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 THE REPUBLIC OF GUINEA


WORK-JUSTICE-SOLIDARITY


MINISTER FOR MINES AND GEOLOGY

















BASIC AGREEMENT





;; :y f between





THE REPUBLIC OF GUINEA





.....AND





GUINEA ALUMINA CORPORATION LTD








i AND


GLOBAL ALUMINA ("GLOBAL")








FOR THE CONSTRUCTION AND OPERATION OF AN ALUMINA PLANT AT


SANGAREDI


 2











BASIC AGREEMENT (CONVENTION DE BASE)











The present agreement and its Exhibits (together, the “Agreement”) are made at


Conakry, Republic of Guinea.


BETWEEN:














1. THE REPUBLIC OF GUINEA, represented by his Excellency Dr, Alpha Mady


Soumah, Minister for Mines and Geology (hereinafter referred to as the "State"),





Of the first part;














2. GUINEA ALUMINA CORPORATION LTD (“GAC”), a private company registered


in the British Virgin Islands, with its registered office at P.O. Box 3152, Road Town,


Tortola, British Virgin Islands represented by Mr. Bernard Cousineau duly authorised to


this effect (hereinafter referred to as the “Investor” or “GAC”),





Of the second part;

















3. A company doing business as GLOBAL ALUMINA, a Canadian company,


registered in New Brunswick, a holding company, duly organised according to the laws


of Canada, the shares of which are listed on the Toronto Venture Exchange under the


code GPC.U and registered at World headquarters, 44 Chipman Hill, 10th Floor, P.O.


Box 7289, Saint John, New Brunswick E2L 4S6, Canada, represented by its Chairman


and Chief .Executive Officer, Mr. Bruce J, Wrobel duly authorised to this effect


(hereinafter referred to as “GLOBAL ”),








Of the third part;





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RECITALS








WHEREAS:


The State, in furtherance of its desire to promote the exploitation and enhancement


of mining and industrial activities in the Republic of Guinea, has decided, that such


enhancement and exploitation may be conducted by or with the aid of foreign


investors, with a view to advancing the economic development and promoting the


well-being of its people.


The State, within the scope of this policy, represents that it aims to enhance the


value of the significant high-grade bauxite resources in the region of Boke, by their


exploitation, transformation and commercialisation. The policy aims, in addition, to


encourage the exploitation of such mineral resources and of the mining


infrastructure put in place by the State, together with the construction of industrial


installations at Sangaredi for the transformation of such mineral resources.


The State has previously granted the Investor exclusivity in order to develop the


Refinery Project in the Sangaredi region, pursuant to a Memorandum of


Understanding dated November 21, 2001, as amended since that date (the


“MOLT);


The State has decided to license to the Investor the mining and industrial


activities which are the subject of this Agreement;





The State shall guarantee the Investor for the entire term of this Agreement


against any interference with the free, whole and full enjoyment of the rights which


it agrees to grant hereunder.


The Investor has expressed a desire to build upon, possess and enhance the


areas put at its disposal for the purposes of mining and industrial development


operations in Guinea, which includes the extraction of bauxite and its


transformation into alumina, designing, developing, financing, constructing, owning


and operating an approximately 2.8 million tonnes per annum Refinery (capable of


Expansion, as such term is hereinafter defined) as well as the port, rail and


roadway and related Infrastructure (as such term is hereinafter defined) required for


the Project, such as installations necessary for the use of water resources,


communication installations, housing and related social installations, real estate


improvements, in existence or to be built for the purposes of the project (the


“Project”);





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The State and the investor have initiated discussions in relation to a Basic


Agreement in terms of which the State will, among other matters, grant to the


Investor a mining concession for the supply of the Refinery with bauxite in the


Study Area defined in article 3 hereof and the benefit of all the rights which are


necessary for the purposes of implementing the Project in the Concession Area.


The State wishes the Project works to commence as soon as possible and that the


works relating to the Port Installations and the Industrial Installations and


Equipment (as such terms are hereinafter defined) begin within a period of ninety


(90) Business Days from the date of this Agreement.


The Investor is amenable to begin various works and, in particular, those relating





to the Port Installations and the Industrial Installations and Equipment in existence


and to be built, (including the Channel), subject to obtaining an exclusive usage


and/or exclusive concession of the rights required for this purpose, as well as the


assurance from the State that the necessary efforts will be made in order that the


required contractual documentation and procedures for the implementation of the


Project are put in place as soon as possible.


The State has agreed to grant to the Investor, according to the terms of this


Agreement, the exclusive right to develop, design, construct, finance, own, operate


and maintain Port Installations on the Port' Area (as such term is hereinafter


defined) and the Industrial Installations and Equipment on the Industrial Zone (as


such term is hereinafter defined) on land made available to the Investor by the


State for this purpose and to grant to the Investor a right of access and use of the


Channel and the principal railway line;





The State acknowledges' that the Project Activities are strictly dependent upon the


ability of the Investor to use, for the entire duration of the Project, the installations


and to access the Existing Infrastructure situated in particular outside the


Concession Area (as hereinafter defined), most of which are the property of the


State or under concession;


The Investor represents that it understands the objectives of the State as stated


herein;


The State has port infrastructure, under concession, available to it in the port area





of Kamsar and wishes the ownership of the new Port Installations built by the


Investor to be transferred to it in accordance with article 12,6 hereafter.








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The Investor represents that it has available to it all required technical,


technological and commercial capacity for the implementation and operation of the


Project;











The Investor represents that it has ail the capability to seek the financing


necessary for the implementation of the Project:











GLOBAL is a holding company, duly organised according to the laws of Canada,


the shares in which are listed on the Toronto Venture Exchange. As a listed


company, the allocation of the share capital of GLOBAL may change, at any


moment, throughout the term of this Agreement, which the State acknowledges.





As a result, any direct,or indirect change of control shall have no impact on this


Agreement or on the rights granted hereunder.











GLOBAL confirms in its capacity as holding company of the Investor that:











(a) it shall assist the Investor, to the extent permitted by Canadian law, in the


context of obtaining the financing for the Project by the Investor, set out in


Article 16 hereof;











(b) upon the signature of this Agreement, it (i) shall make public the signature of


this Agreement, all in accordance with the provisions of the stock exchange


legislation and regulations applicable in Canada; and (ii) shall inform its


Subsidiary (as such term is defined hereinfter) of the undertakings envisaged


in terms of Article 35.2 hereafter.











GLOBAL owns, directly or indirectly, upon the date of signature of this Agreement


and until the date on which financing has been obtained definitively and irrevocably


as set out in Article 16 below, one hundred per cent (100%) of the share capital


and voting rights in the Investor, according to the description set out in Exhibit 1


hereto.








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NOW, THEREFORE, IT HAS BEEN AGREED AS FOLLOWS:








DEFINITIONS


For the purposes of this Agreement, the capitalized terms and phrases used in this


Agreement shall have the following meanings unless stipulated to the contrary in this


agreement:


“Accounting and Tax Exhibit” means Exhibit 2 attached to the present


Agreement.





“Additional Port Royalty” is defined in Article 12.6.2 (ii) hereinafter.


“Affiliated Company” means any entity directly or indirectly controlling


or controlled by, or under direct or indirect


common control with the Investor. For the


purposes of this definition, the term "control"


(including the terms “controlled by" and “under


common control with") shall mean the


possession, directly or indirectly, of the power to


direct or cause the direction of the management


policies of such person.


“Agreement” means the present Basic Agreement including


the Exhibits and any amendments or


supplements hereto.


“ANAIM” means I’Agence Nationale d’Amenagement des


Infrastructures Minieres de Guinee or any other


Authority which replaces it.


“Assets” means all property, rights, titles and interests


present or future, moveable or immoveable,


corporeal or incorporeal, belonging to the


Investor, or put at the Investor’s disposal or


leased to or granted to the Investor by the State


or by any third party, together with the rights


granted to the Investor under this Agreement or


under any other agreement (including the


Infrastructure Agreement) relative to the design,


development, construction, financing, ownership





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or operation of the various elements of the


Project (including, without limitation, the profits


and revenues which will result from the Project


and which will be paid or payable to the Investor


or for its account).





“Authorisations” means all administrative acts, such as permits,


consents, approvals, waivers and exemptions,


entry, exit and residence visas, importation


licenses, administrative registrations, decrees,


decrees granting the mining concession, mining


rights (research and exploration and exploitation


rights), rulings, circulars, tax and customs


exemption certificates and other authorisations in


whatever form, required in the Republic of


Guinea to carry out the Project Activities.





“Authority” means the State and the Government of the


Republic of Guinea and includes in particular any


ministerial department, territorial administration,


body or agency including the relevant land


commissions (commissions foncieres), the


relevant port and customs authorities authorized


under Guinean laws to act in the name of the


State, exercising legislative, executive,


administrative or judicial power or any entity


having a mandate to exercise such a power.


Authority also means a legislative, executive,


administrative or judicial power or any entity


having a mandate to exercise such a power.





“Business Day” means any day during which the banks in


Conakry (Republic of Guinea) and in New York


(United States) are open for the purposes of


“CBG” clearing operations and transactions on the


monetary market between them.


means the Compagnie des Bauxites de Guinee.





“Channel” means the access channel from the Atlantic


Ocean to the port of Kamsar with an approximate


total length of 17 km on the Rio Nunez and a





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width of 120 meters, expandable to a width of


200 meters.


“Company” means the Guinean company Guinea Alumina





Corporation (GAC Guinea) set out in Article 4.


For the purposes of Chapter V hereafter, the


Company is understood to mean the Company,


its Affiliated Companies and its Direct Sub-


Contractors as defined hereafter.


“Compensation Payment” is defined in Article 34.2.1 of this Agreement.





“Concession Area” means the territory, which is the subject of this


Agreement, the perimeter of which is set forth in


Exhibit 6, as may be expanded from time to time


during the term of this Agreement. The


Concession Area shall also include the land


reserved and/or acquired for the purposes of the


Port Installations and the Industrial Installations


and Equipment, as well as the land reserved


and/or acquired for the purpose of the


Infrastructure to be constructed for the Project,


including all elements thereon and thereunder


such as bauxite, water, soil, sand, trees and other


materials. The Concession Area includes the


Mining Concession, the Port Area and the


Industrial Zone.





is defined in Article 34.2.1 paragraph 1.


“Contractual Period”


“Contractual Documents” means all written contracts, agreements or heads





of agreement, directly or indirectly related to the


Project Activities.


“Current Legislation” means the Guinean regulations (laws, orders,


decrees, rulings, decisions, instructions, case law


etc.) known and existing on the date of signature


hereof and made on this date, taking into account


the interpretation thereof as at that date both in


Guinea and in the application of international


customs for large mining projects.








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“Date of Commercial Production Start-up” has the meaning set out in Article 6 of this


Agreement.


“Damage” is defined in Article 19.2 hereinafter.





“Direct Sub-Contractor” means any enterprise chosen by the Investor or


its Affiliated Companies validly existing and which


has the necessary competencies to provide the


services or carry out the works necessary for the


purpose of the Project Activities and having


entered into a contract with the Investor or its


Affiliated Companies, or one of their sub¬


contractors exclusively in the context of the


Project, the identity and nature of such services


or works requiring to be communicated to the


State, upon request, immediately upon signature


of the sub-contract.





“Effective Date” means the date on which all the conditions set


out in Article 34.1 of this Agreement are fulfilled.


“Exhibits” means the documents listed at the end of this


Agreement which set out the details of, or


complete, the provisions of this Agreement, of


which they form an integral part.





“Existing Infrastructure” means the infrastructure that is the object of the


concession agreement between the State and


ANAiM of the first part and the CBG of the other


part (Port, City, Channel and Railway) are the


subject of the ANAIM/CBG Agreement dated


June 13, 1996, and which are required for the


carrying out of the Project Activities.





“Expansion” means the development, design, construction,


financing, ownership, operation and maintenance


of any activity intended to increase the alumina


production capacity of the Refinery as set out in


Article 7 of this Agreement.





“Fiscal and Customs Regime” means the fiscal and customs regime set out in


terms of Chapter V hereof.





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“Force Majeure” has the meaning set out in Article 38.1 of this


Agreement.


“Force Majeure Compensation” is defined in Article 38.3 of this Agreement.


means the socio-economic, environmental,


“Implementation Studies”


demographic and any other studies considered


as necessary by the Investor to design, develop,


“Indemnification” construct and finance the Project.


is defined in article 19.2 hereof.





“Industrial Zone” means the area on which shall be built at Kamsar


the Industrial Installations and Equipment, the


coordinates of which are set out in Exhibit 4


hereto.





“Industrial Installations and Equipment” means the installations and equipment for


the warehousing of alumina and Intrants to be


constructed and upgraded for the handling of the


products which will be and shall remain the


property of the Investor in their entirety and


which are all necessary to the functioning of the


Project.


“Infrastructure” means the road, rail, port and other infrastructure


including, without limitation, the roads, railroads,


port installations and other lines of


communication (such as pipelines and other


transmission lines) in existence or to be created.


“Infrastructure Agreement" means all the provisions relating to the practical


and logistical terms of use by the Investor of the


ANAIM infrastructure under concession with CB6


to be signed between the State, the Investor,


ANAIM and CBG and which upon signature shall


become, fully and automatically, Exhibit 3 hereto.


“Intrant" means any product, raw materials, equipment


and other goods used in the mining operating





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process and in the transformation of bauxite into


alumina.


“Investor” means GAC and the Company.


“Lender(s)” means any party or parties providing a financing


to the Investor or its Affiliated Companies or


such other entities as either the Investor or its


Affiliated Companies might form, each with


“Long-term Purchase respect to any of the Project Activities, or such


Lender's designee.


Agreements” means the agreements relating to transactions of


a minimum duration of ten (10) years, signed by


the Investor with various purchasers in order to


“Maintenance Plan” sell alumina.


is defined in Article 34.2.2 hereafter.


“Mining Code” means the Code Minier of the Republic of


Guinea, as in force and effect on the date hereof.


“Mining Concession” means the mining boundary delineated by the


geographical coordinates and which will be the


subject of the decree granting the concession


“Party and/or Parties” and shall include the Study Area defined in Article


3 hereafter.


means the .State and/or the Investor.


"Plant” or “Refinery” means the plant for the transformation of bauxite


into alumina, of which the construction, start-up


“Port Agreement” and operation form part of the Project.


is defined in Article 12.6.1.


“Port Activities” has the meaning given to it in Article 12.2 of this


Agreement.


“Port Area” means the offshore area, starting at the high


water line, on which shall be built the quay and





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the jetty, the details of which are set out in Exhibit


5 hereto.


“Port Installations” means the improvements to the Channel and the


construction of a quay and jetty starting at the


high water line in the Port Area, identified in the


development plan for the Port Area, set out in


Exhibit 5 hereto, excluding the Industrial


installations and Equipment.


“Port Royalty” is defined in Article 12.6.2 (i) hereinafter.


“Project Activities” has the meaning set forth in Article 26 of this


Agreement.


“Project Installations” means all the constructions built in the


/ Concession Area in connection with the Project.


“Study Area” is defined in Article 3 of this Agreement.


“Subsidiary" means the company the shares of which are fully


and directly owned by Global at the date hereof,


as described in Exhibit 1 hereto.


