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 Dated 2018

















(1) THE MINISTRY OF MINES AND


PETROLEUM OF THE GOVERNMENT OF





THE ISLAMIC REPUBLIC OF


AFGHANISTAN


and


(2) SILK ROAD MINING




















MINING CONTRACT


relating to Shaida Project
















































































909074811.12


 CONTENTS





Clause Page


PART 1 DEFINITIONS AND INTERPRETATION.....................................................3


1. Definitions and interpretation...........................................................................3


PART 2 TERM OF CONTRACT AND GRANT OF LICENCES..............................14


2. Term and phases.............................................................................................14


3. Grant of mining rights.....................................................................................15


4. Mining Rights Area.........................................................................................19


5. Exploration Phase...........................................................................................19


6. Exploitation Phase .................................................................... 22


PART 3 FISCAL AND FINANCIAL PROVISIONS..................................................33


7. Surface rental..................................................................................................33


8. Royalties.........................................................................................................33


9. Customs duties................................................................................................38


10. Taxation..........................................................................................................38


11. Payments.........................................................................................................40


PART 4 REPORTING AND INSPECTION................................................................42


12. Financial Records and Statements, reporting..................................................42


13. Inspection........................................................................................................45


PART 5 OTHER RIGHTS AND OBLIGATIONS................................................................46


14. Mutual Obligations.........................................................................................46


15. Government Assurances and Obligations.......................................................47


16. Company Rights and Obligations...................................................................49


17. Infrastructure...................................................................................................53


18. Obligations of Contractors and Subcontractors..............................................55


PART 6 ENVIRONMENTAL AND SOCIAL OBLIGATIONS...........................................56


19. Environmental and social obligations; Closure Obligations...........................56


20. Rights of Citizens of the State........................................................................59


21. Local Community Development......................................... 60


22. Employment and Training of Local Citizens..................................................61


PART 7 REPRESENTATIONS AND WARRANTIES...............................................64


23. Representations and warranties.......................................................................64


PART 8 SURRENDER. BREACH, TERMINATION AND FORCE


MAJEURE.......................................................................... 67


24. Surrender.........................................................................................................67


25. Termination by the MoMP..............................................................................68


26. Consequences of Termination, etc..................................................................70


27. Indemnification...............................................................................................71


28. Force Majcurc; Suspension..................................................................^7......72"-


909074811.12 /


 CONTENTS





Clause Page


PART 9 ASSIGNMENT AND CONFIDENTIALITY................................................74


29. Assignment............................................................................................ 74


30. Confidential Information..................... 77


PART 10 MISCELLANEOUS PROVISIONS...............................................................80


31. Notices.................................................................. 80


32. Applicable law......................................................... 81


33. Dispute Resolution Mechanism......................................................................81


34. Periodic Review................................................. 86


35. Ancillary Provisions........................................................................................86


36. Governing language........................................................................................87


37. Further Acts....................................................................................................87


38. Duplicate originals..........................................................................................88


39. Good faith.......................... ..88


40. No Effect on Applicable Law. etc...................................................................88










































































909074811.12


Schedules





1. Mining Area


2. Destination Schedule


Part 1 - The Minerals Law


Part 2 - The Mining Regulations


3. Performance Bond


4. Specific Proposal Commitments


5. Beneficial Ownership and Management

































































909074811 12


THIS MINING CONTRACT (as amended, modified or supplemented from time to time in


accordance with the terms hereof, this "Contract") is dated 2018 and made


between:


1. THE MINISTRY OF MINES AND PETROLEUM OF THE GOVERNMENT


OF THE ISLAMIC REPUBLIC OF AFGHANISTAN (the "MoMP"); and


2. SILK ROAD MINING (the "Company") which is duly authorised and constituted


under the laws of the Islamic Republic of Afghanistan, having its registered office at


Block #403. Noman Building. Beside Awesta Hospital, Kolola Pushta, Kabul,


Afghanistan and qualified to do business in the State under A1SA Licence #D-11839.


BACKGROUND:


A. All naturally occurring minerals on the surface or subsurface of the territory of


Afghanistan are the exclusive property of the State.


B. The Company desires to conduct Mining Activities in the Mining Area and for this


purpose participated in the Tender Process relating to the award of licenses to conduct


mining exploration and exploitation activity within the Mining Area.


C. The Company has been selected as the successful bidder under the Tender Process to


carry out the Mining Activities within the Mining Area.


D. The Company is entitled to obtain the right to prospect, explore, exploit, process,


transform, transport, export, market and sell Mineral Substances within the Mining


Area as contemplated by the Tender Process.


E. The Company intends to develop and operate the Project in a manner which will


ensure its long term sustainability as well as protecting the natural environment of the


State, and promoting social and economic growth in the State.


F. This Contract is entered into in accordance with the requirements of the Tender


Process and Applicable Law.


NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL RIGHTS AND


OBLIGATIONS CONTAINED IN THIS CONTRACT AND OF OTHER GOOD AND


VALUABLE CONSIDERATION. THE PARTIES HEREBY AGREE AS FOLLOWS:
































909074SI1.12


 PART 1


DEFINITIONS AND INTERPRETATION





1. DEFINITIONS AND INTERPRETATION


1.1 Definitions


"Affiliate" means an entity that directly, or indirectly through one or more


intermediaries. Controls, is Controlled by, or is under common Control with the


Company;


"Afghan Public Protection Force" means the entity established by the Ministry of


the Interior of the State for the purpose of providing security for projects located


within the State which are deemed by the Ministry of the Interior of the State to be of


national interest together with any successor of such entity which may be in existence


from time to time;


"Afghani" means the lawful currency from time to time of the State;


"Agreed Environmental and Social Standards" means:


(a) any Environmental Law or Social Law from time to time as in effect and


having application to the Company or the Project:


(b) the World Bank Group Environmental Health and Safety Policies as from time


to time in effect;


(c) the World Bank Group/IFC Environmental, Health and Safety Guidelines as


from time to time in effect;


(d) the LFC Performance Standards on Social and Environmental Sustainability as


from time to time in effect;


(e) the Equator Principles as from time to time in effect;


(f) the Environmental Management Plan;


(g) the Closure Plan;


(h) the Social Impact Assessment and Action Plan; and


(i) the Environmental Impact Assessment;


"Anticorruption Laws" has the meaning assigned to that term in Clause 14,2


{Transparency obligations of the Company);


"Applicable Accounting Standards" means applicable accounting standards within


the meaning of the International Accounting Standards Regulation 1606/2002 to the


extent applicable to the relevant statements;








909074811.12 3


 "Applicable Law" has the meaning ascribed to that term in Clause 32 (Applicable


Law) and shall, for the avoidance of doubt, include the Minerals Law and the Mining


Regulations;





"Approval" means an authorisation, consent, approval, resolution, licence,


exemption, filing, notarisation or registration;


"Baseline Environmental Assessment" means a report containing a description ol


the Environment in the Project area prior to the commencement of any Mining


Activities, including the then existing flora and fauna, soil air quality, underground


and surface water, landscape aesthetics, farming conditions and socio-economic


conditions in local communities;


"Business Day" means a day (other than a Friday) on which banks are open for


general business in Kabul;


"Central Bank" means Da Afghanistan Bank;


"Closure Guarantee" has the meaning assigned to that term in Clause 19.3


(Guarantee for closure expenses);


"Closure Plan" means the plan to be produced and submitted to the MoMP by the


Company under Clause 6.7 (Closure Plan) and in accordance with the Minerals Law


and Mining Regulations as such plan may be amended from time to time in


accordance with this Contract;


"Commercial Production" means the period during which the Project shall have


been developed to the stage where the Mine is producing Mineral Substances on a


continuous economically feasible basis in substantially the manner contemplated by


the Feasibility Study (and in any event on a basis not less efficient than any standard


for the deemed commencement of commercial production specified in the Minerals


Law);


"Commission" means the Commission established pursuant to Article 9 of the


Minerals Law;


"Community Development Agreement" has the meaning assigned to that term in


Clause 21.1 (Community Development Agreement);


"Company" has the meaning assigned to that term in the preamble;


"Confidential Information" has the meaning assigned to that term in Clause 30.2(b)


(Certain information confidential);


"Constitution" means the constitution of the State ratified on 26 January. 2004;


"Construction Period" means the period commencing on the date of award of the


Exploitation Licence and ending on the Date of Commencement of Commercial


Production;


"Consultation" means an open, inclusive, and non-coercive process, conducted


the native language of the participants, for the exchange of information, idetis and


909074811.12 4 /


 viewpoints about the potential benefits and impacts of the Project. Any consultation


shall strive to include, in socially and culturally acceptable forms, all social elements





in the area affected by the subject matter under consideration, including both men and


women:


"Contract" has the meaning ascribed to that term in the preamble;


"Convention" has the meaning assigned to that term in Clause 33.4(a) (ICSID


Arbitration):


"Control" means the power of one person to:


(a) vote more than fifty percent (50%) of the issued share capital of, or the voting


power in, a second person; or


(b) direct, or cause the direction of, the management, business or policies of such


second person whether through the ability to exercise voting power, by


contract or otherwise;


and the terms "Controlled" and "Controlling" shall have correlative meaning;


"Date of Commencement of Commercial Production" means the last day of the


first period during which, for a continuous period of ninety (90) days, the Mine is


producing Mineral Substances at a rate and in a volume which is not less than sixty


percent (60%) of the design capacity of the plant and facilities at the Mine as reflected


in the Feasibility Study;


"Dispute" has the meaning assigned to that term in Clause 33.2(a) (Notice of


Dispute):


"Dispute Notice" has the meaning assigned to that term in Clause 33.2(a) (Notice of


Dispute):


"Dollar" and the sign "U.S.S" means the lawful currency of the United States of


America from time to time;


"Early Warning" has the meaning assigned to that term in Clause 33.1(a) (Early


Warning Procedure):


"Early Warning Meeting" has the meaning assigned to that term in Clause 33.1(b)


(Early Warning procedure):


"Effective Date" shall mean [•] 2018, which shall be the date on which this


Contract, endorsed by the Commission and approved by the Council of Ministers, is


signed by the duly authorised representatives of the MoMP and the Company;


"El l I" means the Extractive Industries Transparency Initiative;


"El'll Principles and Criteria" means the Principles and Criteria of the Extractive


Industries Transparency Initiative (as published on www.eiti.org) as the same may be


amended, re-enacted or replaced from time to time;





909074811 12 5


 ’'Environment" means humans, animals, plants and all other living organisms


including the ecological systems of which they form part and the following media:














(a) air (including air within natural or man-made structures, whether above or


below ground);


(b) water (including territorial and inland waters, water under or within land and


water in drains and sewers); and


(c) land (including land under water),


and "Environmental" shall have a corollary meaning;


"Environmental Impact Assessment" means the impact assessment required to be


produced and submitted to the MoMP by the Company under Clause 6.3(a)


(Environmental Impact Assessment and Environmental Management Plan) and in


accordance with the Minerals Law. Mining Regulations and Environmental Code;


"Environmental Law" means any applicable law or regulation (including the


Environmental Law of the State (Official Gazette No. 912, dated 25 January, 2007))


which relates to:





(a) the pollution or protection of the Environment;





(b) the conditions of the workplace; or





(c) the generation, handling, storage, use, release or spillage of any substance


which, alone or in combination with any other, is capable of causing harm to


the Environment including any waste:





"Environmental Management Plan" means the plan required to be produced and


submitted to the MoMP by the Company under Clause 6.3(b) (Environmental Impact


Assessment and Environmental Management Plan) and in accordance with the


Minerals Law and Mining Regulations as such plan may be amended from time to


time in accordance with tins Contract;





