x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2014
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
Minnesota
|
20-0803515
|
|
(State or other jurisdiction of
Incorporation or organization)
|
(I.R.S. Employer
Identification No.)
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Large accelerated filer | o | Accelerated Filer | o |
Non-accelerated filer | o | Smaller reporting company | x |
March 31, 2014
|
June 30, 2013
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
Assets
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 5,299,715 | $ | 825,100 | ||||
Amounts receivable and prepaid expenses (note 4)
|
271,942 | 209,520 | ||||||
Loan to related party (note 4)
|
50,716 | 136,999 | ||||||
Marketable securities (note 5)
|
79,409 | 10,000 | ||||||
Total current assets
|
5,701,782 | 1,181,619 | ||||||
Equipment (note 6)
|
20,179 | 38,817 | ||||||
Total assets
|
$ | 5,721,961 | $ | 1,220,436 | ||||
Liabilities and Stockholders' Equity
|
||||||||
Liabilities
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable and accrued liabilities (note 4)
|
$ | 2,079,924 | $ | 803,130 | ||||
Deferred premium on flow-through shares (note 8)
|
100,538 | - | ||||||
Total liabilities
|
2,180,462 | 803,130 | ||||||
Stockholders' Equity
|
||||||||
Common stock, 450,000,000 shares authorized, $0.001 par value,
|
||||||||
266,127,603 issued and outstanding (June 30, 2013 –
|
||||||||
175,604,320) (note 9)
|
266,127 | 175,604 | ||||||
Additional paid-in capital
|
85,575,786 | 75,357,442 | ||||||
Accumulated comprehensive loss
|
22,021 | (62,849 | ) | |||||
Donated capital
|
20,750 | 20,750 | ||||||
Accumulated deficit during exploration stage
|
(82,343,185 | ) | (75,073,641 | ) | ||||
Total stockholders' equity
|
3,541,499 | 417,306 | ||||||
Total liabilities and stockholders' equity
|
$ | 5,721,961 | $ | 1,220,436 |
March 1, 2004
(date of inception) to
|
For the nine months
ended March 31,
|
For the three months
ended March 31,
|
||||||||||||||||||
March 31, 2014 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Revenues
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Expenses
|
||||||||||||||||||||
Mineral exploration expense (note 4 & 7)
|
31,219,335 | 4,290,899 | 3,194,788 | 2,706,609 | 906,431 | |||||||||||||||
Stock-based compensation
|
||||||||||||||||||||
(notes 4, 9 & 10)
|
24,856,963 | 681,419 | 1,470,678 | 439,600 | 1,059,640 | |||||||||||||||
Impairment loss on mineral
|
||||||||||||||||||||
properties (note 7)
|
11,358,637 | - | - | - | - | |||||||||||||||
General and administrative (note 4)
|
8,786,367 | 911,273 | 831,968 | 317,538 | 306,236 | |||||||||||||||
Professional and consulting fees (note 4)
|
8,731,206 | 1,567,387 | 1,571,547 | 977,434 | 495,720 | |||||||||||||||
Depreciation (note 6)
|
105,287 | 18,638 | 16,664 | 6,671 | 4,951 | |||||||||||||||
Donated services and expenses
|
18,750 | - | - | - | - | |||||||||||||||
Foreign currency translation gain
|
(1,237,551 | ) | (236,661 | ) | (71,764 | ) | (146,555 | ) | (80,893 | ) | ||||||||||
Total expenses
|
83,838,994 | 7,232,955 | 7,013,881 | 4,301,297 | 2,692,085 | |||||||||||||||
Net loss from operations
|
(83,838,994 | ) | (7,232,955 | ) | (7,013,881 | ) | (4,301,297 | ) | (2,692,085 | ) | ||||||||||
Other Income / (Loss)
|
||||||||||||||||||||
Investment income
|
1,255,805 | 27,260 | 305,938 | 19,860 | 10,376 | |||||||||||||||
Other income
|
303,853 | - | - | - | - | |||||||||||||||
Impairment of marketable securities (note 5)
|
(63,849 | ) | (63,849 | ) | - | - | - | |||||||||||||
Net Loss
|
(82,343,185 | ) | (7,269,544 | ) | (6,707,943 | ) | (4,281,437 | ) | (2,681,709 | ) | ||||||||||
Unrealized (loss)/gain from investments in
|
||||||||||||||||||||
marketable securities
|
(47,672 | ) | 21,021 | (7,513 | ) | 16,582 | 2,000 | |||||||||||||
Recognition of other than temporary
|
||||||||||||||||||||
loss (note 5)
|
63,849 | 63,849 | - | - | - | |||||||||||||||
Comprehensive loss
|
$ | (82,327,008 | ) | $ | (7,184,674 | ) | $ | (6,715,456 | ) | $ | (4,264,855 | ) | $ | (2,679,709 | ) | |||||
Loss per share - basic and diluted
(note 12)
|
$ | (0.03 | ) | $ | (0.04 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||||||||
Weighted average shares outstanding -
|
||||||||||||||||||||
basic and diluted (note 12)
|
212,067,742 | 160,757,292 | 229,488,978 | 164,199,726 |
March 1, 2004 | For the nine months ended | |||||||||||
(date of inception) to | March 31, | March 31, | ||||||||||
March 31, 2014 | 2013 | 2012 | ||||||||||
Net loss
|
$ | (82,343,185 | ) | $ | (7,269,544 | ) | $ | (6,707,943 | ) | |||
Adjustments to reconcile net loss to net
cash used in operating activities:
|
||||||||||||
Depreciation
|
105,287 | 18,638 | 16,664 | |||||||||
Gain on sale of marketable securities
|
(4,545 | ) | (4,545 | ) | - | |||||||
Donated services and expenses
|
20,750 | - | - | |||||||||
Non-cash proceeds received
|
(74,000 | ) | - | - | ||||||||
Dual currency deposits
|
71,680 | - | - | |||||||||
Impairment loss on mineral properties
|
11,358,637 | - | - | |||||||||
Stock-based compensation
|
24,856,963 | 681,419 | 1,470,678 | |||||||||
Issuance of shares and warrants for
services rendered
|
168,100 | - | - | |||||||||
Impairment of marketable securities
|
63,849 | 63,849 | - | |||||||||
Change in operating assets and liabilities:
|
||||||||||||
Amounts receivable and prepaid expenses
|
(271,942 | ) | (62,422 | ) | 228,907 | |||||||
Accounts payable and accrued liabilities
|
2,080,750 | 1,276,794 | (565,137 | ) | ||||||||
Tax credits recoverable
|
(245,186 | ) | - | - | ||||||||
Non-cash portion of marketable securities
|
366 | - | - | |||||||||
Net cash used in operating activities
|
(44,212,476 | ) | (5,295,811 | ) | (5,556,831 | ) | ||||||
Financing Activities
|
||||||||||||
Proceeds from issuance of common stock,
net of costs
|
51,907,720 | 9,732,482 | 4,023,113 | |||||||||
Exercise of warrants and stock options
|
1,075,500 | - | 105,000 | |||||||||
Government grants received
|
245,186 | - | - | |||||||||
Net cash provided by financing activities
|
53,228,406 | 9,732,482 | 4,128,113 | |||||||||
Investing Activities
|
||||||||||||
Mineral property acquisition costs
|
(3,419,973 | ) | - | - | ||||||||
Purchase of property and equipment
|
(125,465 | ) | - | (9,808 | ) | |||||||
Investment in dual currency deposits
|
(32,938,800 | ) | - | - | ||||||||
Redemption of dual currency deposits
|
32,867,078 | - | - | |||||||||
Loan to related party
|
(50,716 | ) | 86,283 | 88,347 | ||||||||
Purchases of marketable securities, net of sales
|
(103,763 | ) | (103,763 | ) | - | |||||||
Proceeds on sale of marketable securities
|
55,424 | 55,424 | - | |||||||||
Net cash (used in) provided by investing activities
|
(3,716,215 | ) | 37,944 | 78,539 | ||||||||
Increase (decrease) in cash and cash equivalents
|
5,299,715 | 4,474,615 | (1,350,179 | ) | ||||||||
Cash and cash equivalents - beginning of period
|
- | 825,100 | 3,479,484 | |||||||||
Cash and cash equivalents - end of period
|
$ | 5,299,715 | $ | 5,299,715 | $ | 2,129,305 | ||||||
Non-cash investing and financing activities: | ||||||||||||
Issuance of common stock for mineral properties
|
$ | 5,190,500 | $ | - | $ | - | ||||||
Issuance of common stock and warrants for services
|
$ | 5,811,125 | $ | - | $ | - | ||||||
Supplemental Disclosures:
|
||||||||||||
Interest received
|
$ | 817,422 | $ | - | $ | - | ||||||
Taxes received
|
$ | 9,441 | $ | - | $ | - |
1.
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Exploration Stage Company and Going Concern
|
2.
|
Significant Accounting Policies
|
3.
|
Recent Accounting Pronouncements Affecting The Company
|
o
|
"Income Taxes (ASC Topic - 740): Presentation of an Unrecognized Tax Benefit when a Net OperatingLoss Carry-forward, a Similar Tax Loss, or a Tax Credit Carry-forward Exists" (ASU 2013-11) was issuedduring July 2013. FASB issued guidance on how to present an unrecognized tax benefit. The guidance is effective for annual periods beginning after December 15, 2013. The Company is currently evaluating the impact of ASC Topic - 740.
|
4.
|
Related Party Transactions and Balances
|
a)
|
The Company incurred a total of $90,000 (March 31, 2013: $89,495) office administration and rent expense from a public company related by common management, Red Pine Exploration Inc (TSX.V: "RPX").
|
b)
|
5,370,000 (March 31, 2013: 5,275,000) stock options were issued to related parties during the period with exercise prices between $0.11 and $0.18 (March 31, 2013: between $0.21 and $0.29). These stock options valued at $513,364 (March 31, 2013: $1,051,175) were issued to directors and officers of the Company.
|
c)
|
The Company incurred $754,515 (March 31, 2013: $634,387) in administrative, management and consulting fees to directors and officers.
|
d)
|
The Company incurred $571,395 (March 31, 2013: $898,083) in charges from a mining and engineering firm for which one of the Company's directors serves as a senior officer and a director.
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e)
|
During the nine month period ended March 31, 2014 the Company
Optioned a 75% interest in the Sagar Property to Honey Badger Exploration Inc. (TSX-V: "TUF"), a public company related by common management. Refer to Note 7 - Minerals Properties for the terms of this property transaction.
|
a)
|
Related party balances of $46,326 (June 30, 2013: $46,381) in prepaid expenses.
|
b)
|
The Company has advanced a short-term loan to RPX totaling $50,716 (June 30, 2013: $136,999). This loan is interest bearing at a rate of 3% and is expected to be paid back in full within the next 12 months. $300,000 was originally loaned during January 2012 and represents the highest outstanding balance. $225,000 has been paid back on the loan since inception up to March 31, 2013, all against the loan's principal balance. Accrued interest due totaled $11,029 as at March 31, 2014.
|
c)
|
Of the $571,395 (March 31, 2013: $898,083) in charges from a mining and engineering firm for which one of the Company's directors serves as a senior officer and director, $415,801 (March 31, 2013: $243,907) is included in accounts payable and accrued liabilities.
|
d)
|
$325,867 (March 31, 2013: $Nil) is included within accounts payable and accrued liabilities as a committed amount due to the former Chief Executive Officer of the
Company.
|
5.
|
Marketable Securities
|
6.
|
Equipment
|
Accumulated
|
March 31, 2014
|
June 30, 2013
|
||||||||||||||
Cost
|
Depreciation
|
Net Book Value
|
Net Book Value
|
|||||||||||||
Exploration equipment
|
$ | 63,547 | $ | 43,368 | $ | 20,179 | $ | 38,817 |
7.
|
Mineral Properties
|
7.
|
Mineral Properties - continued
|
-
|
$1,500,000 within 15 days upon the earlier of the completion of a financing or nine months following theagreement's closing date and up to 9.5% of TUF’s issued and outstanding common shares ("I&O Shares")at the time of issuance to a maximum of 15,000,000 common shares.
|
-
|
$1,500,000, subject to receiving shareholder approval but within eighteen months from the agreement'sclosing date, and up to 15% of TUF’s I&O Shares at the time of issuance to a maximum of 35,000,000common shares (the maximum includes all common shares previously issued). If shareholder approval is not obtained, the Company will receive $750,000 and additional common shares that equal up to 9.5% of TUF’s I&O Shares at the time of issuance to a maximum of 20,000,000 common shares (the maximum includes all common shares previously issued).
|
-
|
Subject to meeting certain conditions, TUF is granted a three-year option (“Option”), commencing noearlier than June 1, 2015, to purchase the Company's remaining 25% interest. If exercised, the Companywill receive $1,000,000 and common shares up to 19.5% of TUF’s I&O Shares at the time of issuance to an aggregate maximum of 60,000,000 common shares (the maximum includes all common shares previously issued) within 15 days of any requisite shareholder and regulatory approval. If shareholder approval is not obtained for the Option, TUF can elect to pay $1,875,000 in lieu of shares. If the Option is not exercised, the Company and TUF will enter into a joint venture agreement consistent with industry norms for such arrangements including a standard dilution clause.
|
-
|
Subject to certain conditions, the Company has been provided with a first right of refusal for a period of 5
years to maintain its equity position by participating in any future private placements. The Company will
retain a 2% net smelter royalty (“NSR”) on the property, of which, 1% could be purchased by TUF for
$1,000,000.
|
8.
|
Deferred Premium on Flow-Through Shares
|
For the nine month period ended March 31, 2014 | ||||
Deferred premium on flow-through shares, beginning of period
|
$ | - | ||
Recognized on issuance of flow-through shares
|
100,538 | |||
Deferred premium on flow-through shares, end of period
|
$ | 100,538 |
9.
|
Common Stock and Additional Paid-in Capital
|
a)
|
During July 2012, the Company issued 700,000 shares of common stock for consideration of $105,000. The shares were issued pursuant to the exercise of stock options.
|
b)
|
On July 13, 2012, the Company issued 1,695,000 stock options to directors, officers and consultants of the Company at an exercise price of $0.29. The stock options were valued at $411,038 using the Black-Scholes pricing model with the following assumptions: risk free interest rate - 1.25%; expected volatility - 138%; dividend yield - NIL; and expected life - 4 years. These stock options vested on the grant date.
|
c)
|
During November 2012, the Company closed a brokered and non-brokered private placement raising a total of $2,032,500. The Company issued 5,807,142 common stock at $0.35 per share and 2,903,571 common share purchase warrants at an exercise of $0.50 and an expiry date 24 months from the date of issue. In addition, the Company paid a fee of $119,010 and issued 340,028 compensation warrants. Each compensation warrant entitles the holder to purchase one common share at $0.35 and one half of one common share purchase warrant at an exercise price of $0.50.
|
d)
|
On February 27, 2013, the Company issued 5,900,000 stock options to directors, officers and consultants at an exercise price of $0.21. The stock options were valued at $1,059,640 using the Black-Scholes pricing model with the following assumptions: risk free interest rate - 1.40%; expected volatility - 129%; dividend yield - NIL; and expected life - 5 years. These stock options vested on the grant date.
|
e)
|
During March 2013, the Company closed a private placement raising a total of CAD$2,358,000 (USD$2,307,035). The Company issued 12,350,000 common stock at prices between $0.18 and $0.20 per share. In addition, the Company paid a fee of CAD$86,000 (USD$84,176) and issued 270,000 compensation warrants. Each compensation warrant entitles the holder to purchase one common share at CAD$0.20.
|
f)
|
On July 9, 2013, the Company issued 1,255,000 stock options to directors, officers and consultants at an exercise price of $0.11. The stock options were valued at $117,594 using the Black-Scholes pricing model with the following assumptions: risk free interest rate - 1.25%; expected volatility - 128%; dividend yield - NIL; and expected life - 5 years. These stock options vested on the grant date.
|
9.
|
Common Stock and Additional Paid-in Capital - continued
|
g)
|
Between July 26, 2013 and August 1, 2013, the Company closed a private placement raising a total of $2,043,452. The Company issued 16,950,001 common stock at prices of CAD$0.125 and $0.12 per share. The Company paid a fee of $114,087 and issued 402,000 compensation warrants at an exercise price of CAD$0.125 and 150,000 compensation warrants at an exercise price of $0.12. Each compensation warrant expires one year from the date of issue.
|
h)
|
On September 19, 2013, the Company issued 750,000 stock options to directors, officers and consultants at an exercise price of $0.15. The stock options were valued at $96,675 using the Black-Scholes pricing model with the following assumptions: risk free interest rate - 1.25%; expected volatility - 127%; dividend yield - NIL; and expected life - 5 years. These stock options vested on the grant date.
|
i)
|
On October 9, 2013, the Company issued 250,000 stock options to directors and officers of the Company at an exercise of $0.13 and an expiry date of October 9, 2018. The stock options were valued at $27,550 using the Black-Scholes pricing model with the following assumptions: risk free interest rate - 1.25%; expected volatility - 126%; dividend yield - NIL; and expected life - 5 years. These stock options vested on the grant date.
|
j)
|
On December 18, 2013 the Company closed a private placement raising a total of CAD$1,566,490 (USD$1,479,023). The Company issued 11,189,215 common shares at a price of CAD$0.14. The Company paid fees of $112,067 and issued 671,353 compensation warrants at an exercise price of CAD$0.14. Each compensation warrant expires eighteen months from the date of issue.
|
k)
|
On January 10, 2014, the Company issued 4,625,000 stock options to directors and officers of the Company at an exercise of $0.18 and an expiry date of January 10, 2019. The stock options were valued at $413,475 using the Black-Scholes pricing model with the following assumptions: risk free interest rate - 1.50%; expected volatility - 110%; dividend yield - NIL; and expected life - 5 years. These stock options vested on the grant date.
|
l)
|
On January 15, 2014 and January 31, 2014, the Company closed a private placement raising a total of CAD$7,486,088 (USD$6,910,503). The Company issued 62,384,067 common shares at a price of CAD$0.12 and 31,192,033 common share purchase warrants with an exercise price of CAD$0.18. Of the 31,192,033 common share purchase warrants, 29,152,033 expire on January 14, 2017, 1,450,000 expire on June 14, 2015 and 590,000 expire on January 31, 2017. The Company paid fees, including commissions, legal fees and TSX fees of $488,234 and issued 3,396,744 compensation warrants at an exercise price of CAD$0.14. Each compensation warrant expires eighteen months from the date of issue.
|
m)
|
On February 6, 2014, the Company issued 250,000 stock options to a consultant of the Company at an exercise of $0.18 and an expiry date of February 6, 2019. The stock options were valued at $26,125 using the Black-Scholes pricing model with the following assumptions: risk free interest rate - 1.50%; expected volatility - 107%; dividend yield - NIL; and expected life - 5 years. These stock options vested on the grant date.
|
10.
|
Stock Options
|
Number of
|
Weighted-Average
|
|||||||
Stock Options
|
Exercise Price ($)
|
|||||||
Outstanding and exercisable, June 30, 2012
|
23,690,000 | 0.29 | ||||||
Issued
|
7,595,000 | 0.23 | ||||||
Exercised
|
(700,000 | ) | 0.15 | |||||
Expired
|
(1,695,000 | ) | 0.15 | |||||
Cancelled
|
(1,750,000 | ) | 0.32 | |||||
Outstanding and exercisable, June 30, 2013
|
27,140,000 | 0.28 | ||||||
Issued
|
7,130,000 | 0.16 | ||||||
Expired
|
(750,000 | ) | 0.35 | |||||
Cancelled
|
(200,000 | ) | 0.26 | |||||
Outstanding and exercisable, March 31, 2014
|
33,320,000 | 0.25 |
Exercise
|
Number of
|
Expiry
|
|||||||
Price ($)
|
Stock Options
|
Date
|
|||||||
0.40 | 4,850,000 |
May 11, 2014
|
|||||||
0.30 | 3,700,000 |
July 1, 2016
|
|||||||
0.29 | 1,695,000 |
July 13, 2016
|
|||||||
0.20 | 1,800,000 |
October 24, 2016
|
|||||||
0.21 | 2,240,000 |
December 1, 2016
|
|||||||
0.28 | 5,850,000 |
March 7, 2017
|
|||||||
0.23 | 180,000 |
May 23, 2017
|
|||||||
0.21 | 5,875,000 |
February 27, 2018
|
|||||||
0.11 | 1,255,000 |
July 9, 2018
|
|||||||
0.15 | 750,000 |
September 19, 2018
|
|||||||
0.13 | 250,000 |
October 9, 2018
|
|||||||
0.18 | 4,625,000 |
January 10, 2019
|
|||||||
0.18 | 250,000 |
February 6, 2019
|
|||||||
33,320,000 |
11.
|
Warrants
|
Number
|
Exercise
|
|||||||
of Warrants
|
Price ($)
|
|||||||
Outstanding and exercisable, June 30, 2012
|
43,619,695 | 0.55 | ||||||
Issued
|
3,513,599 | 0.46 | ||||||
Expired
|
(43,619,695 | ) | 0.55 | |||||
Outstanding and exercisable, June 30, 2013
|
3,513,599 | 0.46 | ||||||
Issued
|
35,812,130 | 0.16 | * | |||||
Expired
|
(270,000 | ) | 0.18 | |||||
Outstanding and exercisable, March 31, 2014
|
39,055,729 | 0.16 | * |
Exercise
|
Number of
|
Expiry | |||||||
Price ($)
|
Warrants
|
Date
|
|||||||
0.11 | (a) | 402,000 |
July 26, 2014
|
||||||
0.12 | 150,000 |
August 1, 2014
|
|||||||
0.35 | 340,028 |
November 15, 2014
|
|||||||
0.13 | (b) | 671,353 |
June 19, 2015
|
||||||
0.13 | (b) | 3,396,744 |
July 14, 2015
|
||||||
0.16 | (c) | 1,450,000 |
July 14, 2015
|
||||||
0.23 | (d) | 2,903,571 |
November 15, 2016
|
||||||
0.16 | (c) | 29,152,033 |
January 14, 2017
|
||||||
0.16 | (c) | 590,000 |
January 31, 2017
|
||||||
39,055,729 |
12.
|
Loss Per Share
|
13.
|
Commitments
|
14.
|
Subsequent Events
|
·
|
our ability to raise additional capital as required;
|
·
|
the market price for graphite, vanadium, gold, uranium and for any other minerals which we may find;
|
·
|
ongoing joint ventures;
|
·
|
the results of our proposed exploration programs on our mineral properties;
|
·
|
environmental regulations that may adversely impact cost and operations; and
|
·
|
our ability to find joint venture partners, as needed, for the development of our property interests.
|
·
|
$1,500,000 within 15 days upon the earlier of the completion of a financing or nine months following the agreement's closing date and up to 9.5% of TUF’s issued and outstanding common shares ("I&O Shares") at the time of issuance to a maximum of 15,000,000 common shares.
|
·
|
$1,500,000, subject to receiving shareholder approval but within eighteen months from the agreement's closing date, and up to 15% of TUF’s I&O Shares at the time of issuance to a maximum of 35,000,000 common shares (the maximum includes all common shares previously issued). If shareholder approval is not obtained, we will receive $750,000 and additional common shares that equal up to 9.5% of TUF’s I&O Shares at the time of issuance to a maximum of 20,000,000 common shares (the maximum includes all common shares previously issued).
|
·
|
Subject to meeting certain conditions, TUF is granted a three-year option (“Option”), commencing no
earlier than June 1, 2015, to purchase the our remaining 25% interest. If exercised, we will receive $1,000,000 and common shares up to 19.5% of TUF’s I&O Shares at the time of issuance to an aggregate maximum of 60,000,000 common shares (the maximum includes all common shares previously issued) within 15 days of any requisite shareholder and regulatory approval. If shareholder approval is not obtained for the Option, TUF can elect to pay $1,875,000 in lieu of shares. If the Option is not exercised, TUF and ourselves will enter into a joint venture agreement consistent with industry norms for such arrangements including a standard dilution clause.
|
·
|
Subject to certain conditions, we have been provided with a first right of refusal for a period of 5 years to maintain its equity position by participating in any future private placements. We will retain a 2% net smelter royalty (“NSR”) on the property, of which, 1% could be purchased by TUF for $1,000,000.
|
● | Stream Sediment sampling of all stream on the property area |
● | Detailed Geological mapping over selected startigraphic horizons |
● | Reconnaissance geological mapping over the entire property |
● | Soil sampling over selected target areas and prospecting over selected target areas |
● | Limited trenching over selected targets |
● | Construction of a cinder block base camp |
● | Construction of a one kilometre long surfaced airstrip |
● | Repair and surfacing of the access road from base camp to the airstrip |
● | Airborne geophysical surveying |
● | Infill stream sediment sampling |
● | Detailed Geological mapping over selected stratigraphic horizons |
● | Prospecting over selected target areas |
● | Grid emplacement over selected target areas |
● | Ground-based magnetometer and frequency domain EM surveys |
● | Soil sampling over selected target areas |
● | Infill stream sediment sampling |
● | Detailed geological mapping over selected stratigraphic horizons |
● | Prospecting over selected target areas with the aid of a mobile XRF analyzer |
● | Prospecting over selected target areas with the aid of a mobile XRF analyzer |
● | Ground-based scintillometer surveying over selected target areas |
● | Diamond drilling of 31 holes over 4,073 metres |
● | XRF soil sample analyses (8,490 samples) on lines 200 metres apart covering 18 kilometre strike length |
● | Scintillometer surveying (112 line kilometres) on lines 200 metres apart over an 18 kilometre strike length |
● | Trenching (140 trenches for 17,105 metres) |
● | Diamond drilling of 54 diamond drill holes over 8,931 metres |
● | Diamond drilling of 46 diamond drill holes over 8,952 metres |
● | Prospecting over selected target areas with the aid of a mobile XRF analyzer (20 grab samples) |
● | Geologic mapping over the Manga and Mainty deposits at 1:5000 scale |
● | ERT ground geophysical survey (5.64 km) |
● | MAG ground geophysical survey (169.53 km) |
● | Gradient Array EM ground geophysical survey (128.82 km) |
● | Diamond drilling of 10 holes over 1,157.5 metres |
● | Trenching (16 trenches for 1,912 metres) |
● | Prospecting over selected target areas |
● | Diamond drilling of 20 holes over 2,842 metres |
● | Prospecting over selected target areas |
● | EM31 ground geophysical survey over selected target areas (160.5 km) |
● | Trenching (18 trenches for 2,100 metres) |
● | Diamond drilling of 41 diamond drill holes over 8,459 metres |
·
|
The average mass recovery into the large and extra-large flake category (greater than +80 mesh) was 43.5% based on the results of fifteen size fraction analyses of the combined concentrate;
|
·
|
The average grade of the extra-large flake (greater than +48 mesh) was 97.7% Ct;
|
·
|
The average grade of the large flake (greater than +80 mesh) was 97.4% Ct;
|
·
|
The average grade of the medium flake (greater than +200 mesh) was 96.7% Ct;
|
·
|
The majority of the impurities reported to the small flake size fractions (-400 mesh)
|
·
|
The average total carbon content of twelve pilot plant surveys was 93.7% Ct
at an average carbon recovery of 90.3%.
|
Country
|
Flake output
|
China
|
380,000
|
Brazil
|
96,000
|
India
|
35,000
|
North Korea
|
30,000
|
Canada
|
21,000
|
Norway
|
8,000
|
Zimbabwe
|
5,000
|
Madagascar
|
4,000
|
Russia
|
2,000
|
Ukraine
|
1,500
|
Germany | 300 |
Total | 428,300 |
Country
|
Amorphous output
|
China
|
400,000
|
Austria
|
16,000
|
Mexico
|
12,000
|
Turkey
|
300
|
Total
|
428,300
|
Refractories, foundry and crucibles | 39% |
Metallurgy | 28% |
Parts and components | 10% |
Batteries | 9% |
Lubricants | 9% |
Other
|
5% |
Salient Statistics—United States
|
2008
|
2009
|
2010
|
2011
|
2012est
|
|||||||||||||||
Production, mine, mill
|
520 | 230 | 1,060 | 590 | 270 | |||||||||||||||
Imports for consumption:
|
||||||||||||||||||||
Ferrovanadium
|
2,800 | 353 | 1,340 | 2,220 | 3,400 | |||||||||||||||
Vanadium pentoxide, anhydride
|
3,700 | 1,120 | 4,000 | 2,810 | 1,570 | |||||||||||||||
Oxides and hydroxides, other
|
144 | 25 | 167 | 886 | 1,210 | |||||||||||||||
Aluminum-vanadium master alloys (gross weight)
|
618 | 282 | 951 | 278 | 180 | |||||||||||||||
Ash and residues
|
1,040 | 791 | 521 | 1,420 | 1,500 | |||||||||||||||
Sulfates
|
2 | 16 | 48 | 42 | 40 | |||||||||||||||
Vanadates
|
187 | 214 | 158 | 303 | 320 | |||||||||||||||
Vanadium metal, including waste and scrap
|
5 | 22 | 10 | 44 | 110 | |||||||||||||||
Exports:
|
||||||||||||||||||||
Ferrovanadium
|
452 | 672 | 611 | 314 | 530 | |||||||||||||||
Vanadium pentoxide, anhydride
|
249 | 401 | 140 | 89 | 40 | |||||||||||||||
Oxides and hydroxides, other
|
1,040 | 506 | 1,100 | 254 | 190 | |||||||||||||||
Aluminum-vanadium master alloys (gross weight) 1,390
|
447 | 1,190 | 920 | 1,400 | ||||||||||||||||
Vanadium metal, including waste and scrap
|
57 | 23 | 21 | 102 | 10 | |||||||||||||||
Consumption:
|
||||||||||||||||||||
Apparent
|
5,820 | 1,040 | 5,190 | 6,963 | 6,400 | |||||||||||||||
Reported
|
5,170 | 4,690 | 5,030 | 5,120 | 5,200 | |||||||||||||||
Stocks, consumer, yearend
|
335 | 295 | 248 | 2185 | 2220 | |||||||||||||||
* Price, average, dollars per pound V2O5
|
$ | 12.92 | $ | 5.43 | $ | 6.46 | $ | 6.76 | $ | 6.52 | ||||||||||
Imports + exports + adjustments for government
|
||||||||||||||||||||
and industry stock changes as a percentage of
|
||||||||||||||||||||
apparent consumption
|
91 | % | 78 | % | 81 | % | 92 | % | 96 | % |
Mine production
|
Reserves (thousand | |||||||||||
2011
|
2012est
|
metric tons)
|
||||||||||
China
|
23,000 | 23,000 | 5,100 | |||||||||
South Africa
|
22,000 | 22,000 | 3,500 | |||||||||
Russia
|
15,200 | 16,000 | 5,000 | |||||||||
United States
|
1,590 | 1,270 | 45 | |||||||||
Other countries
|
1,600 | 1,600 |
not applicable
|
|||||||||
World total (approximate)
|
63,390 | 63,870 | 14,000 |
·
|
$1,500,000 within 15 days upon the earlier of the completion of a financing or nine months following the agreement's closing date and up to 9.5% of TUF’s issued and outstanding common shares ("I&O Shares") at the time of issuance to a maximum of 15,000,000 common shares.
|
·
|
$1,500,000, subject to receiving shareholder approval but within eighteen months from the agreement's closing date, and up to 15% of TUF’s I&O Shares at the time of issuance to a maximum of 35,000,000 common shares (the maximum includes all common shares previously issued). If shareholder approval is not obtained, we will receive $750,000 and additional common shares that equal up to 9.5% of TUF’s I&O Shares at the time of issuance to a maximum of 20,000,000 common shares (the maximum includes all common shares previously issued).
|
·
|
Subject to meeting certain conditions, TUF is granted a three-year option (“Option”), commencing no
earlier than June 1, 2015, to purchase the our remaining 25% interest. If exercised, we will receive $1,000,000 and common shares up to 19.5% of TUF’s I&O Shares at the time of issuance to an aggregate maximum of 60,000,000 common shares (the maximum includes all common shares previously issued) within 15 days of any requisite shareholder and regulatory approval. If shareholder approval is not obtained for the Option, TUF can elect to pay $1,875,000 in lieu of shares. If the Option is not exercised, TUF and ourselves will enter into a joint venture agreement consistent with industry norms for such arrangements including a standard dilution clause.
|
·
|
Subject to certain conditions, we have been provided with a first right of refusal for a period of 5 years to maintain its equity position by participating in any future private placements. We will retain a 2% net smelter royalty (“NSR”) on the property, of which, 1% could be purchased by TUF for $1,000,000.
|
·
|
Following our accounting policies of expensing acquisition costs and exploration expenses on mineral properties as incurred, this amounts increased the net loss for each period. For the nine months ended March 31, 2014, we spent $4,290,899 (March 31, 2013: $3,194,788) on our mineral properties. This represents an increase of $1,096,111. In the prior year, we completed a drill program on our Molo ground as part of work required to complete our National Instrument 43-101 report (which was subsequently filed during the second quarter of fiscal 2013). During the nine months ended March 31, 2014, we have progressed on our Bankable Feasibility Study which to date includes, among other things, drilling and related costs as well as spent funds on our Madagascar pilot plant through SGS in Lakefield, Canada. We have also spent funds on the Sagar property which we recently divested 75% of our 100% interest.
|
·
|
Professional fees totalled $1,567,387 for the period ended March 31, 2014, down $4,160 from the March 31, 2013’s total of $1,571,547. General and administration totalled $911,273 for the period ended March 31, 2014, up $79,305 from the March 31, 2013’s total of $831,968. General and administration are costs associated with running the Toronto and Madagascar offices. Investor relations expenses, including the use of third parties at conferences and lunches who are assisting in spreading knowledge about our company to retail investors, institutional investors and potential off-take parties plus the cost of travel are the primary reasons for the increase in general and administration expenses. Trips have included numerous visits to Asia, Europe, and Africa to update existing investors and potential off-take partners, trips to California for investor presentations and trips to New York City and surrounding area for both investors, conferences and discussions with potential off-take partners. In addition, trips have also been made to our property in Madagascar to work on our company’s bankable feasibility study with the assistance with DRA. With regards to professional fees, legal fees where higher during the current period when compared to the prior period. In addition, the Company recorded a charge of $325,867 due to its former Chief Executive Officer. This was offset by lower professional fee charges to employees and other consultants of the company.
|
·
|
Stock-based compensation decreased by $789,259 from $1,470,678 for the nine month period ended March 31, 2013 to $681,419 for the nine month period ended March 31, 2014. A total of 7,130,000 stock options were issued at exercise prices between $0.11 and $0.18 during the nine months ended March 31, 2014 while 7,595,000 stock options were issued at exercise prices between $0.21 and $0.29 during the nine months ended March 31, 2013. The value noted within the statement of operations is the theoretical Black-Scholes calculated value of the stock options, based on subjective factors including volatility, risk-free interest rate, dividend yield and expected life.
|
·
|
Net investment income totalled $27,260 for the nine month period ended March 31, 2014 and $305,938 during the nine month period ended for March 31, 2013. During 2012, our cash balance was higher allowing us to make greater returns. More significantly, during 2012, due to the rise in the value of low-risk bond funds, we were able to capitalize by investing our net excess cash and yielding a significant return.
|
·
●
|
During the nine months ended March 31, 2014, $63,849 (March 31, 2013: $Nil) was written off as a result of other than a temporary decline in market value of various investments held during the life of our company.
|
·
|
From inception to June 30, 2004, we raised $59,750 through the issuance of 9,585,000 common shares.
|
·
|
For the year ended June 30, 2005, we did not raise any capital from new financings.
|
·
|
For the year ended June 30, 2006, we raised $795,250 through the issuance of 2,750,000 common shares and 2,265,000 common share purchase warrants.
|
●
|
For the year ended June 30, 2007, we raised $17,300,000 through the issuance of 34,600,000 common shares and 29,000,250 common share purchase warrants
.
|
·
|
For the year ended June 30, 2008, we did not raise any capital from new financings.
|
·
|
For the year ended June 30, 2009, we raised $680,000 through the issuance of 6,800,000 common shares and 3,400,000 common share purchase warrants.
|
·
|
For the year ended June 30, 2010, we raised $6,500,000 through the issuance of 21,666,667 common shares and 21,666,667 common share purchase warrants.
|
·
|
For the year ended June 30, 2011, we raised net proceeds of $13,178,708 through the issuance of 30,936,654 common shares and 15,468,328 common share purchase warrants and $886,501 (by issuing 4,549,500 common shares) through the exercise of common share purchase warrants.
|
·
|
For the year ended June 30, 2012, we raised net proceeds of $635,000 (by issuing 2,540,000 common shares) through the issuance of common shares and $84,000 (by issuing 510,000 common shares) through the exercise of common stock purchase options.
|
·
|
For the year ended June 30, 2013, we raised net proceeds of $4,076,113 through the issuance of 18,157,142 common shares and 3,513,599 common share purchase warrants and $105,000 by issuing 700,000 common shares through the exercise of common stock purchase options.
|
·
|
For the nine month period ended March 31, 2014, we raised net proceeds of $9,732,482 through the issuance of 90,523,283 common shares and 35,812,130 common share purchase warrants.
|
·
|
During July 2012, $105,000 was raised through the exercise of 700,000 stock options at $0.15.
|
·
|
On July 13, 2012, we issued 1,695,000 stock options to directors, officers and consultants of our company at an exercise price of $0.29 and an expiry date of July 13, 2016.
|
·
|
During November 2012, we closed a brokered and non-brokered private placement raising a total of $2,032,500. We issued 5,807,142 common stock at $0.35 per share and 2,903,571 common share purchase warrants at an exercise price of $0.50, expiring 24 months from the date of issue. We paid fees of $119,010 and issued 340,028 compensation common share purchase warrants. Each compensation common share purchase warrant entitles the holder to purchase one common share at $0.35 and one half of one common share purchase warrant at an exercise price of $0.50.
|
·
|
On February 27 2013, we issued 5,900,000 stock options to directors, officers and consultants of our company at an exercise price of $0.21 and an expiry date of February 27, 2018.
|
·
|
During March 2013, we closed a private placement raising $2,307,035. We issued 12,350,000 common stock at prices between CAD$0.18 and CAD$0.20 per share. We paid a fee of $84,176 and issued 270,000 compensation warrants. Each compensation warrant entitles the holder to purchase one common share at CAD$0.20.
|
·
|
During July and August 2013, we closed a private placement raising $2,043,452 through the issuance of 16,950,001 common shares. We paid a fee of $114,087 and issued 402,000 compensation warrants at an exercise price of CAD$0.125 and 150,000 compensation warrants at an exercise price of $0.12. Each compensation warrant expires one year from the date of issue.
|
·
|
On December 18, 2013, we closed a private placement raising a total of $1,479,023. We issued 11,189,215 common shares at a price of CAD$0.14. We paid fees of $112,067 and issued 671,353 compensation warrants at an exercise price of CAD$0.14. Each compensation warrant expires eighteen months from the date of issue.
|
·
|
On January 10, 2014, we issued 4,625,000 stock options to directors and officers of the Company at an exercise of $0.18 and an expiry date of January 10, 2019.
|
·
|
On January 15, 2014 and January 31, 2014, we closed a private placement raising a total of $6,910,503. We issued 62,384,067 common shares at a price of CAD$0.12 and 31,192,033 common share purchase warrants with an exercise price of CAD0.18. Of the 31,192,033 common share purchase warrants, 29,152,033 expire on January 14, 2017, 1,450,000 expire on June 14, 2015 and 590,000 expire on January 31, 2017. We paid fees of $488,234 and issued 3,396,744 compensation warrants at an exercise price of CAD$0.14. Each compensation warrant expires eighteen months from the date of issue.
|
·
|
On February 6, 2014, we issued 250,000 stock options to a consultant of the Company at an exercise of $0.18 and an expiry date of February 6, 2019.
|
·
|
During July 2012, $105,000 was raised through the exercise of 700,000 stock options at $0.15 per share.
|
·
|
On July 13, 2012, we issued 1,695,000 stock options to directors, officers and consultants of the Company.
|
·
|
During November 2012, we closed a brokered and non-brokered private placement raising a total of $2,032,500. We issued 5,807,142 common stock at $0.35 per share and 2,903,571 common share purchase warrants at an exercise price of $0.50, expiring 24 months from the date of issue. We paid fees of $119,010 and issued 340,028 compensation common share purchase warrants. Each compensation common share purchase warrant entitles the holder to purchase one common share at $0.35 and one half of one common share purchase warrant at an exercise price of $0.50.
|
·
|
On February 27, 2013, we issued 5,900,000 stock options to directors, officers and consultants of the Company.
|
·
|
During March 2013, we closed a private placement raising CAD$2,358,000 (USD$2,307,035). We issued 12,350,000 common stock at prices between $0.18 and $0.20 per share. We paid a fee of $86,000 (USD$84,176) and issued 270,000 compensation warrants. Each compensation warrant entitles the holder to purchase one common share at CAD$0.20.
|
·
|
During July and August 2013, we closed a private placement raising $2,043,452 through the issuance of 16,950,001 common shares. We issued 402,000 compensation warrants at an exercise price of CAD$0.125 and 150,000 compensation warrants at an exercise price of $0.12. Each compensation warrant expires one year from the date of issue.
|
·
|
On December 18, 2013, we closed a private placement raising a total of $1,479,023. We issued 11,189,215 common shares at a price of CAD$0.14. We paid fees of $112,067 and issued 671,353 compensation warrants at an exercise price of CAD$0.14. Each compensation warrant expires eighteen months from the date of issue.
|
·
|
On January 15, 2014 and January 31, 2014, we closed a private placement raising a total of $6,910,503. We issued 62,384,067 common shares at a price of CAD$0.12 and 31,192,033 common share purchase warrants with an exercise price of CAD$0.18. Of the 31,192,033 common share purchase warrants, 29,152,033 expire on January 14, 2017, 1,450,000 expire on June 14, 2015 and 590,000 expire on January 31, 2017. We paid fees of $488,234 and issued 3,396,744 compensation warrants at an exercise price of CAD$0.14. Each compensation warrant expires eighteen months from the date of issue.
|
Exhibit Number | Description | |
3.1 | Articles of Incorporation of Uranium Star Corp. (now known as Energizer Resources Inc.) (Incorporated by reference to Exhibit 3.1 to the registrant’s current report on Form 8-K as filed with the SEC on May 20, 2008) | |
3.2
|
Articles of Amendment to Articles of Incorporation of Uranium Star Corp. changing its name to Energizer Resources Inc. (Incorporated by reference to Exhibit 3.1 to the registrant’s current report on Form 8-K filed with the SEC on July 16, 2010) | |
3.3
|
Amended and Restated By-Laws of Energizer Resources Inc. (Incorporated by reference to Exhibit 3.2 to the registrant’s current report on Form 8-K as filed with the SEC on July 16, 2010)
|
|
3.4
|
Amendment to the By-Laws of Energizer Resources Inc. (Incorporated by reference to the registrant’s current report on Form 8-K as filed with the SEC on October 16, 2013)
|
|
4.1
|
Amended and Restated 2006 Stock Option Plan of Energizer Resources, Inc. (as of February 2009) (Incorporated by reference to Exhibit 4.1 to the registrant's Form S-8 registration statement as filed with the SEC on February 19, 2010)
|
|
4.2
|
Form of broker Subscription Agreement for Units (Canadian and Offshore Subscribers) (Incorporated by reference to Exhibit 4.1 to the registrant’s current report on Form 8-K as filed with the SEC on March 19, 2010)
|
|
4.3
|
Form of standard Subscription Agreement for Units (Canadian and Offshore Subscribers) (Incorporated by reference to Exhibit 4.2 to the registrant’s current report on Form 8-K as filed with the SEC on March 19, 2010)
|
|
4.4
|
Form of Warrant to Purchase common shares (Incorporated by reference to Exhibit 4.3 to the registrant’s current report on Form 8-K as filed with the SEC on March 19, 2010)
|
|
4.5
|
Form of Class A broker warrant to Purchase common shares (Incorporated by reference to Exhibit 4.4 to the registrant’s current report on Form 8-K as filed with the SEC on March 19, 2010)
|
|
4.6
|
Form of Class B broker warrant to Purchase common shares (Incorporated by reference to Exhibit 4.5 to the registrant’s current report on Form 8-K as filed with the SEC on March 19, 2010)
|
|
4.7
|
Agency Agreement, dated March 15, 2010, between Energizer Resources, Clarus Securities Inc. and Byron Securities Limited (Incorporated by reference to Exhibit 4.6 to the registrant’s current report on Form 8-K filed with the SEC on March 19, 2010)
|
|
4.8
|
Form of Warrant relating to private placement completed during November 2012.
|
|
4.9
|
Agency Agreement relating to private placement completed during November 2012.
|
|
4.10
|
Amended and Restated Stock Option Plan of Energizer Resources, Inc. (Incorporated by reference to the registrant’s current report on Form 8-K as filed with the SEC on October 16, 2013)
|
|
10.1
|
Property Agreement effective May 14, 2004 between Thornton J. Donaldson and Thornton J. Donaldson, Trustee for Yukon Resources Corp. (Incorporated by reference to Exhibit 10.1 to the registrant's Form SB-2 registration statement as filed with the SEC on September 14, 2004)
|
|
10.2
|
Letter of Intent dated March 10, 2006 with Apofas Ltd. (Incorporated by reference to Exhibit 99.1 to the registrant's current report on Form 8-K as filed with the SEC on March 13, 2006)
|
|
10.3
|
Letter agreement effective May 12, 2006 between Yukon Resources Corp. and Virginia Mines Inc. (Incorporated by reference to Exhibit 99.1 to the registrant's current report on Form 8-K filed as with the SEC on May 9, 2006)
|
|
10.4
|
Joint Venture Agreement dated August 22, 2007 between Uranium Star Corp. & Madagascar Minerals and Resources Sarl (Incorporated by reference to Exhibit 10.1 to the registrant's Form 8-K as filed with SEC on September 11, 2007)
|
10.5
|
Share Purchase Agreement between Madagascar Minerals and Resources Sarl and THB Venture Limited (a subsidiary of Energizer Resources Inc.) dated July 9, 2009 (Incorporated by reference to Exhibit 10.5 to the registrant’s Form 10K/A as filed on April 8, 2013)
|
|
10.6 |
Joint Venture Agreement between Malagasy Minerals Limited and Energizer Resources Inc. dated December 14, 2011 (Incorporated by reference to Exhibit 10.6 to the registrant’s Form 10K/A as filed on April 8, 2013).
|
|
10.7 | ||
10.8 | ||
10.9 | ||
10.10 | ||
21 |
Subsidiaries of the Registrant (Incorporated by reference to Exhibit 21.1 to the registrant’s annual report on Form 10-K filed with the SEC on September 21, 2009)
|
|
31.1 | ||
31.2 | ||
32.1 | ||
32.2 | ||
99.1 |
Canadian National Instrument 43-101 Technical Report Update for Green Giant Property, Fotadrevo, Province of Toliara, Madagascar (Incorporated by reference to Exhibit 99.1 to the registrant's report on Form 8-K filed with SEC on July 9, 2010)
|
ENERGIZER RESOURCES INC. | |||
Dated: May 13, 2014
|
By:
|
/s/ Richard Schler | |
Name: Richard Schler | |||
Title: Chief Executive Officer and Director | |||
Dated: May 13, 2014
|
|||
By: | /s/ Peter D. Liabotis | ||
Name: Peter D. Liabotis | |||
Title: Chief Financial Officer (Principal Accounting Officer) |
BETWEEN
:
|
ENERGIZER RESOURCES INC.