“Tax” means any tax, value added tax, duty, stamp


duty, charge, customs levy, fee or royalty (as well


as social charges) and, more generally, any fiscal


or quasi-fiscal levy for the benefit of the State,


any Authority, any local government and public or


publicly held body, or public or private body


commissioned with the management of a public


service or with a public service assignment.


“World Bank Guidelines” means the environmental safeguards and policies


set out by the World Bank.


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CHAPTER I:


GENERAL PROVISIONS





ARTICLE 1: PURPOSE OF THIS AGREEMENT


The purpose of this Agreement is to:


define the general economic, legal, administrative, financial, fiscal, customs, land,


mining, maritime, environmental and social conditions in which the Parties


undertake to carry out the Project.


To this end, its purpose is:


(i) . for the Investor to design, develop and operate a Refinery in the Concession


Area:


(ii) for the State to grant the facilities and guarantees that the State accepts to give


vis-a-vis the Investor to allow the implementation of the Project (including (i) the


granting of a mining concession, for the supply of the Refinery with bauxite,


covering the entirety of the Study Area defined in Article 3 hereinafter; and (ii) the


construction of Port Installations and Industrial Installations and Equipment defined


in Article 12 hereinafter) and the improvement of the Channel and the railway line


as set out in the Infrastructure Agreement;


(iii) for the Parties to define the consequences of any failure to comply with their


respective undertakings in terms of this Agreement.


It is specified that this Agreement includes a number of derogations from the Current


Legislation and legislative and regulatory texts in force at any moment whatsoever


throughout the duration of this Agreement which derogations shall have the force of law


and shall prevail in the event of discrepancy with any other text.


ARTICLE 2 : DESCRIPTION OF THE PROJECT


The Project aims:


• at the exploration and exploitation of the bauxite resources within the Mining


Concession granted to the Investor in the Study Area for the purposes of its


transformation into alumina;








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• at the construction of a Refinery of a capacity of approximately 2.8 million


metric tons per year;


• at the construction of the Port Installations and the Industrial Installations and


Equipment at Kamsar;


• at the improvement of the Channel;


• at the improvement of the principal railway line as defined in the


infrastructure Agreement;


• at the design, construction, development, management, ownership and


maintenance of other Infrastructure, particularly road and rail, required for the


implementation of the Project (including, without limitation, port, Channel,


warehousing, transport, energy production, use of water resources etc.) for


the purposes of the Project.


• at the construction of social infrastructure of a residential and sanitary nature


relating thereto.


It is understood that, prior to the implementation of the Project, the Parties agree to


proceed with the following successive phases;


(a) identification by the Investor of the Lenders likely to agree the financing,


including the debt and equity, as well as the provision of risk guarantees,


insurance and other security arrangements for the Project;


(b) carrying out the Implementation Studies in co-operation with the State : it


being understood that when the State becomes involved in such


•' Implementation Studies, it shall ensure that its services and other Authorities


concerned act with the necessary diligence in order not to delay the progress


of the Project Activities;


(c) negotiations by the Investor with various Direct Sub-Contractors or third


parties of agreements relating to the evaluation, design and construction of


the Refinery as well as any equipment, installation, component and


Infrastructure linked to the Project;


(d) the State shall undertake, with diligence, all actions required and shall give


the necessary instructions to the Authorities which are concerned, in any


manner whatsoever, by the Concession Area, the Project Activities (including





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in particular the transport, port and customs Authorities) and the other rights


guaranteed to the Investor in terms of this Agreement in order that such


rights shall be fully respected;








(e) the State shall ensure and guarantee to the Investor that the Authorities co¬


operate fully with the Investor in order to effect the filings or registrations


which may be necessary to protect the rights guaranteed to the Investor in


terms of this Agreement;











(f) the State shall take the necessary measures such that any confirmations


which may be required by the Lenders, according to which the State fully


supports the Project, shall be given;








(g) in relation to the implementation by the Investor of the rights granted to it


over the Existing Infrastructure and the Channel under the terms of this


Agreement, the State shall ensure that the practical, logistical and royalty


terms and conditions relative to the use by the Investor of the Existing


Infrastructure and the Channel shall be worked out in good faith by CBG and


ANAIM in order to ensure that the needs and demands of the Project are


dealt with in an efficient manner and are reflected in the Infrastructure


Agreement;











(h) any development liable to have a negative effect on this Agreement, the Port


Installations, the Industrial Installations.and Equipment, the Infrastructure


Agreement, the use of the. Channel or the Project shall be notified


immediately to the Investor.








The Investor shall continue to carry out the works relating to the Port Installations and


those relating to the Channel, in accordance with the terms of this Agreement.











The successive phases described in this Article 2 shall take place in accordance with a


schedule (which automatically shall become Exhibit 8) which may be changed to reflect


the development of the Project and the actual implementation of its various elements.


 CHAPTER II:


EXPLOITATION, PRODUCTION AND COMMERCIALISATION





ARTICLE 3 : MINING CONCESSION








The Mining Concession granted by the State to the Investor, for the supply of the


Refinery with bauxite, covers the area where the Investor has carried out its studies for


the implementation of the Project and which shall be the subject of a decree in


accordance with the Current Legislation.





ARTICLE 4 : OPERATING COMPANY





4.1.: Guinea Alumina Corporation (“GAC Guinea") is a Guinean Company created on





August 16,2000 for the purposes of the Project Activities (the “Company").





4.2.: The legal regime and the distribution of the capital of the said Company shall be


specified in its bylaws in accordance with the Uniform Act relating to Corporations and


GIEs dated 17 April 1997, adopted under the OHADA Treaty. The State shall have the


right to designate a representative, who will be a natural person of its choice, to sit on


the executive committee of the Company.





4.3.: From the date on which the financing is definitively and irrevocably obtained for the


Project, the Company shall become the beneficiary of the rights and obligations resulting


from this Agreement in place of GLOBAL and, from that date, the Company and GAC, in


their capacity as Investor, shall act jointly and severally for the purposes of this


Agreement.





ARTICLE 5 : RIGHT OF EXPLOITATION





5.1.: The Investor will carry out all industrial exploitation, transformation and marketing





activities within the limits and conditions set out in this Agreement.








- 5.2.: The Parties agree that the Investor shall have, during the term of this Agreement,


the right to produce and market alumina according to its requirements.





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ARTICLE 6 : COMMERCIAL PRODUCTION


The start-up of the commercial production of alumina shall be effective only when the


threshold of production of the Refinery shall have reached one hundred and fifty


thousand (150,000) metric tons each month over a continuous period of four (4) months.





ARTICLE 7: EXPANSION OF PRODUCTION





The State recognises the right of the Investor to build one or more Expansions if it


considers this appropriate and in accordance with its development plan; provided that:


(i) within the context and for the purposes of any Expansion, the Investor will


benefit from all the advantages and provisions of this Agreement for the


same duration as this Agreement; and


(ii) the State agrees, without prejudice to the provisions of paragraph (i) above,


to, by mutual agreement with the Investor and in good faith, and to the


extent necessary make any changes, in particular with regard to the


extension of the Concession Area, as are required to be made to this


Agreement to permit the implementation of the Expansion under the most


favourable economic conditions, taking into account the world market at that


time.





ARTICLE 8 ; RIGHT OF ACCESS OF THE STATE


8.1. : The State shall have the right of access and visit during working hours and





provided it has notified the Investor in writing of its intention to exercise this right and


provided its does not impede the smooth running of the commercial and industrial


operations of the Company and the Project Activities.


8.2. : The State and its representatives shall not communicate to third parties the


information gathered during such visits without the prior written consent of the Investor,


except for information which is in the public domain.


ARTICLE 9 : ACCESS TO COMMERCIAL PRODUCTION





9.1.: The State shall have the right to submit to the Investor a request seeking to sign


with the Investor a Long Term Purchase Agreement. The Investor shall examine this


request and the Parties shall have a period of one (1) month in which to attempt to





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conclude such an agreement (i) on conditions (in particular financial terms) which are at


[east as advantageous as those which the Investor may obtain from a third party, for the


same quantity and for supply agreements of even duration; and (ii) taking into account


the financing imperatives of the Project. If such conditions may not be obtained in the


course of negotiation with the State, the Investor shall be under no obligation to sell


part of its production of alumina to the State.


9.2.: The Parties agree in addition that in the event that a smelter is built by the State


on the Sangaredi site during the term of this Agreement, the Investor shall be amenable


to work out the extent to which it may enter into a Long Term Purchase Agreement on


the best conditions available on the international market at that date and provided that


the alumina produced by the Investor is available.


ARTICLE 10 : COMMERCIALISATION





The Investor shall have the right to export from Guinea without any restriction, its


production of alumina throughout the entire duration of this Agreement.


ARTICLE 11 : INFRASTRUCTURE








11,1.: The State hereby guarantees to the Investor a right of access and use of the


Existing infrastructure (including the Channel) throughout the term of this Agreement.


The practical and logistic terms relating to the use of the Existing infrastructure (including


the Channel) - which are all necessary to the implementation of the Project - shall be


specified in the infrastructure Agreement. The Infrastructure Agreement shall also be an


integral part of this Agreement,


From the date of signature of this Agreement, the State guarantees to the Investor that


it shall have the right to access and use of the Channel in such a manner as to be able


to carry out and build the Port Installations, the Industrial Installations and Equipment,


the Port Activities and the Project Activities. For this purpose, the State shall take the


necessary measures with ANAIM, the Kamsar port Authorities, CBG and any third party


concerned in order that the Investor fully enjoys this right of access and use in the most


efficient manner and without any adverse effect on the Project Activities and Port


Activities or on the obtaining of the financing necessary for the implementation of the


Project and the Port Activities by the Investor.








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11.2. : The Infrastructure put in place by the Investor, which is not included in the


Infrastructure Agreement, shall be the property of the Investor in accordance with the


provisions of this Agreement.


11.3. : (i) During the validity of this Agreement, if the implementation of the Project


requires that additional infrastructure other than that provided in this Article be put into


place, then the State shall grant to the Investor all rights, guarantees and land required


and shall enter into any necessary agreements to that effect with any third parties. The


Investor shall, in compliance with the Current Legislation build at its own cost' such


infrastructure and shall become the owner of the equipment relating to this Infrastructure


or to the Existing Infrastructure.


(ii) In relation to any additional Infrastructure for connecting to the principal


railway line under CBG concession, the provisions of Article 11.3 (i) above shall apply, it


being always specified that the ownership of the said Infrastructure upon the expiry of


this Agreement shall revert to the State, provided that no residual value shall have to be


paid if the Agreement comes to an end at the end of the Contractual Period set out in


Article 34.2.1 hereafter.


11.4. : The State guarantees to the Investor: I


(i) that the rights and obligations of CBG, ANAIM, the State and the Investor,


relating to the use, functioning, maintenance and development of the Existing


Infrastructure and the Channel shall be exclusively those set out in this


Agreement and in the Infrastructure Agreement. The State shall take the


necessary measures to ensure that the financial and logistical terms and


conditions and other undertakings relating to the use by the Investor of the


Existing Infrastructure shall be worked out in good faith by CBG and ANAIM


in order to ensure that the needs and demands of the Project are dealt with in


an efficient manner and are reflected in the Infrastructure Agreement.


In any event, the State guarantees that from the date of signature of this


Agreement and pending signature of the Infrastructure Agreement, the


Investor shall have a right of access to and use of the Existing infrastructure


in such a manner as to be able to carry out and use the Port Installations, the


Industrial Installations and Equipment, the Port Activities and the Project


Activities. For this purpose, the State shall take the necessary measures with


ANAIM, the Kamsar port Authorities, CBG and any third party concerned in


order that the Investor may fully enjoy this right of access and use in the


most efficient manner and without having an adverse effect on the


implementation of the Project Activities and Port Activities:








aredi Alumina Refinery - Basic Agreement


(ii) the performance by CBG and ANAIM of their obligations under the terms of


the Infrastructure Agreement;


(iii) other than as expressly stipulated in the agreement entered into on 13 July


1996 between ANAIM and CBG relative to the use by CBG of certain Existing


Infrastructure, and as clearly defined in the Infrastructure Agreement, the


State has not granted any right of access whatsoever relative to the Existing


. Infrastructure to any third party whatsoever.


If a third party makes a request to the State to have a right of access to the


Existing Infrastructure, the State shall submit this request in writing, without


delay, to the Investor, to CBG and to ANAIM and shall only have the right to


grant such a right of access with their prior written and unanimous consent.


ARTICLE 12: PORT INSTALLATIONS AND INDUSTRIAL INSTALLATIONS


AND EQUIPMENT





12.1.; The State hereby grants to the Investor the right to design, develop and exploit


for the purposes of the Project:


(i) On the Port Area: the Port Installations and the expansion of the Channel as it


exists and the turning basin at the new quay with provisions for an expanded


beacon system.


(ii) On the Industrial Zone: the Industrial Installations and Equipment which shall


include in particular:


a deep water port for alumina in proximity to the existing port, with the


capacity to harbour ships of over 50,000 metric tons;


storage facilities with the following capacities:





. alumina up to 400,000 T;


. caustic soda up to 150,000 T;


. fuel oil up to 120,000 T;


. diesel up to 60,000 T;


. coke up to 100,000 T;


. coal up to 120,000 T;


. limestone up to 80,000 T;


. other products up to 60,000 T.








Sangaredi AJumina Refinery - Basic Agreement


 21





a parking area for 2,500 containers and vehicles.


12.2. : The State hereby grants the Investor, without restriction, an exclusive


concession over the Industrial Zone and the Port Area, conferring upon the Investor the


exclusive right to develop, design, construct, finance, own, operate and maintain the Port


Installations and the Industrial Installations and Equipment on the Industrial Zone and on


the Port Area and to carry out the Port Activities (as defined in the present Article 12.2),


including, without limitation, the exclusive right to use, without restriction, the lands,


waterways and seaways for the purposes of the Port Installations and Industrial


Installations and Equipment, the right to: (i) use, clear, transform and improve the Port


Area and the Industrial Zone and any vegetation, trees, facilities, structures,


improvements or obstructions located on or under the Port Area and the Industrial Zone


or the Channel; (ii) secure the Port Area and the Industrial Zone by installing fencing or


other suitable materials on the Port Area and the Industrial Zone; (iii) restrict the access


of persons to the Port Area and the Industrial Zone; (iv) utilize the goods and resources


(whether movable or immovable) that are located on, may be built upon or that are part


of the Port Area and the Industrial Zone; (v) dredge material from the seabed so as to


form a safe berth for vessels using the Port Installations and Industrial Installations and


Equipment and to deposit the dredged material on land or in any other place clear of any


navigable channel; (vi) dredge sand or suitable fill material from the seabed and to


deposit on land on the Port Area and the Industrial Zone so as to raise the surface of the


land and to consolidate it so as to be more suitable for the construction works relating to


the Port Installations, the Channel and the Industrial Installations and Equipment; (vii)


freely transport and/or import (by rail, road, air or sea) all materials, goods, equipment,


services or people, and store, load and unload the same in places and in premises


related to the Port Area and the Industrial Zone and (viii) carry out all activities necessary


for the development, design, construction, financing, ownership, operation and


maintenance of the Port Installations and the Industrial Installations and Equipment or of


the Channel;


(hereinafter collectively referred to as the “Port Activities”).


12.3. : The State represents and warrants that it has not granted, and will not grant


during the term of this Agreement, to any third party whatsoever a right of access or use,


of any nature whatsoever, with respect to the Port Area or Industrial Zone, or rights that


may adversely affect the rights granted by the State hereunder (including the right of


access and use of the Channel for the purposes of the Project).


