time pursuant to the POSMAC Joint Venture Agreement dated 3 April 2002. | ||
Post-Commencement NCEP Loans has the meaning given in clause 8(c)(ii)(B). | ||
Post-Completion Cashflow Amount has the meaning given in item 7 of Schedule 8. | ||
* * * |
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Pre-Commencement NCEP Loans means any loan provided by Rio Tinto or BHP Billiton, or its Affiliate, to a JV Entity of which it is a Related Corporation to fund cash flows in respect of New Capital Expansion Projects during the Relevant Period. | ||
Pre-Feasibility Study has the meaning given in clause 8.2(d) of the Joint Venture Agreement. | ||
Preliminary Study has the meaning given in clause 8.2(a) of the Joint Venture Agreement. | ||
Private Ruling means a private ruling as defined in s.995-1(1) of the 1997 Tax Act. | ||
Proposing Party has the meaning given in clause 6.2(c). | ||
Quarter means a three month period commencing on 1 January, 1 April, 1 July or 1 October. | ||
Receiving Party has the meaning given in clause 6.2(c). | ||
Recoveries has the meaning given in clause 3.2(c). | ||
Related Corporation has the meaning given to Related Body Corporate in the Corporations Act but as if Subsidiary had the meaning given in this Agreement, and also includes: |
(a) | in the case of Rio Tinto, any Rio Tinto Group entity; and |
(b) | in the case of BHP Billiton, any BHP Billiton Group entity. |
Relevant JV Entity means, in relation to each Issuer, the Issuer, its Issuer JV Subsidiaries and the Manager. | ||
Relevant Period has the meaning given in item 1.1(a) of Schedule 8. | ||
Relevant Period Assets means: |
(a) | the Relevant Period Iron Ore Assets; and |
(b) | the Marketing Assets. |
Relevant Period Excluded Assets means the Excluded Assets other than the Marketing Assets and, for the avoidance of doubt, does not include Relevant Period Iron Ore Assets. | ||
Relevant Period Excluded Liabilities means the Excluded Liabilities other than the Marketing Liabilities. | ||
Relevant Period Iron Ore Assets means: |
(a) | the Iron Ore Assets; and |
(b) | any assets held by BHP Billiton or Rio Tinto or their respective Affiliates that would constitute an Iron Ore Asset if any right, title or interest (whether direct or indirect) in the assets were held by a JV Entity. |
Relevant Period Liabilities means: |
(a) | the Iron Ore Liabilities; |
(b) | the Marketing Liabilities; and |
(c) | any liability Attributable to assets held by BHP Billiton or Rio Tinto or their respective Affiliates that would constitute an Iron Ore Asset if any right, title or interest (whether direct or indirect) in the assets were held by a JV Entity. |
Remuneration Committee has the meaning given in Schedule 10. |
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Representative means a representative of an Owner appointed to the Owners Council pursuant to clause 3.2 of the Joint Venture Agreement. | ||
Reporting Policy means the reporting policy on the terms initialled by each of Rio Tinto and BHP Billiton for identification on or about the date of this Agreement. | ||
Responsible Party has the meaning give in clause 13(g). | ||
Retained Assets has the meaning given in clause 3.6(b)(iv)(B). | ||
Revised Accounting Policy has the meaning given in clause 3.5(b)(iii)(A). | ||
RGP3 means Rapid Growth Project 3, as described in the scope overview for the project disclosed in the Due Diligence Materials. | ||
RGP4 means Rapid Growth Project 4, as described in the scope overview for that project disclosed in the Due Diligence Materials. | ||
RGP5 means Rapid Growth Project 5 which is intended to increase the system capacity of BHP Billitons existing Pilbara iron ore operations to 205 million tonnes per annum, as described in the RGP5 Scope of Work. | ||
* * * | ||
RGP5 Facilities means all plant, equipment, facilities and infrastructure and related assets in connection with RGP5 as contemplated by the RGP5 Scope of Work. | ||
RGP5 Handover means that stage of RGP5 when: |
(a) | all the commissioning tests including construction verification, no-load commissioning and load commissioning which would reasonably be required by a prudent principal to take-over the RGP5 Facilities have been carried out and passed and the RGP5 Facilities are able to be safely operated and maintained by BHP Billiton and are ready to be taken-over, operated and maintained by BHP Billiton; |
(b) | the RGP5 Facilities are complete except for minor omissions, defects and modifications requested by BHP Billiton which: |
(i) | do not prevent them from being used for their intended purpose; |
(ii) | do not prejudice their safe operation and maintenance; and |
(iii) | will not prejudice their safe and convenient operation and maintenance, |
provided the RGP5 Facilities meet the minimum operational and performance standards specified in the RGP5 Scope of Work; |
(c) | any marked up Red Line As Built Drawings reasonably required by BHP Billiton have been handed over to BHP Billiton; |
(d) | any Vendor Manuals and other documentation necessary for the safe and convenient operation and maintenance of the RGP5 Facilities have been handed over to BHP Billiton; |
(e) | all required training of BHP Billiton personnel has been carried out; |
(f) | all required operating spares have been received by BHP Billiton; and |
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(g) | all documents, warranties and other information which BHP Billiton, in its sole discretion, decides are essential for the take-over, operation and maintenance of the RGP5 Facilities have been handed over to BHP Billiton. |
* * * | ||
* * * | ||
Rhodes Ridge Joint Venture means the joint venture established by the Rhodes Ridge Joint Venture Agreement dated 11 October 1972. | ||
Ring-Fencing Protocol means the ring-fencing protocol, on the terms initialled by each of Rio Tinto and BHP Billiton for identification on or about the date of this Agreement. | ||
Rio Tinto Consolidated Group means the Consolidated Group of which RTL is the Head Company. | ||
Rio Tinto Estimated Adjusted Cashflows means the Rio Tinto estimated adjusted cash flows as determined in accordance with item 1.4 of Schedule 8. | ||
Rio Tinto Group means RTL, RTP and each of their Subsidiaries and Rio Tinto Group entity means an entity in the Rio Tinto Group. | ||
Rio Tinto Indemnified Parties has the meaning given in clause 4.4(c). | ||
Rio Tinto Issuer means the entity to be incorporated under clause 5.3(a)(i) in accordance with item 1.1(c) of Part 1 of Schedule 7. | ||
Rio Tinto JV Entities means: |
(a) | as at the date of this Agreement, the Rio Tinto Issuer and the Rio Tinto Subsidiaries listed in, and which are engaged in the businesses described in, schedule 2 of the Joint Venture Agreement; and |
(b) | any other wholly-owned Subsidiary of the Rio Tinto Issuer that subsequently acquires an Iron Ore Asset under clause 2.4(c) of the Joint Venture Agreement. |
Rio Tinto JVs means: |
(a) | the Robe Joint Venture; |
(b) | the Hope Downs Joint Venture; |
(c) | the Channar Joint Venture; |
(d) | the Bao-HI Joint Venture; |
(e) | the Beasley Joint Venture; |
(f) | the Rhodes Ridge Joint Venture; and |
(g) | any other joint venture that a Rio Tinto JV Entity enters into after the date of the Joint Venture Agreement within the scope of the WA Iron Ore JV. |
Rio Tinto Marketing SPV means the entity to be incorporated under clause 5.3(a)(i) in accordance with item 1.1(d) of Part 1 of Schedule 7. |
Rio Tinto Iron Ore Owned R&D IP has the meaning given in the Intellectual Property Management Agreement. |
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Rio Tinto Owner means the entity to be incorporated under clause 5.3(a)(i) in accordance with item 1.1(b) of Part 1 of Schedule 7. | ||
Rio Tinto R&D IP means the Rio Tinto Iron Ore Owned R&D IP and the Rio Tinto Iron Ore Relevant R&D IP. | ||
Rio Tinto Iron Ore Relevant R&D IP has the meaning given in the Intellectual Property Management Agreement. | ||
Rio Tinto RP Assets and Liabilities has the meaning given in item 1.5 of Schedule 8. | ||
Rio Tinto State Agreements means: |
(a) | the Iron Ore (Hamersley Range) Agreement Act 1963 (WA); |
(b) | the Iron Ore (Hamersley Range) Agreement Act 1968 (Paraburdoo) (WA); |
(c) | the Iron Ore (Yandicoogina) Agreement Act 1996 (WA); |
(d) | the Iron Ore (Robe River) Agreement Act 1964 (WA); |
(e) | the Iron Ore (Rhodes Ridge) Authorisation Act 1972 (WA); |
(f) | the Iron Ore (Mt Bruce) Agreement Act 1972 (WA); |
(g) | the Iron Ore (Channar Joint Venture) Agreement Act 1987 (WA) ; and |
(h) | the Iron Ore (Hope Downs) Agreement Act 1992 (WA). |
Rio Tinto Tax Funding Agreement means the tax funding agreement of the Rio Tinto Consolidated Group as amended as at 22 December 2005 . | ||
Robe or Robe Joint Venture means the joint venture carried on under the name Robe River Iron Associates as constituted from time to time pursuant to the Robe River Joint Venture Agreement dated 25 May 1970. | ||
Scheduling Protocol means the scheduling protocol, on the terms initialled by each of Rio Tinto and BHP Billiton for identification on or about the date of this Agreement. | ||
Secondary Processing means secondary processing of iron ore being the concentration or upgrading of iron ore otherwise than by washing, drying, crushing or screening, or a combination thereof. | ||
Security Interest means any mortgage, pledge, lien or charge or any other security or preferential interest or arrangement of any kind or any other right of, or arrangement with, any creditor to have its claims satisfied in priority to other creditors with, or from the proceeds of, any asset. | ||
Selling Entities means those JV Entities that are able to sell Iron Ore Product to the Marketing SPVs, being as at the date of the Joint Venture Agreement Hamersley Iron Pty Ltd, Hamersley Iron-Yandi Pty Ltd and BHP Billiton Minerals Pty Ltd. * * * | ||
Senior Executive Team means each senior executive who reports directly to the CEO, and Senior Executive Team Member has a corresponding meaning. | ||
Set-Off Agreement means the set-off agreement to be negotiated by Rio Tinto and BHP Billiton in accordance with clause 3.5(b)(vii), to be signed by the parties to that agreement at Completion. |
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Shareholder Circular means each of the Rio Tinto shareholder circular (and any supplementary shareholder circular) and the BHP Billiton shareholder circular (and any supplementary shareholder circular), in connection with the WA Iron Ore JV. | ||
Shareholder Meetings means the shareholder meetings to be held by BHP Billiton or Rio Tinto (as applicable) for shareholders of BHP Billiton or Rio Tinto, respectively, to vote on the resolutions to approve the WA Iron Ore JV. | ||
Share means a share in the capital of an Issuer. | ||
Sole Funding Party has the meaning given in clause 8.3(b)(ii) or clause 8.4(g)(ii) of the Joint Venture Agreement, as the context requires. | ||
Sole Risk Assets means, in relation to a Sole Funding Party, all assets forming part of its entitlements in respect of the relevant Sole Risk Development or Sole Risk Opportunity pursuant to schedule 4 of the Joint Venture Agreement including any Sole Risk Iron Ore Product, Sole Risk Cash Flows, Sole Risk Receivable or Sole Risk Asset Surplus, and also includes: |
(a) | Cash arising from Sole Risk Cash Flows, and any loan or deposit arising from use of such Cash; |
(b) | anything which is, or is deemed to be, a Sole Risk Asset under, or by operation of, the Transaction Documents; and |
(c) | anything that the Owners agree are Sole Risk Assets. |
Sole Risk Asset Surplus of an Issuer on an Insolvency Administration has the meaning in the Funding and Distribution Policy. | ||
Sole Risk Cash Flows means Cash Flows attributable to Sole Risk Assets and Sole Risk Liabilities. | ||
Sole Risk Development has the meaning given in clause 8.3(b)(ii) of the Joint Venture Agreement. | ||
Sole Risk Entity has the meaning given in item 4 of schedule 4 of the Joint Venture Agreement. | ||
Sole Risk Iron Ore Product means any finished iron ore product recovered, produced or purchased as part of the conduct of operations of a Sole Risk Development or Sole Risk Opportunity. | ||
Sole Risk Liabilities means, in relation to a Sole Funding Party, all liabilities Attributable to Sole Risk Assets including any Sole Risk Loans, and also includes: |
(a) | anything which is, or is deemed to be, a Sole Risk Liability under, or by operation of, the Transaction Documents; and |
(b) | anything that the Owners agree are Sole Risk Liabilities. |
Sole Risk Loans means: |
(a) | loans made by a Sole Funding Party to an Issuer or the Manager to discharge funding obligations in respect of a Sole Risk Development or Sole Risk Opportunity pursuant to schedule 4 of the Joint Venture Agreement; and |
(b) | NCEP Loans which convert to Sole Risk Loans under clause 8(c)(iv). |
Sole Risk New Capital Expansion Project means a New Capital Expansion Project that is treated as being a Sole Risk Development or a Sole Risk Opportunity. | ||
Sole Risk Opportunity has the meaning given in clause 8.4(g)(ii) of the Joint Venture Agreement. |
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Sole Risk Receivable means a debt arising from the sale of Sole Risk Iron Ore Product by an Issuer (or Issuer JV Subsidiary) to, or as directed by, a Sole Funding Party. | ||
Staff Category Employees means, subject to any specific exceptions approved by the Implementation Oversight Committee, an employee in a managerial, professional, administrative, technical or supervisory role in respect of whom the Manager will not be bound, upon commencement of employment by the Manager, by an industrial instrument by virtue of the transfer of business provisions in the Fair Work Act 2009 (Cth) or the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth). | ||
Stamp Duty means: |
(a) | duty that is payable under any of the following (and any additional tax, penalty, fine or interest relating to that duty): |
(i) | the Duties Act 2008 (WA); | ||
(ii) | the Duties Act 1997 (NSW); | ||
(iii) | the Stamp Duty Act 1978 (NT); | ||
(iv) | the Duties Act 2001 (Qld); | ||
(v) | the Duties Act 2000 (Vic); | ||
(vi) | the Duties Act 2001 (Tas); | ||
(vii) | the Stamp Duties Act 1923 (SA); and | ||
(viii) | the Duties Act 1999 (ACT); and |
(b) | amounts payable as a result of the revocation, or assessment or reassessment in relation to, any connected entity exemption or corporate reconstruction relief from duty, additional tax, penalty, fine or interest under (a). |
State Agreement means each of the BHP Billiton State Agreements, the Rio Tinto State Agreements and any other agreement entered into by the State of Western Australia and an Owner, a JV Entity or their respective nominees from time to time in connection with JV Operations in accordance with the Government Agreements Act 1979 (WA). |
Subsidiary has the meaning given in the Corporations Act, provided that: |
(a) | an entity will also be deemed to be a Subsidiary of a body corporate if it is controlled (within the meaning of that term provided by Pt 1.2, Div 6 of the Act); and |
(b) | a trust may be a Subsidiary (for the purposes of which a unit or other beneficial interest will be deemed to be a share in the capital of a body corporate) and a body corporate or a trust may be a Subsidiary of a trust. |
Subsidiary Member means has the meaning given by s.995-1(1) of the 1997 Tax Act. | ||
Support Assets has the meaning given in clause 3.6(b)(iv)(A). | ||
Sustainable Development Committee has the meaning given in Schedule 10. | ||
Synergies Capture Plan has the meaning given in the Joint Venture Agreement, and also includes the First Synergies Capture Plan. |
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Tax means any tax, duty, charge or levy imposed now or at any future date under the present or future Laws of Australia or any other country, and also includes any associated penalties, fines or interest. | ||
Tax Allocation Methodology has the meaning given in clauses 3.5(b)(iv). | ||
Tax Asset means any amount receivable in respect of Tax, including any reduction, refund or reimbursement of Tax, Input Tax Credit entitlement and any amount receivable under a Tax Funding Agreement or Tax Sharing Agreement, and any amount receivable under Division 721 of the 1997 Tax Act or Subdivision 265-A in Schedule 1 of the Taxation Administration Act 1953. | ||
Tax Funding Agreement means the BHP Billiton Tax Funding Agreement or the Rio Tinto Tax Funding Agreement (as appropriate). | ||
Tax Liability means any amount payable in respect of Tax, including any amount payable to an Authority, any amount payable under a Tax Funding Agreement or Tax Sharing Agreement, and any amount payable under Division 721 of the 1997 Tax Act or Subdivision 265-A in Schedule 1 of the Taxation Administration Act 1953. | ||
Tax Sharing Agreement means an agreement contemplated by s.721-25 of the 1997 Tax Act. | ||
Technical Committee has the meaning given in Schedule 10. | ||
Term Deposit has the meaning given in the Funding and Distribution Policy. | ||
Terms of Reference has the meaning given in clause 3.5(a). | ||
* * * |
(a) | * * * |
(b) | * * * |
(i) | * * * |
(ii) | * * * |
Transaction Document means: |
(a) | this Agreement; |
(b) | the Joint Venture Agreement, including the Funding and Distribution Policy; |
(c) | each Debenture Deed Poll; |
(d) | each Management Delegation Agreement; |
(e) | each Creditor Deed Poll; |
(f) | each Parent Company Guarantee; |
(g) | each Cross Charge; |
(h) | each Ore Sales Agreement; |
(i) | the Infrastructure Sharing Agreement; |
(j) | the Blending Agreement; |
(k) | the Intellectual Property Management Agreement; |
(l) | the ERP Service and Licence Agreement; |
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(m) | the Transitional Services Agreement; |
(n) | the Policies and Protocols; |
(o) | the Set Off Agreement; |
(p) | each Deed of Accession; and |
(q) | any other agreements entered into by some or all of the parties in connection with, or to give effect to the requirements of, the documents listed above. |
* * * |
Transitional Services Agreement means the transitional services agreement on the terms initialled by each of Rio Tinto and BHP Billiton for identification on or about the date of this Agreement, as developed by the Implementation Management Committee under clause 3.6(b)(iii), to be signed by the parties to that agreement at Completion. | ||
Undisclosed Liabilities means Iron Ore Liabilities, which relate to: |
(a) | any claim made by a third party arising from circumstances existing or events occurring on or before the Effective Date; or |
(b) | any amount expended, on a voluntary basis, to forestall any such claim, but where the claim is, or is likely to be, US$50 million or more, only where the Owners Council has given its prior approval to the amount to be expended, |
that is made or expended, as the case may be, within 10 years of Completion, but excludes: |
(c) | all Iron Ore Liabilities which were disclosed in the Due Diligence Materials; and |
(d) | Excluded Liabilities. |
WA Iron Ore JV means the joint venture to be known as the West Australian Iron Ore Joint Venture to be formed in accordance with clause 2.1(a) of the Joint Venture Agreement. |
* * * |
Weighing, Sampling and Analysis Protocol means the weighing, sampling and analysis protocol on the terms initialled by each of Rio Tinto and BHP Billiton for identification on or about the date of this Agreement. | ||
Wheelarra Joint Venture means the joint venture carried on under that name as constituted from time to time pursuant to the Wheelarra Joint Venture Agreement dated 28 September 2004. | ||
Workforce Principles means the principles to be applied in planning the composition of the WA Iron Ore JVs workforce, set out in item 1 of Schedule 6. | ||
* * * | ||
Yandi Joint Venture means the joint venture carried on under that name as constituted from time to time pursuant to the Yandi Joint Venture Agreement dated 10 June 1991. | ||
1.2 | Interpretation | |
Headings are for convenience only and do not affect interpretation. The following rules apply unless the context requires otherwise. |
(a) | The singular includes the plural, and the converse also applies. |
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(b) | A gender includes all genders. |
(c) | If a word or phrase is defined, its other grammatical forms have a corresponding meaning. |
(d) | A reference to a person includes a corporation, trust, partnership, unincorporated body or other entity, whether or not it comprises a separate legal entity. |
(e) | A reference to a clause, Schedule or annexure is a reference to a clause of, or schedule or annexure to, this Agreement. |
(f) | A reference to an agreement or document (including a reference to this Agreement) is to the agreement or document as amended, supplemented, novated or replaced, except to the extent prohibited by this Agreement or that other agreement or document. |
(g) | A reference to a party to this Agreement, the Transaction Documents or another agreement or document includes the partys successors, permitted substitutes and permitted assigns (and, where applicable, the partys legal personal representatives). |
(h) | A reference to legislation or to a provision of legislation means the legislation as amended from time to time and includes a modification or re-enactment of it, a legislative provision substituted for it and a regulation or statutory instrument issued under it. |
(i) | A reference to sale or sell includes to procure the sale and a reference to purchase includes to procure the purchase. |
(j) | A reference to dollars and $ is to Australian currency unless otherwise specified. |
(k) | A reference to time is a reference to: |
(i) | time in the place in which the relevant event occurs; or |
(ii) | if the relevant event is to occur in more than one place, time in Perth, Western Australia. |
(l) | If the day on which any act, matter or thing is to be done is a day other than a Business Day, such act, matter or thing will be done on the immediately succeeding Business Day. |
(m) | The meaning of general words is not limited by specific examples introduced by including, or for example, or similar expressions. |
(n) | A reference to a liability incurred by any person includes any claim, loss, liability, cost or expense of that person arising from or in connection with any obligation (including indemnities and all other obligations owed as principal or guarantor) whether liquidated or not, whether present, prospective or contingent or otherwise and whether or not it would be shown as a liability under applicable accounting principles and whether owed, incurred or imposed by or to or on account of or for the account of that person alone, severally or jointly or jointly and severally with any other person. |
(o) | A reference to an asset of any person includes any form of real or personal, present or future, tangible or intangible property, any form of legal or equitable right which is not property, and anything of economic value which is not a form of property or legal or equitable right, whether or not the property, right or other thing would be shown as an asset under applicable accounting principles, and whether owned, acquired, held, used or controlled by or for the account of that person alone, or severally or jointly, or jointly and severally, with any other person and whether or not assignable. |
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(p) | A reference to a loss incurred by any person includes any loss, liability, damage, cost, charge or expense that the person pays, incurs or is liable for and any other diminution of value of any description which the person suffers, including all liabilities on account of taxes or duties, all interest, penalties, fines and other amounts payable to third parties and all reasonable legal expenses and other expenses in connection with investigating or defending any claim, action, demand or proceeding, whether or not resulting in any liability, and all amounts paid in settlement of any such claims. |
(q) | Other than in clauses 3.2(a) and 3.2(j), any reference to an asset, liability, revenue, expense or cash flow of a JV Entity will, in relation to any JV Entity that is not wholly owned (directly or indirectly) by Rio Tinto and BHP Billiton, exclude a proportion of that asset, liability, revenue, expense or cash flow, equal to the proportion of that JV Entity owned by third parties. |
(r) | Nothing in this Agreement is to be interpreted against a party on the ground that the party put forward this Agreement or a relevant part of it. |
1.3 | Multiple parties |
Where this Agreement confers a right or imposes an obligation on Rio Tinto or BHP Billiton (as applicable): |
(a) | that right is held by RTL and RTP, or by BHPBL and BHPBP, (as applicable) severally; and |
(b) | that obligation is owed by RTL and RTP, or by BHPBL and BHPBP, (as applicable) jointly and severally. |
Any reference in this Agreement to Rio Tinto and BHP Billiton is a reference to each of RTL and RTP and BHPBL and BHPBP (as applicable) separately (for example a representation, warranty or undertaking relates to each of them separately). |
1.4 | Consents or approval |
If the doing of any act, matter or thing under this Agreement is dependent on the consent or approval of a party or is within the discretion of a party, the consent or approval may be given or the discretion may be exercised conditionally or unconditionally or withheld by the party in its absolute discretion unless expressly provided otherwise. |
1.5 | Method of payment |
All payments required to be made under this Agreement must be tendered by way of direct transfer of immediately available funds to the bank account nominated in writing by the party to whom the payment is due. Any payment tendered under this Agreement after 4pm in the local time of the bank branch from which payment is made must be taken to have been made on the next succeeding Business Day (the deemed payment date) after the date on which payment is tendered, and if the deemed payment date is after the relevant due date for payment, interest will accrue under item 1.6 accordingly. |
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1.6 | Interest on amounts payable |
Unless otherwise specified, interest accrues on each amount which is due and payable, but not paid, by either Rio Tinto or BHP Billiton to the other under or in accordance with this Agreement: |
(a) | on a daily basis from the due date up to the date of actual payment; |
(b) | both before and after judgment (as a separate and independent obligation); and |
(c) | at the rate which is the sum of the Bank Bill Rate plus a margin of 3%, calculated for successive periods of one month, with the first period commencing on the due date of the amount on which interest is payable. |
The defaulting party must pay interest accrued under this item 1.6 on written demand by the non-defaulting party or, if no demand is made, on the last day of each month. The interest is payable in the currency of the unpaid amount on which it accrues. |
1.7 | Grossed up for Tax |
Where a payment by way of indemnity is required to be made under this Agreement, it will be Grossed up for Tax if, and to the extent necessary, in order to preserve or restore the recipients economic position having regard to all relevant matters including: |
(a) | the reason that the payment obligation arises; |
(b) | the nature of any related Loss or costs incurred by the recipient; |
(c) | if the payment is in respect of deprivation of income or profit, or non-receipt of another amount, which would have been subject to Tax; |
(d) | if the payment is in respect of a Loss or other event, which results in the recipient, or a Consolidated Group of which it is a member, obtaining a deduction, a reduction in present or future Tax, a Tax rebate or a Tax credit, which offsets any Tax otherwise due on the payment; and |
(e) | if the payment is an indemnity in respect of Stamp Duty or other Tax, which duty or other Tax offsets any Tax otherwise due on the payment. |
For the avoidance of doubt, a reference to a payment by way of indemnity includes: |
(f) | a payment by way of indemnity in relation to Rio Tinto Information or BHP Billiton Information under clause 4.4(b) or (c); |
(g) | a payment by way of indemnity in relation to Undisclosed Liabilities under clause 13(g); |
(h) | a payment by way of indemnity in relation to Indemnified Tax Liabilities under clause 15(d); |
(i) | a payment by way of indemnity in relation to warranties under clause 16.4 or 16.5; and |
(j) | a payment under Schedule 6, item 4(g). |
For the avoidance of doubt, this item 1.7 does not apply to: |
(k) | a payment for the transfer or sale of an asset; |
(l) | a payment under clause 3.2(c)(iii)(C) in respect of a BI Loss; or |
(m) | a subscription for Debentures. |
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1.1 | ( European Commission ): | |
The satisfactory conclusion of the European Commissions pre-completion investigation under Article 101 of the Treaty on the Functioning of the European Union ( TFEU ) into the WA Iron Ore JV, whether brought about by: |
(a) | the European Commission making a decision under Article 10 of Council Regulation 1/2003 that Article 101 TFEU does not apply to the WA Iron Ore JV; |
(b) | the European Commission finding that the WA Iron Ore JV infringes Article 101 TFEU but imposing remedies which are acceptable to Rio Tinto and BHP Billiton under clauses 2.3(d) and 1.1 by a decision under Article 7 of Council Regulation 1/2003 indicating that it no longer has grounds for action under Article 101 TFEU; |
(c) | the European Commission issuing a decision under Article 9 of Council Regulation 1/2003 in relation to the WA Iron Ore JV on the basis of binding commitments being offered which are acceptable to Rio Tinto and BHP Billiton under clauses 2.3(d) and 1.1; or |
(d) | the European Commission otherwise indicating to the parties that it does not intend to pursue an investigation into the WA Iron Ore JV, or that the WA Iron Ore JV is compatible with Article 101 TFEU. |
1.2 | ( Germany ): |
All filings having been made in relation to the WA Iron Ore JV pursuant to the Gesetz gegen Wettbewerbsbeschränkungen (act against restraints of competition) of 1957 of Germany, and: |
(a) | the German Federal Cartel Office has declined its jurisdiction; |
(b) | the German Federal Cartel Office has cleared the transaction after a Phase 1 proceeding (Vorprüfverfahren) by issuing a notice that the transaction will not be prohibited (Mitteilung der Nichtuntersagung) that has been received by the notifying parties, or the transaction is deemed to be cleared because the applicable waiting period pursuant to sec. 41(1)(1) of the German act against restraints of competition has expired without the Federal Cartel Office having opened Phase II proceedings (Hauptprüfverfahren) pursuant to sec. 41(1)(2) of the German act against restraints of competition; or |
(c) | the German Federal Cartel Office has cleared the transaction after a Phase II proceeding (Hauptprüfverfahren) by issuing a clearance decision (Freigabeentscheidung) that has been received by the notifying parties, or the transaction is deemed to be cleared because the applicable waiting period pursuant to sec. 41(2)(2) of the German act against restraints of competition (plus potential extensions pursuant to sec. 41 (2) (4) no. 1 of the German act against restraints of competition) has expired without the Federal Cartel Office having prohibited the transaction. |
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1.3 | ( ACCC ): |
Either one of the following having occurred: |
(a) | BHP Billiton and Rio Tinto having received notice in writing from the ACCC to the effect that the ACCC does not propose to intervene in or seek to prevent, pursuant to Part IV of the Australian Trade Practices Act 1974 (Cth), BHP Billiton or Rio Tinto entering into, or giving effect to, the WA Iron Ore JV, or acquiring any rights or interests with respect to the WA Iron Ore JV; or |
(b) | BHP Billiton and Rio Tinto having been granted clearance or authorisation to enter into, or to give effect to, the WA Iron Ore JV or to acquire any rights or interests with respect to the WA Iron Ore JV, by the ACCC or the Australian Competition Tribunal under Part VII of the Australian Trade Practices Act 1974 (Cth), and no application for review of such clearance or authorisation having been made within the period prescribed by such Act. |
1.4 | ( Ministry of Commerce of the Peoples Republic of China ): |
(a) | All filings have been made to the relevant Authority of the Peoples Republic of China in relation to the WA Iron Ore JV pursuant to the requirements of the Anti-Monopoly Law of the Peoples Republic of China ( AML ) and relevant regulations with respect to the competition review of joint ventures, and such filings have been accepted by the relevant Authority for examination, and: |
(i) | the relevant Authority has cleared the transaction after a preliminary examination by issuing a notice that the transaction will not be prohibited or a further examination is not required for the transaction and such notice has been received by the notifying parties pursuant to Article 25 par.1 of the AML, or the transaction is deemed to be cleared because the applicable waiting period for the preliminary examination has expired without the relevant Authority having issued a notice to commence a further examination pursuant to Article 25 par. 2 of the AML; or |
(ii) | in the event that the relevant Authority requires a further examination by issuing a notice after the preliminary examination , the relevant Authority has cleared the transaction after such further examination (including any extension thereof) by issuing a notice that the transaction will not be prohibited and such notice has been received by the notifying parties pursuant to Article 26 par. 1-2 of the AML, or the transaction is deemed to be cleared because the applicable waiting period for the further examination (including any extension thereof) has expired without the relevant Authority having rejected the transaction pursuant to Article 26 par. 3 of the AML; and |
(b) | No examination of the transaction by a relevant Authority of the Peoples Republic of China with the legal power and capacity to prevent Completion occurring, or to order Rio Tinto and BHP Billiton not to undertake any obligation under the Joint Venture Agreement, remains in effect, and no relevant Authority of the Peoples Republic of China with such legal power and capacity has: |
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(i) | ordered either Rio Tinto or BHP Billiton not to undertake any conduct it will be obligated to pursuant to the terms of the Joint Venture Agreement; or |
(ii) | imposed any condition, |
other than an order or a condition that is acceptable to Rio Tinto and BHP Billiton under clauses 2.3(d) and 2.4 of this Agreement. |
1.5 | ( Korea Fair Trade Commission ): |
All filings having been made in relation to the WA Iron Ore JV pursuant to the Monopoly Regulation and Fair Trade Law and: |
(a) | for the filing under Article 12 of the Monopoly Regulation and Fair Trade Law: |
(i) | the Korea Fair Trade Commission has cleared the transaction without a formal hearing after confirmation of the Secretary General or Vice-chairman of the Korea Fair Trade Commission and BHP Billiton and Rio Tinto have received the official letter of the Korea Fair Trade Commission giving clearance to permit each of BHP Billiton and Rio Tinto to: |
(A) | enter into, or to give effect to, the WA Iron Ore JV; and |
(B) | have a major interest or become a major stakeholder with respect to the WA Iron Ore JV; |
(ii) | the Korea Fair Trade Commission has cleared the transaction after a formal hearing conducted by a full bench of commissioners and BHP Billiton and Rio Tinto have received the official letter of the Korea Fair Trade Commission giving clearance to: |
(A) | enter into, or to give effect to, the WA Iron Ore JV; and |
(B) | have a major interest or become a major stakeholder with respect to the WA Iron JV; or |
(iii) | the transaction is deemed to be cleared because the applicable review period has expired (without the issuance of disapproval or non-acceptance by the Korea Fair Trade Commission) pursuant to Article 12 of the Monopoly Regulation and Fair Trade Law and Article 18 of the Presidential Decree thereof, |
and, in each case, those Authorisations remain in force in all respects and there has been no notice, intimation or indication of intention to revoke, suspend, restrict, modify or not renew those Authorisations; and |
(b) | if a filing is required under Article 19 of the Monopoly Regulation and Fair Trade Law by the Korea Fair Trade Commission, then the Korea Fair Trade Commission has cleared the transaction pursuant to Article 19 of the Monopoly Regulation and Fair Trade Law and BHP Billiton and Rio Tinto have received the official letter of the Korea Fair Trade Commission giving clearance to each of BHP Billiton and Rio Tinto in relation to the WA Iron Ore JV. |
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1.6 | ( Japan Fair Trade Commission ): |
(a) | If BHP Billiton and Rio Tinto have applied for prior consultation (jizen sodan) with the Japan Fair Trade Commission in relation to the WA Iron Ore JV pursuant to the Policies Dealing with Prior Consultation Regarding Business Combination Plans (Kigyo Ketsugo Keikaku ni Kansuru Jizen Sodan ni Taisuru Taio Hoshin; December 11, 2002, as amended) and have not withdrawn that application. BHP Billiton and Rio Tinto have received a response from the Japan Fair Trade Commission that the transaction will not substantially restrain competition in relation to the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade of Japan (Shiteki Dokusen no Kinshi Oyobi Kosei Torihiki no Kakuho ni Kansuru Horitsu; Law No. 54 of 1947; (Antimonopoly Act)) as amended; or |
(b) | if BHP Billiton and Rio Tinto are required to file a prior formal notification (jizen todokede) in relation to the WA Iron Ore JV pursuant to the Antimonopoly Act, as amended, the Japan Fair Trade Commission is deemed to have cleared the transaction because the Japan Fair Trade Commission has not issued a notice of disapproval or non-acceptance of the WA Iron Ore JV to BHP Billiton or Rio Tinto pursuant to Section 49(5) of the Antimonopoly Act as amended within the applicable time periods; and |
(c) | in any event, the Japan Fair Trade Commission has not initiated an administrative investigation (shinsa) that remains open in relation to the WA Iron Ore JV pursuant to Sections 45(2) and 45(4) of the Antimonopoly Act. |
1.7 | ( Taiwan Fair Trade Commission ): |
All filings being made in relation to the WA Iron Ore JV pursuant to the Taiwan Fair Trade Law of 1991, and the regulations and rulings promulgated by the Taiwan Fair Trade Commission, and: |
(a) | the Taiwan Fair Trade Commission has declined its jurisdiction over the transaction; |
(b) | the Taiwan Fair Trade Commission has cleared the transaction by issuing a notice that the transaction will not be prohibited and such notice has been received by the notifying parties or posted on the website of the Taiwan Fair Trade Commission; or |
(c) | the transaction is deemed to be cleared because the applicable waiting period plus potential extensions pursuant to Article 11 of the Taiwan Fair Trade Law has expired without the Taiwan Fair Trade Commission having prohibited the transaction. |
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1.1 | BHP Billiton |
BHPBL (as Head Company of the BHP Billiton Consolidated Group) obtaining a Private Ruling from the Commissioner of Taxation to the following effect (and words which have a defined meaning in the 1936 Tax Act or 1997 Tax Act have the same meaning below): |
(a) | * * * |
(i) | * * * |
(ii) | * * * |
(iii) | * * * |
(b) | * * * |
(i) | * * * |
(ii) | * * * |
(c) | * * * |
1.2 | Rio Tinto |
RTL (as Head Company of the Rio Tinto Consolidated Group) obtaining a Private Ruling from the Commissioner of Taxation to the following effect (and words which have a defined meaning in the 1936 Tax Act or 1997 Tax Act have the same meaning below): |
(a) | * * * |
(i) | * * * |
(ii) | * * * |
(iii) | * * * |
(b) | * * * |
(i) | * * * |
(ii) | * * * |
(c) | * * * |
1.3 | Joint BHP Billiton/Rio Tinto Condition Precedent |
* * * |
(a) | * * * |
(b) | * * * |
(c) | * * * |
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1.1 | Rio Tinto Stamp Duty ruling |
* * * |
(a) | * * * |
(i) | * * * |
(A) | * * * | ||
(B) | * * * | ||
(C) | * * * |
* * * | |||
(ii) | * * * | ||
(iii) | * * * |
(A) | * * * | ||
(B) | * * * |
(b) | * * * |
(i) | * * * |
(A) | * * * | ||
(B) | * * * |
* * * | |||
(ii) | * * * |
(c) | * * * |
(i) | * * * |
(A) | * * * | ||
(B) | * * * |
* * * | |||
(ii) | * * * |
(d) | * * * |
1.2 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * |
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1.3 | * * * | |
* * * |
(a) | * * * |
(i) | * * * |
(A) | * * * |
* * ** * * | |||
(ii) | * * * | ||
(iii) | * * * |
(A) | * * * | ||
(B) | * * * |
(b) | * * * |
(i) | * * * |
(A) | * * * | ||
(B) | * * * |
* * * | |||
(ii) | * * * |
(c) | * * * | ||
(d) | * * * |
1.4 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * |
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1.1 | Rio Tinto Identified Projects |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * | ||
(e) | * * * | ||
(f) | * * * | ||
(g) | * * * | ||
(h) | * * * | ||
(i) | * * * |
1.2 | BHP Billiton Identified Projects |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * |
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(a) | Within 5 days of achieving RGP5 Handover, BHP Billiton and Rio Tinto must jointly appoint an Independent Engineer, nominated by the President of the Institute of Engineers, Australia unless Rio Tinto and BHP Billiton agree otherwise, to prepare and deliver to Rio Tinto the RGP5 Handover Verification Report. The Independent Engineer must: |
(i) | have appropriate qualifications and experience; and |
(ii) | not have any interest which conflicts or may conflict with his or her appointment as an expert in relation to the dispute. |
(b) | If Rio Tinto does not agree with all or any part of the RGP5 Handover Verification Report, Rio Tinto may, within 30 days of receipt of that report, serve a dispute notice on BHP Billiton. If a dispute notice is served, Rio Tinto and BHP Billiton must consult in good faith with each other and the Independent Engineer, to attempt to resolve the dispute. If the dispute cannot be resolved by consultation within one month (or such other time as Rio Tinto and BHP Billiton may agree) after service of the dispute notice, the dispute will be resolved by an Independent Expert. |
(c) | For the purposes of paragraph (a), the Independent Engineer must be an engineer appointed by agreement between Rio Tinto and BHP Billiton or, in the absence of agreement, appointed by the President of the Institute of Engineers, Australia. |
(d) | For the purposes of paragraph (b), the Independent Expert must: |
(i) | have appropriate qualifications, including experience in the subject matter of the dispute or deadlock; and |
(ii) | not have any interest which conflicts or may conflict with his or her appointment as an expert in relation to this dispute. |
(e) | The Independent Expert must determine whether the conclusion reached in the RGP5 Handover Verification Report is in accordance with the requirements and intention of clause 3.4(a) and Schedule 5 Part 2. |
(f) | If the Independent Expert determines that the conclusion reached in RGP5 Handover Verification Report is not in accordance with the requirements and intention of clause 3.4(a) and Schedule 5 Part 2, then for the purposes of clause 3.4(b), RGP5 Handover will be deemed not to have taken place. |
(g) | For the purposes of clause 3.4: |
(i) | the Independent Expert will accept oral and written submissions from Rio Tinto and BHP Billiton and make a written determination in relation to the matters in dispute within 28 days of his or her appointment unless the Independent Expert certifies that the matter is complex in which case the period will be extended to 60 days; |
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(ii) | the Independent Expert will keep all information received in connection with its appointment under this Agreement confidential; |
(iii) | in the absence of manifest error, the decision of the Independent Expert made under this Schedule will be final and binding on Rio Tinto and BHP Billiton; and |
(iv) | the costs of the Independent Expert will be borne equally between Rio Tinto and BHP Billiton. |
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* * * |
* * * |
(a) | * * * |
(i) | * * * |
(ii) | * * * |
(b) | * * * |
(c) | * * * |
(i) | * * * |
(ii) | * * * |
(iii) | * * * |
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* * * |
(a) | * * * |
(b) | * * * |
(i) | * * * |
(ii) | * * * |
(c) | * * * |
(i) | * * * |
(ii) | * * * |
(d) | * * * |
(e) | * * * |
(i) | * * * |
(ii) | * * * |
(iii) | * * * |
(f) | * * * |
(g) | * * * |
(h) | * * * |
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1. | Workforce Principles |
The following principles are to be applied in planning the composition of the WA Iron Ore JVs workforce: |
(a) | The Senior Executive Team is to be sourced approximately 50:50 from each of Rio Tinto and BHP Billiton on a best person for the job basis. |
(b) | As at the JV Commencement Date: |
(i) | the Manager will be the employer of the CEO, the Senior Executive Team and Staff Category Employees; |
(ii) | subject to any Existing JV Arrangements and to any specific transitional arrangements approved by the Implementation Oversight Committee, other JV Employees will be employed by the Manager or a JV Entity; and |
(iii) | where employees are to change employer to the Manager consistent with the intention described in item 2(d), or to another JV Entity consistent with item 1(b)(ii), such change of employer will be subject to a prior confirmatory decision of the Implementation Oversight Committee, made taking into account all matters set out in item 2(d). |
There will be no secondments into the WA Iron Ore JV, and neither BHP Billiton or Rio Tinto nor their respective Owners has rights of appointment to any position. |
(c) | Following the JV Commencement Date, * * *, made taking into account the matters set out in item 2(d). |
(d) | Employees engaged after the JV Commencement Date * * * will be employed by the Manager unless otherwise approved by the Owners Council. |
(e) | * * * |
(f) | Except where otherwise specified in this Schedule, * * * and any costs associated with the JV Employees will be: |
(i) | in respect of the Relevant Period, taken into account in the Interim Adjusted Cashflow Statement and the Final Adjusted Cashflow Statement; and |
(ii) | in respect of the period on and from the JV Commencement Date, a cost of the WA Iron Ore JV. |
(g) | * * *costs associated with the establishment of the WA Iron Ore JV will be: |
(i) | taken into account in the Interim Adjusted Cashflow Statement and the Final Adjusted Cashflow Statement if paid during the Relevant Period; and |
(ii) | a cost of the WA Iron Ore JV if paid on or after the JV Commencement Date. |
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(h) | The WA Iron Ore JV must adopt an owner/operator model, using employees in preference to contractors in long-term operating roles, with a progressive transition to that model from current arrangements. |
2. | Selection processes and recruitment |
(a) | Employees must be selected for roles in the WA Iron Ore JVs organisation structures from amongst the available workforces of each of Rio Tinto and BHP Billiton and their relevant JV Entities, and from external sources as appropriate, by consistent application of objective merit-based criteria, including the expertise and experience of each candidate in light of the expertise and experience required of the role. |
(b) | In the case of Senior Executive Team roles, and any other particular roles specified by the Implementation Oversight Committee, an assessment of candidates by an independent third party should be obtained. |
(c) | Appointments of: |
(i) | the CEO and the Senior Executive Team will be subject to the approval of the Owners Council in accordance with the Joint Venture Agreement; and |
(ii) | other employees apart from the CEO and the Senior Executive Team, must be approved by the employees manager one-removed taking into account the recommendation of the employees immediate manager. |
(d) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * | ||
(iv) | * * * |
* * * |
(e) | The costs associated with item 2(d) will be: |
(i) | taken into account in the Interim Adjusted Cashflow Statement and the Final Adjusted Cashflow Statement if paid during the Relevant Period; and |
(ii) | a cost of the WA Iron Ore JV if paid on or after the JV Commencement Date. |
3. | Remuneration and other benefits |
(a) | Remuneration and benefit principles must be developed and applied consistently for employees in comparable functions and at comparable levels taking into account: |
(i) | any constraints under employment legislation; and | ||
(ii) | any risks or costs associated with a particular proposal. |
(b) | * * * |
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(c) | The following matters will be recognised by the Manager or the JV Entity and accepted as a cost of the WA Iron Ore JV: |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * |
* * * |
(d) | * * * However, the cost of the payment will be: |
(i) | taken into account in the Interim Adjusted Cashflow Statement and the Final Adjusted Cashflow Statement if paid during the Relevant Period; and |
(ii) | a cost of the WA Iron Ore JV if paid on or after the JV Commencement Date. |
(e) | * * * |
(i) | * * * |
(ii) | * * * |
(iii) | if granted after the JV Commencement Date, will be a cost of the WA Iron Ore JV. |
(f) | * * * unless otherwise approved by the Implementation Oversight Committee or the Owners Council (as applicable), their cost will be: |
(i) | taken into account in the Interim Adjusted Cashflow Statement and the Final Adjusted Cashflow Statement to the extent that and pro rata with * * * the Relevant Period; and |
(ii) | a cost of the WA Iron Ore JV if paid on or after the JV Commencement Date, |
but will otherwise be the responsibility of Rio Tinto or BHP Billiton as applicable. |
(g) | Long-term incentive arrangements for eligible members of the WA Iron Ore JV workforce must be designed: |
(i) | to operate from the JV Commencement Date; | ||
(ii) | * * * | ||
(iii) | * * * | ||
(iv) | * * * |
4. | Superannuation |
(a) | Defined contribution superannuation arrangements must be established, or made available, for all employees. |
(b) | * * * |
(c) | * * * |
(d) | * * * |
(e) | Any benefit accrual * * * will be: |
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(i) | in respect of the Relevant Period, taken into account in the Interim Adjusted Cashflow Statement and the Final Adjusted Cashflow Statement; and |
(ii) | in respect of the period on and from the JV Commencement Date, a cost of the WA Iron Ore JV. |
BHP Billiton or Rio Tinto, as applicable, will be responsible for the funding of benefits accrued * * * up to the Effective Date. | |||
* * * | |||
* * * |
(iii) | * * * |
(iv) | * * * |
(f) | For the avoidance of doubt, any funding liability relating to superannuation benefits * * * for service prior to the Effective Date will be borne wholly by BHP Billiton or Rio Tinto, as applicable. Any funding liability relating to service after the Effective Date will be: |
(i) | in respect of the Relevant Period, taken into account in the Interim Adjusted Cashflow Statement and the Final Adjusted Cashflow Statement; and |
(ii) | in respect of the period on and from the JV Commencement Date, a cost of the WA Iron Ore JV. |
(g) | The actuarial cost to the employer of the benefit accrual * * * between the Effective Date and the JV Commencement Date will be reimbursed by the Manager to the BHP Billiton entity or the Rio Tinto entity as the case may require as soon as practicable after the JV Commencement Date to the extent that the Manager has not otherwise met that cost by making contributions at the required level * * *. |
5. | Workers compensation |
(a) | Independent workers compensation insurance arrangements must be established. |
(b) | Workers compensation liabilities and claims management costs * * * will be the responsibility of the relevant employer. |
6. | Contractors |
(a) | Contractor personnel considered for employment by the WA Iron Ore JV will be subject to the processes set out in item 2 above. |
(b) | The transition of contractor personnel to direct employment by the Manager (or a JV Entity) must be planned and undertaken so as to minimise cost and disruption to operations, and must take into account the potential for application at law of transferred industrial instruments. |
(c) | * * * |
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(i) | * * * |
(ii) | * * * |
arising from the transition of the contractor personnel to direct employment by the Manager (or JV Entity). Any such costs, including any termination of employment entitlements and the payment of accrued leave entitlements, will remain the cost of the contractor. |
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1. | Part 1 Rio Tintos reorganisation steps |
1.1 | Pre-Completion reorganisation steps |
Rio Tinto must implement and complete the following reorganisation steps in the following order in accordance with clause 5.3(a)(i): |
(a) | the incorporation of a company limited by shares, all of which are held by RTL ( Rio Tinto HoldCo ); |
(b) | the incorporation of an Australian incorporated company limited by shares, all of which are held by Rio Tinto HoldCo ( Rio Tinto Owner ); |
(c) | the incorporation of an Australian incorporated company limited by shares * * *, all of which are held by RTL ( Rio Tinto Issuer ); |
(d) | the incorporation of a company limited by shares, all of which are held by Rio Tinto HoldCo ( Rio Tinto Marketing SPV ); |
(e) | * * * |
(i) | * * * |
(ii) | * * * |
(iii) | * * * |
(f) | * * * |
(g) | * * * |
1.2 | Other reorganisation steps |
Rio Tinto must * * * in accordance with clause 5.4(a)(i): |
(a) | * * * |
(b) | * * * |
(c) | * * * |
(d) | * * * |
(e) | * * * |
(f) | * * * |
(g) | * * * |
(h) | * * * |
(i) | * * * |
(j) | * * * |
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(k) | * * * |
(l) | * * * |
(m) | * * * |
(n) | * * * |
(o) | * * * |
(p) | * * * |
(q) | * * * |
(r) | * * * |
(s) | * * * |
(t) | * * * |
(u) | * * * |
(v) | * * * |
(w) | * * * |
(x) | * * * |
(y) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * | ||
(iv) | * * * | ||
(v) | * * * | ||
(vi) | * * * | ||
(vii) | * * * | ||
(viii) | * * * |
* * * |
Page 95
1.3 | Diagrams | |
Diagram 1 | ||
* * * |
Page 96
Diagram 2 | ||
* * * |
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2. | Part 2 BHP Billitons reorganisation steps |
2.1 | Pre-Completion reorganisation steps | |
BHP Billiton must implement and complete the following reorganisation steps in accordance with clause 5.3(a)(ii): |
(a) | the incorporation of a company limited by shares ( BHP Billiton HoldCo ), all of which are held by BHPBL; |
(b) | the incorporation of an Australian incorporated company limited by shares ( BHP Billiton Owner ), all of which are held by BHP Billiton HoldCo; |
(c) | the incorporation of an Australian incorporated company limited by shares * * * ( BHP Billiton Issuer ), all of which are held by BHPBL; |
(d) | the incorporation of a company limited by shares ( BHP Billiton Marketing SPV ), all of which are held by BHP Billiton HoldCo; |
(e) | * * * |
(f) | * * * |
(g) | * * * |
2.2 | Other reorganisation steps |
(a) | BHP Billiton must, in accordance with clause 5.4(a)(ii)(A), procure: |
(i) | * * * |
(ii) | * * * |
(A) | * * * | ||
(B) | * * * | ||
(C) | * * * |
(iii) | * * * |
(iv) | * * * |
(b) | BHP Billiton must * * * in accordance with clause 5.4(a)(ii)(A): |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * | ||
(iv) | * * * | ||
(v) | * * * |
(A) | * * * |
* * * |
(c) | BHP Billiton must deal in accordance with clause 5.4(a)(ii)(B) with: |
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(i) | * * * | ||
(ii) | * * * |
Page 99
2.3 | Diagrams | |
Diagram 1 | ||
* * * |
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Diagram 2 | ||
* * * |
Page 101
2.4 | Aerial photograph | |
* * * |
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2.5 | Map | |
* * * |
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1. | Determination of BHP Billiton Equalisation Investment |
1.1 | BHP Billiton Equalisation Investment | |
The BHP Billiton Equalisation Investment will equal: |
(a) | US$5.8 billion (Escalated from 1 July 2009 until Completion); plus |
(b) | one half of the Estimated Cashflow Difference (which may be a positive or negative number), determined in accordance with item 1.3; plus |
(c) | an amount equal to one half of the net present value (discounted at a 3% discount rate (nominal and pre-tax) to Completion) of the post-JV Commencement Date payments (principal, interest and fees) payable by any BHP Billiton Group entity under * * * expressed as a positive number. |
1.2 | Credit to notional franking account |
(a) | The Manager must credit the account of franking credits available to frank Coupons payable on the Debentures held by the BHP Billiton Owner in the Rio Tinto Issuer (as provided in item 9 of the Funding and Distribution Policy) with an amount agreed between BHP Billiton and Rio Tinto. |
(b) | The amount referred to in paragraph (a) will be determined having regard to the difference between the Australian income tax paid on the pre-tax profits of the Rio Tinto JV Entities and the BHP Billiton JV Entities included in the Rio Tinto Final Cashflows and the BHP Billiton Final Adjusted Cashflows. Where the Estimated Adjusted Cashflows indicate with sufficient certainty a minimum amount that should be credited to the account, that minimum amount will be credited at Completion, and any necessary adjustments arising from the Final Adjusted Cashflows will be made when they are finalised. |
(c) | As provided in the Funding and Distribution Policy, the franking credits referred to in paragraph (b) will be retained by Rio Tinto Limited in its franking account for application to Coupons paid to the BHP Billiton Owner. |
(d) | Rio Tinto and BHP Billiton will enter into good faith negotiations after the JV Commencement Date to agree arrangements for payment of Coupons or other frankable distributions to which the franking credits referred to in paragraph (b) will be attached so as to enable BHP Billiton Limiteds franking account to be credited with those amounts. |
1.3 | Estimated Cashflow Difference |
(a) | The Estimated Cashflow Difference will be determined in accordance with paragraphs (b) and (c). |
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(b) | For each Month during the period from and including the Effective Date to and including the day prior to the JV Commencement Date (the Relevant Period ) an Estimated Monthly Difference will be calculated by: |
(i) | determining the Rio Tinto Estimated Adjusted Cashflows in US dollars in accordance with item 1.4(a); |
(ii) | determining the BHP Billiton Estimated Adjusted Cashflows in US dollars in accordance with item 1.4(b); |
(iii) | subtracting the Rio Tinto Estimated Adjusted Cashflows from the BHP Billiton Estimated Adjusted Cashflows; and |
(iv) | the resulting difference (which may be a positive or negative amount) being Escalated between the last day of the Month concerned and the date of Completion, so as to determine the Estimated Monthly Difference (the Estimated Monthly Difference ). |
(c) | The Estimated Monthly Differences for each Month in the Relevant Period will be summed, and the adjustment made for the Net Accrued Notional Tax for the Relevant Period, determined in accordance with item 5.5(c), to determine the Estimated Cashflow Difference (which may be a positive or negative amount) (the Estimated Cashflow Difference ). |
1.4 | Estimated Adjusted Cashflows |
(a) | The Rio Tinto Estimated Adjusted Cashflow in respect of any Month during the Relevant Period will be the net cash flow shown in the Rio Tinto Interim Adjusted Cashflow Statement for that Month prepared in accordance with item 1.5(b): |
(i) | excluding, for the avoidance of doubt, any cash flows (other than study costs) associated with a Rio Tinto Group New Capital Expansion Project; and |
(ii) | excluding, for the avoidance of doubt, any cash flows associated with research and development in relation to Rio Tinto R&D IP (whether incurred by a JV Entity or an Affiliate of Rio Tinto). |
(b) | The BHP Billiton Estimated Adjusted Cashflow in respect of any Month during the Relevant Period will be the net cash flow shown in the BHP Billiton Interim Adjusted Cashflow Statement for that Month prepared in accordance with item 1.5(b): |
(i) | excluding, for the avoidance of doubt, any cash flows (other than study costs) associated with a BHP Billiton Group New Capital Expansion Project; and |
(ii) | excluding, for the avoidance of doubt, any cash flows associated with research and development in relation to BHP Billiton R&D IP (whether incurred by a JV Entity or an Affiliate of BHP Billiton). |
1.5 | Interim Completion Accounts |
(a) | Each of Rio Tinto and BHP Billiton (as applicable) must, as soon as practicable and in any event not less than 20 Business Days prior to Completion, prepare notional stand-alone consolidated balance sheets as at the Effective Date for: |
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(i) | the Relevant Period Assets and the Relevant Period Liabilities of the Rio Tinto Group, (the Rio Tinto RP Assets and Liabilities ) with balances adjusted in accordance with the principles set out in item 5, prepared consistently with the Guidance Materials and in accordance with: |
(A) | the accounting polices of Rio Tinto; and | ||
(B) | the principles set out in item 4, |
and reviewed in accordance with the AUP by the auditor of Rio Tinto, whose review work must be available for inspection by the Auditor once appointed under clauses 3.6(b)(viii) and 3.7(b); and |
(ii) | the Relevant Period Assets and the Relevant Period Liabilities of the BHP Billiton Group, (the BHP Billiton RP Assets and Liabilities ), with balances adjusted in accordance with the principles set out in item 5, prepared consistently with the Guidance Materials and in accordance with: |
(A) | the accounting polices of BHP Billiton; and | ||
(B) | the principles set out in item 4, |
and reviewed in accordance with the AUP by the auditor of BHP Billiton, whose review work must be available for inspection by the Auditor once appointed under clause 3.6(b)(viii) and 3.7(b) |
(the Effective Date Balance Sheets ). |
(b) | Each of Rio Tinto and BHP Billiton must prepare: |
(i) | an estimated notional stand-alone consolidated balance sheet as at the day prior to the JV Commencement Date for the Rio Tinto RP Assets and Liabilities and the BHP Billiton RP Assets and Liabilities (as applicable) with balances adjusted in accordance with the principles set out in item 5 (the Interim Completion Balance Sheets ) prepared consistently with, and in the same form as, the Effective Date Balance Sheets; and |
(ii) | notional stand-alone consolidated adjusted cash flow statements for each Month in the Relevant Period for the Rio Tinto RP Assets and Liabilities and the BHP Billiton RP Assets and Liabilities (as applicable) with balances adjusted in accordance with the principles set out in item 5 (the Interim Adjusted Cashflow Statements ). The Interim Adjusted Cashflow Statement for any Month in the Relevant Period ending after 15 Business Days prior to Completion will be an estimate. Each Interim Adjusted Cashflow Statement must be prepared in accordance with the methodology adopted under item 1.6 of the Funding and Distribution Policy, on the assumption that it applied from the Effective Date and all Relevant Period Assets and Relevant Period Liabilities are assets and liabilities of the JV Entities, and consistently with the Guidance Materials. |
(c) | Rio Tinto and BHP Billiton must provide each other with their respective Interim Completion Balance Sheets and Interim Adjusted Cashflow Statements not less than 15 Business Days prior to Completion. |
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(d) | Each of Rio Tinto and BHP Billiton must also provide to the other: |
(i) | by no later than 31 January 2010, an estimate of the Rio Tinto or BHP Billiton Estimated Adjusted Cashflows (as applicable) for each complete full Month in the Relevant Period prior to that date and a separate statement of the total expenditure in that Month associated with Rio Tinto Group New Capital Expansion Projects or BHP Billiton Group New Capital Expansion Projects (as applicable); and |
(ii) | thereafter, within 10 Business Days after the end of each Month in the Relevant Period (but not later than 15 Business Days prior to Completion) an estimate of the Rio Tinto or BHP Billiton Estimated Adjusted Cashflows (as applicable) for that Month and a separate statement of the total expenditure in that month associated with Rio Tinto Group New Capital Expansion Projects or BHP Billiton Group New Capital Expansion Projects (as applicable). |
(e) | Where an Interim Completion Balance Sheet or an Interim Adjusted Cashflow Statement must be prepared on an estimated basis, that estimate must be prepared in good faith and on a fair and reasonable basis. |
2. | Determination of Adjustment Amount |
2.1 | Adjustment Amount | |
The Adjustment Amount will equal: |
(a) | one half of the Cashflow Adjustment Amount determined under item 2.2; |
(b) | plus any Agreed Sole Risk Adjustment for a Sole Risk Development undertaken by Rio Tinto under item 2.6; and |
(c) | minus any Agreed Sole Risk Adjustment for a Sole Risk Development undertaken by BHP Billiton under item 2.6, |
and: |
(d) | if positive, the Rio Tinto Owner will subscribe for Debentures in the BHP Billiton Issuer in that amount; and |
(e) | if negative, the BHP Billiton Owner will subscribe for Debentures in the Rio Tinto Issuer in that amount. |
2.2 | Cashflow Adjustment Amount |
(a) | Subject to paragraph (c), the Cashflow Adjustment Amount will equal the difference between the Estimated Cashflow Difference and the Final Cashflow Difference, determined in accordance with item 2.3, Escalated from Completion until the date for subscription of the Adjustment Amount. |
(b) | Subject to paragraph (c), for the purposes of this item 2.2, the Cashflow Adjustment Amount will be: |
(i) | positive and payable by Rio Tinto if the subscription price payable by BHP Billiton at Completion would have been lower had the Final Cashflow Difference |
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been used in calculating that subscription price rather than the Estimated Cashflow Difference; or |
(ii) | negative and payable by BHP Billiton if the subscription price payable by BHP Billiton at Completion would have been higher had the Final Cashflow Difference been used in calculating that subscription price rather than the Estimated Cashflow Difference. |
(c) | Each of BHP Billiton and Rio Tinto must procure that the Auditor reviews the Escalation of the Cashflow Adjustment Amount and the Adjustment Amount to ensure that it has been calculated in accordance with this Agreement. |
2.3 | Final Cashflow Difference | |
The Final Cashflow Difference will be determined in the same manner as the Estimated Cashflow Difference under item 1.3 including Escalation of cash flows to Completion (including cash flows associated with a Rio Tinto Group JV New Capital Expansion Project or a BHP Billiton Group JV New Capital Expansion Project and cash flows referred to in items 2.4(a)(ii) and 2.4(b)(ii)) and the adjustment made for Net Accrued Notional Tax for the Relevant Period, determined in accordance with item 5.5(e), except that: |
(a) | references to Estimated Adjusted Cashflows determined in accordance with item 1.4 will be read as references to Final Adjusted Cashflows determined in accordance with item 2.4; and |
(b) | references to the Estimated Cashflow Difference will be read as references to the Final Cashflow Difference. |
2.4 | Final Adjusted Cashflows |
(a) | Rio Tintos Final Adjusted Cashflow in respect of any Month during the Relevant Period will be the net cash flows shown in the Rio Tinto Final Adjusted Cashflow Statement for that Month prepared in accordance with item 2.5(a): |
(i) | including any cash flows associated with a Rio Tinto Group JV New Capital Expansion Project and excluding any cash flows (other than the study costs) associated with a Rio Tinto Group Sole Risk New Capital Expansion Project or other Rio Tinto Group New Capital Expansion Project; and |
(ii) | if, before the earlier of: |
(A) | expiry of the period referred to in clause 8(c)(i) during which the Receiving Party may make an election; and | ||
(B) | the date when all such elections have been made, |
(the Expiry or Election Date ), the Manager has recommended, and the Owners Council has approved, the development of Rio Tinto R&D IP for use in the WA Iron Ore JV and the continuation of research and development in relation to that Rio Tinto R&D IP in accordance with clause 8 of the Intellectual Property Management Agreement, including any cash flows associated with research and development in relation to that Rio Tinto R&D IP (whether incurred by a JV |
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Entity or an Affiliate of Rio Tinto) to the same extent that ongoing research and development is agreed to be funded by the WA Iron Ore JV, provided that: |
(C) | all claimed expenses are properly attributed to Iron Ore Production Activities; and | ||
(D) | no mark-up or margin is applied to those costs by Rio Tinto. |
(b) | BHP Billitons Final Adjusted Cashflow in respect of any Month during the Relevant Period will be the net cash flows shown in the BHP Billiton Final Adjusted Cashflow Statement for that Month prepared in accordance with item 2.5(a): |
(i) | including any cash flows associated with a BHP Billiton Group JV New Capital Expansion Project and excluding any cash flows (other than the study costs) associated with a BHP Billiton Group Sole Risk New Capital Expansion Project or other BHP Billiton Group New Capital Expansion Project; and |
(ii) | if, by the Expiry or Election Date, the Manager has recommended, and the Owners Council has approved, the development of BHP Billiton R&D IP for use in the WA Iron Ore JV and the continuation of research and development in relation to that BHP Billiton R&D IP in accordance with clause 8 of the Intellectual Property Management Agreement, including any cash flows associated with research and development in relation to that BHP Billiton R&D IP (whether incurred by a JV Entity or an Affiliate of BHP Billiton) to the same extent that ongoing research and development is agreed to be funded by the WA Iron Ore JV, provided that: |
(A) | all claimed expenses are properly attributed to Iron Ore Production Activities; and | ||
(B) | no mark-up or margin is applied to those costs by BHP Billiton. |
2.5 | Final Completion Accounts |
(a) | Each of Rio Tinto and BHP Billiton must: |
(i) | as soon as reasonably practicable and, in any case, in sufficient time for the Auditor to comply with paragraph (b), prepare a final version of the Interim Completion Balance Sheets ( Final Completion Balance Sheets ) and Interim Adjusted Cashflow Statements ( Final Adjusted Cashflow Statements ) that had been prepared on an estimated basis under item 1.5(b). The final versions will be prepared on the same basis, in respect of the same date or period and, in the same form as, the interim versions (which were prepared consistently with the Guidance Materials) except that: |
(A) | actual amounts will replace any estimates; and | ||
(B) | the Final Adjusted Cashflow Statements will be prepared in accordance with item 5.4; and |
(ii) | procure that the Auditor undertakes a review in accordance with the AUP in respect of the Final Completion Balance Sheets and Final Adjusted Cashflow Statements, including making the adjustments referred to in paragraph (b). |
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(b) | In carrying out its review in accordance with the AUP, the Auditor will be instructed to: |
(i) | ensure that the Final Completion Balance Sheets and Final Adjusted Cashflow Statements have been prepared in accordance with the requirements of this Agreement; |
(ii) | ensure that the Final Completion Balance Sheets and Final Adjusted Cashflow Statements have been prepared in a consistent manner as between Rio Tinto and BHP Billiton, including in relation to approaches and levels of materiality; |
(iii) | where in the Auditors opinion the Final Completion Balance Sheets or Final Adjusted Cashflow Statements (or both) have not been prepared in accordance with this Agreement or have not been prepared in a consistent manner, then the Auditor must propose such adjustments to the Final Completion Balance Sheets and Final Adjusted Cashflow Statements as the Auditor reasonably determines best reflect the requirements and intentions of this Schedule; |
(iv) | provide Rio Tinto and BHP Billiton with a draft of the AUP review report, including a statement of any adjustments that the Auditor proposes pursuant to paragraph (iii) and give both Rio Tinto and BHP Billiton a reasonable opportunity to provide comments in writing to the Auditor on the draft report. Any written comments provided by either Rio Tinto or BHP Billiton to the Auditor must be provided to the other at the same time, and the Auditor must consider the comments and, if either Rio Tinto or BHP Billiton so requests, meet with Rio Tinto and BHP Billiton to discuss the Auditors proposed response to the comments before finalising the AUP report; |
(v) | address its AUP review report to both Rio Tinto and BHP Billiton; and |
(vi) | complete the AUP review reports by no later than 210 days after Completion. |
The Final Completion Balance Sheets or Final Adjusted Cashflow Statements, adjusted as proposed by the Auditor, will be final and binding on Rio Tinto and BHP Billiton, unless either Rio Tinto or BHP Billiton disputes them in accordance with item 6. |
2.6 | Agreed Sole Risk Adjustment | |
For the purposes of clause 8(c)(i) and item 2.1 of this Schedule: |
(a) | if, before the fifth Business Day after finalisation of the Final Completion Accounts, Rio Tinto and BHP Billiton have agreed the fair market value for a Sole Risk Development undertaken by Rio Tinto or BHP Billiton (as applicable) under clause 8.3(c) and item 1(b) of schedule 4 of the Joint Venture Agreement, then the Agreed Sole Risk Adjustment will be the other Owners Participating Share of that fair market value; or |
(b) | if not, then on determination of the fair market value under clause 8.(c) and item 1(b) of schedule 4 of the Joint Venture Agreement in accordance with item 1 of schedule 9 of the Joint Venture Agreement, the party undertaking the Sole Risk Development will instead subscribe for further Debentures in the other Owners Participating Share of that fair market value in accordance with clause 7.5, within 5 Business Days of that determination. |
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3. | JV Commencement Date Balance Sheets |
The Manager must, in accordance with clause 4.3(f) of the Joint Venture Agreement, as soon as practicable after the JV Commencement Date, and in any event within 90 days, prepare: |
(a) | a notional stand-alone consolidated balance sheet, as at the JV Commencement Date, for the Iron Ore Assets and Iron Ore Liabilities (without adjustment under item 5) in accordance with the methodology adopted under the Funding and Distribution Policy ( JV Commencement Date Balance Sheet ), prepared in accordance with the Accounting Policy and reviewed by the Auditor in accordance with the AUP. |
(b) | a JV Commencement Date Balance Sheet, prepared in accordance with the accounting policy of Rio Tinto and reviewed in accordance with the AUP by the Auditor; and |
(c) | a JV Commencement Date Balance Sheet, prepared in accordance with the accounting policy of BHP Billiton and reviewed in accordance with the AUP by the Auditor. |
Each JV Commencement Date Balance Sheet must be prepared in accordance with International Financial Reporting Standards as adopted by the European Union. |
4. | Other Balance Sheets |
The Effective Date Balance Sheets, the Interim Completion Balance Sheets and the Final Completion Balance Sheets (the Balance Sheets ) must be prepared in accordance with International Financial Reporting Standards as adopted by the European Union, adjusted in accordance with the following principles: |
(a) | the Balance Sheets will be prepared in accordance with the methodology adopted under item 1.6 of the Funding and Distribution Policy, on the assumption that it applied from the Effective Date and all Relevant Period Assets and Relevant Period Liabilities are assets and liabilities of the JV Entities; |
(b) | the Balance Sheets will be prepared on the assumption that all loans and deposits from Affiliates or third parties are Relevant Period Excluded Assets, except for any loans or deposits that Rio Tinto and BHP Billiton agree form part of Relevant Period Assets; and |
(c) | the Balance Sheets will be calculated and prepared in US dollars. Where the functional currency of a Rio Tinto JV Entity or BHP Billiton JV Entity is not US dollars, the Balance Sheets must be prepared in the functional currency of that Rio Tinto JV Entity or BHP Billiton JV Entity (as applicable) and then converted into US dollars in accordance with International Financial Reporting Standards as adopted by the European Union. The exchange rates used for this purpose should be disclosed in the Balance Sheets. |
5. | Adjusted Cashflow Statements |
5.1 | Interim Adjusted Cashflow Statements |
Subject to item 1.4, each Interim Adjusted Cashflow Statement must show the net cash flow (on a notional stand-alone consolidated basis) for the relevant Month for the Rio Tinto RP Assets and Liabilities or the BHP Billiton RP Assets and Liabilities (as applicable) adjusted in accordance with |
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principles set out in this item 5. For the avoidance of doubt, cash flows will (unless otherwise stated in this Schedule 8) be reflected in the Interim Adjusted Cashflow Statements based on the time of receipt or payment as applicable. |
5.2 | Included cash flows |
(a) | For the avoidance of doubt inclusions | ||
Subject to items 5.2(b) and (c) and items 5.3(b) and (c), the following cash flows will (for the avoidance of doubt) be included in the net cash flows shown in each Interim Adjusted Cashflow Statement: |
(i) | capital expenditure in respect of, and proceeds from sale of, Relevant Period Iron Ore Assets in that Month; |
(ii) | exploration and evaluation expenditure in relation to Relevant Period Iron Ore Assets in that Month; |
(iii) | dividends received from associates relating to Relevant Period Iron Ore Assets in that Month (except where the cash flows of the associates are included in the notional consolidation of the cash flow statement); |
(iv) | any cash flows referred to in items 1(f)(i), 1(g)(i), 2(e)(i), 3(d)(i), 3(f)(i), 4(e)(i) and 4(f)(i) of Schedule 6 as being taken into account in the Interim Adjusted Cashflow Statement or Final Adjusted Cashflow Statement (as applicable), in that Month; |
(v) | iron ore production costs expended in that Month; |
(vi) | expenditure during that Month (whether by a JV Entity or an Affiliate, as applicable) relating to the reinstatement, repair or replacement of Relevant Period Iron Ore Assets (other than construction projects in progress) damaged or destroyed, in accordance with clause 1.1; |
(vii) | include costs in that Month that have been directly incurred, in the ordinary course, by a JV Entity or an Affiliate in relation to Patented BHP Billiton IP, Non-Patented BHP Billiton IP, Patented Rio Tinto IP or Non-Patented Rio Tinto IP (each as defined in the Intellectual Property Management Agreement), including costs incurred in respect of licences for, maintenance of, or the creation of Improvements (as defined in the Intellectual Property Management Agreement) to Patented BHP Billiton IP, Non-Patented BHP Billiton IP, Patented Rio Tinto IP or Non-Patented Rio Tinto IP, where those costs are Attributable to the BHP Billiton Group or Rio Tinto Group Iron Ore Production Activities; |
(viii) | any Recoveries by a JV Entity in respect of an Event received during that Month; and |
(ix) | non-product revenue from Relevant Period Iron Ore Assets received during that Month. |
(b) | Specific Relevant Period inclusions | ||
Subject to item 5.2(c) and items 5.3(b) and (c), net cash flows for the period included in the Interim Adjusted Cashflow Statement will: |
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(i) | include receipts from the sale of iron ore in that Month, including receipts from the sale of iron ore on hand as at the Effective Date, calculated, notwithstanding that the WA Iron Ore JV excludes marketing activities from its operations, on the basis that receipts from the sale of iron ore must be adjusted to reflect the FOB Price paid by the end customer to any Rio Tinto Group entity or BHP Billiton Group entity; |
(ii) | include actual demurrage costs associated with contracts for the sale of iron ore in that Month; |
(iii) | include Marketing Costs in that Month; |
(iv) | be adjusted to ensure that any cash flows associated with a transaction with an Affiliate (including both the supply of goods or services to, and the acquisition of goods or services from, an Affiliate): |
(A) | are recorded at cost and do not include any mark-ups, management fees, licence fees or royalties paid to Affiliates; and | ||
(B) | include the same types of costs and are calculated consistently with the allocation keys in the Guidance Materials and otherwise on the same basis in relation to both Rio Tinto and BHP Billiton. |
Any transactions with Affiliates that remain in the Interim Adjusted Cashflow Statement must be clearly disclosed, including the name of the Affiliate, the nature of the goods or services supplied and the basis of the charge; |
(v) | include cash flows during that Month associated with short-term incentive cash payments of a Transferring Employee contemplated by item 3(f) of Schedule 6, to the extent that and pro rata with so much of, the applicable incentive period as falls within the Relevant Period; |
(vi) | subject to item 5.3(d), include any Cash outflows or Cash inflows in respect of any Taxes (in or out of Australia) for the Month to the extent that they relate to acts, transactions or events that are reflected in the BHP Billiton Estimated Adjusted Cashflows or the Rio Tinto Estimated Adjusted Cashflows (as applicable). In this paragraph, references to Taxes include PAYG instalment payments, final company tax payments, amounts paid or received under amended assessments, and like payments or receipts under foreign income tax laws (and, for the avoidance of doubt, in the case of members of the BHP Billiton Consolidated Group or the Rio Tinto Consolidated Group, also include amounts payable or receivable under a Tax Funding Agreement or Tax Sharing Agreement, with such adjustments as are necessary to prevent double counting); and |
(vii) | include any other items specifically agreed in writing by both Rio Tinto and BHP Billiton to be included. |
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(c) | Timing inclusions | ||
Subject to items 5.3(b) and (c): |
(i) | the net cash flows shown in each Interim Adjusted Cashflow Statement will include any items specifically agreed in writing by both Rio Tinto and BHP Billiton to be included; and |
(ii) | the Interim Adjusted Cashflow Statement will show as a cash outgoing the value of any goods or services received in that Month that have been pre-paid as at the Effective Date and will show as a cash receipt the value of any goods or services supplied in that Month that have been pre-paid as at the Effective Date. The amount of the adjustment will equal the amount that is shown in the Effective Date Balance Sheet as a prepayment as at the Effective Date. |
If the amount of any cash flow referred to in this item 5.2 relates to more than one Month, then that amount will be allocated pro rata so that the proportion of the amount relating to the relevant Month is included in the Interim Adjusted Cashflow Statement for that Month. |
5.3 | Excluded Cashflows |
(a) | For the avoidance of doubt exclusions | ||
Subject to items 5.2(b) and (c) and items 5.3(b) and (c), the following cash flows will (for the avoidance of doubt) be excluded from the net cash flows shown in each Interim Adjusted Cashflow Statement: |