, a corporation existing under the laws of the State of Minnesota and having a place of business at
141 Adelaide Street West, Suite 520, Toronto, Ontario, M5H 3L5
|
|
(hereinafter referred to as the “
Vendor
”)
|
AND
:
|
HONEY BADGER EXPLORATION INC.
, a corporation existing under the laws of Ontario and having a place of business at
141 Adelaide Street West, Suite 520, Toronto, Ontario, M5H 3L5
|
|
(hereinafter referred to as the “
Purchaser
”)
|
1.
|
Reciprocal Representations and Warranties
|
1.1
|
Each Party hereby represents and warrants to each of the other Parties that, as of the date hereof:
|
(a)
|
it is a body corporate duly incorporated or continued, as the case maybe, and in good standing under the laws of its jurisdiction of incorporation or continuation, as the case may be, is qualified to do business and is in good standing in those jurisdictions where necessary in order to carry out its purposes;
|
(b)
|
all corporate and other actions required to authorize it to enter into and perform this agreement, the Transaction and all other transactions contemplated by this agreement have been properly taken, with the exception of the regulatory approvals and filings which are a condition of Closing (as defined in Section 7 hereof) (the “
Regulatory Approvals
”);
|
(c)
|
it has all requisite corporate power to own, lease and operate its assets and to carry on its business as now conducted;
|
(d)
|
it has the capacity to enter into this agreement, the Transaction, all other transactions contemplated by this agreement and all other documents contemplated herein;
|
(e)
|
subject to the Regulatory Approvals, it will not breach any other agreement or arrangement to which it is a party or be in violation of any law to which it is subject, by entering into or performing this agreement, the Transaction, all other transactions contemplated by this agreement and all other documents contemplated herein;
|
(f)
|
this agreement has been duly executed and delivered by it and is valid and binding upon it in accordance with its terms; and
|
(g)
|
except as otherwise set forth herein, no consent from a lender or any third party is necessary to authorize it to execute this agreement, to complete the Transaction and all other transactions contemplated by this agreement, and to execute and deliver all related documents.
|
2.
|
Representations and Warranties of
the Vendor
|
2.1
|
The Vendor hereby represents and warrants to the Purchaser that, as of the date hereof:
|
(a)
|
it is the beneficial and registered owner of a 100% interest in the Claims, free and clear of all defects, liens, adverse claims, demands, charges, restrictions, encumbrances, royalties and liabilities of any nature and quality whatsoever, existing or threatened, except for the First Royalty, the Second Royalty, the Virginia Royalty, the Back-In-Right and the Right of First Refusal (hereinafter collectively, the “
Liens
”), and the Purchaser shall acquire good, legal and marketable title to the Claims and beneficial ownership thereof; and
|
(b)
|
it is not aware of any material facts or circumstances which have not been disclosed in this agreement and which should be disclosed in order to prevent the representations and warranties in this agreement from being materially misleading.
|
2.2
|
With respect to the Claims, the Vendor hereby represents and warrants to the Purchaser that, as of the date hereof:
|
(a)
|
Subject to the Liens, it is the exclusive and absolute owner of all mining and proprietary rights attaching to the Claims and proper evidence of such ownership has been duly filed, registered or recorded wherever necessary to perfect and preserve the Vendor's rights, title and interest thereto;
|
(b)
|
all mining and proprietary rights have been properly staked or otherwise properly constituted, as applicable, and are valid, in good standing and free and clear of all liens, except for the Liens and public utilities,;
|
(c)
|
it does not owe any amount in connection with the First Royalty, the Second Royalty and the Virginia Royalty as of the Effective Date;
|
(d)
|
it has delivered to the Purchaser all relevant information concerning title to each Claim;
|
(e)
|
to the best of the Vendor's knowledge and belief, all activities and operations on any of the Claims, prior to the date hereof, have been performed in a manner consistent with the laws and regulations in effect at the relevant time and all filings required in order to maintain the mining rights in good standing have been properly and timely recorded or filed with the appropriate government agencies;
|
(f)
|
there is no judgment, decree, injunction, ruling or order of any court, governmental department, commission, agency, instrumentality or arbitrator and no claim, suit, action, litigation, arbitration or governmental proceeding in progress, pending or threatened against or relating to, or affecting any of the Claims which could prevent the Vendor from entering into this agreement and performing its obligations hereunder and from completing the Transaction;
|
(g)
|
to the best of the Vendor's knowledge and belief, each Claim is free and clear of any hazardous or toxic material, pollution, or other adverse environmental conditions which may give rise to any environmental liability;
|
(h)
|
it has full authority to grant, sell, assign, and transfer to the Purchaser, as applicable, the mining and proprietary rights attaching to each Claim and its rights and obligations under each of the First Royalty, the Second Royalty and the Virginia Royalty, as contemplated herein; and
|
(i)
|
it is not in default or violation of any agreement, lease, license, permit, certificate, instrument, regulation, statute or decree applicable to it, which default or violation could adversely affect its ownership of any of the Claims, its right to conduct mineral exploration thereon or its performance or operations in respect thereof.
|
2.3
|
The Vendor represents and warrants to the Purchaser that each of the representations and warranties set forth in any provision of this Section
2
is true, correct and complete as at the date of this agreement and shall be true and accurate as of the Closing Date (as described in Section 7 hereof) as if given as of such date.
|
2.4
|
The Vendor recognizes that the accuracy and completeness of each representation and warranty set forth in any provision of this Section
2
is a condition upon which the Purchaser is relying and without which the Purchaser would not have agreed to complete the Transaction.
|
2.5
|
No investigation or inquiry made by or on behalf of the Purchaser shall have the effect of waiving or diminishing any of the representations and warranties set forth in any provision of this Section
2
.
|
3.
|
Representations and Warranties of the Purchaser
|
3.1
|
The Purchaser hereby represents and warrants to the Vendor that, as of the date hereof, it is not aware of any material facts or circumstances which have not been disclosed in this agreement and which should be disclosed in order to prevent its representations and warranties in this agreement from being materially misleading.
|
3.2
|
This Agreement has been duly authorized by the board of directors
of the Purchaser and no other corporate proceedings on the part of the Purchaser are necessary to authorize this Agreement, any related agreements to which the Purchaser is a party or the transactions contemplated hereby and thereby. This Agreement and all related agreements to which the Purchaser is a party have been duly executed and delivered by the Purchaser and constitute legal, valid and binding obligations of the Purchaser, enforceable against the Purchaser by the Vendor in accordance with their terms, except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the rights of creditors generally and except that equitable remedies may be granted only in the discretion of a court of competent jurisdiction.
|
3.3
|
The execution and delivery by the Purchaser of this Agreement and all related documents to which the Purchaser is a party, the performance by the Purchaser of its obligations hereunder and thereunder and the completion of the transactions herein and therein provided for will not result in the violation of, or constitute a default under or cause the acceleration of any obligation of the Purchaser under:
|
(a)
|
any agreement to which the Purchaser is a party or by which it is bound;
|
(b)
|
any provision of the constating documents or by-laws or resolutions of the board of directors (or any committee thereof) or shareholders of the Purchaser (and no conflict with the same will be caused thereby);
|
(c)
|
any judgment, decree, order or award of any agency or arbitrator; or
|
(d)
|
any applicable laws of Canada, Ontario or any jurisdictions where the Purchaser is qualified or required to be qualified to do business or where it carries on business.
|
3.4
|
There is no requirement for the Purchaser to make any filing with, give any notice to or obtain any Permit of, any agency as a condition to the lawful consummation of the transactions contemplated by this Agreement
|
3.5
|
Shares:
|
(a)
|
Upon issuance, the Initial Vendor Shares and the Additional Vendor Shares (collectively, the “Shares”) will be duly authorized and validly issued as fully paid and non-assessable shares in the capital of the Purchaser.
|
(b)
|
No prospectus is required nor are any other documents required to be filed, proceedings taken or approvals, permits, consents or authorizations obtained under the Ontario Securities Act and the rules and regulations thereunder ("
Ontario Securities Laws
") to permit the Vendor to trade the Shares in the Province of Ontario, either through registrants or dealers registered under Ontario Securities Laws who comply with such laws or in circumstances in which there is an exemption from the registration requirements under Ontario Securities Laws, provided that:
|
(i)
|
at the time of such trade, the Purchaser is and has been a "reporting issuer" (as defined under Ontario Securities Laws) in the Province of Ontario for the four months immediately preceding the trade;
|
(ii)
|
at the time of such trade, at least four months have elapsed from the Closing Date;
|
(iii)
|
a certificate representing the Shares has been issued that carries a legend in the form prescribed by National Instrument 45-102 – Resale of Securities ("
NI 45-102
");
|
(iv)
|
the trade is not a "control distribution" (as such term is defined in NI 45-102) and the seller is not a "promoter" within the meaning of Ontario Securities Laws;
|
(v)
|
no unusual effort is made to prepare the market or to create a demand for the Shares;
|
(vi)
|
no extraordinary commission or consideration is paid to a person or company in respect of the trade; and
|
(vii)
|
if the selling security holder is an insider or officer of the Purchaser, the selling security holder has no reasonable grounds to believe that the Purchaser is in default of "securities legislation" (as such term is defined in National Instrument 14-101).
|
(c)
|
The Purchaser is, and has been for a period of four months, a "reporting issuer" (as defined under Ontario Securities Laws) in the Province of Ontario.
|
3.6
|
In the past twelve month period, the Purchaser has made all securities filings that it was required to file under any applicable securities laws on a timely basis (the "
Securities Filings
"). As of their respective dates, each of the Securities Filings complied with all requirements of the applicable securities laws, and none of the Securities Filings contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Purchaser included in the Securities Filings: (i) comply with applicable accounting requirements and with the published rules and regulations of applicable securities laws with respect thereto; (ii) have been prepared in accordance with IFRS or Canadian GAAP, as applicable, during the period involved (except as may be indicated in the notes thereto or, in the case of unaudited financial statements, as permitted by applicable securities laws); and (iii) fairly present (subject, in the case of any unaudited statements, to recurring audit adjustments normal in nature and amount) the consolidated financial position of the Purchaser at the date thereof and the consolidated results of its operations and cash flows or changes in financial position for the periods then ended.
|
4.
|
Consideration
|
4.1
|
Cash Payments
|
(a)
|
pay to the Vendor, by certified cheque, wire transfer or other form of payment acceptable to the Purchaser, the sum of $1,500,000 in cash (the “
Initial Cash Payment
”) within 15 days upon the earlier of (i) the completion of a financing, in accordance with Section 10.6 hereof, or (ii) nine months following the Effective Date; and
|
(b)
|
pay to the Vendor, by cheque, wire transfer or other form of payment acceptable to the Purchaser, an additional sum of $1,500,000 in cash (the “
Additional Cash Payment
”) within 18 months of the Effective Date (the “
Second Cash Payment
”).
|
4.2
|
Issuance of Shares
|
(a)
|
issue and deliver to the Vendor within 15 days after the Initial Cash Payment, an amount of fully paid and non-assessable common shares of the Purchaser (the “
Initial Vendor Shares
”), which represents 9.5% of the Purchaser’s total number of issued and outstanding common shares at the time of issuance, to a maximum of 15,000,000 common shares;
|
(b)
|
issue and deliver to the Vendor fully paid and non-assessable common shares of the Purchaser (the “
Additional Vendor Shares
”), within 15 days after the later of (i) receipt of the approval of the shareholders of the Purchaser and (ii) the Second Cash Payment
an amount of common shares that in aggregate (Initial Vendor Shares plus Additional Vendor Shares) does not represent a number of common shares greater than 15%
(the “
Vendor’s
Equity Position
”)
of the Purchaser’s issued and outstanding common shares at the time of issuance, to an aggregate maximum
of 35,000,000 common shares, which is inclusive of the Initial Vendor Shares.
|
(c)
|
if regulatory or shareholder approval for the issuance of the Additional Vendor Shares has not been received and therefore, the Additional Vendor Shares cannot be issued to the Vendor pursuant to the terms of this agreement, the Purchaser shall pay to the Vendor an additional sum of $750,000 in lieu of the Additional Vendor Shares to acquire the initial 75% interest in the Claims and will submit a request to the TSX Venture Exchange («TSXV») to issue an amount of shares that when added to the Initial Vendor Shares previously issued to the Vendor does not
represent an aggregate number of common shares greater than 9.5% of the Purchaser’s issued and outstanding common shares at the time of issuance, to a maximum of 20,000,000 common shares
; and
|
(d)
|
the Initial Vendor Shares and the Additional Vendor Shares to be issued pursuant to Section 4.2 hereof shall be issued under a private placement exemption and subject to a four-month restricted period stipulated in a legend and any other restrictions under applicable securities laws or TSXV rules, before becoming freely tradable, the issuance of which shall be subject to prior acceptance for listing by the TSXV.
|
5.
|
Right of First Refusal
|
6.
|
Assignment of the Virginia Agreement, Poisson Agreement and Amending Agreement
|
6.1
|
The Purchaser acknowledges and agrees that the Claims are subject to the Virginia Agreement, the Poisson Agreement and the Amending Agreement (collectively, the “
Assigned Contracts
”) and effective as of Closing, the Vendor hereby assigns and transfers unto the Purchaser a 75% undivided interest in all of its rights, interests, duties and obligations under each of the Assigned Contracts, and the Purchaser hereby accepts the assignment and transfer of the Assigned Contracts effective as of Closing and covenants and agrees that, from and after the Closing Date, the Purchaser will observe, perform and fulfil each and every covenant, provision, obligation, term and condition of, or applicable to the Vendor under the Assigned Contracts as if it was an original party thereto, and following such assignment and transfer, the Vendor shall be relieved of liability thereunder.
|
6.2
|
The Purchaser agrees to execute such further and other agreements, including with the parties to the Assigned Contracts, to evidence that the Purchaser has agreed to assume the obligations of the Vendor under the Assigned Contracts.
|
7.
|
Closing Date
|
8.
|
Covenants
|
8.1
|
Covenants of the Purchaser:
|
(a)
|
With respect to the issuance, sale and delivery of the Shares to the Vendor hereunder, the Purchaser covenants to use all reasonable commercial efforts to obtain all necessary approvals from the TSXV
and comply with all necessary requirements of any applicable securities laws; and upon the issuance o
f the Shares to the Vendor, the Purchaser will have received all necessary approvals from the TSXV, and complied with all necessary requirements of any applicable securities laws, with respect to the issuance, sale and delivery of the Shares to the Vendor hereunder;
|
(b)
|
The Purchaser shall present a resolution to its shareholders at its next annual meeting of shareholders scheduled for June 2014, to authorize and approve the aggregate issuance of up to 19.5% of the issued and outstanding capital of the Purchaser to the Vendor as required pursuant to this agreement
|
(c)
|
the Purchaser shall use its best efforts to maintain its status as a "reporting issuer" under Canadian securities laws for a period of two (2) years following the Closing, and shall use its best efforts to maintain its listing of its common shares on the TSXV for a period of two (2) years following Closing.
|
9.
|
Conditions of Closing
|
9.1
|
Due Diligence.
Forthwith upon execution of this agreement, the Vendor shall arrange to provide the Purchaser and its authorized representatives and agents, free access, during reasonable business hours, to such information and records, which the Purchaser may reasonably request in order to obtain the information necessary to evaluate the Claims and to prepare the documentation necessary to obtain the Regulatory Approvals. The Vendor agrees to use reasonable commercial efforts to cause the officers, senior employees and other personnel and consultants of the Vendor to meet and collaborate with the Purchaser and its representatives in this regard. The Transaction is conditional upon the Purchaser being satisfied, in its sole and absolute discretion, with the results of such due diligence review.
|
9.2
|
Approvals.
Before the Closing Date, all regulatory approvals, authorizations and other consents with respect to the Closing which may be required by law, together with all such permits, licenses and other authorizations as may be reasonably required in order to close the Transaction shall have been obtained, including, without limiting the generality of the foregoing, approval from the Toronto Stock Exchange for the Vendor and from TSXV for the Purchaser, failing which this agreement shall terminate and the parties shall have no further obligations thereunder, with the exception of those contained in Sections 15 and 16
6
hereof.
|
9.3
|
Consents.
Prior to the Closing Date, the Vendor shall have obtained all consents, permits and approvals from parties to any contracts or other agreements that may be required in connection with the Transaction, without limiting the generality of the foregoing, the consent of Virginia as contemplated in Section 5 hereof.
|
9.4
|
Transfer of Documents.
On the Closing Date, all necessary transfer forms, agreements, instruments, conveyances, assignments, releases and other document required or useful in the opinion of the Purchaser' legal advisors to properly convey the Claims to the Purchaser shall have been executed.
|
10.
|
Delivery of Documents
|
10.1
|
Following the performance by the Purchaser of its obligations pursuant to Section 4 hereof, the Vendor shall execute, acknowledge and deliver to the Purchaser a
Transfer of Mining Rights
prepared by the Purchaser and satisfactory to the Vendor in proper form for registration in the
Public Register of Real and Immovable Mining Rights
maintained at the
ministère des Ressources naturelles
(Québec) in favour of the Purchaser pursuant to which the Vendor transfers to the Purchaser a 75% undivided interest in all of its right, title and interest in the Claims, with registration fees in connection with this transfer to be paid by the Purchaser.
|
10.2
|
The Purchaser shall deliver or cause to be delivered to the Vendor an assignment, assumption and release agreement among the Vendor, the Purchaser, Pierre Poisson and Joanne Jones pursuant to which (i) the Vendor assigns to the Purchaser a 75% undivided interest in all its rights, interests, duties and obligations under each of the Poisson Agreement and the Amending Agreement in connection with each of the First Royalty and the Second Royalty; and (ii) the Purchaser agrees to observe and be bound by all of the provisions each of the Poisson Agreement and the Amending Agreement with respect to the rights, interests and obligations assigned to or assumed by the Purchaser in the place and stead of the Vendor in connection with the First Royalty and the Second Royalty.
|
10.3
|
The Purchaser shall deliver or cause to be delivered to the Vendor an assignment, assumption and release agreement among the Vendor, the Purchaser and Virginia pursuant to which (i) the Vendor assigns to the Purchaser a 75% undivided interest in all its rights, interests, duties and obligations under the Virginia Agreement including in connection with the Virginia Royalty and the Back-In-Right; and (ii) the Purchaser agrees to observe and be bound by all of the provisions of the Virginia Agreement with respect to the rights, interests and obligations assigned to or assumed by the Purchaser in the place and stead of the Vendor.
|
10.4
|
The Parties shall have received evidence that all requisite approvals, consents and acceptances of the appropriate regulatory authorities and the Toronto Stock Exchange and the TSXV required to be made or obtained by either one of the Parties in order to complete the Closing have been made or obtained on terms satisfactory to each of the Parties, acting reasonably.
|
10.5
|
The Purchaser shall deliver or cause to be delivered to the Vendor evidence satisfactory to the Vendor that the shareholders of the Purchaser have approved the Transaction, if such approval is required by the TSXV, corporate laws or by securities regulations.
|
10.6
|
The Purchaser shall have raised capital through the completion of placement of its securities for gross proceeds of a minimum of $3,000,000 on such terms and conditions as may be determined by the Parties (the “
Financing
”), it being understood that the Purchaser shall use reasonable commercial efforts to complete the Financing.
|
10.7
|
The Purchaser shall deliver or cause to be delivered to the Vendor by cheque, wire transfer or other form of payment acceptable to the Vendor, the Initial Cash Payment pursuant to Section 4.1(a) hereof.
|
10.8
|
The Purchaser shall deliver or cause to be delivered to the Vendor a common share certificate representing the Initial Vendor Shares pursuant to Section 4.2(a) hereof.
|
11.
|
Post-Closing
|
11.1
|
The Purchaser shall deliver or cause to be delivered to the Vendor by cheque, wire transfer or other form of payment acceptable to the Vendor, the Additional Cash Payment pursuant to Section 4.1(b) hereof.
|
11.2
|
The Purchaser shall deliver or cause to be delivered to the Vendor a common share certificate representing the Additional Vendor Shares pursuant to Section 4.2(b) hereof or, in lieu of the Additional Vendor Shares, the $750,000 cash payment pursuant to Section 4.2(c) hereof, by cheque, wire transfer or other form of payment acceptable to the Vendor.
|
12.
|
Default
|
13.
|
Option
|
13.1
|
If and when the Purchaser has made all the Cash Payments and the Issuance of all Shares (or cash in lieu thereof, as permitted or required herein) in accordance with Section 4 hereof, the Vendor will grant to the Purchaser a three (3) year term option to purchase the remaining 25% interest in the Claims (the “Option”), for the period beginning on the date that is the later of (i) June 1, 2015 and (ii) the Vendor satisfying all of the purchase conditions as described herein. The Option will automatically terminate on a date that is three (3) years from the later of (i) or (ii) above. In order to exercise the Option, the Purchaser shall:
|
(a)
|
pay to the Vendor an additional sum of $1,000,000; assuming the applicable shareholder approval has been received, issue an additional amount of the Purchaser’s common shares (the “
Option Shares
”) that in aggregate (Initial Vendor Shares plus Additional Vendor Shares plus Option Shares), does not represent a number of common shares greater than 19.5% of the Purchaser’s issued and outstanding common shares at the time of issuance of the Option Shares, to an aggregate maximum
of 60,000,000 common shares. For clarity, the maximum Option Shares issued would be the lesser of 25,000,000 common shares or a number of shares that when added to all the previous share issuances to the Vendor as outlined above represents an aggregate number of shares equal to 19.5% of the Purchaser’s issued and outstanding shares at the time of issuance;
|
(b)
|
or, in the event that shareholder approval is required for the issuance of the Option Shares and the Purchaser has not received such shareholder approval, the Purchaser shall pay an additional sum of $1,875,000 in lieu of the Option Shares in order to acquire the remaining 25% interest in the Claims;
|
(c)
|
grant the Vendor a pre-emptive right to participate in any further equity financing of the Purchaser in order to allow the Vendor to maintain the Vendor’s equity position in the Purchaser’s share capital (the “
Pre-Emptive Right
”) at the time of the contemplated equity financing. The Pre-Emptive Right shall be exercisable by the Vendor at any time until 5:00 p.m. (Eastern Standard Time) on the date that is five business days following written notice by the Purchaser to the Vendor that it is proceeding with a proposed financing. The Pre-Emptive Right to be granted to the Vendor upon exercise of the Option shall automatically terminate on the earliest to occur of the following; (i) should the Vendor’s equity position in the Purchaser’s share capital at any time be less than 5% of the Purchaser’s issued and outstanding common shares; (ii) should the Vendor decline to participate in two consecutive equity financings of the Purchaser; or (iii) 5 years from the date of this agreement.
|
13.2
|
At any time from the date of this agreement, the Vendor or its successor will not increase, directly or indirectly, its aggregate ownership interest of the Purchaser to more than 19.5% of all issued and outstanding common shares of the Purchaser, without the prior written approval of the Purchaser.
|
13.3
|
Notwithstanding the exercise of the Option by the Purchaser, the Vendor shall retain a 2% net smelter returns royalty (“
NSR
”) in the form attached hereto as Schedule “E” in respect of the Claims, of which 1% may be repurchased by the Purchaser, at any time and from time to time, in consideration for payment of $1,000,000 in cash or immediately available funds.
|
13.4
|
If the Option is not exercised by the Purchaser within the timing outlined in 13.1, then the Parties agree to enter into a joint venture agreement consistent with industry norms for such agreements including a standard dilution clause for non-participation. The Vendor would then be entitled to a free carried interest on its 25% participating interest until the delivery by the Purchaser of a bankable feasibility study or equivalent on the Claims.
|
14.
|
Conduct of Business
|
15.
|
Expenses
|
16.
|
Confidentiality
|
17.
|
Exclusivity
|
18.
|
Indemnification
|
18.1
|
Indemnification by the Vendor
|
(a)
|
any breach by the Vendor of or any inaccuracy of any representation or warranty of the Vendor contained in this Agreement or in any agreement, certificate or other document executed and delivered by the Vendor; or
|
(b)
|
any breach or non-performance by the Vendor of any covenant to be performed by it which is contained in this Agreement or in any agreement, certificate or other document executed and delivered by the Vendor.
|
18.2
|
Indemnification by the Purchaser
|
(a)
|
any breach by the Purchaser of or any inaccuracy of any representation or warranty contained in this Agreement or in any agreement, certificate or other document executed and delivered by the Purchaser; or
|
(b)
|
any breach or non-performance by the Purchaser of any covenant to be performed by it which is contained in this Agreement or in any agreement, certificate or other document executed and delivered by the Purchaser (including the Assigned Contracts).
|
18.3
|
The Vendor’s and the Purchaser's indemnification obligations under this agreement shall be limited to an amount equal to the dollar value, from time to time, of the consideration received pursuant to this agreement. Notwithstanding the foregoing, there will be no limit on a party’s liability for indemnification hereunder to the extent the claim arises from fraud.
|
19.
|
General Provisions
|
19.1
|
Assignment.
This agreement shall enure to the benefit of and be binding upon the respective successors and permitted assigns of the Parties. Neither Party shall assign its rights or delegate its obligations hereunder voluntarily or by operation of law, without the prior written consent of the other Party.
|
19.2
|
Waiver of Rights.
The failure of a Party to insist on the strict performance of any provision of this agreement or to exercise any right, power or remedy upon a breach hereof shall not constitute a waiver of any provision of this agreement or limit the Party's right thereafter to enforce any provision or exercise any right.
|
19.3
|
Amendments.
No modification or amendment to this agreement shall be valid unless made in writing and duly executed by the Parties.
|
19.4
|
Entire Agreement.
This agreement, contains the entire understanding of the Parties and cancels and replaces all prior understandings between the Parties relating to the subject matter hereof, and all prior agreements.
|
19.5
|
Arbitration.
Any dispute or conflict between the parties concerning this Agreement which cannot be settled by them shall be submitted firstly to a mutually agreeable mediator who will have no authority to bind the parties and, in the event that mediation efforts are unsuccessful, to a single arbitrator pursuant to the provisions of the Arbitration Act (Ontario), or, if the parties cannot agree upon a single arbitrator, to three arbitrators, one appointed by the Vendor, one appointed by the Purchaser and a third appointed by the arbitrators appointed by the Vendor and the Purchaser. The arbitrator or arbitrators, as the case may be, may order any party to produce documents prior to the arbitration or to submit a witness to discovery. Arbitration proceedings shall take place in Toronto, Ontario at such place as the arbitrator or arbitrators shall determine.
|
19.6
|
Severability.
If any term, part or provision of this agreement is declared unenforceable, illegal, or in conflict with any laws to which this agreement is subject, such term, part or provision shall be considered severed from this agreement, the remaining portions thereof shall not be affected and this agreement shall be construed and enforced as if it did not contain that term, part or provision.
|
19.7
|
Time.
Time is of the essence of this agreement and all related documents.
|
19.8
|
Further Assurances.
Each of the Parties hereby undertakes to refrain from performing any act or entering into any transaction or negotiation which would interfere or be inconsistent with the terms of this agreement and the due completion of the Transaction.
|
19.9
|
Currency.
All monetary amounts expressed in dollars in this agreement shall be determined and payable in Canadian currency, unless otherwise expressly provided.
|
19.10
|
Public Announcements
. A Party desiring to make a disclosure, statement or press release concerning this agreement shall first consult with the other Party prior to making such disclosure, statement or press release, and the Parties shall use all reasonable efforts, acting expediently and in good faith, to agree upon a text for such statement or press release which is satisfactory to the Parties.
|
19.11
|
Notice.
Any notice or other required communications hereunder shall be given in writing and delivered by hand, registered air mail, telefax, or by overnight courier. Any such notice shall be given to each of the Parties at their following addresses:
|
|
TO
THE VENDOR
:
|
ENERGIZER RESOURCES INC.
|
|
141 Adelaide Street West
Suite 520
Toronto, Ontario M5H 3L5
|
|
Attention: Richard E. Schler
|
|
TO THE PURCHASER:
|
HONEY BADGER
EXPLORATION INC.
|
|
141 Adelaide Street West
Suite 520
Toronto, Ontario M5H 3L5
|
|
Attention: Peter Liabotis
|
|
or to any other addresses that any Party may at any time designate by written notice to the other Party.
|
|
All notices shall be effective and shall be deemed delivered (i) if by hand, or by overnight courier, on the date of delivery if delivered during normal business hours, and, if not delivered during normal business hours, on the next business day following delivery, (ii) if by electronic communication, on the next business day following receipt of the electronic communication, and (iii) if by mail, on the next business day after actual receipt.
|
19.12
|
Counterparts.
This agreement may be executed in any number of counterparts, and it shall not be necessary that the signatures of all Parties be contained on any counterpart. Each counterpart shall be deemed an original, but all counterparts together shall constitute one and the same instrument.
|
19.13
|
Independent Legal Advice.
The Parties expressly declare that they have been given sufficient time to seek such independent legal or other advice as they deem appropriate with respect to this matter and the terms of this agreement and the Parties voluntarily accept the said terms.
|
19.14
|
Governing Law.
This agreement is made under and shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.
