NOTICE: The text below was created automatically and may contain errors and differences from the contract's original PDF file. Learn more here REPUBLIC OF GUINEA
Work- Justice - Solidarity
MINISTRY OF MINES AND ENERGY
The Republic of Guinea
FOR THE EXPLOITATION OF THE ZOGOTA / N'ZEREKORE IRON ORE
CONAKRY, DECEMBER 2009
BETWEEN THE UNDERSIGNED:
- The Republic of Guinea, duly represented for the purposes of this
agreement by Mr. Mahmoud Thiam, Minister of Mines and
OF THE ONE PART,
- BSG Resources (Guinea) Limited, a company under Guernsey law,
whose registered office is at.................... Guernsey, duly
represented for the purposes of this agreement by its CEO, Mr.
OF THE SECOND PART,
- BSG Resources (Guinea) Ltd, a sole proprietorship limited liability
company under Guinean law, registered in the Commercial
Register of Guinea under No. RCCM/GC-KAL/013.755A/2006
dated 24.11.2006 amended by declaration No. RCCM/GC-KAL-
M2/024.524/2009 dated 20 February 2009, located at the Villa
Andre, quartier Coleah, Southern cornice, Conakry, POB 6389,
duly mandated and represented by its co-manager, Mr. Asher
AVIDAN, hereinafter referred to as "the company"
OF THE THIRD PART
IT HAS BEEN STATED AND AGREED AS FOLLOWS:
- WHEREAS the Republic of Guinea encourages research,
prospection, exploitation and valorization of mineral resources in
WHEREAS in this light, the country has decided that this
valorization could be undertaken by or with the help of investors in
order to promote the economic development and the populations'
WHEREAS the Mining Code provides that the mineral or fossil
substances contained in the subsoil or on the surface, as well as
underground waters and geothermal deposits on the territory of the
Republic of Guinea and its exclusive economic zone, belong to the
State and cannot be the object of any form of private appropriation,
save as provided in the Mining Code and the Land Codes.
However, holders of operating titles acquire ownership of the
substances they extract.
WHEREAS in this framework, the Republic of Guinea informed
the mining investors of:
► the necessity to ensure rational resources exploitation to
avoid freezes, mortgages and waste,
► the principle that the mining infrastructures (railway and
port) located on the national territory belong to the
Government as well as any new mining infrastructure that
would be implemented,
► the necessity to create a mid-term synergy as to the iron
ore and bauxite exploitation, transportation and evacuation
schemes over the whole territory in order to minimize
operation and transportation costs and to ensure mining
► its commitment to tap mining resources with respect for
the environment, in compliance with the World Bank
► its commitment to turn mining areas into socio-economic
and industrial development centers leading to the
implementation of unities meant to transform raw materials
into finished and semi-finished products,
WHEREAS BSG Resources, conforming to the Government's
strategy as to the valorization of mining resources, has solicited an
iron ore exploration permit at Zogota, in N'Zerekore" prefecture,
WHEREAS the Republic of Guinea acceded to this request through
decrees A/2006/706/MMG/SGG of February 6 2006 granting BSG
Resources one (01) iron ore exploration permit, renewed by decree
A/2009/1327/PR/MMEH/SGG of June 10 2009,
WHEREAS the works carried out by BSG Resources Guinea led to
the identification of commercially exploitable iron ore deposits, as
attested by the feasibility study enclosed to the request for grant of
concession addressed to the Minister of Mines and Energy on
WHEREAS this study has been approved by the Government and
that the company fulfills the conditions attached to the grant of the
WHEREAS in this framework the Government granted, through
Decree n°...................dated......................(See copy in
Appendix......), the company BSG Resources a mining lease for a
period of twenty five (25) years, renewable, for the exploitation of
the iron ore deposits at Zogota, in N’Zerekore" prefecture,
WHEREAS BSG Resources wishes to develop the areas at its
disposal through the design, funding, development and
construction in Guinea of a complex consisting of a mine and its
dependencies (plants, storage areas, power stations, lodgings) and
of a railway with a nominal production capacity of 30 Mt/y of iron
WHEREAS BSG Resources nevertheless wished to evacuate the
iron ore production stemming from its mining concession through
WHEREAS the company therefore committed to implement a new
railway in Guinea that would be connected to the already existing
railway in Liberia and to use the railway and port infrastructures
located on the territory of the Republic of Liberia,
- WHEREAS the Republic of Guinea acceded to this request for the
►The Government's willingness to see the iron ore deposits in
operation as quickly as possible,
► The proximity of the Zogota deposits to the Liberian border,
►The request issued by the Guinean Government to the company
to rebuild the Conakry-Kankan railway and its potential extension,
► The establishment of an economic zone in the South-East of the
Republic of Guinea,
- WHEREAS BSG Resources has approved these requests and
declares possessing the financial, technical, technological and
commercial capacities required for the achievement and
exploitation of the project,
- WHEREAS the Government wishes the Project operations to
commence as soon as reasonably possible,
The Government and BSG Resources have initiated this basic Agreement
whose terms and conditions are defined below:
SECTION I: GENERAL PROVISIONS
CLAUSE 1: DEFINITIONS
Within the framework of the present Agreement, the following
expressions and words shall have the meanings hereunder assigned to
them or unless otherwise expressly agreed by the parties.
- "Project assets": means the project installations, all property
rights, rights, titles or interests already existing or to be created,
movable or immovable, tangible or intangible, belonging to the
investor or to the company, or put at the disposal of the investor or
the company, granted or rent for the benefit of the investor or the
company by the Government or by any other third party, as well as
all the rights granted to the investor and the company in virtue of
the present Agreement or any other contract, including the
contracts of the project regarding the design, funding, construction,
development, management, exploitation of the different elements
of the project, including and without limitation, profits and
incomes that will result from the Project and that will be paid or
payable by or to the investor or the company or on their behalf,
"Activities referred to in this Agreement": generally means the
prospecting activities, development, mining operations, processing,
transportation, exportations, handling, trade, sale of iron ore and
any other activity involved by the project in compliance with the
provisions of the present Agreement,
"Year": refers to a period of three hundred sixty five (365)
"Calendar year": refers to a period covering 12 consecutive
months beginning January 1 and ending December 31,
•'Authority": refers to the Government and its organs of public
power, including notably any ministerial department, territory
administration, body or person acting on behalf of the government,
exercising legislative, executive, administrative or judicial power
or mandated to exercise such powers,
"C.P.D.M": stands for Centre de Promotion et de Developpement
Miniers of the Ministry of Mines and Geology, or its successors
and all the bodies and instrumentalities, which acts as sole liaison
between the Administration and investors,
"Land Code": refers to the Land Code of the Republic of Guinea
in force at the date of signature,
"Mining Code": refers to the act ratified by Law L/95/036/CTRN
of 30 June 1995 representing the Mining Code of the Republic of
Guinea including any amendment, modification, supplement or
extension hereof as well as any related application decree,
"Employment Law": of the Republic of Guinea in force at the
date of signature,
" Mining Concession": refers to a mining concession granted to
the company by the Government in virtue of the effective Mining
Code and the conditions stipulated by the present agreement related
to the area covered by the Mining Concession,
"Infrastructures contract": refers to the agreement between the
Government and BSGR regarding the design, development and
management of the railway running from Zogota to the Liberian
"Agreement": refers to the present agreement and its appendices
as well as any modification that could be added to it,
"Agreement": refers to the present agreement and its appendices
as well as any modification that could be subsequently added to it.
The Agreement is sometimes referred to as "this agreement" or
"the present agreement".