(i) | all cash flows attributable to Relevant Period Excluded Assets and Relevant Period Excluded Liabilities (as determined in accordance with the methodology adopted under item 1.6 of the Funding and Distribution Policy, on the assumption that it applied from the Effective Date and all Relevant Period Assets and Relevant Period Liabilities are assets and liabilities of the JV Entities) and any other cash flows not attributable to Relevant Period Assets or Relevant Period Liabilities (as determined in accordance with the methodology adopted under item 1.6 of the Funding and Distribution Policy, on the assumption that it applied from the Effective Date and all Relevant Period Assets and Relevant Period Liabilities are assets and liabilities of the JV Entities) received or paid in that Month; |
(ii) | all amounts received during that Month that relate to sales of iron ore invoiced to an Owner or its Related Corporations by an Other JV Participant pursuant to an arrangement referred to in clause 6.7 of the Joint Venture Agreement; and |
(iii) | JV Formation Costs and any JV Implementation Costs, other than Approved JV Implementation Costs paid in that Month. |
(b) | Specific Relevant Period exclusions |
Subject to items 5.2(b) and (c) and item 5.3(c), the following cash flows will be excluded from the net cash flows shown in each Interim Adjusted Cashflow Statement: |
(i) | gains or losses realised during that Month from hedging activities; |
(ii) | premia in respect of any insurance policy and associated insurance planning and administration costs; |
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(iii) | actual shipping costs during that Month associated with contracts for the sale of iron ore; |
(iv) | the payments (principal, interest and fees) under the * * * paid by BHP Billiton Iron Ore Pty Limited during that Month; |
(v) | costs (excluding RGP5 study costs) of procuring the completion of design, construction and commissioning of RGP5 in accordance with the RGP5 scope of Work and achieving RGP5 Handover above $4.8 billion (85% BHP Billiton share) paid by BHP Billiton during that Month; |
(vi) | costs paid during that Month that item 4 of Schedule 6 provides are to be borne by either Rio Tinto or BHP Billiton; |
(vii) | costs paid by either party during that Month in relation to workers compensation liabilities and claims management costs associated with * * * item 5(b) of Schedule 6. |
(viii) | cash flows during that Month associated with incentive entitlements of an employee that do not fall within item 5.2(b)(v); |
(ix) | any receipts during that Month under any public liability insurance policy (including in connection with contract works) or contract works insurance policy relating to a partys Relevant Period Iron Ore Assets, and any other recoveries received during that Month in connection with a public liability claim (including in connection with contract works) or the reinstatement, repair or replacement of a construction project; |
(x) | any expenditure during that Month relating to a public liability claim (including in connection with contract works), including expenditure in making any recoveries in connection with such a claim; |
(xi) | any expenditure during that Month relating to the reinstatement, repair or replacement of construction projects in progress that have been damaged or destroyed, in accordance with clause 3.2(j); |
(xii) | any receipts during that Month under any property damage and business interruption insurance policy relating to a partys Relevant Period Iron Ore Assets, where the applicable deductible under the relevant insurance policy is less than the applicable Deductible under clause 3.2(c), and to the extent that the receipts, when aggregated with receipts in any previous Month relating to the same Event under any property damage and business interruption insurance policy do not exceed the difference between the applicable deductible under the relevant insurance policy and the applicable Deductible under clause 3.2(c); |
(xiii) | any receipts during that Month under any property damage and business interruption insurance policy relating to a partys Relevant Period Iron Ore Assets, to the extent that the receipts (when aggregated with any prior receipts in relation to the same Event), exceed the lesser of the Assessed Loss and the Maximum Amount; |
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(xiv) | any Recoveries by an Affiliate in respect of an Event received during that Month; and |
(xv) | any other items specifically agreed in writing by both Rio Tinto and BHP Billiton to be excluded, |
and: |
(xvi) | the Interim Adjusted Cashflow Statement will only take into account cash flows arising from the operating and investing activities of the relevant Rio Tinto JV Entities and BHP Billiton JV Entities attributable to Relevant Period Assets and Relevant Period Liabilities during the Relevant Period, as determined in accordance with International Accounting Standard 7 Statement of Cash Flows ( IAS 7 ), and will not take into account cash flows associated with their financing activities, as determined in accordance with IAS 7, (whether by way of shareholder equity, debt or otherwise), including: |
(A) | interest payments and receipts; | ||
(B) | dividend payments and capital distributions; | ||
(C) | loan repayments and draw-downs, and debt waivers, assumptions and novations and like transactions; | ||
(D) | advances and loans to or from a Rio Tinto Group entity or BHP Billiton Group entity (as applicable); | ||
(E) | equity issues and repurchases; | ||
(F) | payments on finance leases; and |
(xvii) | any Cash outflows or Cash inflows in respect of any Taxes (in or out of Australia) for the Month to the extent that item 5.2(b)(vi) does not apply to them. In this paragraph, references to Taxes include PAYG instalment payments, final company tax payments, amounts paid or received under amended assessments, and like payments or receipts under foreign income tax laws (and, for the avoidance of doubt, also include amounts payable or receivable under a Tax Funding Agreement or Tax Sharing Agreement). |
(c) | Timing exclusions | ||
Subject to items 5.2(b) and (c), the following cash flows will be excluded from the net cash flows shown in each Interim Adjusted Cashflow Statement: |
(i) | all amounts received during that Month that relate to sales that were invoiced and delivered (even if invoiced at a provisional amount) prior to the Effective Date. The amount of the adjustment will equal the actual cash received, regardless of the amount shown in the Effective Date Balance Sheet; |
(ii) | all amounts paid during that Month that relate to purchases of goods or services that were received prior to the Effective Date. The amount of the adjustment will equal the actual cash paid regardless of the amount shown in the Effective Date Balance Sheet. This adjustment will apply irrespective of whether the purchase related to an operating or capital item; |
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(iii) | proceeds of any insurance claim in that Month relating to events that occurred prior to the Effective Date; |
(iv) | royalty payments paid and/or received during that Month in relation to ore sales before the Effective Date; and |
(v) | any other items specifically agreed in writing by both Rio Tinto and BHP Billiton to be excluded. |
If the amount of any cash flow referred to in this item 5.3 relates to more than one Month, then that amount will be allocated pro rata so that the proportion of the amount relating to the relevant Month is included in the Interim Adjusted Cashflow Statement for that Month. | |||
(d) | GST | ||
For the avoidance of doubt, the cash flows shown in each Interim Adjusted Cashflow Statement will exclude: |
(i) | GST payable to the Australian Taxation Office on supplies; |
(ii) | amounts payable to suppliers for GST on acquisitions for which an Input Tax Credit arises; and |
(iii) | equivalent liabilities and credits for goods and services tax, value added tax or like taxes in other jurisdictions. |
5.4 | Final Adjusted Cashflow Statements | |
The Final Adjusted Cashflow Statements will also be prepared in accordance with the requirements of items 5.1 to 5.3 (inclusive), except that: |
(a) | cash flows attributable to JV New Capital Expansion Projects will be included; |
(b) | cash flows (other than the study costs) attributable to Sole Risk New Capital Expansion Projects or other New Capital Expansion Projects will be excluded; |
(c) | if, by the Expiry or Election Date, the Manager has recommended, and the Owners Council has approved, the development of BHP Billiton R&D IP or Rio Tinto R&D IP (as applicable) for use in the WA Iron Ore JV and the continuation of research and development in relation to that BHP Billiton R&D IP or Rio Tinto R&D IP (as applicable) in accordance with clause 8 of the Intellectual Property Management Agreement, any cash flows associated with research and development in relation to that BHP Billiton R&D IP or Rio Tinto R&D IP (as applicable) (whether incurred by a JV Entity or an Affiliate of BHP Billiton or Rio Tinto, as applicable) will be included to the same extent that ongoing research and development is agreed to be funded by the WA Iron Ore JV, provided that: |
(i) | all claimed expenses are properly attributed to Iron Ore Production Activities; and |
(ii) | no mark-up or margin is applied to those costs by BHP Billiton or Rio Tinto (as applicable); and |
(d) | any cash flows associated with research and development in relation to BHP Billiton R&D IP or Rio Tinto R&D IP not referred to in paragraph (c) will be excluded. |
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5.5 | General provisions |
(a) | The Interim Adjusted Cashflow Statements and Final Adjusted Cashflow Statements must be calculated and prepared in US dollars. Where the functional currency of the relevant entity is not US dollars, the Interim Adjusted Cashflow Statements and Final Adjusted Cashflow Statements must be prepared in the functional currency of that entity and then converted into US dollars using an average of the applicable daily Bloomberg Fix exchange rate (code: BFIX) reported by Bloomberg at 4pm (Sydney time) for the relevant Month. The exchange rates used for this purpose must be disclosed in the Interim Completion Accounts and the Final Completion Accounts. |
(b) | The Interim Adjusted Cashflow Statements and Final Adjusted Cashflow Statements must be prepared in the same form as the standardised templates set out in the Guidance Materials. |
(c) | The net accrued notional tax ( Net Accrued Notional Tax ) for the Relevant Period will be calculated by subtracting accrued notional tax in respect of total BHP Billiton Estimated Adjusted Cashflows from accrued notional tax in respect of total Rio Tinto Estimated Adjusted Cashflows (which may be a positive or negative number). |
(d) | For the purposes of item (c), accrued notional tax relates to amounts payable or receivable in respect of income tax and is calculated on the basis of the following principles: |
(i) | accrued notional tax will be calculated on an accruals basis, such that the relevant entity need not have actually paid, or become liable to pay, the income tax (including making a payment under a Tax Funding Agreement or Tax Sharing Agreement) in the Relevant Period; |
(ii) | accrued notional tax will take into account the income tax consequences for the Relevant Period arising from acts, transactions or events that are reflected in the BHP Billiton Estimated Adjusted Cashflows or the Rio Tinto Estimated Adjusted Cashflows (as applicable), but will be calculated net of any Cash outflows or Cash inflows in respect of income tax (in or out of Australia) already taken into account under item 5.2(b)(vi), and, in the case of members of the BHP Billiton Consolidated Group or the Rio Tinto Consolidated Group will take into account amounts payable or receivable under a Tax Funding Agreement or Tax Sharing Agreement, or by the Head Company, with such adjustments as are necessary to prevent double counting; |
(iii) | accrued notional tax will be calculated on the basis that all entities with Cash Flows included in the BHP Billiton Estimated Adjusted Cashflows or the Rio Tinto Estimated Adjusted Cashflows (as applicable) are residents of Australia for Australian income tax purposes; |
(iv) | accrued notional tax will be calculated in relation acts, transactions or events that are reflected in the BHP Billiton Estimated Adjusted Cashflows or the Rio Tinto Estimated Adjusted Cashflows (as applicable) in accordance with all applicable Australian income tax laws, and, for the avoidance of doubt, will take into account depreciation in relation to Relevant Period Iron Ore Assets, and expenditure in relation to Relevant Period Iron Ore Assets paid or incurred before the Effective |
Page 118
Date that is deductible for the purposes of the 1936 Act or the 1997 Act after the Effective Date (determined on a fair and reasonable basis); and |
(v) | accrued notional tax will be calculated at the Australian statutory company tax rate (currently 30%) that would apply to the Head Company of the BHP Billiton Consolidated Group or the Rio Tinto Consolidated Group (as applicable) during the Relevant Period. |
(e) | Net Accrued Notional Tax in respect of the Final Adjusted Cashflow Statements will be calculated in the same way as set out in items 5.5(c) and 5.5(d), with Net Accrued Notional Tax calculated in relation to acts, transactions or events that are reflected in the BHP Billiton Final Adjusted Cashflows or the Rio Tinto Final Adjusted Cashflows (as applicable) using the same tax treatment (including tax rates) that was adopted in relation to the Cash Flows referred to in item 5.5(c). |
5.6 | Guidance Materials | |
In the event of an inconsistency between this Schedule and the Guidance Materials, this Schedule will prevail to the extent of the inconsistency. |
6. | Disputes |
(a) | Either Rio Tinto or BHP Billiton may, within 30 days of receipt of the Final Completion Accounts, serve a dispute notice on the other. If a dispute notice is served, the dispute must be resolved by an Independent Expert and subject to paragraph (b), the provisions of clauses 16.2 and 16.3 of the Joint Venture Agreement will apply. |
(b) | The Independent Expert must determine whether the Final Completion Accounts and the Adjustment Amount have been determined in accordance with the requirements and intention of clause 1 and this Schedule. |
(c) | If the Independent Expert determines that an adjustment must be made to the Adjustment Amount, then that adjustment will be effected by the Rio Tinto Owner or the BHP Billiton Owner subscribing for further Debentures for the amount of that adjustment in accordance with clause 7.5 within 5 Business Days of that determination. |
7. | Post-JV Commencement Date cash flows |
(a) | Within 90 days after the end of each six month period ( Cashflow Period ), with the first such Cashflow Period commencing on the JV Commencement Date, Rio Tinto and BHP Billiton must provide to one another a statement reviewed by the auditor of Rio Tinto or the auditor of BHP Billiton (as applicable) in accordance with the AUP setting out: |
(i) | as a positive number all amounts received during that Cashflow Period that relate to sales of iron ore that were invoiced and delivered (even if invoiced at a provisional amount) in the Relevant Period. The amount, in relation to sales of iron ore, must be calculated on the same basis specified in item 5.2(a); |
(ii) | as a negative number: |
Page 119
(A) | all amounts paid during that Cashflow Period that relate to purchases of goods or services that were received in the Relevant Period (irrespective of whether the purchase related to an operating or capital item); and | ||
(B) | an amount equal to the value of any iron ore supplied to customers in that Cashflow Period that was pre-paid in the Relevant Period, as recorded in the Final Completion Balance Sheets; and |
(iii) | such reductions in respect of accrued tax as are appropriate to ensure the cash flows covered by this item 7 are reduced by accrued tax basis, consistently with the methodology in item 5.5; and |
(iv) | the net sum of the above amounts ( Post-Completion Cashflow Amount ). |
(b) | If, in relation to a Cashflow Period one Owner has a lower Post-Completion Cashflow Amount that Owner will, as soon as practicable after the provision of both statements under item 7(a), be entitled to receive a franked Coupon in an amount equal to the after-Tax amount of one half of the difference between the two Owners Post-Completion Cashflow Amounts . |
(c) | After the second Cashflow Period, and (if no settlement is reached under this item 7(c)) each subsequent Cashflow Period, Rio Tinto and BHP Billiton must negotiate in good faith to agree a settlement of any such amounts still outstanding. If such a settlement is reached, the provisions of this item 7 will no longer apply. |
Page 120
(1) | references to the Warrantor and Warrantor Group are: |
(a) | where BHP Billiton is giving the warranties to BHP Billiton and the BHP Billiton Group, respectively; and |
(b) | where Rio Tinto is giving the warranties to Rio Tinto and the Rio Tinto Group, respectively; and |
(2) | references to JV Entities are: |
(a) | where BHP Billiton is giving the warranties to the BHP Billiton JV Entities; and |
(b) | where Rio Tinto is giving the warranties to the Rio Tinto JV Entities; and |
(3) | references to the other party are: |
(a) | where the Warrantor is BHP Billiton, to Rio Tinto; and |
(b) | where the Warrantor is Rio Tinto, to BHP Billiton. |
(1) | Except as disclosed in the Due Diligence Materials or otherwise in writing to the other party, the Relevant Period Iron Ore Assets of the Warrantor are owned by the Warrantor Group and are not subject to any Security Interest, other than: |
(a) | a Permitted Security Interest; or |
(b) | an Existing JV Cross Charge. |
(2) | The Due Diligence Materials provided by or on behalf of a member of the Warrantor Group to the other party were provided in good faith and, to the best of the knowledge and belief of the Warrantor, were true, accurate and, except to the extent that disclosure has been withheld as required by contractual obligations of confidentiality to third parties, or by antitrust Laws, complete in all material respects at the time they were provided. |
(1) | Diagram 1 and Diagram 2 set out in item 1.3 of Part 1 of Schedule 7 shows all the Rio Tinto JV Entities in yellow shaded boxes and is a complete and accurate depiction of the ownership interests in and held by Rio Tinto JV Entities. |
(1) | Diagram 1 set out in item 2.3 of Part 2 of Schedule 7 identifies as JV Entity all the BHP Billiton JV Entities and is a complete and accurate depiction of the ownership interests in and held by BHP Billiton JV Entities. |
Page 121
Resolved that, pursuant to clause 3.3(a)(iv) of the Joint Venture Agreement, the following policies are necessary and desirable: |
(a) | an insurance protocol; and |
(b) | a hedging policy. |
Further Resolved that, pursuant to clause 3.3(a)(iv) of the Joint Venture Agreement, the following policies (in the form tabled at the meeting) be approved and take effect from the JV Commencement Date: |
(a) | the Insurance Protocol; and |
(b) | the Hedging Policy. |
Resolved that the following Owners Council meeting procedures be adopted pursuant to clause 3.5 of the Joint Venture Agreement: |
At least 14 days prior notice of each meeting of the Owners Council, together with notice of the agenda for the meeting, will be given to each Representative by the Manager or the Owner calling the meeting. Notice of any meeting or of the agenda for the meeting, or both, may be waived by all the Representatives. Additional items may be added to the agenda by the Manager or any Owner by notice to each Representative not less than 5 days prior to the scheduled date of the meeting. If notice of an agenda has not been waived in accordance with this paragraph, only items on the agenda may be the subject of decision at an Owners Council meeting, unless otherwise agreed by the Owners Council. |
Resolved that, pursuant to clause 3.9 of the Joint Venture Agreement, with effect from the JV Commencement Date, the following standing committees be established, with the following functions and responsibilities: |
(a) | an audit committee ( Audit Committee ), which will make recommendations, and report and provide advice, to the Owners Council, based on its review of relevant material, including: |
(i) | the financial information that will be provided to the Owners and the public; |
(ii) | the systems and internal controls that the Owners Council and the Manager will establish; and |
(iii) | the audit, accounting and financial reporting processes of the WA Iron Ore JV; |
Page 122
(b) | a remuneration committee ( Remuneration Committee ), which will report and provide advice to the Owners Council in relation to the remuneration of the CEO and Senior Executive Team members; and |
(c) | a technical committee ( Technical Committee ), whose function will be to: |
(i) | report and provide advice to the Owners Council, based on pertinent reports and technical information relating to the operations and development and expansion activities of the WA Iron Ore JV; and |
(ii) | report and provide advice to the Owners Council based on the Owners Business Plans and Budgets and studies provided to the Owners pursuant to clause 8 of the Joint Venture Agreement. |
(d) | a sustainable development committee ( Sustainable Development Committee ), whose function will be to report and provide advice to the Owners Council in relation to its oversight of matters relating to health, safety, environment, community and sustainable development, including: |
(i) | the WA Iron Ore JVs compliance with applicable legal and regulatory requirements; and |
(ii) | the approach to be taken by the Manager in relation to these matters. |
Each of the Committees will meet at least Quarterly (or more frequently as may be desirable) and will regulate the conduct of their meetings as they see fit. |
Resolved that [ insert name ], recommended by the Implementation Management Committee in accordance with clause 3.6(b)(viii) of the Implementation Agreement for appointment as the initial Auditor, be appointed as the initial Auditor and that such appointment take effect on and from the JV Commencement Date. | ||
Further Resolved that [ insert name ] recommended by the Implementation Management Committee in accordance with clause 3.6(b)(viii) of the Implementation Agreement for appointment as the internal auditor, be appointed as the internal auditor and that such appointment take effect on and from the JV Commencement Date. |
Resolved that, pursuant to clause 3.13 of the Joint Venture Agreement, the Revised Accounting Policy (in the form tabled at the meeting) be adopted as the Accounting Policy and have effect from the JV Commencement Date. |
Resolved that for the purposes of clause 3.10(l) of the Joint Venture Agreement: |
(a) | the Budget Overrun Percentage is * * * of the total expense specified in the relevant Budget; |
(b) | the Expenditure Category Overrun Amount is * * * of the expense specified in the relevant Budget for each of the following categories of aggregated expenditure: |
(i) | * * * |
Page 123
(ii) | * * * |
(iii) | * * * |
* * * |
(c) | * * * |
(i) | * * * |
(ii) | * * * |
Page 124
Page 125
Production Joint Venture Agreement
1.
Definitions and Interpretation
2
1.1
Definitions
2
1.2
Interpretation
2
2.
WA Iron Ore Production Joint Venture Overview
2
2.1
Formation of WA Iron Ore Production Joint Venture
2
2.2
Scope of WA Iron Ore JV
3
2.3
Objectives of the WA Iron Ore JV
5
2.4
JV Entities
5
2.5
Term of the WA Iron Ore JV
7
3.
Governance of WA Iron Ore JV
8
3.1
Establishment of the Owners Council
8
3.2
Representation on Owners Council
8
3.3
Owners Council Powers and Functions
9
3.4
Managers Authority
11
3.5
Meetings
11
3.6
Voting
12
3.7
Deadlock general principles
12
3.8
Deadlock resolution for specific matters
12
3.9
Owners Council Committees
14
3.10
Business Plans, Budgets and Synergies Capture Plans
15
3.11
Called Sums
18
3.12
Funding and Distribution Policy
21
3.13
Policies and Protocols
21
4.
Management of WA Iron Ore JV
22
4.1
Appointment and removal of Manager
22
4.2
Liability
22
4.3
Manager Duties
24
4.4
Board of Manager
25
4.5
Appointment and Removal of CEO and Senior Executive Team
25
4.6
Employees of Manager
27
4.7
WA Iron Ore JV systems, standards and procedures
28
4.8
Revenue Based Royalties
28
4.9
JV Entities and Managers accounts and records
30
4.10
Accounting systems
32
4.11
Audit
33
4.12
Reporting Policy and Accounting Policy
34
4.13
Access to Information
35
4.14
Weighing, Sampling and Analysis Protocol
37
4.15
Insurance
37
4.16
Intellectual property
38
4.17
Maintenance of tenements
38
4.18
Environmental compliance and rehabilitation
39
4.19
Ownership of WA Iron Ore JV Property
39
4.20
Manager not empowered to create Encumbrances
39
|
4.21 | Assignment, subcontracting and delegation | 39 | |||||
|
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5.
|
* * * | 39 | ||||||
|
||||||||
|
5.1 | * * * | 39 | |||||
|
||||||||
|
5.2 | * * * | 39 | |||||
|
||||||||
|
5.3 | * * * | 40 | |||||
|
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|
5.4 | * * * | 40 | |||||
|
||||||||
|
5.5 | * * * | 40 | |||||
|
||||||||
6. | Supply of Iron Ore Product | 40 | ||||||
|
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|
6.1 | General principles | 40 | |||||
|
||||||||
|
6.2 | Ore Sales Agreements | 41 | |||||
|
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|
6.3 | Quantity | 41 | |||||
|
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|
6.4 | Price | 44 | |||||
|
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|
6.5 | Minimising need for Adjustments | 47 | |||||
|
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|
6.6 | Separate Marketing | 47 | |||||
|
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|
6.7 | * * * | 48 | |||||
|
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7. | Other marketing arrangements | 48 | ||||||
|
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|
7.1 | Product standardisation | 48 | |||||
|
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|
7.2 | Pre-existing Customer Contracts | 48 | |||||
|
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8. | Expansions and New Opportunities | 49 | ||||||
|
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|
8.1 | Owners Forward Demand Forecasts | 49 | |||||
|
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|
8.2 | Development Studies | 49 | |||||
|
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|
8.3 | Owners' Council Decisions on Projects | 51 | |||||
|
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|
8.4 | New Opportunities | 52 | |||||
|
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|
8.5 | General provisions | 53 | |||||
|
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|
8.6 | Incidental acquisitions | 53 | |||||
|
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9. | Default and Dilution | 54 | ||||||
|
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|
9.1 | Suspension of voting rights | 54 | |||||
|
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|
9.2 | Liability for Unpaid Amounts and Associated Amounts | 56 | |||||
|
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|
9.3 | Payment by Non-Defaulting Owner | 56 | |||||
|
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|
9.4 | Remedy of Default | 56 | |||||
|
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|
9.5 | Non-Defaulting Owner's Election | 57 | |||||
|
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|
9.6 | Purchase Option | 58 | |||||
|
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|
9.7 | Dilution Option | 59 | |||||
|
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|
9.8 | Implementation of Dilution | 60 | |||||
|
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|
9.9 | Cross Charges | 61 | |||||
|
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10. | Disposals | 61 | ||||||
|
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|
10.1 | No restriction on disposals | 61 | |||||
|
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|
10.2 | Underlying assets | 61 | |||||
|
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|
10.3 | * * * | 61 | |||||
|
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|
10.4 | Minority Owners (less than 17%) | 62 | |||||
|
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|
10.5 | Substantial Owner (17% or greater, but not greater than 25%) | 63 | |||||
|
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|
10.6 | New Majority Owner (Third Party or Existing Owner) | 63 | |||||
|
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|
10.7 | No Majority Owner * * * | 63 | |||||
|
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|
10.8 | Requirements for all Disposals to third parties | 64 |
Page (ii)
|
10.9 | Requirements for Disposals from one Owner to another Owner | 64 | |||||
|
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|
10.10 | * * * | 65 | |||||
|
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11. | Security Structure | 65 | ||||||
|
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11.1 | Single purpose undertaking - Owners | 65 | |||||
|
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|
11.2 | Funding undertaking - Owners | 66 | |||||
|
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|
11.3 | Security Interests - Owners | 66 | |||||
|
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|
11.4 | Security Interests Issuers, shareholders of JV Entities and JV Entities | 66 | |||||
|
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|
11.5 | Cross Charges - Owners | 66 | |||||
|
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|
11.6 | Cross Charges Issuers and JV Entities general requirement | 67 | |||||
|
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|
11.7 | Agreed Reorganisation and removal of Agreed Impediments | 67 | |||||
|
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|
11.8 | Procedure for granting Cross Charges | 69 | |||||
|
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|
11.9 | * * * | 70 | |||||
|
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12.
|
* * * | 70 | ||||||
|
||||||||
|
12.1 | * * * | 70 | |||||
|
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|
12.2 | * * * | 70 | |||||
|
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|
12.3 | * * * | 70 | |||||
|
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13. | Public Announcements and External Relations | 72 | ||||||
|
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|
13.1 | Public Announcements | 72 | |||||
|
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|
13.2 | Continuous Disclosure | 72 | |||||
|
||||||||
|
13.3 | External Relations | 72 | |||||
|
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14. | Confidentiality | 73 | ||||||
|
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|
14.1 | Confidential Information not to be disclosed | 73 | |||||
|
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|
14.2 | Permitted disclosure | 74 | |||||
|
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|
14.3 | Conditions to disclosure | 75 | |||||
|
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|
14.4 | Owners Confidential Information | 76 | |||||
|
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|
14.5 | Law of confidentiality | 76 | |||||
|
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|
14.6 | Former party bound | 76 | |||||
|
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15. | Relationship of the Parties | 77 | ||||||
|
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|
15.1 | No partnership or proprietary interests | 77 | |||||
|
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|
15.2 | Liability | 77 | |||||
|
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16. | Independent Expert | 77 | ||||||
|
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|
16.1 | Referral to Independent Expert | 77 | |||||
|
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|
16.2 | Appointment of Independent Expert | 77 | |||||
|
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|
16.3 | Conduct of Independent Expert | 77 | |||||
|
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17. | Prohibition on partition | 78 | ||||||
|
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18. | Force Majeure | 78 | ||||||
|
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|
18.1 | Event of Force Majeure | 78 | |||||
|
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|
18.2 | No liability during an Event of Force Majeure | 79 | |||||
|
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|
18.3 | Suspension of obligations | 79 | |||||
|
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|
18.4 | Remedy of Force Majeure | 79 | |||||
|
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|
18.5 | Mitigation | 79 | |||||
|
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|
18.6 | No requirement to settle labour dispute | 80 | |||||
|
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|
18.7 | * * * | 80 |
Page (iii)
19. | GST | 80 | ||||||
|
||||||||
|
19.1 | Definitions | 80 | |||||
|
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|
19.2 | Recovery of GST | 81 | |||||
|
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|
19.3 | Liability net of GST | 81 | |||||
|
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|
19.4 | Adjustments | 82 | |||||
|
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|
19.5 | Revenue exclusive of GST | 82 | |||||
|
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|
19.6 | Cost exclusive of GST | 82 | |||||
|
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|
19.7 | GST obligations to survive termination | 82 | |||||
|
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20. | Governing Law and Jurisdiction | 82 | ||||||
|
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|
20.1 | Governing Law | 82 | |||||
|
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|
20.2 | Final judgment conclusive and enforceable | 82 | |||||
|
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|
20.3 | Dispute Resolution | 82 | |||||
|
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|
20.4 | Service of Process | 83 | |||||
|
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21. | Ancillary Provisions | 84 | ||||||
|
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|
21.1 | Notices | 84 | |||||
|
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|
21.2 | Severability | 85 | |||||
|
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|
21.3 | Variation | 85 | |||||
|
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|
21.4 | No Waiver | 85 | |||||
|
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|
21.5 | Remedies | 85 | |||||
|
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|
21.6 | No Merger | 86 | |||||
|
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|
21.7 | Costs and Expenses | 86 | |||||
|
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|
21.8 | Entire Agreement | 86 | |||||
|
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|
21.9 | Further Assurances | 86 | |||||
|
||||||||
|
21.10 | Change of Law | 86 | |||||
|
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|
21.11 | Enurement | 86 | |||||
|
||||||||
|
21.12 | Civil Liability Act 2002 | 87 | |||||
|
||||||||
|
21.13 | Counterparts | 87 | |||||
|
||||||||
Schedule 1 | 88 | |||||||
|
||||||||
Definitions and Interpretation | 88 | |||||||
|
||||||||
Schedule 2 | 118 | |||||||
|
||||||||
List of JV Entities | 118 | |||||||
|
||||||||
Schedule 3 | 122 | |||||||
|
||||||||
Support for Owner Loans and Owner Guarantees | 122 | |||||||
|
||||||||
Schedule 4 | 125 | |||||||
|
||||||||
Sole Risk Developments and Sole Risk Opportunities | 125 | |||||||
|
||||||||
Schedule 5 | 138 | |||||||
|
||||||||
Pre-Feasibility and Feasibility Studies | 138 | |||||||
|
||||||||
Schedule 6 | 141 | |||||||
|
||||||||
Owner Guarantee Deed of Indemnity | 141 | |||||||
|
||||||||
Schedule 7 | 142 | |||||||
|
||||||||
Ore Sales Agreement | 142 | |||||||
|
||||||||
Schedule 8 | 143 | |||||||
|
||||||||
* * * | 143 |
Page (iv)
Schedule 9
|
147 | |
|
||
Determination of Fair Market Value and Purchase Options
|
147 | |
|
||
* * *
|
151 | |
|
||
* * *
|
151 | |
|
||
Schedule 11
|
175 | |
|
||
New Owners Assumption Deed
|
175 | |
|
||
Schedule 12
|
176 | |
|
||
Cross Charges
|
176 | |
|
||
Schedule 13
|
179 | |
|
||
Creditor Deed Poll
|
179 | |
|
||
Schedule 14
|
180 | |
|
||
Existing Cross Charges
|
180 | |
|
||
Schedule 15
|
184 | |
|
||
Product Types
|
184 | |
|
||
Schedule 16
|
186 | |
|
||
Parent Company Guarantee
|
186 | |
|
||
Schedule 17
|
187 | |
|
||
Parent Assumption Deed
|
187 | |
|
||
Schedule 18
|
188 | |
|
||
Deed of Accession (Sole Risk Entity)
|
188 |
Page (v)
Date
|
2009 | ||
|
|||
|
|||
|
|||
Parties
|
|||
|
|||
|
|||
1.
|
Rio Tinto Limited (ACN 004 458 404), a company incorporated in Australia, of Level 33, 120 Collins Street, Melbourne, Victoria, Australia ( RTL ). | ||
|
|||
2.
|
Rio Tinto plc (registration number 00719885), a company incorporated in England and Wales, of 2 Eastbourne Terrace, London, United Kingdom ( RTP and, together with RTL, Rio Tinto ). | ||
|
|||
3.
|
BHP Billiton Limited (ACN 004 028 077), a company incorporated in Australia, of 180 Lonsdale Street, Melbourne, Victoria, Australia ( BHPBL ). | ||
|
|||
4.
|
BHP Billiton plc (registration number 3196209), a company incorporated in England and Wales, of Neathouse Place, London, United Kingdom ( BHPBP and, together with BHPBL, BHP Billiton ). | ||
|
|||
5.
|
[*] ( Rio Tinto Owner ) . | ||
|
|||
6.
|
[*] ( BHP Billiton Owner ) . | ||
|
|||
7.
|
[*] ( Rio Tinto Marketing SPV ) . | ||
|
|||
8.
|
[*] ( BHP Billiton Marketing SPV ) . | ||
|
|||
9.
|
[*] ( the Manager ) . | ||
|
|||
Recitals
|
|||
|
|||
|
|||
A
|
Rio Tinto and BHP Billiton each carry on iron ore operations in Western Australia. | ||
|
|||
B
|
Rio Tinto Owner and BHP Billiton Owner own shares and debentures in [names of debenture issuers to be inserted]. | ||
|
|||
C
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Rio Tinto Owner and BHP Billiton Owner have determined that their respective interests as shareholders and debenture holders will be enhanced if the following arrangements (to be known collectively as the West Australian Iron Ore Joint Venture) are entered into: | ||
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(a) each JV Entity contracts to have its Iron Ore Assets managed by the Manager;
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(b) each relevant JV Entity enters contracts to allow its infrastructure to be used by the other
JV Entities;
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(c) each relevant JV Entity enters contracts to sell agreed proportions of its annual production to Rio
Tinto Marketing SPV and BHP Billiton Marketing SPV, for separate
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and independent marketing and sale to
their respective customers; and
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(d) Rio Tinto Owner and BHP Billiton Owner agree to share in equal proportions the cost of funding the
respective iron ore operations of the JV Entities,
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on the terms and conditions of this Agreement and the other Transaction Documents, subject to the terms of any Existing JV Arrangements. | ||
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D
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The objectives of the West Australian Iron Ore Production Joint Venture are to manage, develop and expand, on a unified basis, the respective iron ore assets of the JV Entities in Western Australia, realise the significant synergy opportunities available to them and facilitate increased supply to the global marketplace. | ||
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1. | Definitions and Interpretation | |
1.1 | Definitions | |
In this Agreement, unless the subject matter or context requires otherwise, the terms defined in item 1.1 of schedule 1 have the meaning given to them in that schedule. | ||
1.2 | Interpretation | |
The interpretation provisions in items 1.2 to 1.7 of schedule 1 apply to the interpretation of this Agreement. | ||
2. | WA Iron Ore Production Joint Venture Overview | |
2.1 | Formation of WA Iron Ore Production Joint Venture |
(a) | Subject to paragraph (b), on and from the JV Commencement Date, a joint venture to be known as the West Australian Iron Ore Joint Venture will be formed in accordance with the terms of the Transaction Documents ( WA Iron Ore JV ). | ||
(b) | The Owners acknowledge that formation of the WA Iron Ore JV will only occur after the BHP Billiton Owner has subscribed for Debentures issued by the Rio Tinto Issuer and the Rio Tinto Owner has subscribed for Debentures issued by the BHP Billiton Issuer, and that continued participation in the WA Iron Ore JV will require the Owners (or their Related Corporations) to continue to hold such Debentures. | ||
(c) | The holding of such Debentures does not confer on the Debenture Holder any legal or equitable rights other than the rights of an unsecured creditor and the economic interest conferred by participation in the WA Iron Ore JV. For the avoidance of doubt, it is expressly declared and acknowledged that: |
(i) | a Debenture does not confer any proprietary interest in law or equity of any kind whatsoever in: |
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(A) | any of the assets or cash flows of the Shareholder, the Issuer or any of their Related Corporations; or | ||
(B) | any income, profits or gains of the Shareholder, the Issuer or any of their Related Corporations; and |
(ii) | the Shareholder, the Issuer and their Related Corporations do not, by reason of the execution of this Agreement or the Debenture Deeds Poll, or the issue of the Debentures, hold any of their assets, cash flows, income, profits or gains on any trust (actual or constructive) of any kind whatsoever for the Debenture Holders, or have any fiduciary relationship of any kind whatsoever with the Debenture Holders, |
except that certain amounts received by a Shareholder or a Debenture Holder (or their Related Corporations) in excess of their entitlements under the Funding and Distribution Policy will be held on trust pursuant to clauses 4.6, 6.3, 10.3 and 11.9 of that policy. | |||
(d) | On the JV Commencement Date, the Participating Shares in the WA Iron Ore JV will be: |
(i) | Rio Tinto Owner 50%; and | ||
(ii) | BHP Billiton Owner 50%. |
2.2 | Scope of WA Iron Ore JV |
(a) | The permitted scope of the WA Iron Ore JV is: |
(i) | the production of Iron Ore Product in Western Australia and delivery of that Iron Ore Product at the ships rail, including: |
(A) | mining, processing and blending iron ore, and operating associated rail, port, power and other infrastructure in Western Australia, including the Secondary Processing facilities at Tom Price and Newman and the HBI Beneficiation Plant; | ||
(B) | maintaining, constructing, upgrading and expanding iron ore mines and infrastructure in Western Australia; | ||
(C) | any proposal, development or activity required to satisfy Secondary Processing obligations under any current or future State Agreements; and | ||
(D) | any Secondary Processing that the Owners agree is economically feasible or necessary having regard to the projected life of operations and the quality of the iron ore reserves and resources available to the WA Iron Ore JV; |
(ii) | further business development activities associated with the business referred to in paragraph (i) above, including exploration for iron ore in Western Australia and the acquisition of additional iron ore assets in Western Australia; and | ||
(iii) | all other activities reasonably necessary or incidental to the above. |
It is intended that (except as contemplated by this Agreement or any other Transaction Document, or required by Existing JV Arrangements), the activities of the Rio Tinto Group |
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and the BHP Billiton Group falling within this scope should be conducted only through the WA Iron Ore JV. | |||
(b) | The following are excluded from the permitted scope of the WA Iron Ore JV: |
(i) | the sale and marketing of Iron Ore Product (which will be carried on by each Owner and its Related Corporations separately); | ||
(ii) | HBI Plant and HIsmelt (and any associated liabilities); | ||
(iii) | any other Secondary Processing except as contemplated by paragraph (a); | ||
(iv) | exploration, whether in Western Australia or elsewhere, for non-iron ore mineral products; | ||
(v) | any Excluded Asset; and | ||
(vi) | iron ore business development activities outside Western Australia. |
(c) | Except as required under the terms of this Agreement and the other Transaction Documents, each Owner Parent must not, and must procure that its Affiliates do not, explore for iron ore resources and reserves in Western Australia other than in connection with: |
(i) | a New Opportunity that the Manager cannot operate and maintain due to any contractual constraints existing at the time the New Opportunity is acquired, but only to the extent of such contractual constraints; and | ||
(ii) | any Target Iron Ore Assets that will not form part of the WA Iron Ore JV pursuant to clause 8.6(d). |
(d) | If there is a discovery of prospective iron ore resources in Western Australia (a Discovery ) as a consequence of exploration activities for other minerals on a tenement in which an Owner (the Finder Owner ) or any of its Affiliates (the Finder ) holds or is entitled to acquire an interest, whether direct or indirect (the Interest ), then the Finder Owner must notify the Manager and the other Owner as soon as practicable. Upon receipt of such notification, the Manager must decide whether it wishes to take up the opportunity on behalf of the WA Iron Ore JV. If the Manager decides that it does not wish to take up the opportunity on behalf of the WA Iron Ore JV, it must refer the matter to the Owners Council. If the Owners Council declines the opportunity, the Finder Owner will be free to pursue the Interest as a Sole Risk Opportunity in accordance with item 2 of schedule 4, unless the Representatives of the Finder Owner voted against (or abstained from voting on) the opportunity at the Owners Council meeting at which the opportunity was declined. | ||
(e) | If either the Manager or the Owners Council decides to take up the opportunity as part of the WA Iron Ore JV under paragraph (d), the Manager and the Finder Owner will, subject to this paragraph (e), agree an arrangement (a Transfer Arrangement ) for making the Interest available to a JV Entity that is a wholly owned Subsidiary of the Finder Owner. Any such Transfer Arrangement: |
(i) | must include a reimbursement of the costs incurred by the Finder Owner or Finder (as applicable) in making the Discovery and all transfer costs incurred by the Finder Owner or Finder (as applicable) in making the relevant tenure available to the JV Entity (which amounts will be treated as costs of the WA Iron Ore JV): and |
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(ii) | will be conditional on: |
(A) | the satisfaction of all legal and regulatory constraints in relation to the Transfer Arrangement; and | ||
(B) | * * * |
The Finder Owner must use, and where applicable must procure that the Finder uses, all reasonable endeavours to ensure that such constraints are overcome * * * | |||
(f) | If the conditions to a Transfer Arrangement can be satisfied, the Finder Owner and the relevant Owner Parent must procure compliance by the Finder with the terms of the Transfer Arrangement. | ||
(g) | If the conditions to a Transfer Arrangement cannot be satisfied, and either the Manager or the Owners Council has decided to take up the opportunity as part of the WA Iron Ore JV, then the Finder Owner must use all reasonable endeavours to confer, to the extent practicable, on the other Owner an economic interest in the Discovery equal to the other Owners Participating Share of the Finder Owners Interest, subject to that other Owner paying a reimbursement of that other Owners Participating Share of the costs referred to in paragraph (e)(i). |
2.3 | Objectives of the WA Iron Ore JV | |
The objectives of the WA Iron Ore JV are to: |
(a) | manage and develop, on a unified basis, each JV Entitys respective Iron Ore Assets and Western Australian iron ore production operations, including all activities required to produce finished Iron Ore Product for delivery to the Marketing SPVs and the Non-Selling Entities; | ||
(b) | achieve substantial cost and capital reductions and other efficiencies from operational integration, including infrastructure sharing and ore blending; | ||
(c) | facilitate resource optimisation and utilisation through ore blending and integrated mine planning; | ||
(d) | explore for iron ore resources and reserves, expand existing iron ore production operations and acquire additional iron ore assets in Western Australia; | ||
(e) | improve expansion potential, facilitating increased supply to the global marketplace; and | ||
(f) | otherwise realise synergies including through the combined management of the Iron Ore Assets by the Manager. |
2.4 | JV Entities |
(a) | * * * |
(i) | * * * |
(A) | * * * |
(B) | * * * |
* * * |
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(ii) | * * * |
(b) | * * * |
(i) | * * * | ||
(ii) | * * * |
(A) | * * * | ||
(B) | * * * | ||
(C) | * * * | ||
(D) | * * * | ||
(E) | * * * |
(1) | * * * | ||
(2) | * * * |
* * * | |||
(F) | * * * |
(1) | * * * | ||
(2) | * * * |
* * * | |||
(G) | * * * |
(1) | * * * | ||
(2) | * * * |
* * * | |||
(H) | * * * | ||
(I) | * * * |
(1) | * * * | ||
(2) | * * * |
* * * | |||
(J) | * * * | ||
(K) | * * * |
* * * |
(iii) | * * * | ||
(iv) | * * * |
(c) | * * * |
(i) | * * * |
(A) | * * * |
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(B) | * * * | ||
(C) | * * * |
(1) | * * * | ||
(2) | * * * |
(ii) | * * * |
(A) | * * * | ||
(B) | * * * |
(iii) | * * * |
(d) | * * * |
(i) | * * * | ||
(ii) | * * * |
(e) | * * * * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * | ||
(iv) | * * * |
(A) | * * * | ||
(B) | * * * |
* * * |
2.5 | Term of the WA Iron Ore JV | |
The WA Iron Ore JV will commence on the JV Commencement Date and continue until the earlier of when: |
(a) | all assets referred to in the definition of Iron Ore Assets are completely depleted or disposed of, and all liabilities in respect of the Iron Ore Assets of the JV Entities (including rehabilitation and closure costs associated with the Iron Ore Assets) have been discharged, including under the State Agreements, and the winding up of all JV Operations is complete; and |
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(b) | only one Owner continues to hold a Participating Interest, |
and, in either case, no Sole Risk Development or Sole Risk Opportunity continues to be undertaken by a party to this Agreement. The WA Iron Ore JV and this Agreement cannot be terminated in any other circumstances. | ||
3. | Governance of WA Iron Ore JV | |
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3.1 | Establishment of the Owners Council |
(a) | With effect from the JV Commencement Date, a non-executive Owners Council is established to represent the Owners and oversee JV Operations. | ||
(b) | The Owners Council is the ultimate governance body of the WA Iron Ore JV. | ||
(c) | The CEO will report to the Owners Council. |
3.2 | Representation on Owners Council |
(a) | Each Owner may appoint up to four Representatives to the Owners Council. | ||
(b) | The Representatives appointed by an Owner will collectively have one vote. | ||
(c) | Subject to paragraph (d), one Representative will be appointed as JV Chairperson and will hold office for a one year period (or until resignation, dismissal, incapacity or death). | ||
(d) | The first JV Chairperson will be appointed by Rio Tinto and will remain in the position for a four year period from the JV Commencement Date, unless the appointee: |
(i) | resigns, becomes incapacitated or dies before the expiration of that period; or | ||
(ii) | is removed by the agreement of both Owners, |
in which case Rio Tinto may (after consultation with BHP Billiton) appoint a replacement for the balance of that four year period. Subject to clause 3.8(e)(iii), after the initial four year period expires, BHP Billiton will appoint the JV Chairperson for the next one year period, with the right to appoint subsequent JV Chairpersons rotating between each Owner each year thereafter. | |||
(e) | The JV Chairperson will not have a casting vote. | ||
(f) | The primary roles of the JV Chairperson are to: |
(i) | provide leadership to the Owners Council and ensure the efficient organisation and conduct of the Owners Council and its activities; | ||
(ii) | in consultation with the CEO: |
(A) | set the agenda for and convene Owners Council meetings; | ||
(B) | agree a forward programme for Owners Council meetings, to be approved by the Owners Council; |
(iii) | facilitate the effective contribution of the Representatives and the work of the Owners Council at its meetings; |
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(iv) | be responsible for ensuring that principles and processes of the Owners Council are maintained (including between meetings) in fulfilling the Owners Councils governance role; and |
(v) | promote constructive and respectful relations among the Representatives in the fulfilment of their governance role. |
The role conferred on the JV Chairperson does not extend to any involvement in the day to day management of JV Operations. | |||
(g) | The Owners Council will monitor the decisions and actions of the CEO and the performance of the WA Iron Ore JV to gain assurance that progress is being made towards the objectives of the WA Iron Ore JV set out in clause 2.3. | ||
(h) | Between meetings of the Owners Council, the JV Chairperson will ensure that the CEO provides information relating to proposed significant decisions and actions and the basis for them to the Owners Council in a timely manner. | ||
(i) | The Owners Council may appoint a JV Employee as Owners Council secretary to support the Owners Council. The Owners Council secretary will report to the JV Chairperson on matters relating to the Owners Council. |
3.3 | Owners Council Powers and Functions | |
The Owners Council has the following powers and functions: |
(a) | the power to approve the following high level policies regulating the conduct of JV Operations: |
(i) | business conduct; | ||
(ii) | health, safety and environment; | ||
(iii) | communities, including towns and indigenous groups; and | ||
(iv) | such other policies as the Owners Council determines are necessary or desirable; |
(b) | the power to review the conduct of the JV Operations; | ||
(c) | the power to give general direction as to the manner in which the Manager manages the JV Operations; | ||
(d) | the following powers and functions: |
(i) | approving Business Plans, Budgets and Synergies Capture Plans in accordance with clause 3.10; | ||
(ii) | approving contracts with a value exceeding US$250 million (Indexed); | ||
(iii) | reviewing performance against Business Plans and Budgets (including integration synergy capture); | ||
(iv) | approving capital projects exceeding US$250 million (Indexed); | ||
(v) | approving studies for projects with a capital cost exceeding US$250 million (Indexed); | ||
(vi) | approving mine closures; |
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(vii) | approving Iron Ore Asset disposals and acquisitions (whether of shares or assets or by entry into of joint venture arrangements or otherwise) exceeding US$100 million (Indexed) or the relinquishment of tenure having a strategic value; | ||
(viii) | approving strategy for dealing with third party access requests; | ||
(ix) | approving product types, volumes and specifications; | ||
(x) | reviewing the performance of the CEO and Senior Executive Team members and fixing the remuneration of the CEO and Senior Executive Team members; | ||
(xi) | approving related party transactions (including transactions with either Owner or their Affiliates); | ||
(xii) | subject to item 14.3 of the Reporting Policy, approving the commencement or settlement of litigation involving a potential liability or claim exceeding US$100 million (Indexed); | ||
(xiii) | approving the encumbrance of Iron Ore Assets, other than Permitted Security Interests; | ||
(xiv) | approving entry into new State Agreements or material amendments to existing State Agreements; | ||
(xv) | appointing and removing the CEO; | ||
(xvi) | approving the appointment of Senior Executive Team members pursuant to clause 4.5; | ||
(xvii) | ensuring the management of intellectual property in accordance with the Intellectual Property Management Agreement (distinguishing between patented and unpatented intellectual property); | ||
(xviii) | approving the exercise by the Manager of enforcement powers under any Cross Charge granted to the Manager; | ||
(xix) | such other powers and functions as are specifically conferred on the Owners Council by a Transaction Document; and | ||
(xx) | such other powers and functions that the Owners Council resolves are necessary or desirable. Any such resolution will be effective only if and when the resolution is initialled by a duly authorised representative of each Owner. |
Notwithstanding any other provision of this Agreement, until the second anniversary of the JV Commencement Date, the CEOs approval limit will not exceed US$125 million (Indexed), unless the Owners Council otherwise agrees following a review to be conducted after the first anniversary of the JV Commencement Date. The references in paragraphs (d)(ii), (iv) and (v) to US$250 million (Indexed) will be taken to be references to US$125 million (Indexed) until the second anniversary of the JV Commencement Date or any earlier date the Owners Council otherwise agrees. | |||
The Owners Council may amend or replace the policies referred to in paragraph (a) by passing a resolution adopting the amended or replaced policy and providing a copy of that amended or replaced policy to the Owners and the Manager. |
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3.4 | Managers Authority |
(a) | Subject to clause 3.3 and to Existing JV Arrangements, the Manager (at the direction of the CEO) will have clear authority to manage the JV Operations and the Owners will not interfere with the day-to-day management of the JV Operations as carried out by the JV Entities. The CEO will be required to act in accordance with the governance arrangements. The separate references to the CEO are not intended to suggest otherwise. | ||
(b) | Subject to clause 3.10(i)(iii), the Manager may not act in respect of any matter falling within the functions and powers of the Owners Council except with the authority of a decision: |
(i) | made by the Owners Council; or | ||
(ii) | arrived at through the deadlock resolution procedures set out in clauses 3.7 and 3.8. |
Where no decision is made by the Owners Council in respect of any matter falling within a function or power referred to in clauses 3.3(a), 3.3(d)(i), 3.3(d)(ix), 3.10(l), 4.7(a), 4.7(c) or 4.15(a) in respect of a particular period, the Manager must continue to act in accordance with the most recent decision of the Owners Council in relation to that matter. |
3.5 | Meetings |
(a) | The Owners Council will meet at least Quarterly at meetings convened in accordance with clause 3.2(f)(ii) and additional meetings may be called by either Owner or the Manager. Each Owner may add additional points to the agenda for any Owners Council Meeting in accordance with any meeting procedures approved by the Owners Council. | ||
(b) | Owners Council meetings will be held in Perth, Western Australia (or such other place as the Owners agree in writing), or by contemporaneously linking together of Representatives by instantaneous communication devices. | ||
(c) | The Owners Council may by resolution establish procedures regulating the convening and conduct of Owners Council Resolutions. The Owners Council must comply with any such resolution. | ||
(d) | Subject to clause 9.1(a)(iii), a quorum of the Owners Council will be constituted by a Representative from each Owner. If a quorum is not present the Owners Council meeting will be postponed for 7 days. If a quorum is not present at the first postponed meeting, the Owners Council meeting will be postponed for a further 7 days. At the second postponed meeting, a quorum will be formed by one Representative of the Owner who was represented at the two earlier meetings. The only items that may be considered at any postponed meetings are items that were included in the agenda provided in relation to the first meeting. The date and time for each postponed meeting will be notified to each Representative by the Manager or the Owner whose Representative was present at the relevant postponed meeting as soon as practicable after the time the relevant meeting is adjourned. | ||
(e) | The Manager must be separately represented at each meeting of the Owners Council, unless the Owners otherwise agree, but will have no right to vote. | ||
(f) | Duly passed resolutions of the Owners Council within the scope of its functions will be contractually binding on the Manager from the time passed, and the Manager must act on |
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the basis of those resolutions, even if it has not received minutes of the meeting signed by the JV Chairperson (provided that, if the Manager is not present at the meeting, it has been notified of the resolution). In the event of an inconsistency between this Agreement and the Policies and Protocols, the policies referred to in clause 3.3(a) or an Owners Council resolution, this Agreement will prevail to the extent of that inconsistency. | |||
(g) | A resolution in writing signed by all the Representatives is valid and effectual as if it had been passed at a duly convened meeting of the Owners Council. The written resolution may consist of one or several documents in the same terms. |
3.6 | Voting |
(a) | All matters considered at Owners Council meetings will be decided by unanimity of the votes cast. | ||
(b) | If a unanimous vote cannot be obtained, the deadlock resolution procedure provided in clauses 3.7 and 3.8 will apply. |
3.7 | Deadlock general principles |
(a) | If the Owners Council does not reach agreement on a matter, then either Owner may refer the dispute to the chief executive officers of the ultimate holding companies of the Owners (the Chief Executives ), who will meet and seek to resolve the matter in good faith within 30 days. | ||
(b) | If the Chief Executives are unable to resolve the matter within 30 days of referral to them, either Owner may refer the dispute to the chairpersons of the ultimate holding companies of the Owners (the Owners Chairpersons ), who will meet and seek to resolve the matter in good faith within 30 days. | ||
(c) | If the Owners Chairpersons are unable to resolve the matter within 30 days of referral to them, then: |
(i) | if the matter is of a type referred to in clause 3.8, the dispute will be resolved in accordance with the provisions of clause 3.8; and | ||
(ii) | if the matter is not of a type referred to in clause 3.8, clause 3.4(b) will apply. |
3.8 | Deadlock resolution for specific matters | |
Deadlocks in relation to communities and other issues
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(a) | If the Owners Chairpersons have been unable to resolve a dispute about a proposal or expenditure put forward by an Owner or the Manager in relation to: |
(i) | communities or towns; | ||
(ii) | indigenous groups; | ||
(iii) | environmental issues; or | ||
(iv) | occupational health and safety, |
any Owner may refer the dispute to an Independent Expert for prompt resolution under clause 16. |
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(b) | The Independent Expert will be required to determine whether or not the proposal or expenditure in relation to the relevant matter in paragraph (a) is being put forward in whole or in part for a collateral purpose, or for other reasons that are not wholly connected with the WA Iron Ore JV. | ||
(c) | If the Independent Expert reaches the view that: |
(i) | the proposal or expenditure is being put forward for one of the reasons in paragraph (b), then the Owners Council will be deemed to have rejected that proposal or expenditure, and the Manager will not be authorised to implement it; or | ||
(ii) | the proposal or expenditure is not being put forward for one of the reasons in paragraph (b), then the Owners Council will be deemed to have approved that proposal or expenditure and the Manager will be authorised and required to implement it. |
Deadlocks in relation to Government obligations
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(d) | If the Owners Chairpersons have been unable to resolve a dispute in relation to a proposal put forward by an Owner or the Manager: |
(i) | for the satisfaction of a Secondary Processing obligation under a current or future State Agreement; | ||
(ii) | to assume, perform, amend or satisfy any other obligation imposed by an Authority (including under a current or future State Agreement or imposed as a condition to any Authorisation); or | ||
(iii) | that relates to the preservation of a JV Tenement, |
an Owner may refer the dispute to an Independent Expert for resolution under clause 16. In making the determination, the Independent Expert must determine what is in the best interests of the WA Iron Ore JV, having regard to: |
(iv) | in the case of paragraph (i), the alternatives available to satisfy the Secondary Processing obligations and the costs and consequences of failing to do so; | ||
(v) | in the case of paragraph (ii), the alternatives available and the costs and consequences of failing to assume, perform, amend or satisfy the obligation concerned; or | ||
(vi) | in the case of paragraph (iii), the obligations applying in relation to the JV Tenement and the strategic or economic value of the JV Tenement. |
Deadlocks in relation to CEO appointment
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(e) | If the Owners Chairpersons have been unable to resolve a dispute in relation to the appointment of the CEO, then unless paragraph (f) applies: |
(i) | the CEO who is then holding office will continue to act as CEO; | ||
(ii) | the Owners Council must conduct a Quarterly review of the CEOs appointment until a CEO agreed by the Owners Council (other than on a temporary basis) is appointed; and |
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(iii) | if the JV Chairperson has been appointed by Rio Tinto under clause 3.2(d) during the first four year period from the JV Commencement Date, then that JV Chairperson will continue in office and Rio Tinto will continue to be entitled to appoint the JV Chairperson until a CEO agreed by the Owners Council (other than on a temporary basis) is appointed. |
(f) | If the Owners Chairpersons have been unable to resolve a dispute in relation to the appointment of the CEO and the CEO who is then holding office: |
(i) | does not wish to continue to act; | ||
(ii) | resigns, becomes incapacitated or dies; or | ||
(iii) | has been removed from the position, |
and the Owners disagree in relation to a replacement, the JV Chairperson will appoint a temporary CEO from the Senior Executive Team. That temporary appointment, and any proposals for an alternative CEO, will be reviewed each Quarter until such time as the Owners Council agrees on the appointment of a replacement CEO. If the JV Chairperson has been appointed by Rio Tinto under clause 3.2(d) during the first four year period from the JV Commencement Date, then that JV Chairperson will continue in office and Rio Tinto will continue to be entitled to appoint the JV Chairperson until a CEO agreed by the Owners Council (other than on a temporary basis) is appointed. |
3.9 | Owners Council Committees |
(a) | From time to time the Owners Council may, by resolution, establish standing and ad hoc committees ( Committees ). The function of such Committees will be to report and provide advice to the Owners Council in relation to the exercise of powers conferred on the Owners Council by this Agreement. | ||
(b) | Each Owner will be entitled to nominate an equal number of representatives to be members of each Committee. The members of each Committee must be Owners Council Representatives, except that an Owner may nominate one Committee member who is not an Owners Council Representative provided that person is of group management committee or executive committee seniority. Each Owner is entitled to have advisors (internal and external) attend Committee meetings on a specific needs basis in order to ensure that an Owner has access to requisite advice in the context of a particular matter or project. | ||
(c) | The chairperson of each Committee must be an Owners Council Representative. The Owners will divide between them the first Committee Chairs of the audit and remuneration committees. The Owners will also divide between them the first Committee Chairs of the technical and sustainable development committees. Committee chairpersons will serve two years and their appointment will alternate between each Owner. | ||
(d) | The Committees will meet together, adjourn and otherwise regulate their meetings as directed by the Committee chairperson and otherwise as they see fit. | ||
(e) | The Owners acknowledge and agree that on Completion the following standing Committees will be established: |
(i) | an audit committee; |
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(ii) | a remuneration committee; | ||
(iii) | a sustainable development committee; and | ||
(iv) | a technical committee, |
in each case with the functions contemplated by resolutions of the Owners Council required to be made pursuant to clause 6.2(f) of the Implementation Agreement. | |||
(f) | The audit committee and remuneration committee established at Completion will remain in place unless a subsequent Owners Council resolution abolishes them. The sustainable development committee and the technical committee established at Completion will remain in place until the fourth anniversary of the JV Commencement Date, unless a subsequent Owners Council resolution extends their existence. Any other standing or ad hoc committee will remain in place for the period set by the Owners Council when establishing that Committee. |
3.10 | Business Plans, Budgets and Synergies Capture Plans |
(a) | The Manager must prepare each Business Plan and each Budget in accordance with this clause 3.10 and submit them to the Owners Council. The Manager must submit: |
(i) | each Business Plan to the Owners Council at least 6 months (or such other period as the Owners Council may agree) prior to the commencement of each Half Year; and | ||
(ii) | each Budget (including the Synergies Capture Plan as a discrete component) to the Owners Council at least 90 days (or such other period as the Owners Council may agree) prior to the commencement of each Half Year. |
(b) | The first Business Plan and the first Budget will be prepared and approved in accordance with clauses 3.6(b)(v) and (vi) and 3.7 of the Implementation Agreement. | ||
(c) | Rio Tinto and BHP Billiton are committed to identifying synergies between their respective Iron Ore Assets and associated iron ore production operations and implementing appropriate arrangements to reduce costs and maximise efficiencies in a manner that operates fairly between the Owners and their respective Related Corporations that are parties to the Transaction Documents. | ||
(d) | The first Synergies Capture Plan will be prepared and approved in accordance with clauses 3.6(b)(vii) and 3.7 of the Implementation Agreement and will include details of the synergies the WA Iron Ore JV is expected to achieve, which will form a baseline against which synergy capture can be measured. | ||
(e) | The capture of synergies will be a key business initiative as outlined in the initial Business Plan and Budget. Each Synergies Capture Plan must: |
(i) | be consistent with the objectives set out in paragraph (c); | ||
(ii) | identify and describe the synergies the Manager expects the WA Iron Ore JV to realise in each Quarter for the forthcoming year and include indicative estimates for any synergies to be realised after the forthcoming year, including the synergies specified as the baseline synergies in the first Synergies Capture Plan and any synergies identified in any subsequent Synergies Capture Plan; |
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(iii) | provide indicative estimates of the costs and expenses to be incurred by the Manager and each Owner to capture the synergies/implement the Synergies Capture Plan; | ||
(iv) | include a reconciliation of planned and actual progress in the delivery of the synergies compared against both the previous Synergies Capture Plan and the baseline contained in the first Synergies Capture Plan; | ||
(v) | detail the specific information and actions the Manager requires from the Owners to implement the Synergies Capture Plan; and | ||
(vi) | otherwise comply with the Reporting Policy . |
(f) | The Managers obligation to prepare and submit a Synergies Capture Plan (and any associated reporting) pursuant to this clause 3.10 will continue until such time as is agreed by the Owners Council. | ||
(g) | In preparing each Business Plan and each Budget, the Manager must: |
(i) | ensure the requirements of any Existing JV Arrangements of which the Manager is aware are met; and | ||
(ii) | subject to satisfying paragraph (i); |
(A) | provide for the achievement of Pilbara System Capacity and present options for improvements; and | ||
(B) | ensure that JV Operations are conducted at minimum efficient cost, subject to system safety and integrity. |
(h) | Each Business Plan and each Budget must: |
(i) | cover the forthcoming 5 year period and set out all information on a monthly basis for the first 2 years and on a Quarterly basis for the final three years; | ||
(ii) | be prepared on the assumption that the WA Iron Ore JV will operate at full capacity, based on the Managers forecast of capacity over the next 5 years based on the existing assets and approved expansions; | ||
(iii) | be reported in Australian dollars. An Owner may require the Manager to also prepare a Business Plan and a Budget for that Owner in another currency, in accordance with the Reporting Policy and the Accounting Policy; | ||
(iv) | include estimates of production, capital and operating expenditure, funds required from the Owners and proposed cash distributions; | ||
(v) | include an explanation and reconciliation against performance projected in the previous Business Plan or previous Budget; | ||
(vi) | in the case of the Budget, be consistent with, and include an explanation and reconciliation against, the then-current Business Plan; and | ||
(vii) | include all details, estimates and forecasts required under, and be prepared in accordance with, the Reporting Policy and the Accounting Policy. |
(i) | If the Owners Council: |
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(i) | approves a Business Plan or a Budget submitted to it, that Business Plan or that Budget will apply for the relevant Half Year; | ||
(ii) | agrees amendments to a Business Plan or a Budget, that Business Plan or that Budget as amended will apply for the relevant Half Year; or | ||
(iii) | rejects a Business Plan or a Budget or fails to make a decision, the Manager must prepare a revised Business Plan or a revised Budget within 30 days of the relevant Owners Council meeting for reconsideration by the Owners Council. In doing so, the Manager must have regard to the views, if any, expressed by the Owners Council. This paragraph (i) will then apply in relation to the revised Business Plan or the revised Budget, except that, subject to paragraph (j) below: |
(A) | if the Owners Council rejects the Managers revised Business Plan or the revised Budget or fails to make a decision within 30 days from the date on which such revised Business Plan or Budget is presented, the Managers revised Business Plan or Budget will apply for the relevant Half Year (except to the extent that paragraph (B) applies); or | ||
(B) | if the Synergies Capture Plan reflected in the Budget is rejected (or a decision is not made within 30 days from presentation of a revised Synergies Capture Plan), the previous approved Synergies Capture Plan will continue in force. |
(j) | Where any component of the revised Business Plan or the revised Budget relates to a matter within the authority of the Owners Council under clause 3.3, that component must be consistent with: |
(i) | any decisions of the Owners Council; or | ||
(ii) | the resolution of any deadlock in accordance with clauses 3.7 and 3.8. Where the deadlock has not been resolved for whatever reason, the relevant component of the Business Plan or the Budget will be consistent with the position, if any, applying to that component for the immediately preceding Half Year as set out or reflected in the Business Plan or the Budget for that Half Year. |
(k) | The Manager may prepare supplementary Business Plans and supplementary Budgets from time to time. Any supplementary Business Plan or Budget will require approval of the Owners Council pursuant to clause 3.3(d)(i). |
(l) | Subject to paragraph (m), the Manager must not incur: |
(i) | expenses in excess of a percentage of the total expense specified in the relevant Budget, which percentage will be determined by the Owners Council from time to time (the Budget Overrun Percentage ); or | ||
(ii) | expenses in excess of the amount determined by the Owners Council from time to time in relation to categories of expenditure in the Budget as determined by the Owners Council from time to time (the Expenditure Category Overrun Amount ), |
without preparing and obtaining approval from the Owners Council to a supplementary Budget pursuant to paragraph (k). The Manager must promptly notify the Owners of any |
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reasonably anticipated expenses in excess of the amounts specified in this paragraph (l) and the reasons for such excess. | |||
(m) | Despite any Business Plan or Budget, the Manager may take any action that is reasonably necessary from time to time in an emergency situation to: |
(i) | prevent or mitigate: |
(A) | any risk to the health or safety of any persons in circumstances where they may be at risk; or | ||
(B) | any risk of any material damage to the environment or to any Iron Ore Asset or any other property of any person (including maintenance of all Authorisations and tenure in good standing); or |
(ii) | repair any material damage to the environment, any Iron Ore Asset or any other property of any person on a temporary basis, |
and to incur all reasonable costs in so doing. Such expenditure must be reported to the next meeting of the Owners Council and must, in the first instance, be funded out of Called Sums on hand to the Manager and not then immediately required for JV Operations, and to the extent of any remaining deficit, will be requested as additional Called Sums pursuant to clause 3.11(a). | |||
(n) | Once the Synergies Capture Plan is approved, the Manager and the JV Entities will be required to implement it in accordance with its terms and to take whatever action is reasonably necessary for its implementation. | ||
(o) | The Manager must report to the Owners Council on a Quarterly basis identifying the synergies outstanding, the steps required to achieve the synergies and the progress of the Manager against the then applicable Synergies Capture Plan in accordance with the Reporting Policy. |
3.11 | Called Sums |
(a) | The Manager may at any time send a notice (a Call Notice ) to the Owners requiring them to contribute funds in accordance with item 2 of the Funding and Distribution Policy in proportion to their respective Participating Shares to meet JV Cash Costs that the Manager estimates are to be paid during the period to which the Call Notice relates (each a Called Sum ). | ||
(b) | A Call Notice must specify: |
(i) | the amount (and currency of the amount if in a currency other than Australian dollars) of the Called Sums in respect of each Owner; | ||
(ii) | a reconciliation of the amount of the Called Sums to the then current Business Plan and Budget (including a reconciliation to any undrawn Called Sums in the previous months); | ||
(iii) | a reconciliation of the amount of the Called Sums to the current cash on hand balance; |
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(iv) | that part of the Called Sums for an Owner that relates to working capital requirements and that part of the Called Sums for an Owner that relates to capital expenditure requirements; | ||
(v) | the amount of the Called Sums for an Owner to be paid to each Issuer and/or the Manager; | ||
(vi) | which entity or entities the funds are to be lent or contributed to; | ||
(vii) | relevant banking details for the transfer of funds; and | ||
(viii) | an estimate of the Called Sums that are likely to be called by the Manager in the subsequent month. |
(c) | The Manager must issue a monthly notice ( Monthly Cash Requirements Notice ) on or before the 10th day of each month specifying: |
(i) | an indicative estimate of the total amount of funds that the Manager will require for the following month; | ||
(ii) | the dates during that month on which Called Sums will be payable ( Called Sum Payment Dates ), which dates must be at intervals of no less than one week; and | ||
(iii) | an indicative estimate of the amount of funds the Manager will require on each of the Called Sum Payment Dates. |
(d) | The Manager must issue Call Notices at least 1 Business Day prior to each Called Sum Payment Date specifying the actual amount of funds that the Manager requires to be paid on that date. | ||
(e) | The Manager may also issue Call Notices at any other time with respect to any additional funds required during the period to which a Call Notice issued under paragraph (d) relates. | ||
(f) | The Owners Council may from time to time resolve to make such alterations to the arrangements described in paragraphs (b), (c), (d) and (e) as the Owners Council considers appropriate. | ||
(g) | Subject to paragraph (i) and paragraph (o), each Owner must pay the Called Sums by way of loans or equity contributions to the Issuers or the Manager in the proportions specified in the Call Notice to an account or accounts nominated by the Manager: |
(i) | in the case of a Call Notice referred to in paragraph (d), on the relevant Called Sum Payment Dates and in the amounts specified in the Call Notice; and | ||
(ii) | in the case of a Call Notice referred to in paragraph (e), within 10 days of the date of the Call Notice. |
Such loans or equity contributions will be transferred to bank accounts established in the name of an Issuer, accounts established in the name of the Manager acting as the agent of an Issuer, or accounts established in the name of the Manager as appropriate ( JV Bank Accounts ). The amount of any Called Sum will be payable by way of loan or equity contribution in Australian dollars unless any JV Cash Costs are incurred in another currency and the Call Notice requires the relevant part of the Called Sum to be paid in that other currency. |
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(h) | The Manager must ensure that the funds transferred to the JV Bank Accounts pursuant to paragraph (g) are on the same day placed on deposit in equal shares with the Owners or their Designated Finance Companies, by transferring the funds to bank accounts nominated by the Owners ( Owners Bank Accounts ). As funds are required by the Manager, the Manager must provide a request for the funds on 24 hours notice to the Owners and the Owners must transfer, or procure that their Designated Finance Companies transfer, the funds to the JV Bank Accounts nominated by the Manager. | ||
(i) | If a JV Entity or the Manager has incurred a Substantial Liability as a result of a third party claim, other than a liability to which clauses 13 or 15 of the Implementation Agreement applies, then the Owners Council may determine whether or not to cease funding that JV Entity or the Manager. If at an Owners Council meeting the Owners cannot reach an agreement on whether or not to cease funding such JV Entity or the Manager, then the Owners Council will be deemed to have determined not to fund that JV Entity or the Manager. | ||
(j) | Unless the Funding and Distribution Policy requires that all or part of any funding be by way of equity, or paragraph (o) applies, Called Sums paid by an Owner by way of loan to an Issuer or the Manager will be treated as Participant Loans on the terms set out in the Funding and Distribution Policy. Where equity funding is required, it will be on the terms agreed by the Owners pursuant to the Funding and Distribution Policy. | ||
(k) | Where payment of a Called Sum is made by way of loan or equity contribution to an account in the name of the Manager, the funds in that account must be held by the Manager for or on behalf of that Issuer for the purpose of being expended in accordance with this Agreement. | ||