|
ENERGIZER RESOURCES INC. | HONEY BADGER EXPLOR ATION INC. | |||
By:
|
“Peter Harder”
|
By:
|
“J.P. Desrochers”
|
|
Name:
|
Peter Harder
|
Name:
|
J.P. Desrochers
|
|
Title:
|
Chairman of the Board
|
Title:
|
Director
|
By:
|
“Richard Schler”
|
By:
|
“Peter Liabotis”
|
|
Name:
|
Richard Schler
|
Name:
|
Peter Liabotis
|
|
Title:
|
Chief Executive Officer
|
Title:
|
Chief Financial Officer
|
CDC 36315
|
CDC 1043890
|
CDC 1043925
|
CDC 1043960
|
CDC 1044170
|
CDC 1132961
|
|||||
CDC 36316
|
CDC 1043891
|
CDC 1043926
|
CDC 1043961
|
CDC 1103333
|
CDC 1132962
|
|||||
CDC 36317
|
CDC 1043892
|
CDC 1043927
|
CDC 1043962
|
CDC 1103334
|
CDC 1132963
|
|||||
CDC 36318
|
CDC 1043893
|
CDC 1043928
|
CDC 1043963
|
CDC 1103335
|
CDC 1132964
|
|||||
CDC 36319
|
CDC 1043894
|
CDC 1043929
|
CDC 1043964
|
CDC 1103336
|
CDC 1132965
|
|||||
CDC 36320
|
CDC 1043895
|
CDC 1043930
|
CDC 1043965
|
CDC 1103337
|
CDC 1132966
|
|||||
CDC 36321
|
CDC 1043896
|
CDC 1043931
|
CDC 1043966
|
CDC 1103338
|
CDC 1132967
|
|||||
CDC 36322
|
CDC 1043897
|
CDC 1043932
|
CDC 1043967
|
CDC 1103339
|
CDC 1132968
|
|||||
CDC 36323
|
CDC 1043898
|
CDC 1043933
|
CDC 1043968
|
CDC 1132934
|
CDC 1132969
|
|||||
CDC 36324
|
CDC 1043899
|
CDC 1043934
|
CDC 1043969
|
CDC 1132935
|
CDC 1132970
|
|||||
CDC 36325
|
CDC 1043900
|
CDC 1043935
|
CDC 1043970
|
CDC 1132936
|
CDC 1132971
|
|||||
CDC 36326
|
CDC 1043901
|
CDC 1043936
|
CDC 1043971
|
CDC 1132937
|
CDC 1132972
|
|||||
CDC 36327
|
CDC 1043902
|
CDC 1043937
|
CDC 1043972
|
CDC 1132938
|
CDC 1132973
|
|||||
CDC 1043868
|
CDC 1043903
|
CDC 1043938
|
CDC 1043973
|
CDC 1132939
|
CDC 1132974
|
|||||
CDC 1043869
|
CDC 1043904
|
CDC 1043939
|
CDC 1043974
|
CDC 1132940
|
CDC 1132975
|
|||||
CDC 1043870
|
CDC 1043905
|
CDC 1043940
|
CDC 1043975
|
CDC 1132941
|
CDC 1132976
|
|||||
CDC 1043871
|
CDC 1043906
|
CDC 1043941
|
CDC 1043976
|
CDC 1132942
|
CDC 1132977
|
|||||
CDC 1043872
|
CDC 1043907
|
CDC 1043942
|
CDC 1043977
|
CDC 1132943
|
CDC 1132978
|
|||||
CDC 1043873
|
CDC 1043908
|
CDC 1043943
|
CDC 1043978
|
CDC 1132944
|
CDC 1132979
|
|||||
CDC 1043874
|
CDC 1043909
|
CDC 1043944
|
CDC 1043979
|
CDC 1132945
|
CDC 1132980
|
|||||
CDC 1043875
|
CDC 1043910
|
CDC 1043945
|
CDC 1043980
|
CDC 1132946
|
CDC 2097640
|
|||||
CDC 1043876
|
CDC 1043911
|
CDC 1043946
|
CDC 1043981
|
CDC 1132947
|
CDC 2097641
|
|||||
CDC 1043877
|
CDC 1043912
|
CDC 1043947
|
CDC 1043982
|
CDC 1132948
|
CDC 2097642
|
|||||
CDC 1043878
|
CDC 1043913
|
CDC 1043948
|
CDC 1043983
|
CDC 1132949
|
CDC 2097643
|
|||||
CDC 1043879
|
CDC 1043914
|
CDC 1043949
|
CDC 1043984
|
CDC 1132950
|
CDC 2097644
|
|||||
CDC 1043880
|
CDC 1043915
|
CDC 1043950
|
CDC 1043985
|
CDC 1132951
|
CDC 2097645
|
|||||
CDC 1043881
|
CDC 1043916
|
CDC 1043951
|
CDC 1043986
|
CDC 1132952
|
CDC 2097646
|
|||||
CDC 1043882
|
CDC 1043917
|
CDC 1043952
|
CDC 1043987
|
CDC 1132953
|
CDC 2097647
|
|||||
CDC 1043883
|
CDC 1043918
|
CDC 1043953
|
CDC 1043988
|
CDC 1132954
|
CDC 2097648
|
|||||
CDC 1043884
|
CDC 1043919
|
CDC 1043954
|
CDC 1043989
|
CDC 1132955
|
CDC 2097649
|
|||||
CDC 1043885
|
CDC 1043920
|
CDC 1043955
|
CDC 1043990
|
CDC 1132956
|
CDC 2097650
|
|||||
CDC 1043886
|
CDC 1043921
|
CDC 1043956
|
CDC 1043991
|
CDC 1132957
|
CDC 2097651
|
|||||
CDC 1043887
|
CDC 1043922
|
CDC 1043957
|
CDC 1043992
|
CDC 1132958
|
CDC 2097652
|
|||||
CDC 1043888
|
CDC 1043923
|
CDC 1043958
|
CDC 1043993
|
CDC 1132959
|
CDC 2120537
|
|||||
CDC 1043889
|
CDC 1043924
|
CDC 1043959
|
CDC 1043994
|
CDC 1132960
|
CDC 2120538
|
CDC 2120539
|
CDC 2377789
|
CDC 2384943
|
CDC 2384982
|
CDC 2388395
|
||||||
CDC 2120540
|
CDC 2377790
|
CDC 2384944
|
CDC 2384983
|
CDC 2388396
|
||||||
CDC 2120541
|
CDC 2377791
|
CDC 2384945
|
CDC 2384984
|
CDC 2388397
|
||||||
CDC 2120542
|
CDC 2377792
|
CDC 2384946
|
CDC 2384985
|
CDC 2388398
|
||||||
CDC 2120543
|
CDC 2377793
|
CDC 2384947
|
CDC 2384986
|
CDC 2388399
|
||||||
CDC 2120544
|
CDC 2377794
|
CDC 2384948
|
CDC 2384987
|
CDC 2389191
|
||||||
CDC 2120545
|
CDC 2377795
|
CDC 2384949
|
CDC 2384988
|
CDC 2389192
|
||||||
CDC 2120546
|
CDC 2377796
|
CDC 2384950
|
CDC 2384989
|
CDC 2389193
|
||||||
CDC 2120547
|
CDC 2377797
|
CDC 2384951
|
CDC 2384990
|
CDC 2389194
|
||||||
CDC 2120548
|
CDC 2377798
|
CDC 2384952
|
CDC 2384991
|
CDC 2389195
|
||||||
CDC 2120549
|
CDC 2377799
|
CDC 2384953
|
CDC 2384992
|
CDC 2389196
|
||||||
CDC 2120550
|
CDC 2377800
|
CDC 2384954
|
CDC 2384993
|
|||||||
CDC 2120551
|
CDC 2377801
|
CDC 2384955
|
CDC 2385416
|
|||||||
CDC 2120552
|
CDC 2377802
|
CDC 2384956
|
CDC 2385417
|
|||||||
CDC 2120553
|
CDC 2377803
|
CDC 2384957
|
CDC 2385418
|
|||||||
CDC 2120554
|
CDC 2377804
|
CDC 2384958
|
CDC 2385419
|
|||||||
CDC 2120555
|
CDC 2377805
|
CDC 2384959
|
CDC 2385420
|
|||||||
CDC 2120556
|
CDC 2377806
|
CDC 2384960
|
CDC 2385421
|
|||||||
CDC 2120557
|
CDC 2377807
|
CDC 2384961
|
CDC 2385422
|
|||||||
CDC 2120558
|
CDC 2377808
|
CDC 2384962
|
CDC 2385423
|
|||||||
CDC 2120559
|
CDC 2377809
|
CDC 2384963
|
CDC 2385424
|
|||||||
CDC 2120560
|
CDC 2377810
|
CDC 2384964
|
CDC 2385425
|
|||||||
CDC 2120561
|
CDC 2377811
|
CDC 2384965
|
CDC 2385426
|
|||||||
CDC 2120562
|
CDC 2377812
|
CDC 2384966
|
CDC 2386856
|
|||||||
CDC 2120563
|
CDC 2377813
|
CDC 2384967
|
CDC 2386857
|
|||||||
CDC 2120564
|
CDC 2377814
|
CDC 2384968
|
CDC 2386858
|
|||||||
CDC 2120565
|
CDC 2377815
|
CDC 2384969
|
CDC 2386859
|
|||||||
CDC 2120566
|
CDC 2377816
|
CDC 2384970
|
CDC 2386860
|
|||||||
CDC 2120567
|
CDC 2384932
|
CDC 2384971
|
CDC 2386861
|
|||||||
CDC 2120568
|
CDC 2384933
|
CDC 2384972
|
CDC 2388385
|
|||||||
CDC 2120569
|
CDC 2384934
|
CDC 2384973
|
CDC 2388386
|
|||||||
CDC 2120571
|
CDC 2384935
|
CDC 2384974
|
CDC 2388387
|
|||||||
CDC 2120572
|
CDC 2384936
|
CDC 2384975
|
CDC 2388388
|
|||||||
CDC 2120573
|
CDC 2384937
|
CDC 2384976
|
CDC 2388389
|
|||||||
CDC 2120574
|
CDC 2384938
|
CDC 2384977
|
CDC 2388390
|
|||||||
CDC 2120575
|
CDC 2384939
|
CDC 2384978
|
CDC 2388391
|
|||||||
CDC 2120576
|
CDC 2384940
|
CDC 2384979
|
CDC 2388392
|
|||||||
CDC 2120577
|
CDC 2384941
|
CDC 2384980
|
CDC 2388393
|
|||||||
CDC 2377788
|
CDC 2384942
|
CDC 2384981
|
CDC 2388394
|
CDC 1043868
|
CDC 1043903
|
CDC 1043938
|
CDC 1043973
|
CDC 1132939
|
CDC 1132974
|
|||||
CDC 1043869
|
CDC 1043904
|
CDC 1043939
|
CDC 1043974
|
CDC 1132940
|
CDC 1132975
|
|||||
CDC 1043870
|
CDC 1043905
|
CDC 1043940
|
CDC 1043975
|
CDC 1132941
|
CDC 1132976
|
|||||
CDC 1043871
|
CDC 1043906
|
CDC 1043941
|
CDC 1043976
|
CDC 1132942
|
CDC 1132977
|
|||||
CDC 1043872
|
CDC 1043907
|
CDC 1043942
|
CDC 1043977
|
CDC 1132943
|
CDC 1132978
|
|||||
CDC 1043873
|
CDC 1043908
|
CDC 1043943
|
CDC 1043978
|
CDC 1132944
|
CDC 1132979
|
|||||
CDC 1043874
|
CDC 1043909
|
CDC 1043944
|
CDC 1043979
|
CDC 1132945
|
CDC 1132980
|
|||||
CDC 1043875
|
CDC 1043910
|
CDC 1043945
|
CDC 1043980
|
CDC 1132946
|
||||||
CDC 1043876
|
CDC 1043911
|
CDC 1043946
|
CDC 1043981
|
CDC 1132947
|
||||||
CDC 1043877
|
CDC 1043912
|
CDC 1043947
|
CDC 1043982
|
CDC 1132948
|
||||||
CDC 1043878
|
CDC 1043913
|
CDC 1043948
|
CDC 1043983
|
CDC 1132949
|
||||||
CDC 1043879
|
CDC 1043914
|
CDC 1043949
|
CDC 1043984
|
CDC 1132950
|
||||||
CDC 1043880
|
CDC 1043915
|
CDC 1043950
|
CDC 1043985
|
CDC 1132951
|
||||||
CDC 1043881
|
CDC 1043916
|
CDC 1043951
|
CDC 1043986
|
CDC 1132952
|
||||||
CDC 1043882
|
CDC 1043917
|
CDC 1043952
|
CDC 1043987
|
CDC 1132953
|
||||||
CDC 1043883
|
CDC 1043918
|
CDC 1043953
|
CDC 1043988
|
CDC 1132954
|
||||||
CDC 1043884
|
CDC 1043919
|
CDC 1043954
|
CDC 1043989
|
CDC 1132955
|
||||||
CDC 1043885
|
CDC 1043920
|
CDC 1043955
|
CDC 1043990
|
CDC 1132956
|
||||||
CDC 1043886
|
CDC 1043921
|
CDC 1043956
|
CDC 1043991
|
CDC 1132957
|
||||||
CDC 1043887
|
CDC 1043922
|
CDC 1043957
|
CDC 1043992
|
CDC 1132958
|
||||||
CDC 1043888
|
CDC 1043923
|
CDC 1043958
|
CDC 1043993
|
CDC 1132959
|
||||||
CDC 1043889
|
CDC 1043924
|
CDC 1043959
|
CDC 1043994
|
CDC 1132960
|
||||||
CDC 1043890
|
CDC 1043925
|
CDC 1043960
|
CDC 1044170
|
CDC 1132961
|
||||||
CDC 1043891
|
CDC 1043926
|
CDC 1043961
|
CDC 1103333
|
CDC 1132962
|
||||||
CDC 1043892
|
CDC 1043927
|
CDC 1043962
|
CDC 1103334
|
CDC 1132963
|
||||||
CDC 1043893
|
CDC 1043928
|
CDC 1043963
|
CDC 1103335
|
CDC 1132964
|
||||||
CDC 1043894
|
CDC 1043929
|
CDC 1043964
|
CDC 1103336
|
CDC 1132965
|
||||||
CDC 1043895
|
CDC 1043930
|
CDC 1043965
|
CDC 1103337
|
CDC 1132966
|
||||||
CDC 1043896
|
CDC 1043931
|
CDC 1043966
|
CDC 1103338
|
CDC 1132967
|
||||||
CDC 1043897
|
CDC 1043932
|
CDC 1043967
|
CDC 1103339
|
CDC 1132968
|
||||||
CDC 1043898
|
CDC 1043933
|
CDC 1043968
|
CDC 1132934
|
CDC 1132969
|
||||||
CDC 1043899
|
CDC 1043934
|
CDC 1043969
|
CDC 1132935
|
CDC 1132970
|
||||||
CDC 1043900
|
CDC 1043935
|
CDC 1043970
|
CDC 1132936
|
CDC 1132971
|
||||||
CDC 1043901
|
CDC 1043936
|
CDC 1043971
|
CDC 1132937
|
CDC 1132972
|
||||||
CDC 1043902
|
CDC 1043937
|
CDC 1043972
|
CDC 1132938
|
CDC 1132973
|
CDC 1043868
|
CDC 1043903
|
CDC 1043938
|
CDC 1043973
|
CDC 1132946
|
||||
CDC 1043869
|
CDC 1043904
|
CDC 1043939
|
CDC 1043974
|
CDC 1132947
|
||||
CDC 1043870
|
CDC 1043905
|
CDC 1043940
|
CDC 1043975
|
CDC 1132948
|
||||
CDC 1043871
|
CDC 1043906
|
CDC 1043941
|
CDC 1043976
|
CDC 1132949
|
||||
CDC 1043872
|
CDC 1043907
|
CDC 1043942
|
CDC 1043977
|
CDC 1132950
|
||||
CDC 1043873
|
CDC 1043908
|
CDC 1043943
|
CDC 1043978
|
CDC 1132951
|
||||
CDC 1043874
|
CDC 1043909
|
CDC 1043944
|
CDC 1043979
|
CDC 1132952
|
||||
CDC 1043875
|
CDC 1043910
|
CDC 1043945
|
CDC 1043980
|
CDC 1132953
|
||||
CDC 1043876
|
CDC 1043911
|
CDC 1043946
|
CDC 1043981
|
CDC 1132954
|
||||
CDC 1043877
|
CDC 1043912
|
CDC 1043947
|
CDC 1043982
|
CDC 1132955
|
||||
CDC 1043878
|
CDC 1043913
|
CDC 1043948
|
CDC 1043983
|
CDC 1132956
|
||||
CDC 1043879
|
CDC 1043914
|
CDC 1043949
|
CDC 1043984
|
CDC 1132957
|
||||
CDC 1043880
|
CDC 1043915
|
CDC 1043950
|
CDC 1043985
|
CDC 1132958
|
||||
CDC 1043881
|
CDC 1043916
|
CDC 1043951
|
CDC 1043986
|
CDC 1132959
|
||||
CDC 1043882
|
CDC 1043917
|
CDC 1043952
|
CDC 1043987
|
CDC 1132960
|
||||
CDC 1043883
|
CDC 1043918
|
CDC 1043953
|
CDC 1043988
|
CDC 1132961
|
||||
CDC 1043884
|
CDC 1043919
|
CDC 1043954
|
CDC 1043989
|
CDC 1132962
|
||||
CDC 1043885
|
CDC 1043920
|
CDC 1043955
|
CDC 1043990
|
CDC 1132963
|
||||
CDC 1043886
|
CDC 1043921
|
CDC 1043956
|
CDC 1043991
|
CDC 1132964
|
||||
CDC 1043887
|
CDC 1043922
|
CDC 1043957
|
CDC 1043992
|
CDC 1132965
|
||||
CDC 1043888
|
CDC 1043923
|
CDC 1043958
|
CDC 1043993
|
CDC 1132966
|
||||
CDC 1043889
|
CDC 1043924
|
CDC 1043959
|
CDC 1043994
|
CDC 1132967
|
||||
CDC 1043890
|
CDC 1043925
|
CDC 1043960
|
CDC 1044170
|
CDC 1132968
|
||||
CDC 1043891
|
CDC 1043926
|
CDC 1043961
|
CDC 1132934
|
CDC 1132969
|
||||
CDC 1043892
|
CDC 1043927
|
CDC 1043962
|
CDC 1132935
|
CDC 1132970
|
||||
CDC 1043893
|
CDC 1043928
|
CDC 1043963
|
CDC 1132936
|
CDC 1132971
|
||||
CDC 1043894
|
CDC 1043929
|
CDC 1043964
|
CDC 1132937
|
CDC 1132972
|
||||
CDC 1043895
|
CDC 1043930
|
CDC 1043965
|
CDC 1132938
|
CDC 1132973
|
||||
CDC 1043896
|
CDC 1043931
|
CDC 1043966
|
CDC 1132939
|
CDC 1132974
|
||||
CDC 1043897
|
CDC 1043932
|
CDC 1043967
|
CDC 1132940
|
CDC 1132975
|
||||
CDC 1043898
|
CDC 1043933
|
CDC 1043968
|
CDC 1132941
|
CDC 1132976
|
||||
CDC 1043899
|
CDC 1043934
|
CDC 1043969
|
CDC 1132942
|
CDC 1132977
|
||||
CDC 1043900
|
CDC 1043935
|
CDC 1043970
|
CDC 1132943
|
CDC 1132978
|
||||
CDC 1043901
|
CDC 1043936
|
CDC 1043971
|
CDC 1132944
|
CDC 1132979
|
||||
CDC 1043902
|
CDC 1043937
|
CDC 1043972
|
CDC 1132945
|
CDC 1132980
|
CDC
1103333
|
CDC
1103334
|
CDC
1103335
|
a)
|
If the product is treated by an arm’s length party at a smelter, refinery or mint, all expenses relating thereto, including all costs and charges for the treatment, tolling, smelting, refining or minting of such product and all costs associated therewith such as transporting, insuring, handling, weighing, sampling, assaying and marketing, as well as all penalties, representation charges, referee’s fees and expenses, import taxes and export taxes, that is to say the net amount received by the Purchaser from the smelter, refinery or mint, as the case may be, less all costs associated therewith or;
|
b)
|
If the product is treated at a smelter, refinery or mint owned, operated or controlled by the Purchaser or an affiliate of it, all costs, charges and expenses relating thereto or associated therewith, excluding any capital costs incurred in the mining and milling of the product by including the expenses in (a) above, such charges by similar smelters, refineries or mints as the case may be, in arm’s length transactions for the treatment of like quantities and quality of product.
|
Jackson McDonald
140 St Georges Terrace
Perth WA 6000
|
t:
f:
w:
|
+61 8 9426 6611
+61 8 9481 8649
www.jacmac.com.au
|
Contact:
Reference:
|
Will Moncrieff
7141864
|
Sale & Purchase Agreement
|
||
1.
|
Definitions and interpretation |
2
|
|
1.1
|
Definitions
|
2
|
|
1.2
|
Interpretation
|
8
|
|
2.
|
Sale and purchase |
9
|
|
2.1
|
Agreement to sell and purchase
|
9
|
|
2.2
|
Consideration
|
9
|
|
2.3
|
Payment of Purchase Price
|
9
|
|
2.4
|
Escrow
|
10
|
|
3.
|
Conditions to Completion |
10
|
|
3.1
|
Conditions precedent
|
10
|
|
3.2
|
Best endeavours
|
10
|
|
3.3
|
Waiver of Conditions precedent
|
10
|
|
3.4
|
Non-satisfaction of Conditions
|
11
|
|
4.
|
Completion |
11
|
|
4.1
|
Time and place of Completion
|
11
|
|
4.2
|
Obligations of Vendor at Completion
|
11
|
|
4.3
|
Meeting of directors of the Company
|
12
|
|
4.4
|
Obligations of Purchaser at Completion
|
12
|
|
4.5
|
Completion simultaneous
|
12
|
|
4.6
|
Title, property and risk
|
13
|
|
4.7
|
Termination of the Joint Venture Agreement and release
|
13
|
|
5.
|
Pre-Completion conduct |
13
|
|
5.1
|
Conduct pending Completion
|
13
|
|
5.2
|
Vendor’s assistance prior to Completion
|
14
|
|
6.
|
Period after Completion |
14
|
|
6.1
|
Mineral Rights Agreement
|
14
|
|
6.2
|
Production Payments
|
14
|
|
6.3
|
Escrow
|
15
|
|
6.4
|
Royalty
|
15
|
|
7.
|
Representations and warranties |
15
|
|
7.1
|
Representations and warranties by Purchaser
|
15
|
|
7.2
|
Representations and warranties by the Vendor
|
16
|
|
7.3
|
Disclaimer of liability by the Vendor
|
17
|
|
Confidential and Legally Privileged
|
page i
|
Sale & Purchase Agreement
|
||
8.
|
Termination |
18
|
|
8.1
|
Termination
|
18
|
|
8.2
|
Consequences of Termination before Completion
|
18
|
|
9.
|
Confidentiality and public announcements |
18
|
|
9.1
|
Confidentiality
|
18
|
|
9.2
|
Conditions
|
20
|
|
9.3
|
Notice to other Parties
|
21
|
|
9.4
|
Indemnities
|
21
|
|
9.5
|
Survival of confidentiality obligations
|
21
|
|
9.6
|
Use of Mining Information in respect to Other Mineral Rights
|
21
|
|
9.7
|
Notices
|
21
|
|
10.
|
Miscellaneous |
23
|
|
10.1
|
Governing law
|
23
|
|
10.2
|
Amendments
|
23
|
|
10.3
|
Primacy of this Agreement
|
23
|
|
10.4
|
Waiver
|
23
|
|
10.5
|
Consents
|
23
|
|
10.6
|
Counterparts
|
23
|
|
10.7
|
No representation or reliance
|
23
|
|
10.8
|
Expenses
|
24
|
|
10.9
|
Entire agreement
|
24
|
|
10.10
|
Indemnities
|
24
|
|
10.11
|
Severance and enforceability
|
24
|
|
10.12
|
No merger
|
25
|
|
10.13
|
Power of attorney
|
25
|
|
10.14
|
Taxes
|
25
|
|
Schedule 1 – Industrial Minerals |
26
|
||
Schedule 2 – Net Smelter Return Royalty |
27
|
||
Annexure A – Mineral Rights Agreement |
33
|
|
Confidential and Legally Privileged
|
page ii
|
Sale & Purchase Agreement
|
||
Date |
2014
|
Purchaser
|
141 Adelaide Street, West Suite 520, Toronto, Ontario, Canada
|
Malagasy Minerals Limited
ACN 121 700 105
Vendor
|
15, Lovegrove Close, Mount Claremont Western Australia
|
Madagascar-ERG Joint Venture (Mauritius) Ltd
Company Number: 106367
Company
|
6
th
Floor, Newton Tower, Sir William Newton Street, Port Louis, Republic of Mauritius
|
A.
|
Pursuant to a Joint Venture Agreement dated 15 December 2011:
|
(i)
|
the Purchaser acquired a 75% interest in the JV Industrial Mineral Rights; and
|
(ii)
|
the Company was established as the joint venture company for the Joint Venture and the holder of the JV Industrial Mineral Rights and the Purchaser and the Vendor own three shares and one share respectively in the Company.
|
B.
|
By the Memorandum of Understanding, the Vendor has agreed, inter alia, to sell to the Purchaser and the Purchaser has agreed to buy from the Vendor
|
(i)
|
the Vendor Share in the Company; and
|
(ii)
|
the Additional Industrial Mineral Rights.
|
C.
|
The MGY Subsidiaries, which are subsidiaries of the Vendor, are the sole registered and beneficial holders of the Additional Exploration Permits.
|
D.
|
The Vendor has agreed, inter alia, to procure the MGY Subsidiariesto transfer the Additional Industrial Mineral Rights to the Company in the manner set out in the Mineral Rights Agreement.
|
E.
|
The Parties have agreed to formalise the sale and purchase proposed in the Memorandum of Understanding on the terms and conditions contained in this Agreement, together with the Mineral Rights Agreement and the Green Giant JVA.
|
1.
|
Definitions and interpretation
|
1.1
|
Definitions
|
Additional Exploration Permits
has the meaning given to that term in the Mineral Rights Agreement.
|
Additional Exploitation Permits
has the meaning given to that term in the Mineral Rights Agreement.
|
Additional Industrial Mineral Rights
has the meaning given to that term in the Mineral Rights Agreement.
|
Additional Permit Holders
has the meaning given to that term in the Mineral Rights Agreement.
|
Additional Permits
has the meaning given to that term in the Mineral Rights Agreement.
|
Agreement
means this Sale and Purchase Agreement, including any Schedules or annexures, as amended from time to time.
|
ASX
means the ASX Limited (ACN 008 624 691) trading as the Australian Securities Exchange.
|
Authority
means any government department, local government council, government or statutory authority or any other party under a Law or the listing rules of a securities exchange or stock exchange, which has a right to impose a requirement or whose consent is required with respect to any matter or thing arising under, or affected by, this Agreement.
|
Business Day
means a day other than a Saturday or Sunday on or public holiday in Ontario, Canada or Perth, Western Australia.
|
Cash Consideration
means C$400,000.
|
Claim
means in relation to a Party, any demand, claim, action or proceeding made or brought by or against the Party, howsoever arising and whether present, unascertained, immediate, future or contingent.
|
Completion
means completion of the sale and purchase of the Vendor Share and the Additional Industrial Mineral Rights under this Agreement.
|
|
Confidential and Legally Privileged
|
page 2
|
Sale & Purchase Agreement
|
||
(a)
|
the date that is the fourteen (14) days afterthe satisfaction or waiver of the Conditions; or
|
(b)
|
any other date which is agreed in writing by the Parties.
|
Conditions
means the conditions specified clause 3.1 and
Condition
means any one of them.
|
Conditions Satisfaction Date
means dates for satisfaction of the Conditions, as specified in clause 3.4.
|
Confidential Information
means all information, documents, maps, reports, records, studies, forms, specifications, processes, statements, formulae, trade secrets, drawings and other data (and copies and extracts made of or from any such data) in written or electronic form and whether reduced to writing or not, and at any time in the possession or under the control of or readily accessible to any Party, including the Mining Information, concerning:
|
(a)
|
the existence or contents of this Agreement;
|
(b)
|
Joint Venture Property;
|
(c)
|
the operations and transactions of a Party;
|
(d)
|
the organisation, finance, customers, markets, suppliers, intellectual property and know-how of a Party or a Related Body Corporate of a Party; and
|
(e)
|
any other information obtained in performance of this Agreement,
|
that is not in the public domain (except by failure of a Party to perform and observe its covenants and obligations under this Agreement) and that has been obtained by a Party during the negotiations preceding the making of this Agreement or the Memorandum of Understanding by or through or by being a Party to this Agreement or the Memorandum of Understanding.
|
Dispose
means in relation to a person and any property, means to sell, transfer, assign, surrender, create an Encumbrance over, declare oneself a trustee of or part with the benefit or otherwise dispose of that property (or any interest in it or any party of it) whether done before, on or after the person obtains any interest in the property, including without limitation in relation to a share, to enter into a transaction in relation to the share (or any interest in the share) which results in a person other than the registered holder of the share:
|
(a)
|
acquiring or having an equitable or beneficial interest in the share, including, without limitation, an equitable interest arising under a declaration of trust, an agreement for sale and purchase or an option agreement or an agreement creating a charge or other Encumbrance over the share; or
|
(b)
|
acquiring or having any right to receive (directly or indirectly) any dividends or other distribution or proceeds of disposal payable in respect of the share or any right to receive an amount calculated by reference to any of them; or
|
(c)
|
acquiring or having any rights of pre-emption, first refusal or other direct or indirect control over the disposal of the share; or
|
|
Confidential and Legally Privileged
|
page 3
|
Sale & Purchase Agreement
|
||
(d)
|
acquiring or having any rights of (direct or indirect) control over the exercise of any voting rights or rights to appoint Directors attaching to the share; or
|
(e)
|
otherwise acquiring or having equitable rights against the registered holder of the share (or against a person who directly or indirectly controls the affairs of the registered holder of the shares) which have the effect of placing the other person in substantially the same position as if the person had acquired a legal or equitable interest in the share itself,
|
(f)
|
a transaction expressly permitted by this Agreement; or
|
(g)
|
a transaction conditional on each Party consenting to it.
|
Encumbrances
means any mortgage, bill of sale, lien, charge, pledge, writ, warrant, production royalty, caveat (and all claims stated in the caveat), assignment by way of security, security interest, title retention, preferential right or trust arrangement, Claim, covenant, profit a pendre, easement, or any other security arrangement or other right or interest of any third party and includes any other arrangement having the same effect.
|
Energex
means Energex SARL, a company incorporated under the laws of Madagascar and a wholly owned subsidiary of the Vendor
|
Environmental Law
means any law concerning environmental matters which regulates or affects the Additional Exploration Permits, and includes, but is not limited to, laws concerning land use, development, pollution, waste disposal, toxic and hazardous substances, conservation of natural or cultural resources and resource allocation including any law relating to exploration for or development of any natural resource
|
Environmental Liabilities
means any obligation, expense, penalty or fine under Environmental Law, including rehabilitation and rectification work of whatsoever nature or kind.
|
ERG Project Permits
has the meaning given to that term in the Mineral Rights Agreement.
|
ERG Project Area
has the meaning given to that term in the Mineral Rights Agreement.
|
Good Standing
means in relation to anAdditional Exploration Permit, that:
|
(a)
|
such permit is and remains in full force and effect;and
|
(b)
|
such permit:
|
(i)
|
is and remains not liable to cancellation, forfeiture or non-renewal; or
|
(ii)
|
is liable to cancellation, forfeiture or non-renewal where such liabilityis:
|
|
Confidential and Legally Privileged
|
page 4
|
Sale & Purchase Agreement
|
||
(A)
|
not a result of the default of the holder of the permit or its subsidiaries;
|
(B)
|
solely a result of a compulsory surrender under the Mining Code; or
|
(C)
|
solely a result of a Political Event.
|
Governmental Agency
means any government or any governmental, semi-governmental, administrative, fiscal or judicial body, responsible minister, department, office, commission, delegate, authority, instrumentality, tribunal, board, agency, entity or organ of government, whether federal, state, territorial or local, statutory or otherwise, in respect of a sovereign state and includes any of them purporting to exercise any jurisdiction or power outside that sovereign state.
|
Green Giant JVA
means a document entitled “Green Giant Project Joint Venture Agreement” between Energizer and Malagasy, to be entered into on terms acceptable to each of the Parties.
|
Industrial Minerals
means the minerals listed in Schedule 1of this Agreement.
|
(a)
|
a Party being or stating that it is unable to pay its debts when they fall due;
|
(b)
|
any valid attempt to enforce any Encumbrance over a Party’s assets;
|
(c)
|
an administrator being appointed or any step taken to appoint an administrator in respect of a Party;
|
(d)
|
a receiver, receiver and manager, official manager, trustee administrator, liquidator or other controller or similar officer being appointed over the assets of a Party; or
|
(e)
|
an event having a substantially similar effect to clauses (a) to (d) occurring in connection with a Party under the law of any jurisdiction.
|
Joint Venture
means the joint venture formed between Energizer and Malagasy pursuant to the Joint Venture Agreement.
|
Joint Venture Agreement
means the document entitled “Joint Venture Agreement” and dated 15 December 2011 between the Vendor, the Purchaser and the Company.
|
Joint Venture Property
means all assets of the Company, including (without limitation) the following:
|
(a)
|
the JV Industrial Mineral Rights;
|
(b)
|
MadagascarCo’srights under any JV Sublease;
|
(c)
|
any JV Permits held by the Company or MadagascarCo;
|
|
Confidential and Legally Privileged
|
page 5
|
Sale & Purchase Agreement
|
||
(d)
|
all plant and equipment held by the Company, MadagascarCo, Malagasy or Energizer on behalf of the Joint Venture;
|
(e)
|
all debts owed to the Company;
|
(f)
|
any unearned income of the Company;
|
(g)
|
the Mining Information; and
|
(h)
|
all rights and benefits of the Company under all agreements, leases, contracts and arrangements to which the Company is a party in whole or in part, as at Completion.
|
JV Industrial Mineral Rights
has the meaning given to that term in the Mineral Rights Agreement.
|
JV Permits
has the meaning given to that term in the Mineral Rights Agreement.
|
JV Sublease
has the meaning given to that term in the Mineral Rights Agreement.
|
Loss
means any loss, damage, liability, expense or cost but does not include Consequential Loss.
|
Madagascar Co
has the meaning given to that term in the Mineral Rights Agreement.
|
Material Adverse Effect
means an unfavourable or adverse event, occurrence or circumstance, or the result thereof, that causes the actual value of the ERG Project Permits orERG Project Area to be materially impaired or devalued but does not include anything that occurs as a result of a Political Event.
|
Mazoto
means Mazoto Minerals SARL, a company incorporated under the laws of Madagascar and a wholly owned subsidiary of the Vendor.
|
MDA
means Mada-Aust SARL, a company incorporated under the laws of Madagascar and a wholly owned subsidiary of the Vendor
.
|
Memorandum of Understanding
has the meaning given to that term in the Mineral Rights Agreement.
|
MGY Subsidiaries
has the meaning given to that term in the Mineral Rights Agreement.
|
Mineral Rights Agreement
means the document entitled “ERG Project Mineral Rights Agreement” in the form set out in Annexure A, to be entered into on or about the date of this Agreement.
|
|
Confidential and Legally Privileged
|
page 6
|
Sale & Purchase Agreement
|
||
Mining Information
means all technical information including (without limitation) geological, geochemical and geophysical reports, surveys, mosaics, aerial photographs, samples, drill cores, drill logs, drill pulp, assay results, maps and plans relating to the Industrial Minerals in the ERG Project Area, whether in physical, written or electronic form.
|
Party
means a party to this Agreement and
Parties
means the parties to this Agreement.
|
Political Event
means any act, event or cause which is beyond the reasonable control of the Party concerned (other than lack of or inability to use funds) resulting from the action or inaction of any Governmental Agency including expropriation, restraint, prohibition, intervention, requisition, requirement, direction or embargo by legislation, regulation or other legally enforceable order.
|
(a)
|
the Cash Consideration;
|
(b)
|
the Share Consideration;
|
(c)
|
the right to the Production Payments; and
|
(d)
|
grant of the Royalty.
|
(a)
|
a holding company of the Party;
|
(b)
|
a subsidiary of the Party; or
|
(c)
|
a subsidiary of a holding company of the Party.
|
Restriction Agreement
means an agreement in a form acceptable to the Purchaser and the Vendor (acting reasonably) or in such form as is required by the relevant Authorities, whereby the Vendor agrees that the Share Consideration will be restricted from trading in accordance with the requirements of clause 2.4 or 6.3 (as applicable).
|
(a)
|
2,500,000 ordinary shares in the Purchaser; and
|
(b)
|
3,500,000 warrants to subscribe for ordinary shares in the Purchaser, exercisable at a price equal to the volume weighted average price of the Purchaser’s ordinary shares traded on TSX during the five (5) days prior to the date of this Agreement and expiring on the date five (5) years from the date of this Agreement.
|
|
Confidential and Legally Privileged
|
page 7
|
Sale & Purchase Agreement
|
||
Vendor Share
means the Share held by the Vendor, being the only share held by the Vendor in the Company.
|
1.2
|
Interpretation
|
(a)
|
headings are for convenience; and
|
(b)
|
an obligation or a liability assumed by, or a right conferred on, 2 or more persons binds or benefits them jointly and severally;
|
(c)
|
a word or phrase in the singular number includes the plural, a word or phrase in the plural number includes the singular, and a word indicating a gender includes every other gender;
|
(d)
|
if a word or phrase is given a defined meaning, any other part of speech or grammatical form of that word or phrase has a corresponding meaning;
|
(e)
|
a reference to:
|
(i)
|
a party, clause, schedule, exhibit, attachment or annexure is a reference to a party, clause, schedule, exhibit, attachment or annexure to or of this Agreement;
|
(ii)
|
a party includes that party’s executors, administrators, successors
,
permitted assigns, including persons taking by way of novation and, in the case of a trustee, includes a substituted or an additional trustee;
|
(iii)
|
an agreement includes any undertaking, deed, agreement and legally enforceable arrangement whether in writing or not, and is to that agreement as varied, novated, ratified or replaced from time to time;
|
(iv)
|
a document includes an agreement in writing and any deed, certificate, notice, instrument or document of any kind;
|
(v)
|
a document in writing includes a document recorded by any electronic, magnetic, photographic or other medium by which information may be stored or reproduced;
|
(vi)
|
a document (including this Agreement) includes a reference to all schedules, exhibits, attachments and annexures to it, and is to that document as varied, novated, ratified or replaced from time to time;
|
(vii)
|
legislation or to a provision of legislation includes any consolidation, amendment, re-enactment, substitute or replacement of or for it, and refers also to any regulation or statutory instrument issued or delegated legislation made under it;
|
(viii)
|
a person includes an individual, the estate of an individual, a corporation, an authority, an unincorporated body, an association or joint venture (whether incorporated or unincorporated), a partnership and a trust;
|
|
Confidential and Legally Privileged
|
page 8
|
Sale & Purchase Agreement
|
||
(ix)
|
a right includes a power, remedy, authority, discretion or benefit;
|
(x)
|
conduct includes an omission, statement or undertaking, whether in writing or not;
|
(xi)
|
an agreement, representation or warranty in favour of two or more persons is for the benefit of them jointly and severally; and
|
(xii)
|
an agreement, representation or warranty on the part of two or more persons binds them jointly and severally;
|
(f)
|
the word “
includes
” in any form is not a word of limitation;
|
(g)
|
the words “
for example
” or “
such as
” when introducing an example do not limit the meaning of the words to which the example relates to that example or to examples of a similar kind;
|
(h)
|
a reference to a day is to a period of time commencing at midnight and ending 24 hours later;
|
(i)
|
if a period of time dates from a given day or the day of an act or event, it is to be calculated exclusive of that day; and
|
(j)
|
a reference to “
C$
”, “
$
” or “
dollar
” is to Canadian currency except where otherwise expressly indicated.
|
2.
|
Sale and purchase
|
2.1
|
Agreement to sell and purchase
|
2.2
|
Consideration
|
2.3
|
Payment of Purchase Price
|
(a)
|
The Cash Consideration is to be paid by the Purchaser to the Vendor on Completion.
|
|
Confidential and Legally Privileged
|
page 9
|
Sale & Purchase Agreement
|
||
(b)
|
The Share Consideration is to be issued by the Purchaser to the Vendor on Completion.
|
(c)
|
The right to the Production Payments and the grant of the Royalty are described in clauses 6.2 and 6.4 respectively.
|
2.4
|
Escrow
|
(a)
|
any escrow or resale restrictions or both imposed by any relevant Authority; and
|
(b)
|
a voluntary escrow period of 12 months, which period shall run concurrently with any hold periods imposed by a relevant Authority.
|
3.
|
Conditions to Completion
|
3.1
|
Conditions precedent
|
(a)
|
the Parties having obtained all shareholder and regulatory approvals necessary to achieve Completion under this Agreement including:
|
(i)
|
TSX approvals;
|
(ii)
|
ASX approvals; and
|
(iii)
|
all necessary approvals under the relevant laws of Ontario, Canada, the United States of America and Australia,
|
(b)
|
the Purchaser, Vendor and Company executing the Mineral Rights Agreement:
|
(c)
|
the Purchaser and Vendor executing the Green Giant JVA.
|
3.2
|
Best endeavours
|
3.3
|
Waiver of Conditions precedent
|
|
Confidential and Legally Privileged
|
page 10
|
Sale & Purchase Agreement
|
||
3.4
|
Non-satisfaction of Conditions
|
4.
|
Completion
|
4.1
|
Time and place of Completion
|
4.2
|
Obligations of Vendor at Completion
|
(a)
|
deliver to the Purchaser the following documents:
|
(i)
|
(
share certificates
) the share certificate(s) in respect of the Vendor Share;
|
(ii)
|
(
Restriction Agreement
) a Restriction Agreement duly executed by the Vendor;
|
(iii)
|
(
sharetransfer instruments
) instruments of transfer for the Vendor Share naming the Purchaser as the transferee, duly executed by the Vendor and in registrable form;
|
(iv)
|
(
company documents
) all copies in the Vendor’s possession of cheque books, financial and accounting records, agreements, and all other records, papers, books and documents of the Company;
|
(v)
|
(
permits and licenses
) all originals and copies in the Vendor’s possession of current permits, licences, leases, subleases and other documents issued to the Company under any legislation or ordinance relating to the ERG Project Area;
|
(vi)
|
(
Mining Information
) copies of all Mining Information in the Vendor’s possession; and
|
(vii)
|
(
other documents
) any other document which the Purchaser reasonably requires to obtain good title to the Vendor Shareand to enable the Purchaser to cause the registration of the Vendor Share in the name of the Purchaser.
|
(b)
|
(
execution of agreements
) if not already done, execute the:
|
(i)
|
the Mineral Rights Agreement; and
|
(ii)
|
the Green Giant JVA.
|
|
Confidential and Legally Privileged
|
page 11
|
Sale & Purchase Agreement
|
||
4.3
|
Meeting of directors of the Company
|
(a)
|
the registration of the transfer of the Vendor Share;
|
(b)
|
the issue of a new share certificate for the Vendor Share in the name of the Purchaser; and
|
(c)
|
the cancellation of the existing share certificate(s) in the name of the Vendor for the Vendor Share.
|
4.4
|
Obligations of Purchaser at Completion
|
(a)
|
(
Cash Consideration
) pay the Cash Consideration to the Vendor;
|
(b)
|
(
Share Consideration
) issue the Share Consideration to the Vendor free from any Encumbrances or other third party rights and enter the Vendor on the Purchaser’s share register as the holder of the Share Consideration;
|
(c)
|
(
Purchaser’s shares
) do all things necessary and within its power to ensure that ordinary shares in the Purchaser issued pursuant to the Share Consideration are admitted to quotation on the TSX or other equivalent stock exchange and, subject to the clause 2.4, are freely tradeable;
|
(d)
|
(
holding statements
) deliver or cause to be delivered to the Vendor:
|
(i)
|
certificates or holding statements in respect of the Share Consideration (delivery to occur as soon as possible following Completion); and
|
(ii)
|
any other document which the Vendor requires to obtain or evidence good title to the Share Consideration,
|
(e)
|
(
execution of agreements
) if not already done, execute the Green Giant JVA and the Mineral Rights Agreement; and
|
(f)
|
(
other acts
) do and execute all other acts and documents which this Agreement requires the Purchaser to do or execute at Completion.
|
4.5
|
Completion simultaneous
|
(a)
|
there is no obligation on any Party to undertake or perform any of the other actions;
|
|
Confidential and Legally Privileged
|
page 12
|
Sale & Purchase Agreement
|
||
(b)
|
to the extent that such actions have already been undertaken, the Parties must do everything reasonably required to reverse those actions; and
|
(c)
|
each Party must return to the other all documents delivered to it under this clause 4, and must each repay to the other all payments received by it under this clause 4, without prejudice to any other rights any Party may have in respect of that failure.
|
4.6
|
Title, property and risk
|
(a)
|
The title to, property in and risk of the Vendor Share and the Additional Industrial Mineral Rights:
|
(i)
|
until Completion, remains solely with the Vendor; and
|
(ii)
|
passes to the Purchaser on and from Completion.
|
(b)
|
The title to, property in and risk of the Additional Industrial Mineral Rights shall pass to the Purchaser in accordance with the terms of the Mineral Rights Agreement.
|
4.7
|
Termination of the Joint Venture Agreement and release
|
(a)
|
the Joint Venture Agreement will immediately terminate in accordance with clause 28.1(b) of the Joint Venture Agreement; and
|
(b)
|
subject to the terms of this Agreement, each Party acknowledges and agrees that:
|
(i)
|
it shall have no rights whatsoever against the other Parties for any payment or Claim arising under or in connection with the Joint Venture Agreement; and
|
(ii)
|
it unconditionally releases and forever discharges each of the other Parties from any Claims they may now have or but for this Agreement at any time in the future may have had directly or indirectly against the other Parties arising under or in connection with the Joint Venture Agreement whether such Claims are known, unknown or incapable of being known at the time of execution of this Agreement.
|
5.
|
Pre-Completion conduct
|
5.1
|
Conduct pending Completion
|
|
Confidential and Legally Privileged
|
page 13
|
Sale & Purchase Agreement
|
||
(a)
|
(
disposal of Shares
) must not, without the prior written consent of the Purchaser, Dispose or agree to Dispose of the Vendor Share;
|
(b)
|
(
disposal of Additional Permits
) must procure that the MGY Subsidiaries do not, without the prior written consent of the Purchaser, Dispose or agree to Dispose of the Additional Permits;
|
(c)
|
(
no Encumbrances
) must not create any Encumbrance or any adverse claim or interest concerning:
|
(i)
|
the Joint Venture Property;
|
(ii)
|
the Vendor Share;
|
(iii)
|
the Additional Industrial Mineral Rights; or
|
(iv)
|
the Company,
|
(d)
|
(
Good Standing
) must ensure that the Additional Permit Holders make all payments necessary to maintain the Additional Exploration Permits in Good Standing and pay any and all rates, rents and taxes until Completion, including making applications and doing all things necessary as may be required by relevant Laws.
|
5.2
|
Vendor’s assistance prior to Completion
|
6.
|
Period after Completion
|
6.1
|
Mineral Rights Agreement
|
6.2
|
Production Payments
|
(a)
|
Upon the Purchaser completing a bankable feasibility study in respect of the exploitation of Industrial Minerals within the ERG Project Area andmaking a public announcement on the TSX regarding the results of that study, the Purchaser must:
|
(i)
|
within 30 days of the date of the announcement pay to the Vendor the amount of C$700,000 in cash; and
|
(ii)
|
subject to receiving relevant TSX approvals and other necessary approvals (which the Purchaser agrees to seek within 5 Business Days of the date of the announcement) and immediately upon receiving such approvals, issue to the Vendor 1,000,000 ordinary sharesof the Purchaser at a price equal to the volume weighted average price of the Purchaser’s ordinary shares traded on TSX during the five (5) days immediately prior the date of issue.
|
|
Confidential and Legally Privileged
|
page 14
|
Sale & Purchase Agreement
|
||
(b)
|
On the commencement of commercial production of Industrial Minerals from the ERG Project Area, the Purchaser must, within 30 days, pay to the Vendor the amount of C$1,000,000 in cash.
|
6.3
|
Escrow
|
(a)
|
The Vendor acknowledges and agrees that the issue of the Purchaser’s common shares pursuant to clause 6.2(a)(ii) will be subject to:
|
(i)
|
any escrow or resale restrictions or both imposed by any relevant Authority; and
|
(ii)
|
a voluntary escrow period of 12 months, which period shall run concurrently with any hold periods imposed by relevant Authorities.
|
(b)
|
The issue of the Purchaser’s common shares shall be subject to the Vendor delivering to the Purchaser a Restriction Agreement, duly executed by the Vendor.
|
6.4
|
Royalty
|
7
|
Representations and warranties
|
7.1
|
Representations and warranties by Purchaser
|
(a)
|
it is validly incorporated and subsisting under the laws of Minnesota, USA;
|
(b)
|
the execution and delivery of this Agreement has been duly and validly authorised by all necessary corporate action;
|
(c)
|
it has corporate power and lawful authority to execute and deliver this Agreement and to observe and perform or cause to be observed and performed all of its obligations in and under this Agreement;
|
(d)
|
there is no litigation or proceeding of any nature concerning the Purchaser, pending or threatened against them or a Related Body Corporate which may prevent or impair the Purchaser’s ability to enter into or perform its obligations in and under this Agreement;
|
|
Confidential and Legally Privileged
|
page 15
|
Sale & Purchase Agreement
|
||
(e)
|
this Agreement does not conflict with or constitute or result in a material breach of or default under any agreement, deed, writ, order, injunction, judgment, law, rule or regulation to which it is a party or is subject or by which it is bound in a manner which may materially and adversely affect the rights and interests of a Party under this Agreement; and
|
(f)
|
it has not suffered an Insolvency Event.
|
7.2
|
Representations and warranties bythe Vendor
|
(a)
|
it is the registered legal and beneficial owner of the Vendor Share;
|
(b)
|
it is validly incorporated and subsisting under the laws of Australia;
|
(c)
|
the execution and delivery of this Agreement has been duly and validly authorised by all necessary corporate action;
|
(d)
|
it has corporate power and lawful authority to execute and deliver this Agreement and to observe and perform or cause to be observed and performed all of its obligations in and under this Agreement;
|
(e)
|
there is no litigation or proceeding of any nature concerning the Vendor, pending or threatened against the Vendor or a Related Body Corporate which may prevent or impair the Vendor’s ability to enter into or perform its obligations in and under this Agreement;
|
(f)
|
this Agreement does not conflict with or constitute or result in a material breach of or default under any agreement, deed, writ, order, injunction, judgment, law, rule or regulation to which it is a party or is subject or by which it is bound in a manner which may materially and adversely affect the rights and interests of a Party under this Agreement;
|
(g)
|
it has not suffered an Insolvency Event;
|
(h)
|
subject to the Bureau du Cadastre Minier de Madagascar approving the Vendor’s application to include Industrial Mineral Rights under the Additional Permits, it has the full right, power and authority to sell the Additional Industrial Mineral Rights and to procure the MGY Subsidiaries to transfer the legal and beneficial interest to the Additional Industrial Mineral Rights to the Purchaser in accordance with the Mineral Rights Agreement;
|
(i)
|
one or more of the MGY Subsidiaries arethe registered and beneficial holders of the Additional Exploration Permits;
|
(j)
|
no person other than the Purchaser, the Vendor and their Related Bodies Corporate has any proprietary rights of any nature in respect of the Additional Exploration Permits and they have not granted to any person any rights to own or possess any interest or any rights to explore or prospect for minerals or to mine the same in any part of the land comprising the Additional Exploration Permits;
|
|
Confidential and Legally Privileged
|
page 16
|
Sale & Purchase Agreement
|
||
(k)
|
the Additional Exploration Permits are free of any Encumbrances except to the extent of any conditions imposed under the Mining Code;
|
(l)
|
there is no litigation or proceeding of any nature concerning the Additional Exploration Permits, pending or threatened againstor any other person which may defeat, impair, detrimentally affect or reduce the right, title and interest of the Company or the Additional Permit Holders in theAdditional Exploration Permits or the interest therein, including any plaint seeking forfeiture of the Additional Exploration Permits;
|
(m)
|
to the best of its knowledge, the Additional Exploration Permits have been duly marked off, granted and applied for in accordance with the Mining Code;
|
(n)
|
the Additional Exploration Permits are in Good Standing under the Mining Code and they are not in breach or contravention of any of the terms and conditions upon which the Additional Exploration Permits were granted or of any other rule, regulation or provision of the Mining Code or any other statute concerning, affecting or relating to the Additional Exploration Permits;
|
(o)
|
to the best of the Vendor’s knowledge, information and belief, there are no facts or circumstances that could, under the currently applicable laws of Madagascar, give rise to the cancellation, forfeiture or suspension or grant of the Additional Exploration Permits when renewed, that could have a Material Adverse Effect;
|
(p)
|
except as disclosed to thePurchaser before the date of this Agreement, there are no agreements or dealings in respect of the Additional Exploration Permits;
|
(q)
|
there is not in existence any current compensation agreement with the owner or occupier of any land which is subject to the Additional Exploration Permits;
|
(r)
|
there are no Environmental Liabilities relating to or affecting the Additional Exploration Permits, nor are there any circumstances relating to the Exploration Permits which may reasonably be expected to give rise to future Environmental Liabilities, except to the extent of any report, study or assessment required to be lodged pursuant to the Mining Code or other regulation in relation to the Additional Exploration Permits;
|
(s)
|
the Mining Information is complete and accurate in all material respects as it relates to the Additional Exploration Permits; and
|
(t)
|
the Additional Exploration Permits have been granted in respect of all of the ground described in the Additional Exploration Permits other than as a result of a compulsory surrender required under the Mining Code or other law affecting the Additional Exploration Permits.