"D.N.M": stands for National Direction of Mines under the
authority of the Ministry of Mines and Geology, its successors and
all related bodies and instrumentalities,
"Effective Date": refers to the date on which the present
Agreement enters into force,
"Failure": means a breach of any of the provisions of the present
Agreement, of any applicable law, or of any condition set out in the
prospecting permit or in the mining concession located within the
territory covered by this Agreement,
"Pre-operation expenses": means the expenses and costs incurred
for the benefit of or within the territory covered by the Agreement
within the framework of the Prospecting Permit granted to the
Company and of the investments for the development of the
project. These costs include: the expenses incurred within the
territory covered by the Agreement - including those incurred
within the framework of the prospecting activities, pre-feasibility
studies, feasibility studies, delimitation of mineral reserves areas,
mine and infrastructure, the development and construction costs
prior to the extraction, processing, transportation preceding the first
"Development": means the prospecting operations and the works
entailed by the opening of the mine, the mining of iron ore,
processing activities, and also includes the construction and
commissioning of the necessary infrastructures and installations,
such as road construction, communication infrastructures, power
installations as well as water processing equipment and facilities,
"Decree related to the Mining Concession": refers to the Decree
issued by the President of the Republic granting the Company a
"World Bank Directives": refers to the protection standards and
environmental policy of the World Bank,
"GOVERNMENT": means the Republic of Guinea represented
by the Minister of Mines and Geology,
"Feasibility Study": means a comprehensive study conducted by
or for the company to determine the feasibility of operating an iron
ore deposit within the territory covered by the Agreement,
"Mining Exploitation": means the operations and works related
to the technical and economic use of Mineral Substances, including
mine development, extraction and processing activities,
"Force Majeure": has the meaning defined in clause 41 of the
"Guinea": refers to the Republic of Guinea,
"Taxes": means the taxes, fees, stamp duties, patent and license
fees applied in the Republic of Guinea,
"Investor": means BSG Resources (Guinea) Limited, a company
under Guernsey law, whose registered office is in Guernsey,
“Days” : Refers to consecutive calendar days, without adjustments
for official closures, holiday days or any other interruption to the
“Current Legislation": Refers to all the valid legislative and
regulatory texts of the Republic of Guinea (laws, Regulations,
Decrees, Orders, Decisions, Instructions, jurisprudence etc);
“Applicable Law”: Refers to the Mining Code and other laws,
regulations and decrees, and any other legislative instrument of
Guinean law, including rules, regulations, resolutions or other
directives or standards that require compliance, published
officially, having the force of law, and in effect at the time of their
“Ore Concentrate”: Refers to raw iron ore that has been processed
to remove impurities to increase the content of the ore;
“Minister”: Refers to the Minister appointed by the President of
Guinea and responsible for the Ministry of Mines and Geology,
responsible for the regulation of activities of Prospecting,
development and operations of mineral substances;
“Processing Operations”: Refers to the operations and works
carried out in order to improve the quality of the extracted ore;
“Mining Operations”: Refers to all the operations and works
carried out as part of Mining Work, including Prospecting
Activities for Mineral Substances;
“Parties” means the Government, Investors and the Company, and
“Party” means the Government or the Investors or the Company;
“Operating Perimeter”: Means that part of the Contractual Area
in which the workable deposits are located;
“Person”: Refers to any person or body, a company or any other
form of corporate entity;
“Commercial Production”: Refers to commercial production as
defined in clause 15.3 of this Agreement;
“Project”: Refers to the activities of working the iron ore Zogota
in the N’Zerekore prefecture, including production, transportation,
shipping and marketing of the Zogota iron ore by the Company, as
well as the rebuilding of the Conakry - Kankan railway, as
described in its different phases in clause 10 of this Agreement;
“Reports”: Refers to every report required under the Mining Code
and this Agreement, as well as every report, study, analysis or
interpretation that is geological, geophysical, technical, financial,
economic and marketing, prepared by or on behalf of the Company
within the Territory Stipulated by the Agreement, concerning
Prospecting, Development and Mining Operations Activities,
which the Company must submit;
“Tax and Customs Regime”: Refers to the tax and customs
regime applicable in accordance with the provisions of this
Agreement, as defined in clause 33;
“Company”: BSG Resources (Guinea) SARL, a Sole
Proprietorship Limited Company under Guinean law, registered in
the Guinean Commercial Registry under No. RCCM/GC-
KAL/013.755A/2006 on November 24, 2006, modified by
declaration No. RCCM/GC-KAL-M2/024.524/2009 on February
“Affiliated Company”: Refers to any company that controls or is
controlled, whether directly or indirectly, by the investor or a
company that controls or is controlled, whether directly or
indirectly, by a company or entity that itself controls, whether
directly or indirectly, the investor; “Control” refers to the direct or
indirect ownership by a company or any other entity of at least fifty
percent (50%) of the shares providing a majority of the voting
rights at the general meeting of another company or entity, or a
holding providing authority to determine policy and management;
“Direct Subcontractors”: Means the operators, bidders,
entrepreneurs, suppliers and other persons working exclusively on
“Project Territory”: refers to everything within the operations
perimeter, the land occupied by infrastructure works and marked
on the maps attached as appendices to this Agreement;
- “Territory Stipulated by the Agreement”: Refers to the territory
stipulated in this Agreement as described in Appendix B, including
any modification or enlargement granted in accordance with the
provisions of the Mining Code, but excluding any part of such
territory that, if applicable, has been waived by the Company in
accordance with the provisions of this Agreement and the Mining
- “Third party”: Refers to a Person apart from the Government, the
Company, a Person that is part of the Company, an Affiliated
Company to any Person that is part of the Company, an Operator, a
Subcontractor or any Party to this Agreement;
- “Land User or Occupier”: Refers to any Person that occupies or
uses in law that is in effective or by common law a piece of land
located within the Territory Stipulated by the Mining Agreement
and in project areas outside the Concession territory;
CLAUSE 2: INTERPRETATION
In this Basic Agreement and unless the context dictates otherwise:
The singular includes the plural and the masculine the feminine and
The table of contents and the organization of this Agreement into
sections, clauses, paragraphs is only for the purpose of making
reading easier and in no way affects its interpretation.
Any reference to the law or to any other legislation includes any
amendment, modification, addition or law that replaces it, subject to
application of the stabilization clause.
In the event of any uncertainty concerning any description of a
perimeter or zone by geographic coordinates, geographic maps or
sketch map, only the geographic coordinates shall be valid;
Any reference to a Party includes the successors of this Party or any
other authorized successor;
Those terms in this Basic Agreement that are not defined shall have the
meaning accorded them in the Mining Code.
CLAUSE 3; APPENDICES
The attached appendices are an integral part of this Agreement.
CLAUSE 4: PURPOSE OF THE AGREEMENT
In accordance with Article 11 of the Mining Code, the purpose of this
Agreement is to define the rights and obligations of the Parties and the
general economic, legal, administrative, financial, fiscal, customs and
excise, mining, environmental, social, transport and shipping conditions
according to which the Parties undertake to carry out the Project for
working the iron deposits at Zogota in the N'Zerekore prefecture.
To this end it consists of:
(i) For BSG Resources to design, finance, develop and operate an iron
ore mine within the area of the Concession; transportation of the
iron ore by railway over Guinean and Liberian territory; shipping
the ore from the port of Buchanan in Liberia.
(ii) For the Government, to grant the facilities and guarantees that it
agrees to subscribe for BSG Resources to facilitate carrying out the
Project (mine, accessories and subsidiaries, and the railway lines).
(iii) For the Parties, to define the consequences of possible non-
compliance with their respective undertakings under the terms of
CLAUSE 5: APPLICABLE LAW
This Agreement is governed by the Applicable Laws of the Republic of
However, in the event of a contradiction and/or difference between Current
Legislation and the provisions of this Agreement, the latter shall take
CLAUSE 6: GENERAL WARRANTIES
Each of the Parties declares and warrants:
That it is duly authorized to enter into this Agreement and to have
obtained all the required authorizations to this end under its
That it is capable of meeting all the obligations arising therefrom.
CLAUSE 7: UNDERTAKING OF GOOD FAITH
Both of the Parties undertake to comply with the terms and conditions
stated herein and to act in good faith in the fulfillment of its obligations
throughout the period of the Agreement.
CLAUSE 8; MINING CONCESSION
The Mining Concession granted under Order No............shall be
executed in accordance with the provisions of the Mining Code and this
CLAUSE 9: EFFECTIVE DATE - PERIOD
In accordance with the provisions of the Mining Code, the effective date of
this Convention shall be its approval by order and shall remain in force
throughout the validity period of the Concession.
CLAUSE 10: DESCRIPTION OF PROJECT
The project involves:
- The working, transportation, exporting and marketing of the iron ore;
• The rebuilding of a railway line Conakry - Kankan;
10.1 Phase I: Zogota
The Company shall provide the facilities and equipment required to work,
transport, store and ship an amount of thirty (30) million tons of iron ore
annually for fifteen (15) years from the Date of First Commercial Production.
The Company shall provide:
a) An open cast iron ore mine at Zogota in the prefecture of N'Zerekore;
b) An industrial area at Zogota that shall include:
• Storage and loading areas,
• A railway line in Guinea 102 km long,
• A railway depot,
• Facilities and equipment,
• Electrical power station with output of.....MW,
• A water treatment station,
• A residential area;
• A hospital for employees.
c) A port area in Buchanan, Republic of Liberia, which shall include:
• Storage and loading areas,
• A residential area.
d) The Conakry - Kankan railroad.
10.2 Phase II: Blocks 1 and 2 Simandou K6rouane
At this stage the Company undertakes to create the following elements:
- Two iron ore mines,
- Industrial facilities and equipment,
- Suitable railway infrastructure required for removing the iron ore.
- A residential area at Kerouane,
- Extension of equipment and installations to the port of Buchanan.
For Phase II the Company shall present the Government with a feasibility
study within 24 months from date of signature of this Agreement.
The conclusions and terms of this study will facilitate defining the terms for
the grant of the Mining Concession between the Parties, the terms of
operation and shipping from these two Blocks.
CLAUSE 11; ZOGOTA INVESTMENTS
The Company undertakes to invest as part of this Agreement the sum of USD
2,542,000,000 to carry out the project, broken down as follows:
Mines USD 243,000,000
Industrial facilities and equipment, USD 496,000,000
Residential areas and hospital USD 71,000,000
Railway and rolling stock USD 845,000,000
Port USD 463,000,000
Contingency (20%) USD 424,000,000
CLAUSE 12: CONAKRY - KAN KAN - KEROUANE RAILWAY
The Company undertakes to rebuild this railway and will submit the
feasibility study to the Government for approval. The cost of this
reconstruction is budgeted at USD 1 billion (1,000,000,000) plus 20% for
The Company undertakes to build 50% of this railway during the first phase
of the project.