12.4. : The State hereby acknowledges that the rights granted to the Investor in this


Article 12 include the right for the Investor to fully control and operate and to use


without any restriction or exception the various elements which comprise the Port Area


and the Industrial Zone.








Sangatedi Alumina Refinery - Basic Agreement











/


 22








12.5. : Ownership of Industrial Installations and Equipment:


The State acknowledges and accepts that, throughout the term of this Agreement, the


Investor shall have all the rights of ownership and in particular the exclusive rights for


developing, transforming, constructing, using, exploiting and improving the Industrial


Installations and Equipment howsoever for the purposes of the Project without any


restriction whatsoever.


12.6. : Specific provisions relating to the Port Installations:


12.6.1. : The State shall have, for the entire term of this Agreement, the full and whole


ownership of the Port Installations which will be (i) financed and constructed by the


Investor; and (ii) granted by the State to the investor automatically and on an exclusive


basis for the entire term of this Agreement in accordance with the provisions of Article


12.2 above. The Parties shall specify the terms and conditions set out in Article 12.6 in a


port agreement to be agreed upon, which will automatically become Exhibit 7 hereto (the


“Port Agreement").


12.6.2. : The State acknowledges that significant financing wilt be required and sought


by the Investor from Lenders for the purposes of the Port Activities on the basis of the


guarantees given by the State to the Investor under this Agreement, in order for the


Investor .to build the Port Installations.


As a result, the Parties agree that no usage royalty shall be due to the State by the


Investor in consideration for the rights granted to the Investor by the State over the


Port Installations as set out in Article 12.2 above, for a term of twenty five (25) years


from the start of alumina exportation by the Investor, all without prejudice to the


guarantees given io the Investor in Chapter V hereof.


(i) At the end of the abovementioned period of twenty five (25) years, the Investor


shall pay to the State, for a new term of twenty five (25) years, an annual royalty


equal to two per cent (2%) of the construction costs of the Port Installations (the


“Port Royalty") in consideration for the Port Installations being made available and


for the exclusive right of use thereof.


(ii) At the end of the period of twenty five (25) years set out in Article 12.6.2 (i) above,


the amount of the port royalty, shall be increased to five per cent (5%) per year of


the costs of construction of the Port installations for the remainder of the term of


the Agreement (the “Additional Port Royalty").








Sangaredi Alumina Refinery - Basic Agreement


 23








12.6.3.: The Parties agree that upon the amount of the port royalty for the two periods of


twenty five years set out in Article 12.6.3(i) and (ii) above, the Investor shall withhold ten


per cent (10%) which shall be kept in an escrow account to be opened at an investment


grade bank; this sum being intended to guarantee the costs of maintenance and upkeep


of the Port Installations throughout the entire term of this Agreement. .


These sums may only be used for the purposes of maintenance and upkeep of the Port


Installations by the Investor; their effective use shall be made by consultation by the


Investor with ANAIM.








ARTICLE 13 : PARTICIPATION OF THE STATE








13.1. : The State shall have the right to make an offer to GLOBAL to acquire, directly or


indirectly, in the six (6) months following the Effective Date of this Agreement, a


shareholding in GLOBAL on market terms, it being specified that this will not affect the


raising of financing by the Investor for the purposes of the Project, This shareholding


shall not affect in any way the management and administration of the Investor or of any


other management entity put in place for the purposes of the Project.


13.2. ; This shareholding shall not in any way grant the State a power of direct or


indirect control over GLOBAL or the Investor and shall be fully paid in US Dollars and


shall not imply any restriction or impact on the rights and guarantees granted by the


State to the Investor in this Agreement.








ARTICLE 14 : FREIGHT AND MARITIME TRANSPORT








To the extent that the Investor will have responsibility for transport, the Investor


undertakes to have up to fifty per cent (50%) of the exported alumina taken by vessels


designated by the State sailing under the Guinean or assimilated flag, provided that the


vessels possess a valid maintenance certificate issued by LLOYDS, and that the


conditions of their tenders are equally or more competitive than those which the


Investor would obtain on the freight market for identical terms including as to technical


loading and unloading obligations for the deemed period of the freight and in respect of


the shipping conditions involved and taking account of all other parameters which would


be taken into account to analyse the competitiveness of an offer.








Sangaredi Alumina Refinery - Basic Agreement


 24





ARTICLE 15: PURCHASE, SUPPLIES AND SERVICES





15.1. : The Investor and its Direct Sub-Contractors will whenever possible use services


and raw materials from Guinean sources and products manufactured in Guinea insofar


as these services and products are available on equally competitive terms as to price,


quality, warranties and delivery time as on the international market.


15.2. : The use by the Investor of a Guinean Company in accordance with the terms of


the preceding paragraph shall not imply any future obligation, in the event that the said


company is not able to satisfy the Investor or in the event that the conditions which it


proposes are not competitive or if it has not been able to respect all of the conditions


stipulated in Article 15.Tabove.








CHAPTER III:


UNDERTAKINGS OF THE INVESTOR





ARTICLE 16 : FINANCING OF THE PROJECT





16.1. : The Investor undertakes to identify and use its best efforts to negotiate the


agreements relating to the obtaining of the financing necessary for the implementation of


the Project by the Investor and to use its best efforts to have these signed within a


period of eighteen (18) months from the Effective Date, provided that:


all of the necessary Authorisations have been irrevocably provided to the


Investor;


all of the rights have been made available to the Investor, in accordance with


the terms hereof so that the Project can be implemented; and


the necessary land has been transferred to the Investor, in accordance with


the provisions of this Agreement.


The Investor envisages that the financing shall be obtained according to a plan which


shall be communicated by the Investor to the State.


The Investor undertakes to inform the State of any delay and difficulty in the negotiation


of the financing and shall indicate to the State the reasons for such delay and to what


extent these obstacles may be overcome. If these obstacles cannot be overcome, the





Sangaredi Alumina Refinery - Basic Agreement


 25








Parties shall meet in order to agree on the future of the Project and so that each Party


may draw the consequences of this situation.





16.2. : Without prejudice to the demands of the Lenders which shall be reflected in the


agreements relating to the financing^ of the Project, the financing of the Project as


envisaged at the date hereof, will be of the order of 30% by equity financing and 70% by


external financing.


16.3. : The State agrees to participate actively in this process and to respond favourably





to any request which may be made of it in this regard by the Investor or the Lenders.


ARTICLE 17 : EMPLOYMENT OF STAFF





17.1. : Guinean Personnel


17.1.1. : During the term of this Agreement, the Investor and its Direct Sub-Contractors





shall:





employ as a matter of priority Guinean nationals and/or residents to meet


their needs for unskilled labour, in remuneration terms generally conforming


to common practices in Guinea;


put in place a training and promotion program for the Guinean personnel to


allow them to acquire the experience necessary to fill management positions


(cadre and cadre supeheur)] and


provide sanitary coverage and living quarters for personnel which comply


with the Current Legislation and common practices in Guinea.





17.1.2. : The Investor and its Direct Sub-Contractors shall have the right to terminate


the employment of any employees hired under Article 17.1.1 above, subject to complying


with the relevant provisions of the laws of the Republic of Guinea.


17.2. : Expatriate Personnel





17.2.1.: The Investor, its Affiliated Companies and Direct Sub-Contractors may freely


employ for the purposes of their activities with respect to the Project Installations


personnel who in the opinion of the Investor are necessary to the efficient conduct of


the Project Activities and to their success. The Authorisations required for such


expatriate personnel will be issued by the competent services on the following terms:








Sangaredi Alumina Refinery - Basic Agreement








/


 26





17.2.2. : A work permit will be issued in individual name to each member of the


expatriate personnel on the request of the Investor. The permit will be issued within a


maximum of fifteen (15) Business Days from the date of deposit of the complete file with


the competent services and in any case within the necessary time frame for conducting


the Project Activities, except in exceptional cases where, for objective and manifest


reasons of public security, it is not appropriate to issue such a permit.


The work permit will be issued for a renewable period of three (3) years if the contract of


employment is of unspecified duration, and for the duration of the contract if its duration


is fixed. Renewal of the work permit will be effected following the same procedures as


those set out in the preceding paragraph.


17.2.3. : The expatriate employees and their families (spouses and dependants) must


also hold a residence visa in order to be able to reside in Guinea. The visa will be


issued in individual name on the request of the person concerned or of the Investor or


Direct Sub-Contractor, as the case may be. The visa will be issued within fifteen (15)


Business Days from the date of deposit of the complete file with the competent services,


except in exceptional cases where, for objective and manifest reasons of public security,


it is not appropriate to issue such a permit. Renewal of the visa will be effected following


the same procedures as those set out in the foregoing paragraphs of this Article.


An entry and multiple and long-duration exit visa will be given to expatriate employees


on the request of the Investor or Direct Sub-Contractor, as the case may be.


17.2.4. : The State undertakes that, during the term of this Agreement, it will not pass or


enact any measures vis-a-vis the Investor, its Affiliated Companies or Direct Sub¬


contractors which lead to a restriction of the terms under which the Current Legislation


allows:


the entry, residence and exit of any members of personnel of the Investor, its


Affiliated Companies or Direct Sub-Contractors, their families, and their


personal effects; and


the employment and dismissal by the Investor or by its Affiliated Companies


or Direct Sub-Contractors of expatriate personnel of their choice, irrespective


of the nationality of such expatriate personnel. r


ARTICLE 18: INSURANCE


18.1.: The Investor shall assume the direct consequences of the civil liability which it


could incur by reason of any loss or damage of whatever nature, caused to a third party


or to its staff in the course of conducting the activities of the Project and caused by its





Sangaredi Alumina Refinery - Basic Agreement


 27





staff or the equipment or goods of which it is owner or which are placed under its


responsibility.


To this end, the Investor shall purchase the necessary insurance policies against such


risks with insurance companies of its choice, offering guarantees of coverage and


indemnification which the Investor shall judge to be the most adequate.


18.2.: Where there is no difference in terms of guarantees, premiums, prices and of


settlement of claims in any other currencies where such claims bear the right to an


indemnification in other currencies, the Investor shall opt for the purchase of insurance


from Guinean insurance companies, provided that such insurance policies may be re¬


insured with investment grade international companies operating in the re-insurance


sector.


ARTICLE 19: INDEMNIFICATION


19.1. : Any Party who causes.damage to another Party in the context of this Agreement


and/or the Infrastructure Agreement shall indemnify the non-breaching Party in respect


of the damage caused by the breaching Party (even if the damage suffered results from


a breach of the provisions of this Agreement and does not give rise to termination of this


Agreement and/or the Infrastructure Agreement).


19.2. : The indemnification by the Party in breach must cover all of the damage suffered


(the “Indemnification"). The term “Damage1’ covers all direct and indirect damage,


tangible and intangible, including in particular the replacement value of the Assets lost


by the Investor (if the State is the Party in breach) all of the costs, actual or future


operating losses and profits until the expiry of this Agreement, expenses, interest, legal


expenses, expert fees and other disbursements incurred by the Party suffering the


damage.


19.3. : The amount of Indemnification shall be settled within sixty (60) days from the date


of occurrence of the first damage resulting from the breach of this Agreement. The


Indemnification shall be calculated during this period.


This amount shall include interest running from the date of the Damage until the actual


date of payment of the indemnity. This interest shall be calculated ten per cent (10%) per


annum compounded monthly.


19.4. : The Indemnification shall be paid only in US Dollars.





Sangaredi Alumina Refinery - Basic Agreement


 28





19.5. : It is specified that if it becomes impossible for the Investor to carry out the


Project and/or the Port Installations and/or the Industrial Installations and Equipment


and/or operate the Refinery and/or access and use the Channel, for reasons attributable


to the State, this will be deemed to be a breach by the State of this Agreement and/or


the Infrastructure Agreement and as an expropriation by the State of the Assets, giving


an entitlement to Indemnification provided the terms of Article 34.3.1 hereinafter are


complied with, in accordance with the terms hereof.


In the event that no agreement is reached between the Parties within sixty (60) Business


Days from the date of receipt by the State of the notice by the Investor invoking the


impossibility on the part of the Investor to implement the Project and/or the Port


Installations and/or the Industrial Installations and Equipment and/or to operate the


Refinery and/or to access and use the Channel, for reasons attributable to the State, the


Indemnification shall be determined by an international expert appointed by the mutual


agreement of the Parties, or, in the event of disagreement, by the general secretariat of


ICSID upon the request of the most diligent Party (the “Expert"). The Expert appointed


shall determine the consideration owed by the State upon the hypothesis that the


Agreement shall continue on the same terms until the expiration of (i) the Contractual


Period set out in Article 34.2.1 above; or (ii) for a further period of fifty (50) years


(whichever is the longer).


ARTICLE 20: PROTECTION OF THE ENVIRONMENT AND CULTURAL


HERITAGE





20.1.: The Investor agrees to:





(i) conduct all Project Activities regarding the environment in compliance


with the Authorisations and Current Legislation and applicable World


Bank Guidelines and will give the State a right of access to the


Concession Area in accordance with the provisions of Article 8 above;


(ii) perform, or have performed, investigations into the impact of the Project





on the natural and human environment and the environment generally.


The report on these investigations will include recommendations as to,


measures necessary to ease the negative impacts of the Project on the


affected environments as well as a program of repair of the lands


making up the exploited territories or compensatory measures and a


plan of environmental surveillance. The Investor shall be responsible


for implementing this program of repair and compensatory measures;








Sangaredi Alumina Refinery - Basic Agreement


 29








(iii) develop the red-mud stock basins in accordance with the World Bank


Guidelines applicable in this regard; and





(iv) if it becomes aware of elements of national cultural heritage, moveable


or Immoveable, in the course of its exploration activities, then the


Investor will not move such objects and will promptly inform the


administrative authorities.





20.2.: The State guarantees to the Investor that:


(i) it is unaware of any fact likely to undermine the implementation of the


Project or the Project Activities or the effective completion of the


Project;





(ti) if the Investor is not in a position to carry out the resettlement of


populations affected by the Project in compliance with all applicable


World Bank Guidelines, then the State shall carry out such resettlement


in compliance with all applicable World Bank Guidelines upon the


request of the Investor.








CHAPTER IV;


GUARANTEES GIVEN BY THE STATE





ARTICLE 21: CO-OPERATION OF ADMINISTRATIVE AUTHORITIES





21.1. : The State, particularly through ANAIM, undertakes to facilitate all steps and


' procedures by all appropriate measures in accordance with the Current Legislation and


undertakes to provide all reasonable assistance necessary for the implementation of the


Project, and in particular:





all of the works of construction, development, exploitation, or enhancement


of bauxite resources for the production of alumina that the Investor may


carry out in the context of the present Agreement, and also;


for (i) the development, design, construction, financing, ownership,


exploitation and maintenance of the Port Installations, the Industrial


Installations and Equipment and the access to the Channel by virtue of this


Agreement; (ii) the performance of its obligations as set out hereunder,


including, without any limitation, by transferring to the Investor free of


charge (without prejudice to Article 26.5) and in accordance with the.