(l) | The Owners acknowledge that the WA Iron Ore JV is intended to operate on a minimum cash balance. Unless otherwise approved by the Owners Council, or paragraph (o) applies the WA Iron Ore JV will be funded entirely by way of loans or equity contributions from the Owners as contemplated by this clause 3.11 and not by way of third party debt. For these purposes third party debt: |
(i) | includes any project financing of a JV Entity, trade debt, working capital facility and long term lease of heavy mobile equipment * * *; | ||
(ii) | does not include: |
(A) | ordinary course debt such as purchases on credit terms and capital leases for activities that are incidental to JV Operations such as leases of office equipment and motor vehicles and short term leases of heavy mobile equipment; or | ||
(B) | indebtedness in respect of an indemnity, guarantee or similar undertaking issued by a bank or other provider of financial accommodation, which relates to JV Operations. |
For the avoidance of doubt, this paragraph (i) does not preclude project financing by an Owner in compliance with clause 11. |
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(m) | The amount of any Called Sum properly called by the Manager in accordance with this Agreement constitutes a funding obligation due and payable to the Issuers or the Manager (as applicable) by the Owners (in proportion to their Participating Shares) and will be enforceable by the Manager, or by the Issuers directly if the Manager does not take action, in accordance with this Agreement. | ||
(n) | Any amounts payable under a contract for the supply of goods or services between a JV Entity and an Affiliate of an Owner (other than under a Transaction Document) will be excluded in determining JV Cash Costs and JV Accounting Costs and any such amounts must be borne by the Owner concerned unless the contract has been approved by the Owners Council (whether or not the contract was entered into prior to the JV Commencement Date). | ||
(o) | The Owners acknowledge that funds may also be contributed by way of indemnity pursuant to item 2.19 of the Funding and Distribution Policy, and references in this Agreement to Called Sums include amounts called under the indemnity arrangements in item 2.19. |
3.12 | Funding and Distribution Policy |
(a) | The Owners, the Manager and the Marketing SPVs must, and must procure that each of their Related Corporations, comply with the Funding and Distribution Policy and the Debenture Deeds Poll. |
(b) | The Owners, the Manager and the Marketing SPVs agree that the application of funds, and all payments and repayments of loans and deposits, and all settlements of receivables, pursuant to the Funding and Distribution Policy will have the characteristics and status described in the Funding and Distribution Policy. |
3.13 | Policies and Protocols |
(a) | As at the date of this Agreement, the Owners have agreed: |
(i) | the Accounting Policy; | ||
(ii) | the Reporting Policy; | ||
(iii) | the Ring-Fencing Protocol; | ||
(iv) | the Scheduling Protocol; and | ||
(v) | the Weighing, Sampling and Analysis Protocol, |
(the Policies and Protocols ). | |||
(b) | The Policies and Protocols may be amended or replaced by the Owners Council passing a resolution adopting the amended or replaced policy or protocol and a representative of each Owner initialling the amended or replaced policy or protocol. | ||
(c) | The Funding and Distribution Policy and each of the Policies and Protocols, including as amended or replaced in accordance with paragraph (b), will be legally binding on the parties to this Agreement as if set out in full in this Agreement. |
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4. | Management of WA Iron Ore JV | |
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4.1 | Appointment and removal of Manager |
(a) | The Owners appoint the Manager to manage the JV Operations as carried out by the JV Entities on the terms set out in this Agreement. | ||
(b) | The Manager will at all times be owned by Hamersley Holdings Ltd and BHP Billiton Minerals Pty Ltd in equal shares. | ||
(c) | At Completion, the Managers constitution will be in the form agreed by Rio Tinto and BHP Billiton and may only be amended with the agreement of the Owners. | ||
(d) | The Manager: |
(i) | may be removed by a resolution of the Owners Council; and | ||
(ii) | will be automatically removed if the Manager becomes an externally administered body corporate (as defined in the Corporations Act), unless the Owners Council resolves that the Manager not be so removed. |
Where the Manager is removed, the Owners Council must appoint a replacement Manager which will be owned by Hamersley Holdings Ltd and BHP Billiton Minerals Pty Ltd in equal shares. |
4.2 | Liability | |
Managers Liability and Indemnity |
(a) | Subject to paragraphs (b), (c), (d) and (e), if an Owner (or its Affiliates) sustains or incurs any Loss as a result (whether directly or indirectly) of any breach by the Manager of its obligations under this Agreement or under any other Transaction Document then the other Owner (the Paying Owner ) must pay an amount to that Owner (the Receiving Owner ) equal to the Paying Owners Participating Share of the Loss (subject to adjustment under paragraph (e)). | ||
(b) | An Owner will not be liable under paragraph (a) in relation to a breach by the Manager that results in a Loss or Losses totalling less than A$10 million. | ||
(c) | An Owner may not recover a Loss under paragraph (a) where the Managers breach has caused the Owners (or their Affiliates) to sustain the same type of Loss and the quantum of the Owners (and their Affiliates) Loss is in proportion to their respective Participating Shares. | ||
(d) | If an Owner wishes to make a claim under paragraph (a), it must provide a notice to the other Owner, with a copy to the Manager, setting out in reasonable detail the basis of the claim and the amount claimed. The Owners must meet and seek in good faith to agree whether an amount is payable under paragraph (a) and, if so, the amount payable. If the Owners are unable to reach agreement, then either Owner may refer the matter to the Chief Executives, who will meet and seek to resolve the matter in good faith within 30 days. If the Chief Executives are unable to resolve the matter within 30 days of referral to them, then either Owner may refer the dispute to the Owners Chairpersons, who will meet and seek to resolve the matter within 30 days and, failing resolution, the matter will be referred |
to the Independent Expert in accordance with clause 16. If the Owners agree or an Independent Expert determines that an amount is payable under paragraph (a), the Paying Owner must pay that amount to the Receiving Owner within 10 Business Days. | |||
(e) | If a breach by the Manager of its obligations under this Agreement or under any other Transaction Documents results in one Owner (or its Affiliates) incurring Losses and the other Owner (or its Affiliates) receiving profits or other financial benefits, then: |
(i) | the Paying Owner must pay the Receiving Owner the full amount of the Losses of the Receiving Owner, up to a maximum amount equal to the profits or other financial benefits received by the Paying Owner as a consequence of that breach; and | ||
(ii) | if the amount required to be paid by the Paying Owner under paragraph (e)(i) is less than the Receiving Owners Loss, the Paying Owner must also pay to the Receiving Owner the Paying Owners Participating Share of the unpaid balance of the Loss. |
Owner Proceedings |
(f) | If a third party commences legal, administrative or other proceedings against an Owner or any Owners Affiliated Corporation and those proceedings relate to, or arose from, JV Operations ( Owner Proceedings ), except where those proceedings relate to a liability to which clauses 13 or 15 of the Implementation Agreement applies or as otherwise provided in clause 3.2 of the Implementation Agreement, then the other Owner must indemnify that Owner or its Affiliates against any Loss arising from those proceedings to the extent the Loss relates to, or arose from, JV Operations, and is not covered by item 8 of the Funding and Distribution Policy in proportion to the other Owners Participating Share. | ||
(g) | An Owner or an Affiliate of an Owner against whom Owner Proceedings are brought: |
(i) | must notify the other Owner and the Manager as soon as practicable after it becomes aware of any such Owner Proceedings; | ||
(ii) | subject to paragraph (h) and item 14.3(b) of the Reporting Policy, is responsible for conducting, defending, negotiating or settling Owner Proceedings as it sees fit; and | ||
(iii) | may require the Manager and the other Owner to provide such assistance in defending the Owner Proceedings as it reasonably requests, including providing documents and making employees available as witnesses. |
(h) | An Owner or an Affiliate of an Owner against whom Owner Proceedings are brought may require the Manager to conduct those Owner Proceedings on its behalf, subject to such limitations and discretions agreed between the Manager and the Owner. The Owners must: |
(i) | cooperate and consult with each other in relation to the conduct, negotiation, defence or settlement of those Owner Proceedings; and | ||
(ii) | provide such assistance in relation to those Owner Proceedings as the Manager or an Owner reasonably requests. |
(i) | Where an Owner or an Affiliate of an Owner incurs reasonable costs under paragraphs (f) to (h), in relation to Owner Proceedings (to the extent those proceedings relate to, or arose from, JV Operations) the other Owner must pay an amount to that Owner equal to the |
paying Owners Participating Share of those reasonable costs within 10 Business Days of demand. Where the Manager incurs reasonable costs under paragraphs (f) to (h), in relation to Owner Proceedings (to the extent those proceedings relate to, or arose from, JV Operations) those costs will be costs of the WA Iron Ore JV borne and funded by the Owners in proportion to their respective Participating Shares in accordance with clause 3.11. |
Obligation to Provide Support for Owner Loans and Guarantees |
(j) | If a member of the BHP Billiton Group or Rio Tinto Group (as applicable), which is not a JV Entity (the Relevant Group Member ) has provided or is obliged under any Existing JV Arrangement to provide any Owner Loans or Owner Guarantees, then the relevant Owner must procure that: |
(i) | the Owner Parent that is not a Related Corporation of the Relevant Group Member; or | ||
(ii) | an entity nominated by that Owner Parent that: |
(A) | is a Related Corporation of that Owner Parent (other than the Manager); and | ||
(B) | where an Owner Guarantee has been provided, has a credit rating of at least an A (as reported by Standard and Poors) at the date of such nomination; or |
(iii) | such other entity as may be agreed with the other Owner, |
(in each of paragraphs (j)(i), (ii) and (iii), the Supporting Entity ) provides support, commensurate with the Participating Share of the relevant Owner, in respect of the Owner Loan or Owner Guarantee, in accordance with schedule 3. | |||
(k) | Before providing any new Owner Loan or Owner Guarantee, the relevant Owner must first consult with the other Owner. Any Owner Loans or Owner Guarantees entered into after the JV Commencement Date, other than pursuant to an obligation under an Existing JV Arrangement or with the agreement of the Owners Council, will be Excluded Liabilities. |
4.3 | Manager Duties |
(a) | The Manager must at all times act in accordance with: |
(i) | the Transaction Documents; | ||
(ii) | the Policies and Protocols; and | ||
(iii) | any policies that are approved by the Owners Council pursuant to clause 3.3(a), which policies will be legally binding on the Manager. |
(b) | The Manager and the CEO will have fiduciary obligations to the Owners. The Manager and the CEO must: |
(i) | ensure JV Operations are conducted safely at all times; | ||
(ii) | act equitably and fairly and give each of the Owners due and equal treatment; | ||
(iii) | subject to any obligations in respect of any Existing JV Arrangements, or any other legally binding obligation on an Owner or a Related Corporation of an Owner, |
manage the Iron Ore Assets for the benefit of the Owners and their respective Related Corporations in a manner that is consistent with the approved Business Plans and Budgets; | |||
(iv) | act in accordance with applicable Laws and consistently with any Authorisations held by the Manager or a JV Entity (including in respect of occupational health and safety, carriage of hazardous goods and the environment); and | ||
(v) | perform any obligation or provide any service in a good, workmanlike and commercially reasonable manner and in accordance with the most suitable engineering, construction, operating, mining, transportation and processing methods and with a standard of skill, diligence and care normally applied or exercised in respect of comparable mine or infrastructure operations. |
For the avoidance of doubt, no JV Entity will have fiduciary obligations to the Owners, and the Owners will not have fiduciary obligations to each other, except for the trusts expressly referred to in clause 2.1(c). | |||
(c) | The Manager and the CEO must not take or omit to take any action if the result would be to cause any JV Entity to breach any agreement to which it is a party and the relevant terms of which have been disclosed to the Manager (including any Existing JV Arrangement or any other infrastructure arrangement or a State Agreement). | ||
(d) | Except to the extent permitted by this Agreement, or with the approval of the Owners Council, the Manager must not undertake any business or engage in any other activity not expressly contemplated by this Agreement. | ||
(e) | Subject to clauses 3.10(l) and (m), the Manager must implement the Business Plan and the Budget (including the Synergies Capture Plan). | ||
(f) | The Manager must comply with any obligation expressly imposed on the Manager in the Implementation Agreement. |
4.4 | Board of Manager | |
The board of directors of the Manager will be appointed in accordance with the constitution of the Manager. | ||
4.5 | Appointment and Removal of CEO and Senior Executive Team |
(a) | Subject to paragraph (b), the CEO of the Manager will be appointed by the Owners Council with effect on and from the JV Commencement Date or the expiry of the previous term of the former CEO (as the case may be). The CEO will be the executive head of the WA Iron Ore JV. | ||
(b) | The first CEO will be appointed by BHP Billiton and will remain in the position for a four year period from the JV Commencement Date, unless the appointee: |
(i) | resigns, becomes incapacitated or dies before the expiration of that period; or | ||
(ii) | is removed by the agreement of both Owners (including, for the avoidance of doubt, by resolution of the Owners Council pursuant to this Agreement), |
in which case BHP Billiton may (after consultation with Rio Tinto) appoint a replacement for the balance of that four year period. On the expiry of the abovementioned four year period each CEO will be appointed for a four year period and paragraph (a) will reapply on the expiry of each such four year period. In appointing a CEO under paragraph (a), the Owners Council will take into account the importance of continuity. | |||
(c) | The contract of employment for the CEO will be approved by the Owners Council and will provide that the CEO will have the same duties as the Manager as set out in clause 4.3 and will be consistent with this clause 4.5. | ||
(d) | The CEO can appoint or dismiss any employee of the Manager, except that the appointment of a Senior Executive Team member requires the approval of the Owners Council. | ||
(e) | It is the intention of Rio Tinto and BHP Billiton that the Senior Executive Team be sourced initially approximately 50:50 from Rio Tinto and BHP Billiton on a best person for the job basis. This 50:50 balance is to be maintained for the first 3 years after the JV Commencement Date. | ||
(f) | Where the CEO: |
(i) | engages in serious misconduct, such conduct being inconsistent with the due and faithful discharge of duties; or | ||
(ii) | is grossly neglectful in their duties, |
then (unless clause 4.5(g) applies) the Owners Council must consider in good faith removing the CEO pursuant to clause 3.3(d)(xv). | |||
(g) | Where the CEO is disqualified from managing corporations under Part 2D.6 of the Corporations Act, the CEO must be removed from office by the Owners Council under clause 3.3(d)(xv) unless: |
(i) | the Owners Council decides otherwise; and | ||
(ii) | the CEO obtains leave from the court to manage the Manager under Part 2D.6 of the Corporations Act. |
(h) | If the CEO is removed pursuant to paragraphs (f) or (g), a replacement CEO will be appointed pursuant to clause 3.3(d)(xv) and, where applicable, clauses 3.8(e) and (f). | ||
(i) | Where an Owner is not satisfied, on reasonable grounds, with the performance of the CEO in achieving the objectives of the Business Plan (including in relation to the Synergies Capture Plan), then that Owner may request, by notice to the other Owner, that the Owners Council conduct an assessment of the performance of the CEO in relation to the each relevant Business Plan within 30 days of the notice. | ||
(j) | An assessment of the CEOs performance by the Owners Council pursuant to paragraph (i) must consider the CEOs performance in relation to: |
(i) | each relevant Business Plan; | ||
(ii) | each relevant Synergies Capture Plan, including: |
(A) | the realisation of synergies pursuant to the Synergies Capture Plan; |
(B) | the engagement by the Manager with Authorities and third parties required to achieve the synergies referred to in those plans; and | ||
(C) | all prior reports by the Manager to the Owners Council in relation to the synergies referred to in those plans; and |
(iii) | each relevant Budget. |
(k) | Where, following the assessment pursuant to paragraph (j), either Owner or both Owners are dissatisfied, on reasonable grounds, with the performance of the CEO the Owners Council must consider in good faith removing the CEO pursuant to clause 3.3(d)(xv). |
4.6 | Employees of Manager |
(a) | All JV Employees, including the CEO and members of the Senior Executive Team, will be remunerated in a manner that is consistent with the WA Iron Ore JVs objectives, subject to: |
(i) | the value of pre-existing entitlements of employees that are to be transferred to the Manager being preserved; and | ||
(ii) | the WA Iron Ore JV meeting those pre-existing entitlements and paying any redundancy costs. |
(b) | Each Owner and the Manager must ensure that: |
(i) | the CEO and each member of the Senior Executive Team: |
(A) | is employed on an exclusive basis by the Manager and is not employed by, or seconded from, an Owner or its Affiliates; | ||
(B) | during the period of such employment: |
(1) | is not an Officer, and does not sit on any committee, council or other oversight group, of an Owner or its Affiliates; and | ||
(2) | does not report, or provide information, to one Owner or its Affiliates, but not the other Owner or its Affiliates, except as required under this Agreement or the Ring-Fencing Protocol; and |
(C) | is not engaged through any relationship of employment, consultancy or other arrangement by either Owner Parent or its Affiliates within 18 months of ceasing to hold their position of CEO or Senior Executive Team member, without the approval of the Owners Council; and |
(ii) | the Managers principal place of business and that of any JV Entity is in a building that is not occupied by any part of the global iron ore business of either Owner, or branded with the name of either Owner. |
(c) | No Owner has the right to second employees to the WA Iron Ore JV or appoint persons to specific positions within the WA Iron Ore JV. | ||
(d) | The Owners and their Affiliates must not provide any commitment, reassurance or representation of employment or re-employment of any JV Employee who is a member of the Senior Executive Team or a direct report of the Senior Executive Team either as part of the process of engagement for employment by the Manager or during the period of employment by the Manager of any such JV Employee. |
(e) | The Owners and their Affiliates must not offer to employ, or seek to employ, a JV Employee who is a member of the Senior Executive Team or a direct report of the Senior Executive Team, without the prior approval of the Owners Council. |
4.7 | WA Iron Ore JV systems, standards and procedures |
(a) | The CEO will have the mandate to make the WA Iron Ore JV operationally stand-alone as soon as practicably possible without any services being provided to the WA Iron Ore JV by any Owner except: |
(i) | as contemplated in the Transitional Services Agreement, the Intellectual Property Management Agreement or the ERP Service and Licence Agreement; or | ||
(ii) | as specifically agreed by the Owners Council. |
(b) | The WA Iron Ore JV will initially source systems, standards and procedures from the Owners, selected in accordance with clauses 3.6(b)(ii) and 3.7 of the Implementation Agreement, and thereafter the WA Iron Ore JV will maintain, improve or replace those systems, standards and procedures subject to clause 4.7(a). | ||
(c) | The WA Iron Ore JV will put in place procurement arrangements initially in accordance with clauses 3.6(b)(iii) and 3.6(b)(x) and 3.7 of the Implementation Agreement. The Manager may recommend to the Owners Council, and the Owners Council may approve, changes to these procurement arrangements. Subject to compliance with competition laws, the procurement arrangements may include: |
(i) | the WA Iron Ore JV having its own stand alone procurement arrangements; | ||
(ii) | the WA Iron Ore JV utilising the procurement arrangements of the Owners, in a manner that is fair between the Owners; | ||
(iii) | the Owners utilising the WA Iron Ore JVs procurement arrangements, in a manner that is fair between the Owners; or | ||
(iv) | any combination of the above. |
(d) | The Manager will adopt the principle of an owner operator model for the WA Iron Ore JV so that it utilises employees in preference to contractors in long term operating roles with the WA Iron Ore JV. To the extent that current operations involve contractors in long term operating roles, the Manager will progressively shift those operations to the owner operator model. |
4.8 | Revenue Based Royalties | |
Payment of Revenue Based Royalties by the Manager |
(a) | The Manager will include in each monthly Call Notice its estimate of any Revenue Based Royalties that are payable by a JV Entity in the relevant month. The Manager may also make such additional calls as are required in order to discharge its obligations under paragraph (b). |
(b) | The Manager must ensure that each JV Entity pays, or the Manager must on behalf of each of the relevant JV Entities pay, the Revenue Based Royalties as and when they fall due. The Revenue Based Royalties will be costs of the WA Iron Ore JV borne by the Owners in their Participating Shares. For the avoidance of doubt, any royalties payable in connection with a Sole Risk Development or Sole Risk Opportunity will be borne entirely by the Sole Funding Party. | ||
(c) | The Manager must appoint an independent third party to assist it to: |
(i) | estimate the Revenue Based Royalties for the purposes of paragraph (a); | ||
(ii) | pay, or procure the payment by the JV Entities of, the Revenue Based Royalties pursuant to paragraph (b); and | ||
(iii) | calculate the Owner Royalty Allocation and the Royalty Allocation Adjustment pursuant to paragraphs (d) to (f). |
Each Owner must provide to the independent third party (but not to the Manager or to the other Owner) any information the independent third party reasonably requires in order to assist the Manager pursuant to this paragraph (c), including such information in relation to the price at which Iron Ore Product is sold. Such information will be dealt with by the independent third party in accordance with the Ring-Fencing Protocol. |
Calculation of Royalty Allocation Adjustment
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(h) | Any dispute arising under this clause 4.8 (including any dispute about a determination or other act of the independent third party) may be referred by either Owner to the Independent Expert for determination pursuant to clause 16. |
4.9 | JV Entities and Managers accounts and records |
(a) | The Manager and the JV Entities will keep accounts and records to enable financial reporting, and the measurement of financial performance, for a Financial Year with a 30 June year end and a Financial Year with a 31 December year end and otherwise as required in accordance with the Accounting Policy and Reporting Policy. | ||
(b) | Subject to paragraph (c), the Manager will keep comprehensive records and accounts in Australian dollars in respect of the Iron Ore Assets owned by, and the JV Operations of, the JV Entities and the Manager in accordance with the Accounting Policy and the Reporting Policy on a consistent basis and subject to the terms of any Existing JV Arrangements. The Manager will also keep records and accounts in such other currencies as are required to |
enable it to comply with its obligations under the Reporting Policy and the Accounting Policy. | |||
(c) | The records and accounts kept by the Manager in respect of: |
(i) | a JV Entity that owns Excluded Assets will be prepared for the JV Operations and Iron Ore Assets only on a stand alone basis and not include costs, expenses and liabilities relating to the Excluded Assets or any Excluded Marketing Operations; and | ||
(ii) | a JV Entity that is a Non-Selling Entity will not include records and accounts relating to its Excluded Marketing Operations and the sale of production (and all costs, expenses and liabilities directly incurred in the sale of production) of that Non-Selling Entity. |
Each Owner will be responsible on behalf of each such JV Entity that is a Related Corporation of that Owner for keeping all relevant records and accounts relating to its Excluded Assets or Excluded Marketing Operations. Preparation of the relevant consolidated and individual entity financial records and accounts for such a JV Entity will be the responsibility of each Owner, provided that the Manager will be responsible for providing all necessary financial information in respect of the Iron Ore Assets and JV Operations, as provided in the Accounting Policy. | |||
(d) | Each Owner and the Manager will provide each other (and their respective auditors) with access to such of their records and accounts as are reasonably required by them to perform their functions under the Transaction Documents and their statutory responsibilities, as provided in the Accounting Policy, including to verify costs and revenues allocated to a JV Entity that owns Excluded Assets or that is a Non-Selling Entity or otherwise conducts Excluded Marketing Operations and to confirm that distributions, loan repayments and other payments have been made in accordance with the Funding and Distribution Policy. | ||
(e) | The records and accounts referred to in paragraph (b) must: |
(i) | include records and accounts enabling the Manager to comply with all obligations under the Transaction Documents (including the Funding and Distribution Policy) including determining and verifying: |
(A) | the Ore Sales Price payable pursuant to the Ore Sales Agreements; and | ||
(B) | the distributions, loan repayments and other payments have been made in accordance with the Funding and Distribution Policy and Debenture Deeds Poll; |
(ii) | be sufficient to provide the information required to enable an Owner: |
(A) | to complete a tax return or deal with any tax enquiry, tax audit or tax litigation (including any information required for the purposes of a consolidated group tax return or business activity statement, or any information required to be provided pursuant to any relevant tax funding agreement, tax sharing agreement or other contractual agreement providing for preparation of stand alone notional tax returns and like documents); |
(B) | to complete statutory accounts and other financial statements (including consolidated group and individual entity financial statements) or any corporate or other regulatory filings of any kind that the Owner or its Related Corporations are required by Law to make; or | ||
(C) | to otherwise comply with any of its obligations under any tax or other Law; and |
(iii) | be sufficient to provide the information required to enable all Existing JV Arrangements to be complied with. |
(f) | In addition to maintaining the records and accounts referred to in this clause 4.9, the Manager will also be responsible, on behalf of each JV Entity which owns only Iron Ore Assets and has no Excluded Marketing Operations, for the preparation of the statutory accounts and other regulatory filings of any kind that are required by Law to be prepared or filed, or are otherwise required to comply with any obligations of such a JV Entity under any tax or other Law, provided however that the Owner that is a Related Corporation of any such JV Entity will remain responsible for procuring that any such statutory accounts or regulatory filings are finalised and lodged or filed. |
4.10 | Accounting systems |
(a) | The Accounting Policy must include (in conjunction with the Funding and Distribution Policy) rules, systems and procedures for: |
(i) | allocating liabilities to the Iron Ore Assets and the Excluded Assets; | ||
(ii) | attributing cash flows to the Iron Ore Assets and the Excluded Assets; and | ||
(iii) | preparing stand-alone cash flow statements, profit and loss statements and balance sheets for the Iron Ore Assets. |
Where there are Sole Risk Assets, liabilities will be allocated, cash flows attributed and statements and balance sheets prepared according to the same methodology. | |||
(b) | The Owners and the Manager must, in relation to the accounting matters for which they are respectively responsible under clause 4.9, establish and maintain accounting systems that operate at all times: |
(i) | to allocate liabilities and attribute cash flows to Iron Ore Assets and Excluded Assets (and, where applicable, Sole Risk Assets) in accordance with the Accounting Policy; | ||
(ii) | to generate stand-alone cash flow statements, profit and loss statements and balance sheets for the Iron Ore Assets and the Excluded Assets (and, where applicable, Sole Risk Assets) in accordance with the Accounting Policy; | ||
(iii) | to calculate the Net Iron Ore Cash Surplus (as defined in the Funding and Distribution Policy) in accordance with the Funding and Distribution Policy; | ||
(iv) | to calculate all Dividends and Coupons (each as defined in the Funding and Distribution Policy) payable in accordance with the Debenture Deeds Poll and the Funding and Distribution Policy; and |
(v) | to otherwise demonstrate full compliance with the Debenture Deeds Poll, the Funding and Distribution Policy and the other Transaction Documents. |
(c) | An Owner may (at its own cost) from time to time conduct a detailed review of the WA Iron Ore JV accounting systems, and to the extent necessary, the other Owners accounting systems, for the purposes of satisfying the Owner that those systems are in compliance with paragraph (b), and following such review the Owners must consult in good faith to determine such adjustments, if any, as may need to be made to the systems so as to ensure that they are compliant. | ||
(d) | Subject to clause 12 of the Implementation Agreement, the cost of making any adjustments to the accounting systems agreed by the parties following a review will be borne: |
(i) | if the deficiency is in the systems of an Owner, by that Owner; or | ||
(ii) | if the deficiency is in the systems of the Manager, by the Owners in proportion to their respective Participating Shares. |
(e) | If the data generated by the WA Iron Ore JV accounting systems, or an Owners accounting systems, or the application of the Accounting Policy using those systems: |
(i) | gives rise to an error, as a result of which an Owner receives any amount in excess of its entitlement under the Funding and Distribution Policy, it will hold the excess on trust pursuant to clause 4.6, 6.3, 10.3 and 11.9 (as applicable) of that Policy; or | ||
(ii) | gives rise to an allocation of distributions between the Owners which is inconsistent with the intention of the Funding and Distribution Policy, the parties will meet to discuss in good faith, and will make such arrangements as are appropriate to rectify the inconsistency (which may include amending the Accounting Policy, the Funding and Distribution Policy or the accounting systems, and may also include making reconciliation payments between Owners). |
4.11 | Audit |
(a) | An auditor will be appointed in respect of the Manager and the WA Iron Ore JV (the Auditor ). An internal auditor will also be appointed in respect of the Manager and the WA Iron Ore JV. The appointment and removal of the Auditor and the internal auditor will be subject to approval of the Owners Council, following receipt of a recommendation from the Audit Committee. Subject to the appointment of the initial Auditor and initial internal Auditor pursuant to clauses 3.6(b)(viii), 3.7 and 6.2(f) of the Implementation Agreement, the Auditor will be appointed following a tender process overseen by the Audit Committee. The internal auditor will be appointed in accordance with the resourcing model for the internal auditor determined by the Owners Council and following such selection process as the Owners Council agrees (which may include a tender process). | ||
(b) | At the times required by, and otherwise in accordance with, the Accounting Policy, the Manager must: |
(i) | procure that the accounts referred to in clause 4.9 (the Accounts ) are audited by the Auditor, including confirming that the Accounts have been prepared in accordance with any Laws applicable to one or more of the Owners; |
(ii) | procure that the Auditor provides confirmation to the Owners that all payments, distributions and dividends during the relevant period were calculated and applied in accordance with the terms of the Funding and Distribution Policy, the Debentures and any other relevant Transaction Documents; | ||
(iii) | agree the scope of the audit with both Owners; and | ||
(iv) | provide a copy of the audit report and confirmation to each Owner. |
The costs of each audit will be deemed to be a cost of the WA Iron Ore JV. | |||
(c) | Either Owner or the Owners Council may, by notice in writing to the Manager, request that: |
(i) | an audit address particular records and accounts of the Manager where the Owner has a reasonable concern that any payment, distribution or dividend paid or received by it in the relevant period has not been calculated or applied in accordance with the terms of the Funding and Distribution Policy, the Debentures or any other relevant Transaction Documents; | ||
(ii) | an audit be undertaken to ensure that the Synergies Capture Plan and reports in relation to the achievement of synergies, including any reconciliation to the baseline specified in the first Synergies Capture Plan, and any synergies forecasts, are audited in accordance with agreed upon procedures (to be conducted either by an external auditor or an internal auditor as requested by the Owner or the Owners Council as the case may be); or | ||
(iii) | such other audits as an Owner or the Owners Council may reasonably request be conducted (either by an external auditor or an internal auditor as requested by the Owner or the Owners Council, as the case may be), including in relation to items such as occupational health and safety, communities or towns, environmental or indigenous issues and internal systems and procedures. |
(d) | For the purposes of carrying out the audit, the Manager and the Owners will, and will procure that the JV Entities, provide the Auditor with access to such of their accounting records as are reasonably required by the Auditor to carry out its functions. The Auditor may also liaise with any auditor appointed by an Owner for the purposes of enabling the Auditor to carry out any audit required under paragraphs (b) or (c). | ||
(e) | The Manager and the Owners will procure that any adjustments required by the Auditor will be made no later than 10 Business Days after they receive notice of any incorrect payment, distribution or dividend, or other non-compliance with the terms of the Funding and Distribution Policy and the Debentures or other relevant Transaction Document and a request from the Auditor to make such adjustments to rectify the error or remedy any non-compliance. |
4.12 | Reporting Policy and Accounting Policy | |
The Manager must prepare its estimates, forecasts, actual results and other data and report to the Owners Council in accordance with the Reporting Policy and the Accounting Policy. |
4.13 | Access to Information |
(a) | The Manager, any Owner whose Affiliates provide ERP Services and each JV Entity must ensure that each Owner: |
(i) | has equal access to information; and | ||
(ii) | receives equal treatment. |
(b) | The Manager and each JV Entity must promptly satisfy any request made by an Owner for: |
(i) | accounts, records or other documents of the Manager or any JV Entity; | ||
(ii) | explanation or information in relation to JV Operations (including future prospects and expansions under review), the Manager or any JV Entity; or | ||
(iii) | any information required for the purposes of any tax enquiry, tax audit or tax litigation, or a consolidated group tax return or business activity statement, or any information required pursuant to any relevant tax funding agreement, tax sharing agreement or other contractual agreement providing for preparation of stand alone notional tax returns and like documents. |
(c) | The Manager must ensure that any document or information it provides to an Owner in response to any request under paragraph (b) is also provided to the other Owner, unless: |
(i) | that request is made for the purposes of: |
(A) | a corporate or other commercially sensitive proposal that has not been announced to the market or is not otherwise in the public domain; or | ||
(B) | a tax or other regulatory audit or investigation of an Owner or of its Related Corporations; and |
(ii) | the Owner making the request provides notice to the Manager and/or JV Entity (as applicable) at the time of making the request that the document or information is being requested for one of the purposes described in paragraph (c)(i). |
(d) | The Manager will utilise systems that: |
(i) | enable the Manager to manage JV Operations independently on a stand alone basis (other than on a transitional basis or as otherwise agreed by the Owners Council); and |
(ii) | comply with the requirements of the Ring-Fencing Protocol. |
(e) | The Manager and each Owner acknowledge that the reporting and information requirements of the Owners Council and each Owner may differ and, accordingly, that: |
(i) | an Owner may require the Manager to provide any report or information referred to in the Reporting Policy to be given to that Owner in the form, format and medium required by that Owner from time to time (including data in electronic format that aligns with, and can be incorporated into, that Owners systems, processes, standards and policies); and | ||
(ii) | the Owners Council may require the Manager to provide any report or information referred to in the Reporting Policy to be given to the Owners Council in a form, format or medium required by the Owners Council from time to time. |
In either case, the Owners Council or Owner (as applicable) may provide to the Manager a template that sets out the format to be used by the Manager for preparing and providing any particular report or information. | |||
(f) | The Manager must establish with each Owner a system interface between each Owners system and the WA Iron Ore JV ERP and other information systems. The system interfaces established with both Owners must (unless the Owners otherwise agree in writing) be equivalent in all respects, including with respect to functionality, efficiency, process and access to data. The system interface must be acceptable to, and meet the requirements of, each individual Owner. The costs of establishing and managing such interfaces will be costs of the WA Iron Ore JV. | ||
(g) | Each Owner may: |
(i) | independently access the WA Iron Ore JV ERP and other information systems (including access to all underlying data); | ||
(ii) | independently generate reports and use data sets and associated analytical tools (including query tools and report writing tools) that the WA Iron Ore JV ERP (and other information systems) are configured to provide; and | ||
(iii) | require the WA Iron Ore JV ERP (and other information systems) be reconfigured to provide the ability for an Owner to independently generate reports and use data sets and associated analytical tools which the WA Iron Ore JV ERP is not configured to provide, subject to: |
(A) | the Manager being able to raise concerns about any such requirement that it considers unreasonable for consideration by the Owners at a meeting of the Owners Council in accordance with item 4.1(h) of the Reporting Policy (as if it was a request to which that clause applies); and | ||
(B) | clause 13.1(b) and schedule 3 of the ERP Service and Licence Agreement. |
(h) | Each Owner, through its authorised representatives, delegates, employees and invitees, at its own risk and expense at all reasonable times, will have: |
(i) | access to all offices, facilities and sites of the WA Iron Ore JV, the JV Entities and the Manager, including for the purposes of investor, analyst and media visits; and | ||
(ii) | the right to examine and make copies of any accounts, records and other documents of or in respect of, the WA Iron Ore JV, the JV Entities or the Manager. |
(i) | The rights and obligations under this clause 4.13 are subject to the terms of the Ring-Fencing Protocol and all obligations of confidence binding on a JV Entity or the Manager. | ||
(j) | Nothing in this clause 4.13, prevents the Manager from raising concerns for consideration by the Owners at a meeting of the Owners Council in accordance with clause 4.1(h) of the Reporting Policy. |
4.14 | Weighing, Sampling and Analysis Protocol |
(a) | The Owners, the Manager and the Marketing SPVs must, and must procure that each of their Related Corporations, comply with the provisions of the Weighing, Sampling and Analysis Protocol. | ||
(b) | All costs incurred in connection with compliance with the Weighing, Sampling and Analysis Protocol pursuant to paragraph (a) will be costs of the WA Iron Ore JV. |
4.15 | Insurance | |
Manager Insurances Responsibilities |
(a) | The Manager must effect, maintain and administer insurances in accordance with the insurance protocol approved by the Owners Council pursuant to clause 6.2(f) of the Implementation Agreement as amended or replaced by the Owners Council from time to time in accordance with the process set out in clause 3.3 (the Insurance Protocol ). | ||
(b) | Each Owner will provide such information and assistance as is necessary to enable the Manager to effect, maintain, administer and comply with any insurances referred to in paragraph (a), including providing any information referred to in the Reporting Policy. | ||
(c) | The Manager agrees to co-operate, provide access to information and systems in accordance with this Agreement and the Reporting Policy and to do all other things reasonably necessary to: |
(i) | enable an Owner to obtain insurance as contemplated in clauses 4.15(e) and 4.15(f), including providing engineers, surveyors, risk assessors and other consultants engaged by an Owner or an agent or insurer of the Owner with access to property and Accounts; and | ||
(ii) | provide cost or claim consultants or assessors engaged by an Owner or insurer of an Owner with access to property and Accounts for the purposes of determining the quantum, scale and scope of any claim or potential claim to be made in relation to the JV Operations. |
Owner Insurance Responsibilities |
(d) | Each Owner, for its own account, will be responsible for effecting, maintaining and administering all insurances required to be effected, maintained and administered by it pursuant to the Insurance Protocol and paragraph (f). | ||
(e) | An Owner may at its own cost effect, maintain and administer insurances in relation to its interest in the WA Iron Ore JV and the sale of Iron Ore Product, including in relation to: |
(i) | material damage and business interruption insurance; | ||
(ii) | liability insurance; | ||
(iii) | marine insurance; | ||
(iv) | contract works; and | ||
(v) | any other insurance that an Owner wishes to effect. |
(f) | Each Owner will be responsible for effecting, maintaining and administering any insurance that is required in respect of the interests of the Other JV Participants pursuant to an |
Existing JV Arrangement or any other infrastructure arrangement to which the Owner or its Related Corporations is a party. | |||
(g) | Where there is insurance cover available in respect to an occurrence that occurred prior to the JV Commencement Date that gives rise to a liability to a third party in connection with an Iron Ore Asset after the JV Commencement Date, the insurance proceeds will be made available to the relevant JV Entity and any residual uninsured liability will be shared by the Owners as costs of the WA Iron Ore JV. | ||
(h) | The Owner, or Related Corporation of the Owner, who is insured under an insurance policy in respect of the liability referred to in (g) above, must use all reasonable endeavours to recover diligently the maximum amount possible from its insurers. All unrecovered costs reasonably incurred by the Owner or Related Corporation of the Owner in obtaining the insurance proceeds from the insurers will be shared by the Owners as costs of the WA Iron Ore JV. | ||
(i) | Where an Iron Ore Asset is damaged after the JV Commencement Date and a decision is made to repair, reinstate and/or replace that Iron Ore Asset, any costs of undertaking such repair, reinstatement and/or replacement will be shared by the Owners as costs of the WA Iron Ore JV (regardless of what insurance arrangements, if any, an Owner may have in respect of the relevant Iron Ore Asset and, in particular, an Owner will not be entitled to defer payment of its share of such costs pending recovery under any applicable insurance policy). | ||
(j) | If the Insurance Protocol requires an Owner to take out insurances in respect of employees who are employed by a JV Entity which is a Subsidiary of the Owner and the employees are engaged in JV Operations, the costs of the Owner in effecting, maintaining and administering such insurances will be a cost of the WA Iron Ore JV. |
4.16 | Intellectual property | |
Each Owner must procure that certain intellectual property is made available to the Manager, the JV Entities and, in certain circumstances, the other Owner pursuant to the Intellectual Property Management Agreement. | ||
4.17 | Maintenance of tenements | |
Subject to the Existing JV Arrangements, the Manager on behalf of the Owners and the JV Entities must ensure that the JV Entities: |
(a) | maintain the JV Tenements in good standing; | ||
(b) | comply with the requirements of the State Agreements; | ||
(c) | secure any ancillary tenements or other titles necessary for the operation of the WA Iron Ore JV; and | ||
(d) | monitor and take appropriate actions in relation to any applications made by third parties over JV Tenements or areas which might reasonably be expected to be required for future JV Operations. Subject to any Existing JV Arrangements or any other infrastructure arrangements, the Manager will be authorised on behalf of the Owners and the JV Entities |
to conduct any negotiations with those third parties as to the terms of access to any JV Tenements. |
4.18 | Environmental compliance and rehabilitation | |
Subject to clause 3.11(g), the Manager must ensure that sufficient funds are called from the Owners in order to meet all Rehabilitation Costs of the WA Iron Ore JV. The Manager may only call funds as required to pay Rehabilitation Costs as, and when, they fall due. | ||
4.19 | Ownership of WA Iron Ore JV Property |
(a) | All property held, developed, constructed or acquired by the Manager on behalf of the WA Iron Ore JV under this Agreement will be Iron Ore Assets. | ||
(b) | Except for assets acquired by the Manager on its own account, the Manager will not have any beneficial interest in the Iron Ore Assets of the JV Entities or in any moneys paid to, collected or received by the Manager for or on behalf of the Owners, or the JV Entities or any of them. |
4.20 | Manager not empowered to create Encumbrances | |
Except as expressly provided in this Agreement or any of the Transaction Documents to which the Manager is a party (and except for Permitted Security Interests), the Manager will not have any right or power to encumber any part of the Iron Ore Assets. | ||
4.21 | Assignment, subcontracting and delegation | |
The Manager may not assign, subcontract or delegate all or any part of its rights, duties and obligations under this Agreement to any party without the prior written approval of the Owners Council. |
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6. | Supply of Iron Ore Product | |
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6.1 | General principles | |
The parties intention is that each Owner should be entitled to have its Marketing SPV purchase that Owners Participating Share of JV Production for each Product Type. The parties recognise, however, that Existing JV Arrangements and Pre-existing Customer Contracts mean that variations |
to such proportionate entitlement to purchase each Product Type will be necessary, as provided in this clause 6. | ||
6.2 | Ore Sales Agreements |
(a) | To give effect to clause 6.1: |
(i) | the Selling Entities (severally, as sellers) must deliver and sell to the Marketing SPVs the quantity of Iron Ore Product determined in accordance with clause 6.3 on the terms set out in their respective Ore Sales Agreements; and | ||
(ii) | each Marketing SPV (as purchaser) must pay to the Selling Entities the purchase price for Iron Ore Product, as determined in accordance with clause 6.4, on the terms set out in the relevant Ore Sales Agreement, unless and until otherwise agreed between the Owners. |
(b) | If a JV Entity ceases to be a Non-Selling Entity and becomes a Selling Entity (either in whole or only in respect of certain Iron Ore Product), that JV Entity must to that extent become a party to each Ore Sales Agreement as a Seller. | ||
(c) | An Owner may nominate third parties to enter into Ore Sales Agreements (as purchasers) in addition to, or instead of, that Owners Marketing SPV. The Owners Marketing SPV must guarantee payment of the Ore Sales Price by any such nominee. | ||
(d) | In making nominations and exercising rights under clauses 6.3 and 6.4, an Owner does so in respect of its Marketing SPVs and its Non-Selling Entities. | ||
(e) | References in this clause 6 to an Owner being entitled to receive Iron Ore Product mean (as the case requires) being entitled to have its Marketing SPV or its nominee purchase the product, or its Non-Selling Entities obtain such product in accordance with Existing JV Arrangements. |
6.3 | Quantity | |
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(c) | * * * |
(i) | * * * | ||
(ii) | * * * |
* * * | |||
(d) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * |
(e) | * * * | ||
(f) | * * * | ||
(g) | * * * |
* * * |
(h) | * * * |
(i) | * * * | ||
(ii) | * * * |
* * * |
(i) | * * * |
* * * |
(j) | * * * |
(i) | * * * | ||
(ii) | * * * |
(k) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * |
(A) | * * * | ||
(B) | * * * |
* * * |
(l) | * * * |
(i) | * * * |
(A) | * * * | ||
(B) | * * * |
(ii) | * * * |
(A) | * * * | ||
* * * | |||
* * * | |||
* * * | |||
* * * | |||
* * * | |||
(B) | * * * |
(m) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * | ||
(iv) | * * * |
* * * |
(n) | * * * |
* * * |
(o) | * * * |
(p) | (i) * * * |
(ii) | * * * | ||
(iii) | * * * |
(A) | * * * | ||
(B) | * * * | ||
(C) | * * * |
* * * |
(iv) | * * * |
(A) | * * * | ||
(B) | * * * |
(v) | * * * |
(A) | * * * | ||
(B) | * * * | ||
(C) | * * * | ||
(D) | * * * | ||
(E) | * * * |
* * * |
* * * |
(q) | * * * |
(i) | * * * |
(A) | * * * | ||
(B) | * * * | ||
(C) | * * * |
* * * | |||
(ii) | * * * | ||
(iii) | * * * |
* * * |
(r) | * * * |
Scheduling |
(s) | Each Owner must, and must procure that its relevant Affiliates, co-operate with the Manager, and the Manager must cooperate with each Owner (and its relevant Affiliates), so as to ensure co-ordinated scheduling of the WA Iron Ore JV production and each Owners shipping activities. | ||
(t) | Each Owner must, and must procure that its relevant Affiliates, comply with the Scheduling Protocol. The Manager must comply with the Scheduling Protocol. |
* * * |
(u) | * * * |
(i) | * * * | ||
(ii) | * * * |
Dispute Resolution |
(v) | Any dispute arising under this clause 6.3 may be referred by either Owner to an Independent Expert for determination pursuant to clause 16. |
* * * |
(w) | * * * |
6.4 | Price | |
* * * |
(a) | * * * |
(i) | * * * | ||
(ii) | * * * |
(A) | * * * | ||
(B) | * * * | ||
(C) | * * * |
(D) | * * * | ||
(E) | * * * | ||
(F) | * * * | ||
(G) | * * * | ||
(H) | * * * | ||
(I) | * * * | ||
(J) | * * * | ||
(K) | * * * | ||
(L) | * * * |
(iii) | * * * |
(A) | * * * | ||
(B) | * * * | ||
(C) | * * * | ||
(D) | * * * | ||
(E) | * * * | ||
(F) | * * * |
(iv) | * * * |
(A) | * * * | ||
(B) | * * * | ||
(C) | * * * | ||
(D) | * * * | ||
(E) | * * * | ||
(F) | * * * | ||
(G) | * * * | ||
(H) | * * * |
(v) | * * * |
(A) | * * * | ||
(B) | * * * | ||
(C) | * * * | ||
(D) | * * * | ||
(E) | * * * |
* * * |
(b) | * * * | ||
* * * |
* * * | |||
* * * | |||
* * * | |||
* * * | |||
(c) | * * * |
(i) | * * * | ||
(ii) | * * * |
(d) | * * * |
* * * |
(e) | (i) | * * * |
* * * | |||
* * * | |||
* * * | |||
* * * | |||
* * * | |||
* * * | |||
(ii) | * * * | ||
(iii) | * * * | ||
(iv) | * * * |
(f) | * * * |
(i) | * * * | ||
* * * | |||
* * * | |||
* * * | |||
* * * | |||
* * * |
* * * |
(ii) | * * * | ||
(iii) | * * * |
(g) | * * * | ||
* * * | |||
* * * | |||
* * * | |||
* * * |
* * * |
Dispute Resolution |
(h) | Any dispute arising under this clause 6.4 (including any dispute about a determination or other act of the independent third party) may be referred by either Owner to the Independent Expert for determination pursuant to clause 16. |
* * * |
(i) | * * * |
6.5 | Minimising need for Adjustments | |
* * * |
(a) | * * * | ||
(b) | * * * |
(i) | * * * | ||
(ii) | * * * |
(A) | * * * | ||
(B) | * * * |
(c) | * * * | ||
(d) | * * * |
(i) | * * * | ||
(ii) | * * * |
(e) | * * * | ||
(f) | * * * | ||
(g) | * * * |
* * * |
(h) | * * * |
(i) | * * * | ||
(ii) | * * * |
(i) | * * * |
6.6 | Separate Marketing |
(a) | The Owners will continue to cause Iron Ore Product to be marketed separately from, and in competition with, each other. | ||
(b) | Each Owner and its Related Corporations will have no knowledge of the marketing strategy or terms of the other Owner and its Related Corporations. | ||
(c) | The Manager will have no knowledge of the marketing strategy of either Owner or their Related Corporations. The Manager has no powers or functions in relation to the marketing of Iron Ore Product by the Owners or their Related Corporations. |
(d) | The Manager and each Owner must, and must procure that its Related Corporations, comply with the Ring-Fencing Protocol. | ||
(e) | Each Owner and its Related Corporations will satisfy their respective product sale commitments arising from their respective Existing JV Arrangements with customers from that Owners Total Allocation. At the date of this Agreement, those arrangements are BHP Billitons Wheelarra Joint Venture, JW 4 Joint Venture and POSMAC Joint Venture, and Rio Tintos Bao-HI Joint Venture and Channar Joint Venture. | ||
(f) | Where Existing JV Arrangements oblige an Owner or its Related Corporations to market the volume entitlements of the Other JV Participants, then the Owner or its Related Corporations will retain those commitments and they will not form part of the WA Iron Ore JV. |
6.7 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * |
* * * |
(c) | * * * | ||
(d) | * * * |
7. | Other marketing arrangements | |
|
||
7.1 | Product standardisation |
(a) | * * * | ||
(b) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * |
(c) | Clause 6.3(j) will not apply to any new Product Type introduced as a result of product standardisation. | ||
(d) | Nothing in this clause 7 will cause Rio Tinto, BHP Billiton or their respective Related Corporations to discuss or coordinate market strategy or contract negotiation either directly as between their respective Iron Ore Marketing Businesses or through the JV Manager or Owners Council. |
7.2 | Pre-existing Customer Contracts | |
* * * |
8. | Expansions and New Opportunities |
|
8.1 | Owners Forward Demand Forecasts |
(a) | * * *, each Owner must notify the Manager of its indicative non-binding rolling * * * demand forecasts ( Demand Forecast ) for Iron Ore Product, by Product Type, to be delivered to them at the ships rail, * * * covered by that Demand Forecast. | ||
(b) | An Owner must not provide its Demand Forecast to the other Owner and the Manager must not provide one Owners Demand Forecast to the other Owner, provided however that the Owners may exchange and discuss that part (but only that part) of their respective Demand Forecasts which relate to production requirements from JV Operations beyond * * *, but only for the purposes of reaching a consolidated view of capacity expansions for the purposes of this clause 8 in accordance with the Ring-Fencing Protocol. | ||
(c) | The Manager may use an Owners Demand Forecast only for the purposes of this clause 8. |
8.2 | Development Studies | |
Preliminary Studies |
(a) | The Manager will be responsible for conducting studies that consider alternate development paths available to the WA Iron Ore JV either in order to meet the consolidated Demand Forecast or as required by an Owner in accordance with paragraph (b) or in accordance with an approved Business Plan and/or Budget (each a Preliminary Study ). Each Preliminary Study will: |
(i) | examine a range of possible mines and infrastructure developments, including the expansion or reconfiguration of existing mines and infrastructure to increase capacity and/or production, including any proposal made by an Owner under paragraph (b)(ii) and progressed by the Manager in accordance with paragraph (b); | ||
(ii) | include a high level indicative analysis of technical and regulatory issues associated with each development option, such analysis to include high level preliminary capital cost estimates and associated economic analysis; and | ||
(iii) | will provide a recommendation of the scope and scale on which it proposes to conduct a Pre-Feasibility Study ( Contemplated Project ). |
(b) | If: |
(i) | in any two consecutive Half Years, the sum of Demand Forecasts referred to in clause 8.1 exceeds the expected JV Capacity for the relevant period(s), either in total or in relation to a particular Product Type; or | ||
(ii) | an Owner proposes by notice to the Manager and the other Owner that the Manager investigate: |
(A) | a mine development (either as an additional mine or as a replacement to an existing mine that is nearing the end of its mine life); or | ||
(B) | expansion of an existing mine, |
and associated infrastructure, for a certain quantity, |
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the Manager may (and will, if directed by an Owner) * * * provide to the Owners Council for review a Preliminary Study which must, where applicable, include a proposal made by an Owner pursuant to paragraph (b)(ii). | |||
(c) | * * *, the Manager and the Owner which has not proposed the Contemplated Project can propose that additional or alternative expansions be reviewed by the Manager as part of the Preliminary Study. |
Pre-Feasibility Studies |
(d) | Unless both Owners have agreed not to proceed to investigate the feasibility of the Contemplated Project * * * the Manager will expeditiously commence, and complete * * *, a pre-feasibility study for the purposes of evaluating the Contemplated Project and associated capital estimates ( Pre-Feasibility Study ). If the Owners Council cannot agree the scale and scope of the Contemplated Project for the purposes of conducting a Pre-Feasibility Study from the options considered in the Preliminary Study * * *, the Manager must prepare the Pre-Feasibility Study based on the scale and scope that it reasonably expects will deliver the highest Net Present Value to the Owners (as determined by the Manager based on the assumptions referred to in schedule 5 or in any guidelines or protocols determined by the Owners Council from time to time) when compared against the same Base Case. The Pre-Feasibility Study will be prepared in accordance with the guidelines set out in item 1 of schedule 5 as amended or replaced by any guidelines or protocols determined by the Owners Council from time to time. | ||
(e) | Once a Pre-Feasibility Study is required to be commenced by the Manager pursuant to paragraph (d), the Manager must (unless otherwise directed by both Owners) progress that Pre-Feasibility Study and any consequential Feasibility Study in respect of the Contemplated Project selected from that Pre-Feasibility Study in priority to all other Preliminary Studies that would overlap with the Pre-Feasibility Study. For the avoidance of doubt, if there is more than one Pre-Feasibility Study or Feasibility Study that the Manager is required to progress pursuant to this clause 8.2, the Manager must progress the first such study in priority to all other studies (unless otherwise directed by both Owners). | ||
(f) | The Manager will promptly provide a copy of the completed Pre-Feasibility Study to the Owners for review and comment. |
Feasibility Studies |
(g) | If the Pre-Feasibility Study contains more than one option for a Contemplated Project and the Owners Council has not agreed on the option to pursue, the option which has the highest Net Present Value to the Owners (as determined by the Manager based on the assumptions referred to in schedule 5 or in any guidelines or protocols determined by the Owners Council from time to time) when compared against the same Base Case, will be selected (the agreed or selected expansion or development referred to as the Project ). | ||
(h) | Based on the outcome of the Pre-Feasibility Study and any comments received from the Owners, the Manager may (and will if directed by an Owner) expeditiously conduct (and, where directed by an Owner, complete * * * a study to evaluate the full economic value of a single development or expansion scenario considered by the Pre-Feasibility Study, including a review of all costs and capital estimates ( Feasibility Study ). The Feasibility |
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Study will be prepared in accordance with the guidelines set out in item 3 of schedule 5 as amended or replaced by any guidelines or protocols determined by the Owners Council from time to time. |
(i) | The Manager will promptly provide to the Owners a copy of the completed Feasibility Study, and a recommendation of the Manager, together with the financial model, study reports and supporting information that were generated by the Manager in connection with the Feasibility Study. |
Reporting |
(j) | The Manager must provide detailed reports on the progress of any studies undertaken pursuant to this clause 8.2 as part of its reporting obligations under the Reporting Policy. |
Costs |
(k) | All costs incurred by the Manager in connection with any Preliminary Study, Pre-feasibility Study or Feasibility Study will be costs of the WA Iron Ore JV. Each Owner will be entitled to retain all information (including copies of the relevant studies and all supporting documentation) irrespective of whether the Project contemplated by a Pre-Feasibility Study or Feasibility Study proceeds as a Sole Risk Development or otherwise. |
8.3 | Owners Council Decisions on Projects |
(a) | * * * an Owners Council meeting will be convened to determine whether the Project the subject of that Feasibility Study will proceed as part of the WA Iron Ore JV. * * * | ||
(b) | If: |
(i) | the Owners Council votes in favour of proceeding with the Project, paragraph (d) will apply; or | ||
(ii) | the Owners Council does not vote in favour of proceeding with the Project, and the Project involves capital expenditure in excess of US$250 million (Indexed), then an Owner that voted in favour of proceeding with the Project, (the Sole Funding Party ) may * * * elect by written notice to the other Owner and to the Manager to proceed with the Project outside the WA Iron Ore JV (a Sole Risk Development ). |
(c) | * * *, the Owner receiving that notice may elect by written notice to the other Owner and to the Manager to participate in the Project as part of the WA Iron Ore JV, in which case paragraph (d) will apply. If no such notice is given, the Sole Funding Party: |
(i) | may proceed with the Project as a Sole Risk Development and the applicable provisions of schedule 4 will apply; and | ||
(ii) | for the avoidance of doubt, will not be obliged to proceed with the Project as a Sole Risk Development. |
(d) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * |
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(iv) | * * * | ||
(v) | * * * | ||
(vi) | * * * |
(e) | Despite any provision of this clause 8 or the Implementation Agreement, each Owner must contribute its Participating Share of the costs of any development or expansion of an Iron Ore Asset or a Secondary Processing facility or alternative proposal, and cannot opt out of any such development or expansion, without the consent of the other Owner, if: |
(i) | * * *; or | ||
(ii) | the Owners have otherwise agreed that this paragraph (e) applies to that development or expansion. |
8.4 | New Opportunities |
(a) | If an Owner or the Manager becomes aware of a potential New Opportunity, it must provide as soon as reasonably practicable notice to: |
(i) | in the case of a New Opportunity in respect of which an Owner has provided notice, the Manager and the other Owner; or | ||
(ii) | in the case of a New Opportunity in respect of which the Manager has provided notice, each Owner. |
(b) | The Manager must progress the proposal to acquire that New Opportunity (including negotiating the terms of that proposal with third parties) * * * | ||
(c) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * | ||
(iv) | * * * |
(d) | * * * | ||
(e) | * * * | ||
(f) | * * *, an Owners Council meeting will be convened to determine whether the New Opportunity the subject of the New Opportunity Notice will proceed as part of WA Iron Ore JV. * * * | ||
(g) | If: |
(i) | the Owners Council votes in favour of proceeding with the New Opportunity, paragraph (i) will apply; or | ||
(ii) | the Owners Council does not vote in favour of proceeding with the New Opportunity, the New Opportunity will not proceed as part of the WA Iron Ore JV, and the Owner that voted in favour of proceeding with the New Opportunity (the Sole Funding Party ) * * * elect by notice to the other Owner and to the |
Page 52
Manager to proceed with the New Opportunity outside the WA Iron Ore JV (a Sole Risk Opportunity ). |
(h) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
* * * | |||
(iii) | * * * | ||
(iv) | * * * |
* * * |
(i) | If the Owners Council agrees to proceed with the New Opportunity as part of the WA Iron Ore JV: |
(i) | the New Opportunity will proceed as part of the WA Iron Ore JV; | ||
(ii) | * * * | ||
(iii) | * * * | ||
(iv) | * * * | ||
(v) | * * * | ||
(vi) | * * * | ||
(vii) | * * * |
(j) | * * * |
(i) | * * * | ||
(ii) | * * * |
8.5 | General provisions |
(a) | * * * |
(i) | * * * | ||
(ii) | * * * |
* * * |
(b) | Any Project, New Opportunity, Sole Risk Development or Sole Risk Opportunity will be conditional on obtaining all necessary Authorisations. | ||
(c) | An Owner may elect to fund the costs of a Project, New Opportunity, Sole Risk Development or Sole Risk Opportunity on a project finance basis in accordance with clause 11.4. |
8.6 | Incidental acquisitions |
(a) | If an Owner or its Affiliate ( Acquirer ) acquires * * * a Non-Iron Ore Target, then the Owner will procure that the Acquirer will, * * * provide written notice to the other Owner and the Manager. |
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(b) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * | ||
(iv) | * * * | ||
(v) | * * * |
(c) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * | ||
(iv) | * * * |
(d) | * * * the other Owner may, subject to paragraph (e), elect to purchase its Participating Share of the Target Iron Ore Assets. If the other Owner: |
(i) | elects to purchase its Participating Share of the Target Iron Ore Assets then, subject to paragraph (e), it will pay the fair market value determined under paragraph (c) to the Acquirer and the Acquirer will transfer the other Owners Participating Share of the Target Iron Ore Assets to the other Owner or its nominee and the Target Iron Ore Assets will form part of the WA Iron Ore JV and will become Iron Ore Assets; or | ||
(ii) | elects not to purchase its Participating Share of the Target Iron Ore Assets, then: |
(A) | the Acquirer is free to own (directly or indirectly) or otherwise deal with the Target Iron Ore Assets outside the WA Iron Ore JV; and | ||
(B) | if the Acquirer is the Owner or a Subsidiary of the Owner, the applicable provisions of schedule 4 will apply to the Target Iron Ore Assets as if they were a Sole Risk Opportunity. |
(e) | * * * |
9. | Default and Dilution |
9.1 | Suspension of voting rights |
(a) | If an Owner ( Defaulting Owner ) fails to provide an amount in respect of a Called Sum that it is required to pay pursuant to clause 3.11 of this Agreement and the Funding and Distribution Policy, being either a failure to pay a Called Sum or a failure to transfer funds or procure the transfer of funds to the JV Bank Accounts in response to a notice by the Manager to the Owner (the Unpaid Amount ) within 30 days of the due date for payment, then: |
Page 54
(i) | the Defaulting Owners voting rights in relation to the WA Iron Ore JV and the Manager will be suspended with effect from the Default Date (being the date falling 30 days after the due date for payment) until: |
(A) | the default has been fully remedied in accordance with clause 9.4; | ||
(B) | the Participating Interest of the Defaulting Owner has been purchased by the Non-Defaulting Owner in accordance with clause 9.6; or | ||
(C) | the Participating Share of the Defaulting Owner has been diluted in accordance with clause 9.7; |
(ii) | no vote taken or matter decided without the Defaulting Owners vote during the period in which the Defaulting Owner was not entitled to vote pursuant to paragraph (a)(i) will be invalid for want of the Defaulting Owners vote; | ||
(iii) | notwithstanding paragraphs (i) and (ii) a Defaulting Owners Representatives may attend, but may not vote at, a meeting of the Owners Council. A Representative of the Defaulting Owner will not be required in order to constitute a quorum of the Owners Council; and | ||
(iv) | the Manager will provide notice to each Owner of the default. |
(b) | Where the suspension of voting rights in respect of any Owners Council decision would, in the reasonable opinion of the Manager or the Defaulting Owner, * * * notwithstanding any ongoing default by the Defaulting Owner. | ||
(c) | A notice by the Manager or the Defaulting Owner under paragraph (b) must be provided to all Owners and the Manager and provide sufficient details of the Material Adverse JV Effect and the decisions that would be affected by any suspension of voting rights. |
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9.2 | Liability for Unpaid Amounts and Associated Amounts |
(a) | Each Unpaid Amount, together with the amounts referred to in paragraph (b), will: |
(i) | constitute a funding obligation due and payable to the Issuers or the Manager (as applicable) by the Defaulting Owner; and | ||
(ii) | be enforceable by the Manager or by the Issuers directly if the Manager does not take action, in accordance with this Agreement (without prejudice to any other means of enforcement available to the Manager or to the other Owner). |
(b) | The total amount due and payable by the Defaulting Owner will also include: |
(i) | interest on the Unpaid Amount calculated pursuant to item 1.5 of schedule 1 ( Default Interest ); and | ||
(ii) | any costs of enforcement or recovery, or attempted enforcement or recovery, incurred by the Manager or the other Owner as a consequence of the default ( Default Costs ), |
(together with the Unpaid Amount, the Default Amount ). |
9.3 | Payment by Non-Defaulting Owner |
(a) | Following receipt of the notice given pursuant to clause 9.1(a)(iii) and provided the other Owner is not also a Defaulting Owner (the Non-Defaulting Owner ), the Non-Defaulting Owner may elect to fund all or any part of the Unpaid Amount. The Non-Defaulting Owner must provide the funding by way of loan in the manner provided for by the relevant Call Notice ( NDO Loan ). | ||
(b) | The Defaulting Owner must on demand by the Non-Defaulting Owner purchase the NDO Loan for an amount equal to the face value of the loan plus interest calculated under paragraph (c), and that aggregate amount: |
(i) | will be a debt due and payable by the Defaulting Owner to the Non-Defaulting Owner; and | ||
(ii) | without limiting any other right of recovery, can be deducted from the price at which the Purchase Option described in clause 9.4 may be exercised by the Non-Defaulting Owner. |
(c) | Interest accrues on each amount which is due and payable by the Defaulting Owner to the Non-Defaulting Owner calculated pursuant to item 1.5 of schedule 1. | ||
(d) | Interest paid pursuant to paragraph (c) will not be considered as having been paid on account of the principal of the Unpaid Amount in respect of which the Defaulting Owner is in default. |
9.4 | Remedy of Default |
(a) | A default by the Defaulting Owner under clause 9.1 will not be regarded as remedied unless and until: |
(i) | the Default Amount has been paid to the Issuers or the Manager (as applicable); or |
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(ii) | if the Non-Defaulting Owner has funded all or any part of the Unpaid Amount pursuant to clause 9.3: |
(A) | all amounts due to the Non-Defaulting Owner under clause 9.3 have been paid; | ||
(B) | all Default Interest and Default Costs due to, or incurred by, the Non-Defaulting Owner have been paid; | ||
(C) | the Default Amount (less the amount the Non-Defaulting Owner has funded and less any amount that is payable to the Non-Defaulting Owner under paragraph (ii)(B)) has been paid to the Issuers or the Manager (as applicable); and |
(iii) | any interest owing by the Defaulting Owner in respect of any of the foregoing have been paid. |
(b) | Where the Defaulting Owner cures the default by purchasing the NDO Loan, such NDO Loan will be deemed to become a Participant Loan. However, if the Called Sum required funding by way of equity contribution or an indemnity under clause 3.11(o), then the Defaulting Owner will discharge the NDO Loan by converting it to equity. | ||
(c) | Where there is more than one default subsisting in respect of a Defaulting Owner, the Non-Defaulting Owner may exercise its remedies under the Transaction Documents in respect of each default within the periods that apply to each such default. |
9.5 | Non-Defaulting Owners Election |
(a) | If clause 9.1 applies, and the default is not remedied in accordance with clause 9.4 within 120 days of receipt of a notice given under clause 9.1(a)(iii), then the Non-Defaulting Owner may give to the Manager and to the Defaulting Owner a notice requiring: |
(i) | the fair market value of the Participating Interest of the Defaulting Owner and the Iron Ore Assets of the Defaulting Owner and its Related Corporations; and | ||
(ii) | the fair market value of the entire WA Iron Ore JV, |
to be determined in accordance with schedule 9. That notice must be given within 60 days of the expiration of the 120 day cure period referred to in this paragraph (a), failing which the Purchase Option will lapse. | |||
(b) | The Non-Defaulting Owner may, within 30 days of finalisation of the fair market values referred to in paragraph (a), elect by providing written notice to the Manager and the Defaulting Owner either to: |
(i) | exercise the Purchase Option in accordance with clause 9.6; or | ||
(ii) | exercise the Dilution Option in accordance with clause 9.7. |
If no notice of election is provided within the 30 day period referred to above, the right to exercise the Purchase Option or Dilution Option will lapse. | |||
(c) | Unless and until all Owners have: |
(i) | met the Sufficient Asset Test; and |
Page 57
(ii) | procured the grant of the Cross Charges to be procured by them pursuant to clause 11.8(b), |
the Non-Defaulting Owner may only exercise the Purchase Option by purchasing the Iron Ore Assets of the Defaulting Owner and its Related Corporations directly (and not, for the avoidance of doubt, by acquiring Securities in the Issuer or the JV Entities that are Related Corporations of the Defaulting Owner). | |||
(d) | If the condition in paragraph (c) has not been satisfied at the time the right to exercise a Purchase Option would otherwise arise in favour of the Non-Defaulting Owner, then: |
(i) | the notice provided by the Non-Defaulting Owner under paragraph (a) will only require the fair market value of the entire WA Iron Ore JV to be valued in accordance with schedule 9; and | ||
(ii) | any notice provided by the Non-Defaulting Owner under paragraph (b) may only be for the exercise of the Dilution Option in accordance with clause 9.7. |
(e) | If the condition in paragraph (c) has been satisfied, then unless and until: |
(i) | all Owners have met the Issuer Share Security Test; and | ||
(ii) | the Cross Charges have been extended to cover all shares in the Issuers pursuant to clause 11.8(g), |
the Non-Defaulting Owner may not exercise the Purchase Option by acquiring Securities in the Issuer that is a Related Corporation of the Defaulting Owner, but may exercise the Purchase Option by purchasing the Iron Ore Assets of the Defaulting Owner and its Related Corporations directly or by acquiring Securities the other JV Entities that are Related Corporations of the Defaulting Owner. | |||
(f) | The parties acknowledge that the Purchase Option or Dilution Option may be exercised in accordance with this clause 9, irrespective of whether the relevant default or defaults have been remedied after the giving of the notice by the Non-Defaulting Owner pursuant to paragraph (a). |
9.6 | Purchase Option |
(a) | Subject to clause 9.5(c) and (e), if the Non-Defaulting Owner exercises the Purchase Option under clause 9.5(b)(i), the Non-Defaulting Owner may purchase all of: |
(i) | the Defaulting Owners Participating Interest, including the Participant Loans and Debentures; and | ||
(ii) | the Iron Ore Assets of the Defaulting Owner and its Related Corporations, either directly or by the acquisition of Securities in the JV Entities that are Related Corporations of the Defaulting Owner at the election of the Non-Defaulting Owner, |
(the Purchase Option ) at a price (the Purchase Option Price ) which is equal to the fair market value determined in accordance with item 1 of schedule 9. | |||
(b) | Item 2 of schedule 9 will apply to the exercise and implementation of the Purchase Option pursuant to this clause 9.6. |
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(c) | If the Purchase Option lapses pursuant to item 2.5 of schedule 9, the Non-Defaulting Owner may within 30 days of the date the Purchase Option lapsed elect by providing written notice to the Manager and the Defaulting Owner to exercise the Dilution Option in accordance with clause 9.7. |
9.7 | Dilution Option |
(a) | If the Non-Defaulting Owner exercises the Dilution Option under clause 9.5(b)(ii) or clause 9.6(c), the Participating Share of the Defaulting Owner will be diluted in accordance with the following formula, with retrospective effect on and from the Default Date (the Dilution Option ): |
Where: | |||
NPS is the new Participating Share of the Defaulting Owner after the application of the formula; | |||
PS is the Participating Share of the Defaulting Owner before the application of the formula; | |||
MV is the fair market value of the entire WA Iron Ore JV determined pursuant to clause 9.5(a)(ii) in accordance with item 1 of schedule 9 at the Default Date (excluding the Non-Defaulting Owners share of the Called Sum in respect of which the dilution notice has been issued (the Relevant Called Sum ) and any subsequent Called Sum); and | |||
CS is the sum of: |
(i) | the total amounts paid by the Non-Defaulting Owner in relation to its share of the Relevant Called Sum and any subsequent Called Sum; and | ||
(ii) | the Defaulting Owners Unpaid Amount. |
(b) | The Participating Share of the Non-Defaulting Owner will be increased by the reduction in the Participating Share of the Defaulting Owner (being PS less NPS for the Defaulting Owner as determined in accordance with the formula in paragraph (a)), with retrospective effect on and from the Default Date. | ||
(c) | If the Defaulting Owners Participating Interest is diluted in accordance with this clause 9.7, then: |
(i) | the Non-Defaulting Owner must, if it has not already done so, fund the Defaulting Owners Unpaid Amount in accordance with clause 9.3; | ||
(ii) | the Defaulting Owner will be taken to have satisfied its obligation to fund that amount and its obligation to reimburse the Non-Defaulting Owner the amount the Non-Defaulting Owner has funded under clause 9.3; and | ||
(iii) | if the Non-Defaulting Owner has made an NDO Loan, the NDO Loan is deemed to become a Participant Loan. |
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(d) | The cost of any stamp duty or equivalent duty arising in connection with dilution and any associated assignment of property must be paid by the Non-Defaulting Owner. | ||
(e) | Any reduction or increase in Participating Share required by this clause 9.7 and any associated assignments contemplated by clause 9.8 will be conditional on obtaining all necessary Authorisations. Pending obtaining any such Authorisations, the Defaulting Owner will hold on trust and for the sole benefit of and at the expense of the Non-Defaulting Owner the appropriate portion of their Participating Interest (subject to any necessary Authorisations having been obtained for such arrangements). | ||
(f) | If, during the period between the Default Date and determination of the relevant new Participating Share, any calls, dividends, distributions or loan repayments have been made on the basis of the pre-dilution Participating Shares (except for dividends and distributions relating to a period prior to the Default Date), once the new Participating Shares have been determined pursuant to this clause 9.7, the Owners will discuss and seek to agree, or failing agreement, and on referral by any Owner, will have determined by the Valuers in accordance with item 1 of schedule 9, the appropriate adjustments to be made to give retrospective effect to the new Participating Shares and the Owners will make all necessary payments and take all other necessary steps in order to give effect to the adjustments determined by the Owners or the Valuers (as applicable). |
9.8 | Implementation of Dilution |
(a) | Following the exercise of the Dilution Option, the Manager must as soon as practicable calculate the revised Participating Shares in accordance with clause 9.7 and notify each Owner of the Participating Shares so calculated. | ||
(b) | Following recalculation by the Manager of the Participating Shares of the Owners under paragraph (a), the Owners must contribute funds to all further Called Sums in proportion to their recalculated Participating Shares. | ||
(c) | In order to give effect to the exercise of the Dilution Option: |
(i) | the Defaulting Owner must: |
(A) | assign to the Non-Defaulting Owner a proportion of its Participating Interest of any Iron Ore Assets owned directly by the Owners pursuant to clause 2.4(c)(ii)(B), prorata with the reduction in its Participating Share; and | ||
(B) | assign to the Non-Defaulting Owner a proportion of its Participant Loans prorata with the reduction in its Participating Share ; and |
(ii) | the Manager must: |
(A) | prepare any appropriate forms of assignment to effect the assignments referred to in paragraph (c)(i) and submit them to the Owners for approval (which may not be unreasonably withheld or delayed) and execution; and | ||
(B) | seek on behalf of the Owners all necessary Authorisations; |