The Government undertakes to grant a full exemption from duties, taxes
and fees on all the goods, materials, equipment and services required for
creating this infrastructure.
SECTION II: PROJECT DEVELOPMENT
CLAUSE 13: PROSPECTING WORKS
In accordance with the provisions of Article 41 of the Mining Code, the
Company can carry out prospecting works within the Concession Perimeter.
All scientific research, studies, interpretations, logs of core samples or
cuttings carried out as part of the prospecting works shall be carried out
under the Company's direct supervision (or of a Subcontractor), by a
| i geologist, geophysicist, geochemist, engineer or technician with the
j j In the event that the Company demonstrates economically exploitable
LJ mineral substances other than iron ore, it must inform the Minister for
I Mines. In this event the Company shall have the right of first refusal and
L operating terms shall be defined in another agreement.
CLAUSE 14: DEVELOPMENT WORKS
14.1 The Company shall carry out all the component parts of the project
l • in accordance with a time chart that is appended to the Agreement.
j 14.2 Required conditions for the development works
LI The development works shall commence following completion of the
a) Provision by the Government to the Company of the required
authorizations to build a railway line in order to facilitate the
removal of the Mining Produce;
b) Approval by the Minister for the Environment of the survey and
plan for environmental and social management as required by
Article 26.1 below;
i I c) Conclusion of the community development agreement as required in
Lj clause 25 below, approved by the competent authorities;
I i d) Acquisition, compensation and/or settlement of all land rights and/or
claims arising from third parties in respect of the mining Concession
■ j and of expropriations for the railway line in the Republic of Guinea;
e) Notification to the Minister of Mines informing of the date of start up
of the project's development activities.
CLAUSE 15: OPERATIONS
15.1 Mining operations
The Company undertakes to carry out its mining operations in accordance
with accepted engineering practice, under safe conditions, and in
compliance with international standards and practices that are usual in the
15.2 Start of Operations
The Company undertakes to start mining operations at the latest by May 31,
In the event that the Company is unable to comply with the deadline of May
31,2012 referred to above, it must inform the Government and provide the
necessary justifications. The Government undertakes to grant it, subject to a
duly supported request, an extension of the said deadline for a maximum
period of six (6) months.
In the case of failure to start the operations of the Mining Produce within
the aforementioned period that has possibly been extended, the
Government may revoke the Mining Concession in accordance with the
provisions of the Mining Code.
The Company must inform the Minister of its start up program for
operations, transportation and shipping of the iron ore within a minimum
period of thirty (30) days.
15.3 First Commercial Production
The start up of commercial iron ore production shall not take effect until a
threshold of stocks at the mine and the port allow for shipping 25,000 tons
per day for a consecutive period of 30 days.
If the Company does not achieve this production rate, but it exports
successively a quantity of more than 20,000 tons per day for over 60 days,
this production shall be deemed as being commercial.
15.4 Works required during the operations period
15.4.1 Works schedule
The Company must submit to the Minister for informational purposes a
works program, including:
• Forecast quantities from operations to transportation,
• Operational methods,
• Work accident statistics,
• System (standard) adopted for safety and hygiene,
• The Monitoring program for the environmental management plan.
15.4.2 Notice of changes
The Company must inform the Minister as soon as possible of any major
change in its Mining Operations (change in operational method, change to
the production program, and of safety standards).
15.4.3 Cessation of operations
If the Company is unable to maintain the Commercial Production of the
Mining Produce for a period of eighteen (18) consecutive months, the
Company will be deemed to not have met the requirements of the minimum
works program and the Government may revoke the Concession in
accordance with the provisions of the Mining Code.
15.4.4 Extension (Expansion or change to facilities)
The Company shall inform the Minister for Mines of any program for
extension and expansion of its facilities in order to increase production.
CLAUSE 16: INFRASTRUCTURE
16.1.1 Zogota - Sanniquellie Mining Railway
It is expressly agreed that the Government shall be the owner of the
railway irrespective of its method of financing. The railway line of 102 km
that will be constructed in Guinean territory outside of the Concession
Perimeter shall be subject to a usage fee.
The Company shall carry out the surveys, finance and construct the railway
line and provide for its operation and maintenance. The Company shall
allocate the agreed fees for use of the railway as a repayment for the
investment it will have made.
After complete repayment of the loans, the Company shall continue to
provide maintenance of the railway and shall pay the Government fees for
use of the railway. These fees shall be fixed according to the same principles
as those used in similar infrastructure used under the same conditions in the
Republic of Guinea.
The Government guarantees the Company right of access and of priority use
of the railway line that will be built on Guinean territory from Zogota to the
Liberian border. Use of this railway by a third party shall be with the
agreement of the Company and may under no circumstances interfere with
the Company's activities.
The Government warrants that it will grant the Company all the required
authorizations to occupy the lands as part of building the railway.
The terms for design, financing, construction, operation and maintenance of
the railway shall be specified by agreement between the Government and
U the Company.
; I 16.1.2 Railway in Liberia
BSG Resources shall provide the Guinean Government with the information,
terms and warranties resulting from the agreements with the Liberian
Government in respect of the renovation, use and maintenance of the
railway line on Liberian territory.
16.1.3 State support
As part of bilateral cooperation and regional agreements, in particular the
Mano River Union, the Government undertakes to obtain from the Liberian
Government an agreement on the use of the railway line in Liberian
territory, of the port area and the residential area in Buchanan.
16.1.4 Access to existing public infrastructure
The State undertakes that Company shall have access and will be able to use
the roads, bridges, airfields, installations, transport-related installations, as
well as pipes for water, electricity and communications, set up or organized
by any body or entity owned or controlled by the Company, with the
exception of the armed forces, without having to pay fees greater than
those paid by companies with identical activities to those of the Company.
The Company is obliged to make suitable road infrastructure (with surfacing)
in the project development area to avoid pollution that is dangerous for the
health of the population.
16.2 Development and Maintenance of the Infrastructure
16.2.1 Subject to compliance with the Applicable Law, the Company can
build, use, improve and maintain any infrastructure, including roads, bridges,
airfields, port or rail installations, and transport-related installations, as well
as electrical power stations, telephone and other communications lines,
pipelines, water pipes or other networks or installations necessary for the
At the Company's request, the Government and the Company must analyse
such infrastructure or other requirements related to the Mining Operations,
including but not limited to energy and transportation requirements with a
view to entering into a fair agreement for the sharing of costs and profits
from such infrastructure.
Notwithstanding the foregoing, no construction may take place in the
a) Any territory, apart from that of the Mining Concession, belonging
to the Government, without the agreement of the Minister for
Mines, such agreement arising from checking with the competent
b) Any area that is part of a Mining Concession or of a prospecting
permit not covered by this Agreement or other activities without
advising the Minister for Mines in wiring in advance, who will take
the necessary measures with the authorities in question and the
holders of mining rights to facilitate carrying out the planned
16.2.2 Construction within the Concession
Subject to the provisions of the Mining Code in respect of closed, protected
or out of bounds areas and subject to the terms stated herein, the Company
holds the following rights in addition to those granted it by the Concession
and this Agreement:
a) Exclusive right of entry and occupation of the Concession,
following termination of the rights and compensation of the Land
Users or Occupiers;
b) Subject to the rights of every third party, Land Users and/or
Occupiers and to the provisions of the Applicable Law, the right to
use and construct on the Concession roads, railways, pipes,
pipelines, sewers, drains, electrical transport lines or other similar
installations required for the activities that are the subject of the
To this end no prior approval is required by the Company in order to build
roads, bridges, railway lines, pits, sewers, pipelines, electrical lines or any
other installations required for the Mining Operations within the area of its
The Minister may require changes in order to limit or eliminate any danger
to the health, safety or well being of the employees or of the public, or any
negative effect on the environment that results from constructing
infrastructure as a result of this paragraph.
16.2.3 Construction outside the Perimeter of the Mining Concession
The Government warrants the Company that it can create infrastructure
outside of the Perimeter of the Mining Concession. To this end the
Government grants it the suitable area to carry out the said infrastructure
and industrial installations.
16.4 Company's Priority of Use
The Company shall have priority for use of any infrastructure that it will have
The Company may limit or prohibit access to roads located within the
Concession, if such access might pose a danger for users or staff, for reasons
of interference with or obstruction of the Mining Operations.
16.5 Third party rights to grazing and cultivation
In the exercise of the rights awarded it under this Agreement, the Company
must take account of and minimize the impact on the rights of Third Parties,
Land Users and/or Occupiers that exist at the Effective Date of the
Agreement (fishing, grazing, word cutting and agriculture rights or rights of
The Company can grant Land Users and/or Occupiers within the Concession
grazing rights or the possibility of cultivation, subject to the pursuit of these
occupations not interfering with the Mining Operations.