|
7.3
|
Disclaimer of liability by the Vendor
|
(a)
|
incurred as a result of a Political Event;
|
|
Confidential and Legally Privileged
|
page 17
|
Sale & Purchase Agreement
|
||
(b)
|
disclosed by the Vendor to the Purchaser or is known by the Purchaser at or prior to Completion;
|
(c)
|
in excess of the total amount of the Purchase Price; or
|
(d)
|
caused or contributed to by a breach by the Purchaser or the Company ortheir respective obligations under this Agreement.
|
8.
|
Termination
|
8.1
|
Termination
|
(a)
|
commits any serious breach or non-observance of any of the provisions of this Agreement that is not capable of being remedied;
|
(b)
|
fails to remedy a breach of this Agreement that is capable of being remedied within fourteen (14) days of being requested (in writing) by the non-defaulting Party to remedy that breach; or
|
(c)
|
suffers an Insolvency Event.
|
8.2
|
Consequences of Termination before Completion
|
(a)
|
no Party has any liability to the other Parties except for antecedent breaches of this Agreement; and
|
(b)
|
clause 9 will continue to operate to the extent applicable.
|
9.
|
Confidentiality and public announcements
|
9.1
|
Confidentiality
|
(a)
|
if the information is at the time generally and publicly available other than as a result of breach of confidence by the Recipient;
|
(b)
|
if the information is at the time lawfully in the possession of the proposed recipient of the information through sources other than the Recipient;
|
(c)
|
by the Recipient to legal and other professional advisers and other consultants and officers and employees of:
|
|
Confidential and Legally Privileged
|
page 18
|
Sale & Purchase Agreement
|
||
(i)
|
the Recipient; or
|
(ii)
|
the Recipient's Related Bodies Corporate,
|
(d)
|
with the prior writtenconsent of the Owner;
|
(e)
|
to the extent required by law or by a lawful requirement of any Governmental Agency having jurisdiction over the Recipient or any of its Related Bodies Corporate;
|
(f)
|
if required in connection with legal proceedings or arbitration relating to this Agreement or for the purpose of advising the Recipient in relation thereto;
|
(g)
|
if and to the extent that it may be necessary or desirable to disclose to any Governmental Agency in connection with applications for consents, approvals, authorities or licenses in relation to this Agreement;
|
(h)
|
to the extent required by a lawful requirement of any stock exchange having jurisdiction over the Recipient or any of its Related Bodies Corporate;
|
(i)
|
if necessary to be disclosed in any prospectus or information memorandum to investors or proposed or prospective investors:
|
(i)
|
for an issue or disposal of any shares or options in the Recipient or any of its Related Bodies Corporate;
|
(ii)
|
for an issue of debt instruments of the Recipient or any of its Related Bodies Corporate; or
|
(iii)
|
for the purposes of the Recipient obtaining a listing on any stock exchange of any shares, options or debt instruments;
|
(j)
|
if necessary to be disclosed to a professional investor or investment adviser for the purposes of enabling an assessment to be made about the merits or otherwise of an investment in the Recipient or any of its Related Bodies Corporate;
|
(k)
|
if necessary to be disclosed to an existing or bona fide proposed or prospective:
|
(i)
|
financier of the Recipient or of any of its Related Bodies Corporate; or
|
(ii)
|
rating agency in respect of the Recipient or of any of its Related Bodies Corporate;
|
(l)
|
if necessary to be disclosed to any bona fide proposed or prospective:
|
|
Confidential and Legally Privileged
|
page 19
|
Sale & Purchase Agreement
|
||
(i)
|
transferee of any property to which the information relates or of any shares in the Recipient or any Related Body Corporate of the Recipient;
|
(ii)
|
financier of such transferee providing or proposing or considering whether to provide financial accommodation; or
|
(iii)
|
assignee of rights under the Recipient's financing documents; or
|
(m)
|
if necessary to be disclosed to legal and other professional advisers and other consultants and officers or employees of any of the persons referred to in clause 9.1(j), 9.1(k), or 9.1(l).
|
9.2
|
Conditions
|
(a)
|
In the case of a disclosure under clause 9.1(c) or 9.1(d) and, where appropriate, under clause 9.1(e) or 9.1(f), the Party wishing to make the disclosure must inform the proposed recipient of the confidentiality of the information and the Party must take such precautions as are reasonable in the circumstances to ensure that the proposed recipient keeps the information confidential.
|
(b)
|
In the case of a disclosure under clause 9.1(g) 9.1(h) or 9.1(i), the Party wishing to make the disclosure may only do so:
|
(i)
|
with the written consent of both Parties, which must not be unreasonably withheld or delayed; or
|
(ii)
|
to the extent required by law, the official rules of any the relevant stock exchange or any Governmental Agency, but if any Party is required to make any such announcement, it must promptly notify the other Party, where reasonably practicable and lawful to do so, before the announcement is made and must confer with the other Party and consider any comments of the other Partyregarding the timing and content of such announcement or any action which the other Party may reasonably elect to take to challenge the validity of such requirementsubject at all times to the disclosing Party’s obligations under law, the official rules of the relevant stock exchange or any Governmental Agency.
|
(c)
|
In the case of a disclosure under clause 9.1(j), 9.1(k) or 9.1(l) or (in the case of legal and other professional advisers and other consultants only) 9.1(m) the Party wishing to make the disclosure must not make any disclosure unless:
|
(i)
|
in the case of a disclosure under clause 9.1(j), 9.1(k) or 9.1(l) the proposed recipient has first entered into and delivered to the Recipient a confidentiality undertaking in a form acceptable to the other Party; or
|
(ii)
|
in the case of a disclosure under clause 9.1(m) the principal or employer of the proposed recipient has first entered into and delivered to the Recipient a confidentiality undertaking in a form acceptable to the other Party which will incorporate a warranty by the principal or employer of the proposed recipient that the proposed recipient is under an obligation of confidentiality to the principal or employer and that the principal or employer will enforce that obligation to the fullest extent that the law or equity allows upon being called upon to do so by any of the Parties
.
|
|
Confidential and Legally Privileged
|
page 20
|
Sale & Purchase Agreement
|
||
9.3
|
Notice to other Parties
|
|
(a)
|
promptly inform each other Party of any request received by that Party from any person described in clause 9.1(e) to disclose information under that clause;
|
|
(b)
|
inform all other Parties as soon as reasonably practicable after information is disclosed by the Party under clause 9.1(e); and
|
|
(c)
|
not disclose any information under clause 9.1 unless all other Parties have been informed of the proposed disclosure.
|
9.4
|
Indemnities
|
9.5
|
Survival of confidentiality obligations
|
9.6
|
Use of Mining Information in respect to Other Mineral Rights
|
9.7
|
Notices
|
(a)
|
must be in writing;
|
(b)
|
must be addressed as follows (or otherwise notified by that Party to the other Party from time to time):
|
|
Confidential and Legally Privileged
|
page 21
|
Sale & Purchase Agreement
|
||
To Energizer | Energizer Resources Inc | |
Attention: |
Chief Executive Officer
|
|
Address:
|
Energizer Resources Inc.
141 Adelaide Street
West Suite 520
Toronto, Ontario
CANADA
|
|
Facsimile: | +1 416.364.2753 | |
To Malagasy | Malagasy Minerals Limited | |
Attention: | Company Secretary | |
Address:
|
Malagasy Minerals Limited
15 Lovegrove Close
Mount Claremont
Western Australia 6010
AUSTRALIA
|
|
Facsimile: | +61 8 9284 3801 |
(c)
|
must be signed by the Party making it or (on that party’s behalf) by the solicitor for or any attorney, director, secretary or authorised agent of that Party;
|
(d)
|
must be delivered by hand or posted by prepaid post to the address, or sent by fax to the number, of the addressee; and
|
(e)
|
is taken to be received by the addressee:
|
(i)
|
(in the case of prepaid post sent to an address in the same country) on the third day after the date of posting;
|
(ii)
|
(in the case of prepaid post sent to an address in another country) on the fifth day after the date of posting;
|
(iii)
|
(in the case of fax) at the time in the place to which it is sent equivalent to the time shown on the transmission confirmation report produced by the fax machine from which it was sent; and
|
(iv)
|
(in the case of delivery by hand) on delivery,
|
|
Confidential and Legally Privileged
|
page 22
|
Sale & Purchase Agreement
|
||
10.
|
Miscellaneous
|
10.1
|
Governing law
|
10.2
|
Amendments
|
10.3
|
Primacy of this Agreement
|
10.4
|
Waiver
|
(a)
|
Failure to exercise or enforce, or a delay in exercising or enforcing, or the partial exercise or enforcement, of a right provided by law or under this Agreement by a Party does not preclude, or operate as a waiver of, the exercise or enforcement, or further exercise or enforcement, of that or any other right provided by law or under this Agreement.
|
(b)
|
A waiver or consent given by a Party under this Agreement is only effective and binding on that Party if it is given or confirmed in writing by that Party.
|
(c)
|
No waiver of a breach of a term of this Agreement operates as a waiver of another breach of that term or of a breach of any other term of this Agreement.
|
10.5
|
Consents
|
10.6
|
Counterparts
|
10.7
|
No representation or reliance
|
|
Confidential and Legally Privileged
|
page 23
|
Sale & Purchase Agreement
|
||
(a)
|
Each Party acknowledges that neither Party (nor any person acting on a Party’s behalf) has made any representation or other inducement to it to enter into this Agreement except for representations or inducements expressly set out in this Agreement.
|
(b)
|
Each Party acknowledges and confirms that it does not enter into this Agreement in reliance on any representation or other inducement by or on behalf of the other Party, except for representations or inducements expressly set out in this Agreement.
|
10.8
|
Expenses
|
10.9
|
Entire agreement
|
(a)
|
embodies the entire understanding of the Parties, and constitutes the entire terms agreed by the Parties; and
|
(b)
|
supersedes any prior written or other agreement of the Parties.
|
10.10
|
Indemnities
|
(a)
|
Each indemnity in this Agreement is a continuing obligation, separate and independent from the other obligations of the Parties, and survives termination, completion or expiration of this Agreement.
|
(b)
|
It is not necessary for a Party to incur expense or to make any payment before enforcing a right of indemnity conferred by this Agreement.
|
(c)
|
A Party must pay on demand any amount it must pay under an indemnity in this Agreement.
|
10.11
|
Severance and enforceability
|
|
Confidential and Legally Privileged
|
page 24
|
Sale & Purchase Agreement
|
||
10.12
|
No merger
|
10.13
|
Power of attorney
|
(a)
|
Each attorney who signs this Agreement on behalf of a Party declares that the attorney has no notice from the Party who appointed him that the power of attorney granted to him, under which the attorney signs this Agreement, has been revoked or suspended in any way.
|
(b)
|
Each Party represents and warrants to each other that its respective attorney or authorised officer who signs this Agreement on behalf of that Party has been duly authorised by that Party to sign this Agreement on its behalf and that authorisation has not been revoked.
|
10.14
|
Taxes
|
(a)
|
For the purpose of this clause 10.14,
Tax
means a tax including any value added or goods and services taxes (including TVA), rate, levy, duty (other than a tax on the net overall income of a Party) and any interest penalty fine or expense relating to any of them.
|
(b)
|
Subject to clause 10.14(c), any Taxes that may be imposed by any authorities in connection with this Agreement and any Taxes, fees or costs in relation to the registration of this Agreementwill be paid by the Purchaser.
|
(c)
|
Any Taxes which may be imposed by any authorities in connection with the transfer of the Vendor Share under this Agreement, will be apportioned equally between the Purchaser and the Vendor.
|
(d)
|
The Purchaser will indemnify and hold the Vendor harmless against any liability for the Purchaser’s obligations set out in clauses10.14(b) and 10.14(c) above, provided that under no circumstances will the Purchaser be liable or accountable for any capital gains tax or income tax liability of the Vendor.
|
|
Confidential and Legally Privileged
|
page 25
|
Sale & Purchase Agreement
|
||
|
Confidential and Legally Privileged
|
page 26
|
Sale & Purchase Agreement
|
||
S2.1
|
Definitions
|
(a)
|
which arise from a subsequent adjustment to the amount paid to a Payer based on the actual Products recovered after refining;
|
(b)
|
tocorrect any accounting or recording errors from previous Quarters;
|
(c)
|
which are otherwise made in accordance with this Agreement; or
|
(d)
|
which are agreed by the Parties.
|
Deductions
means all costs paid or incurred by the Payer, in US dollars or in US Dollar Equivalent, in relation to the sale of Product extracted and recovered from the Development Area after mining and milling or other initial processing within or adjacent to the Development Area, and include:
|
(a)
|
all costs of smelting and refining and retorting the ore and minerals extracted from the Development Area, including Penalties for impurities and all umpire charges and other processor deductions;
|
(b)
|
all road, sea and rail freight, transportation, security and incidental costs and expenses, including forwarding, shipping, demurrage, delay and insurance costs, incurred between the outer boundary of, or adjacent to, the Development Area and the point of delivery of the Products into a Refinery, including the cost of transport to and between any Refinery or other places of treatment;
|
(c)
|
handling and incidental costs and expenses including agency, banking, assaying, sampling, weighing, loading, unloading, stockpiling and storage;
|
(d)
|
actual sales costs, and reasonable marketing, representation, agency and brokerage costs in respect of the Product subject to the Royalty;
|
|
Confidential and Legally Privileged
|
page 27
|
Sale & Purchase Agreement
|
||
(e)
|
administrative and other general overhead costs that are directly attributable and reasonably allocable to the costs set out in paragraphs (a) to (d) above, as agreed with the Payee;
|
(f)
|
Carried Forward Deductions;
|
(g)
|
shipping agency fees;
|
(h)
|
bank charges on sales receipts and payments;
|
(i)
|
government charges on banking transactions;
|
(j)
|
all taxes (excluding taxes based on income of the Payer), royalties, duties, levies and charges lawfully imposed by an Authority, including carbon emission licence fees, charges, fuel excise (net of any fuel tax credits) and carbon trading taxes in any way connected with the transportation or sale of the Product from the Mining Area, including any value added or goods and services taxes (but not if subject to an input tax credit, which is actually claimed and received);
|
(k)
|
any other incidental charge or expense incurred between the outer boundary of, or adjacent to, the Development Area up to the point of delivery of the Products into a Refinery, including on-site transport and storage,
|
(l)
|
any exploration, development, construction, mining, crushing, treatment or concentrating costs incurred by the Payer within or adjacent to the Development Area; or
|
(m)
|
where Products are loaded, treated, milled, processed, transported or unloaded outside the ERG Project Area in a Refinery wholly or partially owned by the Payer or a shareholder, Related Body Corporate or Related Entity of the Payer, any costs and expenses that are in excess of those which would be paid or incurred by the Payer on arm’s length terms, or which would not be Deductions if those Products were processed by a third party.
|
Development Area
means the area within the ERG Project Area existing at the date of this Agreement where mining activities are conducted from time to time during the term of this Agreement.
|
Exchange Rate
means the average of the spot rate of exchange during the relevant period for the purchase of one currency against another currency as set by the usual bank for the Payer or another recognised and reputable banking institution chosen by the Payer, acting reasonably.
|
(a)
|
the total amounts actually received by the Payer from the sale of Product to the owner or operator of a Refinery, in US dollars, or in US Dollar Equivalent, (
Sales
) including the proceeds received from an insurer in the case of loss of, or damage to, the Products (net of any excess paid in respect of that loss),during the expired Quarter, less any refunds, claims or discount, where Sales are effected on an arms-length basis on normal commercial terms; and
|
|
Confidential and Legally Privileged
|
page 28
|
Sale & Purchase Agreement
|
||
(b)
|
if Sales are effected on any other basis than on an arms-length basis on normal commercial terms, or if Product is disposed of otherwise than by sale (whether immediate or for future delivery) during the expired Quarter, the fair market value of the Product so sold or otherwise disposed of during the expired Quarter in US dollars, or in US Dollar Equivalent,as determined in accordance with paragraph S2.8.
|
Net Smelter Return
means Gross Revenue and Adjustments (whether plus or minus) for the relevant Quarter minus Deductions for that Quarter.
|
Payee
means the Vendor, or any subsequent party entitled in accordance with this Agreement to receive payment of the Royalty.
|
Payer
means the Purchaser, or any subsequent mining development company established by the Purchaser and ERG for the exploitation of Industrial Minerals within the Development Area.
|
Penalty
means a charge made by a Refinery, in addition to normal refining costs, for removing from the Product minerals or other substances where the cost of the removal exceeds the value of those minerals or other substances.
|
Product
means any Industrial Minerals, or any product derived from the processing of Industrial Minerals extracted and recovered from the ERG Project Area which is capable of being sold or otherwise disposed of, including those described in Schedule 1.
|
Quarter
means the period of three consecutive Months commencing 1 January, 1 April, 1 July or 1 October in any year, other than the first Quarter which commences on the date the Payee become entitled to the Royalty under clause 6.4 of the Agreement and expires on the date immediately preceding the next to occur of 1 January, 1 April, 1 July or 1 October, and Quarterly has the corresponding meaning.
|
US Dollar Equivalent
means, where sum to which this Agreement relates is not stated in US dollars, the amount determined by converting the amount in foreign currency into US dollars at the Exchange Rate existing when the relevant revenue was earned or receivable, or the relevant expenditure was incurred, by the Payer.
|
S2.2
|
Calculation of Net Smelter Return
|
The Payer will calculate the Net Smelter Return Quarterly from the date on which Product is first produced from the Development Area.
|
|
Confidential and Legally Privileged
|
page 29
|
Sale & Purchase Agreement
|
||
S2.3
|
Reporting
|
S2.4
|
Time for payment of Royalty
|
S2.5
|
Audits and adjustments
|
(a)
|
The Payer’s records that relate to the calculation of the Net Smelter Return and the Royalty for a Quarter (
Royalty Records
) shall be open to inspection and review by the Payee’s external auditors for a period of 12 Months after the end of such Quarter, at the Payee’s cost. If not reviewed in that 12 Month period the Royalty payment for that Quarter will be taken to be in full and final satisfaction of the Payer’s obligations in respect of that payment.
|
(b)
|
If an audit carried out pursuant to paragraph S2.5(a) (Audit) discloses that the Payer has made an overpayment of the Royalty or has made an underpayment of the Royalty of 5% or less, then the Payee will be responsible for payment of the costs of the Audit and the Payer will (as the case may be):
|
(i)
|
deduct the amount of any such overpayment from its next Royalty payment to the Payee; or
|
(ii)
|
add the amount of any such underpayment to the next Royalty payment it makes to the Payee.
|
(c)
|
If an Audit discloses an underpayment by the Payer of more than 5%, then the costs of the Audit shall be borne by the Payer and the amount of the underpayment will be paid by the Payer to the Payee within 14 days after delivery of the Audit report to the Payer.
|
S2.6
|
Assignment
|
(a)
|
The Payer must not sell, assign or otherwise dispose of or encumber the whole or part of its interest in the Development Area without first requiring the assignee or other such party to enter into a covenant with the Payee on terms to the satisfaction of the Payee (acting reasonably) binding it to observe and perform all the terms and conditions of these procedures as from the effective date of assignment or encumbrance.
|
(b)
|
The Payee may only assign, sell or otherwise dispose of the whole (but not a part) of its rights and interest in or under the Royalty (
Relevant Interest
), other than to a Related Body Corporate of the Payee to which this paragraph (b) does not apply, if it first offers to the Payer the opportunity to acquire the Relevant Interest for consideration equal to that offered by the proposed assignee. If the Payer does not accept the offer within 30 days,the Payee may proceed with the assignment, sale or disposal to the proposed assignee within 90 days and on terms no more favourable to the proposed assignee than those offered to the Payer. If the Payer accepts the offer then settlement of the assignment of the Relevant Interest to the Payer shall occur within 60 days thereafter.
|
|
Confidential and Legally Privileged
|
page 30
|
Sale & Purchase Agreement
|
||
S2.7
|
Hedging and Disposal of Intermediate Product
|
(a)
|
All profits and losses resulting from the Payer engaging in any commodity futures trading, option trading, metals trading, gold loans or any combination thereof, or other hedging or price protection arrangements or mechanisms are excluded from calculations of the Net Smelter Return.
|
(b)
|
The Payer must not dispose of, or allow for commingling of, any ore from the Development Area or any intermediate product unless it has ensured that it has access to all information necessary in order to calculate the Royalty.
|
S2.8
|
Reference to expert
|
(a)
|
If any dispute or difference arises between the Parties in connection with, the calculation of the Net Smelter Return or the Royalty, the Parties undertake with each other to use all reasonable endeavours, in good faith, to settle the dispute or difference by negotiation.
|
(b)
|
If any dispute referred to in paragraph S2.8(a) has not been resolved within a reasonable time of not less than 21 days, either Party may refer the matter in issue to an independent expert for determination.
|
(c)
|
Prior to resolution of the dispute, the Parties must continue to perform their respective obligations under this Agreement including all pre-existing obligations the subject of the dispute, except only:
|
(i)
|
an obligation to make a payment to the other Party, where that payment is a subject of the dispute; or
|
(ii)
|
to the extent that lack of resolution of the dispute prevents such performance.
|
(d)
|
Nothing in this clause prevents a Party from commencing proceedings in any court where proceedings are required to obtain urgent interlocutory relief.
|
|
Confidential and Legally Privileged
|
page 31
|
Sale & Purchase Agreement
|
||
Signed as an agreement
by
Energizer
Resources Inc.
|
)
)
)
|
|
/s/ Peter Liabotis
|
/s/ Richard Schler
|
|
Signature
|
Signature
|
|
Peter Liabotis
|
Richard Schler
|
|
Print name
|
Print name
|
|
CFO
|
CEO
|
Signed as an agreement
by
Malagasy
Minerals Limited
(ACN 121 700 105)
|
)
)
)
|
|
/s/ Graeme Raymond Boden
|
/s/ Natasha Lee Forde
|
|
Signature
|
Signature
|
|
Graeme Raymond Boden
|
Natasha Lee Forde
|
|
Print name
|
Print name
|
|
Director
|
Company Secretary
|
ERG Joint Venture (Mauritius) Ltd
|
)
)
)
|
|
/s/ Peter Liabotis
|
/s/ Richard Schler
|
|
Signature
|
Signature
|
|
Peter Liabotis
|
Richard Schler
|
|
Print name
|
Print name
|
|
Company Secretary / Director
|
|
Confidential and Legally Privileged
|
page 32
|
Sale & Purchase Agreement
|
||
|
Confidential and Legally Privileged
|
page 33
|
Jackson McDonald
140 St Georges Terrace
Perth WA 6000
|
t:
f:
w:
|
+61 8 9426 6611
+61 8 9481 8649
www.jacmac.com.au
|
Contact:
Reference:
|
Will Moncrieff
7141864
|
1
|
Definitions and interpretation
|
2
|
|
1.1
|
Definitions
|
2
|
|
1.2
|
Interpretation
|
10
|
|
2
|
Conditions
|
11
|
|
2.1
|
Conditions precedent
|
11
|
|
2.2
|
Waiver of Conditions precedent
|
12
|
|
2.3
|
Non-satisfaction of Conditions
|
12
|
|
3
|
Term
|
12
|
|
4
|
Rights to explore and sublease
|
12
|
|
4.1
|
Grant of Additional Industrial Mineral Rights
|
12
|
|
4.2
|
Minerals Rights interests at Completion
|
13
|
|
4.3
|
Grant of Additional Permits Area Subleases
|
13
|
|
4.4
|
Continuation of JV Subleases and JV Industrial Mineral Rights
|
14
|
|
4.5
|
Transfer of ERG Project Permits
|
14
|
|
4.6
|
Termination of Industrial Minerals Subleases
|
15
|
|
4.7
|
Grant of Other Minerals Subleases
|
16
|
|
4.8
|
Covenants of Permit Holders in respect of the ERG Project Exploration Permits
|
16
|
|
4.9
|
Covenants in respect of the ERG Project Exploration Permits
|
17
|
|
4.10
|
Remedies of Sublessee
|
18
|
|
4.11
|
Exercise of mineral rights
|
18
|
|
4.12
|
Notice of activities
|
19
|
|
4.13
|
Mutual indemnities
|
20
|
|
5
|
Transfer of Permits
|
20
|
|
6
|
Mining Operations
|
20
|
|
6.1
|
Decision to Mine
|
20
|
|
6.2
|
Transfer of Mining Area
|
21
|
|
6.3
|
Conversion to Exploitation Permits
|
21
|
|
6.4
|
Transfer of Exploitation Permits
|
21
|
|
6.5
|
Holding of Exploitation Permits
|
22
|
|
6.6
|
Approval of Mining Department
|
22
|
|
6.7
|
Option of Permit Holders to transfer Exploration Permits prior to conversion
|
22
|
|
6.8
|
Avoidance of forfeiture of Tenements
|
22
|
|
7
|
Environment and Mining Operations
|
23
|
Confidential and Legally Privileged
|
page i
|
8
|
Other Mineral Rights
|
23
|
|
8.1
|
Holder of Other Mineral Rights
|
23
|
|
8.2
|
Priority of exercise of ERG Project Industrial Mineral Rights
|
24
|
|
8.3
|
Suspension of Other Mineral Rights for duration of Mining Operations
|
24
|
|
8.4
|
Transfer of Other Mineral Rights
|
24
|
|
8.5
|
Transfer of ERG Project Industrial Mineral Rights
|
24
|
|
8.6
|
Co-mingling
|
25
|
|
9
|
Representations and warranties
|
26
|
|
9.1
|
Representations and warranties by Energizer
|
26
|
|
9.2
|
Representations and warranties by Malagasy
|
26
|
|
9.3
|
Limitation of warranties and disclaimer of liability by Malagasy
|
28
|
|
10
|
Guarantees
|
29
|
|
10.1
|
Guarantee by Malagasy
|
29
|
|
10.2
|
Guarantee by Energizer
|
29
|
|
11
|
Assignment
|
29
|
|
12
|
Termination
|
30
|
|
12.1
|
Event of Default
|
30
|
|
12.2
|
Effect of termination
|
30
|
|
12.3
|
Continuing remedies
|
31
|
|
13
|
Force Majeure
|
31
|
|
13.1
|
Force Majeure
|
31
|
|
13.2
|
Relief
|
31
|
|
13.3
|
Labour disputes
|
32
|
|
13.4
|
Resumption
|
32
|
|
14
|
Dispute resolution
|
32
|
|
14.1
|
Application
|
32
|
|
14.2
|
Dispute negotiation
|
32
|
|
14.3
|
Arbitration
|
33
|
|
14.4
|
Urgent relief
|
33
|
|
14.5
|
Continued performance
|
33
|
|
15
|
Disputes as to Technical or Financial Matters
|
33
|
|
15.1
|
Definitions
|
33
|
|
15.2
|
Application
|
34
|
|
15.3
|
Dispute negotiation
|
34
|
|
15.4
|
Independent Expert
|
34
|
16
|
Expert Determination
|
34
|
|
16.1
|
Referral to Independent Expert
|
34
|
|
16.2
|
Appointment of Independent Expert
|
34
|
|
16.3
|
Requirements of Independent Expert
|
35
|
|
16.4
|
Rights of the Parties
|
35
|
|
16.5
|
Confidentiality
|
35
|
|
16.6
|
Determination
|
36
|
|
16.7
|
Costs of Independent Expert
|
36
|
|
17
|
Status of Agreement and further acts
|
36
|
|
18
|
Relationship between Parties
|
36
|
|
19
|
Confidentiality and public announcements
|
37
|
|
19.1
|
Confidentiality
|
37
|
|
19.2
|
Conditions
|
38
|
|
19.3
|
Notice to other Parties
|
39
|
|
19.4
|
Indemnities
|
39
|
|
19.5
|
Survival of confidentiality obligations
|
40
|
|
19.6
|
Use of Mining Information in respect to Other Mineral Rights
|
40
|
|
20
|
Notices
|
40
|
|
21
|
Miscellaneous
|
41
|
|
21.1
|
Governing law
|
41
|
|
21.2
|
Amendments
|
41
|
|
21.3
|
Primacy of this Agreement
|
41
|
|
21.4
|
Language
|
41
|
|
21.5
|
Waiver
|
41
|
|
21.6
|
Consents
|
42
|
|
21.7
|
Counterparts
|
42
|
|
21.8
|
No representation or reliance
|
42
|
|
21.9
|
Expenses
|
42
|
|
21.1
|
Entire agreement
|
42
|
|
21.11
|
Indemnities
|
43
|
|
21.12
|
Severance and enforceability
|
43
|
|
21.13
|
No merger
|
43
|
|
21.14
|
Power of attorney
|
43
|
|
21.15
|
Taxes
|
43
|
|
Annexure A – Additional Permits Area
|
1
|
||
Annexure B – JV Area
|
2
|
||
Annexure C – Additional Permits Area Sublease Agreements
|
3
|
||
Annexure D – JV Sublease Agreements
|
4
|
Confidential and Legally Privileged
|
page iii
|
Date | 2014 |
Energizer Resources Inc.
Energizer
|
141 Adelaide Street, West Suite 520, Toronto, Ontario, Canada
|
Malagasy Minerals Limited
ACN 121 700 105
Malagasy
|
15 Lovegrove Close, Mount Clarement, Western Australia
|
Madagascar-ERG Joint Venture (Mauritius) Ltd
Company Number: 106367
ERG
|
6
th
Floor, Newton Tower, Sir William Newton Street, Port Louis, Republic of Mauritius
|
A.
|
As at the date of this Agreement, the MGY Subsidiaries are the sole registered holders of the JV Exploration Permits and the Additional Exploration Permits and there are presently no JV Exploitation Permits, Additional Exploitation Permits or ERG Project Exploitation Permits.
|
B.
|
Pursuant to a Joint Venture Agreement dated 15 December 2011 between Malagasy, Energizer and ERG:
|
(i)
|
Energizer acquired a 75% interest in the JV Industrial Mineral Rights;
|
(ii)
|
ERG was established as the joint venture company for the Joint Venture and Energizer and Malagasy owned three (3) shares and one (1) share respectively in ERG;
|
(iii)
|
Malagasy, through its subsidiaries, the MGY Subsidiaries, maintains a 100% interest in the Other Mineral Rights; and
|
(iv)
|
ERG, through its 100% subsidiary, MadagascarCo, held the JV Industrial Mineral Rights for the JV Permits by way of the JV Subleases.
|
C.
|
Pursuant to the Sale and Purchase Agreement Energizer has agreed to acquire Malagasy’s share in ERG.
|
D.
|
The Parties agree and acknowledge that at the date of this Agreement, the Mining Department (the BCMM) is not accepting and/or processing applications for transfer, registration, amendment or renewal of mining permits or interests in Madagascar and it is not presently possible to obtain formal recognition of the renewal, partition, transfer, registration or amendment of the JV Exploration Permits or the Additional Exploration Permits.
|
Confidential and Legally Privileged
|
page 1
|
E.
|
Pursuant to the Memorandum of Understanding, Malagasy has also agreed, to effect, through the MGY Subsidiaries, a sublease of the Additional Industrial Minerals Rights to MadagascarCo and, when possible, a transfer of the ERG Project Exploration Permits (to the extent they fall within the ERG Project Area) on the terms of this Agreement.
|
F.
|
Pursuant to the Memorandum of Understanding, Malagasy, through its subsidiaries, the MGY Subsidiaries, has agreed to sell to ERG and ERG has agreed to acquire the Additional Industrial Mineral Rights on the terms of this Agreement and the Sale & Purchase Agreement.
|
G.
|
The Parties have agreed to enter into this Agreement to record the basis on which:
|
(i)
|
ERG will obtain the Additional Industrial Mineral Rights and hold the ERG Project Industrial Mineral Rights;
|
(ii)
|
Malagasy will hold the Other Mineral Rights;
|
(iii)
|
the Parties will co-ordinate their respective Exploration and Mining activities within the ERG Project Area;
|
(iv)
|
the Parties will apply for and obtain the various approvals and authorisations required to conduct their respective exploration and mining operations on the ERG Project Area; and
|
(v)
|
the Parties will maintain the ERG Project Permits and, when possible, the MGY Subsidiaries will transfer to ERG’s nominee the ERG Project Exploration Permits (to the extent they fall within the ERG Project Area).
|
1.
|
Definitions and interpretation
|
1.1
|
Definitions
|
Confidential and Legally Privileged
|
page 2
|
(a)
|
subject to paragraph (b), the exploration permits granted under the Mining Code listed in Schedule 2; and
|
(b)
|
in the event of the grant of a new permit over all or part of any of an Additional Permit in accordance with clause 4.5(d):
|
(i)
|
includes any licence, concession, permit or tenement granted within the ERG Project Area in relation to the same ground as the relevant Additional Exploration Permit; and
|
(ii)
|
excludes any licence, concession, permit or tenement outside of the ERG Project Area.
|
(a)
|
the Additional Exploration Permits;
|
(b)
|
the Additional Exploitation Permits;
|
(c)
|
any licence, concession, permit or tenement which may hereafter be in force or issued in lieu of or in relation to the same ground as the permits referred to in paragraphs (a) or (b) of this definition;
|
(d)
|
any permit, concession, licence or tenement that is a successor, renewal, modification, extension or substitute for the permits referred to in paragraphs (a), (b) or (c) of this definition; and
|
(e)
|
all rights to mine and other privileges appurtenant to the mining tenements and all ore and mineral-bearing material, sand, slimes, tailings and residues of whatsoever nature located on and under the land the subject of a licence, concession, permit or tenement referred to in paragraphs (a), (b), (c) or (d) of this definition,
|
Confidential and Legally Privileged
|
page 3
|
(a)
|
the existence or contents of this Agreement;
|
(b)
|
ERG Project Industrial Mineral Rights;
|
(c)
|
the Other Mineral Rights;
|
(d)
|
the ERG Project Permits;
|
(e)
|
the operations and transactions of a Party; and
|
(f)
|
any other information obtained during the Term of this Agreement,
|
Confidential and Legally Privileged
|
page 4
|
Confidential and Legally Privileged
|
page 5
|
(a)
|
such permit is and remains in full force and effect; and
|
(b)
|
such permit:
|
(i)
|
is and remains not liable to cancellation, forfeiture or non-renewal; or
|
(i)
|
is liable to cancellation, forfeiture or non-renewal where such liability is:
|
(A)
|
not a result of the default of the holder of the permit or its subsidiaries;
|
(B)
|
solely a result of a compulsory surrender under the Mining Code; or
|
(C)
|
solely a result of a Political Event.
|
Confidential and Legally Privileged
|
page 6
|
(a)
|
subject to paragraph (b), the exploration permits granted under the Mining Code listed in Schedule 4; and
|
(b)
|
in the event of the grant of a new permit over all or part of any of a JV Permits in accordance with clause 4.5(d):
|
(i)
|
includes any licence, concession, permit or tenement granted within the ERG Project Area in relation to the same ground as the relevant JV Permit; and
|
(ii)
|
excludes any licence, concession, permit or tenement outside of the ERG Project Area.
|
(a)
|
the JV Exploration Permits;
|
(b)
|
the JV Exploitation Permits;
|
(c)
|
any licence, concession, permit or tenement which may hereafter be in force or issued in lieu of or in relation to the same ground as the permits referred to in paragraphs (a) or (b) of this definition;
|
(d)
|
any permit, concession, licence or tenement that is a successor, renewal, modification, extension or substitute for the permits referred to in paragraphs (a), (b) or (c) of this definition; and
|
Confidential and Legally Privileged
|
page 7
|
Confidential and Legally Privileged
|
page 8
|
(a)
|
mine development; and
|
(b)
|
as applicable:
|
(i)
|
in the case of Malagasy, the weighing, sampling, assaying, mining, extraction, crushing, refining, treatment, transportation, handling, storage, loading and delivery of Other Minerals; and
|
(ii)
|
in the case of ERG, the weighing, sampling, assaying, mining, extraction, crushing, refining, treatment, transportation, handling, storage, loading and delivery of Industrial Minerals.
|
Confidential and Legally Privileged
|
page 9
|
(a)
|
a holding company of the Party;
|
(b)
|
a subsidiary of the Party; or
|
(c)
|
a subsidiary of a holding company of the Party.
|
1.2
|
Interpretation
|
(a)
|
headings are for convenience; and
|
(b)
|
an obligation or a liability assumed by, or a right conferred on, 2 or more persons binds or benefits them jointly and severally;
|
(c)
|
a word or phrase in the singular number includes the plural, a word or phrase in the plural number includes the singular, and a word indicating a gender includes every other gender;
|
(d)
|
if a word or phrase is given a defined meaning, any other part of speech or grammatical form of that word or phrase has a corresponding meaning;
|
(e)
|
a reference to:
|
(i)
|
a party, clause, schedule, exhibit, attachment or annexure is a reference to a party, clause, schedule, exhibit, attachment or annexure to or of this Agreement;
|
(ii)
|
a party includes that party’s executors, administrators, successors
,
permitted assigns, including persons taking by way of novation and, in the case of a trustee, includes a substituted or an additional trustee;
|
(iii)
|
an agreement includes any undertaking, deed, agreement and legally enforceable arrangement whether in writing or not, and is to that agreement as varied, novated, ratified or replaced from time to time;
|
(iv)
|
a document includes an agreement in writing and any deed, certificate, notice, instrument or document of any kind;
|
Confidential and Legally Privileged
|
page 10
|
(v)
|
a document in writing includes a document recorded by any electronic, magnetic, photographic or other medium by which information may be stored or reproduced;
|
(vi)
|
a document (including this Agreement) includes a reference to all schedules, exhibits, attachments and annexures to it, and is to that document as varied, novated, ratified or replaced from time to time;
|
(vii)
|
legislation or to a provision of legislation includes any consolidation, amendment, re-enactment, substitute or replacement of or for it, and refers also to any regulation or statutory instrument issued or delegated legislation made under it;
|
(viii)
|
a person includes an individual, the estate of an individual, a corporation, an authority, an unincorporated body, an association or joint venture (whether incorporated or unincorporated), a partnership and a trust;
|
(ix)
|
a right includes a power, remedy, authority, discretion or benefit;
|
(x)
|
conduct includes an omission, statement or undertaking, whether in writing or not;
|
(xi)
|
an agreement, representation or warranty in favour of two or more persons is for the benefit of them jointly and severally; and
|
(xii)
|
an agreement, representation or warranty on the part of two or more persons binds them jointly and severally;
|
(f)
|
the word “
includes
” in any form is not a word of limitation;
|
(g)
|
the words “
for example
” or “
such as
” when introducing an example do not limit the meaning of the words to which the example relates to that example or to examples of a similar kind;
|
(h)
|
a reference to a day is to a period of time commencing at midnight and ending 24 hours later;
|
(i)
|
if a period of time dates from a given day or the day of an act or event, it is to be calculated exclusive of that day; and
|
(j)
|
a reference to “
C$
”, “
$
” or “
dollar
” is to US currency.
|
2.
|
Conditions
|
2.1
|
Conditions precedent
|
(a)
|
the execution of the Sale and Purchase Agreement;
|
(b)
|
the execution of the Green Giant JVA;
|
Confidential and Legally Privileged
|
page 11
|
(c)
|
Completion pursuant to the Sale and Purchase Agreement; and
|
(d)
|
the Parties having obtained all shareholder and regulatory approvals necessary to achieve Completion and give effect to this Agreement including:
|
(i)
|
TSX approvals;
|
(ii)
|
ASX approvals; and
|
(iii)
|
all necessary approvals under the relevant laws of Ontario, Canada, the United States of America and Australia.
|
2.2
|
Waiver of Conditions precedent
|
2.3
|
Non-satisfaction of Conditions
|
3.
|
Term
|
(a)
|
a single Party becoming the holder of all of the Mineral Rights, namely all of the ERG Project Industrial Mineral Rights and all of the Other Mineral Rights; and
|
(b)
|
the expiry or other termination of the last of the ERG Project Permits,
|
4.
|
Rights to explore and sublease
|
4.1
|
Grant of Additional Industrial Mineral Rights
|
(a)
|
the Additional Permit Holders will be deemed to have granted the Additional Industrial Mineral Rights to ERG for consideration which includes the benefit of Exploration activities undertaken at the cost of ERG and MadagascarCo; and
|
(b)
|
Malagasy must procure that the Additional Permit Holders do all things required pursuant to this Agreement or otherwise necessary to effect the grant of the Additional Industrial Mineral Rights to ERG.
|
Confidential and Legally Privileged
|
page 12
|
4.2
|
Minerals Rights interests at Completion
|
Party
|
ERG Project Industrial Mineral Rights
|
Other Mineral Rights
|
ERG (to be a wholly owned subsidiary of Energizer
|
100%
|
0%
|
MGY Subsidiaries
|
0%
|
100%
|
4.3
|
Grant of Additional Permits Area Subleases
|
(a)
|
Upon Completion, Malagasy will procure that the Additional Permit Holders promptly grant to MadagascarCo, or its Related Bodies Corporate, subleases in respect of the Additional Industrial Mineral Rights over the Additional Permits Area on terms whereby, for consideration which includes the benefit of Exploration activities undertaken at the cost of ERG and MadagascarCo:
|
(i)
|
MadagascarCo will, in accordance with the Mining Code, be the sole holder of the Industrial Mineral Rights and have the exclusive right to conduct Exploration and Mining for Industrial Minerals within the Additional Permits Area; and
|
(ii)
|
the Additional Permits Holders will, in accordance with and as permitted under the Mining Code, retain the exclusive right to Other Mineral Rights,
|
(b)
|
Subject to the Mining Code, the Additional Permits Area
Subleases will be for the term of the Additional Permits, including for the term of any renewal of the Additional Permits.