Sangaredi Alumina Refinery - Basic Agreement


 30





legislation applicable, all land, in addition to the Port Area and the Industrial


Zone, reasonably required by the Investor for the design, development,


financing, construction, ownership, operation, maintenance and upkeep of


the Port Installations, the Industrial Installations and Equipment and the use


of the Channel and the principal railway line; and (iii) the import and export,


as the case may be, from the Port Installations and Industrial Installations


and Equipment, the use of the Channel and the principal railway line,


without any restriction whatsoever, of all products, raw materials, goods or


equipment required for the Project Activities including all or part of the


production of the Refinery.





21.2. : The State will, without delay, designate to the Investor the competent services in


each area concerned in order to facilitate all of the administrative steps set out in Article


21.1 above and shall ensure that the said services provide the Investor with all


necessary assistance and issue any permits set out in the Current Legislation.


21.3. : The Investor shall have the right to make, with the co-operation of the


Authorities, any filings and registrations which may be necessary in order to better


protect the rights granted to the Investor by the State hereunder.


ARTICLE 22 : LEGISLATION STABILIZATION


22.1. : The State guarantees to the Investor the maintenance of the economic and


financial benefits and the fiscal and customs conditions, set out in this Agreement for the


whole of the duration of the Project.


22.2. : The Investor may at any time elect to be governed by more favourable legal and


regulatory provisions, notably fiscal and customs provisions, which result from


developments of the law at any time which would be applied in the future to any investor


in Guinea, provided that if the said developments subsequently are modified in an


unfavourable direction, the principle of the stabilisation of the fiscal and customs regime


will apply to the provisions from which the Investor has decided to benefit and such


provisions will therefore remain in force to its benefit.


ARTICLE 23 : GUARANTEES OF PROTECTION OF THE ASSETS AND NON¬


EXPROPRIATION


23.1.: The Investor has the exclusive right and full liberty to own, operate, maintain,


use, enjoy and dispose of all or any of the Assets, in full ownership and to organise its


business in its best interests.





Sangaredi Alumina Refinery - Basic Agreement


 31











23.2.: The State will not expropriate or nationalize all or part of the Assets, whether by


direct action, or through implementation of regulations, legislation, rulings or court


decisions or through the execution of agreements with any third party whatsoever, the


effect of which, either individually, or in the aggregate, is the expropriation or


nationalization of all or part of the Assets, or the interference with the full and exclusive


enjoyment by the Investor of the benefits contemplated with regard to the Project, the


Project Activities or the Port Activities.








ARTICLE 24: FINANCIAL AND ECONOMIC GUARANTEES








24.1. : Subject to the provisions of this Agreement, the State, during the period of


validity of the Agreement, undertakes not to instigate or enact, with regard to the


Investor, any measure implying a restriction of the conditions in which the provisions of


this Agreement permit:


• the employment of expatriate personnel and their free movement in Guinean


territory;





• the free choice of manufacturers and Direct Sub-Contractors;





• the free movement in Guinean territory of equipment and goods, as well as all


substances and products arising from research, exploitation and transformation


activities;





• the free importation of foodstuffs, spares, materials, consumables and other goods


necessary for the Project and the Project Activities;


• the importation of satellite antenna equipment in compliance with the regulations in





force.





24.2.: The State undertakes to supply all permits and Authorisations necessary for the


exercise of the rights guaranteed by this Agreement within the time periods set out


hereunder.





Sangaredi Alumina Refinery - Basic Agreement


 32





ARTICLE 25 : GUARANTEES RELATING TO BANK TRANSACTIONS


The State guarantees to the Investor that:


25.1. : The Investor, the Company, the Affiliated Companies and Direct Sub-


Contractors are authorised to open and maintain currency accounts in foreign countries


with foreign commercial banks of international reputation. The Investor, the Company,


the Affiliated Companies and Direct Sub-Contractors will not be required to repatriate to


Guinea amounts held in these currency accounts except amounts necessary for the


expenses of whatever nature incurred by the Investor, the Company, the Affiliated


Companies and Direct Sub-Contractors in Guinean Francs in Guinea in the context of


the Project, it being specified that all the financial operations and movements


corresponding to the activities of the Investor must be reflected in the national


accounting of Guinea.


The Investor, the Company, the Affiliated Companies and Direct Sub-Contractors will be


authorised to hold accounts in Euros or in US Dollars or other currencies (including,


without limitation, Yen).


25.2. : The Investor, the Company, the Affiliated Companies and Direct Sub-


Contractors are guaranteed by the State the free transfer abroad without restriction or


cost (except for normal bank charges) of funds, dividends and returns on invested capital


as well as the proceeds of the liquidation or realisation of their resources or the Assets.


25.3. : Foreign personnel who are resident in Guinea and employed by the Investor or


any Guinean law company involved in the Project are guaranteed by the State the free


conversion and transfer abroad, without restriction or cost (except for normal bank


charges), of all or part of their wages or other element of remuneration due to them.


25.4. : The Investor undertakes to respect the money exchange regulations in force on


the date of this Agreement provided these regulations are compatible with the rights


granted to the Investor in terms of this Agreement.


ARTICLE 26 : ADMINISTRATIVE, LAND AND MINING GUARANTEES


26.1.: On the basis of the results of the environmental impact study (section relocation


of population), the State, with the financing of the Investor, shall proceed to the


relocation of the population whose presence on the land shall be an impediment to the


research, construction, operation and/or transformation works.








Sangaredi Alumina Refinery - Basic Agreement


 33





The Investor shall pay a fair and equitable indemnification to the inhabitants in question


as provided by the Current Legislation.


The State guarantees to the Investor the free and legal use of the means required to


carry out all the activities relating to this Agreement and the Project.


26.2. : The State guarantees to the Investor that all the Authorizations required under


Current Legislation as well as those prescribed by the Land Code, the Environmental


Code, the Labour and Social Security Codes, the Mining Code and the Code for


Economic Activities and their exhibits, shall be promptly obtained and upon acceptable


conditions for the Investor for the purposes of the implementation of the Project.


26.3. ; By this Agreement, the State grants to the Investor an exclusive and


unrestricted concession over the Concession Area conferring upon the Investor the


exclusive right to implement the Project and to carry out the Project Activities in the


Concession Area and in particular, the right, without limitation, to:


• carry out all activities involved in the exploration for and exploitation of the bauxite


resources throughout the Mining Concession, including the transformation of such


bauxite resources, the commercialisation of the product derived therefrom, the


storage, transport and loading and unloading of raw materials, semi-processed and


finished products by any means and the installation of facilities for the preparation,


concentration and treatment of such bauxite resources;


• design, develop, construct, own, operate and maintain, with full property rights


conceded by this Agreement, the. Refinery, and, as the case may be, any


Expansion;


• access and use the Infrastructure and any other infrastructure, including the


Channel, roads, railroads, communication infrastructures, pipelines, transmission


lines and related facilities and port and airport installations (whether located within


or outside the Concession Area) in existence or to be built as deemed necessary


by the Investor for the implementation of the Project;


• design, develop, construct, own, operate and maintain, with full property rights


conceded by this Agreement, the sites and/or infrastructure necessary for the


autonomous production of energy, including electrical power stations and


transmission lines and related facilities;


• sell excess electrical capacity to any operator approved by the State;








Sangaredi Alumina Refinery - Basic Agreement


 34





• design, develop, construct, own, operate and maintain, with full property rights,


transportation systems to transport products across the Concession Area, including


roads, railways, canals, pipelines, landing strips for private aircraft and helicopters,


cabling and conveyors;


• dredge material from the seabed so as to form a navigable channel for vessels and


to deposit the dredged material on land or in another suitable place clear of the


Channel according to the terms hereof and without prejudice to the guarantees and


undertakings of the State in terms of this Agreement;


• access to land outside the Concession Area and abutting the Infrastructure for the


purpose of obtaining access to leased equipment and/or materials and water;


• use, clear, transform and grade the ground in the Concession Area and any


vegetation, trees, waterways, facilities, structures, improvements or obstructions


located on or under the Concession Area, including the use and the development,


construction and exploitation of dams, water reservoirs, aquifers and water


resources;


• acquire and utilize all raw materials and utilize the goods and resources (whether


movable or immovable) that are located on, may be built upon or that are part of


the Concession Area, including wood and water resources, fill for the site of the


Refinery and dams, ballast for railroads and mined sand;


• carry out all activities related to the use of water, energy, raw materials, expulsion


of gas, discharge and storage of liquid and solid waste (including wastewater, red


mud and ash) and the formation, and storage of red mud;


• secure the Concession Area by installing fencing or other suitable materials on the


Concession Area;


• restrict the access of persons to the Concession Area and related housing and


social installations to the extent that such installations are outside of the


Concession Area;


• freely transport and/or import (by rail, sea, road, air or otherwise) all materials,


goods, equipment, services or people, and store, load and unload the same in


places and in premises related to the Project; and


• carry out the Port Activities and all activities necessary for the development,


design, construction, financing, ownership, operation and maintenance of the





Sangaredi Alumina Refinery - Basic Agreement


 35








Project Installations, together with the Port installations, the Industrial Installations


and Equipment and the Channel.


(hereafter referred to as the “Project Activities”).





26.4. : The State guarantees to the Investor:





(i) that the rights guaranteed to the Investor in terms of this Agreement have been


conceded, guaranteed and acknowledged in accordance with the Current


Legislation, that the State shall ensure the carrying out of all acts necessary for (a)


the unrestricted implementation of this Agreement: and (b) the free enjoyment of


the rights guaranteed hereunder, and by the Infrastructure Agreement and that all


Authorisations required to this effect have been delivered to the Investor and that


all formalities and procedures required by the Current Legislation have been


effected:


(ii) the maintenance of the validity and effect of the Authorisations granted or to be





granted by the port Authorities and/or any person, entity or Authority necessary to


the development, the access to and exploitation of the ground, the water courses,


the Channel the sea and infrastructure of whatever nature (including the


Infrastructure) necessary for the implementation of the Project. The Authorisations


shall be granted in accordance with the relevant Guinean legislation and must


include, without limitation; approval of the environmental impact assessment,


waste-water discharge permits, water rights permits, dredge and fill permits, quarry


permits, tree-cutting permits, air quality permits, local electrical, mechanical and


building permits and zoning or other local approvals. As soon as possible from the


date of the request by the Investor, the State undertakes to grant the above


environmental Authorisations. The Authorisations shall be deemed to be granted in


the absence of an express response by the State within a period of one (1) month


from the date of the request by the Investor. -


26.5. : The State declares and guarantees that the land and the subsoil included within





the Concession Area and the Mining Concession and the rights relating thereto,


conceded and agreed to in terms of this Agreement, have been conceded and


guaranteed in accordance with the Current Legislation and that the Concession Area


and the said rights shall remain valid and in force in ah exclusive manner, throughout the


duration of this Agreement, without any restriction whatsoever which could be liable to


affect the perfect use by the Investor of its rights to implement the Project and the


carrying out of the Project Activities and the Port Activities.


The State declares and guarantees that any land necessary for the Project and the





Project Activities shall be reserved by the Authorities for the Investor in such a manner





Sangaredi Alumina Refinery - Basic Agreement











/


 36





that the necessary Infrastructure may be constructed and used at the desired time and


may be used (along with the land) by the Investor in an exclusive manner or if not in an


exclusive manner, with priority, on condition that the sharing does not affect in a


negative way the efficient pursuit of the Project and for a term expiring on the same date


as this Agreement.


To the extent that the land necessary for the Project Activities is private land, the State


shall negotiate, in accordance with the applicable legislation, the purchase of such land


at a fair market price and if the negotiations are fruitless, the State shall use its


prerogatives of public power to acquire such land; the State shall thereafter transfer this


land to the Investor, within a period of time allowing the progression, within the


established time periods, of the Project Activities, in conditions allowing the Investor to


benefit and enjoy without restriction all rights attached to the status of full ownership. Any


expropriation procedure affecting a third party shall be put in place by the State without


delay, in accordance with the valuation provisions of the Habitation Code in force on the


date of this Agreement.


26.6.; The State hereby represents and warrants to the Investor that it has taken all


required action and instructions with the Authorities involved in any manner with the Port


Area and the Port Activities, including the transportation, the port and customs


Authorities so that the rights granted to the Investor hereunder are fully and constantly


respected, throughout the term of this Agreement, particularly as regards the land,


Channel, the principal railway line and the waterways and seaways relating to the


industrial Installations and Equipment and the Port Installations.








CHAPTER V:


FISCAL AND CUSTOMS REGIME





ARTICLE 27 : GENERAL PROVISIONS


27.1. : Given the specific features of the Project which require investments on an


exceptional scale, and in particular in large-scale infrastructure, which will enhance the


national economy, the Articles of this Chapter V together with the Accounting and Tax


Exhibit define the preferential Fiscal and Customs Regime from which the Project and


the Project Activities benefit. This regime will apply from the date of execution of this


Agreement until the expiry of the term of this Agreement as provided in Article 34.2.1.


27.2. : With the exception of the Taxes expressly mentioned in this Agreement and


which will be applicable according to the terms set out in this Agreement and its Exhibits,





Sangaredi Alumina Refinery - Basic Agreement


 37





the Investor and its Direct Sub-Contractors will not be subject to any Tax in Guinea


throughout the term of this Agreement.


ARTICLE 28: FISCAL REGIME APPLICABLE TO THE PHASES OF THE


CONSTRUCTION WORKS


From the date of signature hereof to the Date of Commercial Production Start-up, the


Investor and its Direct Sub-Contractors will be exempt from any Tax (including VAT) for


all works undertaken during this period, whatever their date of effective payment, except


for those set out exhaustively hereafter:


28.1.1: In relation to the Company, the employer’s social security contributions;


28.1.2. : Withholding tax:





workers who are Guinean nationals are subject to a withholding tax on the salaries


paid by the Company to the State in accordance with Current Legislation;


a withholding in full settlement of all taxes is made on the basis of salaries paid by


the Company to its expatriate personnel who reside more than 183 days in Guinea


in any twelve (12) month period at a rate of 10% of the salaries paid iri and outside


Guinea.


The above withholdings are for the account of the employees and are paid by the


Company to the State.


28.2. : Local Development Tax





28.2.1 :From the Date of Commercial Production Start-Up and until the end of the tax


exemption period of fifteen (15) years set out in Article 29 paragraph 1 hereafter, the


Company shall be subject to a local development tax of five hundred thousand (500,000)


USD per year.


28.2.2:From the first fiscal year following the end of the tax exemption period of fifteen


(15) years set out in Article 29 paragraph 1 hereafter, the Company shall be subject to a


local development tax of one million (1,000,000) USD per year.


28.2.3: The conditions of use of this local development tax shall be defined by mutual


agreement between the Parties hereto, and the beneficiary local authorities.


This tax is deductible for the calculation of taxable profit.





Sangaredi Alumina Refinery - Basic Agreement


 38








28.3.: Mining royalty on alumina


From the first fiscal year following the Date of Commercial Production Start-Up, the


Company shall be subject to a mining royalty on the bauxite transformed into alumina at


the moment of its exit from inventory, equal to five per cent (5%) calculated on the FOB


value of the CBG bauxite on the date .hereof, it being specified that this royalty shall not,,


in any case be less than USD$1 per metric ton nor greater than USD$1.50 per metric


ton. The State shall ensure that CBG communicates to the Investor, within a reasonable


period, the composition of the FOB value of CBG bauxite, as well as documentary proof


in the event this value is changed.


This royalty is deductible for the calculation of corporate income tax.