16.6 Compensation for Land Users or Occupiers
If the Company deems the presence of the Land Users or Occupiers to be
incompatible with its Mining Operations in the Concession, it must
compensate these Land Users or Occupiers present prior to actual
commencement of the construction works and/or relocate them.
In such a case the Company must cooperate with the Government's
specialist departments in the choice of new localities for relocation and
setting the compensation to pay these Land Users or Occupiers, for any
relocation or loss of usage (land title, home, crops).
The aforementioned compensation must match the amount required for
relocating and resettling the said Land Users or Occupiers prior to the actual
commencement of works, in a place and under conditions at least similar to
those that prevailed until prior to the upheaval. Compensation must include
fair market value for all loss of crops, moving costs, costs related to creating
new rights of way, access and use, and any other expense arising from such
If the Land Users or Occupiers there prior to the actual commencement of
the works accept relocation to a new place instead of, whether in whole or
in part, financial compensation, the Company in coordination with the
Government's specialist departments must carry out their relocation.
As part of the relocation the Company must rebuild on the new site
improved homes that take account of the life style of the rural occupants.
In the case of land users, the Company must prepare new areas for these
users to improve their activities.
The Company shall present the Government the map of areas that will
be affected by the project activities prior to initiating removal and
relocation surveys. The conclusions of this survey as approved by the
Government shall be publicized widely among the authorities and
populations in question.
The Government and Company shall set up a management structure for
this operation that will act to monitor the sustainable development plan
that will be drawn up.
16.7 Cooperation in the event of disputes
The Company can take advantage of all the rights provided for in this
Agreement. The Minister undertakes to cooperate with the Company in the
event of difficulties or the interference of third parties, in order to settle any
SECTION III: MARKETING
CLAUSE 17: SALE OF MINING PRODUCE
17.1 Arm's length prices
The Company undertakes to sell the Mining Products from the Concession
under arm's length conditions.
17.2 Government's access to the Mining Produce
At the latest by the end of the first half of a Calendar Year, the Government
may request the Company to enter into a purchase contract for the
following calendar year for a percentage of the total production of Mining
Produce from the Concession.
The Company must examine this request and offer a contract at the same
market financial terms for quantities and periods similar to those in supply
contracts it would have entered into with its clients.
The Government expressly agrees that the Company is under no obligation
to sell it Mining Produce if at the time of receipt of the Government's
request, it is bound by long-term supply contracts that do not allow it satisfy
such a request.
17.3 Notice of Sale to an Affiliated Company
If the Mining Produce is sold to an Affiliated Company, the Company must
within fifteen (15) Days following such sale inform the Minister and provide
him with all the information, data, sales contract and receipts used to
calculated the prices, discounts and commissions involved in such a sale. The
Government shall treat this information as confidential.
17.4 Verification of Mining Produce sales
The Minister is authorized to inspect and verify all sales transactions of
Mining Produce, including their terms and the conditions for fulfilling them.
If at the end of these inspections and/or verifications, the Minister considers
that the sales transactions of Mining Produce do not reflect their fair market
value, he will notify the Company of his opinion and provide it with all
Within fifteen (15) Days following receipt of such a notice, the Company
must submit documentation proving that the amounts paid for sales or
other disposals of the Mining Produce were their fair market value. The
Government shall treat this information as confidential.
Within a period of thirty (30) Days from receipt of the notice and unless
there has been an agreement between the Parties within this time the
Parties must meet in order to try to settle the disagreement in respect of
the sales of Mining Produce, and to agree on the fair market value for the
period in question.
If the Parties cannot agree within ten (10) days from their meeting, one of
the Parties may refer the dispute to an independent expert in order to
determine the fair market value.
The onus of proof is on the Company, which must show that the value
received was the fair market value during the period in question.
At the end of this process and if applicable the Company shall pay forthwith
the taxes and duties that had thus been evaded.
CLAUSE 18: MAINTENANCE AND INSPECTION
18.1 Maintenance of equipment and of the weighing system
The Company must maintain in good working condition all the equipment
and other assets used in the Mining Operations, including the weighing
The Company must have a weighing system that complies with international
standards accepted in the mining industry.
18.2 Method to determine the quantities of Mining Produce
The method for weighing Mining Produce is subject to the Minister's
Such approval should be forthcoming within a period of thirty (30) days from
date of receipt of the request submitted by the Company; it is understood
that no reply within this time constitutes acceptance by the Government of
the method selected by the Company.
The Minister may from time to time and with reasonable prior notice test or
examine the weighing system.
The Company may not modify the weighing method it uses in any way or
change the instruments, equipment or other facilities used for this purpose
without the prior, written approval of the Minister.
18.3 Faults in the weighing instruments
Any fault or other problem with the weighing instrument or method for the
Mining Produce must be corrected forthwith.
Excepting notification to the contrary by the Minister, any fault or problem
with the instrument or method is presumed to have taken place for the last
three (3) months or since the last test or examination of the equipment,
which ever is the longer.
Any payment to the Government resulting from the weighing of Mining
Produce must be adjusted to take into account the fault or problem for the
18.4 Access and inspection by the Government
Duly authorized representatives of the Government holding a movement
order issued or stamped by the Minister for Mines can during the
Company's normal working hours enter the locations in order to inspect,
examine, check or carry out an audit of all the assets, accounts, registers,
equipment, instruments, data concerning mineral substances and other
information related to the Mining Operations in Guinea and Liberia.
18.5 Inspection costs
Inspection and travel expenses shall be considered an operating expense.
In order to ensure the effective implementation of the rights of inspection,
observation, verification and auditing by the Government, the Company
must provide the Government's duly authorized representatives, free of
charge, all reasonable assistance, access to its employees and
representatives, and access to its facilities in the way usually available within
CLAUSE 19: INFORMATION AND REPORTS
19.1 Maintaining files and reports
Throughout the entire period of this Agreement and in accordance with the
Mining Code, the Company must prepare and maintain, in French,
comprehensive files and reports that are transparent, precise and up to date
concerning the activities covered by the Agreement.
Activity reports required by the Mining Code shall be prepared in five (5)
copies and submitted to the CPDM, which will distribute them to the
Files, reports and/or data concerning ores, with the exception of drilling
samples, must be maintained in electronic format in the Republic of Guinea.
In addition the Company must submit its reports in the required form in
order to satisfy the Government in the application of the Transparency
Initiative of the Mining Industries (ITIE).
19.2 Samples to be retained
In accordance with the Mining Code and its rules, orders and regulations,
the Company must maintain fractional samples, or as is the case, drilling
samples, Ore Concentrates, monthly composites from the drilling, and
samples of ore tailings.
19.3 Export of samples
Export of samples must be carried out in accordance with the provisions of
the Mining Code and its rules, orders and regulations.
19.4 Report on annual expenses
The Company must submit to the competent authorities not later than the
30 April each calendar year all its financial statements.
19.5. Annual report on the community development agreement
Not later than the 30 April each calendar year the Company shall send the
competent authorities am annual report on execution of the community
development agreement, which must contain the following information:
a) A qualitative assessment whether or not the targets of the
agreement have been achieved;
b) If applicable, the proof and approaches that will be taken to
achieve the targets in the future;
c) A detailed list of every amount spent by the Company for the local
community development agreement;
d) Any recurrent problem with the local community; and
e) Progress achieved in respect of closing down the mine.
SECTION IV : COMPANY'S UNDERTAKINGS
CLAUSE 21; COMPANY'S OBLIGATIONS AND WARRANTIES
21.1 Declarations and Warranties
The Company declares and warrants to the Government that at date of
signature of this Agreement and throughout its duration:
a) Any information provided to the Government by the Company to
conclude this Agreement contains no false declaration and/or any
b) The Company is a body duly constituted as a company under
Guinean law in accordance with the uniform document
concerning the rights of commercial companies and the Economic
Interest Group (GIE) dated April 17,1997, adopted as part of the
OHADA treaty and declares that it is duly organized and exists
subject to the laws and regulations in force in the Republic of
c) The Company has the powers and authority required to own and
operate its assets at the sites where they are currently held or
operated, and to carry out its activities at the places where they
are being carried out. There is no current action, claim, enquiry,
arbitration procedure or other involving the Company or any
order, decision, injunction, decree or judgment against the
d) The Company has or has access to, and shall make use of at the
right time, all the necessary financial, technical, managerial and
technology skills to meet its obligations and targets as stipulated
in this Agreement, subject to clause 43 of this Agreement.
e) The Company has the necessary powers and authority to sign this
Agreement and to meet the obligations arising therefrom.
21.2 Company's obligations
188.8.131.52 Fund raising
The Investor and the Company undertake to provide the Government with a
financing plan for the project within three (3) months of the agreement on
the terms of financing.
184.108.40.206 Possible changes to facilitate the financing
In order that the Company should obtain the financing necessary for the
operations covered by this Agreement, the Government undertakes to
consider favorably any request for an amendment, interpretation or
application of the terms of the Agreement that could be made.
220.127.116.11 Reporting Requirement
Any loan or other financing transaction of the Mining Operations from an
Affiliated Company must be declared to the Minister, and all documentation
referring thereto must be submitted within sixty (60) Days following the
effective date of such commitments.