"Environmental Protection Agency" means the National Environmental Protection


Agency of the State established under the applicable Environmental Law of the State;





"Equator Principles" means those principles entitled "A financial industry


benchmark for determining, assessing and managing social & environmental risk in


project financing", dated July, 2006, and adopted by various banks and financial


institutions (as published on www.equator-principles.com) as the same may be


amended, re-enacted or replaced from time to time;





"Exploitation" means any activity (excluding construction activities during the


Construction Period) by means of which exploration, pre-production development


and extraction of minerals takes place from an identified deposit by means of open pit


or underground operations from a deposit or an artificial deposit for its processing,


marketing or selling;








909074811.12 6


 "Exploitation Licence" means any licence for carrying out Exploitation within the


Mining Area and granted to the Company pursuant to the Minerals Law;





"Exploitation Licence Application Documents" has the meaning assigned to that


term in Clause 6.1 (Application far Exploitation Licence);


"Exploitation Phase" means the period commencing on the date the Exploitation


Licence is granted to the Company and expiring in accordance with the terms of the


Exploitation Licence;


"Exploration" means any activity carried out to discover minerals in an area in order


to demarcate the quality and quantity of the reserves contained within such area, or to


evaluate the possibilities of its Exploitation;


"Exploration Licence" means any licence for carrying out Exploration within the


Mining Area and granted to the Company pursuant to the Minerals Law;


"Exploration Phase" means the period commencing on the date the Exploration


Licence is granted to the Company and expiring in accordance with the terms of the


Exploration Licence;


"Feasibility Study" means the study required to be produced and submitted to the


MoMP by the Company under Clause 6.2 (Feasibility Study) as such study may be


amended from time to time in accordance with this Contract;


"Financial Guarantee" has the meaning assigned to that term in Clause 16.10


(Security far Performance; Financial Guarantee);


"Financial Year" means, subject to Clause 12.3(a) (Reporting Periods and Local


Language Requirements) a period of twelve (12) months ending on 21 December;


"Financing Plan" means the plan required to be produced and submitted to the


MoMP by the Company under Clause 6.5 (Financing Plan) as such plan may be


amended from time to time in accordance with this Contract;


"ForceMajeure" means:


(a) any event which is reasonably unforeseeable and unavoidable and which the


affected party could not be expected to avoid or control by acting prudently


and reasonably in accordance with Good Industry Practice, but excluding the


events and circumstances listed at paragraph (c);


(b) subject to paragraph (c), and to the extent that the requirements of paragraph


(a) are met. Force Majeure shall include:


(i) wars, insurrections, riots, civil disturbances and acts of terrorism;


(ii) blockades, embargoes, strikes and other labour conflicts which are


industry or country wide and not specific to the Company or its


Affiliates;


(iii) epidemics; and /


909074811 12 7


 (iv) earthquakes, storms. Hoods, fire, lightning or other adverse weather


conditions; and











(c) the following shall in particular not constitute Force Majeure;


(i) economic hardship or a change in market conditions;


(ii) events which make the performance of an affected party's obligations


more onerous, but not impossible;


(iii) wars, insurrections, riots, civil disturbances and acts of terrorism,


unless they directly affect the Mining Area or the Project or constitute


a material escalation of the same relative to the circumstances as at the


Effective Date;


(iv) the usual long winter weather conditions occurring in


the region of the Mining Area; and


(v) any other event that, at the time it occurs, docs not strictly comply with


the definition of Force Majeure under paragraph (a).


"Geological Survey" means the Afghanistan Geological Survey operating within tire


MoMP;


"Good Industry Practice" means the exercise of that degree of skill, diligence,


prudence and foresight which would reasonably and ordinarily be expected to be


applied by a skilled and experienced person engaged in the international mining


industry in jurisdictions generally where significant mining activity takes place and, in


the case of any Environmental or Social aspect of the development and operation of


the Project, shall mean conformity with international best practice standards for


Environmental and Social protection, including internationally recognised standards


promoting sustainable development (and including compliance with the Agreed


Environmental and Social Standards);


"Government" means the ministers who work under the chairmanship of the


president of the State;


"ICSID" has the meaning assigned to that term in Clause 33.4(a) (ICSID


arbitration);


"Independent Expert" means (a) an internationally recognised mining consultant


firm or individual competent in the field of the development, construction and


operation of mining projects; (b) an internationally recognised mining consulting firm


or individual competent on international mineral markets and prices, or (c) an


internationally recognised Environmental and/or Social consultancy firm or individual


competent in the field of international mining operations, as appropriate, in each case


as the Parlies may agree in writing, or failing such agreement within thirty (30) days,


as shall be appointed for this purpose on the application of either Party by the


International Centre for Expertise in accordance with the provision for the


appointment of experts under the Rules for Expertise of the International Chamber of


Commerce;





909074811.12 8


 "international Labour Conventions" means any conventions promulgated under


the authority of the international Labour Organization or any similar body;





"Licences" means the Exploration Licence and the Exploitation Licence;


"Life of Mine Plan" means the plan required to be produced and submitted to the


MoMP by the Company under Clause 6.6 (Life of Mine Plan) as such plan may be


amended from time to time in accordance with this Contract;





"Mine" means collectively, all properties, assets or other rights, whether real or


personal, tangible or intangible, now owned or leased or hereafter acquired by or for











the benefit of the Company which assets are used or intended for use in or forming


part of the Project (and, for the avoidance of doubt, shall include:


(a) the ore deposits referred to in the Licences: and


(b) all associated beneficiation facilities, together with all plant sites, waste


dumps, ore dumps, crushing circuits, abandoned heaps, power supply systems


and ancillary and infrastructure facilities);


"Mineral Substances" means the Principal Metal and any other naturally occurring


substance which has economic value and contains one or more minerals in


amorphous or crystalline form, solid, liquid or gaseous and does not include


hydrocarbons, water, coal, bituminous sand, bituminous clay and quarry materials;


"Minerals Law" means, on the Effective Date, The Minerals Law of the State


(Official Gazette No. 1143 dated 25 Asad 1393) and thereafter and from time to time,


such law as the same may be modified, re-enacted or substituted from time to lime


after the Effective Date:





"Mining Activities" means, subject to compliance with Applicable Law and this


Contract, all work related to the various phases in the mineral development process,





including exploration, logistics, mineral deposit evaluation, mine construction, mine


development, mining, the reclamation or rehabilitation of and remediation of land, the


extraction, beneficiation, refining, transportation, handling, storage and marketing of a


mineral substance extracted, the processing of mine tailings and all other activities


necessary or convenient to carry out the Company's rights and obligations under this


Contract, but not including work performed for others;


"Mining Area" means (a) during the Exploration Phase, the area specifically


delineated in Schedule 1 to this Contract, and (b) during the Exploitation Phase, the


area specifically delineated for Exploitation in an Exploitation Licence;


"Mining Cadastre" means the cadastre established within (he MoMP in accordance


with the Minerals Law;





"Mining Regulations" means the Mining Regulations promulgated pursuant to the


Minerals Law (Official Gazette No. 1007 dated 25 Dalwa 1388) as such regulations


may be modified, re-enacted or substituted from time to time after the Effective Date;





"MoMP" has the meaning assigned to that term in the preamble;





909074811.12 9


 "NEPA Licence" means the environmental permit required to be issued by the


National Environmental Protection Agency of the State in connection with the











Exploration Phase pursuant to the applicable Environmental Law of the State:


"Notice of Transfer" has the meaning assigned to that term in Clause 29.1(c) (Third


Party Assignment)-,


"OECD" means the Organisation for Economic Co-operation and Development;


"Parties" means the MoMP and the Company and their permitted successors and


assigns;


"Position Notice" has the meaning assigned to that term in Clause 33.3(c) (Technical


Dispute Resolution Procedure)


"Prevailing Market Rate of Exchange" means, in relation to the conversion of one


currency into or from Afghanis, the established rate at which the Central Bank buys


or, as the case may be, sells such currency on the relevant date of conversion (as


currently published at http://www.centralbank.gov.af/foreignexchange.php ). If the


Central Bank does not have an established exchange rate for such currency, such


currency shall be converted into Afghanis in the following manner:


(a) based on the market value of die foreign exchange in the country where it was


received at the time it was received, the foreign exchange in question is


converted into Dollars or another currency in which the Central Bank trades:


and


(b) the figure so obtained in terms of Dollars or oilier currency is then converted


into Afghanis:


"Principal Metal" means copper;


"Processing" means orc dressing or metallurgical processes applied to ore or other


Mineral Substances which results in producing products for sale including crushing,


concentration, beneficiation, washing, and refining;


"Project" means the conduct of Mining Activity in relation to the production of


Mineral Substances from the Shaida copper deposit located in the Herat Province,


including the construction of all properties, assets, facilities, infrastructure or other


rights, whether real or personal, tangible or intangible, now owned or leased or


hereafter acquired by or for the benefit of the Company which assets are used or


intended to be used in forming part of such project;


"Proposal" means the proposal for the development of the Project submitted by the


Company on 5 August 2012 in response to the Request for Proposal;


"Request for Proposal" means the "Request for Proposal ", issued by the MoMP


pursuant to "The Request for Expressions of Interest" in connection with the proposed


development of the Project initiated by the MoMP on or about 6 December 2011;


"Royalty Rate" has the meaning assigned to that term in Clause 8.1 (Royal hPRate),





909074811.12 10


 "Rules" has the meaning assigned to that term in Clause 33.5(a) (Arbitration):


"Social Impact Assessment and Action Plan" means the plan required to be














produced and submitted to the MoMP by the Company under Clause 6.4 (Social


Impact Assessment and Action Plan) as such plan may be amended from time to time


in accordance with this Contract;


"Social" means the inter-relationship between humans and the effect of Mining


Activities on humans, in each case in connection with the Project;


"Social Law" means any applicable law. rule or regulation which relates to:


(a) labour or employment;


(b) social security;


(c) the regulation of industrial relations (between government, employers and/or


employees);


(d) the protection of occupational and public health and safety;


(e) the regulation of public participation;


(1) the protection and regulation of ownership of land rights (both formal and


traditional), immovable goods and intellectual and cultural property rights;


(g) the protection and empowerment of indigenous peoples or ethnic groups;


(h) the protection, restoration and promotion of cultural heritage;


(i) all other laws, rules and regulations and procedures providing for the


protection of employees and citizens;


(j) any International Labour Conventions signed and ratified by Afghanistan; and


(k) any United Nations treaty, convention or covenant on human rights signed and


ratified by Afghanistan;


"State" means the Islamic Republic of Afghanistan;


"State Official" means anyone who is an elected, appointed or career official, or


employee, of any central or local government, central or local government-owned or


central or local government-controlled enterprise, company or organisation, who is an


individual acting for any such a central or local government, enterprise, company,


agency or organisation, official of a political party or candidate for political office;


"Surface Rights Fees" has the meaning assigned to that term in Clause 7.1 (Amount


of Surface Rights Fees):


"Tax" means any levy imposed by the State under Applicable Law on income, goods


and sendees (including customs and similar duties), and the employment, health and


welfare of persons; /


909074811 12 1 I


"Tax Code" means the Income Tax Law of the State (Official Gazette No. 976, dated


28 Hut 1387);


"Tax Law" means Applicable Law of the State pertaining to any Tax (including the


Tax Code) and any subsidiary and associated legislation or regulation;


"Technical Dispute" has the meaning assigned to that term in Clause 33.3(a)


(Technical Dispute Resolution Procedure):


"Tender Process" means the tender process relating to permission to conduct Mining


Activities during the Exploration Phase and the Exploitation Phase in relation to the


Mining Area as conducted pursuant to the Request for Proposal and pursuant to which


the Company was appointed as, initially, the reserve bidder and, subsequently, the


preferred bidder in respect of both Licenses;


"Term" has the meaning assigned to that term in Clause 2.1 (Term of this Contract);


"Transferee" has the meaning assigned to that term in Clause 29.1(b) (Third Party


Assignment); and


"Transformation" means any industrial process which changes the form and nature


of a processed mineral or prepares finished or semi-finished products for sale.