|
(c)
|
Subject to clause 4.3(d), the Additional Permit Holders must enter into the Additional Permits Area
Sublease Agreements and any other agreement(s) required by the Mining Code with MadagascarCo to give effect to the right to carry out Exploration and Mining as described in clause 4.3(a) and the Additional Permits Area
Subleases.
|
(d)
|
The Parties must use all reasonable endeavours to ensure the Additional Permits Area
Sublease Agreements and any other agreement contemplated by clause 4.3 are entered into by the Additional Permit Holder and MadagascarCo on, or as soon as possible after, the Completion.
|
Confidential and Legally Privileged
|
page 13
|
4.4
|
Continuation of JV Subleases and JV Industrial Mineral Rights
|
4.5
|
Transfer of ERG Project Permits
|
(a)
|
subject to clause 4.5(e), Malagasy must promptly deliver, or must cause the ERG Project Permit Holders to promptly deliver, to ERG signed instruments of transfer in registrable form for the ERG Project Permits (or part thereof in accordance with clause 4.5(d) below) naming MadagascarCo or such other entity as nominated by ERG, as the transferee;
|
(b)
|
ERG must promptly lodge, or must cause MadagascarCo to promptly lodge executed transfers in registrable form for the ERG Project Permits (or part thereof in accordance with clause 4.5(d) below) with the Mining Department or any Authority which has the right to approve or register exploration and mining permits in Madagascar in accordance with the laws of Madagascar;
|
(c)
|
in the event that Mining Department accepts the registration of the transfers, Malagasy will retain the Other Mineral Rights and the exclusive right to carry out Exploration and Mining for Other Minerals within the ERG Project Area, in accordance with the laws of Madagascar, for the purposes of identifying and exploiting any Other Minerals within that area;
|
(d)
|
subject to clause 4.5(e), to the extent that one or more squares (carres) of an ERG Project Permit fall outside of the ERG Project Area, in lieu of transfer of the whole ERG Project Permit to MadagascarCo in accordance with clause 4.5(a):
|
(i)
|
Malagasy must use its best endeavours to promptly:
|
(A)
|
deliver to ERG, or must cause the ERG Project Permit Holders to promptly deliver, signed instruments of transfer in registrable form for the transfer of a permit, covering only the squares (carres) of the ERG Project Permit which fall within the ERG Project Area, to MadagascarCo; or
|
(B)
|
apply for, and obtain from, the Mining Department the grant of a new permit covering only the squares (carres) of the ERG Project Permit which fall within the ERG Project Area and upon the grant of such new permit promptly deliver to ERG, or must cause the holders of the new permit to promptly deliver, signed instruments of transfer in registrable form for the transfer of the new permit to MadagascarCo; and
|
(ii)
|
until such a replacement permit is transferred to MadagascarCo, the Additional Permits Area Sublease or JV Sublease (as applicable) which applies to that area shall remain in force, unless otherwise agreed in writing by the Parties;
|
Confidential and Legally Privileged
|
page 14
|
(e)
|
irrespective of the obligations described in this clause 4.5, if a Party is required to do anything in relation to this clause 4.5 which could foreseeably result in any cancellation, forfeiture or suspension of the whole or any part of an ERG Project Permit, then:
|
(i)
|
the Parties must consult with one another and in good faith agree to either:
|
(A)
|
proceed with the action; or
|
(B)
|
refrain from that action and undertake such alternative actions as agreed by the Parties in order to transfer the relevant rights and interests in the ERG Project Area to ERG; and
|
(ii)
|
a Party must not proceed with any action that is wholly within its control and could foreseeably result in any cancellation, forfeiture or suspension of the whole or any part of an ERG Project Permit without the other Parties’ consent ; and
|
(f)
|
if segregation under clause 4.5(d) is temporarily unable to occur due to matters outside of the control of the Permit Holders and the Parties, or the Parties agree not proceed with any transfer or segregation under clause 4.5(e), then the Parties and the Permit Holders agree;
|
(i)
|
that the Sublease Agreements in respect of the relevant ERG Project Permit shall remain in place to ensure that ERG has its full interest and benefit in the ERG Project Area;
|
(ii)
|
to implement all reasonable arrangements (whether set out in paragraph (d) or otherwise) to achieve a transfer or grant of the relevant legal interest in the ERG Project Area to ERG as soon as reasonably possible; and
|
(iii)
|
until a transfer is effected in accordance with paragraph (ii), Malagays’s obligations under this Agreement as ERG Project Permit Holder shall continue in respect of the relevant ERG Project Permits.
|
4.6
|
Termination of Industrial Minerals Subleases
|
(a)
|
the parties will do all things necessary to promptly terminate the Industrial Minerals Subleases to which the transferred ERG Project Permit (or part thereof) relates including the termination of the Industrial Minerals Sublease Agreements; and
|
(b)
|
each Party acknowledges and agrees that:
|
Confidential and Legally Privileged
|
page 15
|
(i)
|
it shall have no rights whatsoever against the other Parties for any payment or Claim arising under or in connection with an Industrial Minerals Sublease which is terminated in accordance with clause 4.6(a) above; and
|
(ii)
|
it unconditionally releases and forever discharges each of the other Parties from any Claims they may now have or but for this Agreement at any time in the future may have had directly or indirectly against the other Parties arising under or in connection with an Industrial Minerals Subleases which is terminated in accordance with clause 4.6(a) above, whether such Claims are known, unknown or incapable of being known at the time of execution of this Agreement.
|
4.7
|
Grant of Other Minerals Subleases
|
(a)
|
Upon the successful transfer and registration of an ERG Project Permit to MadagascarCo, ERG will procure that MadagascarCo grants to Malagasy, or its Related Bodies Corporate, a sublease in respect of Other Mineral Rights within the area of the relevant ERG Project Permit other than the ERG Project Industrial Mineral Rights, on terms whereby, for consideration which includes the benefit of Exploration activities undertaken at the cost of Malagasy:
|
(i)
|
Malagasy will, in accordance with the Mining Code, be the sole holder of all Other Mineral Rights within the area of the relevant ERG Project Permit other than the ERG Project Industrial Mineral Rights, and will have the exclusive right to conduct Exploration and Mining for all minerals within the area of the relevant ERG Project Permit, other than Industrial Minerals within the ERG Project Area; and
|
(ii)
|
ERG will, in accordance with and as permitted under the Mining Code, retain the exclusive right to ERG Project Industrial Mineral Rights,
|
(b)
|
Subject to the Mining Code, the Other Minerals Subleases will be for the term of the ERG Project Permits, including for the term of any renewal of the ERG Project Permits.
|
(c)
|
Subject to clause 4.7(d), MadagascarCo must enter into the Other Minerals Sublease Agreements and any other agreement(s) required by the Mining Code with Malagasy or its Related Body Corporate to give effect to the right to carry out Exploration and Mining as described in clause 4.7(a) and the Other Minerals Subleases.
|
(d)
|
The Parties must use all reasonable endeavours to ensure the Other Minerals Sublease Agreements and any other agreement contemplated by clause 4.7 are entered into by Malagasy and MadagascarCo on, or as soon as possible after, Completion.
|
4.8
|
Covenants of Permit Holders in respect of the ERG Project Exploration Permits
|
(a)
|
use all reasonable endeavours permitted under the laws of Madagascar to ensure the ERG Project Permits are renewed in the usual course for such periods as permitted by the Mining Code, as requested by the Sublessee;
|
Confidential and Legally Privileged
|
page 16
|
(b)
|
do all such acts as are reasonably necessary to keep the ERG Project Permits in Good Standing under the Mining Code which can only be done or performed by the registered holder of the ERG Project Permits, provided that the Permit Holder must give the Sublessee adequate prior notice of all such acts;
|
(c)
|
use all reasonable endeavours to have the Sublease Agreements registered with the Mining Department as soon as possible (provided in this case, the costs associated with registration of the Sublease Agreements with the Mining Department will be met 50% by the Permit Holders and 50% by the Sublessee); and
|
(d)
|
apply to the Mining Department to add such minerals to the ERG Project Permits as may be requested by Malagasy or ERG from time to time to the extent those minerals are not already noted on the ERG Project Permits.
|
4.9
|
Covenants in respect of the ERG Project Exploration Permits
|
(a)
|
Subject to clauses 4.8 and 4.11, during the Term, ERG and MadagascarCo must
|
(i)
|
do all such acts and make all such payments as are reasonably necessary to keep the ERG Project Permits in Good Standing under the Mining Code;
|
(ii)
|
comply with all Minimum Expenditure Obligations in respect of the ERG Project Permits (if any),
|
(iii)
|
execute such documents and give to ERG or MadagascarCo such assistance as they may reasonably require to maintain the ERG Project Permits and to keep the ERG Project Permits in Good Standing under the Mining Code; and
|
(iv)
|
where reasonably required by ERG and MadagascarCo, make application for and use their best endeavours to obtain renewals of the ERG Project Permits or conversion of the ERG Project Permits into new mining titles under the Mining Code, as required by ERG and MadagascarCo.
|
(b)
|
During the Term, ERG and Malagasy must contribute as equal contributors to all Outgoings.
|
(c)
|
During the Term, the Permit Holders must supply to the Sublessee, and any person who has the Sublessee’s written authority, any information or document in its possession or control reasonably requested concerning the ERG Project Exploration Permits.
|
4.10
|
Remedies of Sublessee
|
(a)
|
If any Permit Holder does, permits or suffers to be done anything, or omits to do anything required under the Mining Code or other laws of Madagascar, which constitutes a breach of any of its covenants under this Agreement and which may, in the Sublessee’s reasonable opinion, result in:
|
(i)
|
the termination or non-renewal of an ERG Project Permit;
|
(ii)
|
a revocation of any permit, authority or approval necessary to maintain the Good Standing of an ERG Project Permit under the Mining Code; or
|
(iii)
|
loss of access to any part of the ERG Project Area
,
|
(b)
|
Any costs incurred by the Sublessee in exercising its rights pursuant to clause 4.10(a) will be a debt due from the Permit Holders to the Sublessee payable upon demand.
|
(c)
|
The right created by clause 4.10(a) are the sole remedy in respect of a breach to which clause 4.10(a) applies.
|
(d)
|
The Sublessee will not be liable to the Permit Holders for any loss or damage suffered by the Permit Holders as a result of actions taken or omissions made by Sublessee in the course of exercising or purporting to exercise its rights under clause 4.10(a) so long as the Sublessee has acted in good faith.
|
4.11
|
Exercise of mineral rights
|
(a)
|
comply with the conditions of the ERG Project Permits (to the extent that those conditions relate to the ERG Project Area) as if that party were the permit holder;
|
(b)
|
comply with the requirements of the Mining Department, the Mining Code, Environmental Laws and any other laws dealing with miners and the exploration for and mining of minerals;
|
(c)
|
be
solely responsible for any Environmental Liability arising from the exercise of the ERG Project Industrial Mineral Rights in the case of ERG and MadagascarCo, and the exercise of the Other Mineral Rights in the case of Malagasy;
|
(d)
|
be responsible for approvals required for activities on the ERG Project Area, provided that the Permit Holder shall give such assistance as is reasonably necessary to apply for such approvals;
|
Confidential and Legally Privileged
|
page 18
|
(e)
|
be responsible for the preparation and lodgement of any reporting obligations on any work done on, and money expended in connection with the ERG Project Area, provided that the Permit Holder shall give such assistance as is reasonably necessary to prepare such reports;
|
(f)
|
comply with, adopt and exercise Good Mining Practices including rehabilitating any ground disturbance;
|
(g)
|
without prejudice to clause 8, use its reasonable endeavours to minimise interference with the other Parties’ activities in planning, programming and executing any exploration activity on the ERG Project Exploration Permits;
|
(h)
|
keep all drill holes, costeans, trenches, excavations, shafts and other workings secure and safe and properly maintained and, where necessary, fenced; and
|
(i)
|
not do or suffer to be done anything which will or may place in jeopardy the ERG Project Permits or render any of them liable to forfeiture.
|
4.12
|
Notice of activities
|
(a)
|
Each Party must, at least 20 Business Days prior to commencing any program of activity on the ERG Project Area (
Proposed Activity
), give a notice to the other (
Notice of Proposed Activity
) containing particulars of:
|
(i)
|
the general nature of the Proposed Activity; and
|
(ii)
|
the areas of the ERG Project Area which the Party proposes to enter upon to conduct the Proposed Activity and or to construct, operate and maintain infrastructure in relation to the Proposed Activity.
|
(b)
|
The Sublessee will, at the cost of the Permit Holders or a Related Body Corporate of the Permit Holders, assay any exploration results for any minerals within the ERG Project Area requested by the Permit Holders provided that such request is received within 20 Business Days after receipt of a Notice of Proposed Activity.
|
(c)
|
The Permit Holders or a Related Body Corporate of the Permit Holders will, at the cost of the Sublessee, assay any exploration results for any minerals within the ERG Project Area requested by the Sublessee provided that such request is received within 20-Business Days after receipt of a Notice of Proposed Activity.
|
(d)
|
Each Party must provide to the other Party the results of the Party’s activities on the ERG Project Area by way of:
|
(i)
|
quarterly reports; and
|
(ii)
|
reports at such other times as is required by the Permit Holders or a Related Body Corporate of the Permit Holders to enable the Permit Holders to comply with statutory and Mining Departmental reporting obligations as the holders of the ERG Project Exploration Permits.
|
4.13
|
Mutual indemnities
|
(a)
|
Energizer and ERG each jointly and severally agree to indemnify, and keep indemnified, and hold harmless Malagasy and its Related Bodies Corporate, directors, employees and consultants from and against all Claims that may be made, brought against, suffered, sustained or incurred by Malagasy, the MGY Subsidiaries or any of their Related Bodies Corporate, arising out of any act or omission (including any negligent act or omission) of Energizer or ERG and in the course of the exercise of activities undertaken by Energizer or ERG on the ERG Project Area.
|
(b)
|
Malagasy agrees to indemnify, and keep indemnified, and hold harmless Energizer and ERG and each of their Related Bodies Corporate, directors, employees and consultants from and against all Claims that may be made, brought against, suffered, sustained or incurred by ERG and MadagascarCo or any of their Related Bodies Corporate, arising out of any act or omission (including any negligent act or omission) of Malagasy or the MGY Subsidiaries and in the course of the exercise of activities undertaken by Malagasy or the MGY Subsidiaries on the ERG Project Area or in relation to the ERG Project Permits.
|
5.
|
Transfer of Permits
|
(a)
|
Subject to clause 5(b), should the Permit Holders decide to Dispose of their interest in any of the ERG Project Permits, they may only sell, transfer or otherwise dispose of that interest to any person (
Permit Transferee
):
|
(i)
|
provided the Sublessee is given the opportunity to match any bona fide third party offer as a right of first refusal for a period of 30 days from the time of notice of the offer from the Permit Holders; and
|
(ii)
|
the Permit Transferee enters into an Accession Deed.
|
(b)
|
The Permit Holders may transfer the ERG Project Permits to each other or a Related Body Corporate of the Permit Holders provided that the transferee first enters into an Accession Deed.
|
6.
|
Mining Operations
|
6.1
|
Decision to Mine
|
(a)
|
Either Party may at any time and at its sole discretion decide to commence Mining Operations in respect of Industrial Minerals or Other Minerals (as applicable) within all or part of the ERG Project Area (
Decision to Mine
).
|
(b)
|
Upon making a Decision to Mine in accordance with clause 6.1(a), the party who made the Decision to Mine (
Mining Party
) must promptly:
|
(i)
|
give notice to the other Party (
Non-Mining Party
) and the Permit Holders of the Decision to Mine including identifying the boundaries of the Mining Area which is appropriate to encompass all deposits of Industrial Minerals or Other Minerals (as applicable) which are to be included in the Mining Operations, together with any milling or concentrating plant and other appropriate infrastructure and facilities necessary for the efficient conduct of the Mining Operations; and
|
Confidential and Legally Privileged
|
page 20
|
(ii)
|
instruct the Permit Holders to apply for, as the case may be, any authorisation or permission required under the Mining Code or other laws of Madagascar, including the conversion of Exploration Permits into Exploitation Permits and relevant environmental authorisations, the granting of which by the Mining Department or other Governmental Agency of Madagascar is a condition to the implementation of the Decision to Mine.
|
6.2
|
Transfer of Mining Area
|
(a)
|
the Permit Holders and the Mining Party must co-operate to prepare, execute and procure registration of such conditional surrenders, applications, transfers, new sub-leases and other documents as may be necessary to segregate the Mining Area and to vest such area in the Mining Party; but
|
(b)
|
if the Mining Party decides to delay segregation, or segregation cannot immediately occur due to matters outside of the control of the Permit Holders or the Mining Party, then the Parties and the Permit Holders will implement all such reasonable alternative arrangements in order for the Mining Party to have the sole benefit and control of the Mining Area.
|
6.3
|
Conversion to Exploitation Permits
|
(a)
|
in order to commence Mining Operations in respect of all or a part of the ERG Project Area, the ERG Project Exploration Permits, to the extent they cover the Mining Area (
Current Permits
) will be converted into ERG Project Exploitation Permits; and
|
(b)
|
upon either Party making a Decision to Mine, the Parties must do all things necessary to, as promptly as possible, have the Current Permits converted into ERG Project Exploitation Permits and to apply for all relevant environmental authorisations.
|
6.4
|
Transfer of Exploitation Permits
|
(a)
|
Any ERG Project Exploitation Permit issued by the Mining Department to the Permit Holders, except where the Mining Party or its Related Body Corporate is the sole Permit Holder, must be immediately transferred or, if for whatever reason the ERG Project Exploitation Permit cannot immediately be transferred, sub-leased (as applicable) by the Permit Holders to the Mining Party as soon as possible after the grant of the ERG Project Exploitation Permit.
|
Confidential and Legally Privileged
|
page 21
|
(b)
|
The Parties acknowledge and agree that, in relation to this clause 6, it is the preference of the Parties to have any ERG Project Exploitation Permit issued by the Mining Department to a Permit Holder other than the Mining Party or its Related Body Corporate, immediately transferred to the Mining Party. However if such a transfer is not possible for whatever reason, then the Parties will implement such alternative arrangements in order for the Mining Party to have the sole benefit and control of the ERG Project Exploitation Permit including entering into new sub-leases in respect of the ERG Project Exploitation Permits on terms and conditions which are consistent with this Agreement.
|
(c)
|
The Parties acknowledge and agree that on transfer of the ERG Project Exploitation Permits to the Mining Party, the Mining Party will grant a sub-lease to the Non-Mining Party or its nominee in respect to the Industrial Mineral Rights or Other Mineral Rights (as applicable) within the ERG Project Exploitation Permit on terms and conditions which are consistent with this Agreement, including clause 4.
|
6.5
|
Holding of Exploitation Permits
|
(a)
|
not to act in any manner or do anything which is detrimental to the Mining Party or the ERG Project Exploitation Permits; and
|
(b)
|
to act in accordance with the Mining Party’s reasonable instructions in relation to the ERG Project Exploitation Permits provided these instructions are not contrary to or in breach of the laws of Madagascar.
|
6.6
|
Approval of Mining Department
|
6.7
|
Option of Permit Holders to transfer Exploration Permits prior to conversion
|
6.8
|
Avoidance of forfeiture of Tenements
|
(a)
|
If a Party is required to do anything in relation to this clause 6 which could foreseeably result in any cancellation, forfeiture or suspension of the whole or any part of an ERG Project Permit, then:
|
Confidential and Legally Privileged
|
page 22
|
(i)
|
the Parties must consult with one another and in good faith agree to either:
|
(A)
|
proceed with the action; or
|
(B)
|
refrain from that action and undertake such alternative actions as agreed by the Parties in order to transfer the relevant rights and interests in the ERG Project Area to ERG; and
|
(ii)
|
a Party must not proceed with any action that is wholly within its control and could foreseeably result in any cancellation, forfeiture or suspension of the whole or any part of an ERG Project Permit without the other Parties’ consent ; and
|
(b)
|
if segregation or transfer under this clause 6 is temporarily unable to occur due to matters outside of the control of the Permit Holders and the Parties, or the Parties agree not proceed with any transfer or segregation under clause 6.8(a), then the Parties and the Permit Holders agree;
|
(i)
|
that the Sublease Agreements in respect of the relevant ERG Project Permit shall remain in place to ensure that ERG has its full interest and benefit in the ERG Project Area;
|
(ii)
|
to implement all reasonable arrangements (whether set out in this clause 6 or otherwise) to achieve a transfer or grant of the relevant legal interest in the ERG Project Area to ERG as soon as reasonably possible; and
|
(iii)
|
until a transfer is effected in accordance with paragraph 4.5(f)(ii), Malagasy’s obligations under this Agreement as ERG Project Permit Holder shall continue in respect of the relevant ERG Project Permits.
|
7.
|
Environment and Mining Operations
|
8.
|
Other Mineral Rights
|
8.1
|
Holder of Other Mineral Rights
|
(a)
|
the sole holders of the Other Mineral Rights; and
|
(b)
|
no other party has any rights in the ERG Project Permits other than as contemplated by this Agreement.
|
Confidential and Legally Privileged
|
page 23
|
8.2
|
Priority of exercise of ERG Project Industrial Mineral Rights
|
(a)
|
the exercise of the ERG Project Industrial Mineral Rights by ERG; and
|
(b)
|
the exercise of the Other Mineral Rights by the Malagasy,
|
8.3
|
Suspension of Other Mineral Rights for duration of Mining Operations
|
8.4
|
Transfer of Other Mineral Rights
|
(a)
|
Malagasy giving ERG the opportunity to match any bona fide third party offer for the Other Mineral Rights as a right of first refusal for a period of 30 days from the time of notice of the offer from Malagasy;
|
(b)
|
the OMR Transferee being technically and financially able to perform the obligations of Malagasy as the holder of the Other Mineral Rights under this Agreement to the extent of the interest disposed of; and
|
(c)
|
the OMR Transferee entering into a deed with ERG whereby the OMR Transferee agrees to be bound by, and assumes the obligations of Malagasy as the holder of the Other Mineral Rights under this Agreement (including the obligations under this clause) to the extent of the interest to be disposed of.
|
8.5
|
Transfer of ERG Project Industrial Mineral Rights
|
(a)
|
ERG may transfer, assign or otherwise dispose of the whole or any part of the ERG Project Industrial Mineral Rights to any person (
IMR Transferee
) subject to:
|
Confidential and Legally Privileged
|
page 24
|
(i)
|
ERG giving Malagasy the opportunity to match any bona fide third party offer for the ERG Project Industrial Mineral Rights as a right of first refusal for a period of 30 days from the time of notice of the offer from ERG;
|
(ii)
|
the IMR Transferee being technically and financially able to perform the obligations of ERG and MadagascarCo under this Agreement to the extent of the interest disposed of; and
|
(iii)
|
the IMR Transferee entering into a deed with Malagasy whereby the IMR Transferee agrees to be bound by, and assumes the obligations of ERG and MadagascarCo under this Agreement (including the obligations under this clause) to the extent of the interest to be disposed of.
|
(b)
|
If the IMR Transferee is a person that has technical and financial abilities (insofar as such abilities are relevant to the performance of the obligations of the holder of the ERG Project Industrial Mineral Rights under this Agreement) that are equivalent or greater to those of Energizer and ERG as at the Commencement
Date
, then the requirements of clause
8.5
(a)(ii)
shall be deemed to be satisfied.
|
8.6
|
Co-mingling
|
(a)
|
If a deposit of Industrial Minerals is co-mingled with or co-incident to a deposit of Other Minerals then ERG and Malagasy will negotiate in good faith the terms on which they will jointly develop the Industrial Minerals and Other Minerals, provided that, subject to clause 8.6(b), in no circumstances will the exploration or development of a deposit of Other Minerals impede the exploration or development of a deposit of Industrial Minerals.
|
(b)
|
The development of a deposit of Other Minerals that is co-mingled or co-incident to a deposit of Industrial Minerals will prevail over the exploration or development of the deposit of Industrial Minerals only in following circumstances:
|
(i)
|
the deposit of Other Minerals has been determined by a competent person to be an orebody comprising Measured Resource or Ore Reserve with a greater net present value than the deposit of Industrial Minerals; and
|
(ii)
|
Malagasy can demonstrate to the satisfaction of ERG, acting reasonably, that the deposit of Other Minerals can and will be developed and mined within the same timeframe as ERG proposes to develop and mine the deposit of Industrial Minerals. For the purpose clause 8.6(b)(ii), Malagasy must produce for ERG’s consideration a Bankable Feasibility Study or equivalent study.
|
Confidential and Legally Privileged
|
page 25
|
(c)
|
Subject to clause 8.6(d), if ERG and Malagasy are unable to negotiate the joint development of the Industrial Minerals and Other Minerals, then as part of the development of the Industrial Minerals, ERG will, on receiving a written notification from Malagasy, stockpile the Other Minerals so that Malagasy may have the benefit of the development of the Other Minerals once ERG has ceased Mining.
|
(d)
|
Any stockpiling costs associated with the development of Industrial Minerals (including overburden and waste) will be at the expense of ERG. Any costs associated with the stockpiling of Other Minerals undertaken at the request of Malagasy which are not activities which would have been incurred by ERG in the course of Mining Operations in any event, including (but not limited to) any ongoing environmental compliance costs, will be funded 100% by Malagasy.
|
9.
|
Representations and warranties
|
9.1
|
Representations and warranties by Energizer
|
(a)
|
it is validly incorporated and subsisting under the laws of Minnesota, USA;
|
(b)
|
the execution and delivery of this Agreement has been duly and validly authorised by all necessary corporate action;
|
(c)
|
it has corporate power and lawful authority to execute and deliver this Agreement and to observe and perform or cause to be observed and performed all of its obligations in and under this Agreement;
|
(d)
|
this Agreement does not conflict with or constitute or result in a material breach of or default under any agreement, deed, writ, order, injunction, judgment, law, rule or regulation to which it is a party or is subject or by which it is bound in a manner which may materially and adversely affect the rights and interests of a Party under this Agreement; and
|
(e)
|
it is solvent and is capable of performing its obligations under this Agreement.
|
9.2
|
Representations and warranties by Malagasy
|
(a)
|
Malagasy represents and warrants to Energizer and ERG as at the Execution Date that:
|
(i)
|
it is validly incorporated and subsisting under the laws of Australia;
|
(ii)
|
the execution and delivery of this Agreement has been duly and validly authorised by all necessary corporate action;
|
Confidential and Legally Privileged
|
page 26
|
(iii)
|
it has corporate power and lawful authority to execute and deliver this Agreement and to observe and perform or cause to be observed and performed all of its obligations in and under this Agreement;
|
(iv)
|
subject to clause 9.3, this Agreement does not conflict with or constitute or result in a material breach of or default under any agreement, deed, writ, order, injunction, judgment, law, rule or regulation to which it is a party or is subject or by which it is bound in a manner which may materially and adversely affect the rights and interests of a Party under this Agreement; and
|
(v)
|
it is solvent and is capable of performing its obligations under this Agreement.
|
(b)
|
Subject to clause 9.3, Malagasy represents and warrants to Energizer, ERG and MadagascarCo as at the Execution Date, and as at the date of execution of the Additional Permits Area Subleases that:
|
(i)
|
it has full right, power and authority to procure the MGY Subsidiaries to grant the Additional Permits Area Subleases to MadagascarCo in accordance with this Agreement;
|
(ii)
|
one or more of the MGY Subsidiaries are the registered and beneficial holders of the Additional Exploration Permits as identified in this Agreement.
|
(iii)
|
no person other than Malagasy, Energizer and/or their Related Bodies Corporate has any proprietary rights of any nature in respect of the Additional Exploration Permits and they have not granted to any person any rights to own or possess any interest or any rights to explore or prospect for minerals or to mine the same in any part of the land comprising the Additional Exploration Permits;
|
(iv)
|
the Additional Exploration Permits are free of any Encumbrances except to the extent of any conditions imposed under the Mining Code on the Additional Exploration Permits;
|
(v)
|
there is no litigation or proceeding of any nature concerning the Additional Exploration Permits, pending or threatened against them or any other person which may defeat, impair, detrimentally affect or reduce the right, title and interest of the Additional Permit Holders, Malagasy or their Related Bodies Corporate in the Additional Exploration Permits or the interest therein, including any plaint seeking forfeiture of the Additional Exploration Permits;
|
(vi)
|
to the best of its knowledge, the Additional Exploration Permits have been duly marked off, granted and applied for in accordance with the Mining Code;
|
(vii)
|
the Additional Exploration Permits are in Good Standing under the Mining Code and they are not in breach or contravention of any of the terms and conditions upon which the Additional Exploration Permits were granted or of any other rule, regulation or provision of the Mining Code or any other statute concerning, affecting or relating to the Additional Exploration Permits;
|
Confidential and Legally Privileged
|
page 27
|
(viii)
|
to the best of Malagasy’s knowledge, information and belief, there are no facts or circumstances that could, under the currently applicable laws of Madagascar, give rise to the cancellation, forfeiture or suspension or grant of the Additional Exploration Permits when renewed, that could have a Material Adverse Effect;
|
(ix)
|
except as disclosed to Energizer before the date of this Agreement, there are no agreements or dealings in respect of the Additional Exploration Permits;
|
(x)
|
there is not in existence any current compensation agreement with the owner or occupier of any land which is subject to the Additional Exploration Permits;
|
(xi)
|
there are no Environmental Liabilities relating to or affecting the Additional Exploration Permits, except to the extent of any report, study or assessment required to be lodged pursuant to the Mining Code or other regulation in relation to the Additional Exploration Permits;
|
(xii)
|
the Additional Exploration Permits have been granted in respect of all of the ground described in the Additional Exploration Permits, other than as a result of a compulsory surrender required under the Mining Code or other law effecting the Additional Exploration Permits; and
|
(xiii)
|
to the best of its knowledge, Malagasy and the MGY Subsidiaries have done everything that can be done to keep the JV Exploration Permits and the Additional Exploration Permits in Good Standing. For the purpose of this warranty, the Parties agree and acknowledge that due to the matters described in Recital D, neither Malagasy nor the MGY Subsidiaries can obtain formal recognition from the Mining Department or other relevant authority that the JV Exploration Permits or the Additional Exploration Permits are legally valid or effective with regard to the ERG Project Industrial Mineral Rights or Other Mineral Rights.
|
9.3
|
Limitation of warranties and disclaimer of liability by Malagasy
|
(a)
|
incurred as a result of a Political Event;
|
(b)
|
disclosed by Malagasy to Energizer and ERG or is known by Energizer and ERG prior to Completion; or
|
(c)
|
caused or contributed to by a breach by Energizer, ERG or MadagascarCo or their respective obligations under this Agreement.
|
Confidential and Legally Privileged
|
page 28
|
10.
|
Guarantees
|
10.1
|
Guarantee by Malagasy
|
(a)
|
Malagasy agrees to guarantee to Energizer, ERG and MadagascarCo the due performance and observance by each of MDA, Mazoto and Energex of each and every obligation of MDA, Mazoto and Energex under:
|
(i)
|
this Agreement;
|
(ii)
|
the JV Sublease Agreements; and
|
(iii)
|
Additional Permits Area Sublease Agreements.
|
(b)
|
Malagasy agrees to indemnify Energizer, ERG and MadagascarCo in relation to any loss suffered as a result of MDA, Mazoto or Energex failing to perform or observe any of their obligations under:
|
(i)
|
this Agreement;
|
(ii)
|
the JV Sublease Agreements; and
|
(iii)
|
Additional Permits Area Sublease Agreements.
|
10.2
|
Guarantee by Energizer
|
(a)
|
By executing this Agreement, Energizer guarantees to Malagasy the due performance and observance by ERG and MadagascarCo of each and every obligation of ERG and MadagascarCo under:
|
(i)
|
this Agreement; and
|
(ii)
|
any Other Minerals Sublease Agreement entered into by the Parties in accordance with this Agreement.
|
(b)
|
Energizer agrees to indemnify Malagasy in relation to any loss suffered as a result of ERG or MadagascarCo failing to perform or observe any of their obligations under:
|
(i)
|
this Agreement; and
|
(ii)
|
any Other Minerals Sublease Agreement entered into by the Parties in accordance with this Agreement,
|
11.
|
Assignment
|
(a)
|
No Party may assign, sublet, licence or otherwise transfer or part with, mortgage, encumber or in any way deal with its interest under this Agreement otherwise than in accordance with the provisions of this Agreement.
|
Confidential and Legally Privileged
|
page 29
|
(b)
|
At any time during the Term, Energizer or ERG may assign all or any of its rights or obligations under this Agreement as a matter of right to any Related Body Corporate of Energizer without Malagasy’s consent, provided that the assignee enters into an Accession Deed.
|
(c)
|
At any time during the Term, Malagasy may assign all or any of its rights or obligations under this Agreement as a matter of right to any Related Body Corporate of Malagasy without Energizer’s consent, provided that the assignee enters into an Accession Deed and is capable of performing the obligations so assigned.
|
12.
|
Termination
|
12.1
|
Event of Default
|
(a)
|
Should a Party fail to do, execute or perform any material act or thing which such Party is obliged to do, execute or perform pursuant to this Agreement (
Event of Default
), the aggrieved Party may give the defaulting Party a notice requiring the defaulting Party to remedy such Event of Default within a period of 30 days following service of the notice or if such default is not capable of being remedied within such period of 30 days then within such further period as the aggrieved Party or Parties shall deem reasonable.
|
(b)
|
If a Party serves a notice of default under clause 12.1(a) and such default remains un-remedied upon expiry of the period specified in such notice for rectification, the aggrieved Party may terminate this Agreement forthwith upon the service of a further notice in writing to that effect and upon the service of such further notice this Agreement shall terminate forthwith without prejudice to the rights and remedies of the aggrieved Party at law or otherwise howsoever arising.
|
(c)
|
Clause 12.1(a) does not apply to any Event of Default for which another remedy is provided in this Agreement.
|
12.2
|
Effect of termination
|
(a)
|
Termination of this Agreement releases each Party from any further performance of any liability under this Agreement but does not:
|
(i)
|
affect any provision of this Agreement expressed to operate or have effect after termination; or
|
(ii)
|
have any prejudicial effect on any accrued right of any Party in relation to any breach or default under this Agreement by any other Party occurring before termination.
|
(b)
|
If this Agreement is terminated in accordance with clause 12.1, the aggrieved Party has an option to acquire the defaulting Party’s rights and interests under this Agreement at:
|
(i)
|
a value determined by the Parties negotiating in good faith; or
|
(ii)
|
in the absence of agreement under clause 12.2(b)(i) above, a discount of 10% to market value as determined by an independent expert appointed in accordance with clause 16.2.
|
Confidential and Legally Privileged
|
page 30
|
12.3
|
Continuing remedies
|
13.
|
Force Majeure
|
13.1
|
Force Majeure
|
(a)
|
act of God, accident of navigation, war (whether declared or not), sabotage, insurrection, civil commotion, national emergency (whether in fact or law), martial law, fire, lightning, flood, earthquake, landslide, storm or other severe adverse weather conditions, explosion, power shortage, strike or other labour difficulty (whether or not involving employees of a Party concerned), epidemic, quarantine, radiation or radioactive contamination;
|
(b)
|
action or inaction of any government or governmental or other competent Governmental Agency (including any court) including expropriation, restraint, prohibition, intervention, requisition, requirement, direction or embargo by legislation, regulation or other legally enforceable order;
|
(c)
|
delay in the grant of access to an ERG Project Permit;
|
(d)
|
inability to secure, on commercially acceptable terms, rights of access to a Permit from the owners, occupiers, lessees, custodians, trustees, native title claimants or holders of any land to which the ERG Project Permit relates;
|
(e)
|
breakdown of plant, machinery or equipment or shortages of labour, transportation, fuel, power, plant, machinery, equipment or material; and
|
(f)
|
any other cause which by the exercise of foresight or due diligence, a Party is unable to prevent or overcome.
|
13.2
|
Relief
|
(a)
|
that Party is to give the other Party prompt notice of the Force Majeure with reasonably full particulars and, insofar as known to it, the probable extent to which it will be unable to perform, or be delayed in performing its obligation or exercising its right;
|
Confidential and Legally Privileged
|
page 31
|
(b)
|
that obligation, other than an obligation to pay money, is suspended and the time for performing that obligation or for exercising that right is extended but only so far as and for so long as it is affected by the Force Majeure; and
|
(c)
|
the affected Party is to use all possible diligence to overcome or remove the Force Majeure as quickly as possible.
|
13.3
|
Labour disputes
|
(a)
|
settle any strike or other labour dispute on terms contrary to its wishes; or
|
(b)
|
contest the validity or enforceability of any law, regulation or legally enforceable order by way of legal proceedings.
|
13.4
|
Resumption
|
14.
|
Dispute resolution
|
14.1
|
Application
|
(a)
|
this Agreement or its interpretation;
|
(b)
|
any right or liability of any Party under this Agreement; or
|
(c)
|
the performance of any action by any Party under or arising out of this Agreement, whether before or after its termination.
|
14.2
|
Dispute negotiation
|
(a)
|
A Party must not commence legal proceedings in relation to a dispute or refer a dispute to arbitration under this Agreement, unless that Party has complied with this clause 14.
|
(b)
|
A Party claiming that a dispute has arisen must notify the other Party specifying details of the dispute.
|
(c)
|
Each Party must refer a dispute to an authorised officer of that Party for consideration and use its best efforts to resolve the dispute through negotiation within seven (7) Business Days following the dispute notification or longer period agreed between the Parties.
|
Confidential and Legally Privileged
|
page 32
|
(d)
|
Each Party must refer the dispute to its chief executive officer, in the event that the authorised officers of the Parties fail to resolve the dispute within the specified period.
|
(e)
|
Each Party must following reference to its chief executive officer use its best efforts to resolve the dispute by agreement or through an agreed mediation procedure.
|
(f)
|
A Party in compliance with this clause 14.2 may terminate the dispute resolution process by notice to the other Party at any time after seven (7) Business Days following reference of the dispute to its chief executive officer.
|
(g)
|
A Party is not required to comply with this clause 14.2 in relation to any dispute where the other Party is in breach of or default under this clause 14.2 in relation to that dispute.
|
14.3
|
Arbitration
|
(a)
|
the arbitration will be conducted by three arbitrators, who will be appointed as agreed by the Parties or, failing such agreement, by the Deputy President of SIAC or his or her nominee;
|
(b)
|
the arbitration will be conducted in English;
|
(c)
|
each Party is entitled to legal representation at any arbitration; and
|
(d)
|
any arbitration will be conducted in Singapore, or at such other place as the Parties may agree.
|
14.4
|
Urgent relief
|
14.5
|
Continued performance
|
15.
|
Disputes as to Technical or Financial Matters
|
15.1
|
Definitions
|
(a)
|
Technical Matter
means a matter which is capable of determination by reference to Mining knowledge or practice; and
|
(b)
|
Financial Matter
means a matter which is capable of determination by audit or reference to financial or accounting records, knowledge or practice.
|
15.2
|
Application
|
(a)
|
This clause 15 applies to any dispute arising between the Parties in relation to a Financial Matter or a Technical Matter.
|
(b)
|
This clause 15 does not prevent any Party from seeking urgent interlocutory or declaratory relief from a court of competent jurisdiction where, in that Party's reasonable opinion, that action is necessary to protect that Party's rights.
|
15.3
|
Dispute negotiation
|
15.4
|
Independent Expert
|
16.
|
Expert Determination
|
16.1
|
Referral to Independent Expert
|
(a)
|
a Party submits a dispute in accordance with clause 15; or
|
(b)
|
the Parties agree that a dispute between them will be resolved by an Independent Expert; or
|
(c)
|
a dispute is required by this Agreement to be determined by an Independent Expert,
|
16.2
|
Appointment of Independent Expert
|
(a)
|
the Parties must, within 5 Business Days of a Party submitting a Dispute to an Independent Expert in accordance with clause 15.4, endeavour to agree upon the identity of a single Independent Expert to whom the dispute will be referred for determination as soon as is reasonably practicable;
|
Confidential and Legally Privileged
|
page 34
|
(b)
|
if the Parties are unable to agree upon the identity of a single Independent Expert within 20 Business Days of first meeting between senior management under clause 16.2(a), the Parties will, as soon as practicable thereafter:
|
(i)
|
in the case of a Financial Matter, request the President of the Institute of Chartered Accountants in Australia to appoint the Independent Expert; and
|
(ii)
|
in the case of a Technical Matter, request the President of the Australasian Institute of Mining and Metallurgy to appoint the Independent Expert; and
|
(c)
|
within 10 Business Days of appointment, the Independent Expert must set a time and place for receiving the Parties’ submissions.
|
16.3
|
Requirements of Independent Expert
|
(a)
|
The Independent Expert will be required to have appropriate commercial and practical experience and expertise in the area of the dispute.
|
(b)
|
Any person nominated to act as an Independent Expert will be required to fully disclose any interest or duty prior to that person’s appointment. If that person has or may have any interest or duty which conflicts with their appointment as Independent Expert, then that person may not be appointed except with the agreement of all parties to the dispute.
|
(c)
|
Any person nominated to act as an Independent Expert must, before they are appointed, confirm in writing that they are able to resolve the dispute within a reasonable time.
|
(d)
|
The Independent Expert appointed under clause 16.2 will act as an expert and not as an arbitrator.
|
16.4
|
Rights of the Parties
|
(a)
|
may be legally represented at any hearing before the Independent Expert;
|
(b)
|
is entitled to produce to the Independent Expert any materials or evidence which that Party believes is relevant to the dispute; and
|
(c)
|
must make available to the Independent Expert all materials requested by the Independent Expert and all other materials which are relevant to the Independent Expert’s determination.
|
16.5
|
Confidentiality
|
16.6
|
Determination
|
(a)
|
The Independent Expert must make a determination on the dispute within 70 Business Days of appointment and must determine what, if any, adjustments may be necessary between the Parties. The determination of the Independent Expert:
|
(i)
|
must be in the form of a written report;
|
(ii)
|
will be final and binding upon the Parties except in the case of bias, fraud, manifest mistake or error; and
|
(iii)
|
will be kept private and confidential unless otherwise agreed to by all Parties involved in the determination.
|
(b)
|
If the Independent Expert does not determine the dispute within 70 Business Days of appointment, the Parties may terminate the appointment by written agreement and a new Independent Expert will be appointed within 10 Business Days in accordance with the procedure set out in clause 16.2.
|
16.7
|
Costs of Independent Expert
|
(a)
|
the costs of the Independent Expert will be apportioned between the Parties in such proportions as the Independent Expert thinks fit, otherwise the Parties will each bear their own costs; and
|
(b)
|
the Parties will each bear their own costs incurred in the preparation and presentation of any submissions or evidence to the Independent Expert.