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(iii) | each of the Owners must as soon as practicable do everything necessary or appropriate to ensure that all such assignments are promptly and fully effected, including obtaining any necessary Authorisations. |
(d) | For the avoidance of doubt, it is not intended that any Debentures be assigned in order to effect dilution under clause 9.7. |
9.9 | Cross Charges | |
Nothing in this clause 9 affects the ability of any Owner to enforce its rights under any Cross Charge in addition to, or as an alternative to, any remedy provided for in this clause 9 in respect of any default by another Owner. | ||
10. | Disposals |
10.1 | No restriction on disposals | |
An Owner may Dispose of the whole or a proportionate part of its Participating Interest to any person * * * Any such Disposal will not give rise to any purchase option or pre-emption right * * * | ||
10.2 | Underlying assets |
(a) | Neither an Owner nor the Manager may Dispose of all or any Iron Ore Assets or any Securities in any JV Entity which owns any Iron Ore Assets, and the Owners must procure that no JV Entity disposes of all or any Iron Ore Assets * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * | ||
(iv) | * * * | ||
(v) | * * * | ||
(vi) | * * * |
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * | ||
(iv) | * * * |
10.3 | * * * |
(a) | If an Owner Disposes of any proportionate part of its Participating Interest, then for the purposes of this Agreement: |
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(i) | * * * |
(A) | * * *: |
(1) | * * * | ||
(2) | * * * |
(B) | * * * |
(1) | * * * | ||
(2) | * * * |
* * * | |||
(ii) | the Majority Owner * * * is: |
(A) | the Owner * * * whose Participating Share is greater than 25%; or | ||
(B) | where the Participating Shares of a group of Related Corporations are in aggregate greater than 25%, the Owner designated by that group from time to time; |
(iii) | a Substantial Owner is an Owner * * * whose Participating Share is 17% or greater, but not greater than 25%; | ||
(iv) | a Minority Owner is an Owner * * * whose Participating Share is less than 17%; | ||
(v) | * * * | ||
(vi) | * * * | ||
(vii) | the Participating Share of an Owner will be aggregated with any Participating Shares of Related Corporations of the Owner for the purposes of determining whether the Owner is a Majority Owner, Substantial Owner or Minority Owner * * * | ||
(viii) | * * * |
(b) | Except as provided for in this clause 10: |
(i) | the Majority Owner * * * will be entitled and obliged to exercise all rights conferred, and perform all obligations imposed, on an Owner under the Transaction Documents * * *; and | ||
(ii) | the exercise of such rights, and the performance of such obligations, will be binding on the other Owners * * * and may be relied upon by the * * * other Owner * * *. |
(c) | * * * |
10.4 | Minority Owners (less than 17%) | |
A Minority Owner will: |
(a) | not be entitled to exercise any rights of an Owner * * *; and |
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(b) | be reliant on the Majority Owner * * * for the exercise of rights and the performance of obligations * * *, |
* * * | ||
10.5 | Substantial Owner (17% or greater, but not greater than 25%) |
(a) | Subject to paragraph (b), a Substantial Owner will: |
(i) | not be entitled to exercise any rights of an Owner * * *; and | ||
(ii) | be reliant on the Majority Owner * * * for the exercise of rights and the performance of obligations * * * |
* * * | |||
(b) | A Substantial Owner will be entitled to purchase or have its Marketing SPV purchase JV Production and exercise all other rights of an Owner under clause 6. |
10.6 | New Majority Owner (Third Party or Existing Owner) | |
If a Disposing Owner wishes to Dispose of a Participating Share greater than 25% to an Acquiring Owner or an Acquiring Owner otherwise wishes to acquire a Participating Share greater than 25% * * * |
(a) | then upon such Disposal: |
(i) | the Acquiring Owner will become the Majority Owner * * * (the New Majority Owner ); | ||
(ii) | the Disposing Owner will become a Minority Owner or a Substantial Owner (as applicable) if it has not Disposed of its entire Participating Share; | ||
(iii) | * * * | ||
(iv) | * * * | ||
(v) | * * * |
(b) | it will be a condition precedent to such Disposal that the Acquiring Owner acquires a majority ownership of the Iron Ore Assets of the Disposing Owner and its Related Corporations, * * * |
10.7 | No Majority Owner * * * | |
If as a result of a Disposal, there is no Owner * * * whose Participating Share is greater than 25%, the following provisions will apply for so long as that continues to be the case * * *: |
(a) | * * * will be Minority Owners or Substantial Owners (as applicable) and * * * will exercise all the rights and obligations of an Owner referable to their respective Participating Interests; | ||
(b) | the right to vote on the Owners Council may only be exercised by an Owner * * * that has a Participating Share of more than 25%, except that any related party transaction (including transactions with an Owner or its Affiliates) will require the consent of Owners holding, in aggregate, Participating Shares of 75% or more; |
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(c) | if there is no Owner * * * that has a Participating Share of more than 25%, the right to vote on the Owners Council will be exercised by each Owner in proportion to their respective Participating Shares, except that any related party transaction (including transactions with an Owner or its Related Corporations) will require the consent of Owners holding, in aggregate, Participating Shares of 75% or more; | ||
(d) | * * * | ||
(e) | * * * |
10.8 | Requirements for all Disposals to third parties | |
Unless otherwise agreed in writing by the Owners, the following provisions will apply in relation to any Disposal of a Participating Interest to an Acquiring Owner that is a third party: |
(a) | * * * |
(i) | * * * |
(A) | * * * | ||
(B) | * * * |
(ii) | * * * |
(A) | * * * | ||
(B) | * * * |
(iii) | * * * | ||
(iv) | * * * |
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * | ||
(e) | * * * | ||
(f) | * * * | ||
(g) | * * * | ||
(h) | * * * |
10.9 | Requirements for Disposals from one Owner to another Owner | |
Unless otherwise agreed in writing by the Owners, the following provisions will apply in relation to any Disposal of a Participating Interest by a Disposing Owner to an Acquiring Owner that is an existing Owner: |
(a) | * * * |
(i) | * * * | ||
(ii) | * * * |
(A) | * * * | ||
(B) | * * * |
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(b) | * * * | ||
(c) | * * * | ||
(d) | * * * |
10.10 | * * * | |
* * * |
(a) | * * * |
(i) | * * * | ||
(ii) | * * * |
* * * |
* * * |
(b) | * * * |
(i) | * * * | ||
(ii) | * * * |
* * * | |||
(c) | * * * |
(i) | * * * | ||
(ii) | * * * |
* * * |
* * * |
(d) | * * * |
(i) | * * * | ||
(ii) | * * * |
(e) | * * * |
(i) | * * * | ||
(ii) | * * * |
* * * |
11. | Security Structure | |
|
||
11.1 | Single purpose undertaking - Owners | |
An Owner may not carry on any business or other activity other than: |
(a) | the ownership of its Participating Interest; |
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(b) | the exercise of its rights and performance of its obligations under the Transaction Documents; and | ||
(c) | any incidental activities. |
11.2 | Funding undertaking - Owners | |
An Owner must not: |
(a) | fund the acquisition or holding of its Participating Interest by any means other than non-redeemable share capital; or | ||
(b) | incur any Finance Debt other than by way of a Guarantee in respect of Finance Debt of a Related Corporation. |
11.3 | Security Interests - Owners | |
An Owner may not create a Security Interest or permit a Security Interest to subsist over any of its assets other than: |
(a) | a Cross Charge; | ||
(b) | any Permitted Security Interest; and | ||
(c) | any other Security Interest over any or all of its assets, as long as the chargee under that Security Interest has entered into an Intercreditor Deed in favour of the other Owner. |
11.4 | Security Interests Issuers, shareholders of JV Entities and JV Entities | |
Each Owner must procure that each of its Related Corporations which is: |
(a) | a JV Entity; or | ||
(b) | the holder of shares in, or other Securities issued by, the Manager or a JV Entity, |
does not create a Security Interest or permit a Security Interest to subsist over the whole or any part of: |
(c) | its shares or other Securities in the Manager or a JV Entity; or | ||
(d) | any Iron Ore Assets or JV Operations, |
other than: |
(e) | any Permitted Security Interest; | ||
(f) | any Existing JV Cross Charge; and | ||
(g) | any Sole Risk Assets, as long as the chargee under that Security Interest has entered into an Intercreditor Deed in favour of the Manager on behalf of each other party to this Agreement. |
For the avoidance of doubt, this clause does not prevent the creation or subsistence of a Security Interest over any Excluded Assets. | ||
11.5 | Cross Charges - Owners |
(a) | ( Initial Owners ) Each of RTL and BHPBL undertakes to procure that the Rio Tinto Owner and the BHP Billiton Owner, respectively, grants a Cross Charge: |
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(i) | over its Participating Interest and all its other assets and undertaking, but excluding its shares in the relevant Issuer, on or about the date of Completion; and | ||
(ii) | on terms that it will extend to its shares in the relevant Issuer, in accordance with the procedures set out in clause 11.7 and 11.8. |
(b) | ( Subsequent Owners ) It is a condition of any Disposal under clause 10.8(c) that any new Owner grants a Cross Charge over its Participating Interest and all its other assets and undertaking (but, in the case of any shares in an Issuer, only as required in accordance with the procedures set out in clauses 11.7 and 11.8). |
11.6 | Cross Charges Issuers and JV Entities general requirement |
(a) | ( Initial Owners ) Each of the Rio Tinto Owner and the BHP Billiton Owner undertakes to procure that: |
(i) | the Issuer that is its Subsidiary; and | ||
(ii) | each JV Entity that is its wholly-owned subsidiary (as defined in the Corporations Act), |
grants a Cross Charge over any shares it holds in another JV Entity and all its other assets and undertaking, other than any Excluded Assets or Sole Risk Assets, in accordance with the procedure set out in clauses 11.7 and 11.8. | |||
(b) | ( Subsequent Owners ) It is a condition of any Disposal under clause 10.8(c) that any new Owner procures that: |
(i) | any Issuer that is its Subsidiary; and | ||
(ii) | any JV Entity that is its wholly-owned subsidiary (as defined in the Corporations Act), |
grants a Cross Charge over all its assets and undertaking to the extent required in accordance with the procedures set out in clauses 11.7 and 11.8. |
11.7 | Agreed Reorganisation and removal of Agreed Impediments |
(a) | ( Sufficient Asset Test and Issuer Share Security Test ) |
(i) | Each of the Rio Tinto Owner and the BHP Billiton Owner will be taken to have met the Sufficient Asset Test and the Issuer Share Security Test when it has implemented such parts of its Agreed Reorganisation, and obtained consents, waivers or amendments to overcome such of its Agreed Impediments, as the Owners have agreed are required to be implemented and overcome in order to enable the relevant test to be met. | ||
(ii) | A new Owner will be taken to have met the Sufficient Asset Test and the Issuer Share Security Test : |
(A) | * * * | ||
(B) | * * * |
(b) | ( Obligation to use reasonable endeavours ) Subject to paragraph (c), each Owner must, and must procure that its Related Corporations will: |
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(i) | ( Sufficient Asset Test ) use its reasonable endeavours to implement such parts of its Agreed Reorganisation and obtain consents, waivers or amendments to overcome such of its Agreed Impediments as are required to be implemented and overcome in order to enable the Sufficient Asset Test to be met* * *; | ||
(ii) | ( Issuer Share Security Test ) if: |
(A) | all Owners have met the Sufficient Asset Test; and | ||
(B) | the Owners have agreed that they wish to endeavour to meet the Issuer Share Security Test, having regard to the desirability of extending the Cross Charge to the Shares and to any risk of liability associated with doing so, |
use its reasonable endeavours to implement such parts of its Agreed Reorganisation and obtain consents, waivers or amendments to overcome such of its Agreed Impediments as are required to be implemented and overcome in order to enable the Issuer Share Security Test to be met, * * *; and | |||
(iii) | ( other ) use its reasonable endeavours to implement any other parts of its Agreed Reorganisation and obtain consents, waivers or amendments to overcome any other of its Agreed Impediments, * * * |
(c) | * * * |
(i) | * * * | ||
(ii) | * * * |
(A) | * * * | ||
(B) | * * * |
(d) | (* * * Indemnity ) Each Owner (an Indemnifying Owner ) must indemnify each other Owner and its Related Corporations (an Indemnified Party ) for * * *: |
(i) | caused by the implementation of the Indemnifying Owners Agreed Reorganisation; or | ||
(ii) | * * * | ||
(iii) | * * * |
(iv) | * * * | ||
(v) | * * * |
* * * |
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(e) | ( Information requirements ) Each Owner must keep the other Owners informed of the progress of its endeavours under paragraph (b), and must notify the other Owners when it has met the Sufficient Asset Test or the Issuer Share Security Test. |
11.8 | Procedure for granting Cross Charges |
(a) | ( Effect of Agreed Impediments ) A party is not required to procure the grant of a Cross Charge over: |
(i) | Shares; or | ||
(ii) | any part of the assets or undertaking of an Issuer or JV Entity, |
if and to the extent that the grant of the Cross Charge is prohibited or prevented by an Agreed Impediment. | |||
(b) | ( Obligation to procure asset Cross Charge when Sufficient Asset Test met ) | ||
An Owner must procure that any Issuer that is its Subsidiary, and any JV Entity that is its wholly-owned subsidiary, grants a Cross Charge over any shares it holds in another JV Entity and all its other assets and undertaking, other than: |
(i) | any Excluded Assets or Sole Risk Assets; and | ||
(ii) | any assets that continue to be subject to an Agreed Impediment, |
either: |
(iii) | in the case of a new Owner that already meets the Sufficient Asset Test, on becoming an Owner, or | ||
(iv) | otherwise, within 30 days after the Owner meets the Sufficient Asset Test, |
unless the Owner is permitted and elects to defer the grant of that charge under paragraph (e). | |||
(c) | ( Parent Company Guarantee ) Each of Rio Tinto (in the case of the RTL Owner) and BHP Billiton (in the case of the BHP Billiton Owner) must give a Parent Company Guarantee including provisions relating to Called Sums on or before Completion. | ||
(d) | ( Release of Parent Company Guarantee on provision of Cross Charge ) Upon an Owner that has provided a Parent Company Guarantee in relation to Called Sums under paragraph (c) meeting the Sufficient Asset Test, and procuring the grant of the relevant Cross Charges in accordance with paragraph (b), the Parent Company Guarantee will be released to the extent it relates to Called Sums. | ||
(e) | ( Election to defer Cross Charge where only one Owner meets Sufficient Asset Test ) If an Owner has met the Sufficient Asset Test but another Owner has not, the Owner that has met the test may elect to defer the grant of the Cross Charges required under paragraph (b) until each other Owner has also met the Sufficient Asset Test. The Owner may subsequently elect to procure the grant of the Cross Charges at any time even if another Owner has still not met the Sufficient Asset Test. If it does so, the Parent Company Guarantee will be released to the extent it relates to Called Sums. |
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(f) | ( Grant of Cross Charge when both Owners meet Sufficient Asset Test ) If all Owners have met the Sufficient Asset Test, all Cross Charges must be granted as required by paragraph (b). | ||
(g) | ( Obligation to extend Cross Charge if Issuer Share Security Test met ) If it has been agreed under clause 11.7(b)(ii) that the owners are to endeavour to meet the Issuer Share Security Test, the Cross Charges granted by each Owner under clause 11.6 must extend to cover all shares held by the Owner in an Issuer within 30 days after all Owners have met the Issuer Share Security Test. | ||
(h) | ( Continued reasonable endeavours ) An Owners obligations under clause 11.7 will continue until its Agreed Reorganisation has been completed and all its Agreed Impediments have been overcome, even if the relevant Cross Charges have been granted under paragraph (b) and the relevant Parent Company Guarantee has been released and even after the date mentioned in clause 11.7(b)(i). If an Agreed Impediment is overcome in respect of an asset after the relevant Cross Charge has been granted, the relevant Owner must procure that an additional Cross Charge is granted in respect of the relevant asset within 30 days of the Agreed Impediment being overcome. |
11.9 | * * * |
(a) | * * * | ||
(b) | * * * |
(i) | * * * | ||
(ii) | * * * |
(c) | * * * |
12. | * * * | |
|
||
12.1 | * * * | |
* * * | ||
12.2 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * |
12.3 | * * * | |
* * * |
(a) | * * * |
(i) | * * * | ||
(ii) | * * * |
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(iii) | * * * |
(b) | * * * |
(i) | * * * | ||
(ii) | * * * |
(c) | * * * | ||
(d) | * * * | ||
(e) | * * * |
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13. | Public Announcements and External Relations |
13.1 | Public Announcements |
(a) | The Owner Parents must use all reasonable endeavours to agree the wording and timing of all public announcements and statements by either of them relating to the WA Iron Ore JV (including any disclosure to any stock exchange or other Authorities and statements to shareholders, whether in annual reports or otherwise) before any announcement or statement is made. | ||
(b) | The Manager must consult and agree with the Owners the wording and timing of all public announcements and statements made by it on behalf of the WA Iron Ore JV. | ||
(c) | If agreement cannot be reached by the time that any announcement or statement must be made: |
(i) | in the case of paragraph (a), the Owner Parent in question will nevertheless be free to make the relevant announcement or statement, but in doing so must have due regard to the interest of the other Owner Parent and disclose only the information which in its good faith opinion it believes is necessary in the particular circumstances; and | ||
(ii) | in the case of paragraph (b), the Manager will nevertheless be free to make the relevant announcement or statement in respect of operational matters affecting health, safety or the environment. |
(d) | Copies of any public announcement or statement: |
(i) | made by an Owner Parent must be given to the other Owner Parent and the Manager; or | ||
(ii) | made by the Manager must be given to the Owner Parents, |
in the most expeditious manner reasonably available. |
13.2 | Continuous Disclosure | |
The Owners and the Manager will establish a protocol for the referral of material information by the Manager to the Owners to enable the Owner Parents to comply with their regulatory obligations. | ||
13.3 | External Relations | |
The Owner Parents and the Manager will also establish a protocol for consultation and coordination of communications with: |
(a) | Commonwealth and Western Australian State Authorities; | ||
(b) | the media (and analysts); and | ||
(c) | communities, |
in relation to all matters affecting the WA Iron Ore JV. |
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14. | Confidentiality |
14.1 | Confidential Information not to be disclosed |
(a) | For the purposes of this clause 14, Confidential Information means: |
(i) | the terms and conditions of the Transaction Documents; | ||
(ii) | the terms and conditions on which the WA Iron Ore JV supplies or acquires goods and/or services; | ||
(iii) | any information that cannot be disclosed by reason of an Existing JV Arrangement; | ||
(iv) | any proposals or studies that are commercially sensitive and that have not been announced to the market; | ||
(v) | any communications between Owners or between an Owner and the Manager that are commercially sensitive and that are identified as being Confidential Information for the purposes of this clause 14.1 at the time of the communication; and | ||
(vi) | such other categories of information as are determined by the Owners Council from time to time. |
It does not include information: |
(vii) | which is in or comes into the public domain otherwise than by disclosure in breach of a Transaction Document; | ||
(viii) | (other than in respect of the terms and conditions of the Transaction Documents) already known to the person at the date of disclosure; | ||
(ix) | acquired from a third party who is entitled to disclose it; | ||
(x) | which is independently developed by the person receiving that information otherwise than by disclosure in breach of a Transaction Document; | ||
(xi) | disclosed pursuant to the Intellectual Property Management Agreement, the confidentiality of which is governed by that agreement; and | ||
(xii) | other than information disclosed pursuant to the Intellectual Property Management Agreement, which is confidential and commercially sensitive to Rio Tinto, BHP Billiton or their respective Related Corporations and which does not specifically relate to JV Operations (including extracts of those entities Board minutes or documents prepared for submission to investment or evaluation committees) (an Owner Confidential Information ). |
(b) | Each party undertakes that it will not, and will procure that its Related Corporations will not: |
(i) | disclose Confidential Information, including Confidential Information of any other Owner (the Protected Party ), to any person; or | ||
(ii) | use Confidential Information of the Protected Party, |
except either: |
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(iii) | with the prior written approval of the Protected Party; or | ||
(iv) | for the purposes of the Transaction Documents or as otherwise permitted by this clause 14. |
(c) | Each party undertakes that it will: |
(i) | promptly do anything reasonably required by another party to prevent or restrain a breach or suspected breach of this clause 14.1 or any infringement or suspected infringement whether by court proceedings or otherwise; and | ||
(ii) | inform each other party immediately if it becomes aware that Confidential Information has been disclosed to an unauthorised third party. |
14.2 | Permitted disclosure |
(a) | Subject to clause 14.3, an Owner and each Related Corporation of an Owner which is a party to this Agreement may disclose Confidential Information: |
(i) | ( Related Corporation ) to any of its Related Corporations; | ||
(ii) | ( officers and employees ) to its directors, employees, officers and agents or of any of its Related Corporations; | ||
(iii) | ( professional advisers ) to its professional advisers (including legal advisers) and consultants; | ||
(iv) | ( lenders ) to a bank or other financial institution (and its professional advisers including legal advisers) in connection with any loan or other financial accommodation or application for a loan or financial accommodation to it or to any of its Related Corporations or the provision of underwriting for any issue of Securities; | ||
(v) | ( potential disposals ) in connection with any potential Disposal, Security Interest or investment; | ||
(vi) | ( disposals ) to a third party to whom an Owner has Disposed of a proportionate part of its Participating Interest or who has otherwise acquired an economic interest in part of an Owners Participating Interest or to a third party to whom an Owner or a Related Corporation of an Owner has granted a Security Interest; | ||
(vii) | ( required Disclosures ) to the extent required under any applicable Law or the rules or regulations of any recognised securities exchange which apply to it or to any of its Related Corporations; | ||
(viii) | ( legal proceedings ) if the disclosure is required for the purposes of any legal, administrative or other proceedings involving it or any of its Related Corporations; | ||
(ix) | ( Duties ) if and to the extent that it may be reasonably necessary in the discharge of its duties and obligations under the Transaction Documents; | ||
(x) | ( Authority ) if and to the extent that it may be reasonably necessary or desirable to disclose the information to any Authority in connection with applications for any Authorisations; and |
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(xi) | ( Customers ) to an existing or potential customer of Iron Ore Product in connection with the sale of Iron Ore Product or other arrangements for the supply of Iron Ore Product to that customer. |
(b) | The Manager may disclose Confidential Information: |
(i) | ( Related Corporations ) to any of its Related Corporations; | ||
(ii) | ( Other JV Participants ) to Other JV Participants, to the extent required by Existing JV Arrangements; | ||
(iii) | ( officers and employees ) to its directors, employees, officers and agents or any of its Related Corporations; | ||
(iv) | ( professional advisers ) to its professional advisers (including legal advisers) and consultants; | ||
(v) | ( legal proceedings ) if the disclosure is required for the purposes of any legal, administrative or other proceedings involving it or any of its Related Corporations; | ||
(vi) | ( Duties ) if and to the extent that it may be reasonably necessary or desirable in the discharge of its duties and obligations under the Transaction Documents; and | ||
(vii) | ( Authority ) to the extent required under any applicable Law or if and to the extent that it may be reasonably necessary or desirable to disclose the information to any Authority in connection with applications for any Authorisations. |
14.3 | Conditions to disclosure |
(a) | Any disclosure: |
(i) | under clause 14.2(a)(iv), (v) or (vi) may only be made if the person to whom disclosure is to be made first agrees with the Owner disclosing the information, in a form enforceable by the Protected Party and which is no less onerous than the requirements of this clause 14, that the information concerned must not be disclosed to any other person for any purpose, and such disclosure may only be made for the purposes of satisfying the person to whom disclosure is made as to the value and commercial viability of the proposed transaction; and | ||
(ii) | under clause 14.2(a)(i) to (iii), (ix) and (x) and under clause 14.2(b)(i) to (iii) and (v) may only be made if the person to whom disclosure is to be made is informed of the confidential nature of the information and required to, in the case of an Authority, to the extent possible, respect that confidentiality. |
(b) | Any Confidential Information that is required to be disclosed in legal, administrative or other proceedings (other than between the Owners, or an Owner and the Manager) pursuant to clause 14.2(a)(viii) or clause 14.2(b)(v) may not be disclosed to any person unless: |
(i) | prior to that disclosure, the Owner intending to disclose the Confidential Information ( Disclosing Party ) notifies the other Owner giving full details of: |
(A) | the legal, administrative or other proceedings in relation to which disclosure is required, including to the maximum extent permitted by Law, copies of documents filed in those legal, administrative or other proceedings; and |
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(B) | the Confidential Information intended to be disclosed; |
(ii) | to the maximum extent permitted by Law, the Disclosing Party gives the other Owner a reasonable opportunity in a court of law or other appropriate body or forum to: |
(A) | challenge whether the proposed disclosure is in accordance with the terms of this clause 14; | ||
(B) | challenge the obligation of the Disclosing Party or any other person to make that disclosure; or | ||
(C) | secure an order or ruling (including, where appropriate, an order or ruling that the disclosure should only be made on a confidential basis) to protect or preserve the confidentiality of the relevant information; |
(iii) | the Disclosing party takes all reasonable steps to preserve the Confidential Information to be disclosed, including, where appropriate, by doing all things necessary to obtain an order that the Confidential Information be disclosed in accordance with an appropriate confidentiality regime; and | ||
(iv) | the other requirements of this clause 14 applicable to that disclosure are satisfied. |
14.4 | Owners Confidential Information |
(a) | The Owners and the Manager acknowledge that nothing in a Transaction Document will require an Owner to disclose any of its Owners Confidential Information. | ||
(b) | If notwithstanding paragraph (a), an Owner or the Manager obtains Owner Confidential Information of another Owner, it: |
(i) | undertakes that it will not, and will procure that its Related Corporations will not: |
(A) | disclose that information; or | ||
(B) | use that information; and |
(ii) | will (directly or on behalf of its Related Corporations) destroy that information (or expunge it from any device in the case of electronic information) as soon as practicable after receipt of a request from the other Owner. |
14.5 | Law of confidentiality | |
The confidentiality undertaking contained in this Agreement will be in addition to and will in no way derogate from the obligations of the Owners and the Manager in respect of secret and confidential information at law, in equity or under any statute or trade or professional custom or use. | ||
14.6 | Former party bound | |
This clause 14 will continue to bind a party after it ceases to be a party to this Agreement. |
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15. | Relationship of the Parties |
15.1 | No partnership or proprietary interests | |
Nothing in this Agreement or any other Transaction Documents implies that the Owners or any of the JV Entities are: |
(a) | forming a partnership, agency or a similar relationship between the Owners or any of the JV Entities; or | ||
(b) | otherwise carrying on business in common with a view to profit, within the meaning of any partnership or limited partnership legislation in any jurisdiction; or | ||
(c) | otherwise creates any fiduciary relationship between the Owners or any of the JV Entities. |
15.2 | Liability | |
The liabilities and obligations of the Owners arising out of or in connection with the JV Operations will be several and not joint or joint and several and must be borne by them severally in their respective Participating Shares. |
16. | Independent Expert |
16.1 | Referral to Independent Expert | |
This clause 16 will apply to the appointment and conduct of an Independent Expert appointed under this Agreement (but, will not apply in relation to the Valuers appointed pursuant to item 1 of schedule 9). | ||
16.2 | Appointment of Independent Expert |
(a) | The Independent Expert will be appointed by agreement between the parties to the dispute or deadlock. If the parties cannot agree on appointment of an Independent Expert, the appointment will be made by: |
(i) | for technical matters the President of the Institute of Engineers, Australia; | ||
(ii) | for financial and valuation matters the President of the Institute of Chartered Accountants, Australia. |
(b) | The Independent Expert will: |
(i) | have appropriate qualifications, including experience in the subject matter of the dispute or deadlock; and | ||
(ii) | not have any interest which conflicts or may conflict with his or her appointment as an expert in relation to the dispute. |
16.3 | Conduct of Independent Expert |
(a) | The Independent Expert will accept oral and written submissions from the parties to the dispute or deadlock and make a written determination in relation to the matters in dispute within 28 days of his or her appointment unless the Independent Expert certifies that the matter is complex in which case the period will be extended to 60 days. |
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(b) | The Independent Expert will keep all information received in connection with its appointment under this Agreement confidential. | ||
(c) | In the absence of manifest error, the decision of the Independent Expert made under this clause will be final and binding on the parties to the dispute and all other parties to this Agreement. | ||
(d) | The costs of the Independent Expert will be borne equally between the parties in dispute. |
17. | Prohibition on partition |
(a) | Unless otherwise agreed unanimously by the Owners, no Owner or the Manager and no person claiming through an Owner or the Manager may seek partition or the establishment of a trust for sale or take any action (whether by any court order or otherwise) for partition or sale in lieu of partition (and each Owner and the Manager waives any rights it may have under any applicable Law to seek and do any acts and things as stated above) in respect of any Iron Ore Assets or Securities in a JV Entity during the term of this Agreement. | ||
(b) | Nothing in this clause 17 will in any way affect the right of each Owner: |
(i) | to purchase (or nominate a nominee to purchase) product under the Ore Sales Agreements pursuant to clause 6; or | ||
(ii) | to Dispose of its Participating Interest or make any other Disposal of assets as contemplated by clause 10, or to grant a Security Interest or permit a Security Interest to subsist as contemplated by clause 11. |
18. | Force Majeure |
18.1 | Event of Force Majeure | |
For the purposes of this clause 18, an Event of Force Majeure means an event beyond the reasonable control of a party, including: |
(a) | act of God, lightning, storm, flood, cyclone, tidal wave, landslide, fire, earthquake or explosion; | ||
(b) | strike, lockout or stoppage or ban or limitation on work or restraint of labour, whether at a mine or mines, railway, port or otherwise; | ||
(c) | act of public enemy, war (declared or undeclared), terrorism, sabotage, blockade, revolution, riot, insurrection, civil commotion or epidemic; | ||
(d) | any act, inaction, demand, order, restraint, restriction, requirement, prevention, frustration or hindrance by or of any government or other competent authority; | ||
(e) | embargo or boycott, unavailability of essential equipment, materials or facilities, unavailability of qualified employees or contractors, power or water shortages or lack of transportation; or | ||
(f) | any other cause, whether specifically referred to above or otherwise which is not within its reasonable control. |
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18.2 | No liability during an Event of Force Majeure | |
A party will not be liable for any delay in or failure of performance (or for any delay in procuring performance or failure to procure performance by a JV Entity pursuant to clause 2.4(b)(ii)) (other than a delay in or failure to make payment of a Called Sum or any other amount payable under this Agreement) if: |
(a) | that delay or failure arises from an Event of Force Majeure; | ||
(b) | it has taken (or, in the case of a procurement obligation pursuant to clause 2.4(b)(ii), has procured that the relevant JV Entity has taken) all proper precautions, due care and reasonable alternative measures with the object and intent of avoiding the delay or failure and of carrying out its obligations under this Agreement (including, to the extent possible, its procurement obligations under clause 2.4(b)(ii)); and | ||
(c) | as soon as practicable after the beginning of the event of Force Majeure which affects the ability of the party claiming under this clause 18.2 to observe or perform any of its obligations under this Agreement, the claiming party gives notice to each other party, subject to the Ring-Fencing Protocol: |
(i) | fully describing the Event of Force Majeure and, as far as possible, estimating its duration; | ||
(ii) | identifying the specific obligations affected by that Event of Force Majeure and the possible extent to which the claiming party (or the JV Entity in respect of which the claiming party has procurement obligations under clause 2.4(b)(ii)) will be unable to perform those obligations; and | ||
(iii) | specifying the measures proposed to be adopted to remedy or abate the Event of Force Majeure. |
18.3 | Suspension of obligations | |
While an Event of Force Majeure continues, the obligations which cannot be performed because of the Event of Force Majeure (other than a delay in or failure to make payment of a Called Sum or any other amount payable under this Agreement) will be suspended. | ||
18.4 | Remedy of Force Majeure | |
The party that is prevented from carrying out its obligations under this Agreement (including its procurement obligations under clause 2.4(b)(ii)) as a result of an Event of Force Majeure will remedy (or, as the case may be, procure the remedy of) the Event of Force Majeure to the extent reasonably practicable, keep the other parties regularly informed on the progress of remedying the Event of Force Majeure and resume the performance of its obligations (including its procurement obligations under clause 2.4(b)(ii)) as soon as reasonably possible. | ||
18.5 | Mitigation | |
The party that is prevented from carrying out its obligations under this Agreement as a result of an Event of Force Majeure and the Manager must take (or procure the taking by a relevant JV Entity) all action reasonably practicable to mitigate any loss suffered by a party or a third party as a result of that partys failure to carry out its obligations under this Agreement (including its procurement obligations under clause 2.4(b)(ii)). |
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18.6 | No requirement to settle labour dispute | |
A party is not required, under clause 18.4 or 18.5, to settle any labour dispute against its will. | ||
18.7 | * * * |
(a) | * * * | ||
(b) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * |
(c) | * * * | ||
(d) | * * * | ||
(e) | * * * | ||
(f) | * * * | ||
(g) | * * * | ||
(h) | * * * |
19. | GST |
19.1 | Definitions | |
For the purposes of this clause 19: |
(a) | Adjustment has the meaning given by the GST Law; | ||
(b) | Consideration has the meaning given by the GST Law; | ||
(c) | Input Tax Credit has the meaning given by the GST Law and a reference to an Input Tax Credit entitlement of a party includes an Input Tax Credit for an acquisition made by that party but which the representative member of a GST Group or the Joint Venture Operator of a GST Joint Venture is entitled under GST Law; | ||
(d) | GST has the meaning given by the GST Law; | ||
(e) | GST Amount means in relation to a Taxable Supply the amount of GST payable in respect of that Taxable Supply; | ||
(f) | GST Group has the meaning given by the GST Law; | ||
(g) | GST Joint Venture has the meaning given by the GST Law. | ||
(h) | GST Law has the meaning given by the A New Tax System (Goods and Services Tax) Act 1999 (Cth); | ||
(i) | Joint Venture Operator has the meaning given by the GST Law. | ||
(j) | Tax Invoice has the meaning given by the GST Law; and |
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(k) | Taxable Supply has the meaning given by the GST Law excluding the reference to Section 84-5 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth). |
19.2 | Recovery of GST | |
If GST is payable on a Taxable Supply made under, by reference to or in connection with this Agreement, the party providing the Consideration for that Taxable Supply must also pay the GST Amount as additional Consideration. Subject to the prior receipt of a Tax Invoice, the GST Amount is payable at the same time that the other Consideration for the Taxable Supply is provided. This clause 19.2 does not apply to the extent that the Consideration for the Taxable Supply is expressly stated to be GST inclusive. | ||
19.3 | Liability net of GST | |
Any reference in the calculation of Consideration or of any indemnity, reimbursement or similar amount to a cost, expense or other liability incurred by a party must exclude the amount of any Input |
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Tax Credit entitlement of that party in relation to the relevant cost, expense or other liability. A party will be assumed to have an entitlement to a full Input Tax Credit unless it demonstrates otherwise prior to the date on which the Consideration must be provided. | ||
19.4 | Adjustments | |
If an Adjustment occurs in relation to a Taxable Supply made under, by reference to or in connection with this Agreement, the GST Amount will be recalculated to reflect that Adjustment and an appropriate payment will be made between the parties. | ||
19.5 | Revenue exclusive of GST | |
Any reference in this Agreement to price, value, sales, revenue or a similar amount ( Revenue ), is a reference to that Revenue exclusive of GST. | ||
19.6 | Cost exclusive of GST | |
Any reference in this Agreement (other than in the calculation of Consideration or of any indemnity, reimbursement or similar amount) to cost, expense or other similar amount ( Cost ), is a reference to that Cost exclusive of any Input Tax Credit entitlement. | ||
19.7 | GST obligations to survive termination | |
This clause 19 will continue to apply after expiration or termination of this Agreement. |
20. | Governing Law and Jurisdiction |
20.1 | Governing Law |
(a) | This Agreement and the other Transaction Documents are governed by the laws of Western Australia, Australia. | ||
(b) | The parties irrevocably and unconditionally: |
(i) | submit to the non-exclusive jurisdiction of the courts of Western Australia; and | ||
(ii) | agree that they may not object to any suit, action or proceeding commenced under or in connection with this Agreement or the other Transaction Documents on the basis that the courts of Western Australia are not an appropriate forum. |
20.2 | Final judgment conclusive and enforceable | |
The parties agree that a final judgment in any suit, action or proceeding commenced under or in connection with this Agreement or the other Transaction Documents in any court of competent jurisdiction is conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. | ||
20.3 | Dispute Resolution |
(a) | The parties will first seek to resolve any dispute under or in connection with this Agreement or the other Transaction Documents by discussions in good faith. | ||
(b) | Any party may, by notice to the other parties, require any dispute (other than a dispute or deadlock to which the deadlock resolution procedure set out in clauses 3.7 and 3.8 applies |
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or which is otherwise expressly to be referred to an Independent Expert pursuant to clause 16 or a Valuer pursuant to item 1 of schedule 9 or which is to be determined pursuant to an alternative process under the Implementation Agreement) arising under or in connection with this Agreement or the other Transaction Documents to be referred to the Chief Executives. The Chief Executives will meet and seek in good faith to resolve the dispute within 30 days. | |||
(c) | If the Chief Executives are unable to resolve the dispute within 30 days of referral to them, any party may refer the dispute to the Owners Chairpersons, who will meet and seek in good faith to resolve the dispute within 30 days. | ||
(d) | If the Owners Chairpersons are unable to resolve the dispute within 30 days of referral to them, then any party may commence proceedings in any court of competent jurisdiction. | ||
(e) | Subject to paragraph (f), a party may not commence court proceedings in relation to any dispute arising out of or in connection with this Agreement or the other Transaction Documents until it has complied with the dispute resolution process set out in paragraphs (a) to (d). | ||
(f) | Nothing in this clause 20 prevents a party seeking appropriate injunctive or interlocutory relief at any time to preserve property or rights or to avoid losses that are not compensable in damages. | ||
(g) | Each party agrees that: |
(i) | it is responsible for its own costs in connection with the dispute resolution process; and | ||
(ii) | the costs of any suit, action or proceeding commenced under or in connection with this Agreement or the other Transaction Documents will be borne as between the parties as determined by the court of competent jurisdiction that hears the suit, action or proceeding. |
20.4 | Service of Process |
(a) | Each party agrees that service of all writs, process and summonses in any suit, action or proceeding under or in connection with this Agreement or the other Transaction Documents brought in Western Australia may be made on its registered or principal office for the time being in Australia. | ||
(b) | Nothing contained or implied in this Agreement or the other Transaction Documents will in any way be taken to limit the ability of a party to: |
(i) | serve any writs, process or summonses; or | ||
(ii) | obtain jurisdiction over a party in other jurisdictions, |
in any manner permitted by Law. |
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21. | Ancillary Provisions |
21.1 | Notices |
(a) | Subject to paragraph (b), any notice, demand, consent, certificate, approval, nomination, waiver or other similar communication given or made in connection with this Agreement (a notice ): |
(i) | will be in writing and signed by the sender or a person duly authorised by the sender; | ||
(ii) | will be addressed and delivered to the intended recipient at the address or fax number below or the address or fax number last notified by the intended recipient to the sender after the date of this Agreement: |
(A)
|
to Rio Tinto and the Rio Tinto Owner: |
Rio Tinto plc
2 Eastbourne Terrace |
||
|
London W2 6LG | |||
|
UNITED KINGDOM | |||
|
Attention: Company Secretary | |||
|
Fax +44 20 7781 1835 | |||
|
||||
|
and to | |||
|
||||
|
Rio Tinto Limited | |||
|
Level 33, 120 Collins Street | |||
|
Melbourne VIC 3000 | |||
|
AUSTRALIA | |||
|
Attention: Company Secretary | |||
|
Fax +61 3 9283 3151 | |||
|
||||
(B)
|
to BHP Billiton and the | BHP Billiton plc | ||
|
BHP Billiton Owner: | Neathouse Place, Victoria | ||
|
London SW1V 1B | |||
|
UNITED KINGDOM | |||
|
Attention: Company Secretary | |||
|
Fax +44 20 7802 4111 | |||
|
||||
|
and to | |||
|
||||
|
BHP Billiton Limited | |||
|
BHP Billiton Centre | |||
|
180 Lonsdale Street | |||
|
Melbourne VIC 3000 | |||
|
Attention: Company Secretary | |||
|
Fax No: +61 3 9609 3015 | |||
|
||||
(C)
|
to the Manager: | [#] |
(iii) | will be taken to be duly given or made when delivered, received or left at the above fax number or address. If delivery or receipt occurs on a day that is not a |
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business day in the place to which the notice is sent or is later than 4pm (local time) at that place, it will be taken to have been duly given or made at the commencement of business on the next business day in that place. |
(b) | Any notice relating to a matter that is agreed by the Owners Council to be a routine operational communication may be made by electronic email to the email addresses provided by the Owners and the Manager from time to time. Where a notice is permitted to be sent by email pursuant to this paragraph, the notice will be taken to have been received by the party upon the earlier of the sender receiving either an automatic delivery receipt or other confirmation of delivery and otherwise be made in accordance with paragraphs (a)(i) and (iii). |
21.2 | Severability | |
If any of the provisions of this Agreement is or becomes invalid, illegal or unenforceable, in whole or in part, under the law of any jurisdiction, the validity, legality or enforceability of such provision or part under the law of any other jurisdiction and the validity, legality and enforceability of the remaining provisions of this Agreement will not in any way be affected or impaired. If any provision of this Agreement, or its application to any person or entity or any circumstance, is invalid or unenforceable, the parties will make such suitable and equitable provision as is necessary in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision. | ||
21.3 | Variation | |
No variation, modification or amendment of all or any part of this Agreement, including the schedules to this Agreement, will be effective unless in writing and signed by or on behalf of each party other than the Manager. The Manager agrees that it will be bound by any variation, modification or amendment of this Agreement, including the schedules to this Agreement, that is in writing and signed by or on behalf of each party other than the Manager. | ||
21.4 | No Waiver | |
No failure of any of the parties to exercise, or delay by it in exercising, any right, power or remedy in connection with this Agreement will operate as a waiver thereof, nor will any single or partial exercise of any right, power or remedy preclude any other or further exercise of such right, power or remedy or the exercise of any other right, power or remedy. | ||
21.5 | Remedies |
(a) | Except as otherwise provided for in this Agreement, the rights and remedies of the parties are cumulative and not exclusive of rights and remedies provided by Law. | ||
(b) | Without prejudice to any other rights and remedies which any party may have, each party acknowledges and agrees that damages would not be an adequate remedy for any breach by any party of the provisions of this Agreement and any party will be entitled to seek the remedies of injunction, specific performance and other equitable relief (and the parties will not contest the appropriateness or availability thereof), for any threatened or actual breach of any provision of this Agreement by any party and no proof of special damages will be necessary for the enforcement by any party of the rights under this Agreement. |
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21.6 | No Merger | |
The rights and obligations of the parties: |
(a) | will not merge on the completion of any transaction contemplated by this Agreement; and | ||
(b) | will survive the execution and delivery of any assignment or other document entered into for the purpose of implementing a transaction. |
21.7 | Costs and Expenses |
(a) | Each party must bear its own costs arising out of the negotiation, preparation and execution of this Agreement. | ||
(b) | All stamp duty (including fines, penalties and interest) payable by a party on or in connection with this Agreement will be borne by that party. |
21.8 | Entire Agreement | |
This Agreement contains the entire agreement between the parties in relation to its subject matter and supersedes all agreements, undertakings, negotiations and discussions, whether oral or written, of the parties. | ||
21.9 | Further Assurances | |
Each party agrees to do anything necessary or desirable (including executing agreements, deeds, transfers, instruments and documents) to give full effect to this Agreement and the transactions contemplated by it. | ||
21.10 | Change of Law |
(a) | If there is a change in law or change in accounting standards that materially affects the operation of the Transaction Documents to the detriment of an Owner or its Related Corporations, then that Owner by notice to the other Owner may require the other Owner to enter into good faith negotiations to seek to agree such amendments to the Transaction Documents as may be appropriate to mitigate the detriment, to the extent practicable and reasonable, and in a manner which operates fairly between the Owners. A failure to agree amendments is not a dispute that may be referred for resolution in accordance with clause 20.3. | ||
(b) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * | ||
(iv) | * * * |
* * * |
21.11 | Enurement | |
Except as provided in this Agreement, the provisions of this Agreement will enure for the benefit of, and be binding on, the parties and their respective successors and permitted assigns. |
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21.12 | Civil Liability Act 2002 | |
The parties agree that the Civil Liability Act 2002 (WA) is expressly excluded from application to this Agreement and the Transaction Documents, or any relevant dispute, claim, action or other matter whatsoever arising out of or in connection with this Agreement and the Transaction Documents pursuant to Section 4A of that Act. | ||
21.13 | Counterparts | |
This Agreement may be executed in any number of counterparts and by the parties on separate counterparts, each of which will be an original but all of which together will constitute one and the same instrument. This Agreement will not take effect until each party has executed at least one counterpart. |
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1. | Definitions and Interpretation |
1.1 | Definitions | |
The following definitions apply unless the context requires otherwise. | ||
1997 Tax Act means the Income Tax Assessment Act 1997 (Cth). | ||
AAO Issuer has the meaning given in clause 12.3(b)(ii). | ||
Accounting Policy means the accounting policy on the terms initialled by Rio Tinto and BHP Billiton for identification on or about the date of the Implementation Agreement, as amended by the Revised Accounting Policy, in either case as amended or replaced from time to time in accordance with clause 3.13(b). | ||
Accounts has the meaning given in clause 4.11(b)(i). | ||
Acquiring Owner , for the purposes of clause 10, means the entity (which may be a third party or an existing Owner) that is acquiring a Participating Interest from a Disposing Owner. | ||
Additional Tonnes has the meaning given in item 1(c) of schedule 4. | ||
Adjustment Reversion Notice has the meaning given in clause 18.7(f). | ||
Adjustment Termination Notice has the meaning given in clause 18.7(f). | ||
Affiliate means a Related Corporation that is not a JV Entity or the Manager. | ||
Agreed Impediment means each impediment to be overcome for the purposes of clause 11, as agreed between Rio Tinto and BHP Billiton on or about the date of the Implementation Agreement. | ||
Agreed Reorganisation means the reorganisation steps agreed between Rio Tinto and BHP Billiton on or about the date of the Implementation Agreement. | ||
Attributable means attributed, allocated or apportioned in accordance with the Attribution Principles. | ||
Attribution Principles means the principles in item 1.6 of the Funding and Distribution Policy. | ||
Audit Committee means the audit committee to be established pursuant to clause 3.9(e)(i). | ||
Auditor has the meaning given in clause 4.11(a). | ||
Authorisations means all permissions, licences, authorisations, approvals, consents, rulings, registrations, filings, lodgements, permits, franchises, agreements, notarisations, certificates, licences, approvals, directions, declarations, authorities or exemptions from, by or with any Authority, including as may be required or obtained under the Mining Act or any State Agreement. |
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Authority means any minister, government or representative of a government or any governmental, quasi-governmental, local government, statutory, judicial, administrative, fiscal, tax, competition or regulatory authority, entity or other body, department, concession, tribunal, self-regulatory organisation established pursuant to statute or rules of a recognised stock exchange, instrumentality, agency, statutory corporation or public authority. | ||
* * * | ||
BHP Billiton Group means BHPBL, BHPBP and each of their Subsidiaries and BHP Billiton Group entity means an entity in the BHP Billiton Group. | ||
BHP Billiton Issuer has the meaning given in the Implementation Agreement. | ||
BHP Billiton JV Entities means: |
(a) | as at the date of this Agreement, the BHP Billiton Issuer and the BHP Billiton Subsidiaries listed in, and which are engaged in the businesses described in, schedule 2; and | ||
(b) | any other wholly-owned Subsidiary of the BHP Billiton Issuer that subsequently acquires Iron Ore Assets for the purposes of the WA Iron Ore JV. |
BHP Billiton JVs means: |
(a) | the Mt Newman Joint Venture; | ||
(b) | the Goldsworthy Joint Venture; | ||
(c) | the Yandi Joint Venture; | ||
(d) | the Wheelarra Joint Venture; | ||
(e) | the JW4 Joint Venture; | ||
(f) | the POSMAC Joint Venture; and | ||
(g) | any other joint venture that a BHP Billiton JV Entity enters into after the date of this Agreement within the scope of the WA Iron Ore JV. |
BHP Billiton Owner means the entity that is: |
(a) | the holder of Debentures issued by the Rio Tinto Issuer from time to time; and | ||
(b) | the holder of Shares issued by the BHP Billiton Issuer from time to time. |
* * * | ||
BHP Billiton State Agreements means: |
(a) | the Iron Ore (Mount Newman) Agreement Act 1964 (WA); | ||
(b) | the Iron Ore (Mount Goldsworthy) Agreement Act 1964 (WA); | ||
(c) | the Iron Ore (Goldsworthy-Nimingarra) Agreement Act 1972 (WA); | ||
(d) | the Iron Ore (Marillana Creek) Agreement Act 1991 (WA); and |
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(e) | the Iron Ore (McCameys Monster) Agreement Authorisation Act 1973 (WA). |
Bank Bill Rate in relation to any calendar month, means: |
(a) | the average one month Australian bank bill rate by Reuters Monitor Service Page BBSY (rounded up, if necessary, to the nearest two decimal places) displayed at about 10:00 am (Melbourne time) on the first Business Day of that calendar month; or | ||
(b) | if no such rate is displayed for any calendar month, then the Bank Bill Rate for that month in respect of any unpaid amount, will be the rate which is the average (rounded up, if necessary to the nearest two decimal places) of the rates quoted to the person to which the relevant amount is owed by each of three Australian banks selected by that person as the relevant banks buying rate as at 10:00 am (Melbourne time) on the first Business Day of that calendar month for bank-accepted bills of exchange having a term of 30 days. |
Bao-HI Joint Venture means the joint venture established by the Bao-HI Ranges Joint Venture Agreement dated 22 June 2002. | ||
Base Case is the Net Present Value (as determined by the Manager based on the assumptions referred to in schedule 5) of the existing operations prior to any Contemplated Project being assessed. | ||
Beasley Joint Venture means the joint venture to be established pursuant to clause 3.1 of the Beasley River Joint Venture Agreement dated 28 October 2004. | ||
Blending Agreement means the blending agreement to be entered into by [#] pursuant to clause 3.5(a)(vi) and 6.2(a) of the Implementation Agreement. | ||
Budget means, in respect of the WA Iron Ore JV, a document that describes, consistent with the Business Plan, the business activities, the associated resource requirements and the expected financial outcomes, as: |
(a) | prepared by the Manager pursuant to clauses 3.10(a), (i)(iii) or (k); and | ||
(b) | approved by the Owners Council pursuant to clause 3.10(i)(i) or (ii) or applied by operation of clause 3.10(i)(iii) and also includes the First Budget (as defined in the Implementation Agreement). |
Budget Overrun Percentage has the meaning given in clause 3.10(l)(i). | ||
Business Day means a day that is not a Saturday, Sunday or public holiday in Perth, Western Australia. | ||
Business Plan means a document that summarises the operational and financial objectives of the WA Iron Ore JV, its strategy to achieve these objectives, the key initiatives that will enable this strategy to be implemented and the key indicators by which the performance of the WA Iron Ore JV against these objectives can be assessed, as: |
(a) | prepared by the Manager pursuant to clauses 3.10(a), (i)(iii) or (k); and | ||
(b) | approved by the Owners Council pursuant to clause 3.10(i)(i) or (ii) or applied by operation of clause 3.10(i)(iii) and also includes the First Business Plan (as defined in the Implementation Agreement). |
CEO means the chief executive officer of the Manager. |
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CFR has the meaning given in the International Rules for the Interpretation of Trade Terms of the International Chamber of Commerce (Incoterms) 2000 Edition, as replaced from time to time. | ||
CPI means the Australian All Groups Consumer Price Index Number (weighted average of eight capital cities) published by the Australian Bureau of Statistics. In this definition: |
(a) | the reference to the Australian All Groups Consumer Price Index Number (weighted average of eight capital cities) means: |
(i) | the same numbers but with different names at any time; and | ||
(ii) | the same numbers adjusted mathematically to take account of a change at any time in the base year provided that indices of the same base year are used throughout the calculation; and |
(b) | the reference to the Australia Bureau of Statistics includes a reference to: |
(i) | the Bureau but with a different name at any time; and | ||
(ii) | a governmental agency in Australia (in the absence of the Australian Bureau of Statistics) at any time having similar functions. |
Call Deposits has the meaning given in the Funding and Distribution Policy. | ||
Call Notice means a notice given pursuant to clause 3.11(a). | ||
Called Sum has the meaning given in clause 3.11(a). | ||
Called Sum Payment Dates has the meaning given in clause 3.11(c)(ii). | ||
* * * | ||
* * * | ||
Cash means all cash and cash equivalents within the meaning of the definition of Cash Flows. | ||
Cash Flows means, as the case requires, all inflows and outflows of cash and cash equivalents from operating, financing and investing activities, as determined in accordance with IAS 7 and AASB 107. References to Cash inflows and Cash outflows have a corresponding meaning. | ||
Channar Joint Venture means the joint venture established by the Channar Mining Joint Venture Agreement dated 16 November 1987. | ||
Chief Executives has the meaning given in clause 3.7(a). | ||
Commissioner of Taxation means the Australian Federal Commissioner of Taxation. | ||
Committees has the meaning given in clause 3.9(a). | ||
Completion has the meaning given in the Implementation Agreement. | ||
Confidential Information has the meaning given in clause 14.1. | ||
Consolidated Group means a consolidated group as that term is defined in s.995-1 (1) of the 1997 Tax Act. | ||
Contemplated Project has the meaning given in clause 8.2(a). | ||
Contract Quantity has the meaning given in clause 6.5(b)(ii)(A). | ||
Corporations Act means the Corporations Act 2001 (Cth). |
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Creditor Deed Poll means a deed in the form of schedule 13. | ||
Cross Charge means a cross charge in the form of schedule 12. | ||
dmtu means dry metric tonne units. | ||
Debenture means securities of that name issued or to be issued on the terms and conditions set out in the Debenture Deeds Poll. | ||
Debenture Deed Poll means a deed poll entered into by each Issuer in conjunction with the issue of the Debentures on or about the date of this Agreement. | ||
Debenture Holder has the meaning given in the Debenture Deeds Poll. | ||
Deed of Accession means each deed of accession entered into by a Sole Risk Entity in the form set out in schedule 18. | ||
Default Amount has the meaning given in clause 9.2(b). | ||
Default Costs has the meaning given in clause 9.2(b)(ii). | ||
Default Date has the meaning given in clause 9.1(a)(i). | ||
Default Interest has the meaning given in clause 9.2(b)(i). | ||
Defaulting Owner has the meaning given in clause 9.1(a). | ||
Demand Forecast has the meaning given in clause 8.1(a). | ||
Designated Finance Company has the meaning given in the Funding and Distribution Policy. | ||
Dilution Option has the meaning given in clause 9.7(a). | ||
Discovery has the meaning given in clause 2.2(d). | ||
Dispose means, in relation to any asset, to sell, transfer, assign, declare oneself a trustee of, or part with the benefit of, or otherwise dispose of, the asset (or any interest in it, or any part of it) other than (in each case) by the creation of a Security Interest, and Disposal has a corresponding meaning. | ||
Disposing Owner , for the purposes of clause 10, means an Owner (either alone or together with its Related Corporations) that is making a Disposal of any proportionate part of its Participating Interest. | ||
ERP Service and Licence Agreement means the Service and Licence Agreement entered into by [#] on or about the date of this Agreement. | ||
ERP Services has the meaning given in the ERP Service and Licence Agreement. | ||
Effective Date means 1 July 2009. | ||
Escalated means escalated at a nominal rate of 6.5% per annum, compounded annually, using the following formula: |
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Excluded Assets means any assets of any Rio Tinto Group entity or BHP Billiton Group entity from time to time that are not Iron Ore Assets and includes: |
(a) | assets used in Iron Ore Marketing Activities and not Iron Ore Production Activities ( Marketing Assets ) including: |
(i) | plant and equipment used in Iron Ore Marketing Activities and not Iron Ore Production Activities; | ||
(ii) | land (including fixtures) used in Iron Ore Marketing Activities and not Iron Ore Production Activities; | ||
(iii) | contracts and leases to the extent they relate to Iron Ore Marketing Activities, including contracts for the supply of iron ore produced by Iron Ore Production Activities to customers (other than Ore Sales Agreements); | ||
(iv) | Cash and receivables arising from Iron Ore Marketing Activities; | ||
(v) | iron ore to which a Rio Tinto Group entity or BHP Billiton Group entity is entitled that has been loaded on board a ship; and | ||
(vi) | all other assets of a Rio Tinto Group entity or BHP Billiton Group entity referable to Iron Ore Marketing Activities and not Iron Ore Production Activities; |
(b) | for Rio Tinto, its interests in each of the following companies and their existing and future assets: |
(i) | * * * |
(A) | * * * | ||
(B) | * * * | ||
(C) | * * * | ||
(D) | * * * | ||
(E) | * * * | ||
(F) | * * * |
(ii) | * * * | ||
(iii) | * * * | ||
(iv) | * * * | ||
(v) | * * * | ||
(vi) | * * * | ||
(vii) | * * * | ||
(viii) | * * * | ||
(ix) | * * * | ||
(x) | * * * | ||
(xi) | * * * |
(c) | for BHP Billiton, its interests in each of the following: |
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(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * |
(d) | any Secondary Processing facilities, other than the facilities expressly included in the definition of Iron Ore Assets; | ||
(e) | subject to clause 4.16 and the ERP Service and Licence Agreement, all intellectual property and technology of the Rio Tinto Group and the BHP Billiton Group used in Iron Ore Production Activities; | ||
(f) | any Retained Assets; | ||
(g) | Excluded Cash Flows, Excluded Distributable Earnings and Excluded Asset Surplus; | ||
(h) | Cash arising from Excluded Cash Flows, and any loan or deposit arising from use of such Cash; | ||
(i) | anything which is, or is deemed to be, an Excluded Asset or part of Excluded Assets under, or by operation of, the Transaction Documents; and | ||
(j) | anything that the Owners agree are Excluded Assets, |
and, for the avoidance of doubt, does not include Sole Risk Assets. | ||
Excluded Asset Surplus of an Issuer on an Insolvency Administration has the meaning given in the Funding and Distribution Policy. | ||
Excluded Cash Flows means Cash Flows that are not Iron Ore Cash Flows or Sole Risk Cash Flows. | ||
Excluded Distributable Earnings means Distributable Earnings that are not Iron Ore Distributable Earnings. | ||
Excluded Liabilities means any liabilities of any Rio Tinto Group entity or BHP Billiton Group entity, from time to time, that are not Iron Ore Liabilities or Sole Risk Liabilities and includes: |
(a) | any liabilities Attributable to Excluded Assets; | ||
(b) | any liabilities to the extent they arise from the conduct of the Iron Ore Marketing Activities ( Marketing Liabilities ); | ||
(c) | Excluded Loans; | ||
(d) | anything which is, or is deemed to be, an Excluded Liability under, or by operation of, the Transaction Documents; and | ||
(e) | anything that the Owners agree are Excluded Liabilities. |
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Excluded Loans means any loans that are not Iron Ore Loans or Sole Risk Loans, and includes: |
(a) | Agreed Opening Excluded Loans (as defined in the Implementation Agreement); and | ||
(b) | Post-Commencement NCEP Loans (as defined in the Implementation Agreement). |
Excluded Marketing Operations means, in relation to a JV Entity, that part of its operations concerning the sale of Iron Ore Product to customers other than pursuant to an Ore Sales Agreement, and a reference to the Excluded Marketing Operations division of a JV Entity has a corresponding meaning. | ||
Existing JV means a Rio Tinto JV or a BHP Billiton JV. | ||
Existing JV Arrangements means the agreements and other arrangements which constitute a Rio Tinto JV or BHP Billiton JV, from time to time, and includes: |
(a) | the arrangements between Rio Tinto Group entities and Robe in relation to Pilbara Iron infrastructure sharing and Pilbara Iron corporate shared services and mobile equipment, each as amended from time to time; and | ||
(b) | any terms implied under such arrangements and any fiduciary, equitable or other obligation owed in relation to such agreements or other arrangements. |
Existing JV Cross Charge means a Security Interest mentioned in schedule 14. | ||
Expenditure Category Overrun Amount has the meaning given in clause 3.10(l)(ii). | ||
Expiring Contract has the meaning given in clause 6.5(a). | ||
Finance Debt means indebtedness (whether actual or contingent) in respect of money borrowed or raised or other financial accommodation. It includes indebtedness under or in respect of: |
(a) | a Guarantee of Finance Debt or a Guarantee given to a financier; | ||
(b) | a finance lease; | ||
(c) | a swap, option, hedge, forward, futures or similar transaction; | ||
(d) | an acceptance, endorsement or discounting arrangement; | ||
(e) | a redeemable share or redeemable stock; or | ||
(f) | the deferred purchase price (for more than 90 days) of an asset or service, |
or an obligation to deliver assets or services paid for in advance by a financier or otherwise relating to a financing transaction. | ||
Financial Year means a period of 12 months commencing on 1 January in each year and a period of 12 months commencing on 1 July each year. | ||
Finder has the meaning given in clause 2.2(d). | ||
Finder Owner has the meaning given in clause 2.2(d). | ||
Feasibility Study has the meaning given in clause 8.2(h). | ||
FOB has the meaning given in the International Rules for the Interpretation of Trade Terms of the International Chamber of Commerce (Incoterms) 2000 Edition. |
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FOB Price means: |
(a) | where Iron Ore Product is sold on an FOB basis, the price (expressed in US$ per dmtu) for Iron Ore Product the subject of any shipment or sale which is payable by the third party end customer under the applicable FOB sales contract; or | ||
(b) | where Iron Ore Product is sold on a non-FOB basis * * * |
(i) | * * * | ||
* * * | |||
* * * | |||
* * * | |||
* * * | |||
* * * | |||
* * * | |||
* * * | |||
(ii) | * * * |
(A) | * * * | ||
(B) | * * * |
For the avoidance of doubt, the purpose of this definition is to allow the parties to determine the realised FOB price equivalent for each shipment or sale of Iron Ore Product and eliminating the non-FOB component of the price paid by the end customer on an arms length basis. |
Funding and Distribution Policy means the funding and distribution policy initialled by BHP Billiton and Rio Tinto on or about the date of the Implementation Agreement, as amended or replaced from time to time in accordance with clause 21.3. | ||
Goldsworthy Joint Venture means the joint venture carried on under the name Mt Goldsworthy Mining Associates Joint Venture as constituted from time to time pursuant to the Restated Mount Goldsworthy Mining Associates Joint Venture agreement dated 7 September 1990. | ||
Guarantee means an obligation or offer to provide funds (including by subscription or purchase) or otherwise be responsible in respect of an obligation or indebtedness, or the financial condition or solvency, of another person. It includes a guarantee, indemnity, letter of credit or legally binding letter of comfort, or an obligation or offer to purchase an obligation or indebtedness of another person. | ||
Grossed up for Tax means that, where one party (the Payer ) is liable to pay an amount to another party (the Recipient ) and that payment increases the Tax payable by the Recipient or the Head Company of any Consolidated Group of which the Recipient is a member (collectively the Recipient Group ), then the payment must be grossed up by such amount as is necessary to ensure that the net amount retained by the Recipient Group after deduction of Tax or payment of the increased income tax equals the amount the Recipient Group would have retained had the Tax not been payable. |
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Half Year means the 6 month periods commencing on 1 January and 1 July in each year (and includes the period from the JV Commencement Date until the following 30 June or 31 December whichever is the earlier). | ||
* * * | ||
HBI Beneficiation Plant means the assets marked red and green on the aerial photograph in item 2.4 of Part 2 of Schedule 7 of the Implementation Agreement (but excluding all liabilities associated with them and arising from circumstances or events occurring prior to * * * to clause 5.4(a) to (b) of the Implementation Agreement). | ||
HBI Plant means all real property, plant and equipment and other assets situated at the hot briquetted iron processing facility at Boodarie, Western Australia (other than the HBI Beneficiation Plant) and all associated liabilities. | ||
Head Company has the meaning given by s.995-1(1) of the 1997 Tax Act. | ||
HIsmelt means all land, buildings, structures, offices, fixed and mobile equipment, roads, wharfs, loading and unloading facilities, stockpiles, storage facilities and associated facilities owned, leased or used by any member of the Rio Tinto Group at Kwinana, Western Australia including the facility constructed by certain members of the Rio Tinto Group in joint venture with third parties and all HIsmelt Technology. | ||
HIsmelt Technology means technology presently, or in future, owned by, or licensed to, any member of the Rio Tinto Group relating to the high intensity direct smelting of iron, or the dimensioning, design, application, manufacture, erection, installation, testing, operation and maintenance of equipment designed or used for that purpose, including patents, know-how and other designs and copyright, technological and technical knowledge, expertise, experience, inventions, data, algorithms, codes, instructions, techniques, processes, drawings, specifications and other unpatented information. | ||
Hope Downs Joint Venture means the joint venture carried on pursuant to the Hope Downs Joint Venture Agreement dated 16 March 2006 as constituted from time to time. | ||
Implementation Agreement means the implementation agreement entered into by Rio Tinto Limited, Rio Tinto plc, BHP Billiton Limited and BHP Billiton plc on 5 December 2009. | ||
Implementation Management Committee has the meaning given in the Implementation Agreement. | ||
Implementation Oversight Committee has the meaning given in the Implementation Agreement. | ||
Independent Expert means a person appointed in accordance with clause 16. | ||
Indexed means: |
(a) | prior to 31 December 2009, the relevant amount; and | ||
(b) | during any Half Year subsequent to that referred to in paragraph (a): |
where: | |||
CPI t-1 | means the CPI number for the Quarter most recently published prior to the start of that Half Year; and |
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CPI b | means the CPI number for the Quarter ending on 30 June 2009. |
Infrastructure and Blending Principles means the Infrastructure and Blending Principles initialled by Rio Tinto and BHP Billiton for the purposes of identification on or about the date of the Implementation Agreement. | ||
Infrastructure Sharing Agreement means the Infrastructure Sharing Agreement to be entered into by [#] pursuant to clauses 3.5(a)(vi) and 6.2(a) of the Implementation Agreement. | ||
* * * | ||
Insolvency Administration means, in relation to an Issuer, a winding up of the Issuer, or the appointment of an administrator to the Issuer pursuant to Part 5.3A of the Corporations Act 2001 (Cth). | ||
Insurance Protocol has the meaning given in clause 4.15(a). | ||
* * * | ||
Intellectual Property Management Agreement means the intellectual property management agreement entered into by [#] on or about the date of this Agreement. | ||
* * * | ||
Iron Ore Assets means the right, title or interest (whether directly or indirectly held) of any JV Entity from time to time in: |
(a) | plant and equipment and land (including fixtures) used in, or acquired for the purposes of, Iron Ore Production Activities, including mines, water bores, light and heavy mobile equipment, conveyors, processing plant (including crushing, screening, beneficiating, concentrating, washing and drying plant, tailings dams and associated infrastructure), rail infrastructure (including rail track, signalling and control systems), rolling stock (including locomotives, fuel cars and ore cars), communication systems, shipping terminals and port facilities (including stockyards, ore car dumpers, in-load and out-load circuits (including car-dumpers, conveyors, transfer stations, bins, stackers and reclaimers, stockpiles and yards, screening plant, berths, wharves, jetties, tugs), power facilities (including generation, transmission and distribution networks), other associated infrastructure (such as housing and town infrastructure and pastoral stations, airstrips and associated infrastructure, water utilities, gas pipelines and fuel farms), and maintenance facilities and equipment (including administration offices and workshops); | ||
(b) | the beneficiation plant at Newman, and the HBI Beneficiation Plant to the extent that it is made available pursuant to clause 5.4(a)(ii)(B) of the Implementation Agreement); | ||
(c) | the Secondary Processing facilities at Tom Price; | ||
(d) | any other Secondary Processing facilities to the extent required to satisfy obligations under a future State Agreement or obligations not yet satisfied under a current State Agreement; | ||
(e) | any Support Assets; | ||
(f) | the JV Tenements; | ||
(g) | the State Agreements, together with the benefits of all associated Authorisations; |
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(h) | contracts and leases to the extent they relate to Iron Ore Production Activities, other than, on and from the JV Commencement Date, contracts with Affiliates of Rio Tinto or BHP Billiton that have not been approved by the Implementation Oversight Committee or the Owners Council; | ||
(i) | iron ore produced by Iron Ore Production Activities but not yet loaded on board a ship; | ||
(j) | receivables arising from Iron Ore Production Activities, including any amount payable under the Ore Sales Agreements (but excluding any receivable arising from Iron Ore Marketing Activities); | ||
(k) | Iron Ore Cash Flows, Iron Ore Distributable Earnings and Iron Ore Asset Surplus; | ||
(l) | Cash arising from Iron Ore Cash Flows and any loan or deposit arising from use of such Cash; |
Page 99
(m) | any other assets to the extent that they arise from Iron Ore Production Activities | ||
(p) | anything which is, or is deemed to be, an Iron Ore Asset or part of Iron Ore Assets under, or by operation of, the Transaction Documents; and | ||
(q) | anything that the Owners agree are Iron Ore Assets, |
but excluding any Excluded Assets and Sole Risk Assets. | ||
Iron Ore Asset Surplus of an Issuer on an Insolvency Administration has the meaning given in the Funding and Distribution Policy. | ||
Iron Ore Cash Flows means Cash Flows Attributable to Iron Ore Assets and Iron Ore Liabilities. | ||
Iron Ore Distributable Earnings means Distributable Earnings Attributable to Iron Ore Assets and Iron Ore Liabilities. | ||
Iron Ore Liabilities means: |
(a) | any liabilities of any JV Entity from time to time: |
(i) | which are Attributable to Iron Ore Assets; | ||
(ii) | to the extent they arise from Iron Ore Production Activities; or | ||
(iii) | which are Iron Ore Loans, |
and also includes: | |||
(b) | anything which is, or is deemed to be, an Iron Ore Liability under, or by operation of, the Transaction Documents; and | ||
(c) | anything that the Owners agree are Iron Ore Liabilities, |
but excluding any Excluded Liabilities and Sole Risk Liabilities. | ||
Iron Ore Loans means: |
(a) | Agreed Opening Iron Ore Loans (as defined in the Implementation Agreement); | ||
(b) | Participant Loans; | ||
(c) | NDO Loans; and | ||
(d) | any loan that the Owners agree is an Iron Ore Loan. |
Iron Ore Marketing Activities means the activities carried on, and transactions entered into, by the Rio Tinto Group and BHP Billiton Group separately (whether before or after the JV Commencement Date) in relation to: |
(a) | marketing and selling iron ore produced from Iron Ore Production Activities and related activities (other than sales by JV Entities pursuant to Ore Sales Agreements), including Excluded Marketing Operations; and | ||
(b) | transporting iron ore produced from Iron Ore Production Activities from the ships rail in Western Australia to customers and related activities. |
Iron Ore Product means any finished iron ore product recovered, produced or purchased as part of the conduct of JV Operations, including any iron ore recovered, produced or purchased pursuant to an Existing JV Arrangement but does not include Sole Risk Iron Ore Product. |
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Iron Ore Production Activities means activities within the permitted scope of the WA Iron Ore JV: |
(a) | carried on by the Rio Tinto Group and the BHP Billiton Group separately prior to the JV Commencement Date; and | ||
(b) | carried on by the JV Entities or the Manager as JV Operations on and after the JV Commencement Date. |
Issuer means: |
(a) | in the case of Rio Tinto, the Rio Tinto Issuer; and | ||
(b) | in the case of BHP Billiton, the BHP Billiton Issuer. |
Issuer JV Subsidiary means a JV Entity which is a Subsidiary of an Issuer. | ||
Issuer Share Security Test has the meaning given in clause 11.7(a). | ||
JV Accounting Policy means the accounting policies adopted pursuant to the Accounting Policy for the preparation of JV Financial Information. | ||
JV Bank Accounts has the meaning given in clause 3.11(g). | ||
* * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * |
* * * | ||
JV Cash Costs means all cash amounts relating to costs and liabilities of the JV Entities and the Manager payable to any person in connection with the conduct of JV Operations, including capital expenditure, calls made on a JV Entity pursuant to an Existing JV Arrangement and taxes and penalties. It includes all amounts identified in the Transaction Documents as costs of the WA Iron Ore JV and Approved JV Implementation Costs (as defined in the Implementation Agreement). | ||
JV Chairperson means the chairperson of the Owners Council appointed or replaced in accordance with clause 3.2. | ||
JV Commencement Date means the first day of the first month that commences after Completion. | ||
JV Employees means all employees of the Manager and all employees of the JV Entity employed in connection with JV Operations, including the CEO and the members of the Senior Executive Team. | ||
JV Entity means: |
(a) | in the case of Rio Tinto, a Rio Tinto JV Entity; | ||
(b) | in the case of BHP Billiton, a BHP Billiton JV Entity; and | ||
(c) | any other entity jointly owned by the Owners carrying on JV Operations (other than the Manager). |
JV Financial Information has the meaning given in the Accounting Policy. |
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JV Operations means all activities conducted by or on behalf of the JV Entities or the Manager within the scope of the WA Iron Ore JV pursuant to this Agreement on and from the JV Commencement Date, excluding, for the avoidance of doubt, Excluded Marketing Operations and any activities conducted in connection with Excluded Assets, a Sole Risk Development or Sole Risk Opportunity. A reference to the JV Operations division of a JV Entity means that part of its activities which comprise JV Operations. | ||
JV Production means: |
(a) | the amount of Iron Ore Product actually recovered, produced or purchased by the JV Entities in the conduct of JV Operations and able to be loaded onto a vessel * * *; | ||
(b) | but does not include the amount of any Iron Ore Product to which the Other JV Participants are entitled (including a proportion of any production by a JV Entity that is not wholly owned by an Owner equal to the proportion of that entity owned by an Other JV Participant), |