The payment conditions of this mining royalty shall be defined by mutual agreement


between the Parties.


ARTICLE 29: FISCAL REGIME APPLICABLE TO THE OPERATIONAL


PHASE


Taking into account the Implementation Studies, the Company, its suppliers and Direct


Sub-Contractors, shall be exempt from any Tax for a period of fifteen (15) years from the


the Date of Commercial Production Start-up, with the exception of the Taxes set out in


Articles 28.1 to 28.3 above.


At the expiry of this period of fifteen (15) years, the Company, its suppliers and its Direct


Sub-Contractors will be required to pay only the Taxes restrictively stated in this Article


29 and in terms hereof, the Taxes directly paid by the Investor and listed hereafter


being considered to be deductible charges for the calculation of taxable profits, and the


exemptions and adjustments herein provided being"equally applicable as follows:


29.1. : Corporate income tax


The Company will pay corporate income tax at a rate of 35%.


29.1.1. : Amortisation regime


All goods corporeal or incorporeal registered to the Company, together with those goods


put at its disposal in the context of any occupation of public property (including, by


mutual agreement, the Port Installations, taking into account the specific provisions


agreed between the Parties in terms of Article 12.6.1 hereof), give it the right to tax


amortisations in accordance with the terms of the Accounting and Tax Exhibit and the





Sangaredi Alumina Refinery - Basic Agreement


 39








Guinean General Tax Code. The amount of the tax amortisations will be calculated


according to the amortisation regime provided in the Accounting and Tax Exhibit and in


Current Legislation.


29.1.2. : Deferment of deficits





Losses can be deferred over the five fiscal years following the last fiscal year of deficit


from the date of expiry of the tax exemption set out in Article 29. The various deemed


amortisations in the period of deficit, including the amortisations during the period of


exemption, and in particular amortisations of the expenses of the original setting-up, can


be accumulated and deferred over the fifteen (15) successive subsequent fiscal years up


to the taxable income.


29.1.3. : Calculation of taxable income





Unless otherwise provided in this Agreement and in particular in the Accounting and Tax


Exhibit, taxable income is determined in accordance with the Current Legislation.








29.1.4. : Deductions from taxable income


Among other items, the items set out in the Accounting and Tax Exhibit are deductible


from taxable income, as well as the total amount of interest and other payments and


expenses due from the Company by way of syndicated loans and advances including


interest generated by the current accounts of shareholders.


29.1.5. : Reserve for the restoration of deposits:


the Company, if it so wishes, may make a reserve of a maximum of ten per cent





(10%) of taxable profit at the end of each fiscal year, which is deductible from the


taxable profits;


in relation to profitable fiscal years, such reserve can be employed in the five (5)





years following its having been made, failing which it will be recovered in the


financial results of the fiscal year. However, if, at the end of the fifth fiscal year, the


financial results of the Company are in deficit, this reserve may be deferred again


in order to be available for use in relation to a profitable fiscal year;

















Sangaredi Alumina Refinery - Basic Agreement


is


 40





29.1.6. : Investment credit


The Company will benefit from an investment credit representing five per cent (5%) of all


investment made in the course of the fiscal year. This allowance is deemed to be a


deductible charge for the calculation of the taxable profit.


29.1.7. : In the event that the Company possesses an interest in one or more companies


which have invested in new infrastructure not existing at the date of execution of this


Agreement and which are necessary to the Project and directly or indirectly financed in


whole or in part by the latter, the Company will be able, pro rata to its shareholding in


this or these companies, to set their positive or negative results before tax against its


own positive or negative results and vice versa.


29.2. : Withholding tax on income of foreign Direct Sub-Contractors and


service-providers not based in Guinea.


A withholding tax in full settlement of any other tax on income is made upon the income


of foreign Direct Sub-Contractors for any activity in Guinea taking place over more than a


period of one hundred and eighty three (183) Business Days in any calendar year.


The rate of this withholding tax is fixed as follows:


10% as regards service-providers;


10% after deduction of all expenses committed in the context of the contract as


regards all other Direct Sub-Contractors.


These withholding taxes are for the account of the service providers and Direct Sub-


Contractors and will be paid to the State by the Company.


29.3. : The Company will be subject to a tax on income from securities at a rate of fifteen


per cent (15%) of the distributed profits and percentages. All income subject to this Tax


of fifteen per cent (15%) shall be excluded from the taxable profit which is subject to


corporate income tax as set out in Article 29,1 hereof.


29.4. : Withholding tax on rental income at a rate of fifteen per cent (15%) of the rental


income paid to natural persons who are owners of rented buildings. This withholding tax


is on account of the lessor and is repaid by the Company for the account of the lessors.


29.5. :The Company shall be subject to the tourist vehicle tax according to the rates in


force, with the exception of site vehicles and machines.





Sangaredi Alumina Refinery - Basic Agreement


 41





29.6. : A withholding tax at a rate of six per cent (6%) on the salaries paid within and


outwith Guinea will be paid by the Company to the State.


29.7. : Value added tax:


The Company shall be exempt from value added tax on all importations necessary for


the Project, with the exception of material and items exclusively intended for the


personal use of employees of the Company.


The Company shall, once a year, compile a list of the material to be imported and shall


ensure this material shall be exclusively used for the purposes of the Project. This list,


after having been sent to the Centre for Mining Promotion and Development, shall be


published by ministerial decision jointly made by the Minister of Finance and the Minister


for Mines, within a maximum period of fifteen (15) days from the date on which the list is


sent.


The Company shall also be exempt from value added tax on all purchases as well as all


services necessary for the Project whatever the nationality and/or residence of the


supplier or service-provider: this shall also apply to any foreign or Guinean Direct Sub¬


contractors involved in the Project in Guinea, such exemption applying only to the


purchases and services necessary for the implementation of the Project. The exemption


certificates, approved by the Guinean tax or customs administration, shall be sent by the


Company to the various service-providers, suppliers and Direct Sub-Contractors.


ARTICLE 30: CUSTOMS REGIME APPLICABLE TO THE PHASE OF


CONSTRUCTION WORK AND WORK ON ANY EXPANSION


30.1.: Customs relief


From the date of execution of this Agreement, the Investor and its service providers,


suppliers and Direct Sub-Contractors will benefit, in relation to their activities connected


with the Project, from an exemption from customs duties, taxes and royalties on


importation and re-exportation of equipment, materials, heavy machinery, vehicles and


machines with the exception of tourist vehicles or vehicles carrying foodstuffs. In the


event of resale of goods and equipment having benefited from the exemption, the


relevant Taxes will become payable. The component parts, lubricants and fuel (except


petrol) necessary to such capital equipment are also exempt. In the event of the


termination of the Project for whatever reason all goods, equipment and machines used


in the Project may be exported from Guinea free of any Tax of any kind.





Sangaredi Alumina Refinery - Basic Agreement


 42





However, the goods mentioned above will be subject to payment to customs Authorities


of a registration tax at a rate of 2% of the GIF value of the imported goods, the amount


so imposed being capped at 20,000,000 Guinean francs per year.


Any Expansion work will benefit from these same advantages.


30.2.: Temporary importation


The equipment, materials, machines, apparatus, utility and transportation vehicles, other


heavy vehicles, and electrical generators imported by the Investor, its service-providers,


suppliers and Direct Sub-Contractors and intended for construction works and work on


any Expansion are placed within the temporary importation regime free of charge for the


duration of the said works.


At the expiry of the works, the articles imported temporarily in this way can be re¬


exported free of any Tax.


The Company shall compile a list of equipment, materials, heavy machinery, machines


and vehicles used for mining and industrial purposes (except tourist vehicles) together


with the fuel (with the exception of petrol), lubricants, other petroleum products, coals


and raw materials and consumables (not including foodstuffs) to be imported and shall


ensure that these products are used exclusively for the Project. This list, after having


been sent to the Centre for Mining Promotion and Development, shall be published by


ministerial decision jointly made by the Minister of Finance and the Minister for Mines,


within a maximum period of fifteen (15) Business Days. The list may be completed as


and when necessary depending on the advancement of the Project; supplementary


decisions shall be taken according to the same procedures.


The persons covered by this Article 30.2 are required to supply to the Centre for Mining


Promotion and Development and to the customs Authorities in the first quarter of each-


year an inventory of the material so imported temporarily.


In the event of resale in Guinea of goods imported in this way by temporary importation


by the importer, these goods will become liable to charge for taxes and duty to be paid in


accordance with the provisions of the Mining Code.


ARTICLE 31: CUSTOMS REGIME APPLICABLE TO THE OPERATIONAL


AND TRANSFORMATION PHASE








From the Date of Commercial Production Start-up, the Company and the Direct Sub-


Contractors will be required to pay the customs duties and levies in force at the date of





Saxigaredi Alumina Refinery - Basic Agreement


 43





execution of this Agreement in relation to their activities connected to the Project, subject


to the following :


31.1. : The equipment, materials, heavy machinery, machines and vehicles used for


mining and industrial purposes (except tourist vehicles) together with the fuel (with the


exception of petrol), lubricants, other petroleum products, coals and raw materials and


consumables (not including foodstuffs) directly participating in the operations of


extraction and transformation of the bauxite are exempt from any customs levies.


The Company shall, once a year, compile a list of equipment, materials, heavy


machinery, machines and vehicles used for mining and industrial purposes (except


tourist vehicles) together with the fuel (with the exception of petrol), lubricants, other


petroleum products, coals and raw materials and consumables (not including foodstuffs)


to be imported and shall ensure that these products are used exclusively for the Project.


This list, after having been sent to the Centre for Mining Promotion and Development,


shall be published by ministerial decision jointly made by the Minister of Finance and the


Minister for Mines, within a maximum period of fifteen (15) days.


No customs levy is payable on equipment, materials, heavy machinery and machines


directly participating in the operations of exploitation of the railway and port Infrastructure


and transportation necessary to the Project.


The reliefs against registration tax of 0,5% will apply in the same terms as apply to the


phase of construction works and any Expansion work as provided in Article 30.1 above.


31.2. : Importation conditions of the petroleum products necessary for the


implementation of the Project


31.2.1. : The petroleum products (with the exception of petrol) necessary for the


implementation of the Project may be imported by the Company and must-comply with


the specifications in force, it being understood that the Company is exempt from taxes,


duties and royalties (VAT included) on the imported petroleum products.-The Company


shall, once a year, compile a list of petroleum products to be imported and shall ensure


that such products are used exclusively for the purposes of the Project; this list, after


having been sent to the Centre for Mining Promotion and Development, shall be


published by ministerial decision jointly made by the Minister of Finance and the Minister


for Mines, within a maximum period of fifteen (15) Business Days,


31.2.2. : The authorisation to import shall be given for a definite duration by the Minister


for Trade after consultation with the Minister for Mines and with the Finance Minister.


This authorisation is renewable as many times as is necessary for the purposes of the


Project but may not be assigned or transferred.





Sangaredi Alumina Refinery - Basic Agreement


 44








31.2.3. : The entry of the petroleum products into Guinean territory must be made


exclusively by sea and on the condition that the Company has installed the appropriate


logistical infrastructure, approved by the administration and complying with the


requirements for the specific petroleum products to be stocked.


During the period preceding the building of the logistic installations for the stocking of


petroleum products, the Company will have the opportunity to purchase the petroleum


products on the local market and in this regard shall be exempt from VAT and the


customs duties in respect of the petroleum products so bought.


31.2.4. : The petroleum products imported by the Company shall be intended for its


exclusive consumption. They may not be transferred by the Company to third parties.


31.2.5. : Subject to the provisions of Article 18.2 hereof, the Company must in addition


take out insurance with an insurance company approved in Guinea in respect of the


liability for any damage caused by the imported products on Guinean territory.


31.2.6. : Fuel, lubricants and other petroleum products not being used directly in the


operations of transportation, extraction and enhancement of the ore shall be acquired


according to the price structure applicable to the mining sector.


31.3. Importation conditions of the industrial explosives necessary for the


implementation of the Project


31.3.1. : The Company shall have the right to import the industrial explosives for the


purposes of implementing the Project, it being agreed that the Company is exempted


from Taxes (including VAT);


31.3.2. : The Company must inform the competent authorities of the State of its needs in


advance, of the forecast importation plan and of the characteristics of the explosives.


Alternatively, the Company may use companies approved for this kind of activity;


31.3.3. : The explosives imported by the Company shall be intended for its exclusive


consumption. They may not be transferred by the Company to third parties.


31.3.4. : The Company shall for these purposes respect the normal rules of security, as


well as the rules and standards of security in force in the Republic of Guinea in relation


to transportation, warehousing and use of the explosives.





Sangaredi Alumina Refinery - Basic Agreement


 45





ARTICLE 32 : STABILISATION OF THE FISCAL AND CUSTOMS REGIME


The Investor and its Direct Sub-Contractors shall not be subject, in relation to the


Project Activities, to any Tax (including, for the avoidance of doubt, export duties and


taxes, VAT and capital gains tax), which is not expressly provided for in this Agreement.


By virtue of this Agreement, the Investor and its Direct Sub-Contractors shall benefit, in


relation to the Project Activities, from the stabilisation of the Fiscal and Customs Regime


in force on the date of execution of this Agreement (including the provisions of this


Agreement) throughout the term of this Agreement.


The Investor may at any time elect to be governed by more favourable fiscal and


customs provisions which result from developments of the law at any time and/or which


would be applied in the future to any investor in Guinea, provided that if the said


developments subsequently are modified in an unfavourable direction, the principle of


the stabilisation of the Fiscal and Customs Regime as provided hereabove will apply to


the provisions from which the Investor has decided to benefit and such provisions will


therefore remain in force to its benefit.


ARTICLE 33 : MISCELLANEOUS PROVISIONS


33.1, : Accounting Principles


Taking into account the specific characteristics of the Project, the Investor is authorised


to .carry out its accounting in Guinea in US Dollars, but respecting the accounting and


fiscal principles set out in the Accounting and Tax Exhibit and provisions which are not in


conflict with the Guinean Accounting Rian.


These accounts must be sincere, true and detailed and be accompanied by the


documentary proof required to verify them. These accounts may be reviewed by the


representatives of the State specifically authorised to that effect.


33.1.1. : Annual Financial Reports


The financial statements required by Guinean legislation (balance sheet, profit & loss


accounts, intermediate management accounts, finance schedules) shall be converted


into and presented in Guinean francs in accordance with.the conditions set out in this


Agreement and particularly developed in the Accounting and Tax Exhibit.





Sangaredi Alumina Refinery - Basic Agreement








/


 46





33.1.2. : Any information brought to the attention of the State by the Investor in


accordance with the terms of this Article 33.1 shall be considered as confidential and the


State undertakes not to disclose the nature of such to any third parties without having


obtained the prior written consent of the Investor, which shall not be refused without





valid reason.











33.2.: Calculation Of Taxes











The calculation of any taxes, duties and levies is made on the basis of the accounting


data and carried out in US Dollars which shall be converted into Guinean francs (GNF)


on the following terms:








• in relation to taxes computed on a reference period of twelve (12) months (such as


corporate income tax), the rate of exchange applicable shall be the average rate of


the Central Bank of the Republic of Guinea applicable to that fiscal year.





• in relation to any other tax, duty and levy, the rate of exchange applicable shall be


that of the Central Bank of the Republic of Guinea in force on the date on which the


tax becomes payable.