1.2 Interpretation


(a) Unless a contrary indication appears, a reference in this Contract to:


(i) the singular includes the plural and vice-versa;


(ii) Clause and Schedule headings are for ease of reference only and do not


affect the interpretation of this Contract;


(iii) a Clause and Schedule refers to a Clause, or Schedule, of, in or to this


Contract;


(iv) this Contract includes all Schedules to this Contract;


(v) an agreement, instalment or other document includes the same as


amended, novated, supplemented or replaced from time to time;


(vi) a court is to a court of the State;


(vii) any legislation or legislative provision (including the Minerals Law


and the Mining Regulations) includes any statutory modification or re-


enactment of, or legislative provision substituted for. and any


subordinated legislation issued under, that legislation or legislative


provision;


(viii) a person includes any individual, firm, company, corporation,


government, state or agency of a state or any association, trust, joint


venture, consortium or partnership (whether or not having separate-


legal personality);


909074811.12 12


(ix) a regulation includes any regulation, rule, official directive, request or


guideline (whether or not having the force of law) of any


governmental, intergovernmental or supranational body, agency,


department or of any regulatory, self-regulatory or other authority or


organisation;


(x) a time of day is a reference to Kabul, Afghanistan lime;


(xi) a day, quarter or year is. as may be relevant, to a calendar day. calendar


quarter or calendar year and all references to months shall be based on


the solar calendar specified in Article 18 of the Constitution;


(xii) the singular number includes the plural number and vice versa; and


(xiii) any gender includes any other genders.


(b) The expressions ’’including”, "includes" and "include" have the meaning as


if followed by "without limitation".


(c) No rule of construction is to apply to the disadvantage of a party on the basis


that that party drafted the whole or any part of this Contract.


(d) Where a word or phrase is defined, its other grammatical forms have a


corresponding meaning.


(e) Relative to the determination of any period of time "from" means "from


(and including)" and "to" means "to (but excluding)".


1.3 Destination Schedule


Schedule 2 (Destination Schedule) contains a description of certain provisions of the


Minerals Law and Mining Regulations as in effect on the Effective Date and the


location in which such provisions are addressed in this Contract. This Schedule is


included for convenience only and is without prejudice to Clause 3.6 (Primacy of


Licences and Applicable Law).


1.4 Existing rights


The rights, obligations and liabilities of the Company and the MoMP subsisting prior


to the Effective Date under Applicable Law or permits, licences or approvals issued


thereunder, except as superseded herein, shall continue and bind both the Company


and the MoMP during the term of this Contract.























909074811 12 13


 PART 2


TERM OF CONTRACT AND GRANT OF LICENCES





2. TERM AND PHASES


2.1 Term of this Contract


This Contract shall be effective as of the Effective Date and shall remain in effect,


initially for the term of any Exploration Licence and, subsequently, for the term of


any Exploitation Licence unless it is terminated earlier in accordance with the terms


of this Contract (the ’'Tenn"). This Contract shall be renewed if either any


Exploration Licence or any Exploitation Licence is renewed in accordance with


Clause 2.2 (b) or (c) (Phases), respectively, and on terms and conditions that the


Parties may then agree upon to reflect then-existing and foreseeable conditions in


connection with the Project; provided, however, that this Contract (as previously


renewed, if applicable) shall remain in effect during the period during which the


Parties are negotiating the terms of any such renewal.


2.2 Phases


(a) This Contract applies to the Exploration Phase and, if an Exploitation Licence


is granted pursuant to Clause 2.3(b) (Licences), the Exploitation Phase.


(b) Exploration Phase


The Exploration Phase shall be for a period of three (3) years commencing


from the date of registration of the Exploration Licence by the Mining


Cadastre in accordance with die Mining Regulations. To the extent


permissible under Applicable Law. the Company may renew the Exploration


Licence for two (2) consecutive periods of three (3) years in accordance with


the Minerals Law and the Mining Regulations. If, and to the extent that all


conditions for the renewal of the Exploration Licence in the Applicable Law


have been satisfied the MoMP agrees that it shall procure the grant of such


renewal to the extent permitted, and in accordance with. Applicable Law.


(c) Exploitation Phase


If an Exploitation Licence is granted pursuant to Clause 2.3(b) (Licences) the


Exploitation Phase shall be for a period of thirty (30) years commencing from


the date of registration of the Exploitation Licence by the Mining Cadastre in


accordance with the Mining Regulations. To the extent permissible under


Applicable Law, the Company may renew the Exploitation Licence for


consecutive periods of five (5) years each provided that there remains


commercial quantities of undeveloped Mineral Substances in the Mining Area


at the end of the preceding period. Any such renewal shall be in accordance


with the Minerals Law and the Mining Regulations. If, and to the extent that


all conditions for the renewal of the Exploitation Licence in the Applicable


Law have been satisfied the MoMP agrees that it shall procure the^fanTbf


such renewal to the extent permitted, and in accordance with, Applicable Law.


9O9O74SI1-12 14 / (/ y


 To the extent permitted by Applicable Law the Company may apply for


multiple Exploitation Licences in respect of the Mining Area covered by an


Exploration Licence.





2.3 Licences


(a) Exploration Licence


The MoMP shall, within thirty (30) Business Days of the granting of a NEPA


Licence in connection with the Exploration Phase, issue and register an


Exploration Licence to the Company in accordance with the Mining


Regulations to enable it to carry out Exploration activity within the Mining


.Area in accordance with Applicable Law and this Contract.


(b) Exploitation Licence


Il is acknowledged by the Parties that the Tender Process related to the grant


of both an Exploration Licence and an Exploitation Licence in accordance


with Article 19(3) of the Minerals Law. Accordingly, following the conduct of


Exploration activity within the Mining Area in accordance with this Contract


and Applicable Law the Company shall be entitled to apply to the MoMP for


the issue of an Exploitation Licence in relation to the Mining Area without the


need for a further bidding process. It is acknowledged and agreed by die


Parties that the Company intends to apply for an Exploitation Licence in the


event that its Exploration during the Exploration Phase indicates that there is a


mineral deposit in the Mining Area which is capable of being commercially


exploited. Subject to the terms and conditions of Clause 6.8 (Grant of


Exploitation Licence) the MoMP shall forthwith issue and register an


Exploitation Licence to the Company in accordance with the Mining


Regulations and Applicable Law.


3. GRANT OF MINING RIGHTS


3_ 1 Grant of Exploration rights


Upon the grant of the Exploration Licence, but subject to Clause 3.6 (Primacy of


Licences and Applicable Law), the MoMP grants to the Company during the


Exploration Phase such rights as are referred to in the Exploration Licence, subject to


the terms of this Contract, to conduct Exploration in accordance with Applicable Law


and this Contract including the following activities:


(a) exclusively carry out Exploration activity within the Mining Area:


(b) take samples of the Mineral Substances found within the Mining Area in order


to carry out analyses or industrial assays in the laboratory of the Company's


choice, subject to the provisions of the Minerals Law; and


(c) use products extracted at the time of Exploration, subject to the prior


declaration of such products to the MoMP.











909074X11 12


 The MoMP confirms that no other licence has been granted to any other third party to


carry out any Exploration activity or other Mining Activities within the Mining Area.





3.2 Grant of Exploitation t ights





Upon the grant of an Exploitation Licence, but subject to Clause 3.6 (Primacy’ of


Licences and Applicable Law), the MoMP grants to the Company during the


Exploitation Phase such rights as are referred to in the Exploitation Licence, subject to


the terms of this Contract, to conduct Exploitation in accordance with Applicable Law


and this Contract including the following activities:





(a) carry out, within the Mining Area, exploration, development, construction and


Exploitation works in connection with Mineral Substances;














(b) exploit tailings and artificial deposits of Mineral Substances located within the


Mining Area:


(c) establish processing plants for carrying out Processing or Transformation of


Mineral Substances;


(d) proceed with Processing or Transformation of Mineral Substances;


(c) store products on specific sites or locations from where they arc to be


transported;


(f) have priority in the exercise of its rights under this Contract, to the extent


necessary for Mining Activity, over any other permit, concession, grant or any


other activity of whatever nature granted or issued in the Mining Area before


or after the date of this Contract:





(g) make all necessary excavations to mine the Mineral Substances and, subject to


submission of updated documents if necessary, to re-work mine tailings and


dumped materials;





(h) conduct all other Mining Activity as is necessary or convenient to carry’ out


the Company's rights and obligations under this Contract and the Exploitation


Licence and engage in all other activities as are reasonably necessary or


convenient to carry out the Project consistent with Good Industry Practice;





(i) market, sell, export and transport Mineral Substances within the State and


internationally, at market prices.





0) subject always to the provisions of Clause 17.2 (Access to Infrastructure) and


Applicable Law construct, erect, maintain and use. any and all facilities,


infrastructure, buildings, structures, plants, machinery, equipment, railroads,


roadways, pipelines, electrical power and communication lines and facilities,


conveyors, stockpiles, waste piles, reservoirs, tailing impoundments and


facilities, settling ponds, and all other improvements, property and fixtures


used in connection with Mining Activities, or for any activities incidental


thereto (including any houses, buildings, amenities and incidental facilities


the use of the Company, its contractors, agents and their employe and their





909074811.12 16


 immediate families), or for any of the rights or privileges of Company under


this Contract;











(k) deposit earth, rocks, waste, low-grade ore and materials onto the surface of


Mining Area;


(l) drill wells for water and lay and maintain all water lines as may be necessary


or convenient for the conduct of Mining Activities:


(m) install high voltage electrical transmission and substation facilities as required


for the conduct of Mining Activities, including towers, conductors,


transformers, switches and other ancillary facilities;


(n) subject always to Clause 9.1(a) (Customs Duties) and to Clause 16.11 (Use of


local goods and services) import all equipment, machinery, vehicles, supplies,


and spare parts required for the conduct of Mining Activities and export such


equipment, machinery, vehicles, and spare parts:


(o) subject always to the provisions of Applicable Law repatriation of capital and


remittance of profits, dividends and interest on loans; and


(p) use water and wood for Mining Activities in accordance with the Minerals


Law.