in each case expressed in WMT of Iron Ore Product (unless the context requires otherwise). | ||
JV Production Accounting Costs means costs determined in accordance with clause 6.4(a). | ||
JV Tenements means all mining leases, general purposes leases, miscellaneous licences, special leases and easements held pursuant to a State Agreement and / or the Mining Act, Land Act 1933 (WA), Land Administration Act 1997 (WA), Port Authorities Act 1999 (WA) or Jetties Act 1926 (WA) held by or on behalf of a JV Entity* * * except to the extent it relates wholly or substantially to an Excluded Asset. | ||
JW4 Joint Venture means the joint venture carried on under the name JFE Western 4 Joint Venture as constituted from time to time pursuant to the JFE Western 4 Joint Venture Agreement dated 22 July 2005. | ||
* * * |
(a) | * * * | ||
(b) | * * * |
Law includes statutes, regulations, rules of the common law, principles of equity, regulatory agency policies and guidelines and security exchange rules. | ||
Losses means demands, claims, actions or proceedings made or brought by or against a person and losses (including loss of profits), liabilities, costs or expenses of any kind and however arising. | ||
Majority Owner has the meaning given in clause 10.3(a)(ii). | ||
Management Delegation Agreement means each agreement between the Manager and a JV Entity pursuant to which the JV Entity delegates or subcontracts to the Manager certain functions of the JV Entity, or pursuant to which the Manager provides services to the JV Entity, entered into on or about the date of this Agreement. | ||
Manager means each entity appointed from time to time to manage the WA Iron Ore JV in accordance with clause 4.1, being initially the manager incorporated in accordance with clause 5.1 of the Implementation Agreement. | ||
Manager Duties means the duties imposed on the Manager pursuant to clause 4.3. |
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Marginal Profit has the meaning given in item 1(n) of schedule 4. | ||
Marketing Assets has the meaning given in the definition of Excluded Assets. | ||
Marketing Liabilities has the meaning given in the definition of Excluded Liabilities. | ||
Marketing SPV means: |
(a) | in the case of Rio Tinto or the Rio Tinto Owner, the Rio Tinto Marketing SPV; and | ||
(b) | in the case of BHP Billiton or the BHP Billiton Owner, the BHP Billiton Marketing SPV. |
* * * | ||
Maximum Permitted Excluded Loan Balance has the meaning given in the Funding and Distribution Policy. | ||
Mining Act means the Mining Act 1978 (WA) or the Mining Act 1904 (WA) or both (as applicable). | ||
Minority Owner has the meaning given in clause 10.3(a)(iv). | ||
Monthly Cash Requirement Notice has the meaning given in clause 3.11(c). | ||
* * * | ||
Mt Newman Joint Venture means the joint venture carried on under that name as constituted from time to time pursuant to the Mt Newman Joint Venture Agreement dated 1 February 1967. | ||
NDO Loan has the meaning given in clause 9.3(a). | ||
* * * | ||
Net Present Value means the sum of the expected future ungeared cash flows over the life of a project, discounted to reflect the time value of money and investment risk. | ||
* * * | ||
New Majority Owner has the meaning given in clause 10.6(a). | ||
New Opportunity means * * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * |
* * * | ||
New Opportunity Notice has the meaning given in clause 8.4(c). | ||
* * * | ||
* * * | ||
* * * |
(a) | * * * | ||
(b) | * * * |
Non-Defaulting Owner has the meaning given in clause 9.3(a). |
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Non-Iron Ore Target means * * * | ||
Non-Selling Entities means those JV Entities that sell Iron Ore Product, but that are not able to sell Iron Ore Product to the Marketing SPVs by reason of Existing JV Arrangements, being as at the date of this Agreement in relation to Rio Tinto, Channar Mining Pty Ltd, North Mining Limited, RRMC and Hamersley WA Pty Ltd. | ||
Officer means, in relation to an entity, its directors, officers and employees. | ||
Operational Completion is that stage in the design, construction and commissioning of any works under this Agreement when: |
(a) | the works are complete and fit for all of the intended purposes except for minor omissions and minor defects which do not prevent the works from being reasonably capable of being safely and lawfully used for their intended purposes; and | ||
(b) | those tests which a competent, prudent and experienced contractor or construction manager would reasonably carry out and pass, before the works reach operational completion, have been carried out and passed. |
Operational Implementation Plan has the meaning given in item 3(b)(vi) of schedule 5. | ||
Opt-in Owner has the meaning given in items 1(k) or 2(i) of schedule 4 (as applicable). | ||
Ore Loan Balance means the amount in tonnes of Iron Ore Product received by an Owner as a result of an adjustment to the Owners Capacity Percentage made pursuant to clause 6.3(d)(iii), less any amount set off pursuant to clause 6.3(e) or returned pursuant to clause 6.3(f). | ||
Ore Sales Agreements means: |
(a) | the ore sales agreement between the Selling Entities and the Rio Tinto Marketing SPV; and | ||
(b) | the ore sales agreement between the Selling Entities and the BHP Billiton Marketing SPV, |
entered into on or about the date of this Agreement, and any other Ore Sales Agreement entered into pursuant to the operation of clause 10 and schedule 10, as amended or replaced from time to time. |
Ore Sales Price means the price paid by each Marketing Entity to the Selling Entities pursuant to the relevant Ore Sales Agreement, determined in accordance with clause 6.4. |
Other JV Participant means a participant in a Rio Tinto JV or BHP Billiton JV, whether unincorporated or incorporated, that is not a Related Corporation of Rio Tinto or BHP Billiton. |
Owner means: |
(a) | the Rio Tinto Owner; or | ||
(b) | the BHP Billiton Owner, |
and their respective permitted successors and assignees. | ||
* * * | ||
* * * | ||
Owner Confidential Information has the meaning given in clause 14.1(a)(xii). | ||
Owner Guarantee means a Guarantee to: |
(a) | a person other than a JV Entity; or |
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(b) | a consortium, partnership, limited partnership, incorporated or unincorporated joint venture, syndicate or other group in which a JV Entity is a participant (each a Business Association ), |
and in each case in respect of either: |
(c) | a JV Entity, including in connection with its participation in a Business Association; or | ||
(d) | an entity from whom assets were transferred to a JV Entity as part of any re-organisation undertaken by an Owner in connection with the WA Iron Ore JV, |
and which relates to the funding of, or is otherwise provided in connection with, the operations of a JV Entity. |
Owner Loan means a financial loan or other form of financial accommodation or obligation to: |
(a) | a person other than a JV Entity; or | ||
(b) | a consortium, partnership, limited partnership, incorporated or unincorporated joint venture, syndicate or other group in which a JV Entity is a participant (each a Business Association ), |
and in each case in respect of either: |
(c) | a JV Entity, including in connection with its participation in a Business Association; or | ||
(d) | an entity from whom assets were transferred to a JV Entity as part of any re-organisation undertaken by an Owner in connection with the WA Iron Ore JV, |
and which relates to the funding of, or is otherwise provided in connection with, the operations of a JV Entity. |
Owner Parent means, in relation to the Rio Tinto Owner, Rio Tinto and, in relation to the BHP Billiton Owner, BHP Billiton. |
Owner Proceedings has the meaning given in clause 4.2(f). | ||
Owners Bank Accounts has the meaning given in clause 3.11(h). | ||
Owners Chairpersons has the meaning given in clause 3.7(b) | ||
Owners Council means the decision-making body established pursuant to clause 3.1. | ||
* * * | ||
* * * | ||
Parent Assumption Deed means a deed in the form of schedule 17. | ||
Parent Company Guarantee means a guarantee in the form of schedule 16. | ||
Participant Loans has the meaning given in the Funding and Distribution Policy. | ||
Participating Interest , in relation to an Owner, means that Owners Participating Share in relation to the WA Iron Ore JV as constituted by the following rights, benefits, liabilities and obligations from time to time under this Agreement and the other Transaction Documents, including: |
(a) | any shares or Debentures held by the Owner in an Issuer; | ||
(b) | any Participant Loans made by the Owner; |
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(c) | the obligation of the Owner, subject to the terms of this Agreement and the other Transaction Documents, to fund all JV Cash Costs; and | ||
(d) | all other rights, benefits, liabilities and obligations accruing to or incurred by or on behalf of an Owner under, or arising out of, the Transaction Documents. |
Participating Share means the percentage interest of an Owner in the WA Iron Ore JV initially as set out in clause 2.1(d) as may be varied from time to time pursuant to the terms and conditions of this Agreement. |
Permitted Security Interest means any of the following: |
(a) | any lien arising by operation of Law in the ordinary course of business and not securing debt incurred for financing purposes, where the amount secured is paid when due, unless being contested in good faith; | ||
(b) | any charge or lien arising in favour of an Authority by operation of statute, where the amount secured is paid when due, unless being contested in good faith; | ||
(c) | any deposit of cash, securities or other assets under a foreign exchange or interest rate hedging arrangement, entered into in the ordinary course of business; | ||
(d) | any deposit of cash, securities or other assets to secure any bid, tender, contract (other than a contract in respect of debt incurred for financing purposes), lease, statutory obligation or other similar obligation arising in the ordinary course of business; | ||
(e) | any Security Interest existing over any asset when the asset is acquired so long as the amount secured is not increased and the Security Interest was not created in contemplation of the acquisition of the asset; or | ||
(f) | any other Security Interest to which all Owners have given their consent. |
Pilbara Integrated System means: |
(a) | all Iron Ore Assets; | ||
(b) | the interests of Other JV Participants in assets held under Existing JV Arrangements; and | ||
(c) | all Sole Risk Assets, |
but only to the extent such assets are located in the Pilbara region of Western Australia and are connected to infrastructure forming part of the Iron Ore Assets. | ||
Pilbara System Capacity means the quantity of iron ore that the Pilbara Integrated System can deliver at the ships rail in a period, expressed in WMT, having regard to: |
(a) | the design and physical characteristics of the Pilbara Integrated System; and | ||
(b) | good operating practice applicable to the Pilbara Integrated System, |
in each case considered on a whole of system basis. | ||
Policies and Protocols has the meaning given in clause 3.13(a). | ||
POSMAC Joint Venture means the joint venture carried on under that name as constituted from time to time pursuant to the POSMAC Joint Venture Agreement dated 3 April 2002. | ||
* * * |
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* * * | ||
Pre-Feasibility Study has the meaning given in clause 8.2(d). | ||
Preliminary Study has the meaning given in clause 8.2(a). | ||
Production Percentage has the meaning given in clause 6.3(i). | ||
Product Type means each type of Iron Ore Product produced by the West Australian Iron Ore Joint Venture from time to time, expected to be at JV Commencement, the Product Types described in schedule 15. | ||
* * * | ||
* * * | ||
Project has the meaning given in clause 8.2(g) and includes a Project arising from a Subsequent Sole Risk Development Proposal pursuant to item 3 of schedule 4. | ||
Proposed Activities has the meaning given in item 5(a) of schedule 4. | ||
Protected Party has the meaning given in clause 14.1(b). | ||
Purchase Option has the meaning given in clause 9.6(a). | ||
Purchase Option Price has the meaning given in clause 9.6(a). | ||
Purchased Tonnes has the meaning given in item 1(b) of schedule 4. | ||
Purchasing Owner has the meaning given in item 3(c) of schedule 4. | ||
Quarter means the 3 month periods commencing on 1 January, 1 April, 1 July and 1 October. | ||
* * * | ||
RRMC means Robe River Mining Co. Pty Ltd. | ||
Rail and Port Expansion Costs has the meaning given in items 1(e)(i)(B)(1) or (e)(ii)(A) of schedule 4, as the context requires. | ||
Rail and Port Operating Costs has the meaning given in items 1(e)(i)(B)(2) or (e)(ii)(B) of schedule 4, as the context requires. | ||
* * * | ||
Reimbursing Owner has the meaning given in clause 6.3(p)(iii). | ||
Related Corporation has the meaning given to Related Body Corporate in the Corporations Act but as if Subsidiary had the meaning given in this Agreement, and also includes: |
(a) | in the case of Rio Tinto, any member of the Rio Tinto Group; and | ||
(b) | in the case of BHP Billiton, any member of the BHP Billiton Group. |
Relevant Group Member has the meaning given in clause 4.2(j). | ||
* * * | ||
Representative means a representative of an Owner appointed to the Owners Council pursuant to clause 3.2. |
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Reporting Policy means the reporting policy initialled by BHP Billiton and Rio Tinto for the purposes of identification on or about the date of the Implementation Agreement, as amended or replaced from time to time in accordance with clause 3.13(b). | ||
Retained Asset s has the meaning given in the Implementation Agreement. | ||
Revenue Based Royalties means any royalty that is payable in connection with the sale of Iron Ore Product that is based on the actual or notional price at which such Iron Ore Product is sold, including revenue based royalties payable under State Agreements, private royalties agreements with third parties and native title agreements, but does not include any royalty that is payable in connection with production from a Sole Risk Development or Sole Risk Opportunity. | ||
Revised Accounting Policy has the meaning given in the Implementation Agreement. | ||
* * * | ||
Rhodes Ridge Joint Venture means the joint venture established by the Rhodes Ridge Joint Venture Agreement dated 11 October 1972. | ||
Ring-Fencing Protocol means the ring-fencing protocol initialled by BHP Billiton and Rio Tinto for the purposes of identification on or about the date of the Implementation Agreement, as amended or replaced from time to time in accordance with clause 3.13(b). | ||
Rio Tinto Group means RTL, RTP and each of their Subsidiaries and Rio Tinto Group Entity means an entity in the Rio Tinto Group. | ||
Rio Tinto Issuer has the meaning given in the Implementation Agreement. | ||
Rio Tinto JV Entities means: |
(a) | as at the date of this Agreement, the Rio Tinto Issuer and the Rio Tinto Subsidiaries listed in, and which are engaged in the businesses described in, schedule 2; and | ||
(b) | any other wholly-owned Subsidiary of the Rio Tinto Issuer that subsequently acquires Iron Ore Assets for the purposes of the WA Iron Ore JV. |
Rio Tinto JVs means: |
(a) | the Robe Joint Venture; | ||
(b) | the Hope Downs Joint Venture; | ||
(c) | the Channar Joint Venture; | ||
(d) | the Bao-HI Joint Venture; | ||
(e) | the Beasley Joint Venture; | ||
(f) | the Rhodes Ridge Joint Venture; and | ||
(g) | any other joint venture that a Rio Tinto JV Entity enters into after the date of this Agreement within the scope of the WA Iron Ore JV. |
Rio Tinto Owner means the entity that is: |
(a) | the holder of Debentures issued by the BHP Billiton Issuer from time to time; and | ||
(b) | the holder of Shares issued by the Rio Tinto Issuer from time to time. |
* * * |
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Rio Tinto State Agreements means: |
(a) | the Iron Ore (Hamersley Range) Agreement Act 1963 (WA); | ||
(b) | the Iron Ore (Hamersley Range) Agreement Act 1968 (Paraburdoo) (WA); | ||
(c) | the Iron Ore (Yandicoogina) Agreement Act 1996 (WA); | ||
(d) | the Iron Ore (Robe River) Agreement Act 1964 (WA); | ||
(e) | the Iron Ore (Rhodes Ridge) Authorisation Act 1972 (WA); | ||
(f) | the Iron Ore (Mt Bruce) Agreement Act 1972 (WA); | ||
(g) | the Iron Ore (Channar Joint Venture) Agreement Act 1987 (WA); and | ||
(h) | the Iron Ore (Hope Downs) Agreement Act 1992 (WA). |
Robe or Robe Joint Venture means the joint venture carried on under the name Robe River Iron Associates as constituted from time to time pursuant to the Robe River Joint Venture Agreement dated 25 May 1970. | ||
Rollover Tonnes has the meaning given in clause 6.3(o). | ||
Royalty Allocation Adjustment has the meaning given in clause 4.8(e). | ||
Scheduling Protocol means the scheduling protocol initialled by BHP Billiton and Rio Tinto on or about the date of the Implementation Agreement, as amended or replaced from time to time in accordance with clause 3.13(b). | ||
Secondary Processing means secondary processing of iron ore being the concentration or upgrading of iron ore otherwise than by washing, drying, crushing or screening, or a combination thereof. | ||
Security means any debt or equity entitlement of any kind, whether or not constituted or evidenced by a written instrument, and includes any form of share, stock, option, convertible note, bond, debenture, certificate of entitlement, bill of exchange, promissory note, deposit, secured or unsecured loan, or financing arrangement, and for the avoidance of doubt includes a Share or a Debenture. | ||
Security Interest means any mortgage, pledge, lien or charge or any other security or preferential interest or arrangement of any kind or any other right of, or arrangement with, any creditor to have its claims satisfied in priority to other creditors with, or from the proceeds of, any asset. | ||
Selling Entities means those JV Entities that are able to sell Iron Ore Product to the Marketing SPVs, being as at the date of this Agreement Hamersley Iron Pty Ltd, Hamersley Iron-Yandi Pty Ltd and BHP Billiton Minerals Pty Ltd. * * * | ||
Senior Executive Team means each senior executive who reports directly to the CEO and Senior Executive Team Member has a corresponding meaning. | ||
Set-Off Agreement has the meaning given in the Implementation Agreement. | ||
Share means a share in the capital of an Issuer. | ||
Shareholder means: |
(a) | in relation to Rio Tinto Issuer, the holder of Shares issued by Rio Tinto Issuer from time to time; and |
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(b) | in relation to BHP Billiton Issuer, the holder of Shares issued by BHP Billiton Issuer from time to time. |
Sole Funding Party has the meaning given in clause 8.3(b)(ii) or clause 8.4(g)(ii) as the context requires. |
Sole Risk Assets means, in relation to a Sole Funding Party, all assets forming part of their entitlements in respect of the relevant Sole Risk Development or Sole Risk Opportunity pursuant to schedule 4, including any Sole Risk Iron Ore Product, Sole Risk Cash Flows, Sole Risk Receivable or Sole Risk Asset Surplus, and also includes: |
(a) | Cash arising from Sole Risk Cash Flows, and any loan or deposit arising from use of such Cash; | ||
(b) | anything which is, or is deemed to be, a Sole Risk Asset under, or by operation of, the Transaction Documents; and | ||
(c) | anything that the Owners agree are Sole Risk Assets. |
Sole Risk Asset Surplus of an Issuer on an Insolvency Administration has the meaning given in the Funding and Distribution Policy. |
Sole Risk Capacity means the aggregate amount of Sole Risk Iron Ore Product that can be delivered at the ships rail in a period, expressed in WMT having regard to: |
(a) | the design and physical characteristics of the Sole Risk Assets; and | ||
(b) | good operating practice applicable to the Sole Risk Assets and, to the extent applicable, the Pilbara Integrated System considered on a whole of system basis. |
Sole Risk Cash Flows means Cash Flows attributable to Sole Risk Assets and Sole Risk Liabilities. | ||
Sole Risk Development has the meaning given in clause 8.3(b)(ii). | ||
Sole Risk Entity has the meaning given in item 4(a) of schedule 4. | ||
Sole Risk Liabilities means, in relation to a Sole Funding Party, all liabilities Attributable to Sole Risk Assets including any Sole Risk Loans, and also includes: |
(a) | anything which is, or is deemed to be, a Sole Risk Liability under, or by operation of, the Transaction Documents; and | ||
(b) | anything that the Owners agree are Sole Risk Liabilities. |
Sole Risk Loans means loans made by a Sole Funding Party to an Issuer or the Manager to discharge funding obligations in respect of a Sole Risk Development or Sole Risk Opportunity pursuant to schedule 4. | ||
Sole Risk Receivable means a debt arising from the sale of Sole Risk Iron Ore Product by an Issuer (or Issuer JV Subsidiary) to, or as directed by, a Sole Funding Party. | ||
Sole Risk Iron Ore Product means any finished iron ore product recovered, produced or purchased as part of the conduct of operations of a Sole Risk Development or Sole Risk Opportunity. | ||
Sole Risk Opportunity has the meaning given in clause 8.4(g)(ii). | ||
Sole Risk Opportunity Development has the meaning given in item 2(b) of schedule 4. | ||
* * * |
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State Agreement means the BHP Billiton State Agreements, the Rio Tinto State Agreements and any other agreement entered into by the State of Western Australia and an Owner, a JV Entity or their respective nominees from time to time in connection with JV Operations in accordance with the Government Agreements Act 1979 (WA). | ||
Subsequent Sole Risk Development Proposal has the meaning given in item 3(a) of schedule 4. | ||
Subsidiary has the meaning given in the Corporations Act, provided that: |
(a) | an entity will also be deemed to be a Subsidiary of a body corporate if it is controlled (within the meaning of that term provided by Pt 1.2, Div 6 of the Act); and | ||
(b) | a trust may be a Subsidiary (for the purposes of which a unit or other beneficial interest will be deemed to be a share in the capital of a body corporate) and a body corporate or a trust may be a Subsidiary of a trust. |
Substantial Liability means * * *: |
(a) | * * * |
(i) | * * * | ||
(ii) | * * * |
(b) | * * * |
* * * | ||
Substantial Owner has the meaning given in clause 10.3(a)(iii). | ||
Sufficient Asset Test has the meaning given in clause 11.7(a). | ||
Support Assets has the meaning given in clause 3.6(b)(iv)(A) of the Implementation Agreement. | ||
Supporting Entity has the meaning given in clause 4.2(j). | ||
Synergies Capture Plan means a document that describes and measures the progress of a business initiative to identify and capture the efficiencies and other cost benefits associated with the creation of the WA Iron Ore JV, as: |
(a) | prepared by the Manager pursuant to clauses 3.10(a), (i)(iii) or (k); and | ||
(b) | approved by the Owners Council pursuant to clause 3.10(i)(i) or (ii) or applied by operation of clause 3.10(i)(iii). |
Target Iron Ore Assets has the meaning given in clause 8.6(b). | ||
Tax means any tax, duty, charge or levy imposed now or at any future date under the present or future Laws of Australia or any other country, and also includes any associated penalties, fines or interest. | ||
Term Deposit has the meaning given in the Funding and Distribution Policy. | ||
* * * | ||
Transaction Document means: |
(a) | the Implementation Agreement; | ||
(b) | this Agreement, including the Funding and Distribution Policy; |
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(c) | each Debenture Deed Poll; | ||
(d) | each Management Delegation Agreement; | ||
(e) | each Creditor Deed Poll; | ||
(f) | each Parent Company Guarantee; | ||
(g) | each Cross Charge; | ||
(h) | each Ore Sales Agreement; | ||
(i) | the Infrastructure Sharing Agreement; | ||
(j) | the Blending Agreement; | ||
(k) | the Intellectual Property Management Agreement; | ||
(l) | the ERP Service and Licence Agreement; | ||
(m) | the Transitional Services Agreement; | ||
(n) | the Policies and Protocols; | ||
(o) | the Set-Off Agreement; | ||
(p) | * * * | ||
(q) | each Parent Assumption Deed; | ||
(r) | each New Owners Assumption Deed; | ||
(s) | each Owner Guarantee Deed of Indemnity; | ||
(t) | each Deed of Accession; and | ||
(u) | such other agreements entered into by some or all of the parties to give effect to the requirements of the above Transaction Documents . |
Transfer Arrangement has the meaning given in clause 2.2(e). | ||
Transitional Services Agreement means the transitional services agreement on the terms initialled by BHP Billiton and Rio Tinto for identification on or about the date of the Implementation Agreement, as developed by the Implementation Management Committee under clause 3.6(b)(iii) of the Implementation Agreement, to be signed by the parties thereto at Completion. | ||
Ultimate Holding Company has the meaning given in the Corporations Act, but as if subsidiary had the meaning given in this Agreement. | ||
Unpaid Amount has the meaning given in clause 9.1(a). | ||
* * * | ||
* * * | ||
Valuer has the meaning given in item 1.2(b) of schedule 9. | ||
WA Iron Ore JV means the joint venture to be known as the West Australian Iron Ore Joint Venture to be formed in accordance with clause 2.1(a). | ||
WA Iron Ore JV Rail and Port Expansion Costs has the meaning given in item 2(b)(i)(B)(1) or (b)(ii)(A) of schedule 4, as the context requires. |
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WA Iron Ore JV Rail and Port Operating Costs has the meaning given in item 2(b)(i)(B)(2) or (b)(ii)(B) of schedule 4, as the context requires. | ||
WMT means wet metric tonnes. | ||
Weighing, Sampling and Analysis Protocol means the weighing, sampling and analysis protocol initialled by BHP Billiton and Rio Tinto for the purposes of identification on or about the date of the Implementation Agreement, as amended or replaced from time to time in accordance with clause 3.13(b). | ||
Wheelarra Joint Venture means the joint venture carried on under that name as constituted from time to time pursuant to the Wheelarra Joint Venture Agreement dated 28 September 2004. | ||
Yandi Joint Venture means the joint venture carried on under that name as constituted from time to time pursuant to the Yandi Joint Venture Agreement dated 10 June 1991. |
1.2 | Interpretation |
Headings are for convenience only and do not affect interpretation. The following rules apply unless the context requires otherwise. |
(a) | The singular includes the plural, and the converse also applies. | ||
(b) | A gender includes all genders. | ||
(c) | If a word or phrase is defined, its other grammatical forms have a corresponding meaning. |
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(d) | A reference to a person includes a corporation, trust, partnership, unincorporated body or other entity, whether or not it comprises a separate legal entity. | ||
(e) | A reference to a clause, schedule or annexure is a reference to a clause of, or schedule or annexure to, this Agreement. | ||
(f) | A reference to an agreement or document (including a reference to this Agreement) is to the agreement or document as amended, supplemented, novated or replaced, except to the extent prohibited by this Agreement or that other agreement or document. | ||
(g) | A reference to a party to this Agreement, the Transaction Documents or another agreement or document includes the partys successors, permitted substitutes and permitted assigns (and, where applicable, the partys legal personal representatives). | ||
(h) | A reference to legislation or to a provision of legislation includes a modification or re-enactment of it, a legislative provision substituted for it and a regulation or statutory instrument issued under it. | ||
(i) | A reference to sale or sell includes to procure the sale and a reference to purchase includes to procure the purchase. | ||
(j) | A reference to dollars and $ is to Australian currency. | ||
(k) | A reference to time is a reference to: |
(i) | time in the place in which the relevant event occurs; or | ||
(ii) | if the relevant event is to occur in more than one place, time in Perth, Western Australia. |
(l) | If the day on which any act, matter or thing is to be done is a day other than a Business Day, such act, matter or thing will be done on the immediately succeeding Business Day. | ||
(m) | The meaning of general words is not limited by specific examples introduced by including, or for example, or similar expressions. | ||
(n) | A reference to a liability incurred by any person includes any claim, loss, liability, cost or expense, of that person arising from or in connection with any obligation (including indemnities and all other obligations owed as principal or guarantor) whether liquidated or not, whether present, prospective or contingent or otherwise and whether or not it would be shown as a liability under applicable accounting principles and whether owed, incurred or imposed by or to or on account of or for the account of that person alone, severally or jointly or jointly and severally with any other person. | ||
(o) | A reference to an asset of any person includes any form of real or personal, present or future, tangible or intangible property, any form of legal or equitable right which is not property, and anything of economic value which is not in the form of property or legal or equitable right, whether or not the property, right or other thing would be shown as an asset under applicable accounting principles, and whether owned, acquired, held, used or controlled by it for the account of that person alone, or severally or jointly, or jointly and severally, with any other person and whether or not assignable. | ||
(p) | A reference to a loss incurred by any person includes any loss, liability, damage, cost, charge or expense that the person pays, incurs or is liable for and any other diminution of |
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value of any description which the person suffers, including all liabilities on account of taxes or duties, all interest, penalties, fines and other amounts payable to third parties and all reasonable legal expenses and other expenses in connection with investigating or defending any claim, action, demand or proceeding, whether or not resulting in any liability, and all amounts paid in settlement of any such claims. | |||
(q) | Nothing in this Agreement is to be interpreted against a party on the ground that the party put forward this Agreement or a relevant part of it. | ||
(r) | A reference to a JV operating committee includes a reference to a management or other committee howsoever described, which is responsible for making decisions in respect of a joint venture to which either Owner or a Related Corporation of an Owner is a party. | ||
(s) | Unless expressly provided otherwise in this Agreement, any reference to an asset, liability, revenue, expense or cashflow of a JV Entity will, in relation to any JV Entity that is not wholly owned (directly or indirectly) by Rio Tinto or BHP Billiton, excludes a proportion of that asset, liability, revenue, expense or cashflow, equal to the proportion of that JV Entity owned by third parties. |
1.3 | Consents or approval |
If the doing of any act, matter or thing under this Agreement is dependent on the consent or approval of a party or is within the discretion of a party, the consent or approval may be given or the discretion may be exercised conditionally or unconditionally or withheld by the party in its absolute discretion unless expressly provided otherwise. |
1.4 | Method of payment |
All payments required to be made under this Agreement must be tendered by way of direct transfer of immediately available funds to the bank account nominated in writing by the party to whom the payment is due. Any payment tendered under this Agreement after 4pm in the local time of the bank branch from which payment is made must be taken to have been made on the next succeeding Business Day (the deemed payment date) after the date on which payment is tendered, and if the deemed payment date is after the relevant due date for payment, interest will accrue under item 1.5 accordingly. |
1.5 | Interest on amounts payable |
Interest accrues on each amount which is due and payable, but not paid, by one party to another under or in accordance with this Agreement: |
(a) | on a daily basis from the due date up to the date of actual payment; | ||
(b) | both before and after judgment (as a separate and independent obligation); and | ||
(c) | at the rate which is the sum of the Bank Bill Rate plus a margin of 3%, calculated for successive periods of one month, with the first period commencing on the due date of the amount on which interest is payable. |
The defaulting party must pay interest accrued under this item 1.5 on written demand by the non-defaulting party or, if no demand is made, on the last day of each month. The interest is payable in the currency of the unpaid amount on which it accrues. |
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1.6 | Multiple parties |
Where this Agreement confers a right or imposes an obligation on Rio Tinto or BHP Billiton: |
(a) | that right is held by RTL and RTP, and by BHPBL and BHPBP, (as applicable) severally; and | ||
(b) | that obligation is owed by RTL and RTP, and by BHPBL and BHPBP, (as applicable) jointly and severally. |
Any reference in this Agreement to Rio Tinto and BHP Billiton is a reference to each of RTL and RTP and BHPBL and BHPBP (as applicable) separately (for example a representation, warranty or undertaking relates to each of them separately). |
1.7 | Grossed up for tax |
Where a payment by way of indemnity, compensation or reimbursement is required to be made under this Agreement, it will be Grossed up for Tax if, and to the extent necessary, in order to preserve or restore the recipients economic position having regard to all relevant matters including: |
(a) | the reason that the payment obligation arises; | ||
(b) | the nature of any related Loss or costs incurred by the recipient; | ||
(c) | if the payment is in respect of deprivation of income or profit, or non-receipt of another amount, which would have been subject to Tax; | ||
(d) | if the payment is in respect of a Loss or other event, which results in the recipient or a Consolidated Group of which it is a member, obtaining a deduction, a reduction in present or future Tax, a Tax rebate or a Tax credit, which offsets any Tax otherwise due on the payment; | ||
(e) | if the payment is an indemnity in respect of stamp duty or other Tax, which duty or other Tax offsets any Tax otherwise due on the payment. |
For the avoidance of doubt, a reference to a payment by way of indemnity, compensation or reimbursement includes: |
(f) | a reimbursement of costs under clause 2.2(e) or clause 2.2(g) in respect of a Discovery (but not for tax on any gain on a transfer of the Discovery derived by the transferor); | ||
(g) | indemnity for Loss due to Manager default under clauses 4.2(a) and 4.2(e); | ||
(h) | indemnity for Loss and costs in respect of Owner Proceedings under clauses 4.2(f) and (h); | ||
(i) | reimbursement of costs and loss of profit under clause 6.3(p)(iii) on failure to take delivery of sufficient Iron Ore Product; | ||
(j) | reimbursement of loss of profit caused by Sole Risk Projects under item 1(n) of schedule 4 ; | ||
(k) | the indemnity for Loss due to Manager default or Sole Funding Party default under items 5(b) and 5(c) of schedule 4; | ||
(l) | the indemnity for stamp duty in clauses 11.7; | ||
(m) | the indemnities in respect of excess amounts received by a Shareholder, Debenture Holder or Affiliate under items 4.6, 6.3(c), 10.3(b) and 11.9(f) of the Funding and Distribution Policy; |
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(n) | the indemnities under items 6.3(a), 6.4(a), 7.3, 11.9(d) and 11.9(e) of the Funding and Distribution Policy. |
For the avoidance of doubt this item 1.7 does not apply to: |
(o) | a payment for the transfer or sale of an asset; | ||
(p) | a payment for purchase of a Participating Interest; | ||
(q) | a payment in respect of reserves from a Sole Funding Party to the other Owner pursuant to item 1(a) of schedule 4; | ||
(r) | a payment by an Opt-in Owner under item 1(k) or item 2(i) of schedule 4; | ||
(s) | a payment by a Purchasing Owner under item 3(c) of schedule 4; | ||
(t) | a payment in respect of a New Opportunity under clause 8.4(h); | ||
(u) | a payment in respect of Target Iron Ore Assets under clause 8.6(d); | ||
(v) | an indemnity payment for a major property damage event pursuant to clause 3.11(o); | ||
(w) | the royalty allocation adjustment under clause 4.8(d); | ||
(x) | Coupons paid under clause 6.4(e). |
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1. | Rio Tinto JV Entities |
JV Entity | Business of JV Entity | ||||
Baume Pty Limited
|
Holder of interests in the Channar Partnership. | ||||
Beasley River Management Pty Limited
|
Manager of the Beasley River Joint Venture. | ||||
Beasley River Mining Pty Limited
|
Holder of interests in the Beasley River Joint Venture. JV Operations division only. | ||||
Channar Finance Limited
|
Provision of finance to the participants in the Channar Mining Joint Venture. | ||||
Channar Financial Services Pty Ltd
|
Calculates and coordinates payments under the Channar Partnership documents. | ||||
Channar Investment Nominee Pty Limited
|
Operator of the Channar Partnership. | ||||
Channar Management Services Pty Limited
|
Manager of the Channar Mining Joint Venture. | ||||
Channar Mining Pty Limited
|
Holder of interests in the Channar Mining Joint Venture. JV Operations division only. | ||||
Channar Security Pty Limited
|
Holds securities over Channar Joint Venture and other assets for the benefit of Channar Partnership entities. | ||||
Gumala Advisory Co Pty Ltd
|
Acts as advisory trustee in respect of the General Gumala Foundation and the Elderly Foundation. | ||||
Hamersley Associated Investments Pty Limited
|
Holder of interests in the Channar Partnership. | ||||
Hamersley Exploration Pty Limited
|
Holder of iron ore exploration tenements. | ||||
Hamersley HMS Pty Ltd
|
Manager of the Hope Downs Joint Venture. | ||||
Hamersley Holdings Limited
|
Holding company of investments in corporations involved in the mining, transport and export of iron ore and the exploration for mineral deposits in Western Australia. | ||||
Hamersley Iron Pty Limited
|
Mining. Holder of certain commercial tenancies. Provision of services to the Hope Downs, Bao-HI and Channar Joint Ventures. JV Operations division only. | ||||
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JV Entity | Business of JV Entity | ||||
Hamersley Iron-Yandi Pty Limited
|
Mining. Holder of Yandicoogina mineral leases. JV Operations division only. | ||||
Hamersley Resources Limited
|
Holder of interests in and manager of the Rhodes Ridge Joint Venture. | ||||
Hamersley WA Pty Ltd
|
Holder of interests in the Hope Downs Joint Venture. JV Operations division only. | ||||
Juna Station Pty Ltd
|
Operates Juna Downs pastoral station. | ||||
Mount Bruce Mining Pty Limited
|
Holder of mineral lease under the Mount Bruce State Agreement and associated mining interests. | ||||
North Mining Limited
|
Holder of interests in the Robe River Iron Associates Joint Venture, covering mining including rail and port operations. JV Operations division only. | ||||
Pandrew Pty Ltd
|
Held the benefit of certain rights under the Channar project security structure on behalf of certain Japanese debt financiers (now repaid). Currently dormant. | ||||
Pilbara Iron Company (Services) Pty Ltd
|
Provides mining and other corporate services to Hamersley Iron Pty Limited and the Robe River Iron Associates Joint Venture. | ||||
Pilbara Iron Pty Ltd
|
Provides port, rail, power and infrastructure services to Hamersley Iron Pty Limited and the Robe River Iron Associates Joint Venture. | ||||
Ranges Management Company Pty Ltd
|
Manager of the Bao-HI Joint Venture. | ||||
Ranges Mining Pty Ltd
|
Holder of interests in the Bao-HI Joint Venture. | ||||
Robe River Limited
|
Holder of shares in Robe River Mining Co Pty Ltd and the holder of the Robe State Agreement Mining Lease. | ||||
Robe River Mining Co. Pty Ltd
|
Holder of interests in the Robe River Iron Associates Joint Venture, covering mining including rail and port operations. JV Operations division only. | ||||
Robe Fair Value
|
Notional entity in which accounting costs associated with the step up in value arising from Rio Tintos acquisition of North Limited (to the extent they relate to Iron Ore Assets) are recorded. Included only for the purpose of calculating JV Accounting Costs. | ||||
Rocklea Station Pty Ltd
|
Operates Rocklea pastoral station. | ||||
Vostin Pty Limited
|
Holder of interests in the Channar Partnership. | ||||
Yalleen Pastoral Co Pty Ltd
|
Operates Yalleen Pastoral station. | ||||
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2. | BHP Billiton JV Entities |
JV Entity | Business of JV Entity | ||||
BHP Billiton Iron Ore Pty Ltd
|
Manager of iron ore operations (including mining, rail and port). | ||||
BHP Billiton Minerals Pty Ltd
|
Holder of interests in mining joint ventures, covering mining including rail and tug operations; holder of exploration tenements. | ||||
BHP Billiton Mount Newman SPV
|
Holder of iron ore exploration tenements. | ||||
BHP Billiton WAIO Pty Ltd
|
Employs staff and provides their services to BHP Billiton Iron Ore Pty Ltd, for a service fee. Formerly called BHP Iron Pty Limited name changed 23 April 2009. | ||||
BHP Iron Ore (Jimblebar) Pty Ltd
|
Mining. | ||||
BHPB SPV (IO Newco)
|
Subsidiary of the BHP Billiton Issuer to be formed to hold all the shares in BHP Billiton Minerals Pty Ltd. | ||||
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1. | Support for Owner Loans and Owner Guarantees |
1.1 | Method of Providing Support |
The Supporting Entity must provide support: |
(a) | in the case of an Owner Loan, by making a cash deposit (which, for the avoidance of doubt, is not a Cash Flow under the Funding and Distribution Policy) with the Relevant Group Member in an amount equal to its Participating Share of the amount of the Owner Loan from time to time; or | ||
(b) | in the case of an Owner Guarantee, by providing an indemnity in the form set out in schedule 6 (or as otherwise agreed by the Owners to Relevant Group Member for a proportion of the relevant Liability under that Owner Guarantee equal to its Participating Share, |
or (in any case) in any other manner agreed in writing between the Owners. |
1.2 | Time for Providing Support |
The support to be provided by the Supporting Entity under this schedule 3 must be provided: |
(a) | in the case of Owner Loans and Owner Guarantees notified by one Owner to the other prior to Completion, upon Completion; and | ||
(b) | in the case of any other Owner Loan or Owner Guarantee, promptly upon receipt of notification by the relevant Owner to the other. |
1.3 | Application of Cash Deposit Support |
Where a cash deposit is made pursuant to item 1.1(a): |
(a) | prior to, or contemporaneously with, the Owner Loan arising, the cash deposit must be applied by the Relevant Group Member to fund the Owner Loan; or | ||
(b) | in subsequent reimbursement of an existing Owner Loan, the cash deposit can be dealt with at the Relevant Group Members discretion (again, for the avoidance of doubt, not being a Cash Flow under the Funding and Distribution Policy). |
1.4 | Acknowledgement of Cash Deposit |
Where a cash deposit is made pursuant to item 1.1(a) with a Relevant Group Member other than the Owner, the relevant Owner must procure that the Relevant Group Member delivers an acknowledgement of deposit to the Supporting Entity, in the form of a deed poll in favour of the Supporting Entity, in the following terms: |
[Name of Relevant Group Member]: |
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(a) | acknowledges receipt of a deposit of $[amount] from [name of Supporting Entity] (the Supporting Entity ) in respect of [description of Owner Loan] (the Owner Loan ); | ||
(b) | undertakes to repay and make other payments in respect of that deposit as and when required by schedule 3 of the West Australian Iron Ore Production Joint Venture Agreement dated [date]; and | ||
(c) | will hold any amount that it receives in respect of the Owner Loan and is required to pay to the Supporting Entity under paragraph (b) on trust for the Supporting Entity, and will account to it accordingly. |
1.5 | Accounting for Repayments and Other Receipts |
If the Relevant Group Member receives any interest or other return on, or any repayment, reimbursement or other recovery in respect of, any Owner Loan or Owner Guarantee in respect of which a Supporting Entity has: |
(a) | provided support as required under this item 1; and | ||
(b) | complied with its indemnity or other obligations under the support provided, |
the Owner that is a Related Corporation of the Relevant Group Member must procure that the Relevant Group Member (after all amounts owing as at the date of Completion in respect of the relevant Owner Loan or Owner Guarantee have been repaid to that Relevant Group Member) accounts to the Supporting Entity for their Participating Share of the net amount received. No Relevant Group Member will be required to reimburse or compensate a Supporting Entity for any withholding tax or other deduction required to be made from any amount received by the Relevant Group Member, or from any amount to be paid to a Supporting Entity under this item 1.5. |
1.6 | Release of Support |
Where the relevant Owner Loan or Owner Guarantee provided by a Relevant Group Member is cancelled, released or reduced the Relevant Group Member will: |
(a) | in the case of an Owner Guarantee, promptly release and return all, or the relevant part of, the Supporting Entitys support for that Owner Guarantee; and | ||
(b) | in the case of an Owner Loan, promptly return the Supporting Entitys proportionate interest (commensurate with its participating Share) of the undrawn amount of that Owner Loan (if any) (again, for the avoidance of doubt, not being a Cash Flow under the Funding and Distribution Policy). |
1.7 | Adjusting Support to Reflect Changes in Participating Shares |
Where a Supporting Entity provides support in accordance with item 1 and subsequently has its Participating Share varied: |
(a) | where its Participating Share has increased, it is required within 30 days to increase the support provided in accordance with this item 1 to reflect its new Participating Share; or | ||
(b) | where its Participating Share has decreased, on the later of 30 days after the decrease or when all relevant Supporting Entitys which contemporaneously increased their |
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Participating Share have provided the required support in accordance with paragraph (a), the Relevant Group Member will: |
(i) | in the case of an Owner Guarantee, promptly release and return a proportion of the Supporting Entitys support for that Owner Guarantee reflecting the reduction in its Participating Share; and | ||
(ii) | in the case of an Owner Loan, promptly return a proportion of the Supporting Entitys interest (reflecting the reduction in its Participating Share) of the undrawn amount of that Owner Loan (if any) (again, for the avoidance of doubt, not being a Cash Flow under the Funding and Distribution Policy). |
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1. | Sole Risk Development |
(a) | If a Sole Funding Party wishes to proceed with a Sole Risk Development pursuant to clause 8.3, the Sole Funding Party must pay in accordance with the Funding and Distribution Policy an amount equal to the other Owners Participating Share of the fair market value of the scheduled reserves and resources referred to in paragraph (b). A Sole Funding Party may not proceed with a Sole Risk Development until such time as the relevant payment has been made. | ||
(b) | The fair market value will be agreed by the Owners or, failing agreement, will be determined by the Valuers in accordance with item 1 of schedule 9: |
(i) | based on the fact that the scheduled reserves and resources will be developed using the infrastructure assets available to the WA Iron Ore JV; | ||
(ii) | based on the quantity of scheduled reserves and resources that the applicable Feasibility Study identifies as being scheduled for delivery to the Sole Funding Party as part of the Sole Risk Development and the timing for delivery of those tonnes in accordance with the delivery schedule set out in the applicable Feasibility Study, |
(the Purchased Tonnes ); and |
(iii) | otherwise applying the principles set out in item 1 of schedule 9. |
(c) | If the existence of additional reserves or resources is established in the area the subject of a Sole Risk Development through further exploration ( Additional Tonnes ), the Manager will notify the Owners as soon as reasonably practicable. For the avoidance of doubt, any such Additional Tonnes will be Iron Ore Assets for the purposes of this Agreement. | ||
(d) | If the Sole Funding Party elects to proceed with the Sole Risk Development, the Sole Funding Party must: |
(i) | unless otherwise agreed by the Owners Council and subject to paragraph (g)(ii), develop the Sole Risk Development in all material respects in accordance with the final scope and delivery schedule set out in the relevant Feasibility Study and Operational Implementation Plan or as otherwise voted on in the relevant Owners Council meeting; and | ||
(ii) | develop the Sole Risk Development so that it results in total system capacity, that is, mine, infrastructure and associated capacity, sufficient to meet the requirements of the Sole Risk Development. |
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(e) | If the Sole Risk Development: |
(i) | * * * |
(A) | the Sole Risk Development may proceed only if, and to the extent, the use or expansion of that infrastructure by the Sole Funding Party can proceed * * *; and | ||
(B) | if such use or expansion can proceed, the Sole Funding Party: |
(1) | may expand that infrastructure in all material respects in accordance with the final scope set out in the relevant Feasibility Study and must fund the capital costs of such expansion ( Rail and Port Expansion Costs ); and | ||
(2) | may use that infrastructure * * * and must pay a charge referable to the costs of operating the infrastructure ( Rail and Port Operating Costs ), |
in accordance with the terms set out in the Infrastructure Sharing Agreement (or if an Infrastructure Sharing Agreement has not been agreed on the basis of the principles set out in Part A of the Infrastructure and Blending Principles); and |
(ii) | would require the use or expansion of rail and port infrastructure that is wholly owned by a JV Entity, the Sole Funding Party: |
(A) | may expand that infrastructure in accordance with the final scope set out in the relevant Feasibility Study and must fund the capital costs of such expansion ( Rail and Port Expansion Costs ); and | ||
(B) | may use that infrastructure * * * and must pay a charge referable to the costs of operating the infrastructure ( Rail and Port Operating Costs ), |
in accordance with the terms set out in the Infrastructure Sharing Agreement (or if an Infrastructure Sharing Agreement has not been agreed on the basis of the principles set out in Part A of the Infrastructure and Blending Principles). |
(f) | The Sole Funding Party must: |
(i) | subject to clause 8.5(a), fund the capital costs of the Sole Risk Development in accordance with clause 11 of the Funding and Distribution Policy; | ||
(ii) | in relation to costs incurred by the Manager pertaining to the WA Iron Ore JV and the Sole Risk Development as a whole in a Half Year (such as management, infrastructure expenses and overheads) other than Rail and Port Operating Costs ( Whole of System Costs ), incur a portion of Whole of System Costs allocated to it by the Manager on the basis of the proportion of tonnes shipped by the Sole Risk Development in that Half Year as compared to the total tonnes shipped by the WA Iron Ore JV in that Half Year plus: |
(A) | the tonnes shipped by the Sole Risk Development in that Half Year; and |
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(B) | the tonnes shipped by any previous Sole Risk Development in that Half Year; and |
(iii) | incur any other increase in operating costs (other than Rail and Port Operating Costs) not captured in paragraph (ii) directly referrable to the Sole Risk Development, including any costs incurred during the period of construction of the Sole Risk Development. |
(g) | The Sole Funding Party will be entitled to: |
(i) | all the additional capacity created by the Sole Risk Development; and | ||
(ii) | receive the Sole Risk Iron Ore Product attributable to the Sole Risk Development on the same terms as apply to other Iron Ore Product of that type sold under clause 6 as a stand alone product (unless the other Owner has agreed to blending with JV Production, in which case the Sole Funding Party will receive blended product in accordance with the arrangements agreed with the other Owner). |
(h) | Subject to paragraphs (c) and (o), the Sole Risk Development will not be considered to be part of the WA Iron Ore JV, and subject to any express provision to the contrary in any Transaction Document (including item 3 of this Schedule 4), decisions that relate solely to the Sole Risk Development will be made by the Sole Funding Party. | ||
(i) | The Sole Risk Development will be constructed by the Manager in consultation with the Sole Funding Party consistent with the Feasibility Study undertaken in connection with the Sole Risk Development, and the Manager will be required to report to the Sole Funding Party as reasonably required by the Sole Funding Party as to progress including as to cost. The Manager will prepare monthly invoices in respect of the Sole Risk Development in accordance with this item 1 in reasonable detail, which invoices will be payable by the Sole Funding Party. | ||
(j) | If a Sole Funding Party has met its payment obligations under paragraph (a) and proceeds with a Sole Risk Development, the Manager will be obliged to construct, and the Sole Funding Party will be obliged to fund the construction of, the Sole Risk Development in accordance with the Operational Implementation Plan set out in the applicable Feasibility Study, without adjustment unless the adjustment will not, in the reasonable opinion of the Manager, have any material effect on the scope, timing or cost of the works required by the Feasibility Study. | ||
(k) | If a Sole Risk Development has not reached Operational Completion * * *, then the Manager will provide written notice to each Owner. * * * the Owner which is not the Sole Funding Party (the Opt-in Owner ) may elect by written notice to the Sole Funding Party and to the Manager to proceed with the Sole Risk Development as part of the WA Iron Ore JV. If the Opt-in Owner provides such notice, then: |
(i) | the Project the subject of the Sole Risk Development will proceed as part of the WA Iron Ore JV; | ||
(ii) | clause 8.3(d) will apply; and | ||
(iii) | the Opt-in Owner must reimburse, to the Sole Funding Party its Participating Share of: |
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(A) | all costs incurred by the Sole Funding Party in connection with the Sole Risk Development up to the date such notice is provided (any such cost to be Escalated from the end of the month in which that cost was incurred until the date of reimbursement); and | ||
(B) | any amount paid by the Sole Funding Party for the Purchased Tonnes pursuant to paragraph (a) (such amount to be Escalated from the end of the month in which that amount was paid by the Sole Funding Party until the date of reimbursement). |
If no such notice is given, the Sole Funding Party may proceed with the Sole Risk Development and the rights of the Opt-In Owner under this paragraph (h) will lapse and be of no further force or effect. | |||
(l) | Subject to any Existing JV Arrangements, the Sole Risk Development will be operated and maintained by the Manager on a unified basis in conjunction with the Iron Ore Assets as if it had been constructed by the WA Iron Ore JV (accordingly the provisions such as standard of service set out in the Transaction Documents will apply), and no management fees in excess of cost will be payable. | ||
(m) | During the period of construction of the Sole Risk Development, the Manager will use all reasonable endeavours to minimise interference with, or disruption to, the JV Operations. | ||
(n) | If the construction of the Sole Risk Development results or is likely to result in a temporary decrease in the capacity of the Pilbara Integrated System to which the other Owner is entitled during the construction period which would result in an unavoidable loss of sales of Iron Ore Product by that other Owner ( Loss of Sales ), the Sole Funding Party must reimburse the other Owner for the loss of Marginal Profit incurred by the other Owner which arises from Loss of Sales, * * * |
(i) | * * * | ||
(ii) | * * * |
(A) | * * * | ||
(B) | * * * | ||
(C) | * * * | ||
(D) | * * * | ||
(E) | * * * |
For the purposes of this paragraph (n), Marginal Profit means the revenue from sale of a unit of Iron Ore Product produced less the marginal cost of producing that unit of Iron Ore Product, for each relevant unit of Iron Ore Product. |
(o) | * * * | ||
(p) | Without limiting any other provision of this Agreement, the relevant Owners will do all things and execute all documents necessary and take all steps (including, where the Sole Funding Party does not own the tenements the subject of the development taking all steps necessary to ensure the Sole Risk Development can proceed on those tenements) within its power, as required by the Manager or the Sole Funding Party, to give effect to construction |
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of the Sole Risk Development in accordance with the scope of works provided for in the applicable Feasibility Study and the associated Operational Implementation Plan, as adjusted in accordance with paragraph (g). | |||
(q) | If a Sole Funding Party transfers all of its Participating Share in accordance with clause 10, it will also transfer, to the acquirer of that interest, its Sole Risk Assets. |
2. | Sole Risk Opportunity |
(a) | If a Sole Funding Party has elected to proceed with a Sole Risk Opportunity pursuant to clause 8.4, the Sole Funding Party, unless otherwise agreed by the Owners Council, may proceed with the Sole Risk Opportunity only in accordance with the New Opportunity Notice. | ||
(b) | * * * |
(i) | * * * |
(A) | * * * | ||
(B) | * * * |
(1) | * * * | ||
(2) | * * * |
* * * |
(3) | * * * | ||
(4) | * * * | ||
(5) | * * * |
(ii) | * * * |
(A) | * * * | ||
(B) | * * * |
* * * |
(C) | * * * | ||
(D) | * * * | ||
(E) | * * * |
(c) | * * * |
(i) | * * * | ||
(ii) | * * * |
(A) | * * * | ||
(B) | * * * |
(iii) | * * * |
(d) | The Sole Funding Party will: |
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(i) | be entitled to all the additional capacity created by the Sole Risk Opportunity, including any capacity created by a Sole Risk Opportunity Development (and its capacity entitlements under clause 6.3 will be increased accordingly); and | ||
(ii) | receive the Sole Risk Iron Ore Product attributable to the Sole Risk Opportunity on the same terms as apply to other Iron Ore Product of that type sold under clause 6 as a stand alone product (unless the other Owner has agreed to blending with JV Production, in which case the Sole Funding Party will receive blended product in accordance with the arrangements agreed with the other Owner). |
(e) | The Sole Risk Opportunity will not be considered to be part of the WA Iron Ore JV, and subject to any express provision to the contrary in any Transaction Document (including item 3 of this schedule 4), decisions which relate to the Sole Risk Opportunity will be made by the Sole Funding Party. | ||
(f) | Subject to any contractual constraints existing at the time of the acquisition, the Sole Risk Opportunity will be operated and maintained by the Manager on a unified basis in conjunction with the Iron Ore Assets as if it had been constructed by the WA Iron Ore JV (accordingly the provisions such as standard of service set out in the Transaction Documents will apply), and no management fees in excess of cost will be payable. | ||
(g) | Any Sole Risk Opportunity Development will be constructed by the Manager in consultation with the Sole Funding Party consistently with the New Opportunity Notice, and the Manager will be required to report to the Sole Funding Party as reasonably required by the Sole Funding Party as to progress including as to cost. The Manager will prepare monthly invoices in respect of the Sole Risk Opportunity Development in accordance with this item 2 in reasonable detail, which invoices will be payable by the Sole Funding Party. Items 1(m) and (n) of this schedule 4 will apply to any Sole Risk Opportunity Development. | ||
(h) | * * * | ||
(i) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * |
(A) | * * * | ||
(B) | * * * |
(j) | * * * | ||
(k) | Without limiting any other provision of this Agreement, the relevant Owners will do all things and execute all documents necessary and take all steps (including, * * * | ||
(l) | * * * |
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3. | Subsequent Expansions of Sole Risk Developments and Sole Risk Opportunities |
(a) | If: |
(i) | the Sole Funding Party of a Sole Risk Development or the other Owner wishes to expand that Sole Risk Development beyond the final scope and delivery schedule set out in the Feasibility Study and Operational Implementation Plan that applied with respect to the Sole Risk Development; or | ||
(ii) | the Sole Funding Party of a Sole Risk Opportunity or the other Owner wishes to expand that Sole Risk Opportunity beyond the final scope set out in the New Opportunity Notice that applied with respect to that Sole Risk Opportunity, including by: |
(A) | increasing the maximum rate of production of the New Opportunity above the amount specified in the New Opportunity Notice; or | ||
(B) | expanding the maximum Pilbara Integrated System and/or increasing the extent to which the New Opportunity uses the Pilbara Integrated System above the amount specified in the New Opportunity Notice, |
it must first provide written notice to the Manager and to the other Owner proposing that the Manager investigate: |
(iii) | a mine development (either as an additional mine or as a replacement to an existing mine that is nearing the end of its mine life); or | ||
(iv) | expansion of an existing mine, |
and associated infrastructure expansions, for a certain quantity (a Subsequent Sole Risk Development Proposal ). The Manager may (and will, if directed by an Owner) * * * provide to the Owners Council for review a Preliminary Study for that Subsequent Sole Risk Development Proposal in accordance with clause 8.2(a). | |||
(b) | Subject to paragraph (c) * * *, the provisions of clauses 8.2(c) to (h) will apply to the studies associated with the Subsequent Sole Risk Development Proposal, the provisions of clause 8.3 will apply to the decision of the Owners Council on whether to proceed with the Project, and the provisions of item 1 of this schedule will apply if an Owner wishes to proceed with the Project as a Sole Risk Development. | ||
(c) | If, pursuant to clauses 8.3(b) or (c), the Project contemplated by the Subsequent Sole Risk Development Proposal is to proceed as part of the WA Iron Ore JV and relates to a Sole Risk Opportunity, then the Owner (not being the Sole Funding Party of the Sole Risk Opportunity) (the Purchasing Owner ) will pay as directed by the other Owner in accordance with the Funding and Distribution Policy, the Purchasing Owners Participating Share of the fair market value of the assets comprised by the Sole Risk Opportunity to be used in the Project (other than rail and port infrastructure that may be used pursuant to item 2(h) of this schedule), taking into account the cost savings and decreased risks for that Purchasing Owner that result from the Sole Funding Party having undertaken the Sole Risk Opportunity. |
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(d) | The amount to be paid will be agreed by the Owners or, failing agreement, will be determined by the Valuers acting in accordance with item 1 of schedule 9. |
4. | Nomination of Sole Risk Entity |
(a) | If a Sole Funding Party elects to proceed with a Sole Risk Development pursuant to clause 8.3(e) or a Sole Risk Opportunity pursuant to clause 8.4(f), then that Sole Funding Party may, at any time during which the Sole Funding Partys entitlement to proceed with the Sole Risk Development or Sole Risk Opportunity (as applicable) continues, elect to nominate a Related Corporation of the Sole Funding Party (the Sole Risk Entity ) to undertake that Sole Risk Development or Sole Risk Opportunity on its behalf. |
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(b) | If a Sole Funding Party elects for a Sole Risk Entity to undertake a Sole Risk Development or Sole Risk Opportunity pursuant to paragraph (a), then the Sole Risk Entity must enter into a Deed of Accession in the form set out in schedule 18 under which it agrees to: |
(i) | assume the obligations of the Sole Funding Party under the Joint Venture Agreement; and | ||
(ii) | be bound by the terms of the Joint Venture Agreement, |
in each case with respect to only the relevant Sole Risk Development or Sole Risk Opportunity in respect of which the election was made. | |||
(c) | In order to give effect to the provisions of this item 4, each party to this Agreement unconditionally and irrevocably: |
(i) | appoints the Manager to be its attorney and in its name and on its behalf to execute each Deed of Accession and to do all such other acts as are necessary to give effect to the provisions of this item 4; and | ||
(ii) | with effect on and from the date the Deed of Accession becomes effective: |
(A) | consents to the Sole Risk Entity becoming a party to this Agreement for the purposes of the relevant Sole Risk Development or Sole Risk Opportunity and assuming all obligations of the Sole Funding Party in accordance with the provisions of this item 4 and the Deed of Accession in respect of that Sole Risk Development or Sole Risk Opportunity (as applicable); | ||
(B) | agrees that the Sole Risk Entity will be entitled, subject to the terms of the Deed of Accession, to exercise all of the rights, privileges and benefits of the Sole Funding Party under this schedule as if that Sole Risk Entity was named as a party to this Agreement, but only in respect of the relevant Sole Risk Development or Sole Risk Opportunity to which the Sole Risk Entity has been nominated; and | ||
(C) | releases and forever discharges the Sole Funding Party that nominated the Sole Risk Entity from all Liabilities that arise on or after the date of execution of the Deed of Accession (including any obligation to pay Called Sums) in respect of the Sole Risk Development or Sole Risk Opportunity. |
(d) | With effect on and from the date the Deed of Accession becomes effective: |
(i) | each reference in this schedule to the Sole Funding Party in respect of the relevant Sole Risk Development or Sole Risk Opportunity will be taken to be a reference to the Sole Risk Entity, except in the case of items 1(q), 2(l) and 3 which will not apply to the Sole Risk Entity; | ||
(ii) | if the Sole Risk Entity is undertaking a Sole Risk Development, then: |
(A) | the references to the Owners in item 1(c) will be taken to include a reference to the Sole Risk Entity; |
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(B) | the references to the other Owner in item 1(g)(ii) will be taken to be references to each Owner; | ||
(C) | the reference to each Owner in item 1(k) will be taken to include a reference to the Sole Risk Entity; | ||
(D) | the reference to the Owner which is not a Related Corporation of Sole Funding Party in item 1(k) will be taken to be a reference to each Owner that is not a Related Body Corporate of the Sole Risk Entity; | ||
(E) | the references to the other Owner or that other Owner in item 1(n) will be taken to be a reference to each Owner that is not a Related Corporation of the Sole Funding Party; | ||
(F) | the reference to the Owners or either Owner in item 1(n) will be taken to include a reference to the Sole Risk Entity; and | ||
(G) | the reference to the relevant Owners in item 1(p) will be taken to include a reference to the Sole Risk Entity; |
(iii) | if the Sole Risk Entity is undertaking a Sole Risk Opportunity, then: |
(A) | the references to the other Owner in item 2(d)(ii) will be taken to be references to each Owner; and | ||
(B) | the reference to the relevant Owners in item 2(i) will be taken to include a reference to the Sole Risk Entity; |
(iv) | if the Sole Risk Entity is undertaking either Sole Risk Development or Sole Risk Opportunity, then: |
(A) | the reference to An Owner in clause 8.5(c) will be taken to be a reference to The Sole Risk Entity; | ||
(B) | the reference to the other Owner in item 5(a) will be taken to be a reference to each Owner that is not a Related Corporation of the Sole Funding Party; and | ||
(C) | the reference to the Owner that is not the Sole Funding Party in item 6(b) and (c)(i) will be taken to be a reference to each Owner that is not a Related Corporation of the Sole Funding Party; and |
(v) | the Sole Risk Entity will be deemed, to the extent necessary and only in respect of such matters as are relevant to the Sole Risk Development or Sole Risk Opportunity (as applicable), to be an Owner or a party (as applicable) for the purposes of the following clauses: |
(A) | ( Term ) clause 2.5; | ||
(B) | ( Managers Duties ) clause 4.3(b); | ||
(C) | ( Accounts and Records ) clauses 4.9(e)(ii) and (iii); | ||
(D) | ( Accounting Systems ) clause 4.10(a) and (b); | ||
(E) | ( Audit ) clauses 4.11(b)(iii) and (iv) (provided that the costs of such audit will be borne by the Sole Funding Party), (c) and (e); |
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(F) | ( Reporting ) clause 4.12 for the purposes of providing reports in relation to the Sole Risk Development or Sole Risk Opportunity (as applicable) in accordance with the Reporting Policy; | ||
(G) | ( Access to information ) clauses 4.13(b) and (e)(i); | ||
(H) | ( Insurance ) clause 4.15(c), (d) and (e); | ||
(I) | ( Confidentiality ) clause 14; | ||
(J) | ( Relationship of the Parties ) clause 15; | ||
(K) | ( Independent Expert ) clause 16; | ||
(L) | ( Prohibition on Partition ) clause 17; | ||
(M) | ( Force Majeure ) clause 18; | ||
(N) | ( GST ) clause 19; | ||
(O) | ( Governing Law and Jurisdiction ) clause 20; and | ||
(P) | ( Ancillary ) clause 21 (provided that clause 7 of the Deed of Accession will apply in respect of clause 21.3). |
(e) | A Sole Risk Entity must not create a Security Interest or permit a Security Interest to subsist over its rights under this Agreement unless the chargee under the Security Interest enters into an Intercreditor Deed in the form of part 3 of schedule 8 in favour of each Owner. Each other party to this Agreement must, on request, enter into that Intercreditor Deed with the Sole Risk Entity. | ||
(f) | The Sole Risk Entity may Dispose of the whole, but not part, of its rights under this Agreement provided that the assignee must first enter into a Deed of Accession in the form set out in schedule 18. | ||
(g) | The accession of a Sole Risk Entity pursuant to this item 4 will be subject to and conditional on the Sole Funding Party obtaining all necessary Authorisations and third party approvals. |
5. | General provisions |
(a) | If, in connection with any Sole Risk Development or Sole Risk Opportunity, either at the time the Sole Funding Party elects to proceed with the Sole Risk Development or Sole Risk Opportunity or subsequently, the Sole Funding Party or a Related Corporation of the Sole Funding Party wishes to undertake any other activities (including Secondary Processing) on any JV Tenement that does not form part of the Sole Risk Development or Sole Risk Opportunity ( Proposed Activities ), the Sole Funding Party will provide written notice to the Manager and the other Owners and item 6 of this schedule will apply. | ||
(b) | If a Sole Funding Party sustains or incurs any Loss as a result (whether directly or indirectly) of any bad faith, wilful misconduct or gross negligence on the part of the Manager in respect of a Sole Risk Development or Sole Risk Opportunity (as applicable), the Manager must pay an amount to the Sole Funding Party that is equal to the amount of the Loss. Any amount payable by the Manager pursuant to this paragraph (b) will be costs |
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of the WA Iron Ore JV and will be funded by the Owners in proportion to their respective Participating Shares in accordance with clause 3.11. | |||
(c) | If the Manager sustains or incurs any Loss as a result (whether directly or indirectly) of any bad faith, wilful misconduct or gross negligence on the part of a Sole Funding Party in respect of a Sole Risk Development or Sole Risk Opportunity (as applicable), the Sole Funding Party must pay an amount to the Manager that is equal to the amount of the Loss. Any amount payable to the Manager pursuant to this paragraph (c) will be a revenue of the WA Iron Ore JV. | ||
(d) | If a Sole Risk Development or Sole Risk Opportunity is undertaken, a Sole Risk Scheduling Protocol will be developed in accordance with item 5.4 of the Infrastructure and Blending Principles (or, if agreed, the equivalent provisions of the Infrastructure Sharing Agreement). The Scheduling Protocol will be subject to any such Sole Risk Scheduling Protocol. | ||
(e) | * * * |
6. | Sole Risk Activities on Iron Ore JV Tenements |
(a) | Any notice under item 5(a) must contain the following information: |
(i) | the reasons for the selection of the applicable JV Tenement as the location of the Proposed Activities; and | ||
(ii) | the scope of the Proposed Activities, including: |
(A) | details of the forecast timeframe within which the Proposed Activities are to be commenced and completed; | ||
(B) | details of any Authorisations required to implement and undertake the Proposed Activities; | ||
(C) | detailed technical information, plans, specifications, maps and any other information which may reasonably be considered relevant to the Manager for the purposes of making a determination under paragraph (b); and | ||
(D) | details of the steps (if any) the Sole Funding Party or its Related Corporation proposes to take to minimise any interference or disruption to the JV Operations in connection with the Proposed Activities. |
(b) | * * * the Owner that is not the Sole Funding Party will provide written notice to the Sole Funding Party and the Manager which either: |
(i) | consents to the Proposed Activities without qualification; | ||
(ii) | subject to paragraph (c), refuses to consent to the Proposed Activities; or | ||
(iii) | subject to paragraph (c), consents to the proposed Activities, provided that as a condition to such consent the relevant Owner or its Related Corporation make reasonable alterations to the Proposed Activities or comply with reasonable conditions on the conduct of the Proposed Activities. |
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If a relevant Owner fails to give such notice * * * it will be deemed to have given consent pursuant to paragraph (b)(i). | |||
(c) | A relevant Owner may only refuse to consent pursuant to paragraph (b)(ii), or require alterations or impose conditions to its consent pursuant to paragraph (b)(iii), if it reasonably determines, after consultation with the Sole Funding Party, that the Proposed Activities are likely to: |
(i) | unduly prejudice or interfere with any current or prospective JV Operations (including on any area that the Owner that is not the Sole Funding Party reasonably expects will become a JV Tenement in connection with future JV Operations); or | ||
(ii) | materially reduce the quantity of economically extractable iron ore available to the WA Iron Ore JV. |
In order to enable the relevant Owner to make a determination under paragraph (b), the Manager must provide that Owner with such information and such assistance as may reasonably be required by that Owner. | |||
(d) | A relevant Owner may not refuse to grant such consent, or impose such alterations or conditions, where the Sole Funding Party or its Related Corporation is required to undertake the Proposed Activities on the relevant JV Tenement pursuant to any applicable Law or requirement of any Authority. | ||
(e) | If a relevant Owner consents to the Proposed Activities pursuant to paragraphs (b)(i) or (iii), the Sole Funding Party will, or will procure that its Related Corporations will: |
(i) | comply with any conditions or qualifications specified in that consent; and | ||
(ii) | take reasonable steps to ensure that the Proposed Activities do not: |
(A) | unduly prejudice or interfere with any current or prospective JV Operations; or | ||
(B) | materially reduce the quantity of economically extractable iron ore available to the WA Iron Ore JV, by conducting additional drilling to ensure that any prospective resources are not sterilised by the proposed activities or where this is not practicable, the payment of agreed compensation of prospective resources. |
(f) | If, notwithstanding paragraph (e), the Proposed Activities of the Sole Funding Party unduly prejudice or interfere with any current or prospective JV Operations or materially reduce the quantity of economically extractable iron ore available to the WA Iron Ore JV, then the parties will meet and discuss in good faith the measures that the Sole Funding Party can take to rectify the situation (including the form and quantum of any compensation it may to pay to the WA Iron Ore JV) as soon as reasonably practicable. If the parties are unable to | ||
(g) | agree on the measures the Sole Funding Party is required to take to rectify the situation, then any party may refer the matter for determination by the Independent Expert in accordance with clause 16. |
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1. | Preliminary Studies |
The Preliminary Study must: |
(a) | be conducted based on customary economic assumptions agreed by the Owners Council (other than in respect of the assumptions listed in paragraphs (a)(i), (ii) and (iii)) or, in the absence of such agreement (or in the case of paragraphs (a)(i), (ii) and (iii)), selected by the Manager, including in relation to: |
(i) | iron ore prices; | ||
(ii) | current and projected demand and supply conditions in the global market; | ||
(iii) | foreign exchange; | ||
(iv) | cost of capital; and | ||
(v) | inflation; and |
(b) | include the overall scope, direction and timing of the Contemplated Project. |
2. | Pre-Feasibility Studies |
The Pre-Feasibility Study must: |
(a) | be conducted based on customary economic assumptions agreed by the Owners Council (other than in respect of the assumptions listed in paragraphs (a)(i), (ii) and (iii)) or, in the absence of such agreement (or in the case of paragraphs (a)(i), (ii) and (iii)), selected by the Manager, including in relation to: |
(i) | iron ore prices; | ||
(ii) | current and projected demand and supply conditions in the global market; | ||
(iii) | foreign exchange; | ||
(iv) | cost of capital; and | ||
(v) | inflation; and |
(b) | include the overall scope, direction and timing of the Contemplated Project, including: |
(i) | detailed technical information, plans, specifications, maps and any other information which may reasonably be considered relevant to the Contemplated Project (including those items referred to in item 2(b) of this schedule and which are relevant to a Pre-Feasibility Study); |
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(ii) | a preliminary engineering study capital cost estimate (+/- 20-25%) of the cost to bring the Contemplated Project to Operational Completion and reasonable details of the major categories of expenditure, including: |
(A) | direct; | ||
(B) | indirect; | ||
(C) | owners; and | ||
(D) | contingent costs; |
(iii) | details of the associated execution strategy required to implement the Contemplated Project, including Authorisations, third party approvals, commercial, contract and risk management strategies; and | ||
(iv) | consideration of alternatives that deliver Pilbara System Capacity (eg, mine, infrastructure and ancillary assets) sufficient to meet the requirements of the Project; and | ||
(v) | a detailed financial evaluation of the results of the Pre-Feasibility Study and the Managers assessment of the Contemplated Project, including ranking of the options considered by the Pre-Feasibility Study. |
3. | Feasibility Studies |
The Feasibility Study must: |
(a) | be conducted based on customary economic assumptions agreed by the Owners Council (other than in respect of the assumptions listed in paragraphs (a)(i), (ii) and (iii)) or, in the absence of such agreement (or in the case of paragraphs (a)(i), (ii) and (iii)), selected by the Manager, including in relation to: |
(i) | iron ore prices; | ||
(ii) | current and projected demand and supply conditions in the global market; | ||
(iii) | foreign exchange; | ||
(iv) | cost of capital; and | ||
(v) | inflation; |
(b) | include the final scope and project delivery plan of the Project, including: |
(i) | detailed technical information, plans, specifications, maps and any other information which may reasonably be considered relevant to the Project, including: |
(A) | the quantum and nature of scheduled iron ore reserves and resources within the defined area of the Project; | ||
(B) | the product type and likely trends in quality specifications that are expected to be produced; | ||
(C) | projected capital and operating costs of the Project over the project life; |
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(D) | the quantity of additional system capacity (including Latent System Capacity across each major infrastructure element to be used by the expansion or development) that is expected to be created by the Project; | ||
(E) | a clear statement of the scheduled iron ore reserves and resources to be consumed by the Project and a delivery schedule setting out the tonnages expected to be produced and delivered for each year of the Project; | ||
(F) | the required use of system capacity broken down by major infrastructure element to be used in connection with the Project; and | ||
(G) | details of any downstream infrastructure that is required to be constructed in connection with the Project; |
(ii) | a definitive engineering study capital cost estimate (±10-15%) of the cost to bring the Project to Operational Completion and reasonable details of the major categories of expenditure, including: |
(A) | direct; | ||
(B) | indirect; | ||
(C) | Owners; and | ||
(D) | contingent costs; |
(iii) | an assessment of the Project (including valuation) based on the Iron Ore Product being produced by that Project being sold as both a stand alone product and a blended product; | ||
(iv) | preparation of social and environmental impact assessment; | ||
(v) | details of the associated execution strategy required to implement the Project, including Authorisations, third party approvals, commercial, contract and evaluation of key risks and identification of risk management strategies; and | ||
(vi) | an operational implementation plan, including the identification of the project schedule and key project milestones (the Operational Implementation Plan ); and |
(c) | otherwise be of a standard which is sufficient to allow the Manager to proceed immediately to construction and include such information, contain such analysis, and be in a form that would enable a major international bank to form a reasonable judgment with respect to the provision of project financing for the Project. | ||
In addition to providing each Owner with a copy of each Pre-Feasibility Study and Feasibility Study, the Manager must also provide each Owner with a copy of the underlying financial models used in preparing that Pre-Feasibility Study or Feasibility Study (as applicable), including physical and financial information schedules that include operating and capital assumptions that are consistent with those set out in the Reporting Policy. The key assumptions adopted by the Manager in the preparation of the Pre-Feasibility Study or Feasibility Study (as applicable) must be clearly identified and included in those schedules. |
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Page (i)
Date
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Parties
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1.