|
17.
|
Status of Agreement and further acts
|
(a)
|
The Parties agree that this Agreement is binding upon them and intend that this Agreement is legally enforceable in accordance with its terms.
|
(b)
|
Each Party must promptly do all further acts and execute and deliver all further documents (in form and content reasonably satisfactory to that Party) required by law or reasonably requested by any other party to give effect to this Agreement and the transactions contemplated by this Agreement.
|
18.
|
Relationship between Parties
|
(a)
|
Nothing in this Agreement is to be construed so to constitute a Party a partner, agent or representative of any other Party or to create any partnerships or trust for any purpose howsoever except to the extent to which the operator is the agent of the Parties. No Party will be under any fiduciary or other duty to the other which will prevent it from engaging in or enjoying the benefits of any competing endeavours subject to the express provisions of this Agreement.
|
Confidential and Legally Privileged
|
page 36
|
(b)
|
No Party will have any authority to act on behalf of any other Party, except as expressly provided in this Agreement. Where a Party acts on behalf of another without authority, such Party must indemnify the other from any losses, claims, damages and liabilities arising out of any such act.
|
(c)
|
Each Party has the unrestricted right to engage in and receive the full benefit of any competing activities outside of the ERG Project Area.
|
19.
|
Confidentiality and public announcements
|
19.1
|
Confidentiality
|
(a)
|
if the information is at the time generally and publicly available other than as a result of breach of confidence by the Recipient;
|
(b)
|
if the information is at the time lawfully in the possession of the proposed recipient of the information through sources other than the Recipient;
|
(c)
|
by the Recipient to legal and other professional advisers and other consultants and officers and employees of:
|
(i)
|
the Recipient; or
|
(ii)
|
the Recipient's Related Bodies Corporate,
|
(d)
|
with the prior written
consent of the Owner;
|
(e)
|
to the extent required by law or by a lawful requirement of any Governmental Agency having jurisdiction over the Recipient or any of its Related Bodies Corporate;
|
(f)
|
if required in connection with legal proceedings or arbitration relating to this Agreement or for the purpose of advising the Recipient in relation thereto;
|
(g)
|
if and to the extent that it may be necessary or desirable to disclose to any Governmental Agency in connection with applications for consents, approvals, authorities or licenses in relation to this Agreement;
|
(h)
|
to the extent required by a lawful requirement of any stock exchange having jurisdiction over the Recipient or any of its Related Bodies Corporate;
|
Confidential and Legally Privileged
|
page 37
|
(i)
|
if necessary to be disclosed in any prospectus or information memorandum to investors or proposed or prospective investors:
|
(i)
|
for an issue or disposal of any shares or options in the Recipient or any of its Related Bodies Corporate;
|
(ii)
|
for an issue of debt instruments of the Recipient or any of its Related Bodies Corporate; or
|
(iii)
|
for the purposes of the Recipient obtaining a listing on any stock exchange of any shares, options or debt instruments;
|
(j)
|
if necessary to be disclosed to a professional investor or investment adviser for the purposes of enabling an assessment to be made about the merits or otherwise of an investment in the Recipient or any of its Related Bodies Corporate;
|
(k)
|
if necessary to be disclosed to an existing or bona fide proposed or prospective:
|
(i)
|
financier of the Recipient or of any of its Related Bodies Corporate; or
|
(ii)
|
rating agency in respect of the Recipient or of any of its Related Bodies Corporate;
|
(l)
|
if necessary to be disclosed to any bona fide proposed or prospective:
|
(i)
|
transferee of any property to which the information relates or of any shares in the Recipient or any Related Body Corporate of the Recipient;
|
(ii)
|
financier of such transferee providing or proposing or considering whether to provide financial accommodation; or
|
(iii)
|
assignee of rights under the Recipient's financing documents; or
|
(m)
|
if necessary to be disclosed to legal and other professional advisers and other consultants and officers or employees of any of the persons referred to in clause 19.1(j), 19.1(k), or 19.1(l).
|
19.2
|
Conditions
|
(a)
|
In the case of a disclosure under clause 19.1(c) or 19.1(d) and, where appropriate, under clause 19.1(e) and 19.1(f), the Party wishing to make the disclosure must inform the proposed recipient of the confidentiality of the information and the Party must take such precautions as are reasonable in the circumstances to ensure that the proposed recipient keeps the information confidential.
|
(b)
|
In the case of a disclosure under clause 19.1(g), 19.1(h) and 19.1(i), the Party wishing to make the disclosure may only do so:
|
Confidential and Legally Privileged
|
page 38
|
(i)
|
with the written consent of both Parties, which must not be unreasonably withheld or delayed; or
|
(ii)
|
to the extent required by law, the official rules of the relevant stock exchange or any Governmental Agency, but if any Party is required to make any such announcement, it must promptly notify the other Party, where reasonably practicable and lawful to do so, before the announcement is made and must confer with the other Party and consider any comments of the other Party regarding the timing and content of such announcement or any action which the other Party may reasonably elect to take to challenge the validity of such requirement, subject at all times to the disclosing Party’s obligations under law, the official rules of the relevant stock exchange or any Governmental Agency.
|
(c)
|
In the case of a disclosure under clause 19.1(j), 19.1(k) or 19.1(l) or (in the case of legal and other professional advisers and other consultants only) 19.1(m) the Party wishing to make the disclosure must not make any disclosure unless:
|
(i)
|
in the case of a disclosure under clause 19.1(j), 19.1(k) or 19.1(l) the proposed recipient has first entered into and delivered to the Recipient a confidentiality undertaking in a form acceptable to the other Parties; or
|
(ii)
|
in the case of a disclosure under clause 19.1(m) the principal or employer of the proposed recipient has first entered into and delivered to the Recipient a confidentiality undertaking in a form acceptable to the other Parties which will incorporate a warranty by the principal or employer of the proposed recipient that the proposed recipient is under an obligation of confidentiality to the principal or employer and that the principal or employer will enforce that obligation to the fullest extent that the law or equity allows upon being called upon to do so by any of the Parties.
|
19.3
|
Notice to other Parties
|
(a)
|
promptly inform each other Party of any request received by that Party from any person described in clause 19.1(e) to disclose information under that clause;
|
(b)
|
inform all other Parties as soon as reasonably practicable after information is disclosed by the Party under clause 19.1(e); and
|
(c)
|
not disclose any information under clause 19.1 unless all other Parties have been informed of the proposed disclosure.
|
19.4
|
Indemnities
|
Confidential and Legally Privileged
|
page 39
|
19.5
|
Survival of confidentiality obligations
|
19.6
|
Use of Mining Information in respect to Other Mineral Rights
|
20.
|
Notices
|
(a)
|
must be in writing;
|
(b)
|
must be addressed as follows (or otherwise notified by that Party to the other Party from time to time):
|
To Energizer and ERG
|
Energizer Resources Inc
|
|
Attention:
|
Chief Executive Officer | |
Address:
|
Energizer Resources Inc.
141 Adelaide Street
West Suite 520
Toronto, Ontario
CANADA
|
|
Facsimile:
|
+1 416.364.2753 | |
To Malagasy
|
Malagasy Minerals Limited
|
|
Attention: | Company Secretary | |
Address:
|
Malagasy Minerals Limited
15 Lovegrove Close
Mount Claremont
Western Australia 6010
AUSTRALIA
|
|
Facsimile:
|
+61 8 9284 3801 |
(c)
|
must be signed by the Party making it or (on that party’s behalf) by the solicitor for or any attorney, director, secretary or authorised agent of that Party;
|
(d)
|
must be delivered by hand or posted by prepaid post to the address, or sent by fax to the number, of the addressee; and
|
Confidential and Legally Privileged
|
page 40
|
(e)
|
is taken to be received by the addressee:
|
(i)
|
(in the case of prepaid post sent to an address in the same country) on the third day after the date of posting;
|
(ii)
|
(in the case of prepaid post sent to an address in another country) on the fifth day after the date of posting;
|
(iii)
|
(in the case of fax) at the time in the place to which it is sent equivalent to the time shown on the transmission confirmation report produced by the fax machine from which it was sent; and
|
(iv)
|
(in the case of delivery by hand) on delivery;
|
21.
|
Miscellaneous
|
21.1
|
Governing law
|
21.2
|
Amendments
|
21.3
|
Primacy of this Agreement
|
21.4
|
Language
|
21.5
|
Waiver
|
(a)
|
Failure to exercise or enforce, or a delay in exercising or enforcing, or the partial exercise or enforcement, of a right provided by law or under this Agreement by a Party does not preclude, or operate as a waiver of, the exercise or enforcement, or further exercise or enforcement, of that or any other right provided by law or under this Agreement.
|
Confidential and Legally Privileged
|
page 41
|
(b)
|
A waiver or consent given by a Party under this Agreement is only effective and binding on that Party if it is given or confirmed in writing by that Party.
|
(c)
|
No waiver of a breach of a term of this Agreement operates as a waiver of another breach of that term or of a breach of any other term of this Agreement.
|
21.6
|
Consents
|
21.7
|
Counterparts
|
21.8
|
No representation or reliance
|
(a)
|
Each Party acknowledges that neither Party (nor any person acting on a Party’s behalf) has made any representation or other inducement to it to enter into this Agreement except for representations or inducements expressly set out in this Agreement.
|
(b)
|
Each Party acknowledges and confirms that it does not enter into this Agreement in reliance on any representation or other inducement by or on behalf of the other Party, except for representations or inducements expressly set out in this Agreement.
|
21.9
|
Expenses
|
21.10
|
Entire agreement
|
(a)
|
embodies the entire understanding of the Parties, and constitutes the entire terms agreed by the Parties; and
|
(b)
|
supersedes any prior written or other agreement of the Parties.
|
21.11
|
Indemnities
|
(a)
|
Each indemnity in this Agreement is a continuing obligation, separate and independent from the other obligations of the Parties, and survives termination, completion or expiration of this Agreement.
|
(b)
|
It is not necessary for a Party to incur expense or to make any payment before enforcing a right of indemnity conferred by this Agreement.
|
(c)
|
A Party must pay on demand any amount it must pay under an indemnity in this Agreement.
|
21.12
|
Severance and enforceability
|
21.13
|
No merger
|
21.14
|
Power of attorney
|
(a)
|
Each attorney who signs this Agreement on behalf of a Party declares that the attorney has no notice from the Party who appointed him that the power of attorney granted to him, under which the attorney signs this Agreement, has been revoked or suspended in any way.
|
(b)
|
Each Party represents and warrants to each other that its respective attorney or authorised officer who signs this Agreement on behalf of that Party has been duly authorised by that Party to sign this Agreement on its behalf and that authorisation has not been revoked.
|
21.15
|
Taxes
|
(a)
|
For the purpose of this clause 21.15,
Tax
means a tax including any value added or goods and services taxes (including TVA), rate, levy, duty (other than a tax on the net overall income of a Party) and any interest penalty fine or expense relating to any of them.
|
(b)
|
Subject to clause 21.15(c), any Taxes that may be imposed by any authorities in connection with this Agreement and any Taxes, fees or costs in relation to the transfer of the ERG Project Permits under this Agreement and registration of this Agreement will be paid by the Energizer.
|
(c)
|
Any Taxes which may be imposed by any authorities in connection with the the grant of the Additional Industrial Mineral Rights under this Agreement will be apportioned equally between the Energizer and Malagasy.
|
(d)
|
Energizer will indemnify and hold the Malagasy harmless against any liability for the Purchaser’s obligations set out in clauses 21.15(b) and 21.15(c), provided that under no circumstances will the Energizer be liable or accountable for any capital gains tax or income tax liability of Malagasy.
|
Confidential and Legally Privileged
|
page 43
|
Confidential and Legally Privileged
|
page 44
|
Item
|
Exploration Permit
|
1
|
3432
|
2
|
14618
|
Confidential and Legally Privileged
|
page 45
|
Confidential and Legally Privileged
|
page 46
|
Item
|
Exploration Permit
|
Item
|
Exploration Permit
|
|
1
|
3432
|
21
|
21064
|
|
2
|
5394
|
22
|
24864
|
|
3
|
13064
|
23
|
25605
|
|
4
|
13811
|
24
|
25606
|
|
5
|
14619
|
25
|
28340
|
|
6
|
14620
|
26
|
28346
|
|
7
|
14622
|
27
|
28347
|
|
8
|
14623
|
28
|
28348
|
|
9
|
16747
|
29
|
28349
|
|
10
|
16753
|
30
|
28352
|
|
11
|
19003
|
31
|
28353
|
|
12
|
19851
|
32
|
29020
|
|
13
|
19932
|
33
|
31734
|
|
14
|
19934
|
34
|
31735
|
|
15
|
19935
|
35
|
38323
|
|
16
|
21059
|
36
|
38324
|
|
17
|
21060
|
37
|
38325
|
|
18
|
21061
|
38
|
38392
|
|
19
|
21062
|
39
|
38469
|
|
20
|
21063
|
Confidential and Legally Privileged
|
page 47
|
Signed as an agreement
by
Energizer
Resources Inc.
|
)
)
)
|
|
/s/ Peter Liabotis
|
/s/ Richard Schler
|
|
Signature
|
Signature
|
|
Peter Liabotis
|
Richard Schler
|
|
Print name
|
Print name
|
|
CFO
|
CEO
|
Signed as an agreement
by
Madagascar-
ERG Joint Venture (Mauritius) Ltd
|
)
)
)
|
|
/s/ Peter Liabotis
|
/s/ Richard Schler
|
|
Signature
|
Signature
|
|
Peter Liabotis
|
Richard Schler
|
|
Print name
|
Print name
|
|
Director
|
Company Secretary / Director
|
Confidential and Legally Privileged
|
page 48
|
Confidential and Legally Privileged
|
page 2
|
Confidential and Legally Privileged
|
page 3
|
Confidential and Legally Privileged
|
page 4
|
Jackson McDonald
Lawyers
140 St Georges Terrace
Perth Western Australia 6000
|
t:
f:
w:
|
+61 8 9426 6611
+61 8 9481 8649
www.jacmac.com.au
|
Contact:
Reference:
|
Will Moncrieff
7141864
|
Joint Venture Agreement
|
|
1. Interpretation | 2 | |||||
1.1 |
Definitions
|
2 | ||||
1.2 |
Interpretation
|
11 | ||||
2. Commencement | 12 | |||||
3. Conditions precedent | 12 | |||||
3.1 |
Conditions
|
12 | ||||
3.2 |
Best endeavours
|
13 | ||||
3.3 |
Waiver of conditions
|
13 | ||||
3.4 |
Non-satisfaction of conditions
|
13 | ||||
4. Consideration | 13 | |||||
4.1 |
Sale and Purchase Agreement
|
13 | ||||
5. Provision of Mining Information | 13 | |||||
6. Acknowledgements by Parties | 14 | |||||
7. Establishment of JV Company and its Board | 14 | |||||
7.1 |
Establishment
|
15 | ||||
7.2 |
Initial Shareholding Interests
|
15 | ||||
7.3 |
Adoption of constituent document
|
15 | ||||
7.4 |
Board members
|
15 | ||||
7.5 |
Appointment and removal of Directors
|
15 | ||||
7.6 |
Role and powers of the Board
|
16 | ||||
7.7 |
Meetings of the Board
|
16 | ||||
7.8 |
Notice of Board meetings
|
16 | ||||
7.9 |
Quorum
|
17 | ||||
7.10 |
Decisions of the Boards
|
17 | ||||
7.11 |
Voting
|
17 | ||||
7.12 |
Experts and advisers
|
17 | ||||
7.13 |
Minutes of meetings and records
|
17 | ||||
8. Establishment of TenementCo | 17 | |||||
8.1 |
Establishment
|
17 | ||||
8.2 |
Management of TenementCo
|
18 | ||||
8.3 |
Appointment and removal
|
18 | ||||
8.4 |
Role of Country Manager
|
18 | ||||
8.5 |
Adoption of constituent document
|
18 | ||||
9. Business of the JV Company and TenementCo | 18 | |||||
10. Co-operation of Shareholders | 19 |
|
Confidential and Legally Privileged
|
page i
|
Joint Venture Agreement
|
|
11. Right to explore and sublease | 19 | |||||
11.1 |
Grant of Subleases
|
19 | ||||
11.2 |
Covenants of Energizer in respect of the Exploration Permits
|
20 | ||||
11.3 |
Covenants in respect of the Exploration Permits
|
21 | ||||
11.4 |
Remedies of Malagasy
|
21 | ||||
11.5 |
Exercise of Other Mineral Rights
|
22 | ||||
11.6 |
Notice of activities
|
22 | ||||
11.7 |
Mutual indemnities
|
23 | ||||
12. Surrender of Exploration Permits | 23 | |||||
13. Transfer of Permits | 24 | |||||
14. Bankable Feasibility Study, Funding Decision and Decision to Mine | 24 | |||||
14.1 |
Bankable Feasibility Study
|
24 | ||||
14.2 |
Funding Decision
|
25 | ||||
14.3 |
Obligation to Fund
|
26 | ||||
14.4 |
Decision to Mine
|
26 | ||||
14.5 |
Election to participate and formation of mining joint venture
|
26 | ||||
14.6 |
Establishment of Mining Area
|
26 | ||||
14.7 |
Holding of Mining Area
|
27 | ||||
14.8 |
Mining Area ceases to be Joint Venture Property
|
27 | ||||
14.9 |
Transfer of Mining Area
|
27 | ||||
14.10 |
Terms of Mining Joint Venture
|
28 | ||||
14.11 |
Agreement
|
28 | ||||
15. Conversion to Exploitation Permits | 28 | |||||
15.1 |
Conversion
|
28 | ||||
15.2 |
Transfer of Exploitation Permits
|
29 | ||||
15.3 |
Holding of Exploitation Permits
|
29 | ||||
15.4 |
Approval of Mining Department
|
29 | ||||
15.5 |
Option Beneficial Holderto transfer Exploration Permits prior to conversion
|
29 | ||||
15.6 |
Avoidance of forfeiture of Permits
|
30 | ||||
16. Environment and Mining Operations | 30 | |||||
17. Industrial Mineral Rights | 30 | |||||
17.1 |
Holder of Permits and Industrial Mineral Rights
|
30 | ||||
17.2 |
Priority of exercise of Industrial Mineral Rights
|
31 | ||||
17.3 |
Exercise of Industrial Mineral Rights by the Beneficial Holder
|
31 | ||||
17.4 |
Suspension of Other Mineral Rights for duration of Mining Operations
|
31 | ||||
17.5 |
Transfer of Industrial Mineral Rights
|
32 | ||||
17.6 |
Transfer of Other Mineral Rights
|
32 | ||||
17.7 |
Co-mingling
|
32 |
18. Operator | 33 | |||||
18.1 |
First Operator
|
33 | ||||
18.2 |
Functions of the Operator
|
33 | ||||
18.3 |
Operator to prepare Programs and Budgets
|
34 | ||||
18.4 |
Liability of Operator
|
34 | ||||
18.5 |
Indemnity of Operator
|
34 | ||||
18.6 |
Preserve Permits
|
34 | ||||
18.7 |
Reporting
|
34 | ||||
18.8 |
Change of Operator
|
34 | ||||
19. Contributions to Joint Venture Costs | 35 | |||||
20. Right to dilute | 35 | |||||
20.1 |
Election not to fund
|
35 | ||||
20.2 |
Contributions where election not to fund
|
35 | ||||
20.3 |
Dilution
|
36 | ||||
21. Disposal of Shares and pre-emption rights | 39 | |||||
22. Drag along | 39 | |||||
23. Tag along | 40 | |||||
24. Royalties | 40 | |||||
24.1 |
Interest below 10%
|
40 | ||||
24.2 |
Transfer of Royalties
|
40 | ||||
25. Representations and warranties | 40 | |||||
25.1 |
Representations and warranties by Malagasy
|
40 | ||||
25.2 |
Representations and warranties by Energizer
|
41 | ||||
25.3 |
Disclaimer of liability by Energizer
|
43 | ||||
26. Guarantee by Energizer | 43 | |||||
27. Guarantee by Malagasy | 43 | |||||
28. Assignment | 44 | |||||
29. Termination | 44 | |||||
29.1 |
Termination events
|
44 | ||||
29.2 |
Event of Default
|
44 | ||||
29.3 |
Effect of termination
|
45 | ||||
29.4 |
Continuing remedies
|
45 | ||||
30. Force Majeure | 45 | |||||
30.1 |
Force Majeure
|
45 | ||||
30.2 |
Relief
|
46 | ||||
30.3 |
Labour disputes
|
46 | ||||
30.4 |
Resumption
|
46 |
31. Dispute resolution | 46 | |||||
31.1 |
Application
|
46 | ||||
31.2 |
Dispute negotiation
|
47 | ||||
31.3 |
Arbitration
|
47 | ||||
31.4 |
Urgent relief
|
47 | ||||
31.5 |
Continued performance
|
48 | ||||
32. Disputes as to Technical or Financial Matters | 48 | |||||
32.1 |
Definitions
|
48 | ||||
32.2 |
Application
|
48 | ||||
32.3 |
Dispute negotiation
|
48 | ||||
32.4 |
Independent Expert
|
48 | ||||
33. Expert determination | 48 | |||||
33.1 |
Referral to Independent Expert
|
49 | ||||
33.2 |
Appointment of Independent Expert
|
49 | ||||
33.3 |
Requirements of Independent Expert
|
49 | ||||
33.4 |
Rights of the Parties
|
50 | ||||
33.5 |
Confidentiality
|
50 | ||||
33.6 |
Determination
|
50 | ||||
33.7 |
Costs of Independent Expert
|
50 | ||||
34. Status of Agreement and further acts | 51 | |||||
35. Relationship between Parties | 51 | |||||
36. Confidentiality and public announcements | 51 | |||||
36.1 |
Confidentiality
|
51 | ||||
36.2 |
Conditions
|
53 | ||||
36.3 |
Notice to other Shareholders
|
53 | ||||
36.4 |
Indemnities
|
54 | ||||
36.5 |
Survival of confidentiality obligations
|
54 | ||||
36.6 |
Use of Mining Information in respect to Other Mineral Rights
|
54 |
37. Notices | 54 | |||||
38. Miscellaneous | 55 | |||||
38.1 |
Governing law
|
55 | ||||
38.2 |
Amendments
|
55 | ||||
38.3 |
Primacy of this Agreement
|
55 | ||||
38.4 |
Language
|
55 | ||||
38.5 |
Waiver
|
56 | ||||
38.6 |
Consents
|
56 | ||||
38.7 |
Counterparts
|
56 | ||||
38.8 |
No representation or reliance
|
56 | ||||
38.9 |
Expenses
|
56 | ||||
38.10 |
Entire agreement
|
56 | ||||
38.11 |
Indemnities
|
57 | ||||
38.12 |
Severance and enforceability
|
57 | ||||
38.13 |
No merger
|
57 | ||||
38.14 |
Power of attorney
|
57 | ||||
38.15 |
Taxes
|
57 | ||||
Schedule 1 – Exploration Permits and Area of Interest | 58 | |||||
Schedule 2 – Industrial Minerals | 59 | |||||
Schedule 3 – Map of Area of Interest | 60 | |||||
Schedule 4 – Net Smelter Return Royalty | 61 | |||||
Executed as an agreement | 66 | |||||
Annexure A – Form of Sublease Agreement | 67 |
Energizer Resources Inc.
Energizer
|
141 Adelaide Street, West Suite 520, Toronto, Ontario, Canada
|
Malagasy Minerals Limited
ACN 121 700 105
Malagasy
|
15 Lovegrove Close, Mount Claremont, Western Australia
|
A.
|
Pursuant to the Tenement Acquisition Agreements:
|
(a)
|
the Beneficial Holder acquired the Exploration Permits from MMR and is the beneficial holder of the Exploration Permits;
|
(b)
|
MMR is obliged to transfer the Exploration Permits to the Beneficial Holder
.
|
B.
|
In 2008, the Beneficial Holder applied to the Mining Department (the BCMM) for the Exploration Permits to be transferred to the Beneficial Holder and, in 2009, the Beneficial Holder received from the Mining Department Certificates of Registration in its name in relation to each of the Exploration Permits.
|
C.
|
From the time of the execution of the Tenement Acquisition Agreements until the date of this Agreement, the Mining Department has not accepted and/or processed applications for transfer, registration or renewal of mining permits or interests in Madagascar and as a result the Beneficial Holder has been unable to obtain delivery of the actual mining permits under Madagascan law for each of the Exploration Permits.
|
D.
|
As at the date of this Agreement, MMR is the Registered Holder of the Exploration Permits.
|
E.
|
The Parties agree and acknowledge that at the date of this Agreement, the Mining Department (the BCMM) is:
|
(a)
|
not accepting and/or processing applications for transfer, registration or renewal of mining permits or interests in Madagascar and it is not presently possible to obtain formal recognition of the renewal, partition, transfer or registration of the Exploration Permits; or
|
(b)
|
in the event that the Mining Department has recently recommenced accepting and processing applications for transfer, registration or renewal of mining permits or interests, there has not been sufficient time for the Beneficial Holder to either:
|
(i)
|
obtain delivery of the actual mining permits for each of the Exploration Permits; or
|
(ii)
|
gain sufficient knowledge of the Mining Department’s recommencement of these activities to be confident that transfers of the Exploration Permits are currently achievable.
|
F.
|
By the Memorandum of Understanding Energizer and Malagasy agreed to participate in a joint venture in respect of the Permits in relation to the Other Mineral Rights subject to the Parties simultaneously entering into the Sale and Purchase Agreement and the Mineral Rights Agreement.
|
G.
|
The parties have agreed to establish a joint venture on the terms of this Agreement, which supersedes and replaces the Memorandum of Understanding.
|
1.
|
Interpretation
|
1.1
|
Definitions
|
Accession Deed
|
a deed between the Parties to this Agreement and a third party pursuant to which the third party assumes the obligations of the assigning Party to the extent of the interest being assigned to the third party as if the third party was an original party to this Agreement and is otherwise in a form satisfactory to the non-assigning Party, acting reasonably.
|
|
Agreement
|
this agreement.
|
|
Area of Interest
|
the areas the subject of the Exploration Permits and identified by the area shaded dark green in the map at Schedule 3.
|
|
Bankable Feasibility Study | a detailed report or reports prepared by or on behalf of Malagasy and/or JV Company evaluating the feasibility of placing mineral deposits within the Area of Interest, or any part thereof, into production and operation as a mine, which detailed report or reports must include, without limitation, a reasonable assessment of the mineable mineral reserves and their amenability to metallurgical treatment, a complete description of the work, equipment and supplies required to bring the mineral deposits within the Area of Interest into mineral production and the estimated cost thereof, a description of the mining methods to be employed and a financial appraisal of possible mining operations. Such detailed report or reports must be, in the opinion of the person or firm commissioning such report or reports, or, in the event of a dispute between the Parties, in the opinion of such qualified independent firm of consultants as Malagasy and/or JV Company selects in good faith, in such form and of such substance which is normally accepted by substantial, recognised financial institutions for the purpose of determining whether to lend funds for the development of mineral deposits, and must include and be supported by at least the following: | |
(a) | a description of the mining claims within the Area of Interest and that part of the mining claims within the Area of Interest proposed to be the subject of a mine; | |
(b) | the estimated recoverable reserves of minerals and the estimated composition and content thereof; | |
(c) |
the procedure for the development, mining and production of Other Minerals from the mining claims within the Area of Interest;
|
(d)
|
results of mineral processing tests and ore amenability tests;
|
|
(e) | the nature and extent of the facilities which might be necessary to acquire or construct, which may include ore processing facilities if the nature, volume and location of the ore makes such ore processing facilities necessary and feasible, in which event the study must also include a design for such ore processing facilities; | |
(f) | a detailed cost and timing analysis, including a capital cost budget, of the total estimated costs and expenses required to develop a mine on the mining claims within the Area of Interest and to purchase, construct and install all structures, machinery, equipment, and electricity connection or generation equipment required for such mine including an ore processing facility, if so included in accordance with the terms hereof; | |
(g) | detailed operating cost estimates, including working capital requirements for the initial three months of operation of the mine or such longer period as may be reasonably justified; | |
(h) | all description of necessary environmental impact and mitigation studies and costs, including planned rehabilitation of the mining claims within the Area of Interest with estimated costs thereof; | |
(i) | a critical path time schedule for bringing the mining claims within the Area of Interest or any part thereof to commercial production; | |
(j) | such other data and information as are reasonably necessary to substantiate the existence of a mineral deposit of sufficient size and grade to justify development of a mine on the mining claims within the Area of Interest, taking into account all relevant business, tax and other economic considerations; | |
(k) | disclosure of all price assumptions; | |
(l) | a transportation cost analysis; | |
(m) | a proposed procedure or method of disposing of tailings as required under the environmental and mining laws of all Governmental Agencies having jurisdiction; | |
(n) | a detailed discussion and analysis of governmental requirements with respect to the development of a mine on the mining claims within the Area of Interest including time schedules; | |
(o) | details regarding any proposed financing of the project; | |
(p) | a discounted cash flow (net of income taxes) and return on investment analysis, including an economic forecast for the life of the proposed mine; and | |
(q) | appropriate sensitivity analyses. |
Beneficial Holder
|
Energizer’s wholly owned subsidiary, Energizer Resources (Minerals) sarl, a company incorporated under the laws of Madagascar, having its registered office at Immeuble Tecno Mobile, Pres Lot 001 A Bis, Andranomena-Antehiroka, Antananarivo 101, Madagascar.
|
Board
|
the board of Directors of JV Company or TenementCo (as the context requires).
|
Business
|
the business of JV Company and TenementCo as described in clause 9(a) and such other business as the Shareholders may agree.
|
Business Day
|
a day which is not a Saturday, a Sunday or a public holiday in Ontario, Canada or Perth, Western Australia.
|
Claim
|
in relation to a Party, any demand, claim, action or proceeding made or brought by or against the Party, howsoever arising and whether present, unascertained, immediate, future or contingent.
|
Commencement Date
|
the date on which all of the conditions in clause 3.1 are satisfied or waived.
|
Completion
|
has the meaning given to it in the Sale and Purchase Agreement.
|
Confidential Information
|
all information, documents, maps, reports, records, studies, forms, specifications, processes, statements, formulae, trade secrets, drawings and other data (and copies and extracts made of or from any such data) in written or electronic form and whether reduced to writing or not, and at any time in the possession or under the control of or readily accessible to any Party, including the Mining Information, concerning:
(a)
the existence or contents of this Agreement;
(b)
Joint Venture Property;
(c)
Joint Venture Operations;
(d)
JV Company;
(e)
TenementCo;
(f)
the operations and transactions of a Party;
(g)
the organisation, finance, customers, markets, suppliers, intellectual property and know-how of a Party or a Related Body Corporate of a Party; and
(h)
any other information obtained during the Term or in the course of the Joint Venture,
that is not in the public domain (except by failure of a Party to perform and observe its covenants and obligations under this Agreement) and that has been obtained by a
Party
during the negotiations preceding the making of this Agreement or the Memorandum of Understanding by or through or by being a Party to this Agreement or the Memorandum of Understanding.
|
Country Manager
|
has the meaning in clause 8.2.
|
Decision to Mine
|
has the meaning given to that term in clause 14.4(a).
|
Director
|
a director of JV Company.
|
Dispose
|
in relation to a person and any property, means to sell, transfer, assign, surrender, create an Encumbrance over, declare oneself a trustee of or part with the benefit or otherwise dispose of that property (or any interest in it or any party of it) whether done before, on or after the person obtains any interest in the property, including without limitation in relation to a share, to enter into a transaction in relation to the share (or any interest in the share) which results in a person other than the registered holder of the share:
(a)
acquiring or having an equitable or beneficial interest in the share, including, without limitation, an equitable interest arising under a declaration of trust, an agreement for sale and purchase or an option agreement or an agreement creating a charge or other Encumbrance over the share; or
(b)
acquiring or having any right to receive (directly or indirectly) any dividends or other distribution or proceeds of disposal payable in respect of the share or any right to receive an amount calculated by reference to any of them; or
(c)
acquiring or having any rights of pre-emption, first refusal or other direct or indirect control over the disposal of the share; or
(d)
acquiring or having any rights of (direct or indirect) control over the exercise of any voting rights or rights to appoint Directors attaching to the share; or
(e)
otherwise acquiring or having equitable rights against the registered holder of the share (or against a person who directly or indirectly controls the affairs of the registered holder of the shares) which have the effect of placing the other person in substantially the same position as if the person had acquired a legal or equitable interest in the share itself,
but excludes:
(f)
a transaction expressly permitted by this Agreement; or
(g)
a transaction conditional on each Shareholder consenting to it.
|
Encumbrance
|
any mortgage, bill of sale, lien, charge, pledge, writ, warrant, production royalty, caveat (and all claims stated in the caveat), assignment by way of security, security interest, title retention, preferential right or trust arrangement, Claim, covenant, profit a pendre, easement, or any other security arrangement or other right or interest of any third party and includes any other arrangement having the same effect.
|
Energizer
|
Energizer Resources Inc., a company incorporated under the laws Minnesota, United States of America.
|
Environmental Law
|
any law concerning environmental matters which regulates or affects the Permits, and includes, but is not limited to, laws concerning land use, development, pollution, waste disposal, toxic and hazardous substances, conservation of natural or cultural resources and resource allocation including any law relating to exploration for or development of any natural resource.
|
Governmental Agency
|
any government or any governmental, semi-governmental, administrative, fiscal or judicial body, responsible minister, department, office, commission, delegate, authority, instrumentality, tribunal, board, agency, entity or organ of government, whether federal, state, territorial or local, statutory or otherwise, in respect of a sovereign state and includes any of them purporting to exercise any jurisdiction or power outside that sovereign state.
|
Independent Expert
|
an expert independent of the Parties appointed under and for the purposes of clause 33.
|
Industrial Minerals
|
the minerals listed in Schedule 2 of this Agreement.
|
Industrial Mineral Rights
|
all Mineral Rights with respect to Industrial Minerals.
|
Joint Venture
|
the joint venture constituted by this Agreement for the Exploration of, and if warranted, the Mining of the Area of Interest, to be conducted by JV Company and TenementCo pursuant to this Agreement, but does not include the Mining JV.
|
Joint Venture Costs
|
all costs, expenses and liabilities incurred in connection with Joint Venture Operations including:
(a)
all costs of establishing and maintaining JV Company and TenementCo;
(b)
the costs of conducting Exploration Operations (including any Minimum Expenditure Obligations);
(c)
the costs of conducting Mining Operations;
(d)
all rents, fees and taxes applicable to the Permits;
(e)
all Outgoings in relation to Permits;
(f)
the cost of all personnel engaged in the conduct of Joint Venture Operations;
(g)
the cost of all items of plant, equipment, machinery and vehicles used in connection with Joint Venture Operations;
(h)
a charge (not including any element of profit) for administrative and overhead expenses incurred by the Operator, at a rate not exceeding 10% of items of expense referred to in this definition;
(i)
any costs of procuring and maintaining any insurance required for the conduct of Joint Venture Operations in accordance with good industry practice;
(j)
administrative, overhead, office and employment costs and expenses incurred in connection with the conduct of Joint Venture Operations; and
(k)
domestic and international travel expenses incurred in connection with the conduct of Joint Venture Operations.
|
Joint Venture Operations
|
all activities of the Joint Venture under this Agreement including Exploration Operations and if applicable, Mining Operations.
|
Sublease
|
has the meaning given to that term in clause 11.1.
|
Sublease Agreements
|
means the sublease agreements to be entered into by the Beneficial Holder and TenementCo in relation to the relevant area / squares of each Exploration Permit held by the Beneficial Holder within the Area of Interest, in the form set out at Annexure A.
|
Tenement Acquisition Agreements
|
the agreement between MMR and the Beneficial Holder for the acquisition of the Exploration Permits dated on or about July 9 2009.
|
TenementCo
|
the company incorporated or to be incorporated under the laws of Madagascar as described in clause 8.
|
Term
|
the period from the Execution Date to the termination of this Agreement in accordance with its provisions.
|
Trigger Date
|
The first to occur of the following:
(c)
the Funding Decision Date; or
(d)
the date on which a Bankable Feasibility Study is delivered to the Shareholders in accordance with clause 14.1.
|
1.2
|
Interpretation
|
(a)
|
headings are for convenience; and
|
(b)
|
an obligation or a liability assumed by, or a right conferred on, 2 or more persons binds or benefits them jointly and severally;
|
(c)
|
a word or phrase in the singular number includes the plural, a word or phrase in the plural number includes the singular, and a word indicating a gender includes every other gender;
|
(d)
|
if a word or phrase is given a defined meaning, any other part of speech or grammatical form of that word or phrase has a corresponding meaning;
|
(e)
|
a reference to:
|
(i)
|
a party, clause, schedule, exhibit, attachment or annexure is a reference to a party, clause, schedule, exhibit, attachment or annexure to or of this Agreement;
|
(ii)
|
a party includes that party’s executors, administrators, successors
,
permitted assigns, including persons taking by way of novation and, in the case of a trustee, includes a substituted or an additional trustee;
|
(iii)
|
an agreement includes any undertaking, deed, agreement and legally enforceable arrangement whether in writing or not, and is to that agreement as varied, novated, ratified or replaced from time to time;
|
(iv)
|
a document includes an agreement in writing and any deed, certificate, notice, instrument or document of any kind;
|
(v)
|
a document in writing includes a document recorded by any electronic, magnetic, photographic or other medium by which information may be stored or reproduced;
|
(vi)
|
a document (including this Agreement) includes a reference to all schedules, exhibits, attachments and annexures to it, and is to that document as varied, novated, ratified or replaced from time to time;
|
(vii)
|
legislation or to a provision of legislation includes any consolidation, amendment, re-enactment, substitute or replacement of or for it, and refers also to any regulation or statutory instrument issued or delegated legislation made under it;
|
(viii)
|
a person includes an individual, the estate of an individual, a corporation, an authority, an unincorporated body, an association or joint venture (whether incorporated or unincorporated), a partnership and a trust;
|
(ix)
|
a right includes a power, remedy, authority, discretion or benefit;
|
(x)
|
conduct includes an omission, statement or undertaking, whether in writing or not;
|
(xi)
|
an agreement, representation or warranty in favour of two or more persons is for the benefit of them jointly and severally; and
|
(xii)
|
an agreement, representation or warranty on the part of two or more persons binds them jointly and severally;
|
(f)
|
the word “
includes
” in any form is not a word of limitation;
|
(g)
|
the words “
for example
” or “
such as
” when introducing an example do not limit the meaning of the words to which the example relates to that example or to examples of a similar kind;
|
(h)
|
a reference to a day is to a period of time commencing at midnight and ending 24 hours later;
|
(i)
|
if a period of time dates from a given day or the day of an act or event, it is to be calculated exclusive of that day; and
|
(j)
|
a reference to “
A$
”, “
$
” or “
dollar
” is to Australian currency.
|
2.
|
Commencement
|
(a)
|
The Parties acknowledge and agree that this Agreement commences with effect on and from the Commencement Date.
|
(b)
|
With effect on and from the Commencement Date, this Agreement replaces and supersedes the Memorandum of Understanding, which is of no further force and effect.
|
3.
|
Conditions precedent
|
3.1
|
Conditions
|
(a)
|
the execution of the Sale and Purchase Agreement;
|
(b)
|
the execution of the Mineral Rights Agreement;
|
(c)
|
Completion pursuant to the Sale and Purchase Agreement; and
|
(d)
|
the Parties having obtained all shareholder and regulatory approvals necessary to achieve Completion and give effect to this Agreement including:
|
(i)
|
TSX approvals;
|
(ii)
|
ASX approvals; and
|
(iii)
|
all necessary approvals under the relevant laws of Ontario, Canada, the United States of America and Australia
|
3.2
|
Best endeavours
|
3.3
|
Waiver of conditions
|
3.4
|
Non-satisfaction of conditions
|
4.
|
Consideration
|
4.1
|
Sale and Purchase Agreement
|
(a)
|
Malagasy’s performance of its obligations under the Sale and Purchase Agreement and the Mineral Rights Agreement; and
|
(b)
|
Malagasy procuring that, on and from the commencement of commercial production of Other Minerals from the Area of Interest, the JV Company or NewCo Mauritius pay Energizer a royalty of an amount equal to one and a half percent (1.5%) of net smelter returns of all Other Minerals produced from the Area of Interest calculated in accordance with Schedule 4.
|
5.
|
Provision of Mining Information
|
6.
|
Acknowledgements by Parties
|
(a)
|
The Parties acknowledge and agree that :
|
(i)
|
as at the date of this Agreement, MMR is the Registered Holder and MMR will remain the Registered Holder subject to the terms of this Agreement;
|
(ii)
|
upon Energizer receiving notice from the Mining Department that the Mining Department will from that time permit formal transfer and registration of interests in, and transfers of, the Exploration Permits, Energizer must use its reasonable endeavours to procure that MMR and the Beneficial Holder will do all things necessary to transfer the Exploration Permits to the Beneficial Holder; and
|
(iii)
|
following a transfer in accordance with clause 6(a)(ii), the Exploration Permits will remain with the Beneficial Holder other than any portion of an Exploration Permit which is converted to an Exploitation Permit which will be dealt with in accordance with clause 15
.
|
(b)
|
Energizer must use its reasonable endeavours to procure that the Beneficial Holder and the Registered Holder will:
|
(i)
|
perform all obligations expressed by this Agreement to be imposed on those entities by this Agreement; and
|
(ii)
|
execute all such documents as are necessary for those entities to be bound by the obligations imposed on them, and to be entitled to exercise the rights contemplated by this Agreement.
|
(c)
|
The Shareholders must procure that the JV Company and TenementCo:
|
(i)
|
perform all obligations expressed by this Agreement to be imposed on the JV Company and TenementCo; and
|
(ii)
|
execute all such documents as are necessary for those entities to be bound by the obligations imposed on them, and to be entitled to exercise the rights contemplated by this Agreement.
|
(d)
|
The Parties acknowledge that they will use their respective best endeavours to execute the Sublease Agreements contemporaneously with the signing of this Agreement.
|
(e)
|
The Parties acknowledge that Exploration Operations may only be conducted in respect of those Other Minerals noted on the Permits or for which an authorisation of the Mining Department has been received by the Registered Holder acknowledging that those Other Minerals are the subject of the Permits. Energizer will use its reasonable endeavours to procure that the Registered Holder comply with their obligations under clause 11.2(d).
|
7.
|
Establishment of JV Company and its Board
|
7.1
|
Establishment
|
7.2
|
Initial Shareholding Interests
|
(a)
|
On establishment of JV Company, the initial Shareholders and their Shareholding Interests in JV Company will be as follows:
|
Shareholder
|
Number of Shares
|
% Interest
|
||||||
Malagasy
|
3 | 75 | % | |||||
Energizer (or a Related Body Corporate of Energizer)
|
1 | 25 | % |
(b)
|
If required, each Shareholder must subscribe for, for nominal consideration, the number of Shares specified in clause 7.2(a) next to its name.