The rates of exchange defined above shall also apply to the calculation of any later


claims, interest and penalties, as well as for any reimbursements of overpaid taxes.








33.3.: Sale. Mergers. De-Mergers, Partial Business Transfers











No tax, duty or levy is applicable to sales, mergers, de-mergers, partial business


transfers or similar operations for the purposes of the implementation of the Project


between the Investor and the Company or the Affiliated Companies which have the


effect of transferring between them all or part of the Assets of the Project or of


reorganising the legal structures of those involved in the implementation of the Project,


provided that the assignee or the beneficiary of these operations undertakes to respect


the implementation of the Project and respect the provisions of this Agreement


throughout the duration of this Agreement.








Sangaredi Alumina Refinery - Basic Agreement








)


 47





CHAPTER VI:


MISCELLANEOUS AND FINAL PROVISIONS





ARTICLE 34: VALIDITY OF THE AGREEMENT


34.1. : Coming into effect


This Agreement:


• after having been duly approved by the relevant bodies of the Parties and signed


by the Parties,


• shall come into effect upon promulgation of the Decree of the President of the


Republic publishing the law adopted by the Guinean National Assembly adopting


this Agreement, after receiving the legal opinion of the Supreme Court, even if on


that date the publication in the Official Journal of the Republic of Guinea has not


yet occurred. The State undertakes to ensure that the abovementioned


promulgation shall take place within the ninety (90) days following the date of


signature of this Agreement.


34.2. : Duration of the Agreement and of the Mining Concession


34.2.1.: Duration of the Agreement:


Without prejudice to the provisions of Article 34.2.2 hereinafter, the duration of this


Agreement as regards the construction, management and operation of the Refinery is


fixed at ninety-nine (99) years (the "Contractual Period").


Upon the expiry of this Contractual Period, the Parties shall meet to re-negotiate with a


view to renewing this Agreement on the following conditions: the tax and customs regime


that the Parties may agree to in the context of this re-negotiation (i) may not be less


favourable than the common law tax regime in force in Guinea at that time; (ii) must be,


in any event, at least as favourable to the Investor as the most favourable of the tax and


customs regimes applicable at that date to other investors in Guinea; and (iii) must not


have an adverse impact on the future profitability of the Project.


If the Agreement comes to an end without being renewed in accordance with the


preceding pargraph, the State undertakes to pay to the Investor a compensation


payment in an amount equal to the residual value of the Assets, taking into account their


potential use over a period of twenty five (25) years on the terms and conditions


(particularly the tax and customs regime) applicable before the date of expiry of the





Sangaredi Alumina Refinery - Basic Agreement


 48








Agreement (the “Compensation Payment”). The Compensation Payment shall be


determined by an expert appointed by mutual agreement of the Parties at the latest thirty


(30) Business Days following the date of expiry of the Agreement or, if no agreement is


reached, by the secretariat of ICSID, upon the request of the most diligent Party.


34.2.2. :• Duration of the Mining Concession:


(i) The duration of the Mining Concession shall be twenty five (25) years.


(ii) At the end of the period of twenty five (25) years set out in Article 34.2.2(i) above,


the mining concession shall be automatically renewed for a period of twenty five


(25) years.


(iii) If in the six (6) months' preceding the expiry of the second period of twenty five (25)


years set out in Article 34.2.2 (ii) above, the Investor delivers to the State its plan


of upkeep and maintenance purporting to ensure the maintenance of the Refinery


and the Project Installations in good operating condition over the next ten (10)


years (the “Maintenance Plan"), the mining concession shall be automatically


renewed for a period of ten (10) years.


(iv) if in the six (6) months preceding the expiry of the period of ten (10) years set out in


Article 34.2.2 (iii) above, the Investor confirms to the State that the Maintenance


Plan has been implemented and submits a new Maintenance Plan for the next ten


(10) years, then the Mining Concession shall be automatically renewed for


successive periods of ten (10) years each, according to the procedure described in


the present Article 34.2.2 (iv).


34.3.: End of the Aareement/Termination


34.3.1: The end of this Agreement may take place in accordance with the conditions set


forth herein, subject to and without prejudice to the provisions of Articles 19, 34.2,2, 37


and 38, in the event of expiration of its duration, in the event of force majeure and in the


event of serious breach of one of the material obligations or of the guarantees of this


Agreement, all of which without prejudice to any Damages.


Subject to and without prejudice to the provisions of Articles 19,34.2.2,37 and 38, each


of the Parties shall have the right to terminate the present Agreement in the event of


serious breach of one of the material obligations or of the guarantees of this Agreement


by another Party, all without prejudice to any Damages payable. In the event of such a


breach, a written notice must be sent by the Party affected by the breach to the


breaching Party, containing a request to remedy the said breach within a period of sixty


(60) Business Days..in the event that, at the end of this period of sixty (60) Business


 49








Days, the breach persists, the notifying Party shall have the right to terminate the


present Agreement by written notice sent to the breaching Party, the termination having


immediate effect, and without requiring to go before a court, upon the date of receipt by


the breaching Party of this termination notice,


34.3.2.: Subject to and without prejudice to the provisions of Articles 19, 34.2.2,37 and


38, in the event of this Agreement coming to an end:


• The Investor shall have the right to recover all materials, equipment, installations


or other assets which it shall have bought in Guinea and/or imported and/or


installed on Guinean soil, including any infrastructure or other immoveable assets,


and shall have the right to export these freely to any destination of its choice free of


any taxes, charges, registration duties, customs duties or any other right, or to sell


these in Guinea, in which case the taxes or other duties applicable shall require to


be paid.


• In addition, the Investor may deliver to the State any geological research without


delay carried out by it and shall equally return any research or prospecting


document, feasibility studies and other data which shall have been delivered to it by


the State. All such documents and information contained therein shall remain


confidential, which shall not prevent the Investor from communicating these to its


advisers, and shall only be able to be used by the Investor for the purposes of the


reactivation of the Project in accordance with what is stipulated in this Agreement.


ARTICLE 35: TRANSFER - SUBSTITUTION - NEW PARTY


35.1. : Transfer between Affiliated Companies:


The Investor shall have the right to assign, transfer, pledge or transfer in any other


manner its rights and obligations pursuant to this Agreement to any Affiliated Company


and to any entity for the benefit of any Lender.


35.2. : Change of control - Transfer of Assets


35.2.1. : In the event of a change of control of the Investor or the Subsidiary or a


transfer of all the Assets of the Company to a third party who is not an Affiliated


Company, the Investor shall inform the State, prior to the implementation of such a


transaction, and shall communicate the identity of the transferee to it as well as the


confirmation that the transferee has the financial and technical means necessary to


perform this Agreement, in accordance with its terms and shall produce an undertaking


by the new controlling party confirming this. This notification shall be deemed to be





Sangaredi Alumina Refinery - Basic Agreement


 50





accepted by the State in the absence of an express reply on its behalf within sixty (60)


Business Days from the receipt of the notification sent to it by the Investor.


35.2.2. : In the event that the State raises an objection in this regard in the sixty day


period set out above,, the amicable conciliation procedure set out in Article 36.1 below


shall apply, if at the end of the conciliation set out in Article 36.1 below, the State


maintains its refusal or its objections, the refusal of the State shall amount to an


expropriation and a compensation payment shall be paid to the Investor by the State.


The amount of this compensation payment shall be determined by an international


expert appointed by mutual agreement of the Parties or, if no agreement is reached, by


the secretariat of ICSID, upon the request of the most diligent Party (the “Expert”). The


Expert appointed shall determine the compensation payable upon the hypothesis that


the Agreement shall continue on the same terms until the expiration of (i) the Contractual


Period set out in Article 34.2.1 above; or (ii) for a further period of fifty (50) years


(whichever is the longer).


35.2.3. : If a change of control of the Investor or the Subsidiary or the transfer of all the


Assets of the Company to a third party non-Affiliated Company takes place without the


State being informed in accordance with the provisions of Article 35.2.1 above, the


State shall have the right to terminate this Agreement in application of the provisions of


Article 34.3 above.


ARTICLE 36: SETTLEMENT OF DIFFERENCES


36.1.: Prior conciliation


The Parties shall undertake to resolve all disputes relating to the validity, the scope, the


meaning, the interpretation, the performance and the implementation of this Agreement


in an amicable manner. The conciliation procedure shall be commenced, prior'to any


arbitration proceedings, by the most diligent Party which shall serve a conciliation


request upon the other Party by recorded delivery with acknowledgement of receipt. This


request shall contain the reasons for commencing litigation, a memorandum setting out


the basis for the request and the claims of the Party making the request, together with


the pieces of evidence and the name of the proposed conciliator, the other Party having


eight (8) Business Days to notify whether it accepts the proposed conciliator or not or


provide the name of the conciliator which it proposes; a failure to respond within this time


period shall be the equivalent of an agreement of the second Party upon the choice of


conciliator proposed by the first. Within a maximum period of 3 months from the date of


its appointment, the conciliator shall endeavor to settle the disputes submitted to it and


to have the Parties reach an amicable solution. This three-month period shall be reduced


to sixty Business Days for the purposes of Article 35,2.2 above. In the absence of such a


 51





solution within the aforementioned time period, the dispute shall be submitted to the


provisions of the following paragraph.





In the case where the Parties, despite their efforts, are unable to resolve their differences


amicably in a period of sixty (60) Business Days, disputes between the Parties shall be


settled by arbitration in accordance with Article 36.2. Notwithstanding any actions


undertaken to resolve a dispute hereunder, the Parties shall continue to comply with


their obligations still outstanding under this Agreement.


36.2.: Arbitration





The Parties hereby consent to submit to the International Centre for Settlement of


Investment Disputes ("ICSID") any dispute arising out of, or relating to, this Agreement,


which is not settled in accordance with Article 36.1, for arbitration in accordance with the


ICSID Arbitration Rules. The Parties agree to make all applications and submissions to


ICSID and to take all other actions and provide any other information necessary to


institute such arbitration proceedings. Unless otherwise agreed by the Parties, the


arbitration proceedings hereunder shall take place in Paris, France and the number of


arbitrators shall be three (3). Each Party shall have the right to appoint one (1)


arbitrator, and the third arbitrator shall be selected by the two (2) other arbitrators so


appointed. Each Party hereby agrees (a) to be bound by the enforcement and execution


of, any final decision or award of an arbitral tribunal constituted pursuant to this Article


36.2; (b) that neither Party shall be liable for punitive damages as part of any award of


such an arbitral tribunal; and (c) to share equally the fees for such arbitration.


36.3. : Waiver of sovereign immunity


The State hereby specifically waives any right of sovereign immunity as to it and its


property in respect of the enforcement and execution of any final decision or award of an


arbitral tribunal constituted pursuant to Article 36.2. No claim or counterclaim may be


made under the pretext that the Investor has received or might receive under an


insurance contract from any third party (be it public or private) an indemnification or other


compensation in respect of part or all of the damages and interest suffered by it.


36.4. : Applicable Law


This Agreement shall be submitted to and interpreted in accordance with French law,


without regard to the principles of conflicts of law or laws governing creditors’ rights.





Sangatedi Alumina Refinery - Basic Agreement


 52





36.5. : Payment


A minute of conciliation agreed between the Parties, or a decision of an arbitral tribunal


pronounced in accordance with the provisions of this Agreement, shall bind the Parties


and must be performed immediately, without the Parties being entitled to any right of


recourse. Any competent court endorse the arbitral decision in order to allow the


performance of this decision, the sums due requiring to be paid by either Party in US


Dollars to the account of the beneficiary and at the bank and place of its choice. The


sums in question shall be exempt from taxes and any other deduction or charges related


to the fiscal or quasi-fiscal authorities.


36.6. : Interest


The amounts set out in the minute of conciliation or the decision of an arbitral tribunal in


the context of this Agreement, shall include interest calculated from the date of the event


giving rise to the conflict situation and until the date of payment in full.


ARTICLE 37: MODIFICATION





37.1. : Any provision which is not set out in the text of this Agreement may be proposed


by one or other of the Parties and examined in detail. Each Party shall endeavour to


reach a mutually acceptable solution, in order to put the new provisions in an


amendment agreement signed by the Parties and which shall be approved by the State


on the same conditions as this Agreement and the Exhibits hereto. Any change proposal


which would not be accepted by both Parties, in a written amendment, shall have no


effect on the terms of this Agreement or on the rights and obligations set forth herein.


37.2. : In the event of an unexpected and irreversible change in the essential economic


factors on which the viability and feasibility of the Project is based which would render


impossible for the Investor the continuation of the Project at a satisfactory level of


profitability and to the extent that the circumstances surrounding this change are not


attributable to the Investor, the State agrees to put in place, by way of amendment to


this Agreement, additional adjustments in order to redress the Impact of these changes


and to reinstate the conditions in which the Investor expected to implement the Project.


37.3. : In the event that an unexpected and irreversible change in the essential


economic factors occurs at the end of a period of fifty (50) years from the Effective Date


of this Agreement, the State shall have the right to require the Investor to open


negotiations on the Fiscal and Customs Regime set out in this Agreement. Any new tax


regime in the context of this re-negotiation (i) shall not be less favourable than the


common law tax regime in force in Guinea at that time; (ii) must be, in any event, at least


 53





as favourable to the Investor as the most favourable of the tax regimes applicable at


that date to other investors in Guinea; and (iii) must not have a significantly unfavourable


and lasting impact on the future profitability of the Project.


In the event that no agreement is reached between the Parties within sixty (60) Business


Days from the date of receipt by the Investor of the notice by the State invoking an


unexpected and irreversible change in the essential economic factors, then the State


shall purchase the Assets from the Investor at a value determined by an international


expert appointed by the mutual agreement of the Parties, or, in the event of


disagreement, by the general secretariat of ICSID upon the request of the most diligent


Party (the “Expert”). The Expert appointed shall determine the consideration owed by


the Investor upon the hypothesis that the Agreement shall continue on the same terms


until the expiration of (i) the Contractual Period set out in Article 34.2.1 above; or (ii) for a


further period of fifty (50) years (whichever is the longer).








ARTICLE 38: FORCE MAJEURE








38.1. : For the purposes of the present agreement, “Force Majeure” shall mean any


event which is beyond the control of either Party and which renders impossible the


performance by that Party of its obligations or which renders it so difficult that it may be


held to be impossible in such circumstances; the events of Force Majeure including,


among others: wars, military insurrection, riots, civil unrest, earthquakes, fire, explosion,


storms, flooding and other climatic upheaval, strikes, lock-outs or other action of protest


(with the exception of acts of the government or cases where such strikes, lock-outs or


other action of protest are within the control of the Party invoking the Force Majeure).


For the purposes of the present agreement, Force Majeure shall not include:


(i) events resulting from negligence or a deliberate act of one of the Parties or one of


its subcontractors, agents or employees;


(ii) neither an insufficiency of funds, nor a default in payment shall be construed as


Force Majeure.


38.2. : The Party who invokes an event of Force Majeure shall immediately after the


occurrence of an event of Force Majeure, and within a maximum period of 7 Business


Days from the date of its occurrence, send to the other Party a notice by recorded


delivery with acknowledgement of receipt, establishing the elements constituting the


Force Majeure and the probable consequences on the application of the Agreement.