3.3 Grant of access rights





In addition to the rights set out in Clauses 3.1 and 3.2, but subject to Clause 3.6


(Primacy of Licences and Applicable Law);





(a) the MoMP hereby grants to the Company the right to occupy the land within


the Mining Area and full and complete access to the Mining Area, in each case


as may be reasonably required for works and installations which are necessary


or useful for its operations and such part of the surface area as may be required


for the conduct of Mining Activities, including the rights to acquire, import,


construct, install and operate in the Mining Area plant, equipment, railroads,


roads, bridges, pipelines, power generation and transmission facilities, and any


other infrastructure reasonably required for the conduct of Mining Activities:


(b) to the extent permitted under Applicable Law the Company shall have the


right of way to the Mining Area through adjacent or neighbouring areas over


which mining or other rights may have been granted to third parlies by the


MoMP in order to conduct Mining Activities. The Company shall give a


written notice to the holders of such rights at their address registered with the


MoMP before exercising its right of way;





(c) in the event that the Company proposes to exercise its right of way across such


adjacent or neighbouring areas on a regular basis, it shall enter into an


agreement specifying the conditions of use of the right of way and any


measures that may be necessary to protect the Mining Area of such adjacent or


neighbouring licence holder. Such an agreement shall be registered


MoMP;





909074811.12 17


 (d) the Company shall make satisfactory arrangements for payment of a fair and


reasonable compensation for any actual or prospective damage to any crops,





buildings, trees or works within the Mining Area or to adjacent areas caused


by its Mining Activities. The MoMP shall negotiate on behalf of the


landowners or occupiers with the Company to assess the compensation to be


paid. The landowners or occupiers shall have the right to participate in the


negotiations; and


(e) if the Company while exercising its right of way through an adjacent area


causes damage to such an area then the Company shall be Hable to compensate


the owner of such area in accordance with agreed compensation terms


specified in a right of way agreement. If no such terms are agreed then the


amount of the compensation shall be calculated and determined by the MoMP.





3.4 Exclusivity


Subject to the rights granted to individuals by the MoMP in connection with artisanal


mining activities pursuant to Applicable Law or any other artisanal mining activity'


consented to by the Company:


(a) the rights granted to the Company herein to conduct Mining Activities arc


exclusive within the Mining Area and include the exclusive right to mine and


market Mineral Substances extracted from the Mining Area; and


(b) the MoMP undertakes not to grant any rights to prospect for or to mine


Mineral Substances in the Mining Area or market minerals from the Mining


Area to any third party' during the Term of this Contract.


The MoMP undertakes to prevent artisanal miners and other settlers from entering the


Mining Area where such entry would materially adversely affect the rights granted to


the Company herein to conduct Mining Activities exclusively within the Mining Area,


but is not obligated to use force to do so. The MoMP will not grant any licence or


right to conduct artisanal mining activity within the Mining Area without the prior


consent of the Company.





3.5 Legal Title To Mineral Substances





The MoMP agrees that the Company will acquire ownership of the Mineral


Substances from the State upon extraction of the Mineral Substances from the land in


the Mining Area.





3.6 Primacy of Licences and Applicable Law





The right of the Company to conduct Exploration and Exploitation at the Project shall


be governed by the Exploration Licence and (if issued) the Exploitation Licence and


(in each such case) Applicable Law. In the event of any inconsistency between the


terms and conditions of (a) this Contract, on the one hand, and (b) the provisions of


Applicable Law or any Licence on the other, the latter shall govern. The Parties


acknowledge the relevant provisions of the Minerals Law and agree that (c) in the


event of any inconsistency between the Minerals Law or the Mining Regulapens-ajid


any international treaty relating to Mining Activity to which Afghanistaiymas agreed'





909074811.12 18


to be bound by, the latter shall govern, and (d) in the event of any inconsistency


between the Minerals Law or the Mining Regulations and any Applicable Law-


relating to the standards and the obligations to protect the environment and social


conditions, the latter shall govern.


4. MINING RIGHTS AREA


4.1 Maximum size of the Mining Area


(a) The maximum area of the plot for which the Exploration Licence may be


granted hereunder shall not exceed two hundred and fifty (250) square


kilometres.


(b) At the time of renewal of the Exploration Licence granted hereunder, the


surface area of the Mining Area shall be reduced by not less than twenty five


percent (25%) of the total area for which the Exploration Licence was initially


granted,, provided that in the case of a first renewal of the Exploration License


the surface area of the Mining Area following such renewal shall not exceed


one hundred and twenty five (125) square kilometers and shall be composed of


contiguous blocks as required by Article 49 of the Minerals Law. The


Company shall have the right to define the area that it wishes to retain while


making an application for renewal of the Exploration Licence in accordance


with the Mining Regulations. The Company may apply to the MoMP to


enlarge the size of the Mining Area, provided that the sum of the area under


the enlargement application and the original licence area shall not exceed two


hundred and fifty (250) square kilometres.


(c) The portion of the Mining Area covered by any Exploitation Licence granted


hereunder shall correspond to that defined in the Feasibility Study submitted


by the Company in connection with its application for the Exploitation


Licence, but shall in no event exceed fifty (50) square kilometers.


(d) Ln accordance with the Minerals Law it is hereby confirmed that the Mining


Area does not overlap with any area covered by any other mining rights


granted by the MoMP to any other third party-.


(e) The perimeter of the Mining Area covered by any Licence shall be determined


in accordance with Applicable Law, including the Minerals Law.


4.2 Relinquishment of Mining Area


The Company may by written notice to the MoMP relinquish the whole or any pan of


a Licence in respect of the Mining Area in accordance with the provisions of the


Minerals Law and the Mining Regulations.


5. EXPLORATION PHASE


5.1 Company’s obligations prior to conducting Exploration activities


Within six (6) months of the Effective Date and prior to commencing ExpJorgnoiTa^


the Mining .Area, the Company shall: / .





909074811.12 19


 (a) submit a statement of proposed Exploration activity to the MoMP in a form


satisfactory to the MoMP. Such a declaration must include a description and














location of the area where such activity will occur;


(b) obtain written consent from any affected landowners if Exploration will affect


their land;


(c) As required by Article 89(1)1 of the Minerals Law and Article 86 of die


Mining Regulations submit:


(i) a Baseline Environmental Assessment together with an analysis of die


reasonably anticipated Environmental and Social impacts of the


Exploration activities in accordance with Applicable Law;


(ii) a report including cost estimates and schedules, of specific measures to


prevent, reduce or mitigate the Environmental and Social impacts of


the proposed Exploration activity;


(iii) a report to the MoMP setting out measures to rehabilitate the impacted


area following completion of Exploration activity;


(iv) a programme for Exploration work, and budget of expenditures to be


made during the term of the Exploration Licence, such programme and


budget to be consistent with the schedule and quantum of Exploration


activity agreed in connection with the Tender Process;


(v) documents evidencing financial assurance for a minimum amount to


cover the cost of the commitments contained in the programme for


Exploration activity and of any rehabilitation or other action relating to


the prevention, reduction or mitigation of Environmental and Social


impacts; and


(d) to the extent required by Environmental Law:


(i) apply for a NEP A Licence;


(ii) prepare an environmental impact statement and a mitigation and


rehabilitation plan relating to the Exploration Phase; and


(iii) prepare an analysis of the environmental and social impact of the


Exploration activities.


(c) The Parties acknowledge that where practicable the preparation and lodgement


of a document may discharge one or more of the obligations under Clauses


5. l(c)(i) to (c)(iii) and 5.1(d).





5.2 Company's obligations to explore





The Company shall, in addition to its obligations contained in Applicable Law and


elsewhere in this Contract, have the following obligations during the Exploration


Phase:





909074811.12 20


 (a) to submit all reports and data gathered during die Exploration Phase to the


MoMP within thirty (30) Business Days of completion of Exploration








activities at the Mining Area;


(b) to pay surface rights fees for the Mining .Area in accordance with the Minerals


Law, the Mining Regulations and Clause 7 (Surface Rental) of this Contract;


(c) to commence Exploration activity at the Mining Area within six (6) months of


die dale on which the Exploration Licence has been registered with the Mining


Cadastre;


(d) to comply with all Applicable Laws including Applicable Laws regarding


health, safety of labour, human rights, use of water, protection of the


Environment and protection of affected communities, flora and fauna;


(e) to submit to the MoMP any changes to the programme and budget for


Exploration activity submitted in accordance with Clause 5.1(c)(iv)


(Company's obligations prior to conducting Exploration activities)’, provided,


however, that no such change shall in any way contemplate a less extensive


programme for Exploration work than any programme agreed in connection


with the Tender Process;


(f) to maintain written records of its Exploration activities, and to submit its


reports to die Geological Survey as required in the Mining Regulations;


(g) to comply with the customs law when it sends any samples abroad for


assaying and to submit a description of any such sample, indicating the


number, volume and weight, to Ute Geological Survey;


(h) to submit the following reports to the MoMP in accordance with the Mining


Regulations and in a form and substance satisfactory to the MoMP:


(i) a quarterly report concerning its activities no later than ten (10)


Business Days after the end of each quarter;


(ii) an annual report, within thirty (30) Business Days of each annual


anniversary of the date of issue of the Exploration Licence, detailing its


implementation of the Exploration work programme and its annual


expenditure:


(iii) a final report within sixty (60) Business Days of the expiration or


relinquishment of the Exploration Licence, such report to include


complete detailed expenditures incurred during exploration; and


(iv) an evaluation report of mineral deposits, based on the activities and


results that the Company achieved during the Exploration Phase within


sixty (60) Business Days of the expiration of the Exploration Licence;


(i) to collect and keep duplicate samples and sample batches within the Mining


Area and provide them to the Geological Survey in accordance with~thc


Mining Regulations; / t A


1


909074811 |2 21








(j) to allow any authorised representative of the MoMP to inspect any


Exploration activity during normal business hours;


(k) to allow the MoMP to bi-annually review the performance and compliance by


the Company of its obligations during the Exploration Phase as set forth in this


Contract and in Applicable Law;


(l) to continue and conduct Exploration work in a manner which is consistent


with the programme and budget submitted in accordance with Clause 5.1


{Company's obligations prior to conducting Exploration activities') as the


same may be amended pursuant to the provisions of this Clause 5.2;


(m) to pay taxes, fees and all other amounts when due in accordance with the


Minerals Law. the Mining Regulations, Applicable Law and this Contract; and


(n) to comply with all obligations prescribed by Applicable Law in respect of


Exploration, including without limitation Article 52 of the Minerals Law.


5.3 Applicable Law prevails in inconsistency


If there is any inconsistency between the requirements of Clause 5.2 and the


requirements of any Applicable Law, the provisions of the Applicable Law will


prevail to the extent of the inconsistency. It is acknowledged that where practicable


the submission of a single report may discharge one or more of the obligations


described in Clause 5.2 or Clause 12.2. For the avoidance of doubt, without prejudice


to Clause 35.1, to the extent that the reporting requirements under Applicable Law fas


described in Clauses 5.2 and 12.2) are revised after the Effective Date, the Company


shall only be obliged to provide such reports as are required under the Applicable Law


which applies to this Contract.


6. EXPLOITATION PHASE


6.1 Application for Exploitation Licence


At any time during the duration of an Exploration Licence, when the Company shall


have determined that the Mining Area contains a deposit which is capable of being


commercially exploited, then, pursuant and subject always to Applicable Law as from


lime to time in effect, the Company shall be entitled to apply for the issue of an


Exploitation Licence in connection with the Mining Area. In connection with such


application, the Company shall submit the following documents to the MoMP,


(collectively, the "Exploitation Licence Application Documents’’):


(a) the Feasibility Study;


(b) the Environmental Impact Assessment;


(c) the Environmental Management Plan;


(d) the Social Impact Assessment and Action Plan;


(e) the Financing Plan;





909074811.12 22


(f) the Life of Mine Plan;


(g) the Closure Plan; and


(h) any other documents that are required under the Mining Regulations and


Minerals Law.


The Exploitation Licence Application Documents shall be submitted in electronic


formal. In addition at least five (5) printed and bound copies of the same shall be


submitted.