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[Insert Name of Supporting Entity] (the Indemnifier ). | ||
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2.
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[Insert Name of Relevant Group Member] (the Relevant Group Member ). | ||
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Recital
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A
|
On [#], certain members of the Rio Tinto Group and BHP Billiton Group entered into the West Australian Iron Ore Production Joint Venture Agreement for the purposes of establishing the West Australian Iron Ore Production Joint Venture (the Joint Venture Agreement ). | ||
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B
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Clause 4.2(j) and item 1.1 of Schedule 3 of the Joint Venture Agreement require the provision in connection with certain Owner Guarantees of an indemnity in the form set out in this Deed by a Supporting Entity. | ||
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C
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The Relevant Group Member has provided [Description of Owner Guarantee(s)] (the Owner Guarantees ). | ||
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D
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The Indemnifier is entering into this Deed for the purposes of satisfying [the obligation of [Insert name of relevant Owner Parent] (the Owner Parent )/its obligation] to provide support to the Relevant Group Member for a proportion of each Owner Guarantee commensurate with [Insert name of relevant Owner]s (the Relevant Owner ) Participating Share in accordance with clause 4.2(j) and item 1.1 of schedule 3 of the Joint Venture Agreement. | ||
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1. | Definitions and Interpretation |
1.1 | Joint Venture Agreement definitions to apply |
Subject to a contrary meaning being specified in clause 1.2, words and expressions defined in the Joint Venture Agreement have the same meaning when used in this Deed. |
1.2 | Defined Terms |
Creditor means a person to which the Relevant Group Member owes obligations to pursuant to the Owner Guarantees. | ||
Joint Venture Agreement has the meaning given in Recital A. | ||
Owner Guarantees mean the Guarantees described in Schedule 1. | ||
Owner Parent has the meaning given in Recital D. |
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Relevant Owner has the meaning given in Recital D. | ||
1.3 | Joint Venture Agreement interpretation provisions to apply | |
Clauses 1.2 to 1.5 of the Joint Venture Agreement will apply, mutatis mutandis , in the interpretation of this Deed. |
2. | Provision in Accordance with clause 4. 2(j) of the Joint Venture Agreement |
The Indemnifier has entered into this Deed in satisfaction of [the Owner Parents/its] obligations to provide support to the Relevant Group Member for a proportion of the Owner Guarantees commensurate with the Participating Share of the Relevant Owner in accordance with clause 4.2(j) and item 1.1 of schedule 3 of the Joint Venture Agreement. |
3. | Indemnity |
3.1 | General indemnity |
The Indemnifier unconditionally and irrevocably indemnifies the Relevant Group Member against any Loss that may be incurred or sustained by it in relation to the Owner Guarantees or as a direct or indirect consequence of any claim made or purported to be made under the Owner Guarantees, or anything done by any person who is, or claims to be, entitled to the benefit of the Owner Guarantee, in proportion to the Participating Share of the Relevant Owner. |
3.2 | Payment |
(a) | Without limiting clause 3.1, within 30 days, or such shorter period as may be reasonably required to ensure payment by the date required under the Owner Guarantee, of demand by the Relevant Group Member, the Indemnifier must pay to the Relevant Group Member a proportion equal to the aggregate of the Participating Shares of all Owners * * * of all amounts paid or required to be paid by the Relevant Group Member under any Owner Guarantee. In making a demand, the Relevant Group Member must provide the Indemnifier with such reasonable information and materials explaining how the demanded amount has been determined by the Relevant Group Member. | ||
(b) | All payments required under clause 3.1 and this clause 3.2 must be made in the currency in which the amounts are paid or required to be paid by the Relevant Group Member under each Owner Guarantee. |
3.3 | Requirement to Indemnify Unconditional |
The Indemnifiers obligations pursuant to clauses 3.1 and 3.2 are absolute and unconditional. They will not be subject to any reduction, termination or other impairment by any set-off, deduction, abatement, counterclaim, agreement, defence, suspension, deferment or otherwise and the Indemnifier will not be released, relieved or discharged from any obligations under this Deed, nor will such obligations be prejudiced or affected, for any reason other than termination of this Deed pursuant to clause 5.1. |
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4. | Repayments and Receipts |
(a) | Subject to paragraph (b), if the Relevant Group Member receives any interest or other return on, or any repayment, reimbursement or other recovery in respect of any Owner Guarantee, the Relevant Group Member must (after all amounts owing as at the date of Completion in respect of such Owner Guarantee have been repaid to the Relevant Group Member) account to the Indemnifier for the aggregate of the Participating Shares of all Owners * * * of the net amount received. | ||
(b) | The Relevant Group Member (and any of its Related Corporations) will not be required to reimburse or compensate Indemnifier for any withholding tax or other deduction required to be made from any amount received by the Relevant Group Member, or from any amount to be paid to the Indemnifier under this clause 4. |
5. | Release of Indemnity |
5.1 | Events of Release |
This Deed will terminate on the earlier of: |
(a) | immediately upon: |
(i) | all Owner Guarantees being cancelled; or | ||
(ii) | the Relevant Group Member being released from its obligations under the all Owner Guarantees; or |
(b) | where the Related Corporations of the Indemnifier cease to hold the largest Participating Share * * *, on the later of: |
(i) | 30 days after such Related Corporations have ceased to hold such Participating Share; or | ||
(ii) | when the contemporaneous acquirer of its Participating Interest which has the largest Participating Share * * * has provided the required support for the Owner Guarantees in accordance with clause 4.2(j) of the Joint Venture Agreement in replacement of this Deed. |
5.2 | Notification of Release |
The Relevant Group Member will notify the Indemnifier as soon as practicable after: |
(a) | an Owner Guarantee is cancelled; | ||
(b) | the Relevant Group Member is released from its obligations under an Owner Guarantee; or | ||
(c) | this Deed has otherwise terminated in accordance with clause 5.1 |
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6. | Confidentiality |
The Indemnifier must at all times observe, comply with and give effect to the provisions of clause 14 of the Joint Venture Agreement with respect to any Confidential Information disclosed in connection with this Deed. |
7. | Costs and Stamp Duty |
(a) | Each party to this Deed will bear its own costs arising out of the preparation and execution of this Deed. | ||
(b) | All stamp duty (including fines, penalties and interest) payable on or in connection with this Deed must be borne by the Indemnifier. The Indemnifier must indemnify the Relevant Group Member on demand against any Liability for that stamp duty. |
8. | Notices |
Any notice, demand, consent, certificate, approval, nomination, waiver or other similar communication given or made in connection with this Deed: |
(a) | will be in writing and signed by the sender or a person duly authorised by the sender; | ||
(b) | will be addressed and delivered to the intended recipient at the address or fax number below or the address or fax number last notified by the intended recipient to the sender after the date of this Deed: |
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(i) | to the Relevant Group Member: | [#] | |||
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(ii) | to the Indemnifier | [#] |
(c) | will be taken to be duly given or made when delivered, received or left at the above fax number or address. If delivery or receipt occurs on a day that is not a Business Day in the place to which the notice is sent or is later than 4pm (local time) at that place, it will be taken to have been duly given or made at the commencement of business on the next Business Day in that place. |
9. | GST |
9.1 | Definitions |
For the purposes of this clause 9: |
(a) | Adjustment has the meaning given by the GST Law; | ||
(b) | Consideration has the meaning given by the GST Law; | ||
(c) | Input Tax Credit has the meaning given by the GST Law and a reference to an Input Tax Credit entitlement of a party includes an Input Tax Credit for an acquisition made by that party but which the representative member of a GST Group or the Joint Venture Operator of a GST Joint Venture is entitled under GST Law; |
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(d) | GST has the meaning given by the GST Law; | ||
(e) | GST Amount means in relation to a Taxable Supply the amount of GST payable in respect of that Taxable Supply; | ||
(f) | GST Group has the meaning given by the GST Law; | ||
(g) | GST Joint Venture has the meaning given by the GST Law; | ||
(h) | GST Law has the meaning given by the A New Tax System (Goods and Services Tax) Act 1999 (Cth); | ||
(i) | Joint Venture Operator has the meaning given by the GST Law; | ||
(j) | Tax Invoice has the meaning given by the GST Law; and | ||
(k) | Taxable Supply has the meaning given by the GST Law excluding the reference to Section 84-5 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth). |
9.2 | Recovery of GST |
If GST is payable on a Taxable Supply made under, by reference to or in connection with this Agreement, the party providing the Consideration for that Taxable Supply must also pay the GST Amount as additional Consideration. Subject to the prior receipt of a Tax Invoice, the GST Amount is payable at the same time that the other Consideration for the Taxable Supply is provided. This clause 9.2 does not apply to the extent that the Consideration for the Taxable Supply is expressly stated to be GST inclusive. |
9.3 | Liability net of GST |
Any reference in the calculation of Consideration or of any indemnity, reimbursement or similar amount to a cost, expense or other liability incurred by a party must exclude the amount of any Input Tax Credit entitlement of that party in relation to the relevant cost, expense or other liability. A party will be assumed to have an entitlement to a full Input Tax Credit unless it demonstrates otherwise prior to the date on which the Consideration must be provided. |
9.4 | Adjustments |
If an Adjustment occurs in relation to a Taxable Supply made under, by reference to or in connection with this Agreement, the GST Amount will be recalculated to reflect that Adjustment and an appropriate payment will be made between the parties. |
9.5 | Revenue exclusive of GST |
Any reference in this Agreement to price, value, sales, revenue or a similar amount ( Revenue ), is a reference to that Revenue exclusive of GST. |
9.6 | Cost exclusive of GST |
Any reference in this Agreement (other than in the calculation of Consideration or of any indemnity, reimbursement or similar amount) to cost, expense or other similar amount ( Cost ), is a reference to that Cost exclusive of any Input Tax Credit entitlement. |
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9.7 | GST obligations to survive termination |
This clause 9 will continue to apply after expiration or termination of this Agreement. |
10. | Governing Law and Jurisdiction |
10.1 | Governing Law |
(a) | This Deed will be governed by the laws of Western Australia. | ||
(b) | The parties irrevocably and unconditionally: |
(i) | submit to the non-exclusive jurisdiction of the courts of Western Australia; and | ||
(ii) | agree that they may not object to any suit, action or proceeding commenced under or in connection with this Deed on the basis that the courts of Western Australia are not an appropriate forum. |
10.2 | Final judgment conclusive and enforceable |
The parties agree that a final judgment in any suit, action or proceeding commenced under or in connection with this Deed in any court of competent jurisdiction is conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. |
10.3 | Dispute Resolution |
(a) | The parties will first seek to resolve any dispute under or in connection with this Deed by discussions in good faith. | ||
(b) | Any party may, by notice to the other parties, require any dispute arising under or in connection with this Deed to be referred to the Chief Executives. The Chief Executives will meet and seek in good faith to resolve the dispute within 30 days. | ||
(c) | If the Chief Executives are unable to resolve the dispute within 30 days of referral to them, any party may refer the dispute to the Owners Chairpersons, who will meet and seek in good faith to resolve the dispute within 30 days. | ||
(d) | If the Owners Chairpersons are unable to resolve the dispute within 30 days of referral to them, then any party may commence proceedings in any court of competent jurisdiction. | ||
(e) | Subject to paragraph (f), a party may not commence court proceedings in relation to any dispute arising out of or in connection with this Deed until it has complied with the dispute resolution process set out in paragraphs (a) to (d). | ||
(f) | Nothing in this clause 10 prevents a party seeking appropriate injunctive or interlocutory relief at any time to preserve property or rights or to avoid losses that are not compensable in damages. | ||
(g) | Each party agrees that: |
(i) | it is responsible for its own costs in connection with the dispute resolution process; and |
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(ii) | the costs of any suit, action or proceeding commenced under or in connection with this Deed will be borne as between the parties as determined by the court of competent jurisdiction that hears the suit, action or proceeding. |
11. | Ancillary Provisions |
The provisions of clauses 21.2 to 21.6, 21.9 and 21.11 to 21.13 of the Joint Venture Agreement will apply mutatis mutandis , unless the context requires otherwise. |
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([#])
1.
Definitions and Interpretation
1
1.1
Joint Venture Agreement definitions to apply
1
1.2
Definitions
2
1.3
Joint Venture Agreement interpretation provisions to apply
2
1.4
Relationship of Sellers
2
2.
Term and Termination
2
2.1
Commencement
2
2.2
Termination
3
3.
Terms to apply to Clause 6 Sales
3
4.
Deliveries of Iron Ore Product
3
4.1
Sellers to Deliver Iron Ore Product
3
4.2
Title and Risk
3
5.
Quantity
3
6.
Ore Sales Price
4
7.
Weighing, Sampling and Analysis
4
8.
Invoicing and Payment
4
8.1
Invoices
4
8.2
Payment
4
8.3
Delay in Payment
4
8.4
Disputed Invoices
5
9.
Disposals
5
9.1
No restriction on Disposals by the Buyer
5
9.2
Assignment as Part of Disposal of Participating Interest
5
9.3
Nomination of New Buyers
5
10.
Notices
5
Confidentiality
6
12.
Force Majeure
6
12.1
Event of Force Majeure
6
12.2
No liability during an Event of Force Majeure
6
12.3
Suspension of obligations
7
12.4
Remedy of Force Majeure
7
12.5
Mitigation
7
12.6
No requirement to settle labour dispute
7
12.7
* * *
7
13.
GST
7
13.1
Definitions
7
13.2
Recovery of GST
8
13.3
Liability net of GST
8
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13.4 | Adjustments | 8 | |||||
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13.5 | Revenue exclusive of GST | 8 | |||||
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13.6 | Cost exclusive of GST | 8 | |||||
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13.7 | GST obligations to survive termination | 8 | |||||
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14. | Governing Law and Jurisdiction | 9 | ||||||
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14.1 | Governing Law | 9 | |||||
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14.2 | Final judgment conclusive and enforceable | 9 | |||||
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14.3 | Dispute Resolution | 9 | |||||
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14.4 | Service of Process | 10 | |||||
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15. | General Provisions | 10 |
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Parties
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1.
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[ Insert details of each Selling Entity (as defined in the Joint Venture Agreement) ] (collectively the Sellers ). | ||
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2.
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[#] (the Buyer ). | ||
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3.
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[ Manager (as agent for and on behalf of the Sellers) ] (the Manager ). | ||
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Recitals
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A
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On [insert date of Joint Venture Agreement] , certain members of the Rio Tinto Group and BHP Billiton Group entered into the West Australian Iron Ore Joint Venture Agreement for the purpose of establishing the WA Iron Ore JV (the Joint Venture Agreement ). | ||
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B
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[Insert name of Substantial Owner/Majority Owner/Ore Purchasing Owner] is a [Substantial Owner/Majority Owner/Ore Purchasing Owner] pursuant to clause 10 of the Joint Venture Agreement and, in accordance with clause [6.2(c)/6.2(f)], that Owner has nominated the Buyer to enter into this Ore Sales Agreement. | ||
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C
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Clauses 6.1 to 6.4 of the Joint Venture Agreement provide for the Owners and the Manager to procure that the Sellers sell to the Buyer, and the Buyer purchase from the Sellers, amounts of Iron Ore Product from time to time on the terms of the Joint Venture Agreement ( Clause 6 Sales ). | ||
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D
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In order to specify certain additional terms which apply to Clause 6 Sales, and to provide for related matters, the Manager (as agent of the Sellers) and the Buyer have agreed to enter into this Agreement. | ||
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E
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Nothing contained in this Agreement is intended to confer on the Buyer any rights or obligations to purchase Iron Ore Product additional to the rights and obligations referred to in Recital B. | ||
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1. | Definitions and Interpretation |
1.1 | Joint Venture Agreement definitions to apply |
Subject to a contrary meaning being specified in clause 1.2, words and expressions defined in the Joint Venture Agreement have the same meaning when used in this Agreement. |
Page 1
1.2 | Definitions |
The following definitions apply unless the context requires otherwise. | ||
Clause 6 Sales has the meaning given in Recital C. | ||
Commencement Date means [#]. | ||
Joint Venture Agreement has the meaning given in Recital A. |
1.3 | Joint Venture Agreement interpretation provisions to apply |
Items 1.2 to 1.5 (inclusive) of schedule 1 of the Joint Venture Agreement will apply, mutatis mutandis , in the interpretation of this Agreement. |
1.4 | Relationship of Sellers |
(a) | This Agreement establishes a separate contract between each Seller on the one part and the Buyer on the other part. Nothing in this Agreement implies that the parties are: |
(i) | forming a partnership, agency (other than in relation to the Sellers and the Manager) or a similar relationship; | ||
(ii) | otherwise carrying on business in common with a view to profit, within the meaning of any partnership or limited partnership legislation in any jurisdiction; or | ||
(iii) | otherwise creating any fiduciary relationship between the parties. |
(b) | Each Seller is the legal and beneficial owner of the Iron Ore Product to be delivered by it to the Buyer pursuant to this Agreement until such time as title and risk passes in accordance with clause 4.2. Accordingly, the rights, obligations and liabilities of the Sellers under this Agreement are several and not joint or joint and several. | ||
(c) | As contemplated by clause 6.2(b) of the Joint Venture Agreement, if a JV Entity ceases to be a Non-Selling Entity and becomes a Selling Entity, then: |
(i) | that JV Entity must execute, or otherwise agree to comply with and give effect to, this Agreement as soon as practicable; and | ||
(ii) | with effect from the date of such execution, each party: |
(A) | irrevocably consents to that JV Entity becoming a party to, and assuming its obligations as a Seller under, this Agreement; and | ||
(B) | agrees to that JV Entity being entitled to exercise all of the rights, privileges and benefits of a Seller under this Agreement, |
as if that JV Entity was named as a party to this Agreement. |
2. | Term and Termination |
2.1 | Commencement |
This Agreement commences on the Commencement Date and continues to apply to any Clause 6 Sales by the Sellers occurring on or after that date until terminated in accordance with clause 2.2. |
Page 2
2.2 | Termination |
This Agreement (other than clauses 1, 9, 10, 11, 13 and 14, and this clause 2) will automatically terminate on the earlier of: |
(a) | the date on which the WA Iron Ore JV is terminated in accordance with the Joint Venture Agreement; | ||
(b) | the date on which the Buyer (or its Related Corporations) ceases to hold, subject (where applicable as a result of the operation of schedule 10 of the Joint Venture Agreement) to clause 6.2(f) of the Joint Venture Agreement, a Participating Share which is greater than 17%, unless this Agreement is assigned or novated to a purchaser of a Participating Interest pursuant to clause 10 of the Joint Venture Agreement; or | ||
(c) | the date on which the Manager, on behalf of the Selling Entities, and the Buyer agree to terminate this Agreement. |
Termination of this Agreement will be without prejudice to any obligation accruing under this Agreement prior to termination. |
3. | Terms to apply to Clause 6 Sales |
For the purposes of all Clause 6 Sales, the Sellers agree to sell, and the Buyer agrees to purchase, Iron Ore Product on the terms of, and in accordance with the provisions of, this Agreement and the Joint Venture Agreement. |
4. | Deliveries of Iron Ore Product |
4.1 | Sellers to Deliver Iron Ore Product |
Clause 6 Sales of Iron Ore Product will be delivered to the Buyer by the Sellers at the relevant loading port in Western Australia. The Manager must ensure that all such deliveries are made in accordance with the Scheduling Protocol. |
4.2 | Title and Risk |
Clause 6 Sales of Iron Ore Product will be on a FOB basis. Title to, and all risk of loss, damage or destruction to, Iron Ore Product will pass to the Buyer at the time that Iron Ore Product passes over the ships rail from the loading devices into the vessel at the relevant loading port in Western Australia, and the sale and purchase of that Iron Ore Product will be deemed to have occurred at that point. |
5. | Quantity |
The quantity of Iron Ore Product to be sold and purchased as Clause 6 Sales in each Half Year, by Product Type, will be determined in accordance with clause 6.3 of the Joint Venture Agreement. |
Page 3
6. | Ore Sales Price |
The Ore Sales Price to be paid by the Buyer for Clause 6 Sales will be determined in accordance with clause 6.4 of the Joint Venture Agreement. |
7. | Weighing, Sampling and Analysis |
(a) | For all Clause 6 Sales, the Manager must comply with the Weighing, Sampling and Analysis Protocol in relation to the weighing of shipments of Iron Ore Product and the sampling and analysis of shipments of Iron Ore Product at the relevant loading port in Western Australia. | ||
(b) | All costs incurred by the Manager in connection with the weighing, sampling and analysis of Iron Ore Product pursuant to paragraph (a) will be costs of the WA Iron Ore JV. | ||
(c) | For the avoidance of doubt, the costs of determining the weight of each shipment of Iron Ore Product and the sampling and analysis of each shipment of Iron Ore Product at the relevant discharge port will, as between the parties, be borne by the Buyer. |
8. | Invoicing and Payment |
8.1 | Invoices |
As soon as practicable after the end of each Half Year, the Manager, on behalf of the Sellers, must prepare, issue and deliver to the Buyer an invoice for Clause 6 Sales showing: |
(a) | the total quantity of Iron Ore Product, broken down by Product Type, delivered to the Buyer in that Half Year (as determined in accordance with clause 6.3 of the Joint Venture Agreement); and | ||
(b) | the total Ore Sales Price (as determined in accordance with clause 6.4 of the Joint Venture Agreement) for Iron Ore Product delivered in that Half Year, together with a breakdown of: |
(i) | the JV Production Accounting Costs actually incurred for that Half Year in total and as attributed to the other Owners JV Entities; and | ||
(ii) | the Buyers First Owner dmtu and Total other Owner dmtu for the purposes of clause 6.4(b) of the Joint Venture Agreement. |
8.2 | Payment |
The Buyer must pay the Ore Sales Price on demand by the Manager in accordance with item 5 of the Funding and Distribution Policy. |
8.3 | Delay in Payment |
If the Buyer fails to make payment of the Ore Sales Price by the date demanded by the Manager under clause 8.2, it must pay interest on the unpaid amount from that date in accordance with item 1.5 of schedule 1 of the Joint Venture Agreement. Interest must be paid on the date when payment of the amount due is made. |
Page 4
8.4 | Disputed Invoices |
(a) | The dispute resolution procedure set out in clause 6.4(h) of the Joint Venture Agreement will apply to any dispute relating to the amount specified in any invoice provided under this clause 8. | ||
(b) | A party will not be entitled to withhold payment of any amount payable by reason of any dispute. |
9. | Disposals |
9.1 | No restriction on Disposals by the Buyer |
Subject to clauses 10 and, to the extent applicable, 11 of the Joint Venture Agreement, the Buyer may Dispose of all or any part of its rights, obligations or interest in and under this Agreement. |
9.2 | Assignment as Part of Disposal of Participating Interest |
If the Buyer or a Related Corporation of the Buyer Disposes of the whole or a part of its Participating Interest in accordance with clause 10 of the Joint Venture Agreement, then the provisions of clause 10 of the Joint Venture Agreement will apply. |
9.3 | Nomination of New Buyers |
As contemplated by clause 6.2(c) of the Joint Venture Agreement, the Buyer may at any time, and from time to time, provide written notice to the Sellers and the Manager nominating one or more of its Related Corporations to assume all or any part of its rights, obligations and interest in and under this Agreement. Any such notice must specify in reasonable detail the rights and obligations to be assumed by such Related Corporation(s) and, where applicable, the amount of the Buyers entitlement to Iron Ore Product to be assumed (which may be specified by Product Type, as a percentage of the Buyers entitlement or in any other way). |
10. | Notices |
Any notice, demand, consent, certificate, approval, nomination, waiver or other similar communication given or made in connection with this Agreement (a notice): |
(a) | will be in writing and signed by the sender or a person duly authorised by the sender; | ||
(b) | will be addressed and delivered to the intended recipient at the address or fax number below or the address or fax number last notified by the intended recipient to the sender after the date of this Agreement: |
|
(i) | to the Buyer: | [ # ] | |||
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(ii) | to the Manager: | [ # ] |
(c) | will be taken to be duly given or made when delivered, received or left at the above fax number or address. If delivery or receipt occurs on a day that is not a business day in the place to which the notice is sent or is later than 4pm (local time) at that place, it will be taken to have been duly given or made at the commencement of business on the next business day in that place. |
Page 5
11. | Confidentiality |
The Manager and the Buyer must at all times observe, comply with and give effect to the provisions of clause 14 of the Joint Venture Agreement with respect to any Confidential Information disclosed in connection with this Agreement. |
12. | Force Majeure |
12.1 | Event of Force Majeure |
For the purposes of this clause 12, an Event of Force Majeure means an event beyond the reasonable control of a party, including: |
(a) | act of God, lightning, storm, flood, cyclone, tidal wave, landslide, fire, earthquake or explosion; | ||
(b) | strike, lockout or stoppage or ban or limitation on work or restraint of labour, whether at a mine or mines, railway, port or otherwise; | ||
(c) | act of public enemy, war (declared or undeclared), terrorism, sabotage, blockade, revolution, riot, insurrection, civil commotion or epidemic; | ||
(d) | any act, inaction, demand, order, restraint, restriction, requirement, prevention, frustration or hindrance by or of any government or other competent authority; | ||
(e) | embargo, unavailability of essential equipment, materials or facilities, unavailability of qualified employees or contractors, power or water shortages or lack of transportation; or | ||
(f) | any other cause, whether specifically referred to above or otherwise which is not within its reasonable control. |
12.2 | No liability during an Event of Force Majeure |
A party will not be liable for any delay in or failure of performance in respect of Clause 6 Sales under this Agreement or the Joint Venture Agreement (other than a delay in or failure to make payment of any amount payable under those agreements) if: |
(a) | that delay or failure arises from an Event of Force Majeure; | ||
(b) | it has taken all proper precautions, due care and reasonable alternative measures with the object and intent of avoiding the delay or failure and of carrying out its obligations under this Agreement or the Joint Venture Agreement; and | ||
(c) | as soon as practicable after the beginning of the Event of Force Majeure which affects the ability of the party claiming under this clause 12.2 to observe or perform any of its obligations under this Agreement or the Joint Venture Agreement, the claiming party gives notice to each other party: |
(i) | fully describing the Event of Force Majeure and, as far as possible, estimating its duration; | ||
(ii) | identifying the specific obligations affected by that Event of Force Majeure and the possible extent to which the claiming party will be unable to perform those obligations; and |
Page 6
(iii) | specifying the measures proposed to be adopted to remedy or abate the Event of Force Majeure. |
12.3 | Suspension of obligations |
While an Event of Force Majeure continues, the obligations which cannot be performed because of the Event of Force Majeure (other than a delay in or failure to make payment of any amount payable under this Agreement or the Joint Venture Agreement) will be suspended. |
12.4 | Remedy of Force Majeure |
The party that is prevented from carrying out its obligations under this Agreement or the Joint Venture Agreement as a result of an Event of Force Majeure will remedy the Event of Force Majeure to the extent reasonably practicable, keep the other parties regularly informed on the progress of remedying the Event of Force Majeure and resume the performance of its obligations as soon as reasonably possible. |
12.5 | Mitigation |
The party that is prevented from carrying out its obligations under this Agreement or the Joint Venture Agreement as a result of an Event of Force Majeure must take all action reasonably practicable to mitigate any loss suffered by a party or a third party as a result of its failure to carry out its obligations under this Agreement. |
12.6 | No requirement to settle labour dispute |
A party is not required, under clause 12.4 or 12.5, to settle any labour dispute against its will. |
12.7 | * * * |
* * * |
13. | GST |
13.1 | Definitions |
For the purposes of this clause 13: |
(a) | Adjustment has the meaning given by the GST Law; | ||
(b) | Consideration has the meaning given by the GST Law; | ||
(c) | Input Tax Credit has the meaning given by the GST Law and a reference to an Input Tax Credit entitlement of a party includes an Input Tax Credit for an acquisition made by that party but which the representative member of a GST Group or the Joint Venture Operator of a GST Joint Venture is entitled under GST Law; | ||
(d) | GST has the meaning given by the GST Law; | ||
(e) | GST Amount means in relation to a Taxable Supply the amount of GST payable in respect of that Taxable Supply; | ||
(f) | GST Group has the meaning given by the GST Law; |
Page 7
(g) | GST Joint Venture has the meaning given by the GST Law; | ||
(h) | GST Law has the meaning given by the A New Tax System (Goods and Services Tax) Act 1999 (Cth); | ||
(i) | Joint Venture Operator has the meaning given by the GST Law; | ||
(j) | Tax Invoice has the meaning given by the GST Law; and | ||
(k) | Taxable Supply has the meaning given by the GST Law excluding the reference to Section 84-5 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth). |
13.2 | Recovery of GST |
If GST is payable on a Taxable Supply made under, by reference to or in connection with this Agreement, the party providing the Consideration for that Taxable Supply must also pay the GST Amount as additional Consideration. Subject to the prior receipt of a Tax Invoice, the GST Amount is payable at the same time that the other Consideration for the Taxable Supply is provided. This clause 13.2 does not apply to the extent that the Consideration for the Taxable Supply is expressly stated to be GST inclusive. |
13.3 | Liability net of GST |
Any reference in the calculation of Consideration or of any indemnity, reimbursement or similar amount to a cost, expense or other liability incurred by a party must exclude the amount of any Input Tax Credit entitlement of that party in relation to the relevant cost, expense or other liability. A party will be assumed to have an entitlement to a full Input Tax Credit unless it demonstrates otherwise prior to the date on which the Consideration must be provided. |
13.4 | Adjustments |
If an Adjustment occurs in relation to a Taxable Supply made under, by reference to or in connection with this Agreement, the GST Amount will be recalculated to reflect that Adjustment and an appropriate payment will be made between the parties. |
13.5 | Revenue exclusive of GST |
Any reference in this Agreement to price, value, sales, revenue or a similar amount ( Revenue ), is a reference to that Revenue exclusive of GST. |
13.6 | Cost exclusive of GST |
Any reference in this Agreement (other than in the calculation of Consideration or of any indemnity, reimbursement or similar amount) to cost, expense or other similar amount ( Cost ), is a reference to that Cost exclusive of any Input Tax Credit entitlement. |
13.7 | GST obligations to survive termination |
This clause 13 will continue to apply after expiration or termination of this Agreement. |
Page 8
14. | Governing Law and Jurisdiction |
14.1 | Governing Law |
(a) | This Agreement and any Clause 6 Sale will be governed by the laws of Western Australia, Australia. | ||
(b) | The parties irrevocably and unconditionally: |
(i) | submit to the non-exclusive jurisdiction of the courts of Western Australia; and | ||
(ii) | agree that they may not object to any suit, action or proceeding commenced under or in connection with this Agreement or any Clause 6 Sale on the basis that the courts of Western Australia are not an appropriate forum. |
14.2 | Final judgment conclusive and enforceable |
The parties agree that a final judgment in any suit, action or proceeding commenced under or in connection with this Agreement or any Clause 6 Sale in any court of competent jurisdiction is conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. |
14.3 | Dispute Resolution |
(a) | The parties will first seek to resolve any dispute under or in connection with this Agreement any Clause 6 Sale by discussions in good faith. | ||
(b) | Any party may, by notice to the other parties, require any dispute (other than a dispute to which clause 8.4(a) applies) arising under or in connection with this Agreement or any Clause 6 Sale to be referred to the Chief Executives. The Chief Executives will meet and seek in good faith to resolve the dispute within 30 days. | ||
(c) | If the Chief Executives are unable to resolve the dispute within 30 days of referral to them, any party may refer the dispute to the Owners Chairpersons, who will meet and seek in good faith to resolve the dispute within 30 days. | ||
(d) | Subject to paragraph (e), a party may not commence court proceedings in relation to any dispute arising out of or in connection with this Agreement or any Clause 6 Sale until it has complied with the dispute resolution process set out in paragraphs (a) to (c). | ||
(e) | Nothing in this clause 14 prevents a party seeking appropriate injunctive or interlocutory relief at any time to preserve property or rights or to avoid losses that are not compensable in damages. | ||
(f) | Each party agrees that: |
(i) | it is responsible for its own costs in connection with the dispute resolution process; and | ||
(ii) | the costs of any suit, action or proceeding commenced under or in connection with this Agreement or any Clause 6 Sale will be borne as between the parties as determined by the court of competent jurisdiction that hears the suit, action or proceeding. |
Page 9
14.4 | Service of Process |
(a) | Each party agrees that service of all writs, process and summonses in any suit, action or proceeding under or in connection with this Agreement or any Clause 6 Sale brought in Western Australia may be made on its registered or principal office for the time being in Australia. | ||
(b) | Nothing contained or implied in this Agreement will in any way be taken to limit the ability of a party to: |
(i) | serve any writs, process or summonses; or | ||
(ii) | obtain jurisdiction over a party in other jurisdictions, |
in any manner permitted by Law. |
15. | General Provisions |
The provisions of clauses 21.2 to 21.7 and 21.9 to 21.13 of the Joint Venture Agreement will apply mutatis mutandis , unless the context requires otherwise. |
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(e) | * * * | ||||
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(f) | * * * | ||||
|
(g) | * * * | ||||
|
(h) | * * * | ||||
|
(i) | * * * | ||||
2.4
|
* * * | |||||
|
* * * | |||||
|
(a) | * * * | ||||
|
(b) | * * * | ||||
2.5
|
* * * | |||||
|
* * * |
2
3.
|
* * * | |||
3.1
|
* * * | |||
|
* * * | |||
3.2
|
* * * | |||
|
* * * | |||
|
(a) | * * * | ||
|
(b) | * * * | ||
|
(c) | * * * | ||
3.3
|
* * * | |||
|
* * * | |||
3.4
|
* * * | |||
|
* * * | |||
3.5
|
* * * | |||
|
* * * | |||
3.6
|
* * * | |||
|
* * * | |||
3.7
|
* * * | |||
|
* * * | |||
|
(a) | * * * | ||
|
(b) | * * * | ||
|
(c) | * * * | ||
|
* * * | |||
3.8
|
* * * | |||
|
* * * | |||
|
(a) | * * * | ||
|
(b) | * * * | ||
3.9
|
* * * | |||
|
* * * | |||
|
(a) | * * * |
3
|
(b) | * * * | ||||
|
* * * | |||||
4.
|
* * * | |||||
|
(a) | * * * | ||||
|
(b) | * * * | ||||
5.
|
* * * | |||||
|
* * * | |||||
|
(a) | * * * | ||||
|
(b) | * * * | ||||
|
(c) | * * * | ||||
|
* * * | |||||
6.
|
* * * | |||||
6.1
|
* * * | |||||
|
* * * | |||||
6.2
|
* * * | |||||
|
* * * | |||||
7.
|
* * * | |||||
7.1
|
* * * | |||||
|
* * * | |||||
|
(a) | * * * | ||||
|
(b) | * * * | ||||
|
(c) | * * * | ||||
|
(i) | * * * | ||||
|
(ii) | * * * | ||||
|
(d) | * * * | ||||
|
(i) | * * * | ||||
|
(ii) | * * * |
4
(iii) | * * * |
7.2 | * * * |
* * * |
(a) | * * * |
(b) | * * * |
8. | * * * | |
8.1 | * * * |
* * * |
(a) | * * * |
(b) | * * * |
8.2 | * * * |
* * * |
(a) | * * * |
(b) | * * * |
8.3 | * * * |
* * * |
(a) | * * * |
(b) | * * * |
8.4 | * * * |
* * * |
8.5 | * * * |
(a) | * * * |
(b) | * * * |
9. | * * * |
9.1 | * * * |
* * * |
(a) | * * * |
(b) | * * * |
5
(c) | * * * |
(d) | * * * |
(e) | * * * |
(f) | * * * |
(g) | * * * |
(h) | * * * |
(i) | * * * |
(j) | * * * |
(k) | * * * |
9.2 | * * * |
* * * |
9.3 | * * * |
* * * |
9.4 | * * * |
* * * |
9.5 | * * * |
* * * |
9.6 | * * * |
* * * |
9.7 | * * * |
* * * |
10. | * * * | |
10.1 | * * * |
(a) | * * * |
(i) | * * * |
(ii) | * * * |
* * * |
(iii) | * * * |
(iv) | * * * |
6
(v) | * * * | ||
(vi) | * * * |
(b) | * * * |
(i) | * * * |
(ii) | * * * |
* * * |
(iii) | * * * |
(iv) | * * * |
(c) | * * * |
(i) | * * * | ||
(ii) | * * * |
10.2 | * * * |
* * * |
(a) | * * * |
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * | ||
(e) | * * * | ||
(f) | * * * | ||
(g) | * * * | ||
(h) | * * * | ||
(i) | * * * | ||
(j) | * * * | ||
(k) | * * * |
10.3 | * * * |
(a) | * * * |
(i) | * * * |
(ii) | * * * |
(b) | * * * |
7
(i) | * * * |
(A) | * * * |
(B) | * * * |
(ii) | * * * |
(A) | * * * | ||
(B) | * * * | ||
(C) | * * * |
(iii) | * * * |
(iv) | * * * |
10.4 | * * * |
* * * |
10.5 | * * * |
* * * |
11. | * * * | |
* * * |
(a) | * * * |
(b) | * * * |
(i) | * * * |
(ii) | * * * |
(iii) | * * * |
(c) | * * * |
12. | * * * | |
12.1 | * * * |
(a) | * * * |
(b) | * * * |
(i) | * * * |
(ii) | * * * |
8
12.2 | * * * |
* * * |
13. | * * * | |
13.1 | * * * |
* * * |
13.2 | * * * |
* * * |
13.3 | * * * |
* * * |
13.4 | * * * |
(a) | * * * |
(b) | * * * |
13.5 | * * * |
* * * |
(a) | * * * |
(b) | * * * |
13.6 | * * * |
(a) | * * * |
(b) | * * * |
13.7 | * * * |
* * * |
13.8 | * * * |
* * * |
13.9 | * * * |
* * * |
9
1. | * * * |
2. | * * * |
3. | * * * |
10
1. | * * * |
2. | * * * |
3. | * * * |
11
1. | * * * |
* * * |
* * * |
* * * |
* * * |
* * * |
* * * |
* * * |
* * * |
(a) | * * * |
(b) | * * * |
* * * |
* * * |
* * * |
* * * |
* * * |
* * * |
* * * |
* * * |
* * * |
* * * |
* * * |
* * * |
* * * |
* * * |
* * * |
* * * |
12
* * * |
* * * |
* * * |
(a) | * * * |
(b) | * * * |
* * * |
(a) | * * * |
(b) | * * * |
* * * |
* * * |
(a) | * * * |
(b) | * * * |
* * * |
* * * |
(a) | * * * |
(b) | * * * |
2. | * * * |
* * * |
(a) | * * * |
(b) | * * * |
(c) | * * * |
(d) | * * * |
(e) | * * * |
(f) | * * * |
(g) | * * * |
(h) | * * * |
(i) | * * * |
(j) | * * * |
(i) | * * * |
13
(ii) | * * * |
(k) | * * * |
(l) | * * * |
(m) | * * * |
(n) | * * * |
14
15
Page 145
1. | * * * | 1 | ||||||
|
||||||||
|
1.1 | * * * | 1 | |||||
|
1.2 | * * * | 1 | |||||
|
1.3 | * * * | 1 | |||||
|
1.4 | * * * | 1 | |||||
|
1.5 | * * * | 2 | |||||
|
||||||||
2. | * * * | 2 | ||||||
|
||||||||
|
2.1 | * * * | 2 | |||||
|
2.2 | * * * | 2 | |||||
|
2.3 | * * * | 2 | |||||
|
2.4 | * * * | 2 | |||||
|
2.5 | * * * | 2 | |||||
|
||||||||
3. | * * * | 3 | ||||||
|
||||||||
|
3.1 | * * * | 3 | |||||
|
3.2 | * * * | 3 | |||||
|
3.3 | * * * | 3 | |||||
|
3.4 | * * * | 3 | |||||
|
3.5 | * * * | 3 | |||||
|
3.6 | * * * | 3 | |||||
|
3.7 | * * * | 3 | |||||
|
3.8 | * * * | 3 | |||||
|
3.9 | * * * | 3 | |||||
|
||||||||
4. | * * * | 3 | ||||||
|
||||||||
5. | * * * | 4 | ||||||
|
||||||||
6. | * * * | 4 | ||||||
|
||||||||
|
6.1 | * * * | 4 | |||||
|
6.2 | * * * | 4 | |||||
|
||||||||
7. | * * * | 4 | ||||||
|
||||||||
|
7.1 | * * * | 4 | |||||
|
7.2 | * * * | 4 | |||||
|
||||||||
8. | * * * | 5 | ||||||
|
||||||||
|
8.1 | * * * | 5 | |||||
|
8.2 | * * * | 5 | |||||
|
8.3 | * * * | 5 | |||||
|
8.4 | * * * | 5 | |||||
|
8.5 | * * * | 5 | |||||
|
||||||||
9. | * * * | 5 | ||||||
|
||||||||
|
9.1 | * * * | 5 |
|
9.2 | * * * | 6 | |||||
|
9.3 | * * * | 6 | |||||
|
9.4 | * * * | 6 | |||||
|
9.5 | * * * | 6 | |||||
|
9.6 | * * * | 6 | |||||
|
9.7 | * * * | 6 | |||||
|
||||||||
10. | * * * | 6 | ||||||
|
||||||||
|
10.1 | * * * | 6 | |||||
|
10.2 | * * * | 7 | |||||
|
10.3 | * * * | 7 | |||||
|
10.4 | * * * | 8 | |||||
|
10.5 | * * * | 8 | |||||
|
||||||||
11. | * * * | 8 | ||||||
|
||||||||
12. | * * * | 8 | ||||||
|
||||||||
|
12.1 | * * * | 8 | |||||
|
12.2 | * * * | 8 | |||||
|
||||||||
13. | * * * | 9 | ||||||
|
||||||||
|
13.1 | * * * | 9 | |||||
|
13.2 | * * * | 9 | |||||
|
13.3 | * * * | 9 | |||||
|
13.4 | * * * | 9 | |||||
|
13.5 | * * * | 9 | |||||
|
13.6 | * * * | 9 | |||||
|
13.7 | * * * | 9 | |||||
|
13.8 | * * * | 9 | |||||
|
13.9 | * * * | 9 | |||||
|
||||||||
* * * |
||||||||
|
||||||||
1 | * * * | 10 | ||||||
|
||||||||
2 | * * * | 11 | ||||||
|
||||||||
3 | * * * | 12 |
ii
A. | * * * | |
B. | * * * |
1. | * * * | |
1.1 | * * * |
1.2 | * * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * |
1.3 | * * * |
(a) | * * * | ||
(b) | * * * |
1.4 | * * * |
(a) | * * * | ||
(b) | * * * |
1
1.5 | * * * |
2. | * * * | |
2.1 | * * * |
(a) | * * * | ||
(b) | * * * |
(i) | * * * | ||
(ii) | * * * |
2.2 | * * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * |
2.3 | * * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * | ||
(e) | * * * | ||
(f) | * * * | ||
(g) | * * * | ||
(h) | * * * | ||
(i) | * * * |
2.4 | * * * |
2.5 | * * * |
2
3. | * * * | |
3.1 | * * * |
3.2 | * * * |
3.3 | * * * |
3.4 | * * * |
3.5 | * * * |
3.6 | * * * |
(a) | * * * | ||
(b) | * * * |
3.7 | * * * |
3.8 | * * * |
3.9 | * * * |
(a) | * * * | ||
(b) | * * * |
4. | * * * | |
(a) | * * * | ||
(b) | * * * |
3
5. | * * * | |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * |
6. | * * * | |
6.1 | * * * |
6.2 | * * * |
7. | * * * | |
7.1 | * * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * |
(i) | * * * | ||
(ii) | * * * |
(d) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * |
7.2 | * * * |
(a) | * * * | ||
(b) | * * * |
4
8. | * * * | |
8.1 | * * * |
(a) | * * * | ||
(b) | * * * |
8.2 | * * * |
(a) | * * * | ||
(b) | * * * |
8.3 | * * * |
(a) | * * * | ||
(b) | * * * |
8.4 | * * * |
8.5 | * * * |
(a) | * * * | ||
(b) | * * * |
9. | * * * | |
9.1 | * * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * | ||
(e) | * * * | ||
(f) | * * * | ||
(g) | * * * |
5
(h) | * * * | ||
(i) | * * * | ||
(j) | * * * | ||
(k) | * * * |
9.2 | * * * |
9.3 | * * * |
9.4 | * * * |
9.5 | * * * |
9.6 | * * * |
9.7 | * * * |
10. | * * * | |
10.1 | * * * |
(a) | * * * |
(i) | * * * | ||
(ii) | * * * |
(iii) | * * * | ||
(iv) | * * * | ||
(v) | * * * | ||
(vi) | * * * |
(b) | * * * |
(i) | * * * | ||
(ii) | * * * |
6
(iii) | * * * | ||
(iv) | * * * |
(c) | * * * |
(i) | * * * | ||
(ii) | * * * |
10.2 | * * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * | ||
(e) | * * * | ||
(f) | * * * | ||
(g) | * * * | ||
(h) | * * * | ||
(i) | * * * | ||
(j) | * * * | ||
(k) | * * * |
10.3 | * * * |
(a) | * * * |
(i) | * * * | ||
(ii) | * * * |
(b) | * * * |
(i) | * * * |
(A) | * * * | ||
(B) | * * * |
(ii) | * * * |
(A) | * * * |
7
(B) | * * * | ||
(C) | * * * |
(iii) | * * * | ||
(iv) | * * * |
10.4 | * * * |
10.5 | * * * |
11. | * * * | |
(a) | * * * | ||
(b) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * | ||
(iv) | * * * |
(c) | * * * |
12. | * * * | |
12.1 | * * * |
(a) | * * * | ||
(b) | * * * |
(i) | * * * | ||
(ii) | * * * |
12.2 | * * * |
8
13. | * * * | |
13.1 | * * * |
13.2 | * * * |
13.3 | * * * |
13.4 | * * * |
(a) | * * * | ||
(b) | * * * |
13.5 | * * * |
(a) | * * * | ||
(b) | * * * |
13.6 | * * * |
(a) | * * * | ||
(b) | * * * |
13.7 | * * * |
13.8 | * * * |
13.9 | * * * |
9
1. | * * * | |
2. | * * * | |
3. | * * * |
10
1. | * * * | |
2. | * * * | |
3. | * * * |
11
1. | * * * |
(a) | * * * | ||
(b) | * * * |
(a) | * * * | ||
(b) | * * * |
(a) | * * * |
12
(b) | * * * |
(a) | * * * | ||
(b) | * * * |
(a) | * * * |
(b) | * * * |
2. | * * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * | ||
(e) | * * * | ||
(f) | * * * | ||
(g) | * * * | ||
(h) | * * * | ||
(i) | * * * | ||
(j) | * * * |
(i) | * * * | ||
(ii) | * * * |
(k) | * * * | ||
(l) | * * * | ||
(m) | * * * |
13
(n) | * * * |
14
15
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1.1 | * * * | 1 | |||||
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1.2 | * * * | 1 | |||||
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1.3 | * * * | 1 | |||||
|
1.4 | * * * | 1 | |||||
|
||||||||
2. | * * * | 2 | ||||||
|
||||||||
|
2.1 | * * * | 2 | |||||
|
2.2 | * * * | 2 | |||||
|
2.3 | * * * | 2 | |||||
|
2.4 | * * * | 2 | |||||
|
2.5 | * * * | 2 | |||||
|
2.6 | * * * | 2 | |||||
|
||||||||
3. | * * * | 2 | ||||||
|
||||||||
|
3.1 | * * * | 2 | |||||
|
3.2 | * * * | 3 | |||||
|
||||||||
4. | * * * | 3 | ||||||
|
||||||||
|
4.1 | * * * | 3 | |||||
|
4.2 | * * * | 3 | |||||
|
4.3 | * * * | 3 | |||||
|
4.4 | * * * | 3 | |||||
|
4.5 | * * * | 3 | |||||
|
||||||||
5. | * * * | 3 | ||||||
|
||||||||
|
5.1 | * * * | 3 | |||||
|
5.2 | * * * | 4 | |||||
|
5.3 | * * * | 4 | |||||
|
5.4 | * * * | 4 | |||||
|
5.5 | * * * | 4 | |||||
|
5.6 | * * * | 4 | |||||
|
5.7 | * * * | 4 | |||||
|
||||||||
6. | * * * | 4 | ||||||
|
||||||||
|
6.1 | * * * | 4 | |||||
|
6.2 | * * * | 5 | |||||
|
6.3 | * * * | 5 | |||||
|
6.4 | * * * | 6 | |||||
|
6.5 | * * * | 6 | |||||
|
||||||||
7. | * * * | 6 | ||||||
|
||||||||
8. | * * * | 6 | ||||||
|
||||||||
|
8.1 | * * * | 6 | |||||
|
8.2 | * * * | 7 |
9. | * * * | 7 | ||||||
|
||||||||
|
9.1 | * * * | 7 | |||||
|
9.2 | * * * | 7 | |||||
|
9.3 | * * * | 7 | |||||
|
9.4 | * * * | 7 | |||||
|
9.5 | * * * | 7 | |||||
|
9.6 | * * * | 7 | |||||
|
9.7 | * * * | 7 | |||||
|
9.8 | * * * | 7 | |||||
|
9.9 | * * * | 7 | |||||
|
||||||||
* * * | ||||||||
|
||||||||
1 | * * * | 8 | ||||||
|
||||||||
2 | * * * | 9 | ||||||
|
||||||||
3 | * * * | 10 |
ii
* * * | ||
* * * | ||
* * * | ||
* * * | ||
* * * | ||
* * * | ||
* * * | ||
* * * | ||
* * * | ||
* * * |
A. | * * * | |
B. | * * * | |
C. | * * * | |
D. | * * *. | |
E. | * * * | |
F. | * * * |
1. | * * * |
1.1 | * * * | |
* * * | ||
1.2 | * * * | |
* * * | ||
1.3 | * * * | |
* * * |
1.4 | * * * |
(a) | * * * |
1
(b) | * * * |
(c) | * * * |
2. | * * * |
2.1 | * * * |
* * * |
2.2 | * * * |
* * * |
2.3 | * * * |
* * * |
2.4 | * * * |
* * * |
(a) | * * * |
(b) | * * * |
2.5 | * * * |
* * * |
2.6 | * * * |
* * * |
3. | * * * |
3.1 | * * * |
* * * |
(a) | * * * |
(b) | * * * |
(c) | * * * |
(i) | * * * |
(ii) | * * * |
(d) | * * * |
(i) | * * * |
(ii) | * * * |
2
(iii) | * * * |
3.2 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * |
4. | * * * | |
|
||
4.1 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * |
4.2 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * |
4.3 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * |
4.4 | * * * | |
* * * |
4.5 | * * * |
(a) | * * * | ||
(b) | * * * |
5. | * * * | |
|
||
5.1 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * |
3
(c) | * * * | ||
(d) | * * * | ||
(e) | * * * | ||
(f) | * * * | ||
(g) | * * * | ||
(h) | * * * | ||
(i) | * * * | ||
(j) | * * * | ||
(k) | * * * |
5.2 | * * * | |
* * * | ||
5.3 | * * * | |
* * * | ||
5.4 | * * * | |
* * * | ||
5.5 | * * * | |
* * * | ||
5.6 | * * * | |
* * * | ||
5.7 | * * * | |
* * * | ||
6. | * * * | |
|
||
6.1 | * * * |
(a) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
* * * | |||
(iii) | * * * | ||
(iv) | * * * |
4
(v) | * * * | ||
(vi) | * * * |
(b) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
* * * | |||
(iii) | * * * | ||
(iv) | * * * |
(c) | * * * |
(i) | * * * | ||
(ii) | * * * |
6.2 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * | ||
(e) | * * * | ||
(f) | * * * | ||
(g) | * * * | ||
(h) | * * * | ||
(i) | * * * | ||
(j) | * * * | ||
(k) | * * * |
6.3 | * * * |
(a) | * * * |
(i) | * * * | ||
(ii) | * * * |
(b) | * * * |
5
(i) | * * * |
(A) | * * * | ||
(B) | * * * |
(ii) | * * * |
(A) | * * * | ||
(B) | * * * | ||
(C) | * * * |
(iii) | * * * | ||
(iv) | * * * |
6.4 | * * * | |
* * * | ||
6.5 | * * * | |
* * * | ||
7. | * * * | |
|
||
* * * |
(a) | * * * | ||
(b) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * |
(c) | * * * |
8. | * * * | |
|
||
8.1 | * * * |
(a) | * * * | ||
(b) | * * * |
(i) | * * * | ||
(ii) | * * * |
6
8.2 | * * * | |
* * * | ||
9. | * * * | |
|
||
9.1 | * * * | |
* * * | ||
9.2 | * * * | |
* * * | ||
9.3 | * * * | |
* * * | ||
9.4 | * * * |
(a) | * * * | ||
(b) | * * * |
9.5 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * |
9.6 | * * * |
(a) | * * * | ||
(b) | * * * |
9.7 | * * * | |
* * * | ||
9.8 | * * * | |
* * * | ||
9.9 | * * * | |
* * * |
7
* * * |
* * * |
* * * |
8
* * * |
* * * |
1. | * * * | |
2. | * * * | |
3. | * * *. |
9
* * * |
* * * |
1. | * * * | |
* * * | ||
* * * | ||
* * * | ||
* * * | ||
* * * | ||
* * * |
(a) | * * * | ||
(b) | * * * |
* * * | ||
* * * | ||
* * * | ||
* * * | ||
* * * | ||
* * * | ||
* * * | ||
* * * | ||
* * * | ||
* * * | ||
* * * | ||
* * * | ||
* * * | ||
* * * |
(a) | * * * | ||
(b) | * * * | ||
* * * | |||
(a) | * * * |
10
(b) | * * * | ||
* * * | |||
* * * | |||
* * * |
(a) | * * * | ||
(b) | * * * |
2. | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * | ||
(e) | * * * | ||
(f) | * * * | ||
(g) | * * * | ||
(h) | * * * | ||
(i) | * * * | ||
(j) | * * * |
(i) | * * * | ||
(ii) | * * * |
(k) | * * * | ||
(l) | * * * | ||
(m) | * * * | ||
(n) | * * * |
11
12
1. | Determination of Fair Market Value |
1.1 | Application | |
The provisions of this item 1 will be interpreted in accordance with the relevant provisions of the Agreement and will apply in the following circumstances: |
(a) | determination of the fair market value of the Target Iron Ore Assets as contemplated by clause 8.6(c); | ||
(b) | determination of the fair market value of the Participating Interest of the Defaulting Owner and the Iron Ore Assets of the Defaulting Owner and its Related Corporations as contemplated by clause 9.5(a)(i); | ||
(c) | determination of the fair market value of the entire WA Iron Ore JV as contemplated by clause 9.5(a)(ii); | ||
(d) | determination of the fair market value of the scheduled reserves and resources to be developed by a Sole Funding Party as contemplated by item 1(b) of schedule 4; | ||
(e) | determination of the fair market value of the assets comprised by the Sole Risk Opportunity as contemplated by item 2(i)(iii)(A) of schedule 4; and | ||
(f) | determination of the fair market value of the Purchasing Owners Participating Share of the assets referred to in item 3(c) of schedule 4. |
1.2 | Determination of Fair Market Value | |
The fair market value in each case will be: |
(a) | agreed in writing by the Owners; or | ||
(b) | if the Owners are unable to reach agreement * * * the average of three valuations determined by three independent experts in accordance with the remaining provisions of this item 1 (each a Valuer ). |
1.3 | Selection of Valuers |
(a) | The Valuers will be selected by agreement between the Owners or, failing agreement * * * such Valuers will be nominated by the President of the Institute of Chartered Accountants, Australia at the request of either Owner. | ||
(b) | The Valuers will: |
(i) | have appropriate qualifications, including experience in valuation of resource and infrastructure assets; and |
Page 147
(ii) | not have any interest which conflicts or may conflict with his or her appointment as an expert in relation to the dispute. |
1.4 | Conduct of Valuers |
(a) | In determining the fair market value, each Valuer will: |
(i) | consult with the Manager; | ||
(ii) | accept oral and written submissions from the Owners which may be made to him * * *; and | ||
(iii) | make a written determination of fair market value independently and without consultation of the other Valuers. |
(b) | Each Valuer will keep all information received in connection with its appointment under this Agreement confidential. | ||
(c) | The costs and expenses of each Valuer in making its valuation will be borne by the Owners equally. |
1.5 | Matters to be considered by Valuers | |
In determining the fair market value, each Valuer will value the transaction as between a willing but not anxious seller and a willing but not anxious buyer at arms length and have regard to all relevant matters including: |
(a) | current and projected demand and supply conditions in the global iron ore market; | ||
(b) | likely trends in iron ore quality specifications and pricing; | ||
(c) | likely timing and scale of development and/or expansion of all relevant iron ore deposits; | ||
(d) | quantum and nature of all relevant iron ore reserves and resources; | ||
(e) | projected capital and operating costs of development and/or expansion over project life; | ||
(f) | the global competitiveness of relevant iron ore product; | ||
(g) | the party that will bear any stamp duty or equivalent duty arising in connection with the transaction concerned and the amount of that duty; and | ||
(h) | any specific matters that are expressly stated to be considered in the clauses to which this schedule applies. |
1.6 | Manager to provide information | |
The Manager must provide all reasonable information that the Owners or the Valuers (as applicable) requires in order to agree or determine the fair market value in accordance with this item 1. |
1.7 | Valuation to be GST exclusive | |
The fair market value agreed by the Owners or determined by the Independent Expert (as applicable) will be determined on a GST exclusive basis and, accordingly, the fair market value will be expressly stated to be GST exclusive. |
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1.8 | Time for completion of valuation | |
* * * that Valuer will be required to complete their valuation and to deliver a copy of their valuation to the Manager and to the Owners. |
1.9 | Extensions of time | |
If a Valuer fails to complete the valuation within the time fixed under item 1.8, the Owners or the President of the Institute of Chartered Accountants, Australia, as the case may be, may extend the time for completion of the valuations. If no extension is granted * * * another Valuer will be appointed to make that Valuers valuation in accordance with this schedule 9. |
2. | Purchase Options |
2.1 | Application | |
The provisions of this item 2 will be interpreted in accordance with the relevant provisions of the Agreement and will apply to any Purchase Option exercised pursuant to clause 9.6. |
2.2 | Conditions Precedent | |
It will be a condition precedent to completion of the purchase that the Non-Defaulting Owner has obtained all necessary Authorisations. The Non-Defaulting Owner must use all reasonable endeavours to obtain all necessary Authorisations as soon as practicable. |
2.3 | Completion of Purchase | |
If any Purchase Option is exercised, then: |
(a) | subject to clause 9.5(c) and (e), the Defaulting Owner will, and, where relevant, will procure that its Related Corporations: |
(i) | on completion, transfer to the Non-Defaulting Owner all of: |
(A) | its Participating Interest, including the Participant Loans and Debentures; and | ||
(B) | the Iron Ore Assets of the Defaulting Owner and its Related Corporations, either directly or by the acquisition of Securities in the JV Entities that are Related Corporations of the Defaulting Owner at the election of the Non-Defaulting Owner, |
free from any Security Interests, pre-emptive rights, and other third party rights (other than a Cross Charge, a Permitted Security Interest or any Existing JV Arrangements), in consideration for payment by the Non-Defaulting Owner of the Purchase Option Price; and |
(ii) | at or before completion, sign, execute, deliver and do all deeds, documents, transfers, instruments, assurances, acts and other things as may be necessary or appropriate to effect the transfers referred to in paragraph (a)(i) to the Non-Defaulting Owner; and |
Page 149
(b) | the Non-Defaulting Owner will, and, where relevant, will procure that its Related Corporations: |
(i) | * * * provide written notice to the Defaulting Owner of a time during business hours at which, and a place in Australia at which, completion is to occur; and | ||
(ii) | on completion, pay the Purchase Option Price in accordance with item 2.4. |
2.4 | Application of Purchase Option Price | |
Payment of the Purchase Option Price will be made on completion of the purchase by the Non-Defaulting Owner in the following order of priority: |
(a) | first, in payment of royalties to the State and any withholding or deduction for or on account of any taxes, duties, assessments or governmental charges which are referable to the Defaulting Owner (and the Non-Defaulting Owner will not be obliged to reimburse or compensate or make any payment to the Defaulting Owner for or in respect of any such withholding or deduction); | ||
(b) | secondly, by paying to the Manager all Default Amounts owed to it; | ||
(c) | thirdly, by paying to the Non-Defaulting Owner the total of all Unpaid Amounts that have been funded by the Non-Defaulting Owner, along with all associated Default Interest and Default Costs and any valuation fees and expenses charged to the account of the Defaulting Owner pursuant to item 1; and | ||
(d) | fourthly, the balance (if any) will be paid to the Defaulting Owner, or as it may otherwise direct and will not carry any interest. |
2.5 | * * * | |
* * * |
2.6 | Stamp duty and costs | |
The cost of any stamp duty or equivalent duty arising in connection with the exercise of the Purchase Option will be payable by the Non-Defaulting Owner. | ||
2.7 | Warranty | |
The Defaulting Owner warrants to the Non-Defaulting Owner that it has good title to the assets to be transferred free from any Security Interest, pre-emptive rights, and other third party rights (other than a Cross Charge, a Permitted Security Interest and any Existing JV Arrangements). |
Page 150
(a) | * * * | |
(b) | * * * | |
(c) | * * * |
1. | * * * |
1.1 | * * * |
(a) | * * * | ||
(b) | * * * |
1.2 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * | ||
(e) | * * * | ||
(f) | * * * | ||
(g) | * * * | ||
(h) | * * * | ||
(i) | * * * | ||
(j) | * * * | ||
(k) | * * * | ||
(l) | * * * | ||
(m) | * * * |
Page 151
(n) | * * * | ||
(o) | * * * | ||
(p) | * * * | ||
(q) | * * * | ||
(r) | * * * | ||
(s) | * * * | ||
(t) | * * * | ||
(u) | * * * | ||
(v) | * * * | ||
(w) | * * * | ||
(x) | * * * | ||
(y) | * * * | ||
(z) | * * * | ||
(aa) | * * * | ||
(bb) | * * * | ||
(cc) | * * * | ||
(dd) | * * * | ||
(ee) | * * * | ||
(ff) | * * * | ||
(gg) | * * * | ||
(hh) | * * * | ||
(ii) | * * * | ||
(jj) | * * * |
* * * |
(kk) | * * * | ||
(ll) | * * * |
* * * |
(mm) | * * * | ||
(nn) | * * * |
1.3 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * |
Page 152
(c) | * * * | ||
(d) | * * * |
1.4 | * * * |
(a) | * * * | ||
(b) | * * * |
1.5 | * * * | |
* * * |
1.6 | * * * | |
* * * | ||
1.7 | * * * | |
* * * | ||
1.8 | * * * | |
* * * |
(B) | * * * |
1.9 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * |
(iii) | * * * |
1.10 | * * * | |
* * * |
(a) | * * * | ||
(m) | * * * |
1.11 | * * * | |
* * * | ||
1.12 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * |
Page 153
(d) | * * * | ||
(e) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
* * * | |||
* * * |
(A) | * * * | ||
(B) | * * * | ||
(C) | * * * | ||
(D) | * * * |
(i) | * * * | ||
(ii) | * * * |
* * * |
1.13 | * * * | |
* * * |
(f) | * * * | ||
(g) | * * * |
(i) | * * * |
(A) | * * * | ||
(B) | * * * | ||
(C) | * * * |
(ii) | * * * |
(h) | * * * |
(i) | * * * | ||
(ii) | * * * |
(i) | * * * |
1.14 | * * * |
(a) | * * * |
(i) | * * * | ||
(ii) | * * * |
(A) | * * * | ||
(B) | * * * |
(iii) | * * * |
Page 154
* * * | |||
(b) | * * * |
1.15 | * * * | |
* * * |
(ii) | * * * |
1.16 | * * * | |
* * * |
(ii) | * * * |
(A) | * * * | ||
(B) | * * * | ||
(C) | * * * |
* * * |
1.17 | * * * | |
* * * | ||
1.18 | * * * |
(a) | * * * |
(i) | * * * | ||
(ii) | * * * |
(iii) | * * * |
(b) | * * * |
(c) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * |
1.19 | * * * | |
* * * |
(k) | * * * |
1.20 | * * * | |
* * * | ||
* * * |
1.21 | * * * | |
* * * |
Page 155
1.22 | * * * | |
* * * |
(e) | * * * | ||
(f) | * * * |
1.23 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * |
1.24 | * * * | |
* * * |
2. | * * * |
2.1 | * * * | |
* * * | ||
2.2 | * * * | |
* * * | ||
2.3 | * * * | |
* * * |
3. | * * * |
3.1 | * * * | |
* * * | ||
3.2 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * |
3.3 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * |
Page 156
(c) | * * * | ||
(d) | * * * |
3.4 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * | ||
(e) | * * * | ||
(f) | * * * | ||
(g) | * * * | ||
(h) | * * * | ||
(i) | * * * |
* * * | ||
3.5 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * |
3.6 | * * * | |
* * * |
(d) | * * * |
(i) | * * * | ||
(ii) | * * * |
* * * |
3.7 | * * * | |
* * * |
(b) | * * * |
(i) | * * * | ||
(ii) | * * * |
3.8 | * * * | |
* * * |
(b) | * * * |
Page 157
4. | * * * |
4.1 | * * * | |
* * * |
4.2 | * * * | |
* * * | ||
4.3 | * * * | |
* * * |
(a) | * * * | ||
(m) | * * * |
* * * | ||
4.4 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * | ||
(e) | * * * | ||
(f) | * * * | ||
(g) | * * * | ||
(h) | * * * | ||
(i) | * * * | ||
(j) | * * * | ||
(k) | * * * | ||
(l) | * * * | ||
(m) | * * * | ||
(n) | * * * | ||
(o) | * * * | ||
(p) | * * * | ||
(q) | * * * | ||
(r) | * * * | ||
(s) | * * * | ||
(t) | * * * |
Page 158
(u) | * * * | ||
(v) | * * * |
* * * | ||
* * * |
(w) | * * * | ||
(x) | * * * |
4.5 | * * * | |
* * * |
(h) | * * * | ||
(i) | * * * |
4.6 | * * * | |
* * * |
4.7 | * * * | |
* * * | ||
* * * |
(i) | * * * |
(A) | * * * | ||
(B) | * * * | ||
(C) | * * * |
(ii) | * * * |
* * * | ||
4.8 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * |
4.9 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * |
(i) | * * * | ||
(ii) | * * * |
(c) | * * * |
Page 159
(d) | * * * |
(i) | * * * |
(A) | * * * | ||
(B) | * * * |
(1) | * * * | ||
(2) | * * * |
* * * |
(ii) | * * * |
(e) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * |
(A) | * * * | ||
(B) | * * * |
* * * |
(iv) | * * * |
(A) | * * * | ||
(B) | * * * |
(v) | * * * | ||
(vi) | * * * |
(f) | * * * |
* * *
|
* * *
|
* * * |
* * * | |||
* * * | |||
* * * | |||
* * * | |||
* * * |
(i) | * * * | ||
(ii) | * * * |
(g) | * * * | ||
(h) | * * * |
Page 160
4.10 | * * * | |
* * * |
(a) | * * * |
(i) | * * * | ||
(ii) | * * * |
(b) | * * * | ||
(c) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * | ||
(iv) | * * * |
(d) | * * * | ||
(e) | * * * | ||
(f) | * * * | ||
(g) | * * * |
(i) | * * * | ||
(ii) | * * * |
(h) | * * * |
(i) | * * * | ||
(ii) | * * * |
* * * |
(iii) | * * * | ||
(iv) | * * * |
* * * | |||
(i) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * | ||
(iv) | * * * | ||
(v) | * * * | ||
(vi) | * * * | ||
(vii) | * * * |
Page 161
4.11 | * * * | |
* * * |
(a) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * |
* * * | |||
(b) | * * * |
4.12 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * |
5. | * * * |
5.1 | * * * | |
* * * |
* * * |
5.2 | * * * |
(a) | * * * | ||
(b) | * * * |
5.3 | * * * | |
* * * |
(d) | * * * | ||
* * * | |||
* * * | |||
* * * | |||
* * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * |
* * * | |||
* * * | |||
* * * |
Page 162
* * * |
* * * |
* * * |
5.4 | * * * | |
* * * | ||
* * * |
5.5 | * * * |
(a) | * * * | ||
(b) | * * * |
5.6 | * * * | |
* * * |
6. | * * * |
6.1 | * * * | |
* * * | ||
6.2 | * * * | |
* * * | ||
6.3 | * * * |
(a) | * * * |
(f) | * * * |
(b) | * * * |
(i) | * * * | ||
(ii) | * * * |
(c) | * * * |
6.4 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * |
(d) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * |
Page 163
(A) | * * * |
(1) | * * * | ||
(2) | * * * |
(B) | * * * |
(1) | * * * | ||
(2) | * * * |
(e) | * * * |
(c) | * * * | ||
(d) | * * * | ||
(e) | * * * |
(ii) | * * * |
(f) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * | ||
(iv) | * * * |
(B) | * * * |
(g) | * * * |
(l) | * * * |
(i) | * * * |
(A) | * * * | ||
(B) | * * * |
(ii) | * * * |
(A) | * * * | ||
* * ** * * | |||
* * * | |||
* * * | |||
* * * |
(B) | * * * |
* * * |
(h) | * * * | ||
* * * | |||
(i) | * * * | ||
(j) | * * * |
Page 164
(iii) | * * * |
(A) | * * * | ||
(B) | * * * | ||
(C) | * * * |
* * * | |||
(iv) | * * * |
(A) | * * * | ||
(B) | * * * |
(v) | * * * |
(A) | * * * | ||
(B) | * * * | ||
(C) | * * * | ||
(D) | * * * | ||
(E) | * * * |
* * * |
(k) | * * * |
6.5 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * | ||
* * * |
(e) | * * * | ||
(f) | * * * |
(i) | * * * | ||
* * * | |||
* * * | |||
* * * | |||
* * * | |||
* * * | |||
* * * | |||
* * * |
Page 165
(ii) | * * * |
(A) | * * * | ||
(B) | * * * |
* * * | |||
* * * | |||
* * * | |||
* * * | |||
* * * | |||
(iii) | * * * |
(g) | * * * |
(i) | * * * | ||
* * * | |||
* * * | |||
* * * | |||
* * * | |||
(ii) | * * * |
(A) | * * * | ||
(B) | * * * |
* * * |
(h) | * * * | ||
(i) | * * * | ||
(j) | * * * |
(e) | * * * |
7. | * * * |
7.1 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * |
7.2 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * |
Page 166
7.3 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * |
(f) | * * * |
7.4 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * |
(i) | * * * |
(c) | * * * |
7.5 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * | ||
(e) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * |
(f) | * * * |
(n) | * * * |
(i) | * * * | ||
(ii) | * * * |
(A) | * * * | ||
(B) | * * * | ||
(C) | * * * | ||
(D) | * * * | ||
(E) | * * * |
* * * | . |
Page 167
7.6 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * |
7.7 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * |
7.8 | * * * | |
* * * | ||
7.9 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * |
7.10 | * * * | |
* * * | ||
7.11 | * * * | |
* * * |
(a) | * * * |
(a) | * * * |
(b) | * * * | ||
(c) | * * * |
(d) | * * * |
(i) | * * * | ||
* * * |
(C) | * * * | ||
(D) | * * * | ||
(E) | * * * |
(ii) | * * * |
Page 168
(A) | * * * | ||
(B) | * * * |
(d) | * * * |
(e) | * * * |
8. | * * * |
8.1 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * |
8.2 | * * * | |
* * * |
(a) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * | ||
(iv) | * * * |
(b) | * * * |
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * |
8.3 | * * * | |
* * * | ||
8.4 | * * * | |
* * * |
(a) | * * * |
8.5 | * * * | |
* * * |
(a) | * * * |
(i) | * * * |
Page 169
(ii) | * * * |
(b) | * * * | ||
(c) | * * * |
(i) | * * * | ||
(ii) | * * * |
(d) | * * * |
(i) | * * * | ||
(ii) | * * * |
8.6 | * * * |
(a) | * * * |
(i) | * * * |
(a) | * * * |
(i) | * * * | ||
(ii) | * * * |
* * * |
(ii) | * * * |
(b) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
* * * |
* * * |
(a) | * * * | ||
(b) | * * * |
(iii) | * * * |
(A) | * * * | ||
(B) | * * * |
(iv) | * * * | ||
(v) | * * * |
(c) | * * * |
(vi) | * * * | ||
* * * |
* * * |
(vii) | * * * |
Page 170
* * * |
(a) | * * * |
(i) | * * * |
(A) | * * * | ||
(B) | * * * |
* * * | |||
(ii) | * * * |
(b) | * * * |
(i) | * * * | ||
(ii) | * * * |
(viii) | * * * | ||
* * * |
* * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * |
(ix) | * * * |
8.7 | * * * | |
* * * |
(a) | * * * |
(i) | * * * | ||
(ii) | * * * |
* * * | * * * | ||
* * * |
* * * | |||
* * * | |||
* * * | |||
* * * | |||
* * * | |||
* * * |
Page 171
* * * |
(a) | * * * | ||
(b) | * * * |
(b) | * * * |
(b) | * * * |
(c) | * * * |
(c) | * * * |
(i) | * * * | ||
(ii) | * * * | ||
(iii) | * * * |
(d) | * * * |
(e) | * * * |
(e) | * * * |
(i) | * * * | ||
(ii) | * * * |
8.8 | * * * | |
* * * |
(a) | * * * |
(i) | * * * | ||
(ii) | * * * |
(b) | * * * |
(c) | * * * |
(i) | (A) * * * |
(B) | * * * |
(ii) | * * * |
(A) | * * * | ||
(B) | * * * |
(iv) | * * * |
8.9 | * * * | |
* * * | ||
* * * |
* * * |
Page 172
9. | * * * |
9.1 | * * * | |
* * * | ||
9.2 | * * * | |
* * * |
(a) | * * * | ||
(b) | * * * |
(f) | * * * |
(c) | * * * |
9.3 | * * * |
(a) | * * * | ||
(b) | * * * | ||
(c) | * * * | ||
(d) | * * * |
10. | * * * |
* * * | ||
11. | * * * |
* * * | ||
12. | * * * |
* * * | ||
13. | * * * |
* * * | ||
14. | * * * |
* * * | ||
15. | * * * |
* * * |
Page 173
16. | * * * |
* * * | ||
17. | * * * |
* * * | ||
18. | * * * |
* * * | ||
19. | * * * |
* * * | ||
20. | * * * |
* * * | ||
21. | * * * |
* * * | ||
22. | * * * |
* * * |
Page 174
Page 175
1. |
Definitions and interpretation
|
2 | |||||
|
|||||||
1.1 Joint Venture Agreement definitions to apply
|
2 | ||||||
|
|||||||
1.2 Definitions
|
2 | ||||||
|
|||||||
1.3 Joint Venture Agreement interpretive provisions to apply
|
2 | ||||||
|
|||||||
2. |
Acquiring Owner to Assume Liability
|
2 | |||||
|
|||||||
3. |
Consent of Other Parties
|
3 | |||||
|
|||||||
4. |
Disposing Owner Released
|
3 | |||||
|
|||||||
5. |
Liability Pending Effective Date
|
3 | |||||
|
|||||||
6. |
Address of Acquiring Owner for Notices
|
3 | |||||
|
|||||||
7. |
Costs and stamp duty
|
4 | |||||
|
|||||||
8. |
Governing Law and Jurisdiction
|
4 | |||||
|
|||||||
8.1 Governing Law
|
4 | ||||||
|
|||||||
8.2 Final judgment conclusive and enforceable
|
4 | ||||||
|
|||||||
8.3 Dispute Resolution
|
4 | ||||||
|
|||||||
8.4 Service of Process
|
4 | ||||||
|
|||||||
9. |
General Provisions
|
5 |
Page (i)
Date
|
|||||
|
|||||
|
|||||
|
|||||
Parties
|
|||||
|
|||||
|
|||||
1.