|
7.3
|
Adoption of constituent document
|
7.4
|
Board members
|
7.5
|
Appointment and removal of Directors
|
(a)
|
Malagasy shall have the right to appoint further Directors to the Board provided the total number of Directors does not exceed that number permitted under the articles of association of JV Company or by law.
|
(b)
|
Following Trigger Date, and provided Energizer remains a Shareholder, Energizer will be entitled to nominate one (1) Director to the Board.
|
(c)
|
In circumstances where the office of Chairman of the Board becomes free, a new Chairman shall be nominated by the Shareholder holding the majority of Shares at that time.
|
(d)
|
A person will be automatically removed as a Director without the need for any other actions by the Shareholders or the Director if:
|
(i)
|
the Shareholder who nominated the person as a Director ceases to be a Shareholder.
|
(ii)
|
the Shareholder that nominated the person as a Director gives written notice to JV Company that the person ceases to be a Director; or
|
(iii)
|
in such other circumstances as provided for in the articles of association of JV Company.
|
(e)
|
If a Shareholder that nominated a person as a Director gives written notice to the other Shareholders that the person has ceased to be a Director pursuant to clause 7.5(d)(ii), the Shareholder may (without the need for any other actions by JV Company or the Directors) appoint another person as a Director to replace the person who has ceased to be a Director.
|
7.6
|
Role and powers of the Board
|
(a)
|
The business and affairs of the Joint Venture are to be under the control and direction of the Board. All decisions of the Board must not breach the terms of this Agreement or any Law. Except as otherwise provided in this Agreement, the Board is to decide all matters in relation to the business and affairs of the Joint Venture including:
|
(i)
|
adoption of an accounting procedures manual for the Joint Venture and the Operator;
|
(ii)
|
appointment of independent auditors (if any);
|
(iii)
|
delegation of matters to any sub-committees and the Operator;
|
(iv)
|
giving directions to, and setting spending limits and other control mechanisms for any sub-committees and the Operator;
|
(v)
|
the surrender of the Joint Venture Property;
|
(vi)
|
approval and revision of Programs and Budgets; and
|
(vii)
|
other matters to be decided by the Board as specified in this Agreement.
|
(b)
|
All decisions of the Board bind the Shareholders unless such decision is in breach of this Agreement or any Law. Each Shareholder agrees to give effect to those decisions provided such decision or the giving effect to such decision does not breach this Agreement or any Law.
|
7.7
|
Meetings of the Board
|
(a)
|
The Board will meet:
|
(i)
|
at least once each calendar year; and
|
(ii)
|
at such other times as the Board may decide.
|
(b)
|
Meetings of the Board may take place where the Directors are physically present together, by telephone link-up or by audio-visual transmission.
|
(c)
|
A Director may at any time, and the company secretary will on the request of a Director, convene a meeting of the Directors.
|
7.8
|
Notice of Board meetings
|
(a)
|
must specify the time and the place of the meeting, but need not state the nature of the business to be transacted;
|
(b)
|
must be given to each Director not less than 5 days before the meeting; and
|
(c)
|
may be given by telephone, facsimile transmission or electronic mail message,
|
7.9
|
Quorum
|
7.10
|
Decisions of the Boards
|
7.11
|
Voting
|
(a)
|
Each Director may vote at a meeting of the Board.
|
(b)
|
Each Director is entitled to one vote for each Share held by his nominating Shareholder in JV Company, provided that the total number of votes cast by the Directors appointed by his nominating Shareholder who vote on the matter shall not exceed the number of Shares held by the nominating Shareholder in JV Company. For example, if a Shareholder holds 3 Shares, the total number of votes cast by all Directors nominated by that Shareholder shall be 3.
|
(c)
|
In the case of equality of votes, the Chairman of the meeting will have a casting vote.
|
7.12
|
Experts and advisers
|
7.13
|
Minutes of meetings and records
|
(a)
|
Minutes of Board meetings will be kept.
|
(b)
|
On request, JV Company will provide copies of the agenda of Board meetings, minutes of Board meetings and Board papers supporting such minutes to the Shareholder who requests such information.
|
(c)
|
On reasonable notice, any Shareholder and its advisers shall have access to review and will be provided with copies of such of the records of JV Company and TenementCo as reasonably requested from time to time.
|
(d)
|
Energizer and its advisers will, at the cost of Energizer, have the right to conduct an audit review of the records of JV Company and Tenement Co.
|
8.
|
Establishment of TenementCo
|
8.1
|
Establishment
|
(a)
|
The Parties have established, or will as soon as practicable after the Commencement Date establish, a company as TenementCo, being a company incorporated under the laws of Madagascar for the purposes of holding the Subleases.
|
(b)
|
All shares in TenementCo are or will be owned by JV Company.
|
(c)
|
TenementCo has or will be incorporated for the time being as a Société á Responsabilité Limitée.
|
8.2
|
Management of TenementCo
|
(a)
|
Malagasy has, or will as soon as practicable after the Commencement Date, appoint the Gérant résident (
Country Manager
) of TenementCo, who will act in accordance with the instructions provided to him by JV Company.
|
(b)
|
Malagasy may after the Commencement Date, appoint additional Gérants of TenementCo.
|
(c)
|
Decisions of TenementCo will only be made in accordance with an instruction from JV Company and will require the approval of a majority of managers (Gérants) of TenementCo holding office from time to time.
|
8.3
|
Appointment and removal
|
(a)
|
Malagasy shall have the ability to appoint additional Country Managers or remove and replace existing Country Managers of TenementCo subject to the total number of Country Managers so appointed not exceeding that number provided for in the constituent document of TenementCo or by law.
|
(b)
|
If it hasn’t already done so, following the Trigger Date, Malagasy will consider whether it is appropriate for TenementCo to remain incorporated as a Société á Responsabilité Limitée company or whether it is more appropriate to convert to a Société Anonyme company. If TenementCo is converted to a Société Anonyme company at any time following the Trigger Date, and provided Energizer remains a Shareholder of JV Company, Energizer will be entitled to nominate one (1) director to the Board of TenementCo.
|
8.4
|
Role of Country Manager
|
8.5
|
Adoption of constituent document
|
9.
|
Business of the JV Company and TenementCo
|
(a)
|
The business of JV Company will be to, through TenementCo:
|
(i)
|
conduct Joint Venture Operations;
|
(ii)
|
hold and administer the Other Mineral Rights;
|
(iii)
|
hold and administer the Sublease Agreements and Subleases;
|
(iv)
|
upon the grant of Exploitation Permits over any part of the Area of Interest in accordance with clause 15.1, hold and administer the Exploitation Permits; and
|
(v)
|
conduct any Exploration Operations and or Mining Operations.
|
(b)
|
The Shareholders agree and acknowledge that JV Company and/or TenementCo may enter into agreements with third parties with respect to the use, operation or other exploitation of any mining infrastructure which is located within the Area of Interest or any in relation to any other Joint Venture Property, but any agreement of this type must be entered into on arm’s length commercial terms.
|
10.
|
Co-operation of Shareholders
|
(a)
|
cooperate to:
|
(i)
|
foster the development of the Business; and
|
(ii)
|
ensure that JV Company and TenementCo can successfully carry on the Business in accordance with all applicable laws and regulations;
|
(b)
|
not use Confidential Information in a way which damages or is reasonably likely to damage JV Company or TenementCo or any Shareholder, which obligation will continue after a Shareholder has ceased being a Shareholder in JV Company and survive termination of this Agreement. Nothing in this clause prevents Energizer from using the Mining Information in relation to the exploration and development of the Industrial Minerals;
|
(c)
|
not unreasonably delay an action, approval, direction, determination or decision required of the Shareholder;
|
(d)
|
make approvals or decisions that are required of the Shareholder in accordance with the terms and conditions of this Agreement; and
|
(e)
|
provide such assistance as required by this Agreement, at the cost of JV Company, as may from time to time reasonably be requested of it by JV Company or TenementCo or which the Shareholders agree would assist in the development of the Business, provided any costs incurred are reasonable out-of-pocket expenses and do not relate to minor ad-hoc assistance which will be provided in good faith.
|
11.
|
Right to explore and sublease
|
11.1
|
Grant of Subleases
|
(a)
|
Energizer will procure that as soon as reasonably practicable during the Term, the Beneficial Holder grants to TenementCo the Other Mineral Rights and the exclusive right to carry out Exploration and Mining within the Area of Interest, in accordance with the laws of Madagascar, for the purposes of identifying and exploiting any Other Minerals within that area.
|
(b)
|
Energizer will use its best endeavours to procure that as soon as reasonably practicable during the Term, the Beneficial Holder and the Registered Holder grant to TenementCo subleases over the Area of Interest on terms whereby, for consideration which includes the benefit of Exploration Operations undertaken at the cost of TenementCo:
|
(i)
|
TenementCo will
,
in accordance with the Mining Code, be the sole holder of the Other Mineral Rights and have the exclusive right to conduct Exploration and Mining within the Area of Interest; and
|
(ii)
|
the Beneficial Holder will, in accordance with and as permitted under the Mining Code, retain the exclusive right to Industrial Mineral Rights,
|
(c)
|
Subject to the Mining Code, the Subleases will be for the term of the Permits, including for the term of any renewal of the Permits.
|
(d)
|
Subject to clause 11.1(e), Energizer will use its reasonable endeavours to procure that the Beneficial Holder and the Registered Holder must enter into the Sublease Agreements and any other agreement(s) with TenementCo required by the Mining Code to give effect to the exclusive right to carry out Exploration as described in clause 11.1(a) and the Subleases as contemplated under clause 11.1(b).
|
(e)
|
The Parties must use all reasonable endeavours to ensure the Sublease Agreements and any other agreement contemplated by clause 11.1(d) are entered into by the Registered Holder, the Beneficial Holder and TenementCo on, or as soon as possible after, the Commencement Date.
|
11.2
|
Covenants of Energizer in respect of the Exploration Permits
|
(a)
|
use all reasonable endeavours permitted under the laws of Madagascar to ensure the Permits are renewed in the usual course for such periods as permitted by the Mining Code, as requested by JV Company;
|
(b)
|
do all such acts as are reasonably necessary to keep the Permits in Good Standing which can only be done or performed by the registered holder of the Permits, provided that the Registered Holder must give to JV Company adequate prior notice of all such acts;
|
(c)
|
use all reasonable endeavours to have the Sublease Agreements registered with the Mining Department as soon as possible (provided in this case, the costs associated with registration of the Sublease Agreements with the Mining Department will be met 50% by the Beneficial Holder and 50% by JV Company); and
|
(d)
|
apply to the Mining Department to add such of the Other Minerals to the Permits as may be requested by JV Company from time to time to the extent those Other Minerals are not already noted on the Permits.
|
11.3
|
Covenants in respect of the Exploration Permits
|
(a)
|
Subject to clauses 11.2 and 17.3, during the Term, JV Company and TenementCo must:
|
(i)
|
do all such acts and make all such payments as are reasonably necessary to keep the Permits in Good Standing;
|
(ii)
|
comply with all Minimum Expenditure Obligations in respect of the Permits (if any); and
|
(iii)
|
contribute as sole contributors to all Outgoings.
|
(b)
|
For the purposes of ensuring compliance with the obligations under this clause 11.3, Energizer may provide to JV Company or TenementCo (as the case may be) a cash call (together with a copy of the supporting documentation (including any invoice to the extent an invoice exists) to which the cash call relates) for the amount required to be paid by JV Company or TenementCo pursuant to this clause 11.3 no more than 30 days prior to the due date for payment of such amount and JV Company or TenementCo (as the case may be) has the option to satisfy the cash call by:
|
(i)
|
paying the amount referred to in the cash call to Energizer within 20 days of receipt of the cash call; or
|
(ii)
|
paying the amount referred to in the cash call direct to the third party to which the relevant invoice or other supporting documentation relates on or before the due date for payment noted in the cash call provided that the third party will accept payment direct from JV Company or TenementCo (as the case may be).
|
11.4
|
Remedies of Malagasy
|
(a)
|
If Energizer fails to procure any acts or omissions of any Beneficial Holder, which constitutes a breach of clause 11.2 under this Agreement and which may, in JV Company’s reasonable opinion, result in:
|
(i)
|
the termination or non-renewal of a Permit;
|
(ii)
|
a revocation of any permit, authority or approval necessary to maintain the Good Standing of a Permit; or
|
(iii)
|
loss of access to any part of the Area of Interest,
|
(b)
|
Any costs incurred by JV Company or TenementCo in exercising its rights pursuant to clause 11.4(a) will be a debt due from the Beneficial Holder to JV Company payable upon demand.
|
(c)
|
The rights created by clause 11.4(a) are the sole remedy in respect to a breach to which clause 11.4(a) applies.
|
(d)
|
JV Company and TenementCo will not be liable to the Beneficial Holder for any loss or damage suffered by the Beneficial Holder as a result of actions taken or omissions made by JV Company in the course of exercising or purporting to exercise its rights under clause 11.4(a) so long as JV Company has acted in good faith.
|
11.5
|
Exercise of Other Mineral Rights
|
(a)
|
comply with the conditions of the Permits (to the extent that those conditions relate to the Area of Interest) as if TenementCo were the permit holder;
|
(b)
|
comply with the requirements of the Mining Department, the Mining Code, Environmental Laws and any other laws dealing with miners and the exploration for and mining of minerals;
|
(c)
|
be responsible for approvals required for activities on the Area of Interest;
|
(d)
|
be responsible for the preparation and lodgement of any reporting obligations on any work done on, and money expended in connection with the Area of Interest;
|
(e)
|
comply with, adopt and exercise Good Mining Practices including rehabilitating any ground disturbance;
|
(f)
|
without prejudice to clause 17, use its reasonable endeavours to minimise interference with the Beneficial Holder’s activities in planning, programming and executing any exploration activity on the Exploration Permits;
|
(g)
|
keep all drill holes, costeans, trenches, excavations, shafts and other workings secure and safe and properly maintained and, where necessary, fenced; and
|
(h)
|
not do or suffer to be done anything which will or may place in jeopardy the Permits or render any of them liable to forfeiture.
|
11.6
|
Notice of activities
|
(a)
|
TenementCo must, at least 20 Business Days prior to commencing any program of activity on the Area of Interest (
Proposed Activity
), give a notice to Energizer (
Notice of Proposed Activity
) containing particulars of:
|
(i)
|
the general nature of the Proposed Activity; and
|
(ii)
|
the areas of the Area of Interest which TenementCo proposes to enter upon to conduct the Proposed Activity and or to construct, operate and maintain infrastructure in relation to the Proposed Activity.
|
(b)
|
TenementCo will, at the cost of Energizer, assay any exploration results for any Industrial Minerals requested by Energizer provided that such request is received within 20 Business Days after receipt of a Notice of Proposed Activity.
|
(c)
|
Energizer will or will procure the Beneficial Holder to, at the cost of Malagasy, assay any exploration results for any Other Minerals within the Area of Interest requested by Malagasy provided that such request is received within 20 Business Days after receipt of a Notice of Proposed Activity.
|
(d)
|
TenementCo must provide to Energizer the results of TenementCo’s activities on the Area of Interest by way of:
|
(i)
|
quarterly reports; and
|
(ii)
|
reports at such other times as is required by Energizer to enable the Beneficial Holder to comply with statutory and Mining Departmental reporting obligations.
|
11.7
|
Mutual indemnities
|
(a)
|
JV Company and TenementCo each jointly and severally agree to indemnify, and keep indemnified, and hold harmless Energizer and the Beneficial Holder and their Related Bodies Corporate, directors, employees and consultants from and against all Claims that may be made, brought against, suffered, sustained or incurred by Energizer or the Beneficial Holder, arising out of any act or omission (including any negligent act or omission) of JV Company or TenementCo and in the course of the exercise of activities undertaken by JV Company or TenementCo on the Area of Interest.
|
(b)
|
Energizer agrees to indemnify, and keep indemnified, and hold harmless the Shareholders and JV Company and their Related Bodies Corporate, directors, employees and consultants from and against all Claims that may be made, brought against, suffered, sustained or incurred by the Shareholders or JV Company, arising out of any act or omission (including any negligent act or omission) of Energizer or the Beneficial Holder and in the course of the exercise of activities undertaken by them on the Area of Interest.
|
12.
|
Surrender of Joint Venture Property
|
(a)
|
Subject to clause 12(d), the Board of JV Company may resolve by Simple Majority to surrender any of the Joint Venture Property (
Surrendered Property
).
|
(b)
|
If the Board resolves to surrender the whole or any part of, the Joint Venture Property pursuant to any compulsory relinquishment obligations under the Mining Code, then it must consult with the Beneficial Holder and in good faith agree on the areas to be surrendered under the compulsory relinquishment.
|
(c)
|
If the Board resolves to surrender the whole or any part of, the Joint Venture Property other than pursuant to any compulsory relinquishment obligations under the Mining Code, the Operator must not give effect to that decision:
|
(i)
|
if one of the Shareholders (acting through a Director) voted against that resolution to surrender (
Dissenting Party
), until the Operator has first offered in writing to transfer the relevant Joint Venture Property or part thereof to the Dissenting Party for no consideration other than the cost of transfer and the Dissenting Party has not accepted that offer within 14 days after it is made; and
|
(ii)
|
if there is no Dissenting Party or the Dissenting Party does not accept the offer under clause 12(c), until the Operator has first offered in writing to transfer the relevant Joint Venture Property or part thereof to the Beneficial Holder for no consideration other than the cost of transfer and the Beneficial Holder has not accepted that offer within 14 days after it is made.
|
(d)
|
If the Dissenting Party or the Beneficial Holder accepts an offer under clause 12(c), the Operator, the Board and the JV Company must promptly do all things reasonable to complete the transfer and give sole benefit and control of the Surrendered Property to the Dissenting Party or the Beneficial Holder as the case may be.
|
(e)
|
Where the Board resolves to surrender any of the Joint Venture Property, it must:
|
(i)
|
provide two (2) months written notice of the surrender to each Shareholder, which identifies the specific Joint Venture Property which is to be surrendered; and
|
(ii)
|
ensure that, to the extent the surrender of Joint Venture Property applies or relates to a Permit or Permits, that all Outgoings, Minimum Expenditure Obligations (if any) and any payments reasonably necessary to keep the relevant Permit(s) in Good Standing are paid to date and for one (1) year following the date on which notice is given in accordance with clause 12(e)(i) above.
|
(f)
|
On and from the transfer or surrender of any Joint Venture Property under this clause 12:
|
(i)
|
the Surrendered Property will cease to be Joint Venture Property for any purpose under this Agreement; and
|
(ii)
|
except as expressly provided elsewhere in this Agreement, the Shareholders, JV Company and TenementCo will cease to have any rights or liabilities in respect of the Surrendered Property, other than any rights or liabilities which have accrued prior to the date of the resolution to surrender the Surrendered Property.
|
13.
|
Transfer of Permits
|
(a)
|
Subject to clause 13(b), should the Beneficial Holder decide to Dispose of their interest in any of the Permits, Energizer must procure that the Beneficial Holder may only sell, transfer or otherwise dispose of that interest to any person (
Permit Transferee
):
|
(i)
|
provided the JV Company and TenementCo are given the opportunity to match any bona fide third party offer as a right of first refusal for a period of 30 days from the time of notice of the offer from the Beneficial Holder; and
|
(ii)
|
the Permit Transferee enters into an Accession Deed
.
|
(b)
|
The Beneficial Holder may transfer the Permits to another wholly owned subsidiary of Energizer provided that the transferee first enters into an Accession Deed.
|
14.
|
Bankable Feasibility Study, Funding Decision and Decision to Mine
|
14.1
|
Bankable Feasibility Study
|
(a)
|
At any time during the Term, the Board may direct the Operator to carry out a Bankable Feasibility Study in respect of the Area of Interest, the costs of which will form part of the Joint Venture Costs.
|
(b)
|
Throughout the completion of the Bankable Feasibility Study, the Operator will provide the Shareholders with quarterly reports on the progress of the Bankable Feasibility Study and such other information as a Shareholder may reasonably request from time to time in order that such Shareholder can be kept informed of the progress of the Bankable Feasibility Study in order that it will be in a position to arrange finances to make a Decision to Mine in the time period required by clause 14.4(a).
|
(c)
|
Upon completion of a Bankable Feasibility Study referred to in clause 14.1(a), the Operator must provide the Shareholders with a copy thereof.
|
14.2
|
Funding Decision
|
(a)
|
At any time during the Term, the Board may direct the Operator to engage with third parties with a view to securing a Funding Decision in respect of the Area of Interest. The costs of such engagement will form part of the Joint Venture Costs.
|
(b)
|
Throughout any engagement with third parties in relation to a possible Funding Decision, the Operator will provide the Shareholders with quarterly reports on the progress of such engagement and such other information as a Shareholder may reasonably request from time to time in order that such Shareholder can be kept informed of the progress of the engagement in order that it will be in a position to arrange finances to make a Decision to Mine in the time period required by clause 14.4(a).
|
(c)
|
Upon a Funding Decision having been made, the Operator must give the Shareholders written notice of the same together with such documents and other evidence setting out that decision.
|
(d)
|
Within 10 Business Days of service on it of a notice under clause 14.2(c), a Shareholder may dispute that a Funding Decision has been made by giving written notice to the Operator and the other Shareholders.
|
(e)
|
If a Shareholder fails to give notices in accordance with clause 14.2(d) within the 10 Business Day period referred to in that clause, the Shareholder will be deemed to have accepted that a Funding Decision has been made.
|
(f)
|
If a Shareholder gives notice to the Operator and the other Shareholders in accordance with clause 14.2(d) within the 10 Business Day period referred to in that clause, the dispute as to whether a Funding Decision has been made shall be a dispute to which clause 30 applies and shall not, for the avoidance of doubt, be dispute in relation to a Technical Matter or a Financial Matter as defined in clause 32.1.
|
(g)
|
A Funding Decision will be deemed to have been made:
|
(i)
|
if no Shareholder gives notices in accordance with clause 14.2(d) within the 10 Business Day period referred to in that clause: on the date immediately following the last day of the 10 Business Day period; or
|
(ii)
|
if notices are given in accordance with clause 14.2(d) within the 10 Business Day period referred to in that clause, and if the dispute is resolved with an agreement or determination that a Funding Decision has been made: on the date of such agreement or determination.
|
14.3
|
Obligation to Fund
|
14.4
|
Decision to Mine
|
(a)
|
Following the Trigger Date, the Shareholders may, by a Simple Majority, decide to commence Mining Operations in respect of all or part of the Area of Interest the subject of the Bankable Feasibility Study or the Funding Decision (as applicable) (
Decision to Mine
). A Decision to Mine cannot be made earlier than the date which is 90 days after the Trigger Date, unless otherwise agreed in writing by all Shareholders.
|
(b)
|
If the Shareholders make a Decision to Mine in accordance with clause 14.4(a), JV Company must:
|
(i)
|
use its reasonable endeavours to procure that the Beneficial Holder and the Registered Holder apply for, as the case may be, any authorisation or permission required under the Mining Code or other laws of Madagascar, including the conversion of Exploration Permits into Exploitation Permits and relevant environmental authorisations, the granting of which by the Mining Department or other Governmental Agency of Madagascar is a condition to the implementation of the Decision to Mine; and
|
(ii)
|
be responsible for arranging project finance for the development and commencement of the Mining Operations.
|
14.5
|
Election to participate and formation of mining joint venture
|
(a)
|
A Shareholder which did not vote in favour of the Decision to Mine may elect, within 40 Business Days of the Decision to Mine, not to participate in the Mining Operation the subject of the Decision to Mine. The Shareholders who do not make such an election or who voted in favour of the Decision to Mine are referred to as
Mining Parties
.
|
(b)
|
Upon the expiration of the 40 Business Day election period provided for in clause 14.5(a) (
Mining JV Commencement Date
), the Mining Parties will incorporate a joint venture company under the laws of Mauritius (
NewCo Mauritius
), the shareholders of which will be the Mining Parties, in the same proportion as their respective Shareholding Interest in JV Company bear to each other at the time a Decision to Mine is made, which will in turn will hold 100% of the shares in a newly formed company in Madagascar (
NewCo Madagascar
).
|
14.6
|
Establishment of Mining Area
|
(a)
|
Within 30 Business Days after the Mining JV Commencement Date, the Parties will meet to establish the boundaries of the Mining Area which is appropriate to encompass all deposits of Other Minerals the subject of the Bankable Feasibility Study or Funding Decision (as applicable), which deposits may be mined as a single mining enterprise, together with any milling or concentrating plant and other appropriate infrastructure and facilities necessary for the efficient conduct of Mining Operations.
|
(b)
|
In the event of disagreement, the boundaries established for the Mining Area will be determined in accordance with clause 32 and will be the area reasonably required for the Mining Operations the subject of a Decision to Mine and accords with the Mining Code, Good Mining Practices and the Bankable Feasibility Study (if any).
|
14.7
|
Holding of Mining Area
|
(a)
|
Upon the incorporation of NewCo Mauritius and NewCo Madagascar and the establishment of the Mining Area in accordance with clause 14.6, the Mining Parties will consult with each other in good faith and make a determination as to whether the Joint Venture Property within the Mining Area will be transferred into NewCo Madagascar or whether the Joint Venture Property within the Exploration Area (
Exploration Assets
) will be transferred to NewCo Madagascar, leaving the Joint Venture Property within the Mining Area as the sole property of JV Company for the Mining JV.
|
(b)
|
After a determination is made under clause 14.7(a), the Mauritian company (being NewCo Mauritius or JV Company) which through its Madagascan subsidiary (being NewCo Madagascar or TenementCo), holds the property of the Mining JV within the Mining Area from time to time will be known as the
Mauritian Development JV Company
, the purpose of which will be to conduct Mining Operations in respect of the Mining Area. The subsidiary in Madagascar of the Mauritian Development JV Company which holds the property of the Mining JV within the Mining Area will be known as the
Madagascar Development JV Company
.
|
(c)
|
If the Exploration Assets are transferred into NewCo Madagascar then this Agreement will apply in relation to the Exploration Assets as if NewCo Mauritius and NewCo Madagascar were named herein in place of JV Company and TenementCo respectively.
|
14.8
|
Mining Area ceases to be Joint Venture Property
|
(a)
|
On the Mining JV Commencement Date:
|
(i)
|
the Mining Area will be segregated from the Area of Interest;
|
(ii)
|
the Joint Venture Property within the Mining Area will cease to be held beneficially by the JV Company or TenementCo (as applicable) as Joint Venture Property and will be held solely by the Madagascar Development JV Company as property of the Mining JV until transferred in accordance with clause 14.9; and
|
(iii)
|
if JV Company is the Madagascar Development JV Company, those Shareholders who are not Mining Parties must, at the cost of the Mining Parties, transfer all of their interest in Madagascar Development JV Company to the Mining Parties on a pro rata basis resulting in the Mining Parties holding Mining Venture Interests consistent with clause 14.10(b), for consideration equal to 75% of the market value of that interest as agreed between the Parties or, in the absence of agreement, as determined by an independent expert appointed in accordance with clause 33.2
,.
|
(b)
|
For the avoidance of doubt, a Shareholder who transfers all of their interest in Madagascar Development JV Company under clause 14.8(a)(iii) will not be entitled to receive a royalty under clause 24 in respect of the relevant Mining Area which is transferred to the Mining Parties.
|
14.9
|
Transfer of Mining Area
|
(a)
|
the Shareholders and Mining Parties must, and Energizer must use its reasonable endeavours to procure that the Beneficial Holder and the Registered Holder will, co-operate to prepare, execute and procure registration of such conditional surrenders, applications, transfers, new sub-leases and other documents as may be necessary to segregate the Mining Area and to vest the Joint Venture Property within the Mining Area in Madagascar Development JV Company and (if necessary) to vest the Joint Venture Property in the Exploration Area in NewCo Madagascar; but
|
(b)
|
if the Mining Parties decide to delay segregation, or segregation cannot immediately occur due to matters outside of the control of the Beneficial Holder, Shareholders or Mining Parties, the Shareholders and Mining Parties will, and Energizer must use its reasonable endeavours to procure that the Beneficial Holder and the Registered Holder will, implement such alternative arrangements in order for Madagascar Development JV Company to have the sole benefit and control of the Joint Venture Property within the Mining Area and for the Shareholders to have the sole benefit and control of the Joint Venture Property within the Exploration Area.
|
14.10
|
Terms of Mining Joint Venture
|
(a)
|
Following the determination of the Mining Area and the conversion of the Permits into exploitation permits under clause 15, the Mauritian Development JV Company may proceed to implement Mining Operations within the Mining Area.
|
(b)
|
The interest of each Mining Party in the Mauritian Development JV Company will be in proportion to their relative Shareholding Interests in JV Company (
Mining Venture Interest
) at the time a Decision to Mine is made or as they may otherwise agree between themselves.
|
(c)
|
If the then Operator is a Mining Party, then the Operator will be the operator of the Mining Operations conducted by the Mauritian Development JV Company through Madagascar Development JV Company (
Mining Operator
). Otherwise, the Mining Parties will elect a Mining Operator by majority vote in proportion to their respective Mining Venture Interests.
|
(d)
|
The Mining Parties will contribute to the costs incurred by the Mauritian Development JV Company in proportion to their respective Mining Venture Interests to the extent additional funds are required by Mauritian Development JV Company.
|
14.11
|
Agreement
|
(a)
|
provide for all matters necessary for the planning, financing, construction, commissioning and conduct of Mining Operations;
|
(b)
|
otherwise reflect the terms of this Agreement where relevant; and
|
(c)
|
provide for the execution of cross charges which encumber each Mining Party’s Mining Venture Interest, and its interest in any contracts for, and the proceeds of, sale of Other Minerals in favour of each other Mining Party and the Mining Operator as security for its performance of its duties and obligations arising under the agreement.
|
15.
|
Conversion to Exploitation Permits
|
15.1
|
Conversion
|
(a)
|
in order to commence Mining Operations in respect of all or a part of the Area of Interest, the Exploration Permits, to the extent they cover the Mining Area (
Current Permits
) will be converted into Exploitation Permits; and
|
(b)
|
if the Shareholders make a Decision to Mine, the Parties must do all things necessary to, as promptly as possible, have the Current Permits converted into Exploitation Permits and to apply for all relevant environmental authorisations.
|
15.2
|
Transfer of Exploitation Permits
|
(a)
|
Energizer must use its reasonable endeavours to procure that any Exploitation Permit issued by the Mining Department to the Beneficial Holder or the Registered Holder is immediately transferred or, if for whatever reason the Exploitation Permit cannot immediately be transferred, sub-leased (as applicable) by the Beneficial Holder and/or the Registered Holder to Madagascar Development JV Company as soon as possible after the grant of the Exploitation Permit.
|
(b)
|
The Parties acknowledge and agree that, in relation to this clause 15, it is the preference of the Parties to have any Exploitation Permit issued by the Mining Department to a Beneficial Holder or the Registered Holder immediately transferred to Madagascar Development JV Company. However if such a transfer is not possible for whatever reason, then the Parties will implement such alternative arrangements in order for Madagascar Development JV Company to have the sole benefit and control of the Exploitation Permit including entering into new sub-leases in respect of the Exploitation Permits on terms and conditions which are consistent with this Agreement.
|
(c)
|
The Parties acknowledge and agree that on transfer of the Exploitation Permits to Madagascar Development JV Company, Madagascar Development JV Company will grant a sub-lease to Energizer or its nominee in respect to the Industrial Mineral Rights within the Exploitation Permit on terms and conditions which are consistent with this Agreement, including clause 17.
|
15.3
|
Holding of Exploitation Permits
|
(a)
|
not to act in any manner which is detrimental to Madagascar Development JV Company or the Exploitation Permit; and
|
(b)
|
to act in accordance with Madagascar Development JV Company’s reasonable instructions in relation to the Exploitation Permit provided these instructions are not contrary to or breach of the Laws of Madagascar.
|
15.4
|
Approval of Mining Department
|
15.5
|
Beneficial Holder may transfer Exploration Permits prior to conversion
|
15.6
|
Avoidance of forfeiture of Permits
|
(a)
|
If a Party is required to do anything in relation to this clause 15 which could foreseeably result in any cancellation, forfeiture or suspension of the whole or
any part of a Permit, then:
|
(i)
|
the Parties must consult with one another and in good faith agree to
either:
|
A.
|
proceed with the action; or
|
B.
|
refrain from that action and undertake such alternative actions as agreed by the Parties in order to transfer the relevant rights and interests in the Area of Interest to the
Madagascar Development JV Company
; and
|
(ii)
|
a Party must not proceed with any action that is wholly within its
control and could foreseeably result in any cancellation, forfeiture or suspension of the whole or any part of a Permit without the other Parties’ consent; and
|
(b)
|
if segregation or transfer under this clause
15
is temporarily unable to occur
due to matters outside of the control of the Permit Holders and the Parties, or the Parties agree not to proceed with any transfer or segregation under clause 15.6(a), then the Parties and the Beneficial Holder agree:
|
(i)
|
that the Sublease Agreements in respect of the relevant Exploration Permits
shall remain in place to ensure that the JV Company has its full interest and benefit in the Area of Interest;
|
(ii)
|
to implement all reasonable arrangements (whether set out in this clause 15 or otherwise) to achieve a transfer or grant of the relevant legal interest in the Area of Interest to the JV Company as soon as reasonably possible; and
|
(iii)
|
until a transfer is effected in accordance with clause 15.6(b)(ii), Energizer’s obligations under this Agreement to procure the required actions of the Beneficial Holders and the Registered Holder shall continue in respect of the relevant Permits.
|
16.
|
Environment and Mining Operations
|
17.
|
Industrial Mineral Rights
|
17.1
|
Holder of Permits and Industrial Mineral Rights
|
(a)
|
Upon Energizer receiving notice from the Mining Department that the Mining Department will from that time permit formal transfer and registration of interests in, and transfers of, the Exploration Permits, Energizer must use its reasonable endeavours to procure that the MMR and the Beneficial Holder prepare, execute and register such applications, transfers and other documents as may be necessary to transfer the Permits from MMR to the Beneficial Holder.
|
(b)
|
The Parties agree and acknowledge that :
|
(i)
|
subject to clause 15 and clause 17.1(a), MMR is the Registered Holder;
|
(ii)
|
subject to clause 15, the Beneficial Holder is the beneficial holder of the Permits;
|
(iii)
|
subject clause 15, upon and from a transfer of the Permits in accordance with clause 17.1 the Beneficial Holder will be the Registered Holder; and
|
(iv)
|
the Beneficial Holder is the sole beneficial holder of the Industrial Mineral Rights,
|
17.2
|
Priority of exercise of Industrial Mineral Rights
|
(a)
|
the exercise of the Other Mineral Rights by the JV Company; and
|
(b)
|
the exercise of the Industrial Mineral Rights by the Beneficial Holder,
|
17.3
|
Exercise of Industrial Mineral Rights by the Beneficial Holder
|
(a)
|
comply with all applicable laws and conditions of grant of the Permits; and
|
(b)
|
not do or suffer to be done anything which will or may render a Permit liable to cancellation or forfeiture.
|
17.4
|
Suspension of Industrial Mineral Rights for duration of Mining Operations
|
17.5
|
Transfer of Industrial Mineral Rights
|
(a)
|
the Beneficial Holder giving the JV Company the opportunity to match any bona fide third party offer for the Industrial Mineral Rights as a right of first refusal for a period of 30 days from the time of notice of the offer from the Beneficial Holder;
|
(b)
|
the IMR
Transferee being technically and financially able to perform the obligations of the Beneficial Holder as the holder of the Industrial Mineral Rights under this Agreement to the extent of the interest disposed of; and
|
(c)
|
the IMR
Transferee entering into a deed with JV Company and Shareholders whereby the IMR
Transferee agrees to be bound by, and assumes the obligations of the Beneficial Holder as the holder of the Industrial Mineral Rights under this Agreement (including the obligations under this clause) to the extent of the interest to be disposed of.
|
17.6
|
Transfer of Other Mineral Rights
|
(a)
|
JV Company or TenementCo may transfer, assign or otherwise dispose of the whole or any part of the Other Mineral Rights to any person (
OMR Transferee
) subject to:
|
(i)
|
subject to clause 17.6(b), JV Company giving the relevant Beneficial Holder the opportunity to match any bona fide third party offer for the Other Mineral Rights as a right of first refusal for a period of 30 days from the time of notice of the offer from JV Company;
|
(ii)
|
subject to clause 17.6(c), the OMR
Transferee being technically and financially able to perform the obligations of JV Company and TenementCo as the holder of the Other Mineral Rights under this Agreement to the extent of the interest disposed of; and
|
(iii)
|
the IMR Transferee entering into a deed with the relevant Beneficial Holder whereby the OMR
Transferee agrees to be bound by, and assumes the obligations of the Shareholders, JV Company and TenementCo as the holder of the Other Mineral Rights under this Agreement (including the obligations under this clause) to the extent of the interest to be disposed of.
|
(b)
|
If the disposal to the OMR Transferee is on arms length commercial terms, clause
17.6(a)(i) shall not apply.
|
(c)
|
If the IMR Transferee is a person that has technical and financial abilities (insofar as such abilities are relevant to the performance of the obligations of the holder of the Other Mineral Rights under this Agreement) that are equivalent or greater to those of Malagasy as at the Execution Date, then the requirements of clause
17.6(a)(ii) shall be deemed to be satisfied.
|
17.7
|
Co-mingling
|
(a)
|
If a deposit of Other Minerals is co-mingled or co-incident to a deposit of Industrial Minerals then the Beneficial Holder and JV Company will negotiate in good faith the terms on which they will jointly develop the Industrial Minerals and Other Minerals, provided that, subject to clause 17.7(b), in no circumstances will the exploration or development of a deposit of Industrial Minerals impede the exploration or development of a deposit of Other Minerals.
|
(b)
|
The development of a deposit of Other Minerals that is co-mingled or co-incident to a deposit of Industrial Minerals will prevail over the exploration or development of the deposit of Industrial Minerals only in following circumstances:
|
(i)
|
the deposit of Other Minerals has been determined by a competent person to be an orebody comprising a resource or reserve with a greater net present value than the deposit of Industrial Minerals; and
|
(ii)
|
the JV Company can demonstrate to the satisfaction of the Energizer, acting reasonably, that the deposit of Other Minerals can and will be developed and mined within the same timeframe as Energizer proposes to develop and mine the deposit of Industrial Minerals.
|
(c)
|
Subject to clause 17.7(d), if the Beneficial Holder and JV Company are unable to negotiate the joint development of the Industrial Minerals and Other Minerals, then as part of the development of the Other Minerals, JV Company will, on receiving a written notification from Energizer, stockpile the Industrial Minerals so that the Beneficial Holder may have the benefit of the development of the Industrial Minerals once JV Company has ceased Mining.
|
(d)
|
Any stockpiling costs associated with the development of Other Minerals (including overburden and waste) will be at the expense of JV Company. Any costs associated with the stockpiling of Industrial Minerals undertaken at the request of Energizer which are not activities which would have been incurred by JV Company in the course of Mining Operations in any event, including (but not limited to) any ongoing environmental compliance costs, will be funded 100% by Energizer.
|
18.
|
Operator
|
18.1
|
First Operator
|
18.2
|
Functions of the Operator
|
(a)
|
(by itself or through its employees, agents or contractors) manage, direct and control any and all Joint Venture Operations on behalf of and as agent for JV Company, TenementCo and the Parties, subject to the applicable laws of the jurisdictions in which the abovementioned entities are incorporated;
|
(b)
|
implement the Programs and Budgets approved by the Board; and
|
(c)
|
implement the decisions of the Board and shall make all expenditures necessary to comply with those instructions and directions.
|
18.3
|
Operator to prepare Programs and Budgets
|
18.4
|
Liability of Operator
|
18.5
|
Indemnity of Operator
|
18.6
|
Preserve Permits
|
18.7
|
Reporting
|
18.8
|
Change of Operator
|
(a)
|
Malagasy will continue as Operator until:
|
(i)
|
it ceases to hold a majority Shareholding Interest in JV Company; or
|
(ii)
|
it resigns as Operator by giving 30 days' written notice to the other Shareholders of JV Company of its intention to do so.
|
(b)
|
On the resignation or removal of the Operator in accordance with clause 18.8(a), JV Company shall, by way of a Shareholders’ resolution, appoint a new Operator.
|
(c)
|
The resolution referred to in clause 18.8(b) above shall be passed by a Simple Majority.
|
19.
|
Contributions to Joint Venture Costs
|
(a)
|
Subject to clause 19(b), all Joint Venture Costs will be funded 100% by Malagasy, including JV Company’s and TenementCo’s obligations under clause 11.3.
|
(b)
|
Subject to clause 20, on and from the Trigger Date, all Joint Venture Costs in respect to the Mining Area will be funded by the Mining Parties in their Respective Proportions.
|
(c)
|
From the time Energizer is required to contribute to the funding under clause 19(b) (
Contribution Date
), Energizer and its representatives will, at Energizer’s expense and on reasonable notice, have the right to access, review and audit the expenditure of Mauritian Development JV Company and Madagascar Development JV Company.
|
(d)
|
From the Contribution Date, Mauritian Development JV Company may, from time to time by giving notice simultaneously to all Shareholders in Mauritian Development JV Company, request those Shareholders to fund the Joint Venture Costs in their Respective Proportions (
Contribution Notice
) and subject to clause 20.1, within one month after notice is given, all Shareholders must fund the amount specified in the notice.
|
(e)
|
Subject to clause 20.3(c), payment of amounts which a Shareholder is required to fund under this clause 19 and clause 20.2(d) shall be deemed to be the subscription by that Shareholder for additional Shares in Mauritian Development JV Company unless otherwise agreed by the Shareholders.
|
20.
|
Right to dilute
|
20.1
|
Election not to fund
|
20.2
|
Contributions where election not to fund
|
(a)
|
the Non-Contributing Shareholder will not be obliged to contribute the contribution specified in the notice, and:
|
(b)
|
Mauritian Development JV Company may give notice to the other Shareholders of the total amount of Joint Venture Costs not funded by Non-Contributing Shareholders (
Shortfall
);
|
(c)
|
each other Shareholder (
Contributing Shareholder
) may, within 10 Business Days after receiving a notice from Mauritian Development JV Company under clause 20.2(b), give notice to Mauritian Development JV Company that it wishes to fund an additional amount of Joint Venture Costs up to the Shortfall (or, if there is more than one Contributing Shareholder and if the total additional amount that Contributing Shareholders wish to fund is greater than the Shortfall, Mauritian Development JV Company will allocate to each Contributing Shareholder that gives notice the proportion of the Shortfall that the amount of additional Joint Venture Costs that the Contributing Shareholder wishes to fund bears to the total additional Joint Venture Costs that all Contributing Shareholders wish to fund); and
|
(d)
|
each Contributing Shareholder must fund the amount of Joint Venture Costs requested from the Contributing Shareholder under clause 20.2(c) and the additional amount of Joint Venture Costs of which it gives notice to Mauritian Development JV Company or which Mauritian Development JV Company allocates to it under clause 20.2(c).