6.2 Feasibility Study


In connection with any application by the Company for an Exploitation Licence the


Company shall produce a study relating to the feasibility of the conduct of


Exploitation within the Mining Area prepared by (i) an independent third-party agreed


to by the Parties in writing or (ii) by the Company and verified by an Independent


Expert, on the basis of sound engineering and economic principles in accordance with


Good Industry Practice. The Feasibility Study shall include those elements as the


Parties may agree, but shall in any event include the following:


(a) a description and plan of the area over which Exploitation Licence is sought;


(b) an estimate of minable reserves and resources in accordance with


internationally accepted standards;


(c) a market study for all of the Mineral Substances to be produced in die Mining


Area:


(d) an evaluation of the known deposits within the boundaries of the Mining Area,


as well as the Mineral Substances which can be exploited in the Mining Area;


(e) a description of the technology processes to be used, in each case with the


results of any laboratory or other tests designed to identify technologically


appropriate methods for processing the ore or orcs involved;


(0 an initial mine plan indicating expected recovery rales;


(g) a general description of requirements associated with obtaining required


permits, including the estimated cost of compliance and implementation of the


Environmental Management Plan and Social Impact Assessment and Action


Plan;


(h) (i) a description, plans and list of the proposed Project facilities (to include all


infrastructure and associated facilities (such as power, communication,


transportation, roads, and fresh and reclaimed water), the main structures and


the machinery and equipment, (ii) a specification of the raw materials and


services (including electrical requirements and water) required, and (iii) an


assessment of the potential for sharing such facilities and services withjMhQr


users in ways that promote sustainable development of the communipds in and


around the Mining Area and/or local areas (as applicable); /





909074811.12 23


(i) an organisation chart and requirements for personnel;


(j) schedules to initiate construction and construction timetables:


(k) plans for electricity supply for Mining Activities, including reliability and cost


of services that includes an assessment of the potential for sharing electrical


supplies and infrastructure with other users in ways that promote sustainable


development of the communities in the Mining Area:


(l) plans for disposal of tailings from the ore processing plants and of waste rock


and materials from Mining Activities;


(m) a description of plans for any potential reprocessing of materials or tailings;


(n) estimates, intended to be accurate to within fifteen percent (15%), of capital


costs and operation costs;


(o) an economic evaluation and financial analysis (including an estimated rate of


return of investment and cash flow for the various phases of Exploitation),


including probable future capital investments and an analysis of the financial


viability of the Project during the Exploitation Phase;


(p) a plan for the development of, and access to. infrastructure required and


necessary for the development of the Project and in a manner which is


consistent with the obligations of the Company contained in Clause 17


(Infrastructure)',


(q) the estimated Date of Commencement of Commercial Production;


(r) a detailed schedule for the performance of all planned activities during the


Construction Period; and


(s) plans for the development, construction and operation of plants for the


processing and refining of Mineral Substances extracted from the Mining Area


to the extent that it is commercially feasible and reasonable to construct and


operate the same during the Exploitation Phase.


6.3 Environmental Impact Assessment and Environmental Management Plan


In connection with any application by tlic Company for an Exploitation Licence the


Company shall produce:


(a) an assessment of the impact of the proposed Exploitation activity on the


Environment prepared in accordance with Applicable Law and based on sound


engineering and economic principles, and having regard to Good Industry


Practice and the Agreed Environmental and Social Standards, establishing a


baseline of Environmental conditions existing at the Effective Date, and


assessing the Project-related Environmental effects and impacts. The


Environmental Impact Assessment shall include the requirements specified by


the Minerals Law and Mining Regulations and shall in any event inclpdCT '








909074811 12


 (i) a description of the natural and human Environment that will be


affected by the proposed Exploitation activity;








(ii) an identification and analysis of the type, duration and intensity of


potential Environmental and Social impacts of the proposed


Exploitation activity, including cumulative impacts of other mineral


activities in the vicinity of the proposed Exploitation activity: and


(iii) an identification of appropriate mitigation measures to address the


identified impacts of the proposed Exploitation activity; and


(b) a plan for the management of Environmental matters at the Project (which if


prepared by the Company is verified by an Independent Expen with relevant


Environmental expertise) based on the Environmental Impact Assessment and





sound engineering and economic principles, and having regard to Good


Industry Practice and the Agreed Environmental and Social Standards. The


Environmental Management Plan shall, upon request by the MoMP, be made


publicly available in a language and in a form that is accessible to affected


communities in the Mining Area, and shall be placed in the document files


identified in Clause 30.1 (Public documents). The Environmental


Management Plan shall be updated prior to any major change to the Life of


Mine Plan. The Environmental Management Plan shall include those


elements as the Parties may agree, but shall in any event include the following:


(i) measures that the Company intends to use to mitigate adverse


consequences of the development of the Project as described in the


Feasibility Study;


(ii) specific measures to address identified Environmental, human health


and Social impacts of the Exploitation activities identified in the


Environmental Impact Assessment, including measures to avoid or


minimise impacts associated with construction and operation activity


in relation to the development of the Project;


(iii) a monitoring programme with regularly scheduled compliance


assessment and reporting to the MoMP to ensure implementation of


and compliance with the Environmental Management Plan;


(iv) plans for the management, remediation, rehabilitation and control of all


Environmental aspects of the Project, including:


(A) a plan to avoid, minimise, mitigate, rehabilitate and offset,


where appropriate, impacts on biological diversity within the


Mining Area;


(B) a plan consistent with the requirements of Clause 19.2 (Closure


Plan and closure obligations);


(C) a plan for preventing, minimising or mitigating adverse


Environmental impacts to rivers and other potable wfiteFahtl,


ensuring that pollution does not cause unnecessary harm or


900074811 12 25


 destruction to human or animal life or fresh water fish or


vegetation;














(D) opportunities for the improved management and conservation


of natural resources in the Mining Area;


(E) a plan to avoid or minimise greenhouse gas air emissions from


the Project taking into account economically and commercially


feasible technology: and


(F) a plan to effectively manage soil resources to allow tuturc use


of the surface land consistent with the proposed post


Exploitation land use:


(v) a description of the actions to be taken during any periods of temporary


closure or cessation of operations and for the closure activities to be


performed should closure be required prior to completion of the


planned mine life of the Project;


(vi) a plan for concurrent reclamation;


(vii) a plan to restore all mined areas to a final landform that is safe, stable,


and suitable for the proposed post Exploitation land use; and


(viii) a plan regarding the intended post Exploitation land use in the Mining


Area.





6.4 Social Impact Assessment and Action Plan


In connection with any application for an Exploitation Licence the Company shall


produce an impact assessment and action plan relating to Social issues in connection


with the Project in accordance with Good Industry Practice and the Agreed


Environmental and Social Standards, which shall include those elements as the Parties


may agree, but shall in any event include the following:





(a) provisions to prevent or minimise the potential adverse impact of Mining


Activities on the individuals and communities resident in and around (i) the


Mining Area and (ii) areas affected by the processing or transport of Mineral


Substances whether using Company owned infrastructure or infrastructure


provided by the State or third parties;





(b) provisions to prevent or minimise interference with the living conditions of the


population settled within the Mining Area and surroundings, and to cause the


Company's employees and contractors to respect the customs of the local


populations;





(c) provisions to mitigate negative social impacts on the local community,


including housing, sanitation and public health measures of any temporary or


permanent work force engaged by the Company;











909074X11.12 26


 (d) provisions (with guidance from IFC Performance Standards, where


appropriate or relevant) to:





(i) avoid or minimise displacement of persons or involuntary resettlement


wherever feasible;








(ii) make satisfactory arrangements for payment of fair and reasonable


compensation for any prospective damage to any crops, buildings,


trees or works;


(in) compensate the holders for the use of the surface area, where the


surface rights to any land within the Mining Area are held or owned by


local or indigenous or tribal populations as recognised by Applicable


Law, at a rate agreed by the holder and the Company;


(iv) recognise the rights of surface right owners and occupiers, the rights of


indigenous or tribal populations, or other communities in the Mining


Area, to continue utilising land within the Mining Area for subsistence


purposes, including grazing livestock, using waler, cultivating crops,


hunting game, and collecting fruits and fuel wood, provided that such


subsistence use would not be unsafe and does not substantially


interfere with Mining Activity;


(v) provisions for developing a plan of resettlement if at any point a


resettlement of the local population appears to be essential, having


regard to the requirements of IFC Performance Standards including


provisions to;





(A) conduct full Consultation with local governments and all


persons who may be displaced or relocated, with the goal of








developing a resettlement programme to which they consent;


(B) mitigate adverse social and economic impacts by ensuring that


resettlement activities arc implemented with appropriate


disclosure of information and Consultation;


(C) improve, replace or restore the livelihoods of displaced persons


to ensure in all material respects the availability of means of


livelihood adequate to maintain an appropriate quality of life in


the community; and


(D) improve, replace or restore living conditions among displaced


persons through provision of adequate housing with security of


tenure at resettlement sites;


(v>) a procedure where, if the surface of the Mining Area is occupied by


artisanal miners or persons conducting small scale mining activity, the


Company shall (except for any artisanal mining activity of the nature


referred to in Clause 3.4. (Exclusivity)) treat such persons as displaced


persons and implement the resettlement under the provisions of


paragraph (v) above, including a procedure to


9(W7481|.|2 27


resettlement plan is developed in Consultation with those artisanal


miners or persons conducting small scale mining activity; provided,


however, that the Company shall not be liable to compensate or resettle


any artisanal miners who first occupy the Mining Area after the


Effective Date; and provided further, however, that the Company shall


ensure that information regarding the occurrence of the Effective Date


is well documented and disseminated throughout the Mining Area in a


culturally accepted manner; and


(vii) a plan for the transition of the Mining Area to a post Exploitation


economy; and


(e) a plan to establish appropriate sustainable development and social protection


programmes and structures including the following:


(i) approaches to provide adequate housing, sanitation, roads, medical


facilities, power and water supply, educational facilities, religious


facilities and recreational opportunities; and


(ii) measures to be adopted for economic development, employment and


job creation in local communities, taking into account employment


requirements established under Applicable Law.


6.5 Financing Plan


In connection with any application for an Exploitation Licence the Company shall


provide a plan relating to the financing of the Project during the Exploitation Phase


including such provisions as the Company may determine consistent with its


commercial requirements and Good Industry' Practice. The Company shall be


responsible for raising all of the financing necessary to implement the Financing Plan.


6.6 Life of Mine Plan


In connection with any application for an Exploitation Licence the Company shall


provide a plan of the proposed work programme dial provides an overview of how the


Mining Area will be exploited, which shall include those elements as the Parties may


agree but shall in any event include the following:


(a) the size, extent, type and location of the proposed Mining Activities;


(b) the proposed mining methods to be used;


(c) the proposed exploitation and production schedule;


(d) the expected production and long-term mining scheme for Exploitation within


the Mining Area;


(e) the proposed Date of Commencement of Commercial Production;


(f) any proposed further Exploration work; and


(g) the proposed expenditure for the Exploitation Phase. / . j


909074*11.12 28 |


6.7 Closure Plan





In connection with any application for an Exploitation Licence the Company shall


provide a plan with respect to the closure of the Project and rehabilitation of the


Mining Aiea. The Closure Plan shall address the anticipated Environmental, Social


and economic state of the Mining Area during the next five (5) year period of Mining


Activities, and shall be prepared in Consultation with communities in the Mining


Area. It shall be consistent with any Community Development Agreements, and


prepared in a manner which is consistent with guidance provided by the planning for


integrated mine closure toolkit and related guidance published by the International


Council on Mining and Metals.





6.8 Grant of Exploitation Licence


(a) The MoMP shall review the Exploitation Licence Application Documents as


promptly as reasonably possible after receipt and to provide comments thereon


to the Company together with details of any failure to conform to Applicable


Law. the commitments and representations made by the Company during the


Tender Process or the terms of this Contract. The Company shall correct any


failures to conform to Applicable Law, the commitments and representations


made by the Company during the Tender Process or the terms of this Contract,


or shall submit the matter for resolution pursuant to Clause 33 (Dispute


Resolution Mechanism).