21.2.2 Construction of the Mine
The Company undertakes to construct in accordance with the Time
Chart attached in the Appendix an open cast mine together with the
related infrastructure and equipment required to extract the Mining
Produce from the Concession, with an initial production capacity of
thirty (30) million tons per annum at the latest 24 months after the
Effective Date of this Agreement and the Concession.
21.2.3 Construction of a Factory for Processing Magnetite Ores
At the latest at the end of the fifth Year following the Date of First
Commercial Production of Mining Produce, the Company shall present the
Government with a feasibility study for the construction of a factory for
processing magnetite ores.
On the assumption that the conclusions of the feasibility study will be
positive, the Parties will come together in order to set the terms for carrying
out this investment.
In the event that study submitted by the Company is negative, the
Government reserves the right to award a permit to a third party for
working and processing the magnetite deposits.
21.2.4 Construction of a Steel Mill
Ten (10) years after the date of the first commercial production the Parties
shall come together to decide on the construction if a steel mill in the
Republic of Guinea.
In the event that the Company does not commit to build a steel mill, the
Government can find a strategic partner to do so. Under these conditions,
the Company shall negotiate with the Government and with its partner a
contract for the supply of iron ore at market conditions.
CLAUSE 22; COMPANY'S RIGHTS
22.1 Company's Rights
Subject to the specific provisions in this Agreement and/or the Mining
Code, the Company shall enjoy the rights conferred on it under this
Agreement, the Mining Code and the Concession.
Without derogating from the generality of the foregoing, these rights
include inter alia:
a) The exclusive right to carry out the Mining Operations;
b) The right to freely arrange its assets and to organize the business
as it sees fit;
c) Freedom to recruit and dismiss, in accordance with Current
Legislation in the Republic of Guinea;
d) Free circulation in the Republic of Guinea of its staff, assets and
e) Unrestricted importation of goods and services, including
insurance and the funds required for the Mining Operations;
f) Freedom to export and sell the Mining Produce from the
Concession on the international and/or domestic market;
g) The right to transport or have transported the Mining Produce to
a storage, processing or loading location;
h) The right to benefit from any agreement entered into between
the Government and other Governments to facilitate the
transport of the Mining Produce over the territory of these
i) Freedom to set up in Guinea processing plants and iron ore
j) The right to acquire, use and operate any means of
communication, any type of aircraft or other means of transport
as well as the auxiliary facilities or equipment required for the
k) Freedom to carry out large-scale sampling and attempts at
processing the Mining Produce from the Concession in order to
determine the mining potential;
l) Freedom to take, take out and export reasonable quantities,
specimens or samples as part of the Prospecting Activities.
CLAUSE 23: EMPLOYMENT OF STAFF
23.1 Compliance with the work standards in the Republic of Guinea
As part of the employment of staff the Company must comply with the
provisions of the Labor Code and the Social Security Code in force in the
Republic of Guinea.
In addition and in accordance with the practices in the international
mining industry, the Company shall set up an effective system of
prevention and medical treatment of work accidents and occupational
The Company shall take out an adequate insurance policy to cover the
cost of treatment for occupational health hazards and work accidents.
23.2 Employment of Guinean Staff
From the start up of the Mining Operations, the Company must:
a) Employ only Guinean staff for works not requiring qualifications;
b) Give priority to the employment of qualified Guinean staff for the
requirements of the Mining Operations;
c) Contribute to the training of this staff with a view to providing
access to all employment as a qualified worker, supervisor,
manager and Director.
Employment of Guinean Staff in Liberia
As part of bilateral cooperation and regional agreements, in particular
the Mano River Union, the Government undertakes to set up with the
Liberian Government agreements defining the terms of residence and
work of Guineans in Liberia as part of this project. These documents will
be appended to this Agreement.
23.4 Management Careers for Guineans
At the end of each Year the Company shall draw up an agreement with
the Minister a recruitment plan for Guinean staff for the coming years in
order to arrive at an increasingly larger participation by Guinean staff in
the Mining Operations in Guinea and Liberia, it being understood that
five (5) years following the Date of First Commercial Production,
Guinean employees must represent 90% of the Company's workforce.
The Company undertakes to set up a career plan for employees with
positions of responsibility.
23.5 Employment of Expatriate Staff
The Company may employ a reasonable number of expatriate workers
who have a specialty, skills or special knowledge.
At the Company's request and after having submitted the required
supporting documents, the Government undertakes to grant expatriate
staff the required authorizations, including entry visas and residency
rights, work permits and any other permit required by law.
CLAUSE 24; SUBCONTRACTING
The Company may subcontract the carrying out of all or part of the
Mining Operations, but subject to any provisions to the contrary in this
Agreement, shall remain responsible to the Government for the
execution of its obligations under the terms of the said Agreement and
It is expressly agreed that to carry out subcontracted Mining Operations,
the said direct subcontractors shall benefit in particular from the
provisions concerning taxes and customs and excise in the Agreement
that are applicable to Subcontractors of the Company.
Not later than thirty (30) days from the signature of any subcontracting
contract the Company shall supply the Government with a certificate
including the following information:
a) Name and address of the subcontractor,
b) Purpose of the contract,
c) Start date and estimated period of contract,
d) Estimated contractual revenues.
24.2 Payment to Affiliated Companies
Any payment to an Affiliated Company for the execution of services or
the purchase of merchandise related to or regarding the Mining
Operations, must be documented, reasonable and competitive in terms
of price as though it was carried out without any form of dependency.
The amount invoiced to the Company must not be higher than that
charged by third parties for similar services and goods.
24.3 Preference for Guinean goods and services
The Company and the companies working on its behalf must grant
priority to Guinean companies for all contracts especially for purchases,
construction, supply or provision of services, including contracts for
shipping, insurance and transportation of merchandise, on condition
that they offer at least equivalent prices, quantities, quality and delivery
For any contract for a value of more than USD one hundred thousand
(100,000), the Company shall select its subcontractors by tender or by
any other method used in the international mining industry.
CLAUSE 25: FREIGHT AND MARITIME TRANSPORT
The Company undertakes to reserve to the Government of the Republic
of Guinea the right to load the exported tonnage, up to a maximum
proportion of 50% on boats flying the Guinean flag or similar and/or
chartered by the Guinean Government on the international freight
market, on express condition that such ships comply with suitable
seaworthiness standards and that the prices are competitive on the
international maritime freight market.
CLAUSE 26; AGREEMENT ON DEVELOPMENT OF LOCAL
In order to promote the economic and social development of local
communities, the Company undertakes to enter into Development
Agreements as part of the local development plans (PDL).
26.1 Provisions of the local community development agreement
The agreement on the development of local communities has been
negotiated between the Company and the official representatives of the
local communities, and must include at least the following provisions:
1. The Persons representing the various parties for the purpose of the
local community development agreement;
2. The obligations of the Company towards the local communities,
including in particular:
a) The economic or social undertakings that must be made in respect
of sustainable development of the local communities;
b) The setting up of activities, aid and resources to create a self-
sufficient community by the promotion and diversification of
revenue generating activities;
c) The organization of periodic consultancy sessions with the local
community in respect of drawing up a plan for the closure of the
Mining Operations, in order to prepare that community for the
prospective closure of the mine;
3. The obligations of the local communities towards the Company;
4. The terms of the local community development agreement must be
revised every five (5) Calendar Years;
5. The framework for monitoring meetings and procedures between the
Company and the local communities and the means planned to get the
local communities to take part in planning, implementation, management
and monitoring activities; and
6. A declaration whereby the Company and the local community
undertake to solve any dispute concerning the local community
development agreement through their respective representatives, and
failing an agreement, the right to refer the dispute to the competent
authorities, whose decision shall be final.
26.2 Obligation to respect local traditions
The Company must pay attention to the rights, customs and traditions of
the local community when drawing up the local community
26.3 Approval of the Local Community Development Agreement
I The local community development agreement, after having been duly
signed and approved by the representatives of the Company and the
local communities, shall be submitted to the Ministers for Mines and for
Local Communities for approval.
l ; The Ministers must approve the said agreement within thirty (30)
working Days following its receipt at their offices, stating that it complies
with the requirements in the foregoing paragraphs.
( I Any refusal to approve by the Ministers must be sent in writing to the
representatives of the Company and of the local communities stating the
specific reasons and the way that should be considered to correct the
The Company cannot undertake the Development of the Concession
before having received the prior approval for the local community
i I development agreement.
CLAUSE 27: PROTECTION OF THE ENVIRONMENT AND
REHABILITATION OF THE MINING SITES
Throughout the entire validity period of the Agreement, the Company
undertakes to conduct the Mining Operations while taking care to
minimize, manage and limit the impact on the environment.
27.1 Environmental impact study
I - In accordance with the provisions of clause 13 of this Agreement,
commencement of development works is subordinated to the approval
of the Minister for the Environment of the environmental impact study
< j and an environmental management plan prepared by the Company.