|
20.3
|
Dilution
|
(a)
|
The Non-Contributing Shareholder’s percentage ownership of Mauritian Development JV Company will be diluted according to the following formula:
|
|
I =
|
A
x 100
B
|
where:
|
|
I =
|
the Non-Contributing Shareholder’s reduced percentage shareholding;
|
|
A =
|
the total amount contributed to the funding of Mauritian Development JV Company by the Non-Contributing Shareholder at the date of the calculation plus the deemed contribution of the Non-Contributing Shareholder; and
|
|
B =
|
total amount of all funding of Mauritian Development JV Company at the date of the calculation plus the deemed contributions of all Parties,
|
(b)
|
For the purposes of the above calculation, the deemed contribution of the Shareholders will be as follows:
|
(a)
|
As at the Contribution Date:
|
|
(i)
|
the actual total funding contribution of the Shareholders will be:
|
|
Energizer:
|
nil
|
|
Malagasy:
|
$30 million
|
|
(ii)
|
the deemed contribution of the Shareholders will be:
|
|
Energizer:
|
one third of $30 million = $10 million
|
|
Malagasy:
|
nil
|
|
(iii)
|
Energizer’s percentage ownership of Mauritian Development JV Company will be:
|
|
I
|
=
|
A
x 100
B
|
|
|
=
|
10 million x 100
|
|
40 million
|
|
=
|
25%
|
|
(iv)
|
Malagasy’s percentage ownership of Mauritian Development JV Company will be:
|
I
|
=
|
A
x 100
B
|
|
|
=
|
30 million
x 100
|
|
40 million
|
|
=
|
75%
|
(b)
|
If there is then a $10 million programme to which each of Energizer and Malagasy contribute i.e. $2.5 million and $7.5 million respectively, then:
|
|
(i)
|
the actual total funding contribution of the Shareholders will be:
|
|
Energizer:
|
$2.5 million
|
|
Malagasy:
|
$37.5 million
|
|
(ii)
|
the deemed contribution of the Shareholders will be:
|
|
Energizer:
|
one third of $30 million = $10 million
|
|
Malagasy:
|
nil
|
|
(iii)
|
Energizer’s percentage ownership of Mauritian Development JV Company will be:
|
I
|
=
|
A
x 100
B
|
|
|
=
|
12.5 million x 100
|
|
50 million
|
|
=
|
25%
|
|
(iv)
|
Malagasy’s percentage ownership of Mauritian Development JV Company will be:
|
I
|
=
|
A
x 100
B
|
|
|
=
|
37.5 million
x 100
|
|
50 million
|
|
=
|
75%
|
(c)
|
If there is then a $20 million programme to which Energizer elects NOT to contribute but Malagasy does contribute 100% of the $20 million programme cost:
|
|
(i)
|
the actual total funding contribution of the Shareholders will be:
|
|
Energizer:
|
$2.5 million
|
|
Malagasy:
|
$57.5 million
|
|
(ii)
|
the deemed contribution of the Shareholders will be:
|
|
Energizer:
|
one third of $30 million = $10 million
|
|
Malagasy:
|
nil
|
|
(iii)
|
Energizer’s percentage ownership of Mauritian Development JV Company will be:
|
I
|
=
|
A
x 100
B
|
|
|
=
|
12.5 million
x 100
|
|
70 million
|
|
=
|
17.86%
|
|
(iv)
|
Malagasy’s percentage ownership of Mauritian Development JV Company will be:
|
I
|
=
|
A
x 100
B
|
|
|
=
|
57.5 million
x 100
|
|
70 million
|
|
=
|
82.14%
|
(c)
|
A reduction to a Shareholder’s Shareholding Interest shall be effected in such manner as may be agreed between the Shareholders, or failing such agreement within 30 Business Days after the dilution occurs, in the manner determined by the Contributing Shareholders, including by means of:
|
(i)
|
a transfer of Shares as between Shareholders;
|
(ii)
|
the forfeiture or cancellation of some or all of the Non-Contributing Shareholder’s Shares; or
|
(iii)
|
the issue of new Shares to the Contributing Parties.
|
21.
|
Disposal of Shares and pre-emption rights
|
(a)
|
the transferring Shareholder giving the other non-transferring Shareholder the opportunity to match any bona fide third party offer for the Shares as a right of first refusal for a period of 30 days from the time of notice of the offer from the transferring Shareholder;
|
(b)
|
the Share Transferee being technically and financially able to perform the obligations of the transferring Shareholder under this Agreement to the extent of the interest disposed of (for avoidance of doubt if Malagasy is proposing to sell its Shares then the purchaser must have the necessary skills to ensure JV Company or NewCo Mauritius (as applicable) can manage the matters contemplated by this Agreement); and
|
(c)
|
the Share Transferee entering into a deed with the non-transferring Shareholder whereby the Transferee agrees to be bound by, and assumes the obligations of the transferring Shareholder under this Agreement (including the obligations under this clause) to the extent of the interest to be disposed of.
|
22.
|
Drag along
|
(a)
|
Subject to clauses 21 and 22(b), if any third person (
Offeror
) provides to a Shareholder or Shareholders who hold Shares representing not less than 50% of the Shares on issue in the capital of the JV Company or NewCo Mauritius (as applicable) (
Majority Shareholder
) a bona fide arm’s length offer to purchase all of the Shares in JV Company or NewCo Mauritius (as applicable), and each Share of the same class is proposed to be purchased for equal consideration and on the same terms and conditions, then the Majority Shareholder may require each other Shareholder (
Minority Shareholder
) by providing notice in writing to transfer its Shares to the Offeror free from all Encumbrances on those same terms and conditions.
|
(b)
|
Clause 22(a) only applies where the Offeror has made a full cash offer to purchase all of the Shares on issue in the capital of the JV Company or NewCo Mauritius (as applicable).
|
23.
|
Tag along
|
(a)
|
Subject to clauses 21 and 23(b), if the Majority Shareholder wishes to accept a bona fide arm’s length offer for all of its Shares from an Offeror and does not serve a notice in accordance with clause 22, then the Minority Shareholder may require the Majority Shareholder to cause the Offeror to purchase all of the Shares of the Minority Shareholder at a price per Share and on such other terms and conditions as are no less favourable to those offered to the Majority Shareholder by the Offeror for the Shares of the Majority Shareholder.
|
(b)
|
Clause 23(a) only applies where the Offeror has made a full cash offer to purchase all of the Shares on issue in the capital of the JV Company or NewCo Mauritius (as applicable).
|
24.
|
Royalties
|
24.1
|
Interest below 10%
|
(a)
|
If at any time a Shareholder’s Shareholding Interest in JV Company or NewCo Mauritius is reduced to 10% or less, then that Shareholder will be deemed to have assigned and transferred its remaining Shareholding Interest to the other Shareholder in consideration for the other Shareholder procuring that JV Company or NewCo Mauritius pay a royalty of an amount equal to two percent (2%) of net smelter returns of all Other Minerals produced from the Area of Interest calculated in accordance with Schedule 4.
|
(b)
|
For the sake of clarity, if the diluting Shareholder is Energizer, the royalty payable in accordance with clause 24.1(a) is in addition to the royalty payable pursuant to clause 4.1(b).
|
24.2
|
Transfer of Royalties
|
(a)
|
the payee of the royalty giving the payer of the royalty the opportunity to match any bona fide third party offer for the royalty as a right of first refusal for a period of 30 days from the time of notice of the offer from the payee; and
|
(b)
|
the Royalty Transferee entering into a deed with the payer of the royalty whereby the Royalty Transferee agrees to be bound by, and assumes the obligations of the payee under this Agreement (including the obligations under this clause) to the extent of the interest to be disposed of.
|
25.
|
Representations and warranties
|
25.1
|
Representations and warranties by Malagasy
|
(a)
|
it is validly incorporated and subsisting under the laws of Australia;
|
(b)
|
the execution and delivery of this Agreement has been duly and validly authorised by all necessary corporate action;
|
(c)
|
it has corporate power and lawful authority to execute and deliver this Agreement and to observe and perform or cause to be observed and performed all of its obligations in and under this Agreement;
|
(d)
|
there is no litigation or proceeding of any nature concerning Malagasy, pending or threatened against them or a Related Body Corporate which may prevent or impair Malagasy’s ability to enter into or perform its obligations in and under this Agreement;
|
(e)
|
this Agreement does not conflict with or constitute or result in a material breach of or default under any agreement, deed, writ, order, injunction, judgment, law, rule or regulation to which it is a party or is subject or by which it is bound in a manner which may materially and adversely affect the rights and interests of a Party under this Agreement; and
|
(f)
|
it is solvent and is capable of performing its obligations under this Agreement.
|
25.2
|
Representations and warranties by Energizer
|
(a)
|
Energizer represents and warrants to Malagasy as at the Execution Date that:
|
(i)
|
it is validly incorporated and subsisting under the laws of Minnesota, USA;
|
(ii)
|
the execution and delivery of this Agreement has been duly and validly authorised by all necessary corporate action;
|
(iii)
|
it has corporate power and lawful authority to execute and deliver this Agreement and to observe and perform or cause to be observed and performed all of its obligations in and under this Agreement;
|
(iv)
|
there is no litigation or proceeding of any nature concerning Energizer, pending or threatened against them or a Related Body Corporate which may prevent or impair Energizer’s ability to enter into or perform its obligations in and under this Agreement;
|
(v)
|
this Agreement does not conflict with or constitute or result in a material breach of or default under any agreement, deed, writ, order, injunction, judgment, law, rule or regulation to which it is a party or is subject or by which it is bound in a manner which may materially and adversely affect the rights and interests of a Party under this Agreement; and
|
(vi)
|
it is solvent and is capable of performing its obligations under this Agreement.
|
(b)
|
Subject to clause 25.3, Energizer represents and warrants to Malagasy as at the Execution Date, and to Malagasy, JV Company and TenementCo as at the date of execution of the Subleases that to the best of its knowledge:
|
(i)
|
subject to it being able to procure each of the actions of the Registered Holder contemplated by this Agreement, it has full right, power and authority to grant the Subleases to TenementCo in accordance with this Agreement;
|
(ii)
|
its subsidiaries, the Beneficial Holder, are the beneficial holders of the Exploration Permits
.
|
(iii)
|
no person other than the Registered Holder, Energizer and/or Energizer’s Related Bodies Corporate has any proprietary rights of any nature in respect of the Exploration Permits and they have not granted to any person any rights to own or possess any interest or any rights to explore or prospect for minerals or to mine the same in any part of the land comprising the Exploration Permits;
|
(iv)
|
the Exploration Permits are free of any Encumbrances except to the extent of any conditions imposed under the Mining Code on the Exploration Permits;
|
(v)
|
there is no litigation or proceeding of any nature concerning the Exploration Permits, pending or threatened against them or any other person which may defeat, impair, detrimentally affect or reduce the right, title and interest of JV Company or TenementCo in the Exploration Permits or the interest therein, including any plaint seeking forfeiture of the Exploration Permits;
|
(vi)
|
to the best of its knowledge, the Exploration Permits have been duly marked off, granted and applied for in accordance with the Mining Code;
|
(vii)
|
the Exploration Permits are in full force and effect and in Good Standing and not liable to cancellation or forfeiture for any known reasons and they are not in breach or contravention of any of the terms and conditions upon which the Exploration Permits were granted or of any other rule, regulation or provision of the Mining Code or any other statute concerning, affecting or relating to the Exploration Permits;
|
(viii)
|
there are no facts or circumstances that could, under the currently applicable laws of Madagascar, give rise to the cancellation, forfeiture or suspension or grant of the Exploration Permits when renewed, that could have a Material Adverse Effect;
|
(ix)
|
except as disclosed to Malagasy before the Execution Date, there are no agreements or dealings in respect of the Exploration Permits;
|
(x)
|
there is not in existence any current compensation agreement with the owner or occupier of any land which is subject to the Exploration Permits;
|
(xi)
|
there are no Environmental Liabilities relating to or affecting the Exploration Permits, nor are there any circumstances relating to the Exploration Permits which may reasonably be expected to give rise to future Environmental Liabilities, except to the extent of any report, study or assessment required to be lodged pursuant to the Mining Code or other regulation in relation to the Exploration Permits;
|
(xii)
|
the Mining Information is complete and accurate in all material respects; and
|
(xiii)
|
the Exploration Permits have been granted in respect of all of the ground described in the Exploration Permits
.
|
25.3
|
Disclaimer of liability by Energizer
|
(a)
|
caused or contributed to by any failure of Energizer to procure certain acts or omissions of the Registered Holder provided that Energizer used its reasonable endeavours to procure such acts or omissions;
|
(b)
|
a result of the Registered Holder withholding information from, or providing misleading information to, Energizer provided that Energizer did not know that information was being withheld or that the information provided was misleading;
|
(c)
|
a result of a Political Event;
|
(d)
|
disclosed by Energizer to Malagasy or is known by Malagasy at or prior to Completion;
|
(e)
|
in excess of the total amount of the Purchase Price; or
|
(f)
|
caused or contributed to by a breach by Malagasy or its Related Bodies Corporate or their respective obligations under this Agreement.
|
26.
|
Guarantee by Energizer
|
(a)
|
Energizer agrees to guarantee to Malagasy the due performance and observance by the Beneficial Holder of each and every obligation of the Beneficial Holder under:
|
(i)
|
this Agreement; and
|
(ii)
|
any Sublease Agreement entered into by the Parties in accordance with this Agreement.
|
(b)
|
Energizer agrees to indemnify Malagasy in relation to any loss suffered as a result of the Beneficial Holder failing to perform or observe any of their obligations under:
|
(i)
|
this Agreement; and
|
(ii)
|
any Sublease Agreement entered into by the Parties in accordance with this Agreement.
|
27.
|
Guarantee by Malagasy
|
28.
|
Assignment
|
(a)
|
No Party may assign, sublet, licence or otherwise transfer or part with, mortgage, encumber or in any way deal with its interest under this Agreement otherwise than in accordance with the provisions of this Agreement.
|
(b)
|
At any time during the Term, Malagasy may assign all or any of its rights or obligations under this Agreement as a matter of right to any Related Body Corporate of Malagasy without Energizer’s consent, provided that the assignee enters into an Accession Deed.
|
29.
|
Termination
|
29.1
|
Termination events
|
(a)
|
any unanimous agreement by the Shareholders to that effect;
|
(b)
|
in relation to any Party, that Party ceasing to hold any Shares in JV Company; and
|
(c)
|
TenementCo ceasing to have any rights to any of the Other Mineral Rights.
|
29.2
|
Event of Default
|
(a)
|
Should a Party fail to do, execute or perform any material act or thing which such Party is obliged to do, execute or perform pursuant to this Agreement (
Event of Default
), the aggrieved Party may give the defaulting Party a notice requiring the defaulting Party to remedy such Event of Default within a period of 30 days following service of the notice or if such default is not capable of being remedied within such period of 30 days then within such further period as the aggrieved Party or Parties shall deem reasonable.
|
(b)
|
If a Party serves a notice of default under clause 29.2(a) and such default remains un-remedied upon expiry of the period specified in such notice for rectification, the aggrieved Party may terminate this Agreement forthwith upon the service of a further notice in writing to that effect and upon the service of such further notice this Agreement shall terminate forthwith without prejudice to the rights and remedies of the aggrieved Party at law or otherwise howsoever arising.
|
(c)
|
Clause 29.2(a) does not apply to any Event of Default for which another remedy is provided in this Agreement. By way of example, clause 29.2(a) does not apply to a failure to contribute to a Contribution Notice under clause 19 but instead clause 20 would apply to such failure to contribute.
|
29.3
|
Effect of termination
|
(a)
|
Termination of this Agreement releases each Party from any further performance of any liability under this Agreement but does not:
|
(i)
|
affect any provision of this Agreement expressed to operate or have effect after termination; or
|
(ii)
|
have any prejudicial effect on any accrued right of any Party in relation to any breach or default under this Agreement by any other Party occurring before termination.
|
(b)
|
If this Agreement is terminated in accordance with clause 29.2, the aggrieved Party has an option to acquire the defaulting Party’s rights and interests under this Agreement at:
|
(i)
|
a value determined by the Parties negotiating in good faith; or
|
(ii)
|
in the absence of agreement under clause 29.3(b)(i) above, a discount of 10% to market value as determined by an independent expert appointed in accordance with clause 33.2
.
|
29.4
|
Continuing remedies
|
30.
|
Force Majeure
|
30.1
|
Force Majeure
|
(a)
|
act of God, accident of navigation, war (whether declared or not), sabotage, insurrection, civil commotion, national emergency (whether in fact or law), martial law, fire, lightning, flood, earthquake, landslide, storm or other severe adverse weather conditions, explosion, power shortage, strike or other labour difficulty (whether or not involving employees of a Party concerned), epidemic, quarantine, radiation or radioactive contamination;
|
(b)
|
action or inaction of any government or governmental or other competent Governmental Agency (including any court) including expropriation, restraint, prohibition, intervention, requisition, requirement, direction or embargo by legislation, regulation or other legally enforceable order;
|
(c)
|
delay in the grant of access to a Permit;
|
(d)
|
inability to secure, on commercially acceptable terms, rights of access to a Permit from the owners, occupiers, lessees, custodians, trustees, native title claimants or holders of any land to which the Permit relates;
|
(e)
|
breakdown of plant, machinery or equipment or shortages of labour, transportation, fuel, power, plant, machinery, equipment or material; and
|
(f)
|
any other cause which by the exercise of foresight or due diligence, a Party is unable to prevent or overcome.
|
30.2
|
Relief
|
(a)
|
that Party is to give the other Party prompt notice of the Force Majeure with reasonably full particulars and, insofar as known to it, the probable extent to which it will be unable to perform, or be delayed in performing its obligation or exercising its right;
|
(b)
|
that obligation, other than an obligation to pay money, is suspended and the time for performing that obligation or for exercising that right is extended but only so far as and for so long as it is affected by the Force Majeure; and
|
(c)
|
the affected Party is to use all possible diligence to overcome or remove the Force Majeure as quickly as possible.
|
30.3
|
Labour disputes
|
(a)
|
settle any strike or other labour dispute on terms contrary to its wishes; or
|
(b)
|
contest the validity or enforceability of any law, regulation or legally enforceable order by way of legal proceedings.
|
30.4
|
Resumption
|
31.
|
Dispute resolution
|
31.1
|
Application
|
(a)
|
this Agreement or its interpretation;
|
(b)
|
any right or liability of any Party under this Agreement; or
|
(c)
|
the performance of any action by any Party under or arising out of this Agreement, whether before or after its termination.
|
31.2
|
Dispute negotiation
|
(a)
|
A Party must not commence legal proceedings in relation to a dispute or refer a dispute to arbitration under this Agreement, unless that Party has complied with this clause 31.
|
(b)
|
A Party claiming that a dispute has arisen must notify the other Party specifying details of the dispute.
|
(c)
|
Each Party must refer a dispute to an authorised officer of that Party for consideration and use its best efforts to resolve the dispute through negotiation within seven (7) Business Days following the dispute notification or longer period agreed between the Parties.
|
(d)
|
Each Party must refer the dispute to its chief executive officer, in the event that the authorised officers of the Parties fail to resolve the dispute within the specified period.
|
(e)
|
Each Party must following reference to its chief executive officer use its best efforts to resolve the dispute by agreement or through an agreed mediation procedure.
|
(f)
|
A Party in compliance with this clause 31.2 may terminate the dispute resolution process by notice to the other Party at any time after seven (7) Business Days following reference of the dispute to its chief executive officer.
|
(g)
|
A Party is not required to comply with this clause 31.2 in relation to any dispute where the other Party is in breach of or default under this clause 31.2 in relation to that dispute.
|
31.3
|
Arbitration
|
(a)
|
the arbitration will be conducted by three arbitrators, who will be appointed as agreed by the Parties or, failing such agreement, by the Deputy President of SIAC or his or her nominee;
|
(b)
|
the arbitration will be conducted in English;
|
(c)
|
each Party is entitled to legal representation at any arbitration; and
|
(d)
|
any arbitration will be conducted in Singapore, or at such other place as the Parties may agree.
|
31.4
|
Urgent relief
|
31.5
|
Continued performance
|
32.
|
Disputes as to Technical or Financial Matters
|
32.1
|
Definitions
|
(a)
|
Technical Matter
means a matter which is capable of determination by reference to Mining knowledge or practice; and
|
(b)
|
Financial Matter
means a matter which is capable of determination by audit or reference to financial or accounting records, knowledge or practice.
|
32.2
|
Application
|
(a)
|
This clause 32 applies to any dispute arising between the Parties in relation to a Financial Matter or a Technical Matter.
|
(b)
|
This clause 32 does not prevent any Party from seeking urgent interlocutory or declaratory relief from a court of competent jurisdiction where, in that Party's reasonable opinion, that action is necessary to protect that Party's rights.
|
32.3
|
Dispute negotiation
|
32.4
|
Independent Expert
|
33.
|
Expert determination
|
33.1
|
Referral to Independent Expert
|
(a)
|
a Party submits a dispute in accordance with clause 32; or
|
(b)
|
the Parties agree that a dispute between them will be resolved by an Independent Expert; or
|
(c)
|
a dispute is required by this Agreement to be determined by an Independent Expert,
|
33.2
|
Appointment of Independent Expert
|
(a)
|
the Parties must endeavour to agree upon the identity of a single Independent Expert to whom the dispute will be referred for determination as soon as is reasonably practicable;
|
(b)
|
if the Parties are unable to agree upon the identity of a single Independent Expert within 20 Business Days, the Parties will, as soon as practicable thereafter:
|
(i)
|
in the case of a Financial Matter, request the President of Chartered Accountants in Australia to appoint the Independent Expert; and
|
(ii)
|
in the case of a Technical Matter, request the President of the Australian Institute of Mining and Metallurgy to appoint the Independent Expert; and
|
(c)
|
within 10 Business Days of appointment, the Independent Expert must set a time and place for receiving the Parties’ submissions.
|
33.3
|
Requirements of Independent Expert
|
(a)
|
The Independent Expert will be required to have appropriate commercial and practical experience and expertise in the area of the dispute.
|
(b)
|
Any person nominated to act as an Independent Expert will be required to fully disclose any interest or duty prior to that person’s appointment. If that person has or may have any interest or duty which conflicts with their appointment as Independent Expert, then that person may not be appointed except with the agreement of all parties to the dispute.
|
(c)
|
Any person nominated to act as an Independent Expert must, before they are appointed, confirm in writing that they are able to resolve the dispute within a reasonable time.
|
(d)
|
The Independent Expert appointed under clause 33.2 will act as an expert and not as an arbitrator.
|
33.4
|
Rights of the Parties
|
(a)
|
may be legally represented at any hearing before the Independent Expert;
|
(b)
|
is entitled to produce to the Independent Expert any materials or evidence which that Party believes is relevant to the dispute; and
|
(c)
|
must make available to the Independent Expert all materials requested by the Independent Expert and all other materials which are relevant to the Independent Expert’s determination.
|
33.5
|
Confidentiality
|
33.6
|
Determination
|
(a)
|
The Independent Expert must make a determination on the dispute within 70 Business Days of appointment and must determine what, if any, adjustments may be necessary between the Parties. The determination of the Independent Expert:
|
(i)
|
must be in the form of a written report;
|
(ii)
|
will be final and binding upon the Parties except in the case of bias, fraud, manifest mistake or error; and
|
(iii)
|
will be kept private and confidential unless otherwise agreed to by all Parties involved in the determination.
|
(b)
|
If the Independent Expert does not determine the dispute within 70 Business Days of appointment, either Party may terminate the appointment by written notice and a new Independent Expert will be appointed within 10 Business Days in accordance with the procedure set out in clause 33.2.
|
33.7
|
Costs of Independent Expert
|
(a)
|
the costs of the Independent Expert will be apportioned between the Parties in such proportions as the Independent Expert thinks fit, otherwise the Parties will each bear their own costs; and
|
(b)
|
the Parties will each bear their own costs incurred in the preparation and presentation of any submissions or evidence to the Independent Expert.
|
34.
|
Status of Agreement and further acts
|
(a)
|
The Parties agree that this Agreement is binding upon them and intend that this Agreement is legally enforceable in accordance with its terms.
|
(b)
|
Each Party must promptly do all further acts and execute and deliver all further documents (in form and content reasonably satisfactory to that Party) required by law or reasonably requested by any other party to give effect to this Agreement and the transactions contemplated by this Agreement.
|
35.
|
Relationship between Parties
|
(a)
|
Nothing in this Agreement is to be construed so to constitute a Party a partner, agent or representative of any other Party or to create any partnerships or trust for any purpose howsoever except to the extent to which the operator is the agent of the Parties. No Party will be under any fiduciary or other duty to the other which will prevent it from engaging in or enjoying the benefits of any competing endeavours subject to the express provisions of this Agreement.
|
(b)
|
No Party will have any authority to act on behalf of any other Party, except as expressly provided in this Agreement. Where a Party acts on behalf of another without authority, such Party must indemnify the other from any losses, claims, damages and liabilities arising out of any such act.
|
(c)
|
Each Party has the unrestricted right to engage in and receive the full benefit of any competing activities outside the area the subject of the Joint Venture Operations.
|
(d)
|
Any agreement which is entered into by JV Company, TenementCo or the Operator on behalf of JV Company or TenementCo in the performance of its functions and obligations under this Agreement with a Shareholder, a Related Body Corporate of a Shareholder or an officer or director of a Shareholder or a Related Body Corporate of the Shareholder must:
|
(i)
|
be on terms no less commercially reasonable in the particular circumstances of the agreement than would have been the case had the agreement been entered into on normal arm’s length commercial terms with a third party who is not a Shareholder, a Related Body Corporate of a Shareholder or an officer or director of a Shareholder or a Related Body Corporate of a Shareholder; and
|
(ii)
|
be entered into in good faith in the best interests of the Joint Venture.
|
36.
|
Confidentiality and public announcements
|
36.1
|
Confidentiality
|
(a)
|
if the information is at the time generally and publicly available other than as a result of breach of confidence by the Recipient;
|
(b)
|
if the information is at the time lawfully in the possession of the proposed recipient of the information through sources other than the Recipient;
|
(c)
|
by the Recipient to legal and other professional advisers and other consultants and officers and employees of:
|
(i)
|
the Recipient; or
|
(ii)
|
the Recipient's Related Bodies Corporate,
|
(d)
|
with the prior written consent of the Owner;
|
(e)
|
to the extent required by law or by a lawful requirement of any Governmental Agency having jurisdiction over the Recipient or any of its Related Bodies Corporate;
|
(f)
|
if required in connection with legal proceedings or arbitration relating to this Agreement or for the purpose of advising the Recipient in relation thereto;
|
(g)
|
if and to the extent that it may be necessary or desirable to disclose to any Governmental Agency in connection with applications for consents, approvals, authorities or licenses in relation to this Agreement;
|
(h)
|
to the extent required by a lawful requirement of any stock exchange having jurisdiction over the Recipient or any of its Related Bodies Corporate;
|
(i)
|
if necessary to be disclosed in any prospectus or information memorandum to investors or proposed or prospective investors:
|
(i)
|
for an issue or disposal of any shares or options in the Recipient or any of its Related Bodies Corporate;
|
(ii)
|
for an issue of debt instruments of the Recipient or any of its Related Bodies Corporate; or
|
(iii)
|
for the purposes of the Recipient obtaining a listing on any stock exchange of any shares, options or debt instruments;
|
(j)
|
if necessary to be disclosed to a professional investor or investment adviser for the purposes of enabling an assessment to be made about the merits or otherwise of an investment in the Recipient or any of its Related Bodies Corporate;
|
(k)
|
if necessary to be disclosed to an existing or bona fide proposed or prospective:
|
(i)
|
financier of the Recipient or of any of its Related Bodies Corporate; or
|
(ii)
|
rating agency in respect of the Recipient or of any of its Related Bodies Corporate;
|
(l)
|
if necessary to be disclosed to any bona fide proposed or prospective:
|
(i)
|
transferee of any property to which the information relates or of any shares in the Recipient or any Related Body Corporate of the Recipient;
|
(ii)
|
financier of such transferee providing or proposing or considering whether to provide financial accommodation; or
|
(iii)
|
assignee of rights under the Recipient's financing documents; or
|
(m)
|
if necessary to be disclosed to legal and other professional advisers and other consultants and officers or employees of any of the persons referred to in clause 36.1(j), 36.1(k), or 36.1(l).
|
36.2
|
Conditions
|
(a)
|
In the case of a disclosure under clause 36.1(c) or 36.1(d) and, where appropriate, under clause 36.1(e), and 36.1(f), the Party wishing to make the disclosure must inform the proposed recipient of the confidentiality of the information and the Party must take such precautions as are reasonable in the circumstances to ensure that the proposed recipient keeps the information confidential.
|
(b)
|
In the case of a disclosure under clause 36.1(g), 36.1(h) and 36.1(i), the Party wishing to make the disclosure may only do so:
|
(i)
|
with the written consent of both Parties, which must not be unreasonably withheld or delayed; or
|
(ii)
|
to the extent required by law, the official rules of the relevant stock exchange or any Governmental Agency, but if any Party is required to make any such announcement, it must promptly notify the other Party, where reasonably practicable and lawful to do so, before the announcement is made and must confer with the other Party and consider any comments of the other Party regarding the timing and content of such announcement or any action which the other Party may reasonably elect to take to challenge the validity of such requirement, subject at all times to the disclosing Party’s obligations under law, the official rules of the relevant stock exchange or any Governmental Agency.
|
(c)
|
In the case of a disclosure under clause 36.1(j), 36.1(k) or 36.1(l) or (in the case of legal and other professional advisers and other consultants only) 36.1(m) the Party wishing to make the disclosure must not make any disclosure unless:
|
(i)
|
in the case of a disclosure under clause 36.1(j), 36.1(k) or 36.1(l) the proposed recipient has first entered into and delivered to the Shareholders a confidentiality undertaking in a form acceptable to the other Shareholders; or
|
(ii)
|
in the case of a disclosure under clause 36.1(m) the principal or employer of the proposed recipient has first entered into and delivered to the Shareholders a confidentiality undertaking in a form acceptable to the other Shareholders which will incorporate a warranty by the principal or employer of the proposed recipient that the proposed recipient is under an obligation of confidentiality to the principal or employer and that the principal or employer will enforce that obligation to the fullest extent that the law or equity allows upon being called upon to do so by any of the Shareholders
.
|
36.3
|
Notice to other Shareholders
|
(a)
|
promptly inform each other Party of any request received by that Party from any person described in clause 36.1(e) to disclose information under that clause;
|
(b)
|
inform all other Shareholders as soon as reasonably practicable after information is disclosed by the Party under clause 36.1(e) and
|
(c)
|
not disclose any information under clause 36.1 unless all other Shareholders have been informed of the proposed disclosure.
|
36.4
|
Indemnities
|
36.5
|
Survival of confidentiality obligations
|
36.6
|
Use of Mining Information in respect to Other Mineral Rights
|
37.
|
Notices
|
(a)
|
must be in writing;
|
(b)
|
must be addressed as follows (or otherwise notified by that Party to the other Party from time to time):
|
To Energizer or the Beneficial Holder
|
Energizer Resources Inc
|
|
Attention: | Chief Executive Officer | |
Address: |
Energizer Resources Inc.
141 Adelaide Street
West Suite 520
Toronto, Ontario
CANADA
|
|
Facsimile: | +1 416.364.2753 | |
To Malagasy
|
Malagasy Minerals Limited | |
Attention: | Company Secretary | |
Address: |
Malagasy Minerals Limited
15 Lovegrove Close
Mount Claremont
Western Australia 6010
AUSTRALIA
|
|
Facsimile: | +61 8 9284 3801 | |
(c)
|
must be signed by the Party making it or (on that party’s behalf) by the solicitor for or any attorney, director, secretary or authorised agent of that Party;
|
(d)
|
must be delivered by hand or posted by prepaid post to the address, or sent by fax to the number, of the addressee; and
|
(e)
|
is taken to be received by the addressee:
|
(i)
|
(in the case of prepaid post sent to an address in the same country) on the third day after the date of posting;
|
(ii)
|
(in the case of prepaid post sent to an address in another country) on the fifth day after the date of posting;
|
(iii)
|
(in the case of fax) at the time in the place to which it is sent equivalent to the time shown on the transmission confirmation report produced by the fax machine from which it was sent; and
|
(iv)
|
(in the case of delivery by hand) on delivery;
|
38.
|
Miscellaneous
|
38.1
|
Governing law
|
38.2
|
Amendments
|
38.3
|
Primacy of this Agreement
|
38.4
|
Language
|
38.5
|
Waiver
|
(a)
|
Failure to exercise or enforce, or a delay in exercising or enforcing, or the partial exercise or enforcement, of a right provided by law or under this Agreement by a Party does not preclude, or operate as a waiver of, the exercise or enforcement, or further exercise or enforcement, of that or any other right provided by law or under this Agreement.
|
(b)
|
A waiver or consent given by a Party under this Agreement is only effective and binding on that Party if it is given or confirmed in writing by that Party.
|
(c)
|
No waiver of a breach of a term of this Agreement operates as a waiver of another breach of that term or of a breach of any other term of this Agreement.
|
38.6
|
Consents
|
38.7
|
Counterparts
|
38.8
|
No representation or reliance
|
(a)
|
Each Party acknowledges that neither Party (nor any person acting on a Party’s behalf) has made any representation or other inducement to it to enter into this Agreement except for representations or inducements expressly set out in this Agreement.
|
(b)
|
Each Party acknowledges and confirms that it does not enter into this Agreement in reliance on any representation or other inducement by or on behalf of the other Party, except for representations or inducements expressly set out in this Agreement.
|
38.9
|
Expenses
|
38.10
|
Entire agreement
|
(a)
|
embodies the entire understanding of the Parties, and constitutes the entire terms agreed by the Parties; and
|
(b)
|
supersedes any prior written or other agreement of the Parties.
|
38.11
|
Indemnities
|
(a)
|
Each indemnity in this Agreement is a continuing obligation, separate and independent from the other obligations of the Parties, and survives termination, completion or expiration of this Agreement.
|
(b)
|
It is not necessary for a Party to incur expense or to make any payment before enforcing a right of indemnity conferred by this Agreement.
|
(c)
|
A Party must pay on demand any amount it must pay under an indemnity in this Agreement.
|
38.12
|
Severance and enforceability
|
38.13
|
No merger
|
38.14
|
Power of attorney
|
(a)
|
Each attorney who signs this Agreement on behalf of a Party declares that the attorney has no notice from the Party who appointed him that the power of attorney granted to him, under which the attorney signs this Agreement, has been revoked or suspended in any way.
|
(b)
|
Each Party represents and warrants to each other that its respective attorney or authorised officer who signs this Agreement on behalf of that Party has been duly authorised by that Party to sign this Agreement on its behalf and that authorisation has not been revoked.
|
38.15
|
Taxes
|
Item
|
Exploration Permit
|
1.
|
12306
|
2.
|
12814
|
3.
|
12887
|
4.
|
12888
|
S4.1
|
Definitions
|
(a)
|
which arise from a subsequent adjustment to the amount paid to a Payer based on the actual Products recovered after refining;
|
(b)
|
to correct any accounting or recording errors from previous Quarters;
|
(c)
|
which are otherwise made in accordance with this Agreement; or
|
(d)
|
which are agreed by the Parties.
|
(a)
|
all costs of smelting and refining and retorting the ore and minerals extracted from the Mining Area, including Penalties for impurities and all umpire charges and other processor deductions;
|
(b)
|
all road, sea and rail freight, transportation, security and incidental costs and expenses, including forwarding, shipping, demurrage, delay and insurance costs, incurred between the outer boundary of, or adjacent to, the Mining Area and the point of delivery of the Products into a Refinery, including the cost of transport to and between any Refinery or other places of treatment;
|
(c)
|
handling and incidental costs and expenses including agency, banking, assaying, sampling, weighing, loading, unloading, stockpiling and storage;
|
(d)
|
actual sales costs, and reasonable marketing, representation, agency and brokerage costs in respect of the Product subject to the Royalty;
|
(e)
|
administrative and other general overhead costs that are directly attributable and reasonably allocable to the costs set out in paragraphs (a) to (d) above, as agreed with the Payee;
|
(f)
|
Carried Forward Deductions;
|
(g)
|
shipping agency fees;
|
(h)
|
bank charges on sales receipts and payments;
|
(i)
|
government charges on banking transactions;
|
(j)
|
all taxes (excluding taxes based on income of the Payer), royalties, duties, levies and charges lawfully imposed by an Authority,, including carbon emission licence fees, charges, fuel excise (net of any fuel tax credits) and carbon trading taxes in any way connected with the transportation or sale of the Products from the Mining Area, including any value added or goods and services taxes (but not if subject to an input tax credit, which is actually claimed and received); and
|
(k)
|
any other incidental charge or expense incurred between the outer boundary of, or adjacent to, the Mining Area up to the point of delivery of the Products into a Refinery, including on-site transport and storage,
|
(l)
|
any exploration, development, construction, mining, crushing, treatment or concentrating costs incurred by the Payer within or adjacent to the Mining Area; or
|
(m)
|
where Products are loaded, treated, milled, processed, transported or unloaded outside the Area of Interest in a Refinery wholly or partially owned by the Payer or a shareholder, Related Body Corporate or Related Entity of the Payer, any costs and expenses that are in excess of those which would be paid or incurred by the Payer on arm’s length terms, or which would not be Deductions if those Products were processed by a third party.
|
(a)
|
the total amounts actually received by the Payer from the sale of Product to the owner or operator of a Refinery, in US dollars, or in US Dollar Equivalent, (
Sales
) including the proceeds received from an insurer in the case of loss of, or damage to, the Products (net of any excess paid in respect of that loss),during the expired Quarter, less any refunds, claims or discount, where Sales are effected on an arms-length basis on normal commercial terms; and
|
(b)
|
if Sales are effected on any other basis than on an arms-length basis on normal commercial terms, or if Product is disposed of otherwise than by sale (whether immediate or for future delivery) during the expired Quarter, the fair market value of the Product so sold or otherwise disposed of during the expired Quarter in US dollars, or in US Dollar Equivalent, as determined in accordance with paragraph S4.8.
|
(a)
|
in the case of a Royalty under clause 24.1(a) of this Agreement, 2% of the Net Smelter Return; and
|
(b)
|
In the case of a Royalty under clause 4.1(b) of this Agreement, 1.5% of the Net Smelter Return.
|
S4.2
|
Calculation of Net Smelter Return
|
S4.3
|
Reporting
|
S4.4
|
Time for payment of Royalty
|
S4.5
|
Audits and adjustments
|
(a)
|
The Payer’s records that relate to the calculation of the Net Smelter Return and the Royalty for a Quarter (
Royalty Records
) shall be open to inspection and review by the Payee’s external auditors for a period of 12 Months after the end of such Quarter, at the Payee’s cost. If not reviewed in that 12 Month period the Royalty payment for that Quarter will be taken to be in full and final satisfaction of the Payer’s obligations in respect of that payment.
|
(b)
|
If an audit carried out pursuant to paragraph S4.5(a) (
Audit
) discloses that the Payer has made an overpayment of the Royalty or has made an underpayment of the Royalty of 5% or less, then the Payee will be responsible for payment of the costs of the Audit and the Payer will (as the case may be):
|
(i)
|
deduct the amount of any such overpayment from its next Royalty payment to the Payee; or
|
(ii)
|
add the amount of any such underpayment to the next Royalty payment it makes to the Payee.
|
(c)
|
If an Audit discloses an underpayment by the Payer of more than 5%, then the costs of the Audit shall be borne by the Payer and the amount of the underpayment will be paid by the Payer to the Payee within 14 days after delivery of the Audit report to the Payer.
|
S4.6
|
Assignment
|
(a)
|
The Payer must not sell, assign or otherwise dispose of or encumber the whole or part of its interest in the Mining Area without first requiring the assignee or other such party to enter into a covenant with the Payee on terms to the satisfaction of the Payee (acting reasonably) binding it to observe and perform all the terms and conditions of these procedures as from the effective date of assignment or encumbrance.
|
(b)
|
Subject to the Payer not exercising the Royalty Option in accordance with clause 24.2(a), the Payee may only assign, sell or otherwise dispose of the whole (but not a part) of its rights and interest in or under the Royalty (
Relevant Interest
), other than to a Related Body Corporate of the Payee to which this paragraph (b) does not apply, if it first offers to the Payer the opportunity to acquire the Relevant Interest for consideration equal to that offered by the proposed assignee. If the Payer does not accept the offer within 30 days, the Payee may proceed with the assignment, sale or disposal to the proposed assignee within 90 days and on terms no more favourable to the proposed assignee than those offered to the Payer. If the Payer accepts the offer then settlement of the assignment of the Relevant Interest to the Payer shall occur within 60 days thereafter.
|
S4.7
|
Hedging and Disposal of Intermediate Product
|
(a)
|
All profits and losses resulting from the Payer engaging in any commodity futures trading, option trading, metals trading, gold loans or any combination thereof, or other hedging or price protection arrangements or mechanisms are excluded from calculations of the Net Smelter Return.
|
(b)
|
The Payer must not dispose of, or allow for commingling of, any ore from the Mining Area or any intermediate product unless it has ensured that it has access to all information necessary in order to calculate the Royalty.
|
S4.8
|
Reference to expert
|
(a)
|
If any dispute or difference arises between the Parties in connection with, the calculation of the Net Smelter Return or the Royalty, the Parties undertake with each other to use all reasonable endeavours, in good faith, to settle the dispute or difference by negotiation.
|
(b)
|
If any dispute referred to in paragraph S4.8(a) has not been resolved within a reasonable time of not less than 14 days, either Party may refer the matter in issue to an Independent Expert for determination and clause 33 of the Agreement applies.
|
(c)
|
Prior to resolution of the dispute, the Parties must continue to perform their respective obligations under this Agreement including all pre-existing obligations the subject of the dispute, except only:
|
(i)
|
an obligation to make a payment to the other Party, where that payment is a subject of the dispute; or
|
(ii)
|
to the extent that lack of resolution of the dispute prevents such performance.
|
(d)
|
Nothing in this clause prevents a Party from commencing proceedings in any court where proceedings are required to obtain urgent interlocutory relief.
|
|
Confidential and Legally Privileged
|
page 67
|
Dated: May
14, 2014
|
By:
|
/s/ Richard Schler | |
Richard Schler, Chief Executive Officer
|
Dated: May
14, 2014
|
By:
|
/s/ Peter D. Liabotis | |
Peter D. Liabotis, Chief Financial Officer (Principal Accounting Officer)
|
Dated: May
14, 2014
|
By:
|
/s/ Richard Schler | |
Richard Schler, Chief Executive Officer
|
Dated: May
14, 2014
|
By:
|
/s/ Peter D. Liabotis | |
Peter D. Liabotis, Chief Financial Officer (Principal Accounting Officer)
|