(b) The MoMP may provide notice to the Company requesting such revisions to


any of the Exploitation Licence Application Documents as arc reasonable to


contribute to the efficient development of locally required infrastructure and to


assist other national and local needs, provided that such requested revisions


shall relate to the Project and shall be utilised by the Company in the Mining


Area, and provided further that such requested revisions shall not materially


impact the economic returns of the Company in connection with the proposed


development of the Project. If the MoMP provides notice of such requested


revisions within one hundred and eighty (180) days after receipt of the


Exploitation Licence Application Documents, the Company and the MoMP


shall meet within sixty (60) days of the MoMP's written notification to the


Company as to any requested revisions so that the parties may negotiate


revisions to the relevant Exploitation Licence Application Documents. The


Parlies shall establish a time frame within which to revise the relevant


documents, which time frame shall not exceed one hundred and eighty (180)


days from the MoMP's notice to the Company as to the requested revisions. If


the Parties are unable to reach agreement within such time frame, the matter


may be referred by either Party for resolution pursuant to Clause 33 (Dispute


Resolution Mechanism).


(c) No Exploitation Licence may be issued until the Exploitation Licence


Application Documents have been finalised and agreed in accordance with the


provisions of Clauses 6.8(a) and 6.8(b). Within sixty (60) days of the


finalisation and agreement of the Exploitation Licence Application Documents


in accordance with Clauses 6.8(a) and 6.8(b) (but subject always to CJaus^L6


(Primacy of Licenses and Applicable Law), the MoMP shall issue to the)


909074811.12 29 /


 Company an Exploitation Licence for the Mining Area that was tlie subject of


the licence application filed by the Company in accordance with this Contract


and the Minerals Law. No Exploitation activities may be commenced until all


of the conditions set forth in Article 59 of the Minerals Law have been


satisfied.


It is acknowledged by the Parties that the development of the Project is


necessarily a long term process and that, if an Exploitation I.icence is granted,


not all circumstances and events relating to the Exploitation Phase arc capable


of being addressed in this Contract as originally in effect on the Effective


Date. Accordingly, in connection with the award of the Exploitation Licence,


the Parties will enter into good faith negotiations with a view to entering into


such amendments or modifications to this Contract as might be necessary in


order to reflect any specific technical aspects of developing the Project during


the Exploitation Phase which are not adequately reflected in this Contract as


originally executed. No such amended or modification shall, or shall be


required to be entered into to the extent the same (i) would not be consistent


with the terms and conditions applicable to the development of the Project


agreed at the conclusion of the Tender Process, or (ii) would adversely impact


the commercial return on the Project to the State or the Company, or (iii)


would impose any additional materially onerous obligation on the Company or


the State, or (iv) are in any way inconsistent with the provisions of Part 6


(Environmental and Social Obligations).





6.9 Exploitation Phase Obligations


The Company shall have the following obligations during the Exploitation Phase:


(a) to pay Surface Rights Fees for the Mining Area and taxes, fees and royalties


and all other amounts in accordance with the Minerals Law, the Mining


Regulations, Applicable Law and this Contract;


(b) to commence Exploitation by no later than three (3) months after the date of


registration of the Exploitation Licence by the Mining Cadastre;


(c) to continue Exploitation of the deposits within the Mining Area in accordance


with the Exploitation Licence Application Documents. Any deviation of the


work from such documents shall require the approval of the MoMP acting in


accordance with the Minerals Law and Mining Regulations and other


Applicable Law:


(d) to comply with all Applicable Laws, regulations and this Contract regarding


health, safety of work, human rights, use of water, protection of the


Environment and protection of affected communities;


(e) to maintain written records of its documents and activities and to facilitate


access to the same for inspection by the MoMP, and to, not less than quarterly,


submit periodic progress reports to the MoMP, including a description of its


activities, investments, production, sales, revenue, estimated reserves dakrrmd.


such other information as may be required in the Minerals Law and Mining


Regulations or reasonably requested by the MoMP; / ff


909074811 12


 (f) to conduct the Mining Activities in accordance with the provisions of the


Minerals Law, including without limitation Article 60 of the Minerals Law








and the Mining Regulations and including compliance with all obligations


under the Mining Regulations, including without limitation the obligations set


forth in Article 42 of the Mining Regulations;


(g) to give preference to goods and services produced and offered in Afghanistan


in the manner set forth in Clause 16.11 (Use of local goods and services);


(h) to give preference to Afghan nationals in all types of mining employment for


which they are qualified and to limit foreigner employment only to works


requiring highly specialised training and experience in circumstances where


Afghan nationals with such highly specialised training and experience are not


available;


(i) to use the best internationally available and appropriate anti-pollution


technology and facilities in accordance with Good Industry Practice and


Applicable Law;


(j) to recognise and respect the rights, customs and traditions of local


communities;


(k) to utilise appropriate and efficient mining and processing technologies; and


(l) to immediately stop Exploitation activities if historical or cultural artefacts arc


found. The Company shall notify the MoMP within live (5) Business Days of


becoming aware of such findings and shall not resume mining activities until


authorised by the MoMP.





6.10 Requirement to obtain Permits


Where the Company is required under this Contract or Applicable Law to obtain a


permit, licence or approval (including any from the National Environmental


Protection Agency of the State in connection with either of the Exploration Phase or


the Exploitation Phase), the Company shall obtain the necessary permit, licence or


approval from the appropriate Government agency prior to proceeding with or


undertaking the activity authorised by the permit, licence or approval.





6.11 Requirement to update plans





The Company shall from time to time update each of the Feasibility Study.


Environmental Management Plan, Social Impact Assessment and Action Plan and


Financing Plan, in each case:





(a) periodically on not less than an annual basis;





(b) promptly upon the occurrence of any material event or circumstance which


renders any such plan as currently in effect materially inaccurate; and





(c) as may be required from time to time to ensure compliance witlyApplicable


Law. f


31 Q





909074811 12


6.12 Genera! obligations


The Company shall, subject to Applicable Law (and in all cases in accordance with


Good Industry Practice):


(a) conduct all Mining Activities in a prudent, diligent, and efficient manner. All


operations and activities under this Contract shall be conducted so as to


minimise waste or loss of natural resources, protect natural resources against


unnecessary damage, and in a manner intended to minimise pollution and


contamination of the Environment:


(b) take measures to prevent and control fires and to identify and notify


immediately the proper governmental authorities of any fire that occurs within


the Mining Area and which it is aware of;


(c) take measures to avoid damage to the properties of the State and third parties


located within the Mining Area;


(d) install and utilise such recognised modem safety devices and observe such


recognised modem safely precautions as are provided in the Mining


Regulations and this Contract;


(e) observe internationally recognised modern measures for the protection of the


general health and safety of its employees and of all other persons contracted


by it and having legal access to the Mining Area; and


(f) at all times maintain in full force and effect, at its expense, insurance from


reputable insurers with respect to its properties, personnel, liabilities and


operations relating to the Project of the types, in amounts, on policy terms and


with limits at least as favourable to the Company and the State as is customary


under Good Industry Practice.


6.13 Construction


(a) During the Construction Period the Company shall submit to the MoMP on a


quarterly basis, an updated schedule showing progress and any changes in the


milestones or critical paths for the construction of the Project.


(b) Within thirty (30) days of the Feasibility Study being finalised and agreed in


accordance with Clause 6.8(a) (Grant of Exploitation License) the Company


shall commence and diligently continue construction of the Project until its


completion in accordance with the Feasibility Study and any non-material


changes resulting from engineering and other studies conducted by the


Company after completion of the Feasibility Study.


PART 3


FISCAL AND FINANCIAL PROVISIONS











909074811.12 32


7. SURFACE RENTAL


7.1 Amount of Surface Rights Fees


The Company shall pay to the MoMP an annual surface rights fee in accordance with


the Mining Regulations and the following schedule (the "Surface Rights Fees"):


(a) For Exploration Licences:


(i) For die initial term: USD 5 per hectare of land included in the Mining


Area;


(ii) For the initial renewal term: USD 10 per hectare of land included in


the Mining Area;


(iii) For subsequent renewal terms: USD 15 per hectare of land included in


the Mining Area.


(b) For Exploitation Licences:


(i) For metallic and non-metallic minerals: USD 25 per hectare of land


included in the Mining Area:


(ii) For gemstones: USD 35 per hectare of land included in the Mining


.Area.


or. in any such case at such other rates as may from time to time be stipulated


under the Minerals Law. the Mining Regulations or Applicable Law.


7.2 Payment of Surface Rights Fees


The Surface Rights Fees shall be paid annually on the anniversary of the date the


relevant Licence is registered with the Mining Cadastre. If the Surface Rights Fees are


not paid on the due date, the Company shall pay a penalty at the rate of two (2)


percent per month (compounded) on the overdue amount from the due date up to the


date of actual payment. If the failure to pay the Surface Rights Fees continues for a


continuous period of one (1) year then the MoMP reserves the right to terminate the


relevant Licence and this Contract. All Surface Rights Fees shall be paid in Afghanis.


8. ROYALTIES


8.1 Royalty Rate


The Company shall pay to the Government a royalty at the rate of 6.1% (the ’’Royalty


Rate”) on all Principal Metal produced from the Mining Area. The royalty shall be


calculated as follows:





(a) Except as set forth in Clause 8.1(b) the Royalty Rate shall be applied to the


total Gross Market Value of all Contained Metal within the Commercial


Product. ---








909074811.12 33


 (b) The Royalty Rate in respect of any Commercial Product (i) sold for final


Beneficiation (refining) within Afghanistan shall be based on the Net Smelter











Return payable to the Company in connection with such sale, and (ii) which is


subject to final Beneficiation (refining) within Afghanistan on a Toll


Treatment basis shall be based on the Combined Metal before any charge for


tire Toll.


(c) Except in connection with the payment of a royalty calculated in accordance


with Clause 8.1(b). no deductions shall be allowed in determining any royalty


paid under this Contract under permitted Applicable Law.


(d) The amount calculated pursuant to clause (a) or clause (b) shall be determined


as set forth in Clause 8.3 (Payment and calculation of royalty).


As used in this Clause 8.


"Beneficiation " means the process of upgrading a mineral product into a


more concentrated form through a physical or chemical process.


"Commercial Product" means that material containing the Principal Metal


or other Mineral Substance in mineral or pure form created from the final


process of mining and Beneficiation that takes place in Afghanistan in any


given calendar quarter, or any product stockpiled ahead of final Beneficiation


in Afghanistan for more than two (2) calendar quarters other than material


planned for temporary stockpiling in accordance with the Feasibility Study.


Waste Material and Tailings will not be included as Commercial Product for


purposes of stockpiling or production until such lime as such materials arc


scheduled to undergo Beneficiation or re-processing.


"Contained Metal" means the gross amount of Principal Metal contained


within the total mass of the Commercial Product (such amount to be calculated


as the total mass multiplied by the average grade as defined by chemical assay


in accordance with Good Industry Practice).


"Gross Market Value" of any amount of Principal Metal produced during


any calendar quarter shall be determined; (a) in the case of copper, using the


daily average closing seller price of three (3) month copper contracts on rhe


London Metals Exchange during such calendar quarter; and (b) in the case of


gold, the daily average London A.M. gold fixing price as reported by the


London Bullion Market Association during such calendar quarter.