|
[#] [ (ACN [#] ) ] (the Acquiring Owner ). | ||||
|
|||||
2.
|
[#] [ (ACN [#] ) ] (the Disposing Owner ). | ||||
|
|||||
3.
|
[Insert name and details of each other party to the Joint Venture Agreement]
(collectively the Other Parties ). |
||||
|
|||||
Recitals
|
|||||
|
|||||
|
|||||
A
|
The Disposing Owner and the Other Parties are the current parties to the West Australian Iron Ore Joint Venture Agreement dated [#] (the Joint Venture Agreement ) and certain other Transaction Documents. | ||||
|
|||||
B
|
The Participating Shares of the Owners in the WA Iron Ore JV before the Effective Date are: | ||||
|
|||||
|
The Disposing Owner [ #% ] | ||||
|
|||||
|
[Insert details for each Other Party that is an Owner] [ #% ] | ||||
|
|||||
C
|
The Disposing Owner has agreed to Dispose to the Acquiring Owner, and the Acquiring Owner has agreed to acquire, the Disposal Interest (and corresponding Participating Share) in the WA Iron Ore JV, so that on and from the Effective Date the Participating Shares of the parties will be: | ||||
|
|||||
|
[The Disposing Owner (if part of interest is retained) [#%]] | ||||
|
|||||
|
[Insert details for each Other Party that is an Owner] [ #% ] | ||||
|
|||||
|
The Acquiring Owner [ #% ] | ||||
|
|||||
D
|
Clause 10.8 of the Joint Venture Agreement provides that, unless otherwise agreed in writing by the Owners, no Disposal of a Participating Interest to a third party that would otherwise be permitted under that clause may be made unless certain conditions are satisfied (including, among others, the execution of this Deed). | ||||
|
|||||
E
|
The Disposing Owner wishes to be released from [all][a portion, referable to the Disposal Interest] of its obligations under the Joint Venture Agreement and the other Transaction Documents that are referrable to the Disposal Interest as from the Effective Date. | ||||
|
|||||
|
|||||
F
|
In order to give effect to the Disposal of the Disposal Interest, and in satisfaction of the requirement to enter into a New Owners Assumption Deed pursuant to clause 10.8 of the |
Page 1
|
Joint Venture Agreement, the parties have agreed to enter into this Deed. | ||||
|
|||||
1. | Definitions and interpretation |
1.1
|
Joint Venture Agreement definitions to apply
|
|
Subject to a contrary meaning being specified in clause 1.2, words and expressions defined in the Joint Venture Agreement have the same meaning when used in this Deed. | ||
1.2
|
Definitions
|
|
In this Deed, the following terms have the following meanings unless the context requires otherwise. | ||
Disposal Interest means the permitted whole or the permitted portion of the Disposing Owners Participating Interest as at the Effective Date, being a Participating Share of [ # ]% | ||
Effective Date means the date on which each of the requirements set out in clause 10.8 of the Joint Venture Agreement have been satisfied in respect of the acquisition of the Disposal Interest. | ||
Joint Venture Agreement has the meaning given in Recital A. | ||
1.3
|
Joint Venture Agreement interpretive provisions to apply
|
|
Items 1.2 to 1.5 (inclusive) of schedule 1 to the Joint Venture Agreement will apply, mutatis mutandis , in the interpretation of this Deed. |
2.
|
Acquiring Owner to Assume Liability
|
With effect on and from the Effective Date, the Acquiring Owner, to the extent of the Disposal Interest: |
(a) | enjoys all of the rights and benefits of the Disposing Owner under the Joint Venture Agreement and, to the extent applicable, the other Transaction Documents to which the Disposing Owner is a party, and may hold and deal with the Disposal Interest in accordance with the terms of the Joint Venture Agreement without any interruption or disturbance from the Disposing Owner; | ||
(b) | assumes the covenants, liabilities and obligations of the Disposing Owner arising on or after the Effective Date under the Joint Venture Agreement and undertakes to discharge those covenants, liabilities and obligations as and when required; | ||
(c) | notwithstanding paragraph (b): |
(i) | the Acquiring Owner agrees that any steps taken prior to the Effective Date with respect to the exercise of a Purchase Option or a Dilution Option in accordance with the Joint Venture Agreement, or in order to reach completion of that Purchase Option or Dilution Option, will be effective as against the Acquiring Owner even if the relevant obligations have arisen prior to the Effective Date; and |
Page 2
(ii) | to the extent that the Acquiring Owner becomes a Majority Owner as a result of the acquisition of the Disposal Interest, the Acquiring Owner agrees to assume the obligations of the Disposing Owner * * * |
3.
|
Consent of Other Parties
|
With effect on and from the Effective Date, each of the Other Parties: |
(a) | irrevocably and unconditionally consent to the Acquiring Owner becoming a holder of the Disposal Interest and assuming the covenants, liabilities and obligations of the Disposing Owner in relation to the Disposal Interest in accordance with, and to the extent referred to in, clause 2; | ||
(b) | acknowledge and agree that the Acquiring Owner will be entitled to exercise all of the rights and benefits of the Disposing Owner in respect of the Disposal Interest; and | ||
(c) | agree to be bound by the terms of the Joint Venture Agreement and all other Transaction Documents (to the extent relevant) between the Disposing Owner and any of the Other Parties as if the Acquiring Owner was named in that agreement or agreements as a party [ instead of / in addition to ] the Disposing Owner, but only in respect of the Disposal Interest. |
4.
|
Disposing Owner Released
|
With effect on and from the Effective Date, each of the Other Parties releases and forever discharges the Disposing Owner from the covenants, liabilities and obligations relating to or connected with the Disposal Interest on or after the Effective Date under the Joint Venture Agreement and the other Transaction Documents (to the extent relevant), subject to any accrued rights. |
5.
|
Liability Pending Effective Date
|
Until the Effective Date, the Disposing Owner will remain liable for and be responsible for performing and observing all of the covenants, liabilities and obligations which are expressed to apply in respect of, or attaching to the Disposal Interest under the Joint Venture Agreement and the other Transaction Documents (to the extent relevant). |
6.
|
Address of Acquiring Owner for Notices
|
For the purposes of the Joint Venture Agreement and the other Transaction Documents (to the extent relevant), the address of the Acquiring Owner to which all notices must be delivered is: |
to
[Insert details of Acquiring Owner]
:
|
[#] | |
|
||
|
Attention [#] | |
|
||
|
Address: [#] | |
|
||
|
Fax No: [#] |
Page 3
7.
|
Costs and stamp duty
|
(a) | Each party will bear the costs arising out of the negotiation, preparation, execution and enforcement of this Deed. | ||
(b) | Subject to the Joint Venture Agreement, all stamp duty (including fines, penalties and interest) which may be payable on or in connection with this Deed and any instrument executed under this Deed will be borne by the Acquiring Owner. The Acquiring Owner will indemnify the Disposing Owner and the Other Parties on demand against any liability for that stamp duty. |
8.
|
Governing Law and Jurisdiction
|
8.1
|
Governing Law
|
(a) | This Deed will be governed by the laws of Western Australia, Australia. | ||
(b) | The parties irrevocably and unconditionally: |
(i) | submit to the non-exclusive jurisdiction of the courts of Western Australia; and | ||
(ii) | agree that they may not object to any suit, action or proceeding commenced under or in connection with this Deed on the basis that the courts of Western Australia are not an appropriate forum. |
8.2
|
Final judgment conclusive and enforceable
|
|
The parties agree that a final judgment in any suit, action or proceeding commenced under or in connection with this Deed in any court of competent jurisdiction is conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. | ||
8.3
|
Dispute Resolution
|
|
Any dispute, controversy, claim or difference of whatever nature arising under, out of, or in connection with this Deed will be resolved in accordance with clause 20.3 of the Joint Venture Agreement. | ||
8.4
|
Service of Process
|
(a) | Each party agrees that service of all writs, process and summonses in any suit, action or proceeding under or in connection with this Deed brought in Western Australia may be made on its registered or principal office for the time being in Australia. | ||
(b) | Nothing contained or implied in this Deed will in any way be taken to limit the ability of a party to: |
(i) | serve any writs, processes or summonses; or | ||
(ii) | obtain jurisdiction over a party in other jurisdictions, |
in any manner permitted by Law. |
Page 4
9.
|
General Provisions
|
The provisions of clauses 19, 21.1 (subject to clause 6 of this Deed) to 21.6, 21.9 and 21.11 to 21.13 of the Joint Venture Agreement will apply, mutatis mutandis , in this Deed unless the context requires otherwise. |
Page 5
Page 6
Page 176
Page 177
3
|
NOTICE | 23 | ||||||||
|
||||||||||
4 | ACCESSION DEED | 24 | ||||||||
|
||||||||||
5 | RELEASE DEED | 25 | ||||||||
|
||||||||||
6 | PROHIBITED INTERESTS | 26 |
Each company listed in Schedule 1 | ||
(each an Initial Chargor ) | ||
[Rio Tinto Owner / BHP Billiton Owner / Majority Owner] | ||
[ACN/ABN] [ insert ] ( Owner Chargee ) | ||
[Manager] | ||
[ACN/ABN] [ insert ] ( Manager ) |
A. | Under the terms of the Transaction Documents, the Obligors must perform certain financial obligations for the benefit of each Chargee and other parties to whom JV Funding Amounts may be payable, and the Chargors may be obliged to perform certain non-financial obligations for the benefit of the Owner Chargee to enable the Owner Chargee to complete a purchase after exercising a Purchase Option. | |
B. | Each Chargor is entering into this document in favour of each Chargee to secure the performance of some of those obligations. | |
C. | This document is a Cross Charge required under clause 11.8 of the Joint Venture Agreement. |
1. | CREATION OF CHARGE |
1.1 | Charging provision |
(a) | Each Chargor as beneficial owner charges all its Charged Property in favour of the Owner Chargee to secure the punctual payment of all Secured Money and the punctual performance of all Secured Obligations. | ||
(b) | Each Chargor as beneficial owner charges all its Charged Property in favour of the Manager to secure the punctual payment of all Secured Money. |
1.2 | Fixed charge | |
The Charge operates: |
(a) | as a fixed charge over all Fixed Charged Property; and | ||
(b) | subject to clause 1.6, as a floating charge over all Floating Charge Property. |
1
1.3 | Priority | |
Subject to the terms of any Priority Security Interest, the Charge is a first-ranking charge. | ||
1.4 | Dealings with Charged Property | |
Each Chargor covenants for the benefit of each Chargee that it will not: |
(a) | ( negative pledge ) create a Security Interest or permit a Security Interest to subsist over any Charged Property except as permitted by clauses 10 and 11 of the Joint Venture Agreement; or | ||
(b) | ( no Disposal ) Dispose of all or any of its Charged Property except in accordance with clause 1.5. |
1.5 | Dealing with Charged Property | |
Each Chargee consents to any Chargor Disposing of: |
(a) | its Floating Charge Property in the ordinary course of the day-to-day operations of the Chargor; or | ||
(b) | its Charged Property (including Floating Charged Property) as permitted by clause 10 of the Joint Venture Agreement. |
1.6 | Crystallisation | |
The Charge will cease to operate as a floating charge and will operate as a fixed charge, and the licence under clause 1.5(a) will automatically and immediately be withdrawn: |
(a) | in relation to all of a Chargors Floating Charge Property, if this document is enforced against that Chargors Charged Property; or | ||
(b) | in relation to part of a Chargors Floating Charge Property, if: |
(i) | that Chargor breaches clause 1.4; or | ||
(ii) | any step is taken to levy or enforce any distress or other execution on or against that part of the Floating Charge Property or to enforce any Security Interest relating to that part of the Floating Charge Property. |
1.7 | Floating nature of Charge restored | |
If the Charge has become a fixed charge under clause 1.6 in relation to all or part of a Chargors Floating Charge Property, the Chargees may restore the licence under clause 1.5(a) by notice to the relevant Chargor, so that the Charge will again operate as a floating charge and not as a fixed charge in relation to that Floating Charge Property. | ||
1.8 | Prohibited Interests to become Charged Property | |
If the relevant Chargor gives the Chargees a notice in the form of Schedule 3, each Prohibited Interest described in the notice will automatically and immediately become part of the Charged Property of that Chargor without the necessity for any further act by the Chargor. |
2. | UNDERTAKING TO PAY |
(a) | Subject to paragraph (b), each Chargor undertakes duly and punctually to pay to each Chargee an amount equal to each JV Funding Amount when that JV Funding |
2
Amount is due, whether or not the Chargor is the obligor, or the relevant Chargee is the obligee, of that JV Funding Amount. |
(b) | A Chargors obligation under paragraph (a) to make a payment in relation to a JV Funding Amount is taken to be satisfied to the extent that the obligor of that JV Funding Amount makes payment of the JV Funding Amount to the relevant obligee in accordance with the Transaction Documents. |
3. | UNDERTAKING TO PERFORM |
3.1 | Undertaking in respect of Secured Obligations | |
Each Chargor undertakes to each Chargee that it will perform the Secured Obligations. | ||
3.2 | Undertaking in respect of Joint Venture Agreement obligations | |
[Each of Hamersley Iron Pty Limited and Hamersley Iron-Yandi Pty Limited]/[BHP Billiton Minerals Pty Ltd] undertakes to the Owner Chargee to do each thing that an Owner is obliged under the Joint Venture Agreement to procure it to do. |
4. | ENFORCEMENT OF CHARGE |
(a) | The Owner Chargee may take action under this document to enforce the Charge and exercise its powers under this document against a Chargor if an Owner Event of Default has occurred and is continuing in relation to that Chargor. | ||
(b) | The Manager may take action under this document to enforce the Charge and exercise its powers under this document against a Chargor if a Manager Event of Default has occurred and is continuing in relation to that Chargor. | ||
(c) | If no Owner Event of Default is continuing, the Owner Chargee must immediately cease any action to enforce the Charge or exercise its powers under this document, including by removing any Receiver if it has been appointed and giving up possession of any Charged Property. | ||
(d) | If no Manager Event of Default is continuing, the Manager must immediately cease any action to enforce the Charge or exercise its powers under this document, including by removing any Receiver if it has been appointed and giving up possession of any Charged Property. | ||
(e) | If, at any time, the Owner Chargee and the Manager are both entitled to enforce the Charge, then: |
(i) | the exercise by the Owner Chargee of an enforcement power takes precedence over the exercise by the Manager of an enforcement power; and | ||
(ii) | the Manager may not exercise any enforcement power to the extent inconsistent with an enforcement power being exercised by the Owner Chargee while the Owner Chargee exercises its enforcement powers. |
3
5.
|
|
APPOINTMENT OF RECEIVER
|
5.1 | Power to appoint and remove | |
A Chargee may at any time after it becomes entitled to enforce the Charge against a Chargor: |
(a) | appoint a Receiver of all or part of the Charged Property of that Chargor; and | ||
(b) | remove any Receiver it appointed and (subject to clause 4) appoint another in its place. | ||
Any appointment or removal under this subclause must be in writing. |
5.2 | After commencement of winding up | |
The power to appoint a Receiver under clause 5.1 may be exercised even though: |
(a) | an order has been passed to wind up the Chargor when a Chargee becomes entitled to enforce the Charge, or when an appointment is made; or | ||
(b) | a Receiver appointed in the circumstances specified in the preceding paragraph may not, or may not in some respects, act as the Chargors agent. |
6.
|
|
AGENCY
|
6.1 | Agent of the Chargor | |
Subject to clause 6.2 and the next sentence, every Receiver appointed under clause 5 will be taken to be the agent of a Chargor, and that Chargor will be responsible for the Receivers acts, defaults and remuneration. The Chargee who appointed a Receiver may, by notice to the Receiver and the relevant Chargor, require the Receiver to act as its agent. | ||
6.2 | Ceasing to be agent | |
If for any reason (including operation of law) a Receiver ceases to be the agent of a Chargor because of an order passed to wind up the Chargor, the Receiver immediately becomes the agent of the Chargee who appointed it. |
7.
|
|
POWERS OF ENFORCING PARTY
|
(a) | The Enforcing Party will have full power to do all or any of the following: |
(i) | ( take possession ) take possession of, collect and get in the Charged Property and for that purpose to take any proceedings (in the name of the Chargor or otherwise); | ||
(ii) | ( give receipts ) give receipts for all money and other property that may come into the hands of the Receiver in exercise of any power given by this document; | ||
(iii) | ( obligations under Transaction Documents ) cause the Chargor to continue to be associated with the other parties for the purpose of fulfilling its obligations under the Transaction Documents or concur in the continuance of any of those documents; |
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(iv) | ( exercise rights ) exercise all or any powers, rights, discretions and remedies of the Chargor or in connection with the Charged Property (including rights available under the Corporations Act or any other statute); | ||
(v) | ( raise money on Charged Property in priority ) for the purposes of clause 7(a)(iv), borrow or raise money on the security of the Charged Property in priority to this Charge; | ||
(vi) | ( sell assets ) sell (whether or not a Receiver has taken possession), exchange or otherwise Dispose of (absolutely or conditionally) the Charged Property (or agree to do so): |
(A) | by public auction, private sale or tender for cash or on credit; | ||
(B) | in one lot or in parcels; and | ||
(C) | with or without special conditions and otherwise on terms the Receiver considers desirable; |
(vii) | ( execute documents ) execute any document (in the name of the Chargor or otherwise) for the purpose of carrying into effect any power, right and discretion conferred on the Enforcing Party; | ||
(viii) | ( settle disputes ) make any settlements, arrangements or compromise that it thinks fit; and | ||
(ix) | ( do everything ) do or cause to be done everything with respect to the Charged Property (without being responsible for any resulting loss or damage) that it thinks necessary and which could have been done or caused to be done by the Enforcing Party if it was the absolute owner of the Charged Property. |
(b) | Subject always to the obligations of the Enforcing Party under the Corporations Act an Enforcing Party may exercise its power under clause 7(a)(vi) by selling the relevant Charged Property to the Chargee who appointed it. | ||
(c) | An Enforcing Partys powers, rights and discretions referred to in this clause 7: |
(i) | must be interpreted separately and not by reference to one another; and | ||
(ii) | are in addition to all other powers, rights and discretions conferred on it by law, |
but are subject to clause 14. | |||
(d) | Any legislation that adversely affects an obligation of a Chargor, or the exercise by an Enforcing Party of a right or remedy, under or relating to this document is excluded to the full extent permitted by law. |
8.
|
|
PROTECTION OF THIRD PARTIES
|
A purchaser or other party to a disposal or dealing in attempted exercise of a power contained in this document is not: |
(a) | bound to enquire whether there has been a default, whether a Receiver has been properly appointed or about the propriety or regularity of a sale, disposal or dealing; or | ||
(b) | affected by notice that a sale, disposal or dealing is unnecessary or improper. |
5
Despite any irregularity or impropriety in a sale, disposal or dealing, it is to be treated, for the protection of the purchaser or other party to the disposal or dealing, as being authorised by this document and valid. |
9.
|
|
POWERS EXERCISABLE BY CHARGEE
|
9.1 | Exercise of powers | |
After the Charge has become enforceable against a Chargor, a Chargee may exercise any power as an Enforcing Party in addition to any power it has as Chargee. A Chargee may do so even if a Receiver is appointed. | ||
9.2 | Protection of Chargee | |
The exercise of any power by a Chargee does not cause the Chargee to: |
(a) | be a mortgagee in possession; | ||
(b) | account as mortgagee in possession; or | ||
(c) | be answerable for any act or omission for which a mortgagee in possession is liable. |
10.
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REALISATION
|
After the Charge has become enforceable against a Chargor, the Chargor must do anything, and ensure that its employees and agents do anything, that the Enforcing Party may reasonably require to assist it to realise the Charged Property and exercise any power, right, discretion or remedy including: |
(a) | execute any transfer (including any transfer in blank) of, or other document in relation to, any Charged Property; | ||
(b) | do anything that the Enforcing Party thinks is necessary or desirable under the law in force in any place where any Charged Property is situated; and | ||
(c) | give any notice, order, direction and consent that the Enforcing Party thinks is necessary or desirable. |
11.
|
|
APPLICATION OF MONEY
|
Money that an Enforcing Party receives under or because of this document in relation to a Chargor is to be applied in the following order: |
(a) | ( expenses ) first in payment of all expenses of and incidental to: |
(i) | the appointment of any Receiver to that Chargor; and | ||
(ii) | the exercise or attempted exercise by the Enforcing Party of any power, right or discretion referred to in clause 7 (including the Enforcing Partys reasonable remuneration) against that Chargor; |
(b) | ( outgoings ) then in payment of any other outgoings that the Enforcing Party thinks fit to pay; | ||
(c) | ( Priority Security Interest ) then in discharging any Priority Security Interest; |
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(d) | ( Secured Money payable to appointor ) then in payment to the Chargee who appointed it of the Secured Money and any amount necessary to give effect to any indemnity contained in this document; | ||
(e) | ( Secured Money payable to other Chargee ) then in payment to the other Chargee of the Secured Money and any amount necessary to give effect to any indemnity contained in this document; and | ||
(f) | ( surplus ) then, subject to proper claims enforceable under other Security Interests, any surplus must be paid to the relevant Chargor. |
12.
|
|
CONTINUING SECURITY
|
The Charge is a continuing security, and remains in full force in relation to each Chargor until a final irrevocable discharge of the Charge is given by each Chargee, despite any transaction or other thing (including a settlement of account or intervening payment). |
13.
|
|
PROSPECTIVE LIABILITY
|
The parties acknowledge that for the purpose of fixing priorities between the Charge and any subsequent charge registered or registrable under the Corporations Act and for no other purposes, the Charge secures each Chargors prospective liability (being the liability to pay its Secured Money, its liability to perform the Secured Obligations and its liability to indemnify the Enforcing Party as provided in this document) up to a maximum of $150 billion. The Charge may also secure prospective liabilities in excess of this specified maximum amount. |
14.
|
|
RESTRICTIONS ON DISPOSAL BY ENFORCING PARTY
|
In exercising its rights under this document to Dispose of Charged Property, an Enforcing Party may only Dispose of Charged Property: |
(a) | in order to complete a purchase by the Owner Chargee after it exercises a Purchase Option; | ||
(b) | in the ordinary course of the day-to-day operations of the Chargor; | ||
(c) | as permitted by clause 10 of the Joint Venture Agreement; or | ||
(d) | if that Charged Property: |
(i) | is not required in the day-to-day operations of the Chargor; | ||
(ii) | is not otherwise required for the carrying on of the WA Iron Ore JV; and | ||
(iii) | is not shares or other securities in another JV Entity. |
15.
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|
NO MARSHALLING
|
A Chargee is not under any obligation to marshal, appropriate or exercise, apply, perfect or recover any Security Interest that the Chargee holds at any time or any funds or property that the Chargee may be entitled to receive or have a claim on. |
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16.
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NO PAYMENT AVOIDANCE
|
If any payment by a Chargor to an Enforcing Party is avoided for any reason (including any legal limitation, disability or incapacity of or affecting a party or any other fact or circumstance), and whether or not: |
(a) | the obligation to make the payment was illegal, void or substantially avoided; or | ||
(b) | any fact or circumstance was or ought to have been within the knowledge of the Enforcing Party, |
that Chargor: |
(c) | as an additional independent obligation indemnifies the Enforcing Party against that avoided payment; and | ||
(d) | acknowledges that the Chargees rights are to be reinstated and will be the same in relation to that amount as if the application, or the payment or transaction giving rise to it, had not been made. |
Any discharge or release between a Chargee and a Chargor is subject to reinstatement of the Chargees rights under this clause. |
17.
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POWER OF ATTORNEY
|
17.1 | Appointment of attorney |
Each Chargor irrevocably appoints each Chargee, with effect on and from the time that the Charge becomes enforceable by that Chargee against it, to be its attorney to: |
(a) | ( all acts necessary ) do anything necessary or desirable in the opinion of the Chargee to: |
(i) | give full effect to this document; | ||
(ii) | better secure the payment of the Secured Money or the performance of the Secured Obligations; | ||
(iii) | better secure the Chargors Charged Property to the Chargee in a manner consistent with this document; or | ||
(iv) | assist in the execution or exercise of any power, |
including execute any transfer (including any transfer in blank) or other document; |
(b) | ( Chargee powers ) exercise any power, right, discretion or remedy of the Chargee; and | ||
(c) | ( general ) do anything that the Chargor must or may do, or that the Chargee may do, under this document or by law, |
at the Chargors cost. |
A Chargee may appoint and remove substitutes, and may delegate its powers under this clause (including this power of delegation) and revoke any delegation. |
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17.2 | General |
(a) | An attorney appointed under clause 17.1 may do anything contemplated by that clause even if the attorney is affected by an actual or potential conflict of interest or duty, or might benefit from doing it. |
(b) | An attorney appointed under clause 17.1 may do anything contemplated by that clause in its name, in the name of the relevant Chargor or in the name of both of them. |
(c) | A Chargor must ratify anything done by an attorney under clause 17.1. |
(d) | Each Chargor gives the power of attorney in clause 17.1: |
(i) | to secure: |
(A) | payment of the Secured Money to the Chargee under this document and, in the case of the Owner Chargee, performance of the Secured Obligations; | ||
(B) | the Charged Property to the relevant Chargee in a manner consistent with this document; and | ||
(C) | any property interest of the relevant Chargee under this document; and |
(ii) | for valuable consideration, receipt of which is acknowledged by the Chargor. |
17.3 | What an attorney may do in Western Australia |
Without prejudice to the appointment and powers in clauses 17.1 and 17.2, each Chargor appoints each Chargee to exercise, in connection with any property in Western Australia, all or any of the rights, powers and remedies exercisable by an attorney appointed by an instrument in the form of the 19th Schedule to the Transfer of Land Act 1893 (WA). |
18.
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RELEASE AND DISCHARGE
|
18.1 | Partial release |
(a) | Each Chargee agrees that if Charged Property is Disposed of in accordance with clause 10 of the Joint Venture Agreement, it will release that property from the Charge by executing a Release Deed. | ||
(b) | Each Chargee must do anything (including execute any document or form), and must ensure that its employees and agents do anything (including execute any document or form), that the relevant Chargor may reasonably require to give full effect to a release contemplated by clause 18.1(a). | ||
(c) | This clause does not limit the operation of clause 16. |
18.2 | Full discharge |
Each party acknowledges and agrees that, except as contemplated by clause 18.1, neither Chargee is under any obligation to grant a discharge of the Charge or any other Security Interest granted under this document unless: |
(a) | the party seeking the discharge has no continuing or subsisting obligations under the Transaction Documents; |
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(b) | no Secured Money or Secured Obligation is owing to it by the party seeking the discharge; |
(c) | no Secured Money or Secured Obligation is contingently owing to it by the party seeking the discharge (except where there is no reasonable likelihood of the contingent event occurring); and |
(d) | that Chargee is satisfied that there is no reasonable prospect of Secured Money or a Secured Obligation arising in the future, |
at the time that discharge is sought. |
19.
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BENEFIT, ASSIGNMENT AND ACCESSION
|
19.1 | Owners Capacity |
The Owner Chargee holds the benefit of this document for itself and each other member of its Owner Block from time to time. |
19.2 | Assignment | |
A party may only assign, declare a trust over or otherwise deal with its rights under this document: |
(a) | in the case of the Owner Chargee, if it ceases to be the Owner with the largest Participating Share in the [BHP Billiton / Rio Tinto] Owner Block, to the Owner with the largest Participant Share in that Owner Block in accordance with the Joint Venture Agreement; | ||
(b) | in the case of the Manager, to a replacement Manager appointed in accordance with the Joint Venture Agreement; and | ||
(c) | in any other case, with the consent of each other party. |
20.
|
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REGISTRATION AND STAMPING
|
Each Chargor must at its own cost: |
(a) | ( registration under Corporations Act ) ensure that this document is registered (and not just provisionally) against it under section 263 of the Corporations Act; | ||
(b) | ( other registration ) ensure that this document is registered in any other way which any other party notifies to it if any other party is reasonably satisfied that registration is necessary or desirable to perfect the Charge or to protect the rights of any other party under this document; | ||
(c) | ( Authorisations ) obtain all necessary Authorisations in relation to this document and lodge them for registration in each jurisdiction required to perfect the Charge; |
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(d) | ( stamping ) ensure that this document is stamped for the proper amount in each state and territory of Australia in which this document is required to be stamped; and | ||
(e) | ( do everything to perfect Charge ) do everything necessary in each jurisdiction required to perfect the Charge. |
21.
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CONFIDENTIALITY
|
21.1 | Confidential Information not to be disclosed |
(a) | For the purposes of this clause 21, Confidential Information means the terms and conditions of this document and the Transaction Documents. | ||
It does not include information: |
(i) | which is in or comes into the public domain otherwise than by disclosure in breach of this document or a Transaction Document; | ||
(ii) | (other than in respect of the terms and conditions of this document or a Transaction Document) already known to the person at the date of disclosure; | ||
(iii) | acquired from a third party who is entitled to disclose it; and | ||
(iv) | which is independently developed by the person receiving that information otherwise than by disclosure in breach of this document or a Transaction Document. |
(b) | Each party undertakes that it will not, and will procure that its Related Corporations will not: |
(i) | disclose Confidential Information, including Confidential Information of any other party (the Protected Party ), to any person; or | ||
(ii) | use Confidential Information of the Protected Party, except either: | ||
(iii) | with the prior written approval of the Protected Party; or | ||
(iv) | for the purposes of this document or the Transaction Documents, or as otherwise permitted by this clause 21. |
(c) | Each party undertakes that it will: |
(i) | promptly do anything reasonably required by another party to prevent or restrain a breach or suspected breach of this clause 21.1 or any infringement or suspected infringement whether by court proceedings or otherwise; and | ||
(ii) | inform each other party immediately if it becomes aware that Confidential Information has been disclosed to an unauthorised third party. |
21.2 | Permitted disclosure |
Subject to clause 21.3, a party may disclose Confidential Information: |
(a) | ( Related Corporation ) to any of its Related Corporations; |
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(b) | ( officers and employees ) to its directors, employees, officers and agents or of any of its Related Corporations; | ||
(c) | ( professional advisers ) to its professional advisers (including legal advisers) and consultants; | ||
(d) | ( lenders ) to a bank or other financial institution (and its professional advisers including legal advisers) in connection with any loan or other financial accommodation or application for a loan or financial accommodation to it or to any of its Related Corporations or the provision of underwriting for any issue of securities; | ||
(e) | ( potential disposals ) in connection with any potential Disposal, Security Interest or investment; | ||
(f) | ( disposals ) to a third party to whom a party has made a Disposal of part of its Participating Interest or who has otherwise acquired an economic interest in part of a partys property; | ||
(g) | ( required Disclosures ) to the extent required under any applicable Law or the rules or regulations of any recognised securities exchange which apply to it or to any of its Related Corporations; | ||
(h) | ( legal proceedings ) if the disclosure is required for the purposes of any legal, administrative or other proceedings involving it or any of its Related Corporations; | ||
(i) | ( Duties ) if and to the extent that it may be reasonably necessary in the discharge of its duties and obligations under this document or a Transaction Document; | ||
(j) | ( Authority ) if and to the extent that it may be reasonably necessary or desirable to disclose the information to any Authority in connection with applications for any Authorisations; and | ||
(k) | ( Customers ) to an existing or potential customer of Iron Ore Product in connection with the sale of Iron Ore Product or other arrangements for the supply of Iron Ore Product to that customer. |
21.3 | Conditions to disclosure |
(a) | Any disclosure: |
(i) | under clause 21.2(d), (e) or (f) may only be made if the person to whom disclosure is to be made first agrees with the party disclosing the information, in a form enforceable by the Protected Party and which is no less onerous than the requirements of this clause 21, that the information concerned must not be disclosed to any other person for any purpose, and such disclosure may only be made for the purposes of satisfying the person to whom disclosure is made as to the value and commercial viability of the proposed transaction; and | ||
(ii) | under clause 21.2(a) to (c), (i) and (j) may only be made if the person to whom disclosure is to be made is informed of the confidential nature of the information and required to, in the case of an Authority, to the extent possible, respect that confidentiality. |
(b) | Any Confidential Information that is required to be disclosed in legal, administrative or other proceedings (other than between the parties) pursuant to clause 21.2(h) may not be disclosed to any person unless: |
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(i) | prior to that disclosure, the party intending to disclose the Confidential Information ( Disclosing Party ) notifies each other party giving full details of: |
(A) | the legal, administrative or other proceedings in relation to which disclosure is required, including to the maximum extent permitted by Law, copies of documents filed in those legal, administrative or other proceedings; and | ||
(B) | the Confidential Information intended to be disclosed; |
(ii) | to the maximum extent permitted by Law, the Disclosing Party gives each other party a reasonable opportunity in a court of law or other appropriate body or forum to: |
(A) | challenge whether the proposed disclosure is in accordance with the terms of this clause 21; | ||
(B) | challenge the obligation of the Disclosing Party or any other person to make that disclosure; or | ||
(C) | secure an order or ruling (including, where appropriate, an order or ruling that the disclosure should only be made on a confidential basis) to protect or preserve the confidentiality of the relevant information; |
(iii) | the Disclosing Party takes all reasonable steps to preserve the Confidential Information to be disclosed, including, where appropriate, by doing all things necessary to obtain an order that the Confidential Information be disclosed in accordance with an appropriate confidentiality regime; and | ||
(iv) | the other requirements of this clause 21 applicable to that disclosure are satisfied. |
21.4 | Law of confidentiality | |
The confidentiality undertaking contained in this document will be in addition to and will in no way derogate from the obligations of the parties in respect of secret and confidential information at law, in equity or under any statute or trade or professional custom or use. |
21.5 | Former party bound | |
This clause 21 will continue to bind a party after it ceases to be a party to this document. |
22.
|
|
NOTICES
|
Any notice, demand, consent, certificate, approval, nomination, waiver or other similar communication given or made in connection with this document (a notice ): |
(a) | will be in writing and signed by the sender or a person duly authorised by the sender; | ||
(b) | will be addressed and delivered to the intended recipient at the address or fax number below or the address or fax number last notified by the intended recipient to the sender after the date of this document: |
(i) | to the Manager: [#] |
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(ii) | to the Owner Chargee: [#] | ||
(iii) | to a Chargor: [#] |
(c) | will be taken to be duly given or made when delivered, received or left at the above fax number or address. If delivery or receipt occurs on a day that is not a business day in the place to which the notice is sent or is later than 4pm (local time) at that place, it will be taken to have been duly given or made at the commencement of business on the next business day in that place. |
23.
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|
GOVERNING LAW
|
23.1 | Governing law |
(a) | This document is governed by the laws of Western Australia, Australia. | ||
(b) | The parties irrevocably and unconditionally: |
(i) | submit to the non-exclusive jurisdiction of the courts of Western Australia; and | ||
(ii) | agree that they may not object to any suit, action or proceeding commenced under or in connection with this document on the basis that the courts of Western Australia are not an appropriate forum. |
23.2 | Final judgment conclusive and enforceable | |
The parties agree that a final judgment in any suit, action or proceeding commenced under or in connection with this document in any court of competent jurisdiction is conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. |
24.
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ANCILLARY PROVISIONS
|
24.1 | Severability | |
If any of the provisions of this document is or becomes invalid, illegal or unenforceable, in whole or in part, under the law of any jurisdiction, the validity, legality or enforceability of such provision or part under the law of any other jurisdiction and the validity, legality and enforceability of the remaining provisions of this document will not in any way be affected or impaired. If any provision of this document, or its application to any person or entity or any circumstance, is invalid or unenforceable, the parties will make such suitable and equitable provision as is necessary in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision. |
24.2 | Variation | |
No variation, modification or amendment of all or any part of this document, including the schedules to this document, will be effective unless in writing and signed by or on behalf of each party. |
24.3 | No Waiver | |
No failure of any of the parties to exercise, or delay by it in exercising, any right, power or remedy in connection with this document will operate as a waiver thereof, nor will any single or partial exercise of any right, power or remedy preclude any other or further |
14
exercise of such right, power or remedy or the exercise of any other right, power or remedy. | ||
24.4 | Remedies |
(a) | Except as otherwise provided for in this document, the rights and remedies of the parties are cumulative and not exclusive of rights and remedies provided by Law. | ||
(b) | Without prejudice to any other rights and remedies which any party may have, each party acknowledges and agrees that damages would not be an adequate remedy for any breach by any party of the provisions of this document and any party will be entitled to seek the remedies of injunction, specific performance and other equitable relief (and the parties will not contest the appropriateness or availability thereof), for any threatened or actual breach of any provision of this document by any party and no proof of special damages will be necessary for the enforcement by any party of the rights under this document. |
24.5 | No Merger | |
The rights and obligations of the parties: |
(a) | will not merge on the completion of any transaction contemplated by this document; and | ||
(b) | will survive the execution and delivery of any assignment or other document entered into for the purpose of implementing a transaction. |
24.6 | Costs and Expenses |
(a) | Each party must bear its own costs arising out of the negotiation, preparation and execution of this document. | ||
(b) | All stamp duty (including fines, penalties and interest) payable by a party on or in connection with this document will be borne by that party. |
24.7 | Further Assurances | |
Each party agrees to do anything necessary or desirable (including executing agreements, deeds, transfers, instruments and documents) to give full effect to this document and the transactions contemplated by it. |
24.8 | Enurement | |
Except as provided in this document, the provisions of this document will enure for the benefit of, and be binding on, the parties and their respective successors and permitted assigns. |
24.9 | Counterparts | |
This document may be executed in any number of counterparts and by the parties on separate counterparts, each of which will be an original but all of which together will constitute one and the same instrument. This document will not take effect until each party has executed at least one counterpart. |
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16
1. | DEFINITIONS | |
The following definitions apply in this document. | ||
Accession Deed means a document substantially in the form of Schedule 4. | ||
Additional Chargor means any company that accedes to this document in accordance with clause 19.3. | ||
Authorisations means all permissions, licences, authorisations, approvals, consents, rulings, registrations, filings, lodgements, permits, franchises, agreements, notarisations, certificates, licences, approvals, directions, declarations, authorities or exemptions from, by or with any Authority. | ||
Authority means any minister, government or representative of a government or any governmental, quasi-governmental, local government, statutory, judicial, administrative, fiscal, tax, competition or regulatory authority, entity or other body, department, concession, tribunal, self-regulatory organisation established pursuant to statute or rules of a recognised stock exchange, instrumentality, agency, statutory corporation or public authority. | ||
BHP Billiton Group has the meaning given in the Joint Venture Agreement. | ||
Business Day means a day that is not a Saturday, Sunday or public holiday in Perth, Western Australia. | ||
Called Sum has the meaning given in the Joint Venture Agreement. | ||
Cash has the meaning given in the Funding and Distribution Policy. | ||
Charge means each charge created by clause 1. | ||
Charged Property means all a Chargors interest in all its property anywhere (both present and future), other than the Excluded Property. | ||
Chargees means the Owner Chargee and the Manager. | ||
Chargor Block Member means the Chargors Owner and each other member of its Owner Block. | ||
Chargors means each Initial Chargor and any Additional Chargor. | ||
Chargors Issuer means the Issuer of which each Chargor is a Subsidiary. | ||
Chargors Owner means the Owner of which each Chargor is a Subsidiary. | ||
Corporations Act means the Corporations Act 2001 (Cth). | ||
Cross Charge has the meaning given in the Joint Venture Agreement. | ||
Default Costs has the meaning given in the Joint Venture Agreement. | ||
Default Interest has the meaning given in the Joint Venture Agreement. |
17
Dispose means, in relation to any asset, to sell, transfer, assign, declare oneself a trustee of, or part with the benefit of, or otherwise dispose of, the asset (or any interest in it, or any part of it) other than (in each case) by the creation of a Security Interest, and Disposal has a corresponding meaning. | ||
Enforcing Party means: |
(a) | a Chargee entitled under clause 4 to take action to enforce the Charge; and | ||
(b) | a Receiver entitled under clause 5 to take action to enforce the Charge. |
Excluded Assets has the meaning given in the Joint Venture Agreement. |
Excluded Property means: |
(a) | any Excluded Assets; | ||
(b) | any Sole Risk Development or Sole Risk Opportunity; | ||
(c) | any Prohibited Interest unless and until the relevant Chargor gives a notice in relation to it in accordance with clause 1.8; and | ||
(d) | any other property, to the extent that: |
(i) | it is located in New South Wales, for the purposes of the mortgage duty provisions of the Duties Act 1997 (NSW), at the date of first execution of this document; | ||
(ii) | it is land located in New South Wales, for the purposes of the mortgage duty provisions of the Duties Act 1997 (NSW), at any time within 12 months after the date of first execution of this document; or | ||
(iii) | it is located in New South Wales, for the purposes of the mortgage duty provisions of the Duties Act 1997 (NSW), is relevant property as defined in section 208(6) of the Duties Act 1997 (NSW) and is identified in this document or identified under an arrangement in place when this document was first executed, |
unless and until the Duties Act 1997 (NSW) ceases to impose duty on mortgages or charges. |
Fixed Charge Property means all Charged Property that is not Floating Charge Property. |
Floating Charge Property means: |
(a) | Iron Ore Product; and | ||
(b) | any other Charged Property that the relevant Chargor deals with in the ordinary course of the day-to-day operations of the Chargor. |
Funding and Distribution Policy has the meaning given in the Joint Venture Agreement. |
Insolvency Administration means, in relation to a person, its winding up, or the appointment of an administrator to that person pursuant to Part 5.3A of the Corporations Act. |
Iron Ore Assets has the meaning given in the Joint Venture Agreement. |
Iron Ore Product has the meaning given in the Joint Venture Agreement. |
Issuer has the meaning given in the Joint Venture Agreement. |
18
Joint Venture Agreement means the West Australian Iron Ore Production Joint Venture Agreement dated [ insert ] between [the Chargees] and others. | ||
JV Entity has the meaning given in the Joint Venture Agreement. | ||
JV Funding Amount means: |
(a) | any Called Sum payable by a Chargor Block Member to the Manager or the Chargors Issuer under the Transaction Documents and any Default Interest or Default Costs arising from a failure by a Chargor Block Member to pay a Called Sum; | ||
(b) | any amount that a Chargor Block Member is required to transfer or procure the transfer of in accordance with clause 3.11(h) of the Joint Venture Agreement; | ||
(c) | the amount that a Chargor Block Member is obliged to pay to purchase any NDO Loan under the Transaction Documents; | ||
(d) | the amount that the Chargors Owner is obliged to pay: |
(i) | under clause 6.3 of the Funding and Distribution Policy; or | ||
(ii) | under clause 6.4 of the Funding and Distribution Policy; |
(e) | the amount of any Cash costs of a Sole Risk Development or a Sole Risk Opportunity that the Chargors Owner or a Sole Risk Entity that is a Related Corporation of the Chargors Owner is obliged to pay under items 1(f), 1(j) and 2(c) of schedule 4 of the Joint Venture Agreement or item 11.3 of the Funding and Distribution Policy; and | ||
(f) | the amount of any Participant Loans owing or payable by the Chargors Issuer or the Manager to the Owner Chargee, |
each on any account at any time, whether present or future, actual or contingent or incurred alone, jointly, severally or jointly and severally and without regard to the capacity in which the relevant Obligor is liable. | ||
Law includes statutes, regulations, rules of the common law, principles of equity, regulatory agency policies and guidelines and security exchange rules. | ||
Manager has the meaning given in the Joint Venture Agreement. | ||
Manager Event of Default means, in relation to a Chargor, that Chargor entering into Insolvency Administration. | ||
NDO Loan has the meaning given in the Joint Venture Agreement. | ||
Obligor means: |
(a) | the Chargors Owner; | ||
(b) | the Chargors Issuer; and | ||
(c) | the Manager. |
Owner has the meaning given in the Joint Venture Agreement. | ||
Owner Block has the meaning given in the Joint Venture Agreement. |
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Owner Event of Default means, in relation to a Chargor, any of the following: |
(a) | a failure by any Obligor to pay: |
(i) | an amount that it is obliged to pay to purchase any NDO Loan under the Transaction Documents when due; or | ||
(ii) | any other Secured Money (other than any failure to repay a Participant Loan) within 30 days after the due date for payment; or |
(b) | a failure by a Chargor to perform its Secured Obligations within 30 days of written notice from the Chargee requesting it to do so. |
Participant Loans has the meaning given in the Joint Venture Agreement. | ||
Participant Share has the meaning given in the Joint Venture Agreement. | ||
Participating Interest has the meaning given in the Joint Venture Agreement. | ||
Priority Security Interest means: |
(a) | any Security Interest that the Chargees agree ranks in priority to the Charge; and | ||
(b) | any Security Interest over Charged Property that ranks in priority to the Charge by operation of law. |
Prohibited Interest means an asset or interest described in Schedule 6 unless and until the relevant Chargor gives a notice in accordance with clause 1.8 in relation to that asset or interest. | ||
Purchase Option has the meaning given in the Joint Venture Agreement, and the Chargee exercises a Purchase Option by giving a written notice in accordance with clause 9.5(b) of the Joint Venture Agreement. | ||
Receiver means a receiver or receiver and manager appointed under clause 5. | ||
Related Corporation has the meaning given to Related Body Corporate in the Corporations Act but as if subsidiary had the meaning given in this document, and also includes: |
(a) | in the case of Rio Tinto, any member of the Rio Tinto Group; and | ||
(b) | in the case of BHP Billiton, any member of the BHP Billiton Group. |
Release Deed means a document in substantially the form of Schedule 5. | ||
Rio Tinto Group has the meaning given in the Joint Venture Agreement. | ||
Secured Money means the money owing by a Chargor to the Chargee under clause 2, whether present or future, on actual or contingent or incurred alone, jointly, severally or jointly and severally and without regard to the capacity in which the Chargor is liable. | ||
Secured Obligation means, if the Owner Chargees Purchase Option is exercised, a Chargors obligation to transfer to the Owner all of its Iron Ore Assets either directly or through the acquisition of securities in JV Entities owned by it in accordance with item 2 of schedule 9 of the Joint Venture Agreement. | ||
Security Interest means any mortgage, pledge, lien or charge or any other security or preferential interest or arrangement of any kind or any other right of, or arrangement with, |
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any creditor to have its claims satisfied in priority to other creditors with, or from the proceeds of, any asset. | ||
Sole Risk Development has the meaning given in the Joint Venture Agreement. | ||
Sole Risk Opportunity has the meaning given in the Joint Venture Agreement. | ||
Subsidiary has the meaning given in the Corporations Act, provided that: |
(a) | an entity will also be deemed to be a Subsidiary of a body corporate if it is controlled (within the meaning of that term provided by Pt 1.2, Div 6 of the Act); and | ||
(b) | a trust may be a Subsidiary (for the purposes of which a unit or other beneficial interest will be deemed to be a share in the capital of a body corporate) and a body corporate or a trust may be a Subsidiary of a trust. |
Transaction Document has the meaning given in the Joint Venture Agreement. | ||
WA Iron Ore JV has the meaning given in the Joint Venture Agreement. |
2. |
RULES FOR INTERPRETING THIS DOCUMENT
|
2.1 | Interpretation | |
Headings are for convenience only and do not affect interpretation. The following rules apply unless the context requires otherwise. |
(a) | The singular includes the plural, and the converse also applies. | ||
(b) | A gender includes all genders. | ||
(c) | If a word or phrase is defined, its other grammatical forms have a corresponding meaning. | ||
(d) | A reference to a person includes a corporation, trust, partnership, unincorporated body or other entity, whether or not it comprises a separate legal entity. | ||
(e) | A reference to a clause or schedule is a reference to a clause of, or schedule to, this document. | ||
(f) | A reference to an agreement or document (including a reference to this document) is to the agreement or document as amended, supplemented, novated or replaced, except to the extent prohibited by this document or that other agreement or document. | ||
(g) | A reference to a party to this document, the Transaction Documents or another agreement or document includes the partys successors, permitted substitutes and permitted assigns (and, where applicable, the partys legal personal representatives). | ||
(h) | A reference to legislation or to a provision of legislation includes a modification or re-enactment of it, a legislative provision substituted for it and a regulation or statutory instrument issued under it. | ||
(i) | A reference to sale or sell includes to procure the sale and a reference to purchase includes to procure the purchase. | ||
(j) | A reference to dollars and $ is to Australian currency. |
21
(k) | A reference to time is a reference to: |
(i) | time in the place in which the relevant event occurs; or | ||
(ii) | if the relevant event is to occur in more than one place, time in Perth, Western Australia. |
(l) | If the day on which any act, matter or thing is to be done is a day other than a Business Day, such act, matter or thing will be done on the immediately succeeding Business Day. | ||
(m) | The meaning of general words is not limited by specific examples introduced by including, or for example, or similar expressions. | ||
(n) | Nothing in this document is to be interpreted against a party on the ground that the party put forward this document or a relevant part of it. |
2.2 | Consents or approval | |
If the doing of any act, matter or thing under this document is dependent on the consent or approval of a party or is within the discretion of a party, the consent or approval may be given or the discretion may be exercised conditionally or unconditionally or withheld by the party in its absolute discretion unless expressly provided otherwise. |
2.3 | Method of payment | |
All payments required to be made under this document must be tendered by way of direct transfer of immediately available funds to the bank account nominated in writing by the party to whom the payment is due. Any payment tendered under this document after 4pm in the local time of the bank branch from which payment is made must be taken to have been made on the next succeeding Business Day (the deemed payment date) after the date on which payment is tendered, and if the deemed payment date is after the relevant due date for payment, interest will accrue under item 1.5 accordingly. |
2.4 | Interest on amounts payable | |
Interest accrues on each amount which is due and payable, but not paid, by one party to another under or in accordance with this document: |
(a) | on a daily basis from the due date up to the date of actual payment; | ||
(b) | both before and after judgment (as a separate and independent obligation); and | ||
(c) | at the rate which is the sum of the Bank Bill Rate (as defined in the Joint Venture Agreement) plus a margin of 3%, calculated for successive periods of one month, with the first period commencing on the due date of the amount on which interest is payable. |
The defaulting party must pay interest accrued under this item 2.4 on written demand by the non-defaulting party or, if no demand is made, on the last day of each month. The interest is payable in the currency of the unpaid amount on which it accrues. |
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TO:
|
[ insert names ] ( Chargees ) | |
|
||
FROM:
|
[ insert namess ] ( Chargor ) |
Date [ insert date ] |
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BY
:
|
[ insert name ] ( Additional Chargor ) | |
|
||
IN FAVOUR OF
:
|
[ insert names ] ( Chargees ) |
(a) | charges its Charged Property in favour of each Chargee on the terms set out in the Cross Charge; and | |
(b) | covenants for the benefit of each Chargee to observe, perform and be bound by all of the undertakings, liabilities and obligations of a Chargor under the Cross Charge. |
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BY
:
|
[ insert name ] ( Chargee ) | |
|
||
IN FAVOUR OF
:
|
[ insert name ] ( Chargor ) |
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26
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4 | NOTICE SECURED OBLIGATIONS | 24 |
Page 178
A. | Under the terms of the Transaction Documents, the Obligors must perform certain financial obligations for the benefit of the Chargee and other parties to whom JV Funding Amounts may be payable, and the Chargor must perform certain non-financial obligations for the benefit of the Chargee under the Joint Venture Agreement. | ||
B. | The Chargor is entering into this document in favour of the Chargee to secure the performance of some of those obligations. | ||
C. | This document is a Cross Charge that is required [as a Completion Document under clause 6.2 of the Implementation Agreement / to satisfy the requirements set out in clause 10.8(c) of the Joint Venture Agreement]. |
OPERATIVE PROVISIONS |
1. | CREATION OF CHARGE |
1.1 | Charging provision | ||
The Chargor as beneficial owner charges all its Charged Property in favour of the Chargee to secure the punctual payment of all Secured Money and the punctual performance of all Secured Obligations. |
1.2 | Fixed charge | ||
The Charge operates as a fixed charge over all Charged Property. | |||
1.3 | Priority | ||
Subject to the terms of any Priority Security Interest, the Charge is a first-ranking charge. | |||
1.4 | Dealings with Charged Property |
(a) | The Chargor covenants for the benefit of the Chargee that it will not: |
(i) | ( negative pledge ) create a Security Interest or permit a Security Interest to subsist over any Charged Property or the Issuer Shares; or |
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(ii) | ( no Disposal ) Dispose of all or any of its Charged Property or the Issuer Shares, |
except as permitted by clauses 10 and 11 of the Joint Venture Agreement. | |||
(b) | The Chargee consents to the Chargor Disposing of its Charged Property or the Issuer Shares as permitted by clause 10 or 11 of the Joint Venture Agreement. |
1.5 | Issuer Shares to become Charged Property | ||
If the Chargor gives the Chargee a notice in the form of Schedule 3, the Issuer Shares will automatically and immediately become part of the Charged Property without the necessity for any further act by the Chargor. | |||
[ This clause 1.5, paragraph (b) of the definition of Excluded Property and Schedule 3 can be deleted where the Cross Charge is being granted by an Incoming Owner (unless the Incoming Owner acquires the Participating Interest of an existing Owner in circumstances where the charge over the Issuer Shares is not yet required to be provided under clause 11.8 of the Joint Venture Agreement). Where this clause, paragraph (b) of the definition of Excluded Property and Schedule 3 are deleted, the Issuer Shares will form part of the Charged Property and accordingly the references to the Issuer Shares in clause 1.4 will also be deleted. ] | |||
1.6 | Obligations to become Secured Obligations | ||
If the Chargor gives the Chargee a notice in the form of Schedule 4, the obligations described in that notice will automatically and immediately become Secured Obligations without the necessity for any further act by the Chargor. | |||
[ If this Cross Charge is granted by an Incoming Owner in accordance with clause 10. 8(c) of the Joint Venture Agreement, Schedule 4 can be deleted and the definition of Secured Obligations can list the relevant obligations (unless the Incoming Owner acquires the Participating Interest of an existing Owner in circumstances where the Cross Charge is not yet required to extend to secure those obligations in accordance with arrangements agreed between the Owners) .] | |||
2. | UNDERTAKING TO PAY |
(a) | Subject to paragraph (b), the Chargor undertakes duly and punctually to pay to the Chargee an amount equal to each JV Funding Amount when that JV Funding Amount is due, whether or not the Chargor is the obligor, or the Chargee is the obligee, of that JV Funding Amount. | ||
(b) | The Chargors obligation under paragraph (a) to make a payment in relation to a JV Funding Amount is taken to be satisfied to the extent that the obligor of that JV Funding Amount makes payment of the JV Funding Amount to the relevant obligee in accordance with the Transaction Documents. |
3. | UNDERTAKING TO PERFORM |
The Chargor undertakes to the Chargee that it will perform the Secured Obligations. |
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4. | ENFORCEMENT OF CHARGE |
(a) | The Chargee may take action under this document to enforce the Charge and exercise its powers under this document if an Event of Default has occurred and is continuing. | ||
(b) | The Chargee may take action under this document to enforce the Charge and exercise its powers under this document if an Insolvency Enforcement Trigger has occurred and is continuing but the Chargee or a Receiver appointed by it may not exercise any power of sale or otherwise Dispose of any Charged Property (unless it is also permitted to enforce the Charge in accordance with paragraph (a)). | ||
(c) | If no Event of Default or Insolvency Enforcement Trigger is continuing, the Chargee must immediately cease any action to enforce the Charge or exercise its powers under this document, including by removing any Receiver if it has been appointed and giving up possession of any Charged Property. | ||
(d) | For the purposes of paragraph (c), the relevant Insolvency Enforcement Trigger will be deemed to be no longer continuing in the following circumstances: |
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|
Form of Insolvency Enforcement Trigger | Event causing the Insolvency Enforcement | |||
Trigger to cease to exist | |||||
form a binding contract);
(c) issues an invitation for offers (in
writing or, if orally, in a manner
capable of acceptance so as to form a
binding contract); or
(d) indicates in writing an intention,
to deal with Charged Property or the Issuer Shares in breach of clause 1.4. |
(ii) retracts the offer;
(iii) retracts the invitation for offers; or
(iv) retracts the written intention,
and undertakes to the Chargee to comply with
clause 1.4; or
(b) either:
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||||
|
|||||
(i) the
liquidation is permanently stayed or terminated; or
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|||||
|
|||||
(ii) the deed of company arrangement ends or
is terminated,
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|||||
|
|||||
|
and, in either case, the directors of the
Chargor resume their management and control.