 54





38.3.: If, following an event of Force Majeure, the suspension of the obligations of the


Parties exceeds a period of three (3) months, the Parties shall meet as soon as possible


to examine the effects of such events on the performance of the Agreement and, in


particular, on the financial obligations of any nature of the Investor or of its Affiliated


Companies. The Parties shall seek a solution allowing the initial project to be adapted to


the new situation in such a manner as to allow the Investor to continue with the Project.


In the event the Parties do not reach an agreement as to how to remedy the event of


Force Majeure within an additional period of one (1) month,, the State undertakes to pay


to the Investor a compensation payment in an amount equal to the value of the Assets,


taking into account their potential use during the period remaining until the end of (i) the


Contractual Period set out in Article 34.2.1 above; or (ii) for a further period of fifty (50)


years (whichever is the longer), on the terms and conditions (particularly the tax and


customs regime) applicable before the date of occurrence of an event of Force Majeure


(the “Force Majeure Compensation").


The Force Majeure Compensation shall be determined by an expert according to the


criteria set out in the preceding paragraph appointed by mutual agreement of the Parties


at the latest thirty (30) days following the date of expiry of the Agreement or, if no


agreement is reached, by the secretariat of ICSID, upon the request of the most diligent


Party.


ARTICLE 39: LANGUAGE AND MEASUREMENT SYSTEM








This Agreement is drafted in French and in English. All reports or other documents


written or to be written in the application of this Agreement shall be written in French;


while the documents and items may be presented in English, it is specified that in the


event of any comprehension difficulties, the Investor undertakes to have any important


document or annex translated without delay.


In the event of contradiction between the French text and the English text, the French


text shall prevail.


The applicable measurement system shall be the metric system.


ARTICLE 40: CONFIDENTIALITY





40.1.; This Agreement, its Exhibits, and any documentation relative to the results of the


different studies circulating between the Parties, shall be strictly confidential.


 55





40.2.: Without prejudice to the generality of the foregoing, the Parties agree that (a)


each Party shall have the right to disclose this data and information to the Lenders, any


Direct Sub-Contractor, investors in the Project and shareholders of GLOBAL; and (b) the


provisions of this Article 40 shall not prevent the disclosure by the State of limited


information concerning the general development of the status of the Project Installations


to its local media, provided that there is prior consultation with the Investor.


ARTICLE 41: NO WAIVER


Except in the event of an express written waiver, the fact that one Party shall not have


exercised, in full or in part, the rights granted to it under this Agreement shall not in any


way constitute an abandonment of the rights which it has not exercised.








ARTICLE 42: NOTICES


42.1. : Form of Notice


Any notice made in the context of this Agreement shall require to be in writing and


delivered to the recipient by recorded letter with acknowledgement of receipt or by


special courier or by attested telex, whether or not preceded by a fax to the following


addresses;


42.1.1. : All notices to the Republic of Guinea may be validly made to the Minister for


Mines and Geology at the address below:


Minister for Mines and Geology


ANAIM-CBG Building


BP 295 Conakry,


Republic of Guinea


Tel: 224 45 45 46 Fax: 224 41 19 13


42.1.2. : All notices to the Investor must be made to the Investor at the address below:


Global Alumina,


For the attention of Mr. Bruce J, Wrobel (CEO)


World Headquarters


c/o Stewart McKeivey Stirling Scales


44 Chipman Hill, 10th Floor


P.O.Box 7289


 56





Saint John, New Brunswick E2L 4S6


Canada


Tel: +1 (506) 632-1970 Fax: +1 (506) 652-1989


42.2.: Change of address


Any change of address must be notified in writing as soon as possible by the relevant





Party to the other Party or Parties.


ARTICLE 43: EXHIBITS





Exhibits 1 to 8 of this Agreement are an integral part of this Agreement. In the event of


contradiction with the provisions of an Exhibit, the provisions of this Agreement shall


prevail.











Made at Conakry on


(in four (4) originals in French and in English)











FOR AND ON BEHALF OF THE FOR AND ON BEHALF GLOBAL


1 5 OCT. 20SEPUBLICOFOU,NEA (GPC.U)





By the President and Chief Executive


Officer (CEO)




















FOR AND ON BEHALF OF GAC





Mr. Bernard Cousineau











Sangaredi Alumina Refinery - Basic Agreement


 LIST OF EXHIBITS








Exhibit 1: Division of share capital of the Investor


Exhibit 2; Accounting and Tax Exhibit





Exhibit 31: Infrastructure Agreement





Exhibit 4: Industrial Zone





Exhibits: Port Area





Exhibit 6: Concession Area





Exhibit 72; Port Agreement





Exhibit 8: Schedule






























































1 This exhibit will be established upon signature of the Infrastructure Agreement.


2 This exhibit will be established upon signature of the Port Agreement.





Sangaredi Alumina Refinery - Basic Agreement


 58








Exhibit 1: Division of share capital of the Investor


 59








Global Alumina


Corporate Structure


July 23,2000








This white paper lays out in brief the ownership structure, and rationale, for foe Guinea Alumina


Corporation’s (GAC Guinea) Alumina Refinery Project in Guinea.










































































Recognizing both the opportunity and die need to secure substantial sums of capital from many


different investors resident in many different countries, GAC Guinea’s founders established it as


a single-purpose corporate entity in the British Virgin Islands (BV1), a widely accepted


jurisdiction which imposes no income tax on companies incorporated within its jurisdiction.


GAC LTD, in turn, established GAC Guinea, its wholly-owned subsidiary, in Guinea to facilitate


development work performed domestically, and, ultimately, to serve as the direct


owner/operator of the refinery.


GAC LTD is wholly-owned by GAI LTD. It was established within the BVI to serve solely as


the investment entity through which the GAC Alumina Refinery Project would be developed,


built, owned and operated. By retaining this two-tiered BVI corporate structure, Global is


preserving for its investors die most tax-efficient means for off-shore investment strategies. By


retaining GAI LTD between Global and GAC LTD, for example, Global may reinvest dividends


from the GAC Alumina Refinery Project into an additional refinery project in Guinea through


GAI LTD without incurring current tax liability from the investors’ home jurisdictions on the


reinvested dividends.


 60





This two-tired, tax haven structure is very commonly accepted by investors worldwide as a most


flexible, tax-efficient and sensible means of investing their capital into major, cross-border


infrastructure investments.


Recently, GAI LTD completed a $50 million private placement and a series of transactions that


resulted in GAI LTD becoming a wholly-owned subsidiary of Global Alumina, a New


Brunswick, Canada, public company. At the conclusion of these transactions, GAI LTD’s


shareholders became shareholders of Global Alumina, a company now traded on the Toronto


Venture Exchange, and GAI LTD became wholly-owned by Global Alumina. We elected to


become a Canadian public company and to list our shares on the Toronto Venture Exchange as


it is among the largest, most knowledgeable and favorable markets for investments in African


mining and mineral processing companies.


The current structure, therefore, is Global Alumina, a Canadian public company, owns 100% of


GAI LTD, a BVI-based investment holding company, which in turn owns GAC LTD, a BVI-


based investment entity with the sole purpose of completing the GAC Alumina Refinery Project,


owns GAC Guinea, the Guinean entity with the sole purpose of completing the GAC Alumina


Refinery Project.





MJC
















































































Sangaredi Alumina Refinery - Basic Agreement


 61








Global Aluminum Products Corporation


Major Shareholders





August 2004

















Total Outstanding Shares 102,659,623

















Herakles Capital 13,272,000 12.93%


Karalco Resources et al 1,200,000 1.16%


Broadbay Investments Ltd 1.56%


1,600,000


Zefan Ltd 1,600,000 1.56%





Urquin Finance Ltd 1,600,000 1.56%


L-R Global Partners 5,900,000 5.75%





BTR Global Trading 4,700,000 4.58%


Merrill Lynch Invest Mgrs 4,000,000 3.90%


Bruce J, Wrobel 4,000,000 3.90%





Marubeni Corporation (option 25%) 3,000,000 2.92%





AGF Growth Equity Fund 3,000,000 2.92%


Sceptre Investment Ltd 2,650,000 2.58%


AIG Global Investment Corp 1.95%


2,000,000


RAB Special Situations LP 2,000,000 1.95%


Patrick Welsh 2,000,000 1.95%


Mitsubishi Corporation (option 25%) 1.56%


1,600,000


Alan Gayer 1,600,000 1.56%





Helios Offshore Fund 1,500,000 1.46%


EPIC limited Partnership 1,400,000 1.36%


Reservoir Capital .97%


1,000,000


Lombard Odier Darier 1,000,000 .97%





Banque OBC 1,000,000 .97%


Frank Donohue . 1,000,000 .97%


 62














PR1C£A/AteRH0UsE(C0PERS §











FrkcnucrbonscCoopcr* 1.1.1’


PO Bent 92


Roya) Tmsi Tower. Suite 3000


T won to Dominion Ccniic


Private and Confidential Toronto, Ontario


Canada M5K IGS


October 1,2004 Telephone +1416 863 1133


Facsimile*l 416 3 63 *215


Direct Tel. JI6W7 8289


Direct Fax 416 SI-J 32(H)


Mr. Michael J. Celia ■


Chief Financial Officer


Guinea Alumina Products Corporation Limited


405 Lexington Avenue, 25th Floor


New York, New York


U.S.A. 10174














Dear Michael;


As requested by you, please find hereafter our comments on the structure retained by Global


for the purpose of the investment in the Sangaredi alumina refinery project in the Republic of


Guinea. This structure is depicted in the attached diagram,





This dual holding company structure incorporated in the British Virgin Islands has been set up


with the aim of providing Global the most favourable taxation, while retaining the control of


the project through the chain of shareholdings. Indeed, such a two-tier structure, set up in a


jurisdiction which is known for not taxing the income of the companies incorporated herein, is


very commonly chosen by the investors throughout the world as a very flexible and fiscally


advantageous means of investing their funds in significant cross-border infrastructure projects.


In each case, the British Virgin Islands company is a single purpose vehicle, i.e. whose


purpose is to hold their respective subsidiaries (GAl BVj controls GAC BVI, on the one hand,


and GAC BVI controls GAC Guinea, on the other hand) for the Sangaredi alumina refinery


project.


As a result, by interposing GAC BVI between Global and GAC Guinea, for instance, Global





can, through GAC BVI, reinvest the dividends of the GAC Guinea refinery project in new


projects, such as a complementary refinery project in Guinea, whilst avoiding the taxation of


the dividends thus reinvested in Canada.














Tikis tecum cni was written by Pneewai v bouwCoopen; LIP r PwO i n c wirvxi kja w i tii die provision of Ux services solely for die acatiini o f o Pit C clic m Any


use > h kb o per»cti ether i hart the Ph<'d icm nwkes « f rtiis doe uinem and any idi ancc cm. or dettsio ns made on ih« bas ts of. (he comems or (I Mi tloct imeni «c I he


respciuibiliiy of such person. ISvC tteeptsno resperuibilily for tlama£cs.iffio>. sulTc.'edby a person other Ihwi itx JVvC client as a «e*ull of decisions nude d


xilum Ukco in reliance on ihe Cftntrjus nr ttio ctecomcw,


P/«:ewilcilioiiMCoopefa refer* loilw Canadian fimt of PfKevrdterhmiseCoopers LLP and (he oiler member firms of Prirtu-aicflxnisetoopcis I mentions I


Limit eJ. each of whteh is a separate nod iwJe pendent k*Mcnl*ly.






































Sangaredi Alumina Refinery - Basic Agreement


 63














PrICWaTeRhOUsE(CJOPERS i








Mr. Mkkari J. Cdb


Gaiota Alimina Products Corporation United


Oriotw 1,2004


Likewise, any capital gain made by GA1 BVI related to the Sangaredi project,1 which is





reinvested in another project in Guinea, would be taxed neither in the British Virgin Islands


nor in Canada.


This ownership structure mainly reduces the total lax burden associated with the Sangaredi


project in three ways, each of which is discussed briefly below:


(i) it preserves the benefits of the Guinea tax holiday regime granted by Guinea


under the Basic Agreement;


(ii) it permits the defeiTal of Canadian tax on profits resulting from Guinean


operations; .


(iii) it permits the deferral or saving of capital gains tax.


(i) Preserve the benefits of the Guinea tax holiday regime





If Global operated the Sangaredi project as a directly owned branch, Canadian lax


(approximately 35%2) would be levied on the full profits resulting from the Guinean activities.


A foreign lax credit would be granted for Guinea taxes paid or payable thereon each year. As a


result, while the investment would benefit from a total tax exemption according to the Basic


Agreement, Canadian tax would nevertheless be payable, which would be effectively negating


die benefit resulting from the favourable regime proposed under the Basic Agreement.3 This


would also be the case if Global operated Sangaredi through a wholly owned subsidiary,


except that the Canadian lax would arise on the operating profits that would be paid by this


subsidiary as dividends, noting that the passive income of the subsidiary (e.g, interest) would


be taxed in Canada, even if not paid as dividends.





(ii) Defer Canadian tax on production profits


The dividends paid by a Guinea corporation to Global would attract 35% Canadian tax. The


proposed structure will permit the accumulation of these dividends in the British Virgin


Islands, that would possibly be remitted later to Canada or reinvested without attracting


Canadian tax. If these profits were remitted after the tax holiday period, Global might, under


certain conditions provided for by the Canadian tax regulations, claim a credit for any Guinea


tax paid on the more recent earnings, even if the distribution is actually paid in respect of


earlier profits exempted from Guinean tax.





1 Passive income, such as gains from portfolio and certain other investments, would be taxed in Canada (‘FAPr).


' 35 12% is the current corporate tax rate for a company in New Brunswick. •


2 To our knowledge, Canada has not negotiated any « tax sparing » agreement with Guinea that could preserve


this benefit.





(2)



































Sangaredi Alumina Refinery - Basic Agreement











\y?


 64

















pRlClWAiRHOUsS(dOPERS i





Mr. Micta't J. CttU


Guidrj Products Corporilioa Limilfd


Orlobtr 1,2004











(iii) Save tax on disposition


While the above noted benefits can arise with just one bolding company, using a second sub¬





bolding company (in our case GAIBV1) will allow any capital gain realized by GAC BV1 to


be reinvested in other projects, without triggering Canadian tax, or be remitted to Canada at a


preferential tax rate/





Yours very truly,











Gregory New





Enel,


















































■’ 50% of the gain can be remitted to Canada without any Canadian tax. In some cases, the remaining 50% can be


effectively remitted as a capital gain that is taxed at 50% of regular tax rates in Canada.











(3)






































Sangaredi Alumina Refinery - Basic Agreement


PrIC^/VMeRHOUsE(COPERS 11














Diagram of International Structure for Sangared) Alumina Project











Global (Canada)








100%








GAl (BVI)








10m





GAC (BVO





100%





GAC (Guinea)




















Glossary:





Global


Guinea Alumina Products Corporalion, a Canadian (New Brunswick)


comDanv





GAl Global Alumina International Ltd. a BVI company


GAC Guinea Alumina Corporation. Ltd., a BV) company


GAC Guinea Alumina Corporation S.A.. a Guinea corporation









































GO












































Sangaredi Alumina Refinery - Basic Agreement




















■X.S





 66








Exhibit 2 : Accounting and Tax Exhibit


 67














Exhibit 33: Infrastructure Agreement



























































































































































3 This exhibit will be completed upon signature of the Infrastructure Agreement.








Sangaredi Alumina Refinery - Basic Agreement





 68











Exhibit 4: Industrial Zone





•Jfs --- _■





jana. *j>'sujhix,-. Twf t*ri *As to#


eoapiun into ty< owtoyuroes «o oyrtecs notcntD


IN WSJ PUW.