"Mill Cut-off Grade” is the level of contained Primary Metal or other


Mineral Substance within a material below which it is not economically


feasible to process. The Cut-off Grade is as defined within the Feasibility


Study but will change from time to time in relation to the economic climate or


otherwise.


“Mine Cut-off Grade” is the level of contained Primary Metal or other


Mineral Substance within a material below which it is not ecopomwaJJy


feasible to mine and process. The Cut-off Grade is as definej^within thd





909074811 |2 34


Feasibility Study but will change from time to time in relation to the economic


climate or otherwise.


"Net Smelter Return" or "NSR" means the net revenue, (based on the


definitions outlined in the relevant smelter/refinery contract - which arc likely


to be based upon the value of the Contained Metal minus Treatment Charges


and Refining Charges) that an owner of a mine receives from the sale of its


Commercial Product.


"Production" means the process by which a Commercial Product is created


from Beneficiation of material mined under the relevant Exploitation Licence


(including material taken from a stockpile) and in this Clause 8 "produced"


shall be construed accordingly.


"Refining Charge" or "RC" means the price paid by the Company to the


processor of refining the Contained Metals to produce a saleable metal.


"Tailings" means the waste product from the Beneficiation of a mineral


product as defined in the Feasibility Study that may contain a level of


mineralisation of the Principal Metal that is not initially considered to be


economically extractable as defined in the Feasibility Study.


"Toll Treatment" means the process when a mine provides Product to a


smelter for Beneficiation but retains ownership of the final product. The


smelter will charge the mine a toll ("Toll") per tonnage processed.


"Treatment Charge" or "TC" means the charge paid by the Company to


have its concentrate treated through smelting to produce saleable metal. This


is typically quoted in USS per ton of concentrate, and is theoretically a


function of the cost of smelting. In practice, it fluctuates as a function of the


supply/demand balance in the concentrate market.


"Waste Material" means that material defined within the Feasibility Study


which may contain a level of mineralisation of the Principal Metal that is


below the Mine Cut-off Grade or if already mined, below the Mill Cut-off


Grade and is therefore not initially considered to be economically extractable


as defined within die Feasibility Study and is removed in order to access


economically extractable orc material.


8.2 Royally on other Mineral Substances


(a) If Mineral Substances other than the Principal Metal arc produced from the


Mining Area, the Company shall pay a royalty on all such Mineral Substances


produced from the Mining Area. The royalty rate shall be 5%. The value of


such Mineral Substances shall be based on the international fair market value


of such Mineral Substances, determined, in the absence of published


international market prices for such Mineral Substances, in such manner as


agreed by the Parties.


(b) Royalties shall not be payable or paid on stone, sand, graypf^of^othcr


construction materials produced in the Mining Area and used internally by the


9090748! 1.12 35


 Company in construction of any of its facilities or infrastructure for the


Project.





8.3 Payment and calculation of royalty


(a) The obligation to pay mineral royalties commences as soon as Mineral


Substances are being produced at the Project.


(b) Royalties shall be paid in USS or such other currency as may be mutually


agreed and shall be paid on or before the last day of the month following each


calendar quarter in respect of which Mineral Substances are being produced at


the Project. Each payment shall be accompanied by a statement in reasonable


detail showing the basis of computation of royalties due in respect of


shipments or sales made during the preceding calendar quarter.


(c) The Company shall submit to the MoMP a production statement in accordance


with Applicable Law. and if no timeline is specified by the MoMP to provide


such production statements then not later than thirty (30) days after the end of


the calendar quarter in which production commences and thereafter not later


than thirty (30) days after the end of each subsequent calendar quarter during


the term of this Contract. The production statement must be prepared in


accordance with Applicable Law. if any. and Good Industry Practice, and shall


contain the following particulars:


(i) the quantity and quality of Mineral Substances produced and sold;


(ii) the size of Mineral Substances stocks held at the beginning of the


calendar quarter;


(iii) the size of Mineral Substances stocks held at the end of the calendar


quarter; and


(iv) the calculation of the royalty due on such Mineral Substances produced


and sold, in accordance with Clause 8.1 {Royalty Rate) and, if


applicable. Clause 8.2 {Royalty on other mineral materials).


(d) The MoMP may give notice specifying other particulars relating to Project


operations necessary for calculation of the royalty be included in the


production statement and the Company must comply with any such request.


8.4 Final payment of royalty


The final royalty payable under this Contract must be paid no later than thirty (30)


days after the last day of the month in which final settlement is made by the purchaser


of the Mineral Substances produced and sold or otherwise disposed of by the


Company.


8.5 Efficient recovery


(a) The Company shall conduct its Mining Activities to ensure that a.uy'miiiiTve,


processing or treatment of orc prior to domestic sale or export shipment meets





909074811.12 36


 such generally accepted international standards as are economically and


technically feasible.





(b) If in die opinion of die MoMP, the Company is not extracting, removing or


disposing and/or processing the Mineral Substances in the manner








contemplated in the Feasibility Study and/or as required by Applicable Law


dien the MoMP may give notice in writing of such deficiency to the Company.


The Company shall within three (3) months of the receipt of such a notice:


(i) commence work to improve its mining method, treatment and/or


processing facilities to the reasonable satisfaction of the MoMP


provided dial the Company shall in no event be obliged to conduct


mining, processing or treatment activities otherwise than as provided in


the Feasibility Study; and


(ii) submit to the MoMP evidence justifying its performance.


(c) In the event that the MoMP thereafter remains unsatisfied with the Company's


performance, it shall have the right to commission independent technical


studies to determine a fair average recovery rate taking into account the nature


of the proven reserves and the ore and the economic and technical feasibility


of achieving increased recovery by the Company. Such studies shall be carried


out by an Independent Expert appointed by the MoMP and agreed to by the


Company (such agreement not to be unreasonably withheld or delayed).


(d) If die said consultants find that the Company's performance is not satisfactory,


then the cost for such studies shall be borne by the Company. If it is found that


the Company's performance is satisfactory, then the cost of such studies shall


be borne by the MoMP.


(e) If following the completion of such studies, the Company fails within a


reasonable period to achieve the recovery rate indicated by such studies, the


MoMP shall have the right to increase the royalty applicable to the Mineral


Substances delivered for export shipment or domestic sale in proportion to the


extent that the recovery of such Mineral Substances by the Company falls


short of the fair average rate indicated by such studies. The payment of such


increased royalty shall not in any manner absolve the Company from its


obligation to carry out the Mining Activities in a manner consistent with the


Feasibility Study and the other Exploitation Licence Application Documents.





8.6 Disputes regarding Royalty Payments





The Parties agree to submit any dispute arising out of or in connection with


calculation of die royalties payable under this Contract in accordance with procedures


applicable to a Technical Dispute provided for in Clause 33.3 (Technical Dispute


Resolution Procedure). Any additional amount payable to the Government or any


overpayment refundable to die Company, as determined by the Independent Expert,


shall be paid no later than thirty (30) days after the written decision of the


Independent Expert is delivered to both Parties. All royalty paymentspaid in


accordance with any such written decision of die Independent Expert will Tie


considered final and in full satisfaction of all obligations of the Company unless h




Party submits any continuing dispute it may have in connection with such decision to


arbitration in accordance with Clause 33.4 (ICSID Arbitration) or Clause 33.5


(UNCITRAL Arbitration). Pending resolution of any dispute in connection with the


calculation of royalties as aforesaid, payment of royalties shall be made into an


escrow account on terms and conditions, and pursuant to documentation, acceptable


to the MoMP.


9. CUSTOMS DUTIES


9.1 Customs Duties


(a) Subject to Clause 16.11 (Use of local goods and services) the Company shall


be permitted to import into the State, subject to payment of all applicable


customs duties, levies, tariffs, and similar or related charges as specified under


Applicable Law, all the supplies, goods, materials, fuel, machinery, equipment


and consumer goods necessary to properly carry out the Project in its own


name or in the name of contractors, sub-contractors or other persons acting on


behalf of the Company in connection with the development or operation of the


Project. In accordance with the provisions of the Tax Law as in effect on the


Effective Date, and if such provisions shall not be amended in the future, the


Company shall be entitled to apply for an exemption of import duty in


Afghanistan in respect of machinery which is not more than five (5) years old


and which is described in detail in documentation submitted to the relevant


taxation authority prior to the commencement of each of the Exploration


Phase and the Exploitation Phase as may be relevant.


(b) The Government may provide procedures to expedite the admission,


clearance, and verification of use by the State's authorised customs, foreign


investment authority, or mining authority representatives, as applicable, of all


imports by the Company.


(c) The Company, its purchasers and transporters shall have the right, subject to


payment of all applicable customs duties, levies, tariffs and similar or related


charges as specified under Applicable Law as in effect from time to time, to


export freely and at any time the quantities of Mineral Substances produced


from the Mining Area.


10. TAXATION





10.1 Taxation - General





(a) The Company shall be subject to all Tax Law in force in the State and shall


pay income tax, customs duties and other Taxes in accordance with the


Minerals Law and other relevant Applicable Law. except where it is subject to


any relief from the applications of the provisions of a particular Applicable


Law pursuant to a validly granted authority under the Minerals Law or under


any other Applicable Law. rhe Parties expressly agree that upon the grant of


the Exploitation Licence the Company shall qualify for treatment as a


Qualified Extractive Industries Taxpayer under (and as defined in) t.lw-fax


Code (and, for the avoidance of doubt, references in this Contract ter the Date


of Commencement of Commercial Production shall be solely for tire purposes


9OT0744HI 12 38


 of this Contract and shall not in any way affect the method of determining the


commencement of commercial production for purposes of determining the


permissible deduction of pre-production costs within the meaning of the Tax


Code).





(b) The Company shall prepare its balance sheets and other financial statements


for each of its Financial Years in accordance with the requirements of Tax








Law and with Applicable Accounting Standards.


(c) As soon as practicable after the annual financial statements of the Company


are available for each Financial Year, but not later than the first financial


quarter of the following Financial Year, the Company shall submit to the


MoMP an investment report using a format consistent with Good Industry


Practice.


(d) Each year's financial statements shall be accompanied by a certificate of the


chief financial officer of the Company (or. if the Company is incorporated in


Afghanistan, its general director) to the effect that during the year then ended


the Company was in compliance with the requirements of this Contract and


Tax Law.


(e) Each year's financial statements shall be accompanied by a listing of all


transactions with Affiliates of the Company reflected in such financial


statements, identifying the amount of the transaction, the Affiliate involved,


and the nature of the transaction. The Company shall maintain


contemporaneous documentation of each such transaction with any such


Affiliate evidencing the pricing of the transaction, including all documentation


required by Tax Law or any regulations issued thereunder.


(f) Each year's financial statements shall be accompanied by a certificate of the


chief financial officer of the Company (or. if the Company is incorporated in


Afghanistan, its general director) to the effect that with respect to goods or


services covered by any pricing agreement in effect between Company and


any Affiliate of the Company during the relevant period, the Company's


transfer prices during such year were computed in accordance with the


requirements of such pricing agreement and with respect to goods or services


sold or provided in a transaction between the Company and an Affiliate of the


Company which are not covered by such pricing agreement, the prices thereof


imposed during the relevant period were computed in accordance with Tax


Law.





10.2 Withholding tax obligations





The Company shall comply with all Applicable Law in effect from time to time


requiring the withholding of taxes on payments or disbursements made to any person,


whether or not resident or domiciled in the State including physical persons or entities


related to, or employed by. Company or any of its Affiliates.














909074811.12 39


11. PAYMENTS





11.1 Foreign currency remittance and availability


(a) Except in the case of generally applicable exchange controls imposed on a


non-discriminatory basis during a limited time period of genuine fiscal


emergency, the Government confirms that interest, dividends and all other


payments for goods and services are freely remittable from the State.