The Company must submit the study and the plan, in a single or two
separate documents, to the Minister for the Environment in five (5)
The study and the plan, using quantifiable criteria, must contain the data
and analysis reflecting best international practice as recognized in the
mining sector, and must include the following information:
a) Identification of probable major human and natural
environmental impacts, including pollution;
b) General targets in respect of each major environmental impact;
c) Detailed targets in respect of each major environmental impact
and the means to reduce such an impact;
d) Means to achieve the general and detailed environmental targets;
e) Implementation schedule;
f) Forecast budget and timetable to achieve the environmental
g) Ongoing rehabilitation program for the Concession and estimated
h) Final program for gradual rehabilitation for the Concession and
i) Estimated costs for the final program for gradual rehabilitation,
taking into account each Year of operations of the Concession, in
the event that the final rehabilitation has to take place during a
Year in which operating activities cease.
j) As required, this plan shall be updated by the Company and sent
to the Government as soon as possible.
27.2 Cultural Heritage
In the event of the discovery of an archeological site during the Mining
Operations, the Company shall update the elements of the national
cultural heritage, both fixed and movable. It undertakes not to move or
destroy this site or parts thereof and to inform the Government
27.3 Emergency measures
In the event of an emergency or exceptional circumstances, the
Company is obliged to take the necessary immediate and appropriate
For the purposes of this Agreement "an emergency" or "exceptional
circumstances" are considered to be any situation or event, actual or
imminent, whether resulting from a natural occurrence or caused by
man, that might involve the death, wounds or bodily harm to any
person, damages to property or to natural resources, if immediate
action is not taken.
27.4 Company's responsibility in the event of a claim
The Company must keep the Government informed of any claim or
justified debt related to the activities covered by this Agreement, as well
as any legal action or dispute arising from accidents or bodily harm or
damage to goods caused or occurring with the framework of the Mining
Operations. The Company undertakes to compensate the Government
for any expense related to such a claim, debt, action or dispute.
CLAUSE 28: CLOSING DOWN AND REHABILITATION
28.1 Obligations during the close down phase and rehabilitation
The Company must comply with its obligations for closing down and
rehabilitation of the mining sites, as stipulated in the Mining Code, the
Environmental Code and this Agreement.
28.2 Rehabilitation of the area defined in the prospecting permit
The Company is obliged to reinstate the sites and locations affected by
its prospecting works and to put the affected sites and locations into a
state reasonably similar to how they were prior to carrying out of the
28.3 Rehabilitation of the Concession
Prior to expiry of the Concession the Company is obliged to reinstate
the sites and locations affected in accordance with the environmental
and social management plan stipulated in this clause.
28.4 Closing of the mine
28.4.1 Notice of closure
The Company must inform the Minister of its intention to close down
the mine located at the Concession at least six (6) months before the
scheduled closure date.
28.4.2 Closure plan
In cooperation with the Ministry of Mines and the local community, the
Company must draw up a closure plan for the Mining Operations that
prepares the community for a prospective cessation of activities. This
plan must supplement the local community development agreement.
28.4.3 Orderly close down
The Company shall take all steps to handle the close down of the mine
gradually, in an orderly and planned fashion in order to prepare the
community for prospective cessation of activities.
28.4.4 Arrangements for movable and fixed assets
Subject to the Government exercising its option available to it in
accordance with clause 56 of the Mining Code, the Company must
dispose of its entire moveable and fixed assets at the closure of the
mine, it being understand that moveable and fixed assets not removed
must be demolished and the site restored.
28.4.5 Obligation to render the site safe
Prior to expiry of the Concession, the Company must render safe the site
affected by its activities under this Agreement in order to ensure the
safety of the public and of future Land Users or Occupiers.
To this end, the Company must:
a) Permanently seal all the mine shafts including access and
ventilation shafts, if applicable;
b) Remove all electricity transport lines intended for the sole usage
of the Company;
c) Level all steep slopes, shafts on a slope and precipices created by
the Mining Operations in order to render them safe, and when
necessary to close off precipices to avoid any fall, and put up
warning signs as necessary;
d) Render safe and reinforce all dams, concentrations of residue and
cuttings to avoid any collapse.
28.5 First demand bank guarantee
In order to guarantee its obligation of rehabilitation of the Concession
site, the Company must provide the Government with a first demand
bank guarantee, presented by a bank with sufficient financial resources.
The level of this guarantee shall be:
Initially set in relation to the environmental management plan
stipulated in clause 26 of this Agreement,
Then updated annually in line with the said environmental
management plan and, if applicable, with the rehabilitation works
carried out by the Company.
This guarantee can only be called upon at the expiry of the Concession.
SECTION V: WARRANTIES GIVEN BY THE
CLAUSE 29: DECLARATIONS AND WARRANTIES OF THE
The Government declares and warrants to the Company that at date of
signature of this Agreement:
a) The Minister acts as the duly authorized representative of the
Government and has the necessary powers and authority to sign
b) There are no mining rights, no request for mining rights, claim,
option agreement, lease, license, operating contract or any other
restriction that could affect the Concession governed by this
Agreement or the Company's rights as stipulated herein. The
Government is unaware if the existence of any notice, objection
or other pending legal action or dispute in respect of the
Concession in any manner whatsoever. The Concession governed
by this Agreement is free of any closed zone as defined in the
c) Prior to the signature of this Agreement, the Government satisfied
itself that the Company has all the qualifications necessary, as
defined in the Mining Code, and that there is nothing to prevent
the granting of a Concession and the signature of this Agreement.
d) Signature by the Government on this Agreement and the
execution of the obligations arising, are not in violation of any law,
regulation, decree or order of any national or local authority or of
any ruling handed down by a Guinean court.
e) The Government shall ensure that the administrative authorities
provide the Company with all assistance necessary and provide it
with all the permits necessary for the Mining Operations as
stipulated in the applicable Guinean law.
f) The Company shall be entitled to proceed, with the cooperation of
the Authorities, to any registrations that might be deemed
necessary to better protect its rights it has been granted by the
Government under this Agreement;
The Government undertakes to facilitate all administrative steps and
procedures by all appropriate means in accordance with the
Applicable Law and to provide all reasonable assistance that will be
needed for carrying out the Project, and in particular:
(i) For all works concerning construction, development, operations and
enhancement of the iron ore that the Company might undertake as
part of this Agreement;
(ii) For the design, development, financing, construction, ownership,
operation and maintenance of the Project Installations and access to
the Existing Infrastructure and their use under this Agreement;
(iii) For the execution of its obligations that appear in this Agreement,
including but not limited to, by transferring to the Company in
accordance with applicable legislation all land reasonably required by
the Investor for the design, development, financing, construction,
ownership, operation and maintenance of the Project Installations.
CLAUSE 30: FOREIGN EXCHANGE RULES-TRANSFER
The Government warrants the Company that it can freely:
a) Open and operate in Guinea and abroad any bank accounts, in any
currencies, it being understood that the Company has one or
several bank accounts in Guinea duly provided with funds to make
local payments (salaries, local suppliers etc),
b) Take out loans abroad in any currency,
c) Transfer abroad funds, dividends and income from capital
invested, as well as income from the liquidation or sale of their
credits or corporate assets.
In return the Company undertakes to provide the Government:
Within fifteen (15) days of opening them, the details of each bank
account opened abroad,
■ i - Within fifteen (15) days of each quarter, a copy of the bank
statements for the previous quarter of the bank accounts opened
In addition, the Government warrants to foreign staff employed by the
Company and living in the Republic of Guinea free conversion and free
transfer to their countries of origin, savings made on the salaries or
Li other items of remuneration they were due, subject to all taxes having
been paid in accordance with the provisions of Current Legislation and
CLAUSE 31; EXPROPRIATION -NATIONALIZATION
In the event of the expropriation or nationalization of the Company or
any part of its assets, the Government shall pay fair and equitable
compensation based on the market value of the Mining Operations at
i i the date of the expropriation or nationalization.
lJ CLAUSE 32: STABILIZATION PERIOD
The Government warrants the Company from the date of grant of the
u Concession and throughout its full duration the stabilization of Current
Legislation and of all provisions, particularly fiscal and concerning
customs and excise, stipulated in this Agreement.
Accordingly, all changes to Current legislation, particularly fiscal and/or
Li concerning customs and excise, after the date of grant of the Concession
that would as a result increase, whether directly or indirectly, the
Company's tax and/or customs and excise charges would not be
u applicable for it.
On the other hand, the Company may validly take advantage of such
u changes if their effect is to reduce its tax and/or customs and excise
; I In addition, the Company shall benefit from any more favorable clause
granted in respect of the provisions of this Agreement that will be
included in a mining agreement concluded at a later date with another
mining company carrying out similar activities.
SECTION V TAX AND CUSTOMS SYSTEM
CLAUSE 33: TAX REGIME
33.1 Applicable Taxes, Duties, Contributions and Fees
The Company, the Investors and Direct Subcontractors are subject
throughout the period of this Agreement only to following taxes, duties
and fees, to the exclusion of any others, in accordance with the terms
u stipulated in this Agreement:
i | Fixed duties and fees:
Tax on Mining Substances;
J Tax on industrial and commercial profits;
Tax on Income from Securities (IRVM);
Professional Training Levy;
Single tax on vehicles;
Social Security payments.
