Khoshak Brothers Company, with offices in the city of Kabul, Afghanistan, at Chendawol, Jafaria Mosque Street, Sarai Haji Dedar, was the entity selected as the preferred bidder during the Western Garmak Coal Tender Process to negotiate and conclude the contract with the Afghan Government. The company is jointly and severally obliged by the terms of the contract along with any successor entities.
The contract shall be valid for a period of 10 years counted as from the date of its execution. KBC has the right to extend the agreement if in compliance with its terms and conditions for additional periods of 5 years, as per the applicable laws. A request in such sense shall be made to the Ministry of Mines at least 1 year before the end of the contract term.
Concession. Right to explore for coal mineralization and the right to mine the economic portions of the deposit, including the necessary exploration and explotation licenses, associated with the Western Garmak Coal Project
KBC will provide, along with the exploration plan, an environmental action plan detailing how it will minimize environmental disturbance and address reparation of damage caused to the environment through its activities. In the exploitation phase, KBC will provide an Environmental and Social Management Plan, that addresses the environmental and social impacts noted in the Environmental and Social Impact Assessment and the related mitigation measures, as well as the health and safety of employees. The Plan is to include a 'Resettlement Action Plan' if necessary, as well as development projects to assist the local peoples in social development. .KBC will observe the Environmental and Social Mitigation Action Plan as agreed by both parties at the commencement of the mining phase. Additionally, KBC is obliged to include in its plans details for its usage of water and for the protection of local community water supplies.
KBC shall spend a minimum of US$ 50,000 during the contract for the enhancement of the environment for the community in the neighboring area of the mine.
KBC is to provide audited financial statements annually in accordance with International Finance Reporting Standards, together with production statistics in reasonable detail. The accounts should be audited by an internally recognized acounting firm acceptable to the Government of Aghanistan.
A financial guarantee in the amount of US$ 100,000 shall be provided by KBC to the Government of Afghanistan as compensation, and reparation for, damage to the environment, property rights and any other violations resulting from the activities of KBC. The amount of the bond (or its residual after all eventual claims are satisfied) will be returned to KBC at the termination of the contract provided that all outstanding claims for compensation / reparation have been satisfied. Additionally, a surface use fee will be paid annually during the exploration and explotation phases for the operations area and any areas affected by the operations in an amount of US$ 5 per hectare during the exploration phase, and of US$ 25 during the exploitation period.
Royalties due to the Ministry shall correspond to 1211 Afs (one thousand two hundred and eleven Afs) per ton of coal produced from the licensed area. The amounts due shall be paid after the completion of each business quarter.
KBC shall execute the social programs submitted in accordance with the proposal presented at the time the bid for exploration of the coal project in Western Garmak was conducted, as well as with the social development plan.
Afghan nationals shall be employed to the extent practible in all classifications of employment. KBC shall also develop a training program and facility of suitable capacity for the training of Afghan citizens.
KBC shall perform at its sole expense all necessary construction during the term of the agreement, including infrastructure such as roads, clinics, parks, buildings and water resources. All immovable property existing at the time of termination of the agreement will become the property of the government of Afghanistan without compensation.
KBC is obliged to provide a detailed investment plan to the Ministry of Mines for the exploration phase of the mine, which meets the terms of its bid proposal. A Feasibility Study shall also be submitted, along with an investment plan, for the mining phase of the contract.
Any dispute or controversy not solved by mutual agreement within 60 days shall be settled by arbitration initiated by either party by submission to the International Court of Arbitration as the independent arbitrator.
KBC shall take all appropriate risk management measures as outlined in the approved plan to prevent damage to the rights and property of third parties. In the event of negligence or carelessness on the part of KBC under this Contract, KBC will be liable for such injuries or damage in accordance with the applicable laws of Afghanistan.