|
||||
5. | APPOINTMENT OF RECEIVER |
5.1 | Power to appoint and remove | ||
The Chargee may at any time after it becomes entitled to enforce the Charge: |
(a) | appoint a Receiver of all or part of the Charged Property; and | ||
(b) | remove any Receiver it appointed and (subject to clause 4) appoint another in its place. |
Any appointment or removal under this subclause must be in writing. | |||
5.2 | After commencement of winding up | ||
The power to appoint a Receiver under clause 5.1 may be exercised even though: |
(a) | an order has been passed to wind up the Chargor when the Chargee becomes entitled to enforce the Charge, or when an appointment is made; or | ||
(b) | a Receiver appointed in the circumstances specified in the preceding paragraph may not, or may not in some respects, act as the Chargors agent. |
6. | AGENCY |
6.1 | Agent of the Chargor | ||
Subject to clause 6.2 and the next sentence, every Receiver appointed under clause 5 will be taken to be the agent of the Chargor, and the Chargor will be responsible for the Receivers acts, defaults and remuneration. The Chargee may, by notice to the Receiver and the Chargor, require the Receiver to act as its agent. |
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6.2 | Ceasing to be agent | ||
If for any reason (including operation of law) a Receiver ceases to be the agent of the Chargor because of an order passed to wind up the Chargor, the Receiver immediately becomes the agent of the Chargee. | |||
7. | POWERS OF ENFORCING PARTY |
(a) | The Enforcing Party will have full power to do all or any of the following: |
(i) | ( take possession ) take possession of, collect and get in the Charged Property and for that purpose to take any proceedings (in the name of the Chargor or otherwise); | ||
(ii) | ( give receipts ) give receipts for all money and other property that may come into the hands of the Receiver in exercise of any power given by this document; | ||
(iii) | ( obligations under Transaction Documents ) cause the Chargor to continue to be associated with the other parties for the purpose of fulfilling its obligations under the Transaction Documents or concur in the continuance of any of those documents; | ||
(iv) | ( exercise rights ) exercise all or any powers, rights, discretions and remedies of the Chargor or in connection with the Charged Property (including rights available under the Corporations Act or any other statute); | ||
(v) | ( raise money on Charged Property in priority ) for the purposes of clause 7(a)(iv), borrow or raise money on the security of the Charged Property in priority to this Charge; | ||
(vi) | ( sell assets ) sell (whether or not a Receiver has taken possession), exchange or otherwise Dispose of (absolutely or conditionally) the Charged Property (or agree to do so): |
(A) | by public auction, private sale or tender for cash or on credit; | ||
(B) | in one lot or in parcels; and | ||
(C) | with or without special conditions and otherwise on terms the Receiver considers desirable; |
(vii) | ( execute documents ) execute any document (in the name of the Chargor or otherwise) for the purpose of carrying into effect any power, right and discretion conferred on the Enforcing Party; | ||
(viii) | ( settle disputes ) make any settlements, arrangements or compromise that it thinks fit; and | ||
(ix) | ( do everything ) do or cause to be done everything with respect to the Charged Property (without being responsible for any resulting loss or damage) that it thinks necessary and which could have been done or caused to be done by the Enforcing Party if it was the absolute owner of the Charged Property. |
(b) | Subject always to the obligations of the Enforcing Party under the Corporations Act an Enforcing Party may exercise its power under clause 7(a)(vi) by selling the relevant Charged Property to the Chargee. |
5
(c) | An Enforcing Partys powers, rights and discretions referred to in this clause 7: |
(i) | must be interpreted separately and not by reference to one another; and | ||
(ii) | are in addition to all other powers, rights and discretions conferred on it by law, |
but are subject to clause 14. | |||
(d) | Any legislation that adversely affects an obligation of the Chargor, or the exercise by an Enforcing Party of a right or remedy, under or relating to this document is excluded to the full extent permitted by law. |
8. | PROTECTION OF THIRD PARTIES |
A purchaser or other party to a disposal or dealing in attempted exercise of a power contained in this document is not: |
(a) | bound to enquire whether there has been a default, whether a Receiver has been properly appointed or about the propriety or regularity of a sale, disposal or dealing; or | ||
(b) | affected by notice that a sale, disposal or dealing is unnecessary or improper. |
Despite any irregularity or impropriety in a sale, disposal or dealing, it is to be treated, for the protection of the purchaser or other party to the disposal or dealing, as being authorised by this document and valid. |
9. | POWERS EXERCISABLE BY CHARGEE |
9.1 | Exercise of powers | ||
After the Charge has become enforceable, the Chargee may exercise any power as an Enforcing Party in addition to any power it has as the Chargee. The Chargee may do so even if a Receiver is appointed. | |||
9.2 | Protection of Chargee | ||
The exercise of any power by the Chargee does not cause the Chargee to: |
(a) | be a mortgagee in possession; | ||
(b) | account as mortgagee in possession; or | ||
(c) | be answerable for any act or omission for which a mortgagee in possession is liable. |
10. | REALISATION |
After the Charge has become enforceable, the Chargor must do anything, and ensure that its employees and agents do anything, that the Enforcing Party may reasonably require to assist it to realise the Charged Property and exercise any power, right, discretion or remedy including: |
(a) | execute any transfer (including any transfer in blank) of, or other document in relation to, any Charged Property; |
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(b) | do anything that the Enforcing Party thinks is necessary or desirable under the law in force in any place where any Charged Property is situated; and | ||
(c) | give any notice, order, direction and consent that the Enforcing Party thinks is necessary or desirable. |
11. | APPLICATION OF MONEY |
Money that an Enforcing Party receives under or because of this document is to be applied in the following order: |
(a) | ( expenses ) first in payment of all expenses of and incidental to: |
(i) | the appointment of any Receiver; and | ||
(ii) | the exercise or attempted exercise by the Enforcing Party of any power, right or discretion referred to in clause 7 (including the Enforcing Partys reasonable remuneration); |
(b) | ( outgoings ) then in payment of any other outgoings that the Enforcing Party thinks fit to pay; | ||
(c) | ( Priority Security Interest ) then in discharging any Priority Security Interest; | ||
(d) | ( Secured Money ) then in payment to the Chargee of the Secured Money and any amount necessary to give effect to any indemnity contained in this document; and | ||
(e) | ( surplus ) then, subject to proper claims enforceable under other Security Interests, any surplus must be paid to the Chargor. |
12. | CONTINUING SECURITY |
The Charge is a continuing security, and remains in full force until a final irrevocable discharge of the Charge is given by the Chargee, despite any transaction or other thing (including a settlement of account or intervening payment). |
13. | PROSPECTIVE LIABILITY |
The parties acknowledge that for the purpose of fixing priorities between the Charge and any subsequent charge registered or registrable under the Corporations Act and for no other purposes, the Charge secures the Chargors prospective liability (being the liability to pay its Secured Money, its liability to perform the Secured Obligations and its liability to indemnify the Enforcing Party as provided in this document) up to a maximum of $150 billion. The Charge may also secure prospective liabilities in excess of this specified maximum amount. |
14. | ENFORCEMENT SUBJECT TO JOINT VENTURE AGREEMENT |
In exercising its rights under this document to Dispose of Charged Property: |
(a) | an Enforcing Party may only Dispose of Charged Property if it Disposes of the whole or a proportionate part of the Chargors Participating Interest; and |
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(b) | an Enforcing Party must comply with clause 10 of the Joint Venture Agreement unless it is exercising a Dilution Option or Purchase Option, in which case it must do so in accordance with the Joint Venture Agreement. |
15. | NO MARSHALLING |
The Chargee is not under any obligation to marshal, appropriate or exercise, apply, perfect or recover any Security Interest that the Chargee holds at any time or any funds or property that the Chargee may be entitled to receive or have a claim on. |
16. | NO PAYMENT AVOIDANCE |
If any payment by the Chargor to an Enforcing Party is avoided for any reason (including any legal limitation, disability or incapacity of or affecting a party or any other fact or circumstance), and whether or not: |
(a) | the obligation to make the payment was illegal, void or substantially avoided; or | ||
(b) | any fact or circumstance was or ought to have been within the knowledge of the Enforcing Party, |
the Chargor: |
(c) | as an additional independent obligation indemnifies the Enforcing Party against that avoided payment; and | ||
(d) | acknowledges that the Chargees rights are to be reinstated and will be the same in relation to that amount as if the application, or the payment or transaction giving rise to it, had not been made. | ||
Any discharge or release between the Chargee and the Chargor is subject to reinstatement of the Chargees rights under this clause. |
17. | POWER OF ATTORNEY |
17.1 | Appointment of attorney | ||
The Chargor irrevocably appoints the Chargee, with effect on and from the time that the Charge becomes enforceable, to be its attorney to: |
(a) | ( all acts necessary ) do anything necessary or desirable in the opinion of the Chargee to: |
(i) | give full effect to this document; | ||
(ii) | better secure the payment of the Secured Money or the performance of the Secured Obligations; | ||
(iii) | better secure the Charged Property to the Chargee in a manner consistent with this document; or | ||
(iv) | assist in the execution or exercise of any power, |
including execute any transfer (including any transfer in blank) or other document; |
8
(b) | ( Chargee powers ) exercise any power, right, discretion or remedy of the Chargee; and | ||
(c) | ( general ) do anything that the Chargor must or may do, or that the Chargee may do, under this document or by law, |
at the Chargors cost. | |||
The Chargee may appoint and remove substitutes, and may delegate its powers under this clause (including this power of delegation) and revoke any delegation. |
17.2 | General |
(a) | An attorney appointed under clause 17.1 may do anything contemplated by that clause even if the attorney is affected by an actual or potential conflict of interest or duty, or might benefit from doing it. | ||
(b) | An attorney appointed under clause 17.1 may do anything contemplated by that clause in its name, in the name of the Chargor or in the name of both of them. | ||
(c) | The Chargor must ratify anything done by an attorney under clause 17.1. | ||
(d) | The Chargor gives the power of attorney in clause 17.1: |
(i) | to secure: |
(A) | payment of the Secured Money to the Chargee under this document and performance of the Secured Obligations; | ||
(B) | the Charged Property to the Chargee in a manner consistent with this document; and | ||
(C) | any property interest of the Chargee under this document; and |
(ii) | for valuable consideration, receipt of which is acknowledged by the Chargor. |
17.3 | What an attorney may do in Western Australia | ||
Without prejudice to the appointment and powers in clauses 17.1 and 17.2, the Chargor appoints the Chargee to exercise, in connection with any property in Western Australia, all or any of the rights, powers and remedies exercisable by an attorney appointed by an instrument in the form of the 19th Schedule to the Transfer of Land Act 1893 (WA). |
18. | RELEASE AND DISCHARGE |
18.1 | Partial release |
(a) | The Chargee agrees that if Charged Property is Disposed of in accordance with clause 10 of the Joint Venture Agreement, it will release that property from the Charge by executing a Release Deed. | ||
(b) | The Chargee must do anything (including execute any document or form), and must ensure that its employees and agents do anything (including execute any document or form), that the Chargor may reasonably require to give full effect to a release contemplated by clause 18.1(a). | ||
(c) | This clause does not limit the operation of clause 16. |
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18.2 | Full discharge | ||
Each party acknowledges and agrees that, except as contemplated by clause 18.1, the Chargee is not under any obligation to grant a discharge of this Charge or any other Security Interest granted under this document unless: |
(a) | the party seeking the discharge has no continuing or subsisting obligations under the Transaction Documents; | ||
(b) | no Secured Money or Secured Obligation is owing by the party seeking the discharge; | ||
(c) | no Secured Money or Secured Obligation is contingently owing by the party seeking the discharge (except where there is no reasonable likelihood of the contingent event occurring); and | ||
(d) | the Chargee is satisfied that there is no reasonable prospect of Secured Money or a Secured Obligation arising in the future, |
at the time that discharge is sought. |
19. | BENEFIT AND ASSIGNMENT |
19.1 | Chargees capacity | ||
The Chargee holds the benefit of this document for itself and each other member of its Owner Block from time to time. |
19.2 | Assignment | ||
A party may only assign, declare a trust over or otherwise deal with its rights under this document: |
(a) | as permitted by the Joint Venture Agreement; or | ||
(b) | with the consent of each other party. |
This clause does not apply to a dealing which is the creation of a Security Interest. |
20. | REGISTRATION AND STAMPING |
The Chargor must at its own cost: |
(a) | ( registration under Corporations Act ) ensure that this document is registered (and not just provisionally) against it under section 263 of the Corporations Act; | ||
(b) | ( other registration ) ensure that this document is registered in any other way which any other party notifies to it if any other party is reasonably satisfied that registration is necessary or desirable to perfect the Charge or to protect the rights of any other party under this document; | ||
(c) | ( Authorisations ) obtain all necessary Authorisations in relation to this document and lodge them for registration in each jurisdiction required to perfect the Charge; | ||
(d) | ( stamping ) ensure that this document is stamped for the proper amount in each state and territory of Australia in which this document is required to be stamped; and |
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(e) | ( do everything to perfect Charge ) do everything necessary in each jurisdiction required to perfect the Charge. |
21. | CONFIDENTIALITY |
21.1 | Confidential Information not to be disclosed |
(a) | For the purposes of this clause 21, Confidential Information means the terms and conditions of this document and the Transaction Documents. | ||
It does not include information: |
(i) | which is in or comes into the public domain otherwise than by disclosure in breach of this document or a Transaction Document; | ||
(ii) | (other than in respect of the terms and conditions of this document or a Transaction Document) already known to the person at the date of disclosure; | ||
(iii) | acquired from a third party who is entitled to disclose it; and | ||
(iv) | which is independently developed by the person receiving that information otherwise than by disclosure in breach of this document or a Transaction Document. |
(b) | Each party undertakes that it will not, and will procure that its Related Corporations will not: |
(i) | disclose Confidential Information, including Confidential Information of any other party (the Protected Party ), to any person; or | ||
(ii) | use Confidential Information of the Protected Party, |
except either: |
(iii) | with the prior written approval of the Protected Party; or | ||
(iv) | for the purposes of this document or the Transaction Documents, or as otherwise permitted by this clause 21. |
(c) | Each party undertakes that it will: |
(i) | promptly do anything reasonably required by another party to prevent or restrain a breach or suspected breach of this clause 21.1 or any infringement or suspected infringement whether by court proceedings or otherwise; and | ||
(ii) | inform each other party immediately if it becomes aware that Confidential Information has been disclosed to an unauthorised third party. |
21.2 | Permitted disclosure | ||
Subject to clause 21.3, a party may disclose Confidential Information: |
(a) | ( Related Corporation ) to any of its Related Corporations; |
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(b) | ( officers and employees ) to its directors, employees, officers and agents or of any of its Related Corporations; | ||
(c) | ( professional advisers ) to its professional advisers (including legal advisers) and consultants; | ||
(d) | ( lenders ) to a bank or other financial institution (and its professional advisers including legal advisers) in connection with any loan or other financial accommodation or application for a loan or financial accommodation to it or to any of its Related Corporations or the provision of underwriting for any issue of securities; | ||
(e) | ( potential disposals ) in connection with any potential Disposal, Security Interest or investment; | ||
(f) | ( disposals ) to a third party to whom a party has made a Disposal of part of its Participating Interest or who has otherwise acquired an economic interest in part of a partys property; | ||
(g) | ( required Disclosures ) to the extent required under any applicable Law or the rules or regulations of any recognised securities exchange which apply to it or to any of its Related Corporations; | ||
(h) | ( legal proceedings ) if the disclosure is required for the purposes of any legal, administrative or other proceedings involving it or any of its Related Corporations; | ||
(i) | ( Duties ) if and to the extent that it may be reasonably necessary in the discharge of its duties and obligations under this document or a Transaction Document; | ||
(j) | ( Authority ) if and to the extent that it may be reasonably necessary or desirable to disclose the information to any Authority in connection with applications for any Authorisations; and | ||
(k) | ( Customers ) to an existing or potential customer of Iron Ore Product (as defined in the Joint Venture Agreement) in connection with the sale of Iron Ore Product or other arrangements for the supply of Iron Ore Product to that customer. |
21.3 | Conditions to disclosure |
(a) | Any disclosure: |
(i) | under clause 21.2(d), (e) or (f) may only be made if the person to whom disclosure is to be made first agrees with the party disclosing the information, in a form enforceable by the Protected Party and which is no less onerous than the requirements of this clause 21, that the information concerned must not be disclosed to any other person for any purpose, and such disclosure may only be made for the purposes of satisfying the person to whom disclosure is made as to the value and commercial viability of the proposed transaction; and | ||
(ii) | under clause 21.2(a) to (c), (i) and (j) may only be made if the person to whom disclosure is to be made is informed of the confidential nature of the information and required to, in the case of an Authority, to the extent possible, respect that confidentiality. |
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(b) | Any Confidential Information that is required to be disclosed in legal, administrative or other proceedings (other than between the parties) pursuant to clause 21.2(h) may not be disclosed to any person unless: |
(i) | prior to that disclosure, the party intending to disclose the Confidential Information ( Disclosing Party ) notifies each other party giving full details of: |
(A) | the legal, administrative or other proceedings in relation to which disclosure is required, including to the maximum extent permitted by Law, copies of documents filed in those legal, administrative or other proceedings; and | ||
(B) | the Confidential Information intended to be disclosed; |
(ii) | to the maximum extent permitted by Law, the Disclosing Party gives each other party a reasonable opportunity in a court of law or other appropriate body or forum to: |
(A) | challenge whether the proposed disclosure is in accordance with the terms of this clause 21; | ||
(B) | challenge the obligation of the Disclosing Party or any other person to make that disclosure; or | ||
(C) | secure an order or ruling (including, where appropriate, an order or ruling that the disclosure should only be made on a confidential basis) to protect or preserve the confidentiality of the relevant information; |
(iii) | the Disclosing Party takes all reasonable steps to preserve the Confidential Information to be disclosed, including, where appropriate, by doing all things necessary to obtain an order that the Confidential Information be disclosed in accordance with an appropriate confidentiality regime; and | ||
(iv) | the other requirements of this clause 21 applicable to that disclosure are satisfied. |
(a) | will be in writing and signed by the sender or a person duly authorised by the sender; |
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(b) | will be addressed and delivered to the intended recipient at the address or fax number below or the address or fax number last notified by the intended recipient to the sender after the date of this document: |
(i) | to the Chargee: [#] | ||
(ii) | to the Chargor: [#] |
(c) | will be taken to be duly given or made when delivered, received or left at the above fax number or address. If delivery or receipt occurs on a day that is not a business day in the place to which the notice is sent or is later than 4pm (local time) at that place, it will be taken to have been duly given or made at the commencement of business on the next business day in that place. |
23. |
GOVERNING LAW
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23.1 | Governing law |
(a) | This document is governed by the laws of Western Australia, Australia. | ||
(b) | The parties irrevocably and unconditionally: |
(i) | submit to the non-exclusive jurisdiction of the courts of Western Australia; and | ||
(ii) | agree that they may not object to any suit, action or proceeding commenced under or in connection with this document on the basis that the courts of Western Australia are not an appropriate forum. |
23.2 | Final judgment conclusive and enforceable | |
The parties agree that a final judgment in any suit, action or proceeding commenced under or in connection with this document in any court of competent jurisdiction is conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. | ||
24. | ANCILLARY PROVISIONS | |
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24.1 |
Severability
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If any of the provisions of this document is or becomes invalid, illegal or unenforceable, in whole or in part, under the law of any jurisdiction, the validity, legality or enforceability of such provision or part under the law of any other jurisdiction and the validity, legality and enforceability of the remaining provisions of this document will not in any way be affected or impaired. If any provision of this document, or its application to any person or entity or any circumstance, is invalid or unenforceable, the parties will make such suitable and equitable provision as is necessary in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision. | ||
24.2 | Variation | |
No variation, modification or amendment of all or any part of this document, including the schedules to this document, will be effective unless in writing and signed by or on behalf of each party. |
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24.3 | No Waiver | |
No failure of any of the parties to exercise, or delay by it in exercising, any right, power or remedy in connection with this document will operate as a waiver thereof, nor will any single or partial exercise of any right, power or remedy preclude any other or further exercise of such right, power or remedy or the exercise of any other right, power or remedy. | ||
24.4 | Remedies |
(a) | Except as otherwise provided for in this document, the rights and remedies of the parties are cumulative and not exclusive of rights and remedies provided by Law. | ||
(b) | Without prejudice to any other rights and remedies which any party may have, each party acknowledges and agrees that damages would not be an adequate remedy for any breach by any party of the provisions of this document and any party will be entitled to seek the remedies of injunction, specific performance and other equitable relief (and the parties will not contest the appropriateness or availability thereof), for any threatened or actual breach of any provision of this document by any party and no proof of special damages will be necessary for the enforcement by any party of the rights under this document. |
24.5 | No Merger | |
The rights and obligations of the parties: |
(a) | will not merge on the completion of any transaction contemplated by this document; and | ||
(b) | will survive the execution and delivery of any assignment or other document entered into for the purpose of implementing a transaction. |
24.6 | Costs and Expenses |
(a) | Each party must bear its own costs arising out of the negotiation, preparation and execution of this document. | ||
(b) | All stamp duty (including fines, penalties and interest) payable by a party on or in connection with this document will be borne by that party. |
24.7 | Further Assurances | |
Each party agrees to do anything necessary or desirable (including executing agreements, deeds, transfers, instruments and documents) to give full effect to this document and the transactions contemplated by it. |
24.8 | Enurement | |
Except as provided in this document, the provisions of this document will enure for the benefit of, and be binding on, the parties and their respective successors and permitted assigns. | ||
24.9 | Counterparts | |
This document may be executed in any number of counterparts and by the parties on separate counterparts, each of which will be an original but all of which together will constitute one and the same instrument. This document will not take effect until each party has executed at least one counterpart. |
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1. | DEFINITIONS | |
The following definitions apply in this document. | ||
Authorisations means all permissions, licences, authorisations, approvals, consents, rulings, registrations, filings, lodgements, permits, franchises, agreements, notarisations, certificates, licences, approvals, directions, declarations, authorities or exemptions from, by or with any Authority. | ||
Authority means any minister, government or representative of a government or any governmental, quasi-governmental, local government, statutory, judicial, administrative, fiscal, tax, competition or regulatory authority, entity or other body, department, concession, tribunal, self-regulatory organisation established pursuant to statute or rules of a recognised stock exchange, instrumentality, agency, statutory corporation or public authority. | ||
BHP Billiton Group has the meaning given in the Joint Venture Agreement. | ||
Business Day means a day that is not a Saturday, Sunday or public holiday in Perth, Western Australia. | ||
Called Sum has the meaning given in the Joint Venture Agreement. | ||
Cash has the meaning given in the Funding and Distribution Policy. | ||
Charge means the charge created by clause 1. | ||
Charged Property means all the Chargors interest in all its property anywhere (both present and future) including the Chargors Participating Interest, other than the Excluded Property. | ||
Chargor Block Member means the Chargor and each other member of the Chargors Owner Block. | ||
Corporations Act means the Corporations Act 2001 (Cth). | ||
Default Costs has the meaning given in the Joint Venture Agreement. | ||
Default Interest has the meaning given in the Joint Venture Agreement. | ||
Dilution Option has the meaning given in the Joint Venture Agreement. | ||
Dispose means, in relation to any asset, to sell, transfer, assign, declare oneself a trustee of, or part with the benefit of, or otherwise dispose of, the asset (or any interest in it, or any part of it) other than (in each case) by the creation of a Security Interest, and Disposal has a corresponding meaning. | ||
Enforcing Party means: |
(a) | the Chargee entitled under clause 4 to take action to enforce the Charge; and | ||
(b) | a Receiver entitled under clause 5 to take action to enforce the Charge. |
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Event of Default means any of the following: |
(a) | a failure by any Obligor to pay: |
(i) | an amount that it is obliged to pay to purchase any NDO Loan under the Transaction Documents when due; or | ||
(ii) | any other Secured Money (other than any failure to repay a Participant Loan) within 30 days after the due date for payment; or |
(b) | a failure by the Chargor to perform its Secured Obligations within 30 days of written notice from the Chargee requesting it to do so. |
Excluded Assets has the meaning given in the Joint Venture Agreement. | ||
Excluded Property means: |
(a) | any Excluded Assets; | ||
(b) | the Issuer Shares unless and until the Chargor gives a notice in accordance with clause 1.5; and | ||
(c) | any other property, to the extent that: |
(i) | it is located in New South Wales, for the purposes of the mortgage duty provisions of the Duties Act 1997 (NSW), at the date of first execution of this document; | ||
(ii) | it is land located in New South Wales, for the purposes of the mortgage duty provisions of the Duties Act 1997 (NSW), at any time within 12 months after the date of first execution of this document; or | ||
(iii) | it is located in New South Wales, for the purposes of the mortgage duty provisions of the Duties Act 1997 (NSW), is relevant property as defined in section 208(6) of the Duties Act 1997 (NSW) and is identified in this document or identified under an arrangement in place when this document was first executed, |
unless and until the Duties Act 1997 (NSW) ceases to impose duty on mortgages or charges. |
Funding and Distribution Policy has the meaning given in the Joint Venture Agreement. | ||
Implementation Agreement has the meaning given in the Joint Venture Agreement. | ||
Insolvency Enforcement Trigger means: |
(a) | the appointment of an administrator to the Chargor pursuant to Part 5.3A of the Corporations Act; | ||
(b) | a liquidator appointed to the Chargor: |
(i) | disclaims the Joint Venture Agreement by signed writing under section 568(1) of the Corporations Act; or | ||
(ii) | applies for leave of the court in accordance with section 568(1A) of the Corporations to disclaim the Joint Venture Agreement; or |
(c) | a liquidator or a deed administrator appointed to the Chargor: |
(i) | enters into an agreement; |
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(ii) | makes an offer (in writing or, if orally, in a manner capable of acceptance so as to form a binding contract); | ||
(iii) | issues an invitation for offers (in writing or, if orally, in a manner capable of acceptance so as to form a binding contract); or | ||
(iv) | indicates in writing an intention, |
to deal with Charged Property or the Issuer Shares in breach of clause 1.4. |
Iron Ore Assets has the meaning given in the Joint Venture Agreement. | ||
Issuer Shares means the shares held by the Chargor in the [BHP Billiton Issuer / Rio Tinto Issuer]. | ||
Joint Venture Agreement means the West Australian Iron Ore Production Joint Venture Agreement dated [ insert ] between [the Chargor, the Chargee] and others. | ||
JV Entity has the meaning given in the Joint Venture Agreement. | ||
JV Funding Amount means: |
(a) | any Called Sum payable by a Chargor Block Member to the Manager or the [BHP Billiton Issuer / Rio Tinto Issuer] under the Transaction Documents and any Default Interest or Default Costs arising from a failure by a Chargor Block Member to pay a Called Sum; | ||
(b) | any amount that a Chargor Block Member is required to transfer or procure the transfer of in accordance with clause 3.11(h) of the Joint Venture Agreement; | ||
(c) | the amount that a Chargor Block Member is obliged to pay to purchase any NDO Loan under the Transaction Documents; | ||
(d) | the amount that the Chargor is obliged to pay: |
(i) | under clause 6.3 of the Funding and Distribution Policy; or | ||
(ii) | under clause 6.4 of the Funding and Distribution Policy; |
(e) | the amount of any Cash costs of a Sole Risk Development or a Sole Risk Opportunity that the Chargor or a Sole Risk Entity that is a Related Corporation of the Chargor is obliged to pay under items 1(f), 1(j) and 2(c) of schedule 4 of the Joint Venture Agreement or item 11.3 of the Funding and Distribution Policy; and | ||
(f) | the amount of any Participant Loans owing or payable by the [BHP Billiton Issuer / Rio Tinto Issuer] or the Manager to the Chargee, |
each on any account at any time, whether present or future, actual or contingent or incurred alone, jointly, severally or jointly and severally and without regard to the capacity in which the relevant Obligor is liable. | ||
Law includes statutes, regulations, rules of the common law, principles of equity, regulatory agency policies and guidelines and security exchange rules. | ||
Manager has the meaning given in the Joint Venture Agreement. | ||
NDO Loan has the meaning given in the Joint Venture Agreement. | ||
Non-Defaulting Owner has the meaning given in the Joint Venture Agreement. |
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Obligor means: |
(a) | the Owner; | ||
(b) | the [BHP Billiton / Rio Tinto] Issuer; and | ||
(c) | the Manager. |
Owner Block has the meaning given in the Joint Venture Agreement. | ||
Participant Loans has the meaning given in the Joint Venture Agreement. | ||
Participating Interest has the meaning given in the Joint Venture Agreement. | ||
Priority Security Interest means: |
(a) | any Security Interest that the Chargee agrees ranks in priority to the Charge; and | ||
(b) | any Security Interest over Charged Property that ranks in priority to the Charge by operation of law. |
Purchase Option has the meaning given in the Joint Venture Agreement and the Chargee exercises a Purchase Option by giving a written notice in accordance with clause 9.5(b) of the Joint Venture Agreement. | ||
Receiver means a receiver or receiver and manager appointed under clause 5. | ||
Related Corporation has the meaning given to Related Body Corporate in the Corporations Act but as if subsidiary had the meaning given in this document, and also includes: |
(a) | in the case of Rio Tinto, any member of the Rio Tinto Group; and | ||
(b) | in the case of BHP Billiton, any member of the BHP Billiton Group. |
Release Deed means a document in substantially the form of Schedule 2. | ||
Rio Tinto Group has the meaning given in the Joint Venture Agreement. | ||
Secured Money means the money owing by the Chargor to the Chargee under clause 2, whether present or future, on actual or contingent or incurred alone, jointly, severally or jointly and severally and without regard to the capacity in which the Chargor is liable. | ||
Secured Obligation means each of the following obligations: |
(a) | unless and until a notice is given in the form of Schedule 4, none; or | ||
(b) | if a notice is given in the form of Schedule 4, each obligation listed in the notice. |
Security Interest means any mortgage, pledge, lien or charge or any other security or preferential interest or arrangement of any kind or any other right of, or arrangement with, any creditor to have its claims satisfied in priority to other creditors with, or from the proceeds of, any asset. | ||
Sole Risk Development has the meaning given in the Joint Venture Agreement. | ||
Sole Risk Opportunity has the meaning given in the Joint Venture Agreement. | ||
Subsidiary has the meaning given in the Corporations Act, provided that: |
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(a) | an entity will also be deemed to be a Subsidiary of a body corporate if it is controlled (within the meaning of that term provided by Pt 1.2, Div 6 of the Act); and | ||
(b) | a trust may be a Subsidiary (for the purposes of which a unit or other beneficial interest will be deemed to be a share in the capital of a body corporate) and a body corporate or a trust may be a Subsidiary of a trust. |
Transaction Document has the meaning given in the Joint Venture Agreement. | ||
2. | RULES FOR INTERPRETING THIS DOCUMENT | |
2.1 | Interpretation | |
Headings are for convenience only and do not affect interpretation. The following rules apply unless the context requires otherwise. |
(a) | The singular includes the plural, and the converse also applies. | ||
(b) | A gender includes all genders. | ||
(c) | If a word or phrase is defined, its other grammatical forms have a corresponding meaning. | ||
(d) | A reference to a person includes a corporation, trust, partnership, unincorporated body or other entity, whether or not it comprises a separate legal entity. | ||
(e) | A reference to a clause or schedule is a reference to a clause of, or schedule to, this document. | ||
(f) | A reference to an agreement or document (including a reference to this document) is to the agreement or document as amended, supplemented, novated or replaced, except to the extent prohibited by this document or that other agreement or document. | ||
(g) | A reference to a party to this document, the Transaction Documents or another agreement or document includes the partys successors, permitted substitutes and permitted assigns (and, where applicable, the partys legal personal representatives). | ||
(h) | A reference to legislation or to a provision of legislation includes a modification or re-enactment of it, a legislative provision substituted for it and a regulation or statutory instrument issued under it. | ||
(i) | A reference to sale or sell includes to procure the sale and a reference to purchase includes to procure the purchase. | ||
(j) | A reference to dollars and $ is to Australian currency. | ||
(k) | A reference to time is a reference to: |
(i) | time in the place in which the relevant event occurs; or | ||
(ii) | if the relevant event is to occur in more than one place, time in Perth, Western Australia. |
(l) | If the day on which any act, matter or thing is to be done is a day other than a Business Day, such act, matter or thing will be done on the immediately succeeding Business Day. |
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(m) | The meaning of general words is not limited by specific examples introduced by including, or for example, or similar expressions. | ||
(n) | Nothing in this document is to be interpreted against a party on the ground that the party put forward this document or a relevant part of it. |
2.2 | Consents or approval | |
If the doing of any act, matter or thing under this document is dependent on the consent or approval of a party or is within the discretion of a party, the consent or approval may be given or the discretion may be exercised conditionally or unconditionally or withheld by the party in its absolute discretion unless expressly provided otherwise. | ||
2.3 | Method of payment | |
All payments required to be made under this document must be tendered by way of direct transfer of immediately available funds to the bank account nominated in writing by the party to whom the payment is due. Any payment tendered under this document after 4pm in the local time of the bank branch from which payment is made must be taken to have been made on the next succeeding Business Day (the deemed payment date) after the date on which payment is tendered, and if the deemed payment date is after the relevant due date for payment, interest will accrue under item 2.4 accordingly. | ||
2.4 | Interest on amounts payable | |
Interest accrues on each amount which is due and payable, but not paid, by one party to another under or in accordance with this document: |
(a) | on a daily basis from the due date up to the date of actual payment; | ||
(b) | both before and after judgment (as a separate and independent obligation); and | ||
(c) | at the rate which is the sum of the Bank Bill Rate (as defined in the Joint Venture Agreement) plus a margin of 3%, calculated for successive periods of one month, with the first period commencing on the due date of the amount on which interest is payable. |
The defaulting party must pay interest accrued under this item 2.4 on written demand by the non-defaulting party or, if no demand is made, on the last day of each month. The interest is payable in the currency of the unpaid amount on which it accrues. |
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BY
:
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[ insert name ] ( Chargee ) | |
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IN FAVOUR OF
:
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[ insert name ] ( Chargor ) | |
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TO:
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[ insert name ] ( Chargee ) | |
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FROM:
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[ insert name ] ( Chargor ) | |
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TO:
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[ insert name ] ( Chargee ) | |
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FROM:
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[ insert name ] ( Chargor ) | |
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(1) | if the Purchase Option is exercised by the Chargee, to transfer to the Chargee all of its Iron Ore Assets, either directly or through the acquisition of securities in JV Entities owned by it in accordance with item 2 of schedule 9 of the Joint Venture Agreement; and | |
(2) | if the Dilution Option is exercised by the Chargee, to assign to the Non-Defaulting Owner a proportion of its Participating Interest of any Iron Ore Assets and Participant Loans (to the extent that the Dilution Option is effected by way of assignment) in accordance with clause 9.8 of the Joint Venture Agreement. |
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1.
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UNDERTAKING TO COMPLY | 1 | ||||
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1.1 Iron Ore Liabilities | 1 | ||||
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1.2 Excluded Liabilities | 1 | ||||
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1.3 Sole Risk Liabilities | 2 | ||||
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2.
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[ HOLDING MONEYS ON TRUST ] | 2 | ||||
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3.
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AMENDMENT | 3 | ||||
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4.
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NOTICES | 3 | ||||
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5.
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GOVERNING LAW | 3 | ||||
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5.1 Governing law | 3 | ||||
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5.2 Final judgment conclusive and enforceable | 3 | ||||
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6.
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ANCILLARY PROVISIONS | 3 | ||||
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Schedule | ||||||
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1
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CREDITORS | 4 | ||||
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2
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INTERPRETATION | 5 |
West Australian Iron Ore Production Joint Venture
Creditor Deed Poll ( [ BHP Billiton/Rio Tinto ] ) |
DATE | |||
BY |
Each company listed in Schedule 1
(each a Creditor ) |
IN FAVOUR OF |
Each Shareholder and each Debenture Holder (as defined in the Funding and Distribution Policy) in relation to [BHP Billiton Issuer / Rio Tinto Issuer] (each a Beneficiary ) |
RECITALS |
A. | Each Creditor provides or may provide Iron Ore Loans, Excluded Loans or Sole Risk Loans to one or more [BHP Billiton / Rio Tinto] JV Entities. | ||
B. | Each Creditor is entering into this document in favour of the Beneficiaries to set out the terms on which Iron Ore Loans, Excluded Loans and Sole Risk Loans may be repaid. | ||
C. | This document is a Creditor Deed Poll required [as a Completion Document under the Implementation Agreement / under item 1.14 of the Funding and Distribution Policy]. |
OPERATIVE PROVISIONS |
1. | UNDERTAKING TO COMPLY |
[ If a Creditor signing a deed in this form after Completion has made one kind of loan only, then only the relevant subclause needs to be inserted, and the irrelevant subclauses may be deleted. Consequential changes will be made to Recitals A and B. ] | |||
1.1 | Iron Ore Liabilities | ||
Each Creditor: |
(a) | acknowledges that Cash or other assets forming part of: |
(i) | Excluded Assets; or | ||
(ii) | Sole Risk Assets, |
must not be used to discharge any liability of a [BHP Billiton / Rio Tinto] JV Entity to the Creditor that is an Iron Ore Loan; and | |||
(b) | undertakes to the Beneficiaries that it will not require repayment of any Iron Ore Loan owing or payable to it in any way that would result in a breach of the Funding and Distribution Policy. |
1.2 | Excluded Liabilities | ||
Each Creditor: |
1
(a) | acknowledges that Cash or other assets forming part of: |
(i) | Iron Ore Assets; or | ||
(ii) | Sole Risk Assets (unless a Related Corporation of the Creditor is the Sole Funding Party or Sole Risk Entity), |
must not be used to discharge any liability of a [BHP Billiton / Rio Tinto] JV Entity to the Creditor that is an Excluded Loan; and | |||
(b) | undertakes to the Beneficiaries that it will not require repayment of any Excluded Loan owing or payable to it in any way that would result in a breach of the Funding and Distribution Policy. |
1.3 | Sole Risk Liabilities | ||
Each Creditor: |
(a) | acknowledges that Cash or other assets forming part of: |
(i) | Iron Ore Assets; or | ||
(ii) | Excluded Assets (unless a Related Corporation of the Creditor is the Sole Funding Party or Sole Risk Entity), |
must not be used to discharge any liability of a [BHP Billiton / Rio Tinto] JV Entity to the Creditor that is a Sole Risk Loan; and | |||
(b) | undertakes to the Beneficiaries that it will not require repayment of any Sole Risk Loan owing or payable to it in any way that would result in a breach of the Funding and Distribution Policy. |
2. | [ HOLDING MONEYS ON TRUST ] |
[Each Creditor undertakes to the Beneficiaries that if (despite clause 1.2) it receives Cash or other assets forming part of Iron Ore Assets as a payment in respect of Excluded Loans then, unless and until the requirements of item 6.3(a) of the Funding and Distribution Policy have been complied with, it will hold the payment on trust for the Beneficiaries in proportion to their Participating Shares, and will account to them accordingly.] | |||
[ The text above can be deleted if the Creditor or Creditors providing the Creditor Deed Poll are not providing (and will not provide) any Excluded Loans. ] | |||
[Each Creditor undertakes to the Beneficiaries that if (despite clause 1.3) it receives Cash or other assets forming part of Iron Ore Assets as a payment in respect of Sole Risk Loans then, unless and until the requirements of item 11.9(e) of the Funding and Distribution Policy (to the extent applicable) have been complied with, it will hold the payment on trust for the Beneficiaries in proportion to their Participating Shares, and will account to them accordingly.] | |||
[ The text above can be deleted if the Creditor or Creditors providing the Creditor Deed Poll are not providing (and will not provide) any Sole Risk Loans. ] |
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3. | AMENDMENT |
This document may only be amended or replaced in respect of loans owing or payable to any Creditor by a deed signed by that Creditor and each person that is a Beneficiary at that time. |
4. | NOTICES |
Clause 21.1 (Notices) of the Joint Venture Agreement applies to all notices, consents or other communications under this document, on the basis that each Creditor notifies the Beneficiaries that its address is the address set out opposite its name in Schedule 1, and each Beneficiarys address is the address as specified in clause 21.1 of the Joint Venture Agreement, or the address or fax number last notified by the intended recipient to the sender after the date of this document. |
5. | GOVERNING LAW |
5.1 | Governing law |
(a) | This document is governed by the laws of Western Australia, Australia. | ||
(b) | The parties irrevocably and unconditionally: |
(i) | submit to the non-exclusive jurisdiction of the courts of Western Australia; and | ||
(ii) | agree that they may not object to any suit, action or proceeding commenced under or in connection with this document on the basis that the courts of Western Australia are not an appropriate forum. |
5.2 | Final judgment conclusive and enforceable | ||
The parties agree that a final judgment in any suit, action or proceeding commenced under or in connection with this document in any court of competent jurisdiction is conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. |
6. | ANCILLARY PROVISIONS |
Clauses 21.2 (Severability), 21.4 (No Waiver), 21.5 (Remedies), 21.6 (No Merger), 21.7 (Costs and Expenses), 21.9 (Further Assurances), 21.11 (Enurement) and 21.13 (Counterparts) of the Joint Venture Agreement apply to this document as if set out in full in this document (with any necessary changes). |
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Schedule 1 |
CREDITORS | |||
[ insert relevant creditors ] |
4
Schedule 2 |
INTERPRETATION |
1. | DEFINITIONS | ||
In this document Joint Venture Agreement means the West Australian Iron Ore Production Joint Venture Agreement, including the Funding and Distribution Policy, dated [ insert ] between the Owner, the [Rio Tinto / BHP Billiton] Owner and others. | |||
2. | JOINT VENTURE AGREEMENT DEFINITIONS | ||
Any term used in this document that is not defined in this document but is defined in the Joint Venture Agreement has the meaning given to it in schedule 1 of the Joint Venture Agreement. | |||
3. | RULES FOR INTERPRETING THIS DOCUMENT |
(a) | All rules for interpreting the Joint Venture Agreement apply in interpreting this document, except where the context makes it clear that a rule is not intended to apply. | ||
(b) | All references to clauses are references to clauses (including subclauses and paragraphs) in this document unless specifically stated otherwise in this document. |
5
6
|
Cross
Charge
|
Parties
|
||||||
1.
|
Mt Newman Joint Venture Deed of Cross
Charge
ASIC Charge No. 215643 dated 4 May 1988 |
- BHP Billiton Minerals Pty Limited (
Chargor
)
- Pilbara Iron Limited (in liquidation with its residual assets or rights, title or other interests in the Joint Venture assigned to BHP Billiton Minerals Pty Limited under Deed of Assignment dated 16 September 1997) - Mitsui-C. Itoh Iron Pty Ltd - CI Minerals Australia Pty Ltd ( Participants ) - Mt Newman Mining Co. Pty. Limited ( Manager ) |
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2.
|
Wheelarra Joint Venture Deed of Cross
Charge
ASIC Charge No. 1101594 dated 28 September 2004 |
- BHP Iron Ore (Jimblebar) Pty Ltd (
Chargor
)
- ITOCHU Minerals & Energy of Australia Pty Ltd - Mitsui Iron Ore Corporation Pty Ltd - Maanshan Iron and Steel (Australia) Pty Ltd - Shagang (Australia) Pty Ltd - Tangshan Iron and Steel (Australia) Pty Ltd - Wugang (Australia) Pty Ltd ( Other Participants ) - BHP Billiton Iron Ore Pty Ltd ( Manager ) |
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3.
|
JW4 Joint Venture Deed of Cross Charge
ASIC Charge No. 1309289 dated 21 July 2005 |
- BHP Billiton Minerals Pty Ltd (
Chargor
)
- ITOCHU Minerals & Energy of Australia Pty Ltd - Mitsui Iron Ore Corporation Pty Ltd - JFE Steel Australia (YD) Pty Ltd ( Other Participants ) - BHP Billiton Iron Ore Pty Ltd ( Manager ) |
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4.
|
POSMAC Joint Venture Deed of Cross
Charge
|
- BHP Billiton Minerals Pty Ltd (
Chargor
)
- POS-Ore Pty Ltd |
||||||
|
Cross Charge | Parties | ||||||
|
ASIC Charge No. 862711 dated 3 April 2002 |
- CI Minerals Australia Pty Ltd
- Mitsui Iron Ore Corporation Pty Ltd ( Other Participants ) - BHP Billiton Iron Ore Pty Ltd ( Manager ) |
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5.
|
Dampier-Cliffs Deed of Cross Charge
ASIC Charge No. 338079/338082 dated 31 May 1984 |
- BHP Billiton Minerals Pty Limited
- Cliffs Western Australian Mining Co Pty Ltd - Peko-Wallsend Operations Ltd - Mitsui Iron Ore Development Pty Ltd - Nippon Steel Australia Pty Ltd - Sumitomo Metal Australia Pty Ltd |
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6. |
Goldsworthy Joint Venture Any Security Interest required under clause 7.9 of the Restated Mount Goldsworthy Mining Associates Joint Venture agreement dated 7 September 1990 |
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7. |
Yandi Joint Venture Any Security Interest required under clause 7.9 of the Yandi Joint Venture Agreement dated 10 June 1991 |
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8. |
Any other Security Interest required under the terms of any other Existing JV Cross Charge |
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|
Cross Charge | Parties | ||||||
1. |
Robe Joint Venture Deeds of Cross Charge The cross charges created in connection with the Robe Joint Venture, including: Deed of Cross Charge (JVA) dated 31 May 1984 - ASIC Charge No. 199665 (Robe River Mining Co. Pty Ltd); and - ASIC Charge Nos. 236208, 382998 and 387842 (Robe River Limited), as subsequently amended by Amending Deeds in 1986, 1987, 2001, 2004 and 2007, including the following ASIC registered charges: - Amending Deed Deed of Cross Charge (JVA) dated 24 January 1986 - ASIC Charge No. 199512 (Robe River Mining Co. Pty Ltd); and - ASIC Charge Nos. 15284 (North Mining Ltd); and - Amending Deed Deed of Cross Charge (JVA) dated 5 April 2007 - ASIC Charge No. 1455193 (Robe River Mining Co. Pty Ltd); and - ASIC Charge No. 1455203 (North Mining Ltd) Deed of Cross Charge (Port and Rail) dated 31 May 1984, ASIC Charge No. 199925 (Robe River Mining Co. Pty Ltd), as subsequently amended by the Amendment to Deed of Cross Charge (Port and Rail) dated 24 January 1986, ASIC Charge No 15464 (North Mining Limited) |
- Robe River Mining Co. Pty Ltd - North Mining Limited - Robe River Limited (in their capacity as Chargors and Chargees ) - Mitsui Iron Ore Development Pty Ltd - Cape Lambert Iron Associates, a partnership carried on under that name by Nippon Steel Australia Pty Ltd, Sumitomo Metal Australia Pty Ltd and Mitsui Iron Ore Development Pty Ltd - Pannawonica Iron Associates, a partnership carried on under that name by Nippon Steel Australia Pty Ltd and Sumitomo Metal Australia Pty Ltd ( Chargees ) Note: BHP Billiton Minerals Pty Limited is also listed in ASIC records as a chargee in relation to the Deed of Cross Charge (Port and Rail) |
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|
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2. |
|
Hope Downs Joint Venture Deed of Cross Charge
ASIC Charge No. 1280563 dated 16 March 2006 |
- Hamersley WA Pty Ltd (
Chargor
)
- Hope Downs Iron Ore Pty Ltd ( Other Party ) - Hamersley HMS Pty Ltd ( Manager ) |
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|
Cross Charge | Parties | ||||||
3. |
Channar Joint Venture Deed of Cross Charge Deed of Cross Charge dated 16 November 1987 - ASIC Charge No. 148921 (Channar Mining Pty Ltd) - ASIC Charge No. 198871 (Channar Management Services Pty Limited) |
- Channar Mining Pty Ltd - Sinosteel Channar Pty Ltd - Channar Management Services Pty Limited (in their capacity as Chargors and Chargees ) |
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4. |
Bao-HI Joint Venture Deed of Cross Charge ASIC Charge No. 880262 dated 22 June 2002 |
- Ranges Mining Pty Ltd ( Chargor ) - Baosteel Australia Mining Company Pty Ltd ( Other Participant ) - Ranges Management Company Pty Ltd ( Manager ) |
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5. |
Beasley Joint Venture Deed of Cross Charge ASIC Charge No. 1098312 dated 28 October 2004 |
- Beasley River Mining Pty Limited ( Chargor ) - Beasley River Iron Associates, a partnership carried on under that name by Nippon Steel Australia Pty Ltd, Sumitomo Metal Australia Pty Ltd and Mitsui Iron Ore Development Pty Ltd ( Other Party ) - Beasley River Management Pty Limited ( Manager ) |
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6. |
Rhodes Ridge Joint Venture Deed of Cross Charge Any Security Interest required under the Rhodes Ridge Joint Venture Agreement dated 11 October 1972 |
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7. |
Any other Security Interest required under the terms of any other Existing JV Cross Charge |
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(a) | Fines Product Types means Iron Ore Products with a size * * *; and |
(b) | Lump Product Types means Iron Ore Products with a size * * *. |
(dry basis) |
Fe
(%) |
SiO
2
(%) |
Al
2
O
3
(%) |
P
(%) |
Moisture
Content 1 (%) |
LOI
3
(%) |
||||||||||||||
1. Fines Product Types | ||||||||||||||||||||
Rio Tinto Fines Product Types | ||||||||||||||||||||
(a)
|
Pilbara Blend fines; | * * * | * * * | * * * | * * * | * * * | * * * | |||||||||||||
(b)
|
Robe Valley fines; | * * * | * * * | * * * | * * * | * * * | * * * | |||||||||||||
(c)
|
Rio Tinto Yandicoogina fines; | * * * | * * * | * * * | * * * | * * * | * * * | |||||||||||||
BHP Billiton Fines Product Types | ||||||||||||||||||||
(d)
|
Newman High Grade fines; | * * * | * * * | * * * | * * * | * * * | * * * | |||||||||||||
(e)
|
MAC fines; | * * * | * * * | * * * | * * * | * * * | * * * | |||||||||||||
(f)
|
Yandi fines; | * * * | * * * | * * * | * * * | * * * | * * * | |||||||||||||
2. Lump Products | ||||||||||||||||||||
Rio Tinto Lump Product Types | ||||||||||||||||||||
(a)
|
Pilbara Blend lump; | * * * | * * * | * * * | * * * | * * * | * * * | |||||||||||||
(b)
|
Robe Valley lump | * * * | * * * | * * * | * * * | * * * | * * * | |||||||||||||
BHP Billiton Lump Product Types | ||||||||||||||||||||
(c)
|
Newman High Grade lump; | * * * | * * * | * * * | * * * | * * * | * * * | |||||||||||||
(d)
|
MAC lump; | * * *62.6 | * * * | * * * | * * * | * * * | * * * | |||||||||||||
(e)
|
Yandi lump. | * * * | * * * | * * * | * * * | * * * | * * * | |||||||||||||
1. | Definitions and Interpretation | 1 | ||||||
|
||||||||
1.1 |
Joint Venture Agreement definitions to apply
|
1 | ||||||
|
||||||||
1.2 |
Definitions
|
2 | ||||||
|
||||||||
1.3 |
Joint Venture Agreement interpretation provisions to apply
|
2 | ||||||
|
||||||||
1.4 |
[Joint and several obligations
|
2 | ||||||
|
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2. | Guarantee | 2 | ||||||
|
||||||||
2.1 |
Funding and Distribution Policy Guarantee
|
2 | ||||||
|
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2.2 |
[Called Sum Guarantee
|
3 | ||||||
|
||||||||
2.3 |
Liability unaffected by other events
|
4 | ||||||
|
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2.4 |
Continuing guarantee
|
4 | ||||||
|
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2.5 |
Exclusion of moratorium
|
5 | ||||||
|
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3. | Enforcement of this Deed | 5 | ||||||
|
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4. | Conflict | 5 | ||||||
|
||||||||
5. | Costs and Stamp Duty | 5 | ||||||
|
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6. | Notices | 5 | ||||||
|
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7. | Governing Law and Jurisdiction | 6 | ||||||
|
||||||||
7.1 |
Governing Law
|
6 | ||||||
|
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7.2 |
Final judgment conclusive and enforceable
|
6 | ||||||
|
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7.3 |
Dispute resolution
|
6 | ||||||
|
||||||||
8. | Service of Process | 6 | ||||||
|
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9. | Severance | 7 | ||||||
|
||||||||
10. | Counterparts | 7 |
1. | Definitions and Interpretation |
1.1 | Joint Venture Agreement definitions to apply | |
Subject to clause 1.2, words and expressions which are defined in the Joint Venture Agreement have the same meaning in this Deed unless the context requires otherwise. |
1 Only required where clause 11.8(c) of the Joint Venture Agreement applies. |
Page 1
1.2 | Definitions |
In this Deed, the following terms will have the following meanings unless the subject matter or context otherwise requires. | ||
Beneficiary means each the [Rio Tinto / BHP Billiton] Owner * * * | ||
* * * | ||
[ Called Sum Obligation means any obligation of the Obligor: |
(a) | to pay Called Sums under clause 3.11 of the Joint Venture Agreement; | ||
(b) | to transfer or procure the transfer of an amount in accordance with clause 3.11(h) of the Joint Venture Agreement; or | ||
(c) | to pay to purchase any NDO Loan under the clause 9.3 of the Joint Venture Agreement.]2 |
FDP Obligation means any obligation of the Obligor under clauses 6.3(a)(iii)(B) and (C), 6.4(a)(iii)(B) and (C), 11.9(d)(ii) and 11.9(e)(ii) of the Funding and Distribution Policy. | ||
Joint Venture Agreement means the West Australian Iron Ore Production Joint Venture Agreement dated [*] between Rio Tinto Limited, Rio Tinto plc, BHP Billiton Limited, BHP Billiton plc and certain other companies, as amended from time to time. | ||
Obligor means [name of guaranteed Rio Tinto Owner / name of guaranteed BHP Billiton Owner / name of New Owner]. | ||
Power means any right, power, authority, discretion or remedy conferred on a Beneficiary by this Deed. |
1.3 | Joint Venture Agreement interpretation provisions to apply |
Clause 1.2 of the Joint Venture Agreement applies, mutatis mutandis , in the interpretation of this Deed. |
1.4 | [Joint and several obligations |
The obligations of [RTL and RTP / BHPBL and BHPBP] under this Deed are joint and several.] 3 |
2. | Guarantee |
2.1 | Funding and Distribution Policy Guarantee |
(a) | The Guarantor unconditionally and irrevocably guarantees to each Beneficiary the due and punctual performance and observance by the Obligor of all its FDP Obligations. |
2 Only required where clause 11.8(c) of the Joint Venture Agreement applies. | ||
3 Only required where there are multiple guarantors. |
Page 2
(b) | If and whenever the Obligor defaults for any reason whatsoever in the performance of any of its FDP Obligations, the Guarantor will immediately upon demand unconditionally perform (or procure performance of) and satisfy (or procure the satisfaction of) the FDP Obligations in regard to which such default has been made in the manner prescribed by this Deed so that the same benefits will be conferred on each Beneficiary as it would have received if the FDP Obligations had been duly performed and satisfied by the Obligor. | ||
(c) | As a separate and independent obligation, the Guarantor agrees that any of the FDP Obligations (including, without limitation, any moneys payable) which may not be enforceable against or recoverable from the Obligor by reason of any legal limitation, disability or incapacity on or of the Obligor or any other fact or circumstances will nevertheless be enforceable against and recoverable from the Guarantor as though the same had been incurred by the Guarantor and the Guarantor were the sole or principal obligor in respect thereof and must be performed or paid by the Guarantor on demand. | ||
(d) | This Deed is in addition to and without prejudice to and not in substitution for any rights or security which any Beneficiary may now or in the future have or hold for the performance and observance of the FDP Obligations. |
2.2 | [Called Sum Guarantee |
(a) | The Guarantor unconditionally and irrevocably guarantees the due and punctual performance and observance by the Obligor of all its Called Sum Obligations. | ||
(b) | If and whenever the Obligor defaults for any reason whatsoever in the performance of any of its Called Sum Obligations, the Guarantor will immediately upon demand unconditionally perform (or procure performance of) and satisfy (or procure the satisfaction of) the Called Sum Obligations in regard to which such default has been made in the manner prescribed by this Deed so that the same benefits will be conferred on each Beneficiary as it would have received if the Called Sum Obligations had been duly performed and satisfied by the Obligor. | ||
(c) | As a separate and independent obligation, the Guarantor agrees that any of the Called Sum Obligations (including, without limitation, any moneys payable) which may not be enforceable against or recoverable from the Obligor by reason of any legal limitation, disability or incapacity on or of the Obligor or any other fact or circumstances will nevertheless be enforceable against and recoverable from the Guarantor as though the same had been incurred by the Guarantor and the Guarantor were the sole or principal obligor in respect thereof and must be performed or paid by the Guarantor on demand. | ||
(d) | This Deed is in addition to and without prejudice to and not in substitution for any rights or security which any Beneficiary may now or in the future have or hold for the performance and observance of the Called Sum Obligations.] 4 |
4 Only required where clause 11.8(c) of the Joint Venture Agreement applies. |
Page 3
2.3 | Liability unaffected by other events |
The liability of the Guarantor under clause 2.1 [and clause 2.2] 5 : |
(a) | will not be released or diminished by any variation of the FDP Obligations [or Called Sum Obligations] 6 or any forbearance, neglect or delay in seeking performance of the FDP Obligations [or Called Sum Obligations] 7 or any granting of time for such performance; and |
(b) | will not be affected or impaired by reason of any other fact or event which in the absence of this provision would or might constitute or afford a legal or equitable discharge or release or a defence to a guarantor. |
2.4 | Continuing guarantee |
(a) | Clause 2.1: |
(i) | extends to cover the FDP Obligations as amended, varied or replaced, whether with or without the consent of the Guarantor in its capacity as guarantor including, for the avoidance of doubt, where such amendment, variation or replacement increases the obligations guaranteed by the Guarantor under this Deed; and | ||
(ii) | is a continuing guarantee and remains in full force and effect until the earlier of: |
(A) | the Obligor ceasing to be an Owner in accordance with the Joint Venture Agreement; and | ||
(B) | the Guarantor being entitled to be released from its obligations under this Deed in accordance with clause 10.10(e) of the Joint Venture Agreement, |
at which point the Guarantor will automatically be released from its obligations under clause 2.1 but without prejudice to any accrued liabilities of the Guarantor under this Deed. |
(b) | [Clause 2.2: |
(i) | extends to cover the Called Sum Obligations as amended, varied or replaced, whether with or without the consent of the Guarantor in its capacity as guarantor including, for the avoidance of doubt, where such amendment, variation or replacement increases the obligations guaranteed by the Guarantor under this Deed; and | ||
(ii) | is a continuing guarantee and remains in full force and effect until the earliest of: |
(A) | the Obligor ceasing to be an Owner in accordance with the Joint Venture Agreement; | ||
(B) | the Guarantor being entitled to be released from its obligations in relation to Called Sums in accordance with clause 11.8(d) of the Joint Venture Agreement; and |
5 Only required where clause 11.8(c) of the Joint Venture Agreement applies. | ||
6 Only required where clause 11.8(c) of the Joint Venture Agreement applies. | ||
7 Only required where clause 11.8(c) of the Joint Venture Agreement applies. |
Page 4
(C) | the Guarantor being entitled to be released from its obligations under this Deed in accordance with clause 10.10(e) of the Joint Venture Agreement, |
at which point the Guarantor will automatically be released from its obligations under clause 2.2 but without prejudice to any accrued liabilities of the Guarantor under this Deed.] 8 |
2.5 | Exclusion of moratorium |
To the extent permitted by law, a provision of any legislation which at any time directly or indirectly: |
(a) | lessens or otherwise varies or affects in favour of the Guarantor any of its obligations under or any provision of this Deed; or | ||
(b) | stays, postpones or otherwise prevents or prejudicially affects the exercise by a Beneficiary of any Power, |
is negated and excluded from this Deed and all relief and protection conferred on the Guarantor by or under that legislation is also negated and excluded. |
3. | Enforcement of this Deed |
At any time when there is more than one Beneficiary: |
(a) | * * *; and | ||
(b) | it may do so on behalf of each other Beneficiary. |
4. | Conflict |
Where any Power under this Deed is inconsistent with the powers conferred by an applicable law then, to the extent not prohibited by that law, the powers conferred by applicable law are regarded as negatived or varied to the extent of the inconsistency. |
5. | Costs and Stamp Duty |
(a) | The Guarantor shall bear its own costs arising out of the preparation and execution of this Deed. | ||
(b) | All stamp duty (including fines, penalties and interest) payable on or in connection with this Deed must be borne by the Guarantor. The Guarantor must indemnify each Beneficiary on demand against any liability for those costs and that stamp duty. |
6. | Notices |
Any notice, demand, consent, certificate, approval, nomination, waiver or other similar communication given or made in connection with this Deed (a notice ): |
8 Only required where clause 11.8(c) of the Joint Venture Agreement applies. |
Page 5
(a) | will be in writing and signed by the sender or a person duly authorised by the sender; | ||
(b) | will be addressed and delivered to the intended recipient at the address or fax number below or the address or fax number last notified by the intended recipient to the sender after the date of this Deed: |
Guarantor
|
||
|
||
Address:
|
[#] | |
|
||
Fax:
|
[#] | |
|
||
Attention
|
[#] |
(c) | will be taken to be duly given or made when delivered, received or left at the above fax number or address. If delivery or receipt occurs on a day that is not a business day in the place to which the notice is sent or is later than 4pm (local time) at that place, it will be taken to have been duly given or made at the commencement of business on the next business day in that place. |
7. | Governing Law and Jurisdiction |
7.1 | Governing Law |
(a) | This Deed is governed by the laws of Western Australia, Australia. | ||
(b) | The Guarantor irrevocably and unconditionally: |
(i) | submits to the non-exclusive jurisdiction of the courts of Western Australia; and | ||
(ii) | agrees that it may not object to any suit, action or proceeding commenced under or in connection with this Deed on the basis that the courts of Western Australia are not an appropriate forum. |
7.2 | Final judgment conclusive and enforceable |
The Guarantor agrees that a final judgment in any suit, action or proceeding commenced under or in connection with this Deed in any court of competent jurisdiction is conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. |
7.3 | Dispute resolution |
Any dispute, controversy, claim or difference of whatever nature arising under, out of, or in connection with this Deed will be resolved in accordance with clause 19.3 of the Joint Venture Agreement. |
8. | Service of Process |
(a) | The Guarantor agrees that service of all writs, process and summonses in any suit, action or proceeding under or in connection with this Deed brought in Western Australia may be made on its registered or principal office for the time being in Australia. | ||
(b) | Nothing contained or implied in this Deed will in any way be taken to limit the ability of a party to: |
Page 6
(i) | serve any writs, process or summonses; or | ||
(ii) | obtain jurisdiction over a party in other jurisdictions, |
in any manner permitted by Law. |
9. | Severance |
If any of the provisions of this Deed is or becomes invalid, illegal or unenforceable, in whole or in part, under the law of any jurisdiction, the validity, legality or enforceability of such provision or part under the law of any other jurisdiction and the validity, legality and enforceability of the remaining provisions of this Deed will not in any way be affected or impaired. If any provision of this Deed, or its application to any person or entity or any circumstance, is invalid or unenforceable, the Guarantor will make such suitable and equitable provision as is necessary in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision. |
10. | Counterparts |
This Deed may be executed in any number of counterparts and by the parties on separate counterparts, each of which will be an original but all of which together will constitute one and the same instrument. This Deed will not take effect until each party has executed at least one counterpart. |
Page 7
Page 8
1. | Definitions and interpretation | 1 | ||||||
|
||||||||
1.1 |
Joint Venture Agreement definitions to apply
|
1 | ||||||
|
||||||||
1.2 |
Definitions
|
1 | ||||||
|
||||||||
1.3 |
Joint Venture Agreement interpretive provisions to apply
|
2 | ||||||
|
||||||||
2. | Ultimate Holding Company to assume liability | 2 | ||||||
|
||||||||
3. | Consent of the Other Owners | 2 | ||||||
|
||||||||
4. | Address of Ultimate Holding Company for Notices | 2 | ||||||
|
||||||||
5. | Costs and stamp duty | 2 | ||||||
|
||||||||
6. | Governing Law and Jurisdiction | 3 | ||||||
|
||||||||
6.1 |
Governing Law
|
3 | ||||||
|
||||||||
6.2 |
Final judgment conclusive and enforceable
|
3 | ||||||
|
||||||||
6.3 |
Dispute Resolution
|
3 | ||||||
|
||||||||
6.4 |
Service of Process
|
3 | ||||||
|
||||||||
7. | General Provisions | 3 |
Date |
|||
|
|||
Parties |
|||
1.
|
[Insert name and details of Ultimate Holding Company of Relevant Owner] (the Ultimate Holding Company ). | ||
|
|||
2.
|
[
Insert name and details of each other party to the Joint
Venture Agreement (including the Relevant Owner)
]
(collectively the Other Parties ). |
||
|
|||
Recitals |
|||
A
|
Clause 10.10(b) of the Joint Venture Agreement provides that any Owner of which an Issuer is a Subsidiary must, in certain circumstances, procure that its Ultimate Holding Company assumes the Parent Undertakings by executing a Parent Assumption Deed in the form set out in schedule 17 of the Joint Venture Agreement. | ||
|
|||
B
|
By virtue of [insert details of relevant event triggering the requirements of clause 10.10(b)] , [ Insert name of relevant Owner ] (the Relevant Owner ) is an Owner to which clause 10.10(b) applies. | ||
|
|||
C
|
[ Insert name of Ultimate Holding Company of the relevant Owner] is the Ultimate Holding Company (as defined in the Joint Venture Agreement) of the Relevant Owner. | ||
|
|||
D
|
In order to give effect to clause 10.10(b) of the Joint Venture Agreement, and in satisfaction of the requirement to enter into a Parent Assumption Deed, the Ultimate Holding Company and the Other Parties have agreed to enter into this Deed. | ||
|
|||
1. | Definitions and interpretation |
1.1 | Joint Venture Agreement definitions to apply | |
Subject to a contrary meaning being specified in clause 1.2, words and expressions defined in the Joint Venture Agreement have the same meaning when used in this Deed. |
1.2 | Definitions | |
In this Deed, the following terms have the following meanings unless the context requires otherwise. | ||
Effective Date means the date on which the last party executes this Deed. | ||
Joint Venture Agreement means the West Australian Joint Venture Agreement dated [#]. | ||
Relevant Owner has the meaning given in Recital B. |
Page 1
1.3 | Joint Venture Agreement interpretive provisions to apply | |
Items 1.2 to 1.5 (inclusive) of schedule 1 to the Joint Venture Agreement will apply, mutatis mutandis , in the interpretation of this Deed. |
2. | Ultimate Holding Company to assume liability |
(a) | The Ultimate Holding Company covenants and agrees with each of the Other Parties as from the Effective Date to observe, perform and be bound by all of the undertakings, liabilities and obligations in respect of, or attaching to, the Parent Undertakings in respect of the Relevant Owner under the Joint Venture Agreement to the extent that those undertakings, liabilities and obligations are capable of applying to the Ultimate Holding Company. | ||
(b) | On and from the Effective Date, the Ultimate Holding Company will be deemed to be a party to the Joint Venture Agreement for the sole purpose of providing the Parent Undertakings on behalf of the Relevant Owner. |
3. | Consent of the Other Parties |
On and from the Effective Date, each Other Party: |
(a) | unconditionally and irrevocably consents to the Ultimate Holding Company becoming a party to the Joint Venture Agreement for the purposes of the Parent Undertakings in respect of the Relevant Owner; and | ||
(b) | agrees that the Ultimate Holding Company will be entitled to exercise all of the rights, privileges and benefits of the Owner Parent in respect of the Relevant Owner under the Joint Venture Agreement as if that Ultimate Holding Company was named as a party to the Joint Venture Agreement. |
4. | Address of Ultimate Holding Company for Notices |
For the purposes of the Joint Venture Agreement, the address of the Ultimate Holding Company to which all notices must be delivered is: |
to
[Insert details of Ultimate
|
[#] | |
Holding Company]
:
|
Attention [#] |
|
|
||
|
Address: [#] | |
|
||
|
Fax No: [#] |
5. | Costs and stamp duty |
(a) | Each party will bear the costs arising out of the negotiation, preparation, execution and enforcement of this Deed. | ||
(b) | Subject to the Joint Venture Agreement, all stamp duty (including fines, penalties and interest) which may be payable on or in connection with this Deed and any instrument |
Page 2
executed under this Deed will be borne by the Ultimate Holding Company. The Ultimate Holding Company will indemnify the Other Parties on demand against any liability for that stamp duty. |
6. | Governing Law and Jurisdiction |
6.1 | Governing Law |
(a) | This Deed will be governed by the laws of Western Australia, Australia. | ||
(b) | The parties irrevocably and unconditionally: |
(i) | submit to the non-exclusive jurisdiction of the courts of Western Australia; and | ||
(ii) | agree that they may not object to any suit, action or proceeding commenced under or in connection with this Deed on the basis that the courts of Western Australia are not an appropriate forum. |
6.2 | Final judgment conclusive and enforceable | |
The parties agree that a final judgment in any suit, action or proceeding commenced under or in connection with this Deed in any court of competent jurisdiction is conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. | ||
6.3 | Dispute Resolution | |
Any dispute, controversy, claim or difference of whatever nature arising under, out of, or in connection with this Deed will be resolved in accordance with clause 20.3 of the Joint Venture Agreement. | ||
6.4 | Service of Process |
(a) | Each party agrees that service of all writs, process and summonses in any suit, action or proceeding under or in connection with this Deed brought in Western Australia may be made on its registered or principal office for the time being in Australia. | ||
(b) | Nothing contained or implied in this Deed will in any way be taken to limit the ability of a party to: |
(i) | serve any writs, processes or summonses; or | ||
(ii) | obtain jurisdiction over a party in other jurisdictions, |
in any manner permitted by Law. |
7. | General Provisions |
The provisions of clauses 19, 21.1 (subject to clause 4 of this Deed) to 21.7, 21.9 and 21.11 to 21.13 of the Joint Venture Agreement will apply, mutatis mutandis , in this Deed unless the context requires otherwise. |
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Page 4
Page 188
1.
|
Definitions and interpretation | 2 | ||||
|
||||||
|
1.1 Joint Venture Agreement definitions to apply | 2 | ||||
|
1.2 Definitions | 2 | ||||
|
1.3 Joint Venture Agreement interpretive provisions to apply | 2 | ||||
|
||||||
2.
|
Sole Risk Entity to assume liability | 2 | ||||
|
||||||
3.
|
Address of Sole Risk Entity for Notices | 3 | ||||
|
||||||
4.
|
Costs and stamp duty | 3 | ||||
|
||||||
5.
|
Governing Law and Jurisdiction | 3 | ||||
|
||||||
|
5.1 Governing Law | 3 | ||||
|
5.2 Final judgment conclusive and enforceable | 4 | ||||
|
5.3 Dispute Resolution | 4 | ||||
|
5.4 Service of Process | 4 | ||||
|
||||||
6.
|
General Provisions | 4 | ||||
|
||||||
7.
|
Amendments | 4 |
Page (i)
Date
|
|||
|
|||
|
|||
Parties
|
|||
|
|||
1.
|
[#] [ (ACN [#] ) ] (on its own behalf and on behalf of each of the Existing Parties) (the Manager ). | ||
|
|||
2.
|
[#] [ (ACN [#] ) ] (the Sole Risk Entity ). | ||
|
|||
Recitals
|
|||
|
|||
|
[Drafting Note: Recitals A to D (Option 1) to be used where a Sole Funding Party elects to nominate a Sole Risk Entity to undertake a Sole Risk Development or Sole Risk Opportunity pursuant to item 4(a) of schedule 4. Recitals A to C (Option 2) to be used where a Sole Risk Entity disposes of the whole of its Participating Interest pursuant to item 4(f) of schedule 4.] | ||
|
|||
|
(Option 1) | ||
|
|||
A
|
[Items 4(a) and (b) of schedule 4 of the Joint Venture Agreement provide that a Sole Funding Party that becomes entitled to proceed with a Sole Risk Development or Sole Risk Opportunity may nominate a Sole Risk Entity to undertake that Sole Risk Development or Sole Risk Opportunity (as applicable) on its behalf, provided that the Sole Risk Entity first enters into a Deed of Accession in the form set out in schedule 18 of the Joint Venture Agreement. | ||
|
|||
B
|
[ Insert Name of relevant Sole Funding Party ] (the Sole Funding Party ) has elected to proceed with a [ Sole Risk Development / Sole Risk Opportunity ] pursuant to clause [ 8.3(b) / 8.4(g) ] of the Joint Venture Agreement in respect of [ Insert description of Sole Risk Development or Sole Risk Opportunity] (the [ Sole Risk Development / Sole Risk Opportunity ]). | ||
|
|||
C
|
In accordance with item 4(a) of schedule 4, the Sole Funding Party has exercised its right to nominate [ Insert name of Sole Risk Entity ] to undertake the [ Sole Risk Development / Sole Risk Opportunity ] on its behalf. | ||
|
|||
D
|
In order to give effect to the arrangements referred to in Recital C, and in satisfaction of the requirement to enter into a Deed of Accession under item 4(b) of schedule 4 of the Joint Venture Agreement, the Manager (on behalf of each Existing Party) and the Sole Risk Entity have agreed to enter into this Deed.] | ||
|
|||
|
(Option 2) | ||
|
|||
A
|
[Item 4(f) of schedule 4 of the Joint Venture Agreement provides that a Sole Risk Entity is entitled to Dispose of the whole, but not part, of its rights under the Joint Venture Agreement, |
Page 1
|
provided that the transferee Sole Risk Entity first enters into a Deed of Accession in the form set out in schedule 18 of the Joint Venture Agreement. | ||
|
|||
B
|
[ Insert Name of existing Sole Risk Entity ] (the Existing Sole Risk Entity ) has elected to Dispose of its rights under the Joint Venture Agreement in respect of [ Insert description of Sole Risk Development or Sole Risk Opportunity] (the [ Sole Risk Development / Sole Risk Opportunity ]). | ||
|
|||
C
|
In order to give effect to the arrangements referred to
in Recital B, and in satisfaction of the requirement to
enter into a Deed of Accession under item 4(f) of
schedule 4 of the Joint Venture Agreement, the Manager
(on behalf of each Existing Party) and the transferee
Sole Risk Entity have agreed to enter into this Deed.]
|
||
1. | Definitions and interpretation | |
|
||
1.1 | Joint Venture Agreement definitions to apply | |
Subject to a contrary meaning being specified in clause 1.2, words and expressions defined in the Joint Venture Agreement have the same meaning when used in this Deed. | ||
1.2 | Definitions | |
In this Deed, the following terms have the following meanings unless the context requires otherwise. | ||
Effective Date means the later of: |
(a) | the date on which the last party executes this Deed; and | ||
(b) | the date on which the Sole Funding Party obtains the last of the Authorisations and third party approvals required by item 4.(g) of schedule 4 of the Joint Venture Agreement. |
Existing Parties means each party to the Joint Venture Agreement. |
[Existing Sole Risk Entity has the meaning given in Recital B. (Option 2)] |
Joint Venture Agreement means the West Australian Joint Venture Agreement dated [#]. |
[Sole Funding Party has the meaning given in Recital B. (Option 1)] |
[Sole Risk Development has the meaning given in Recital B. / Sole Risk Opportunity has the meaning given in Recital B.] | ||
1.3 | Joint Venture Agreement interpretive provisions to apply |
Items 1.2 to 1.5 (inclusive) of schedule 1 to the Joint Venture Agreement will apply, mutatis mutandis , in the interpretation of this Deed. | ||
2. | Sole Risk Entity to assume liability | |
|
(a) | The Sole Risk Entity covenants and agrees with each of the Existing Parties as from the Effective Date to observe, perform and be bound by all of the undertakings, liabilities and |
Page 2
obligations of the [Sole Funding Party (Option 1) / Existing Sole Risk Entity (Option 2)] in respect of, or attaching to, the [ Sole Risk Development / Sole Risk Opportunity ] under the Joint Venture Agreement (including undertakings, liabilities and obligations that arise before the Effective Date) to the extent that those undertakings, liabilities and obligations are capable of applying to the Sole Risk Entity with respect to the [ Sole Risk Development / Sole Risk Opportunity ] . |
(b) | On and from the Effective Date, the Sole Risk Entity will be deemed to be a party to the Joint Venture Agreement with the rights set out in the Joint Venture Agreement in respect of the [ Sole Risk Development / Sole Risk Opportunity ] . |
3. | Address of Sole Risk Entity for Notices | |
|
For the purposes of the Joint Venture Agreement, the address of the Sole Risk Entity to which all notices must be delivered is: |
to
[Insert details of Sole Risk Entity]
:
|
[#] | |
|
Attention [#] | |
|
Address: [#] | |
|
Fax No: [#] |
4. | Costs and stamp duty | |
|
|
|
(a) | Each party will bear the costs arising out of the negotiation, preparation, execution and enforcement of this Deed. | ||
(b) | All stamp duty (including fines, penalties and interest) which may be payable on or in connection with this Deed and any instrument executed under this Deed will be borne by the Sole Risk Entity. The Sole Risk Entity will indemnify the Existing Parties on demand against any liability for that stamp duty. |
5. | Governing Law and Jurisdiction | |
|
||
5.1 | Governing Law |
(a) | This Deed will be governed by the laws of Western Australia, Australia. |
(b) | The parties irrevocably and unconditionally: |
(i) | submit to the non-exclusive jurisdiction of the courts of Western Australia; and | ||
(ii) | agree that they may not object to any suit, action or proceeding commenced under or in connection with this Deed on the basis that the courts of Western Australia are not an appropriate forum. |
Page 3
5.2 | Final judgment conclusive and enforceable |
The parties agree that a final judgment in any suit, action or proceeding commenced under or in connection with this Deed in any court of competent jurisdiction is conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. | ||
5.3 | Dispute Resolution |
Any dispute, controversy, claim or difference of whatever nature arising under, out of, or in connection with this Deed will be resolved in accordance with clause 20.3 of the Joint Venture Agreement. |
5.4 | Service of Process |
(a) | Each party agrees that service of all writs, process and summonses in any suit, action or proceeding under or in connection with this Deed brought in Western Australia may be made on its registered or principal office for the time being in Australia. |
(b) | Nothing contained or implied in this Deed will in any way be taken to limit the ability of a party to: |
(i) | serve any writs, processes or summonses; or |
(ii) | obtain jurisdiction over a party in other jurisdictions, |
in any manner permitted by Law. |
6. | General Provisions | |
|
The provisions of clauses 19, 21.1 (subject to clause 3 of this Deed), 21.2, 21.4 to 21.6, 21.9 and 21.11 to 21.13 of the Joint Venture Agreement will apply, mutatis mutandis , in this Deed unless the context requires otherwise. |
7. | Amendments | |
|
Notwithstanding clause 21.3 of the Joint Venture Agreement, the Sole Risk Entity acknowledges that: |
(a) | any change to the parties to the Joint Venture Agreement as expressly provided for in the Joint Venture Agreement; or |
(b) | any amendment or variation to the Joint Venture Agreement that affects the rights and obligations of the Existing Parties, but does not affect the rights and obligations of the Sole Risk Entity, |
will not require the Sole Risk Entitys consent. Any amendment or variation to which this clause 7 applies will take effect despite the Sole Risk Entity not having executed that amendment or variation. |
Page 4
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Page 189
Page 126
EXECUTED
by
BHP BILLITON PLC
|
||||
by its authorised signatory:
|
||||
|
||||
|
||||
Authorised signatory |
Witness | |||
|
||||
Print Name |
Print Name |
Page 127
Proportion | Group | |||||||||||
Company and country | Principal | Class of | of class | interest | ||||||||
of incorporation | activities | shares held | held% | % | ||||||||
Australia
|
||||||||||||
Australian Coal Holdings Pty Limited
|
Holding company | A Class Ordinary shares | 100 | 100 | ||||||||
|
Ordinary shares | 100 | 100 | |||||||||
Argyle Diamonds Limited
|
Holding company | Class A shares | 100 | 100 | ||||||||
|
Class B shares | 100 | 100 | |||||||||
Hamersley Holdings Limited
|
Holding company | Ordinary shares | 100 | 100 | ||||||||
Kelian Pty Limited
|
Holding company | Ordinary shares | 100 | 100 | ||||||||
North IOC Holdings Pty Limited
|
Holding company | Ordinary shares | 100 | 100 | ||||||||
North Limited
|
Holding company | Ordinary shares | 100 | 100 | ||||||||
Pacific Aluminium Pty Limited
|
Holding company | Ordinary shares | 100 | 100 | ||||||||
Peko-Wallsend Pty Limited
|
Holding company | Ordinary shares | 100 | 100 | ||||||||
Rio Tinto Aluminium (Holdings) Limited
|
Holding company | Ordinary shares | 100 | 100 | ||||||||
Rio Tinto Aluminium Limited
|
Holding company | Ordinary shares | ||||||||||
Rio Tinto (Commercial Paper) Limited
|
Finance company | Ordinary shares | 100 | 100 | ||||||||
Rio Tinto Finance Limited
|
Finance company | Ordinary shares | 100 | 100 | ||||||||
Rio Tinto Finance (USA) Limited
|
Finance company | Ordinary shares | 100 | 100 | ||||||||
Rio Tinto Investments One Pty Limited
|
Holding company | Ordinary shares | 100 | 100 | ||||||||
Rio Tinto Investments Two Pty Limited
|
Holding company | Ordinary shares | 100 | 100 | ||||||||
RTA Pacific Pty Limited
|
Holding company | Ordinary shares | 100 | 100 | ||||||||
|
||||||||||||
Bermuda
|
||||||||||||
Alcan Ningxia Holdings Limited
|
Holding company | Ordinary shares of USD 100.00 each | 100 | 100 | ||||||||
North IOC (Bermuda) Holdings Limited
|
Holding company | Ordinary shares of BMD 1.00 each | 100 | 100 | ||||||||
North IOC (Bermuda) Limited
|
Holding company | Ordinary shares of BMD 1.00 each | 100 | 100 | ||||||||
Rio Tinto Escondida Limited
|
Holding company | Ordinary shares of USD 1.00 each | 100 | 100 | ||||||||
|
||||||||||||
Brazil
|
||||||||||||
Rio Tinto Alcan Brazil Ltda.
|
Holding company | Ordinary shares of BRL 1.00 each | 100 | 100 | ||||||||
|
||||||||||||
Canada
|
||||||||||||
Rio Tinto Alcan Inc
|
Holding company | Ordinary shares no par value | 100 | 100 | ||||||||
Rio Tinto Canada Inc
|
Holding company | Class B shares no par value | 100 | 100 | ||||||||
|
Class C shares no par value | 100 | 100 | |||||||||
|
Class D shares no par value | 100 | 100 | |||||||||
|
||||||||||||
Namibia
|
||||||||||||
Skeleton Coast Diamonds Limited
|
Holding company | Shares of NAD 2.00 each | 100 | 100 | ||||||||
|
||||||||||||
France
|
||||||||||||
Alcan France SAS
|
Holding company | Shares of EUR 15.25 each | 100 | 100 | ||||||||
Aluminum Pechiney
|
Holding company | Shares of Eur 16.00 each | 100 | 100 | ||||||||
Luzenac Europe SAS
|
Holding company | Shares of EUR 38.15 each | 100 | 100 | ||||||||
|
||||||||||||
Netherlands
|
||||||||||||
Alcan Holdings Europe BV
|
Holding company | Shares of EUR 455.00 each | 100 | 100 | ||||||||
Rio Tinto Eastern Investments BV
|
Holding company | Shares of EUR 454.00 each | 100 | 100 | ||||||||
Rio Tinto Holdings BV
|
Holding company | Shares of EUR 454.00 each | 100 | 100 | ||||||||
Tirbit vof
|
Holding company | Capital not divided into parts | 100 | 100 | ||||||||
Tirbit Holdings BV
|
Holding company | Shares of EUR 453.00 each | 100 | 100 | ||||||||
|
||||||||||||
New Zealand
|
||||||||||||
Rio Tinto Alcan (New Zealand) Limited
|
Holding company | Ordinary shares of NZD 1.00 each | 100 | 100 | ||||||||
RTA Investment (NZ) Ltd
|
Holding company | Ordinary shares of NZD 1.00 each | 100 | 100 | ||||||||
RTA Pacific (NZ) Limited
|
Holding company | Ordinary shares of NZD 1.00 each | 100 | 100 | ||||||||
|
Preference shares of NZD 1.00 each | 100 | 100 | |||||||||
|
||||||||||||
South Africa
|
||||||||||||
Rio Tinto South Africa Limited
|
Holding company | Shares of ZAR 1.00 each | 100 | 100 |
Proportion
Group
Company and country
Principal
Class of
of class
interest
of incorporation
activities
shares held
held%
%
Holding company
Registered shares of CFH 10.00 each
100
100
Holding company
Ordinary shares of GBP1.00 each
51
51
Holding company
Ordinary shares of GBP1.00 each
100
100
Holding company
Ordinary shares of USD 1.00 each
100
100
Finance company
Ordinary shares of GBP1.00 each
100
100
Preference shares of AUD 100.00 each
100
100
Ordinary shares of USD 1.00 each
100
100
Holding company
Ordinary shares of GBP1.00 each
100
100
Finance company
Ordinary shares of GBP1.00 each
100
100
Ordinary shares of USD 1.00 each
100
100
Holding company
Ordinary shares of GBP1.00 each
100
100
Holding company
Ordinary shares of GBP1.00 each
100
100
Holding company
Ordinary shares of GBP1.00 each
100
100
Holding company
Ordinary shares of GBP0.25 each
100
100
Holding company
Ordinary shares of GBP1.00 each
100
100
Holding company
Ordinary shares of GBP1.00 each
100
100
Holding company
Ordinary shares of GBP1.00 each
100
100
Holding company
Ordinary shares of GBP1.00 each
100
100
Preference shares of AUD 100.00 each
100
100
Preference shares of USD 90.00 each
100
100
Holding company
Ordinary shares of USD0.01 each
100
100
Holding company
Ordinary shares of USD 23,009.803922 each
100
100
Holding company
Units of USD 1.00 each
100
100
Holding company
Units of no par value
100
100
Holding company
Holding company
Holding company
Common shares of USD 0.01 each
100
100
Holding company
Common shares of USD 100.00 each
100
100
Holding company
Common shares of USD 0.01 each
100
100
Holding company
Units of no par value
100
100
Holding company
Common shares of no par value
100
100
Holding company
Common shares of no par value
100
100
Holding company
Common shares of USD 0.01 each
100
100
Holding company
Common shares of USD 1.00 each
100
100
1. | I have reviewed this annual report on Form 20-F of Rio Tinto plc (the Company); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; |
4. | The Companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the Companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the Companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting; and |
5. | The Companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the Companys board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Companys ability to record, process, summarise and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Companys internal control over financial reporting. |
/s/ Tom Albanese | ||||
Chief executive | ||||
Date: 27 May 2010 |
1. | I have reviewed this annual report on Form 20-F of Rio Tinto plc (the Company); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; |
4. | The Companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the Companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the Companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting; and |
5. | The Companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the Companys board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Companys ability to record, process, summarise and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Companys internal control over financial reporting. |
/s/ Guy Elliott | ||||
Chief financial officer | ||||
Date: 27 May 2010 |
1. | I have reviewed this annual report on Form 20-F of Rio Tinto Limited (the Company); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; |
4. | The Companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the Companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the Companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting; and |
5. | The Companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the Companys board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Companys ability to record, process, summarise and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Companys internal control over financial reporting. |
/s/ Tom Albanese | ||||
Chief executive | ||||
Date: 27 May 2010 |
1. | I have reviewed this annual report on Form 20-F of Rio Tinto Limited (the Company); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; |
4. | The Companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the Companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the Companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting; and |
5. | The Companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the Companys board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Companys ability to record, process, summarise and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Companys internal control over financial reporting. |
/s/ Guy Elliott | ||||
Chief financial officer | ||||
Date: 27 May 2010 | ||||
/s/ Tom Albanese
|
/s/ Guy Elliott
|
|||
Name: Tom Albanese
|
Name: Guy Elliott | |||
Title: Chief executive
|
Title: Chief financial officer | |||
|
||||
Date:
27 May 2010
|
Date: 27 May 2010 |
/s/ Tom Albanese
|
/s/ Guy Elliott
|
|||
Name: Tom Albanese
|
Name: Guy Elliott | |||
Title: Chief executive
|
Title: Finance director | |||
|
||||
Date:
27 May 2010
|
Date: 27 May 2010 |
/s/ PricewaterhouseCoopers LLP
|
/s/ PricewaterhouseCoopers | |||
|
||||
PricewaterhouseCoopers LLP
|
PricewaterhouseCoopers | |||
London, United Kingdom
|
Brisbane, Australia | |||
27 May 2010
|
27 May 2010 |