With the exception of and limited to what is stated in this clause, the
Company and Direct Subcontractors shall not be subject to any duty, tax
and/or fee of a taxation nature, including value added tax.
The calculation and payment of all taxes and duties incumbent on the
Company is made on the basis of accounting data and is done in US
dollars ($), except for taxes and social security payments assessed on
salaries and withholdings at source on payments denominated in a
currency other than the US dollar, which shall be payable in Guinean
The applicable rate of exchange for conversion transactions in US dollars
for expenses and charges in another currency shall be the average
monthly rate of exchange for the month in question as published by the
Central Bank of the Republic of Guinea.
The exchange rates defined above shall also be applicable for the
calculation of all later back payments, interest charges and penalties,
and for all repayments of overpayment of taxes.
33.2 Fixed duties and fees - Land fees
The Company is liable for fixed duties and fees as well as for land fees in
accordance with Current Legislation.
33.3 Tax on mining substances
The Company shall be liable for the tax on mining substances according
to the following terms:
The tax base for mining substances is made up of:
The FOB value of the iron ore.
The applicable rate for concentrated iron ore (ore that has undergone
mechanical processing to remove impurities in order to increase its
content) is 3.5% of the FOB value.
33.3.3 Terms of payment
This tax is payable quarterly, at the latest on the fifteenth of the month
following each quarter, based upon quantities exported.
This tax is deductible for the calculation of taxable profits.
33.4 Tax on Industrial and Commercial Profits
The Company shall be liable for Tax on Industrial and Commercial Profits
(BIC), to the exclusion of all other taxes on profits, according to the
Taxable profit is determined by application of the provisions of the
General Tax Code and the Mining Code, subject to special provisions
stated in this Agreement.
On account of the building of the Conakry - Kankan railway, the rate for
the Tax on Industrial and Commercial Profits applicable to the net
taxable profit shall be thirty percent (30%).
33.4.3 Tax relief on Industrial and Commercial Profits
In accordance with the provisions of Article 143.3 of the Mining Code,
the Company shall be exempted from the Tax on Industrial and
Commercial Profits for a period of 8 years from the first commercial
The Company shall benefit from a further two years of exemption, being
10 years in all, for the extension of the railway from Kankan to
33.4.4 Terms of payment
Terms of payment for the Tax on Industrial and Commercial Profits are
as stipulated in the General Tax Code.
33.5 Tax on Income from Securities
The Company shall be liable for payment for the Tax on Income from
Securities (dividends, royalties, directors' fees paid by the Company).
33.6 Taxes and contributions assessed on salaries
Salaries paid to employees of the Company or its Direct Subcontractors
shall be liable to the following taxes and contributions:
Lump sum payment at rate of six percent (6%) for salaries paid
to employees with Guinean nationality,
Training levy at the rate of one and a half percent (1.5%) for
salaries paid to its employees in Guinea and outside it. This levy
shall not apply if the Company will have its own, permanent
training center in Guinea. A permanent training center is
defined as being a place where there are classrooms to hold
courses by qualified staff, for the training and development of
the skills of staff taking part directly in the Mining Operations,
Withholding on Salary Payments (RTS) of Guinean nationals by
application of the current scale;
Withholding on Salary Payments (RTS) of foreign employees
residing more than one hundred and eighty-three (183) days in
the Calendar Years at a rate of ten percent (10%) of the
remuneration, it being understood that foreign employees
residing less than one hundred and eighty-three (183) days in
the Calendar Years are exempt from this tax,
Applicable social contributions, it being understood that
foreign employees are exempt.
33.7 Single Tax on Vehicles
The Company, its Investors and Direct Subcontractors are liable for the
Single Tax on Vehicles at the currently applicable rate, excluding for
worksite vehicles and machines.
33.8 Withholding at Source of non-salary income
Payments made by the Company or its Direct Subcontractors to Persons
not resident in Guinea shall be liable to a withholding at source in full
discharge often percent (10%).
It is expressly agreed that interest on bank or other loans contracted by
the Company for the financing of the Project shall be exempt from any
withholding at source.
33.9 Value Added Tax
The Company, Investors and Direct Subcontractors shall be exempt from
value added tax on the purchase of goods and services necessary for the
In the event that, notwithstanding this total exemption on Value Added
Tax, the Company, Investors or Direct Subcontractors pay such a tax,
they can deduct it either as a deduction or repayment.
33.10 Local development levy
From the Start Date of Commercial Production the Company shall be
liable to an annual levy for local development at a rate of 1% of gross
This local development levy is deductible for the calculation of taxable
CLAUSE 34: CUSTOMS REGIME
This clause applies to direct imports by the Company and its Direct
Subcontractors intended for use in connection with the activities under
34.1 Value Added Tax on imports
The Company and its Direct Subcontractors shall be exempt from value
added tax on the import of goods.
34.2 Classification of imported goods
The Company must draw up and have approved by the Ministers of
Mines and of Finance, prior to the start of operations, lists of goods to
be imported, according to the following categories:
a) Category 1: equipment, heavy tools, machines and vehicles
except vehicles for tourism that appear in the Company's
b) Category 2: raw materials and consumables required for on
site processing of the Mining Produce into finished and semi¬
finished products, as well as oil products used in the
production of energy.
c) Category 3: raw materials and consumables required for the
extraction and enhancement of the Mining Produce.
d) Category 4: fuels, lubricants and other oil products not used in
processing the Mining Produce into finished or semi-finished
These lists are revised periodically based upon changes in the Company's
needs, the national production capacity and the availability on time and
on competitive terms of products manufactured locally.
34.3 Temporary admission
Equipment, machines, instruments, utility vehicles, and generators
intended to be used temporarily in Guinea for the requirements of the
project shall be treated as temporary admissions, with suspension of
duties and taxes.
For the purposes of the construction works, goods thus admitted
temporarily can either be re-exported or consumed in accordance with
34.4 Customs relief in the Development phase
From the start date of the construction works, the Company and its
Direct Subcontractors shall benefit for their project related activities
from exemption of duties and taxes, and customs fees on goods in
Category 1 as well as on spare parts and lubricants, with the exception of
the registration tax at the rate of 0.5% of the CIF value with a maximum
ceiling fixed by the Finances Law and the fee on administrative services
In the event of the resale within the Republic of Guinea of items
belonging to Category 1, the Company and its Direct Subcontractors
become liable for all the duties and taxes as determined by the Customs
Service based on an assessment that takes into account the depreciation
that had occurred up until the date of resale.
34.5 Customs relief during the Operations phase, closure and
Imported goods in Category 2 intended for the processing of the Mining
Produce into finished and semi-finished products are exempt from taxes
and customs duties.
Imported goods in Category 1 or Category 3 intended for the extraction
and enhancement of the Mining Produce are taxed upon importation at
a single rate of 5.6% of the FOB value of these goods as well as the fee
on administrative services.
Fuels except petrol, lubricants and other imported oil products
belonging to Category 4 enjoy the price structure applicable to the
34.6 Personal effects
The personal effects and items with the exception of foodstuffs and
private vehicles imported by employees of the Company and its Direct
Subcontractors are exempt from all duties and taxes.
SECTION VI: OTHER FINANCIAL PROVISIONS
CLAUSE 35: GENERAL PRINCIPLES
In the Republic of Guinea the Company must keep its accounts in dollars,
in accordance with the accounting program of OHADA.
Each tax year the Company must have its balance sheet and income
statement certified by a Guinean CPA, and submit its financial
statements to the Minister not later than April 30 of the following year.
For the purposes of verification and audit by the authorized personnel of
the Government, the Company must provide access to its accounting
documents and the supporting documentation.
SECTION VII: SUNDRY AND FINAL PROVISIONS
CLAUSE 36: WAIVER AND TERMINATION
The Company may waive the Concession in accordance with the terms
stipulated in the Mining Code.
The Government, in accordance with the Mining Code, can cancel the
Company's Concession, which involves termination of this Agreement.
Apart from the situations stated in the Mining Code, the Concession can
be terminated if the Company refuses to carry out a final decision in
arbitration in accordance with clause 38 of this Agreement.
CLAUSE 37: SALE, TRANSFER AND LEASE
Any sale or transfer by the Company of all or part of its rights and
obligations arising from the Concession, as well as any direct sale of over
fifty percent (50%) of the Company's shares, by sale or by any other
method involving transfer of effective control of the Company, is
deemed equal to a sale and is subordinated to the prior approval of the
Government, which holds a right of preemption exercisable at the terms
offered by the would-be purchaser.
In the same situation the Company must inform the Government of the
planned sale, stating all available information, and in particular the
name of the purchaser, the price and the payment terms.
From date of receipt of this notification the Government has a period of
thirty (30) days to:
a) Either withhold its approval of the sale and thus exercise its
right of preemption according to the terms of the initial
planned sale of which it had been notified,
b) Or approve the sale and thereby waive its right of preemption,
it being understood that the Government must notify the
Company of its decision at the latest at the end of the period of
thirty (30) days and the absence of a response from the
Government within the thirty (30) day period will mean
approval of the proposed sale and thus a waiver by the
Government of its right of preemption.