2. THIS DATA IS INTCNOEO TO BE USED FCq PRELIMINARY '


design only /no is incluoco solely ron iNroruvriOH,


THE CONTRACTOR SHALL SC RESPONSIBLE rOR ESTABLISHING


AND LUIVTINAINO ALL HORIZONTAL AHO VERTICAL SURVEY


CONTROL OH THE SITE.


3. THE COnnACrofl SHALL PERFOW COMPLETE TOftKRAPHIC AW8


BATHYMETRIC SURVEYS OF THE SHE PRIOR TO BEGINNING


CONSTRUCTION. THESE SURVEYS WILL BE USED FOR FINAL


OESICN OF RECLAMATION AND, TOGETHER WITH REGULAR


POHOftESS SURVEYS, AS A BASIS FOR PROGRESS PAYMENTS.


a UPON COMPLETION OF RECLAMATION AND ROUGH ORAOIHO, THE


CONTRACTOR SHALL RERFORU A FINAL AS-BUILT BATHYMETRIC


ANO TORCRAPHIC SURVEYS.


S, ALL SURVEYS PERRORUEO BY THE CONTRACTOR


SHALL HAVE A U1NIUUU CRIO RESOLUTION OR 23 UCTERS,


ALL SURVEYS SHALL BE PHOV'IOEO TO THE CPWCR tH MARS


COPY ANO DIOITAL TORUATS. WITH ASCII POINT TILLS.


S, SUOUIT DETAILS Or SURVEY PROCEDURES. COUIRUCUT,


rCRUAT, ANO SCHEOVLE TO THE .ONER TOR REVIEW PRIOR


TO BtOlNMINC VORK.


 70














Exhibit 5: Port Area













































































































































































Sangaredi Alumina Refinety -





 0EKM AND yi.lAV WOKK l-,'jlNT?.


i v.'Cfik pcitn • mcrthikg CASTlIiC


1 1/5. 04!..10 i vn :^io./n


H


' C 7 ; H 1 /4 U.W.JKI i s.;'i ■%.•«.w


C-J N I7!> c r-i--


0 N 175 7

1


: C-S : K 175 731.4 5 C 5-1'J i.9-3.20


; c-e | M 176 23S.CO C S'lO -12^.51





| r.-f | N 1 I7S .VV7 V j r w- rtfiffjM.





























&











:3s- f








mJ*.








\


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FORBID


;4ip.vw ftv .W -----»J_ „ .... S-1


Jf >7UI9I*» *>•;«*►" 5\ Guinea Alumina Corporation


tfFWGfifi'ABAM "«>wn rvlfn t-r OO*


« C l « % • . • s'34Jf lJMMJ«S*<-


---■■f----' -......- : - i \ .v* »«• Port of Kamsar Development


~C&? 1 ' ” “ “ * * m‘-i '.'va;

L/


 72














Exhibit 6 : Concession Area



























































































































































Sangaredi Alumina Refinery - Basic Agreement





COORDONNEES DE LA CONCESSION MINIERE DE &f\C


























CooTdoniif ft CifOpraphiauej





PoinH Laiiiudf Nerd Longitude Ouf-ci





A ll" 10’ 00" 13" 58’ 00"


B JJ* 02’ CO” 13* 3J’ 00” •


C 11* 00’ OO" 13* sr 00"





D 10" 55’ 00” I3P 54’ CC"


I IQ1 55’ 00" 14* 10’ 00”


r 11' tO' 00” 14* 10’ 00"








Supcrficie « 690bn5





 rw'-lwtS'IjCiaSrfeW

WOu L«eiR-c s'iHji fo«,’Wk.r«o*ci »w± «c ik lcsx.


as •«nnc*rtr-i»crttKw''« Tcctrie


tcspsr* mi «_j*iJ.rr'n.x-,\ -wc uiv p*s *xh . tATli


scw>uc» rnro tx twnjniKC o« contws ixoiwtcb PTRCJCCTICK: UTU M »


IH THESE FUNS. s

1. THIS 6ATA IS iKTCHClCQ TO 8C USED f« WELIUITUK ' WlRi UCTtftS


DESIGN ONLY ANO IS IMCLUDCO SOLELY TOR INrORUATIa*. OAHU. DABOLA


THC CONTRACTCfl SHALL BC RESPONSIBLE FOR CSTAOLISHIHO T. CONTROL SOURCE MAS BEEH OBTAINED f*C*J eM AT THE PORT


AND LUIKTINAlNO ALU HCftllONTAL AMO VERTICAL BURYEY OF KAJJSAfi, NEW CONTROL POINTS W-VE BEEN ESTABLISHED


COMTBOL OH THC SITE. AS PART OF THC PRELIMINARY SURVCf AS FOLLOWSl


3, THE CWTRACTCft SHALL PERFORM COMPLETE TOPOGRAPHIC AWO POINT ’WSl‘ H l 17» 217.10


BATHYMETRIC SURVEYS OF THE SITE PRIOR TO SECINNtW C SO (20.S3


CONSTRUCTION, THESE SURVEYS WILL BE USED FOR FI HAL CLEV 7,8l


OESICM OF RECLAMATION AND, TOGETHER WITH flECUUR POINT 'MAPS!1 H 1 177 S88.71


PORCRESS SURVEYS, AS A BASIS fOH PROGRESS PAYMENTS.


4, UPON COMPLETION OF RECLWUT10N AND ROUGH GRADING, THE £ 54] 50].(0


CONTRACTOR SHALL PERFORM A FINAL AS-BUILT BATKTWETHIC ELEV 8.10


ANO TCPGRAPHte SURVEYS.


3, ALL SURVEYS PCRFORUCO BY THC CONTRACTOR VERTICAL COHTBOL


SHALL HA VC A UINIULU CRIO RESOLUTION OF 23 METERS. 1, THE VERTICAL OATLU FOR THE PROJCCT SHILL BE THE


ALL SURVEYS SHALL DC PROVIDED TO THE O-HCR IM HARO COO DATUM. OR 'RErtREMCC DATUM LIME t“OL) CORPCSPONOI


COPY AMD BIOITAL FORMATS, WITH ASCII POINT FILES. TO AM ELCVATIOM IS CEMTIutTERJ ABOVE CHART DATUM.


B. SUBMIT DETAILS OF SURVEY PROCEDURES, COUIAUCMT, 2, CHART OATUU REFERS TO ETTRCVC LOW WATER (CLw) OCFIMEO


ro»MAT. ANO SCHEDULE TO THE CuWER FOR REVIEW PRIOR AS THE LOWEST ASTRONOMICAL TIDE (Y SHCU ANO BRITISH


TO QCCIHNIHg WORK.


3, THE CONTRACTOR SHALL VERIFY THE VERTICAL OATLU WITH





THC COO NYOHOCRAPHIC OFFICE. USING THE CAI3TIHC T IOC


SAUCE OR KNOWN ELCVATIONS OF EXISTINO WATCRFRCNT ANO


MARINE STRUCTURES FOR CALIBRATION.











PROPERTY LIMIT WORK. POINTS





WORK PWT HORTHIHC WST1WS


WP-I N 1 178 72187 E SU 889.14





* W*-* H t 178 eei.ee t 5*4 D14.00


v**-J N I »7a 4RA.BI - C 944 501.61


Vrf»-4 H 1 177 U2.53 c 044 eoi.es


Vi?-* k i 176 :&6.oe C S.S 1SA.7S





WP-8 H I 178 388.05 E 542 572.15





YlP-7 N 1 178 259,53 C 542 7412*


Vi9»6 N 1 17A 011.22 C $4) 020.31





N»*-« M 1 <74 046.14 C 6*1 60 *.*3


W»-1© N 1 t ?• 314.03 C SO 710.64


vp-n N 1 US 302.22 C s*2 070.40


WP-U K t 178 377.01 Z 542 940,90





YrP-13 H \ 176 J10.8S Z 543 148,88 h rV,+^. + + m+- A'





WP-U N 1 177 018.13 E 543 221.53 '





W-IS N l 177 028.13 C 54J 420.82 •H Y^ATVT" LINC . f/y

WM8 V 1 17.7 806.62 L‘843 420.81





W7-17 K 1 178 .270.12 c 540 S 67.20 J WP-6 + OF j-


+9-1« h 1 na o»s.so C 544 041.19 __ _ ___ //" \


W-11 H V 17ft* B30.0Z C SU 499.46 f Np^r r-v. 1





Ti ?\f'/ ---------- ---





/O ORAYM BY AMH_ Gulnea Alumina Corporation G-4


S3 SOI STH AVENUES, PROJECT HO. FAIPJLOI-iM


FED EIWL w AY, WA, USA DC9CN BY STP Port of Kamsar Development


BERGER/ABAM CHCCX BY BCM_


inlii/ii'IH, VOICE:(XB)O1-2X0 _ Phase 1 Construction PIHITM


^ FAX'. (KS)tS!«U PRCU MCA 3CB- SHEET HO. _ J_OF 30


U*M | ICVS> 0CS9*n9<


ir OATE


 BCKH AN£> OUA>' WfSKK l-'jINiy


. wc*,k H'Cinn • sCRTIllhC c.-.STmc jrnrng


C-1 ' M 1 l/t> OH.SC! i i MO-yn


la-sin ■■


. N 1 1/4 !>.!/).?!'.r i s.n K.'K.l/


C-3 • H 1 175 IZt-.-t E. S'lO P56.7C'





; C-4 , M i 17* 7i:.e-3 C X5S.9S


! C-S • H 1 1~5> 7s'!.8i C {»« 253.20


: c-e . f< 1 176 £M.tO C 5-10 '128.51





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PI AN QUAY ANQ TRFSIl ? UNITS Globs!


™>'' .....,wf. #v Alumina


h-it:


FORBID


,1? Wl AV?«fc* ^ 1 ru/.H, HT WI1 Guinea Alumina Corporation


JKtiv?wn ia.»rr< f.v


.. ________ .... 1 Port of Kamsar Development


-5;,-,-!---..... • -„•. v; | v.-i 1 ... Phase 1 Construction


... V


 76








Exhibit 74: Port Agreement































































































































































































4 This exhibit will be completed upon signature of the Port Agreement,








7 Sangaredi Alumina Refinery - Basic Agreement





 77








Exhibit 8 :Schedule



















































































































































































Sangaredi Alumina Refinery - Basic Agreement





WORK BREAKDOWN STRUCTURE WORK BREAKDOWN STRUCTURE


iufc


'Area; :: System: V'Vf . ■. DESCRIPTION


Area Area Syetam V ' : DESCRIPiicw 'V>\-





1 0 00 1 3 3 66 Alumina Refinery





1 00 Mine Development 00 Main Process Plant


10 Development & Exploration DriDina to Process Plant General


20 Mine Equipment 13 Bauxite Receiving & Crashing


30 Mine Development 15 Bauxite Blending & Storage





40 Mine Area Drainage 24 Bauxite Grinding


25 Lime Staking


2 Mine Utilities 26 De silica Ken


10 Buildings 30 Digestion


20 Mine Access Road 32 Flocculanl Preparation


30 Water Supply & Storage 33 Mud Washing & Seta era


40 Fuel Systems 6 Storage 34 Mud Filtration





50 Communications 35 Green Liquor Filtration


60 Mobile Equipment 36 Sand Removal


40 Green Liquor HID


4 Mine Process 41 Evaporation


10 Loed-out Facility end Ramp 43 Liquor Purification / Oxalate Destruction


20 . Crustier 45 Precipitation


30 Screening Plant 46 Hydrate Classification





40 Conveyors 47 Cooling Water


50 stockpile and Blending 50 Hydrate Filtration & Calcination


60 Drying 51 Alumina Handling 6 Storage


80 Electrical Distribution System


Mine Electrical Distribution 90 Process Control Systems


8


60 Mine Electrical Distribution 91 Communications


92 Advanced Control Septum


e Mine Control Systems 8 Communications


90 Mine Control Systems & Communications . 3 Raw Material Storage


Lime Unloading 6 Storage


06


Caustic Storage


Hallways 06


2 0 00 09 Add Storage


1 00 Mainline & Passing loops 50 Fuel storage


Mainline & Passing Loops


10


20 Transfer Stations A Air Supply and Distribution


10 PlanlAir


3 Refinery Sidings 20 Instrument Air


10 Refinery Sidings


6 Water Storage & Distribution


4 Mine Sidings Raw Water


10


10 Mine Sidings 20 Water Treatment & Storaqe - Refinery


30 Filtered Water


6 Rotting stock 40 Gland Seal


10 Rollirw Stock 50 Potable Water


60 Fire Water Supply & Distribution


9 Railway Operation Infrastructure 70 Storm Drainage System





10 Railway Operation Infrastructure 60 Yard Sanitary


20 Controls 6 Signalling


30 Communications 6 Reflneiv Site - General


10 Refinery Roads


20 Refinery Mobile Equipment


30 Utility Racks








7 Service Buildings


10 Refinery Cenlral Building


11 Laboratory


12 Cenlral Control Room


13 Wash and Locker Room


14 Security 6 Medical Room





15 Training Rogm


20 Maintenance / Warehouse Building


30 Eguipmenl Cleaning Building


40 Carpenter and Paint Shop


50 Garage and Mobile Equipment








 WORK BREAKDOWN STRUCTURE WORK BREAKDOWN STRUCTURE


Am Sub- System DESCRIPTION Area - Sub¬ System DESORPTION


Ana Area


nuxiiiarv Facilities 6 o op Business Systems


00 Power Plant/ Steam Plant 00


Goal HandJinq 10


Boiler and Turbine House


Ash Disposal / Dam 2


Main Sub-Station 10 Operating & Maintenance Systems


50 tlectrtca! Distribution System 1


Water Trealmenl Plant


Steam Distribution 7 0 00 Township construction


00 Houalnq


Ume Plant 10 Housing-Refiner/ ’


Limestone Plant 20 Housing - Port


Ume Win


Ume Sloraqe 2





3 waste Management .


Sewage Syetem/Weste Water Treatment 9 0 00 Indirect Cost


Acid Waste D'soosal 00 General Indlrvcts


Solid Waste Disoosal 10 Temporary Construction Set-up





Temporary Faculties & Services


10 Construction Camp - Mine


0 UU II Infrastructure 20 Construction Camp - Refinery


1 Port Facilities 30 Construction Camp - Port


Port 40 Catering Services


Built Liquids Handling & Sloraqe


Bolh Solids Handlinq & Storage 3 Spares


Service Buildings - Port • 10 Spares-Mine


50 Mobile Equipment - Port 20 Spares - Refinery


30 Spares • Port


Access & Haul Roads


10 Access Road to Refinery Site 4 Freight


10 Freight





Water Supply 5 EPCM


10 Water Supply Dam 10 EPCM '


Water Treatment Plant'


30 Water Supply to Refinery Site 6 Owner Costa


80 Power Supply 10 First Fills


Access Roads 20 Owners Team


30 Trainnlng


Red Mud Dam ' 40 Taxes and Duties


10 Disposal and Reclaim Ponds SO Insurances


20 Pipeline - Red Mud 60 Operations


Tailing Disoosal & Reclamation


00 Power Supply 7 Allowances


90 Access Roads 10 Allowances





9 Contingency


10 Contingency