It is expressly agreed that no prior approval shall be necessary for direct
or indirect transfer transactions concerning the actions of a company
holding shares in the Company.
In addition, any sale, pledge or transfer made in the interest of an
Affiliated Company is free if the following conditions are met:
a) The transfer agreement specifically states a commitment by
the transferee to be bound by the terms and conditions of this
b) The transferee has demonstrated that it has or has access to
the technical and financial resources and the skills necessary to
carry out the activities under this Agreement;
c) A copy of the transfer agreement is sent to the Government,
d) The transfer agreement is duly signed and contains a clause by
which the transferee assumes all the Company's obligations,
and that if it does not receive the Government's approval the
transfer agreement shall be null and void.
CLAUSE 38: SETTLEMENT OF DISPUTES
38.1 Out of court phase
In the event of a dispute and/or conflict between the Parties in respect
of this Agreement and/or the Concession, including but not limited to its
validity, interpretation, execution, non-compliance or termination, the
Parties undertake in the first instance to try to resolve the dispute or
conflict between them out of court.
Failing an out of court settlement within a period of one hundred and
twenty (120) Days from the date of receipt of the notice sent by one
Party to the other of the dispute or conflict between them, the
provisions of clause 38.2 shall apply.
38.2 Binding arbitration
The Parties agree to submit to the arbitration of the ICC any dispute
arising from or related to this Agreement that has not be resolved under
clause 38.1, using the Arbitration Convention of this institution.
In addition, the Parties agree to make all requests and submissions to
the ICSID or to the International Arbitration Court, depending upon the
case, and to undertake any other actions supply all information required
to set up arbitration proceedings.
Unless the Parties have agreed otherwise, the arbitration procedure
shall take place in Paris (France) and shall be conducted in French.
Thjere shall be three (3) arbitrators: one appointed by the Government,
one appointed by the Company, and the third appointed by the two (2)
arbitrators already chosen.
One of the Parties can start the arbitration process by sending the other
Party a notice to that effect, including:
a) Reference to the provision in this Agreement that has led to
b) Reference to the mining rights issued as part of this
c) The nature of the dispute that has led to the complaint and, if
applicable, any sum of the complaint for damages or
d) The facts that cause any complaint, and
e) The remedy sought.
The Party that receives the notification must reply within thirty (30)
Days, confirming or rejecting the compaliant in whole or in part, and if
applicable stating the nature and circumstances of any counter-
complaint. Failure to reply within the period allocated is considered a
refusal by this Party to accept the complaint and leads to the arbitration
process provided for in this Agreement.
The Parties recognize that the decision handed down following
arbitration under this Agreement is binding, final and without appeal.
That fact that one of the Parties does not take part in the arbitration
proceedings is not a reason to reject the arbitration tribunal's
jurisdiction or its decision.
The Parties expressly waive any objections to arbitration procedures and
the decision arising therefrom, unless the said arbitration does not
comply with requirements stipulated in this Agreement.
The Parties hereby expressly waive any immunity of jurisdiction and any
immunity of execution, for themselves and their respective employees
(except those of the Government exclusively reserved for diplomatic
work), for the requirements of executing any decision or judgment
handed down in respect of this Agreement.
CLAUSE 39: CHANGES
This Agreement cannot be changed and/or amended in any manner,
unless by mutual written agreement between the Parties and entry into
effect in accordance with the same terms as those of this Agreement.
CLAUSE 40: CONFIDENTIALITY
40.1 The Agreement is not confidential
This Agreement is not confidential
All the reports, plans and information provided by the Company under
this Agreement to the Government shall be treated as public documents
unless specified otherwise.
40.2 Non-confidential matters
The following matters are not confidential, subject to a disclosure not
being a violation of any legislation or stock exchange rules governing
securities, applicable to the Company:
a) The annual quantities of mineral substances produced coming
from the Concession;
b) Employment, including training programs offered by the
c) Fees and payment of taxes related to the Concession, without
the details of the calculations of the amounts of such
d) Operating parameters, such as capacities, yield rates and
recovery rates of the mines and the concentration plants and
the dilution factors;
e) Information about the number and frequency of accidents
arising from the Mining Operations;
f) The payment of any amount or any provision of services under
the local community development agreement;
g) Any information held by the Government prior to the Company
obtaining that information, and having been disclosed by
someone not having any obligation of confidentiality towards
40.3 Confidentiality of information
The disclosure of confidential information must be done in such a way as
to ensure the confidentiality of this information by the recipient.
Each of the Parties must ensure that their respective directors,
employees, as well as its shareholders, technical and professional
consultants do not disclose information considered confidential, and do
not make inappropriate use of such information for their own benefit or
the benefit of any other Person.
CLAUSE 41; FORCE MAJEURE
41.1 Case of force majeure
For the purposes of this Agreement, force majeure means any event, act
or circumstance that is unforeseeable, cannot be resisted and is beyond
the control or wishes of a Party for whom the execution of its obligations
by this Party is restricted or rendered impossible.
Without derogating from the generality of the foregoing, the following
events can constitute a case of force majeure:
a) War (whether declared or not), armed insurrection, civil
unrest, blockade, riots, sabotage, embargo, strikes, lock-out or
other protest actions or forms of labor disputes;
b) Any dispute in connection with the Mining Operations, with
Persons who prove they have been significantly affected by the
Mining Operations, including but not limited to other holders
of mining rights, Land Users or Occupiers and members of the
local community, neighboring communities, government
departments or non-governmental organizations (NGO);
c) Any natural catastrophe, including epidemics, earthquakes,
storms, floods, volcanic eruptions, tsunami or other severe
weather issues, explosions and fires;
d) Any other cause outside the control of the Party in question
with the exception of economic problems that are the result of
fluctuations in market prices.
The Parties agree that the Government cannot claim in its favor that the
reasons or events listed in paragraph b constitute a case of force
41.2 Consequences of force majeure
When one of the Parties finds itself objectively prevented from fulfilling
one or several of its undertakings under this Agreement and the Mining
Code on account of a case of force majeure, such an impediment does
not constitute a breach of this Agreement.
41.3 Extension of the Agreement period
The Parties must extend the period of this Agreement for any period for
which a case of force majeure caused the suspension of the execution of
the undertakings under this Agreement.
41.4 Notification of force majeure
When one or other of the Parties finds itself objectively prevented from
fulfilling one or several of its undertakings under this Agreement on
account of force majeure, it must:
a) Within not more than fifteen (15) Days from the date of
occurrence of a major case of force majeure send the other
Party notice by registered mail or by any other available and
rapid method, stating the case of force majeure and the
b) Take the necessary, reasonable and legal measures to solve the
problem that caused the force majeure; and
c) Having adopted the steps referred to in paragraph b), notify
the other Party and take all necessary steps to ensure the
earliest possible return to normal execution of the
undertakings affected by force majeure.
41.5 Meeting between the Parties
If the effects of an event of force majeure last longer than fifteen (15)
Days, the Parties must meet as soon as possible to study the situation
and to agree upon the necessary measures to be taken to solve the
problem that caused the force majeure.
CLAUSE 42; PRECEDENCE OF THE AGREEMENT
The provisions of this Agreement represent the entire agreement
between the Parties and take precedence over any prior declaration,
representation, contract and/or agreement, whether verbal or in
writing, between the Parties (or their Affiliated Companies or prior
holders of the same rights).
CLAUSE 43; NON-WAIVER
Unless by express, written waiver, if one Party does not exercise all or
part of its rights conferred upon it by this Agreement, shall under no
circumstances constitute a case of waiver of the unexercised rights.
CLAUSE 44; SUCCESSORS AND BENEFICIARIES
This Agreement ties the Parties and their respective successors and
CLAUSE 45: COSTS OF THE AGREEMENT
Each of the Parties must assume its own legal expenses or other costs
incurred as part of setting up this Agreement.
CLAUSE 46: NOTICES
All notices, demands and communications made by one of the Parties to
the other as part of this Agreement shall be in writing and shall be
deemed to have been validly delivered if they are handed over
personally in return for a receipt or sent by express mail, by registered
mail, telegram or fax to the addresses stated at the beginning of this
CLAUSE 47: LANGUAGE
All reports, notices and other documentation prepared in application of
this Agreement must be in French.
CLAUSE 48: REGISTATION AND ENTRY INTO EFFECT
Within thirty (3) Days from signature of this Agreement by all the
Parties, the Minister must sent a signed copy to the CPDM, which shall
register it without delay.
In application of the tax system stipulated in this Agreement, and the
Company not being subject to registration duty, no registration duty
shall due payable for this formality.
In witness whereof the Parties have signed this Agreement in five (5)
copies in Conakry on 2009
FOR THE REPUBLIC OF GUINEA
THE MINISTER STAMP OF THE MINISTER
FOR MINES AND ENERGY OF THE ECONOMY AND
Mr. Mahmoud Thiam Captain Mamadou Sande
For BSG Resources For BSG Resources
(Guinea) Limited (Guinea) SARL
DIRECTOR CHIEF EXECUTIVE
Marc Struik 7Asher Avidan