(b) The Company has the right to establish, maintain and hold funds in bank


accounts in Afghanis and/or Dollars in the State in as well as bank accounts in


foreign currency located outside the State; provided, however, that the


Company shall create one or more separate segregated accounts for the


purposes of facilitating the payment and receipt of monies relating to the


Project and shall ensure that such accounts are used for no other purposes


whatsoever (including for the purpose of receiving revenue generated by the


Company from Mining Activities in Afghanistan from sources other than the


Project).


(c) The Company has the right to freely repatriate abroad without any barriers and


to freely dispose of all proceeds (including by way of dividend or other form


of distribution) received within the State from the sale, exchange or export of


Mineral Substances, and any other payments (including loan principal and


interest) to be made abroad.


(d) Any obligation originally stated in Afghanis shall be converted to Dollars at


the Prevailing Market Rate of Exchange.


(e) For purposes of determining compliance by the Company of required


payments in Afghanis under Applicable Law (including any law determining


minimum wages), the amount of any payment by the Company made in


Dollars shall be converted to Afghanis at the Prevailing Market Rate of


Exchange as of the date of payment.


(f) The Company shall have the right to remit and receive in Dollars all payments


of dividends, interest, finance charges, principal, management fees and other


payable items arising from, as a result of, or related to the operations of the


Project.


(g) All remittances and receipts of such payments as referred to in Clause 11.1(f)


shall be free of any (i) penalties in connection with such remittances or


receipts, (ii) any required total or partial surrender, exchange or confiscation


of Dollars received to be remitted, and (iii) any other direct or indirect


restriction on such remittances or receipts.


(h) The Parties acknowledge that the Company may. subject to the provisions of


the Minerals Law, the Mining Regulations and other Applicable Law:


(i) obtain, hold, deal with and disburse funds in such mannerz-Currenci^s


and places as it, in its absolute discretion, determines; / j








909074811.12 40


(ii) freely import into the State funds necessary to properly carry out the


Project and the conduct of Mining Activities in accordance with


Applicable Law;


(tii) remit foreign currency accruing to or earned by it outside the State into


the State; and


(iv) remit proceeds (in currency or otherwise) and repatriate capital (in cash


or assets) outside the State.


(i) Any amounts received and expenditure made in Afghanis or in Dollars shall


be converted from Afghanis into Dollars or from Dollars into Afghanis on the


basis of the Prevailing Market Rate of Exchange.


(j) Any amounts received and expenditure made in currencies other than Dollars


or Afghanis which are converted into Dollars or Afghanis must be so


converted into Dollars or Afghanis on the basis of the Prevailing Market Rate


of Exchange.


(k) The Company shall comply with all financial reporting and approval


requirements applicable to companies in Afghanistan.


1 ] 2 Payments and exchange rates


(a) Unless otherwise specified in this Contract, payments to the Government may


be made in Dollars or other foreign currency which is freely convertible


directly by the Central Bank for the account of the Government.


(b) The payment of the Company's direct obligations to the Government for taxes


and duties shall be in Afghanis, unless the Parties otherwise agree. However,


the Company shall make payments of sums it collects on behalf of the


Government, including taxes withheld from the salaries or wages of the


employees of the Company and any other sums payable to other persons from


which a portion is required by Applicable Law to be withheld or retained by


the Company on behalf of the Government, in the currency in which such


salaries or wages or such other payments are made.


(c) All of the Company's accounting under this Contract shall be in such currency


or currencies as die Parties may from time to time agree.


(d) The Company shall make all payments to be made by it hereunder or


otherwise to the Government without any deduction for Tax or any other


amount unless such a deduction is required by law. If any such deduction is


required by law to be made by the Company the amount of the payment due


from the Company shall be increased to an amount which (after rhe making of


such deduction) leaves an amount equal to the payment which would have


been due if no such deduction had been required.














909074811.12 41


 PART 4


REPORTING AND INSPECTION





12. FINANCIAL RECORDS AND STATEMENTS, REPORTING


12.1 Financial records and financial statements


(a) The Company is responsible for maintaining accurate accounting records in


accordance with Good Industry Practice in a currency agreed upon by the


Parties, in order to comply with Applicable Law and this Contract and to


support all fiscal returns or any other accounting reports required by the


MoMP in relation to the Project.


(b) The Company shall keep physically within the State complete, accurate and up


to date technical and commercial books and records of all Mining Activities in


relation to the Project, including:


(i) details of all revenues and expenditures;


(ii) details of the production of Mineral Substances and the shipment and


sales thereof;


(iii) all maps, geological, geophysical, mining, technical and other data,


records and interpretations;


(iv) Mineral Substances analyses; and


(v) samples and reports connected with and arising from such Mining


Activities.


(c) The Company shall supply and file such technical and commercial


information, reports, returns and statements at such limes and in such form as


may be required by Applicable Law.


(d) All books and records shall be maintained and made available for inspection


by an auditor appointed under and in accordance with this Contract for the


Term of this Contract plus an additional one (1) year. or. if longer, the relevant


period required by Applicable Law.


(c) The Company shall maintain all financial, employment, commercial and other


books and records and comply with all other reporting and filing obligations


under Applicable Law and shall conduct its activities, and shall report, in


accordance with Applicable Law, regulations and directives.


12.2 Reporting


(a) The Company shall deliver to the MoMP within ninety (90) days after the end


of each of its Financial Years:


(i) a balance sheet of the Company, as at the end of such Financial Yeah


and / /j





909074811.12 42


 (ii) statements of income, changes in shareholders' equity and cash flows


of the Company, for such year,











setting forth in each case in comparative form the figures for the previous


Financial Year, all in reasonable detail, and certified by the chief financial


officer of the Company (or. if the Company is incorporated in Afghanistan, its


general director) as having been prepared in accordance with Applicable


Accounting Standards consistently applied except as otherwise noted.


(b) Such financial statements shall be accompanied by an opinion thereon of


independent public accountants of recognised international standing, which


opinion shall state that such financial statements present fairly, in all material


respects, the financial position of the companies being reported upon and then-


result of operations and cash flows and have been prepared in conformity with


Applicable Accounting Standards, consistently applied except as otherwise


noted, that the examination of such accounts in connection with such financial


statements has been made in accordance with generally accepted auditing


standards, and that such audit provides a reasonable basis for such opinion in


the circumstances.


(c) Each year's financial statements shall be accompanied by a listing of all


transactions with Affiliates of the Company, or any of its respective


shareholders, whether or not reflected in such financial statements, identifying


the amount of the transaction, the Affiliate involved, the shareholder of which


such entity is an Affiliate, and the nature of the transaction, certified by the


chief financial officer of the Company (or, if the Company is incorporated in


Afghanistan, its general director) as being correct and complete. Transactions


of the same type with the same entity that arc individually immaterial may be


aggregated rather than separately listed. The Company shall maintain


contemporaneous documentation of each such transaction with an Affiliate


evidencing that the pricing of the transaction was negotiated at arms-length.


(d) If the MoMP determines that it is necessary for it to cause an independent


review or audit of the Company's own records or books or those of any


Affiliate outside of Afghanistan, the Company shall cooperate to provide the


MoMP with copies of the information, books and records needed to complete


the review or audit. If the MoMP nonetheless deems it necessary for any pan


of such audit to be performed outside of Afghanistan, the cost of associated


travel will be borne by the MoMP except to the extent that the Company is


unable to provide the infonnation, books or records needed to complete the


audit in Afghanistan, in which case the Company shall bear both the


reasonable travel cost of a reasonable number of auditors selected by the


MoMP to travel to the place where such information, books and records may


be obtained and their accommodation costs for a reasonable amount of time


necessary to complete their review.


(e) The Company shall promptly upon request provide the MoMP with copies of


all insurance policies maintained in accordance with this Contract_jind the


MoMP shall have the right to review and approve the same, such/Jtpproval\ot


to be unreasonably withheld, provided that unless the MoMP/gives notice/to





909074811 12 43


 the Company of disapproval of such insurance policies within forty five (45)


Business Days following receipt of all such insurance policies, the MoMP


shall be deemed to have given its approval.





(f) Within sixty (60) days of each third anniversary of the Effective Date, the


Company shall provide the MoMP with a report of an independent


internationally recognised insurance consultant reasonably acceptable to the


MoMP to the effect that the insurance obtained and maintained by the


Company in relation to the Project complies with the requirements of this


Contract.


(g) The Company shall promptly upon request provide the MoMP with copies of


all statements relating to bank accounts maintained by it.


(h) The Company shall (and shall procure that any contractors and sub-contractors


providing sen ices in relation to the Project with a value during the relevant


annual period of not less than U.S.S 100,000), at least annually and in addition


on request of the MoMP. provide the MoMP with a list of (i) all entities or


persons who have any direct beneficial ownership interest, and (ii) all entities


or persons who directly or indirectly have in aggregate ten (10) per cent, or


more beneficial ownership interest in the outstanding share capital of the


Company (or, if the shares of the Company are publicly listed on a stock


exchange located in an OECD country, a list of such entities or person owning


five per cent (5%) or more of the outstanding share capital of the Company).


(i) The Company shall, in connection with the occurrence of the Effective Date


deliver to the MoMP a copy of its constituent documents (including any


shareholders, joint venture, consortium or similar agreement which the


Company has entered into or to which it is subject). The Company shall from


time to time promptly provide the MoMP with copies of any amendment


implemented in connection with any such item of documentation.


(j) The Company shall provide such other reports and information as may be


required under Applicable Law within the time frames specified in any


relevant Applicable Law.


12.3 Reporting Periods and Local Language Requirements


(a) The Company shall maintain records, and report to the MoMP, on the basis of


the financial year specified in Applicable Law (being on the Effective Date a


period of twelve (12) months ending on 21 December); provided, however,


that financial statements delivered pursuant to Clause 12.2(a) (Reporting)


may, in circumstances where the Company is not incorporated in Afghanistan,


be prepared on the basis of its financial year ending on the date up to which its


accounts arc prepared.


(b) All records maintained by the Company, and all reports and other information


submitted by the Company to MoMP under this Contract, shall txxfflrimaincd


and submitted in one or more of the official languages of the Stale. )








909074811.12 44


13. INSPECTION


13.1 MoMP Access to Project


The MoMP and ils authorised representatives may enter the Mining Area and any


other place of business of the Company to inspect its operation at any time as well as


from time to time during regular business hours. The Company shall render all


necessary assistance to enable the representatives to inspect techmeal and financial


records relating to the Company's operation as well as the operational aspects of the


Project and shall give the said representatives such information and access as they


may request. The said representatives shall conduct such inspection at their own risk


and shall avoid interference in the normal operations of the Company.


The Company acknowledges the right of the MoMP to issue orders in the manner


contemplated by Clause 16.4(a) (Compliance with instructions for MoMP) as a result


of any observation made by any representative of the MoMP during any visit to the


Project.


13.2 Inspection


(a) The MoMP has the right to audit the Company’s accounts, books and records


maintained under this Contract and Applicable Law for each calendar year


within two (2) years from the end of each such calendar year. Any such audit


requested by the MoM P will be at the Company's sole cost and risk, performed


by and through a technical inspector or an independent professionally


qualified auditor, completed within twelve (12) months of its commencement,


and conducted in a manner which will result in the minimum amount of


inconvenience to the Company.


(b) The MoMP's inspector or auditor shall have the right in connection with such


audit, to visit and inspect, during normal business hours on any Business Day,


all sites, plants, facilities, warehouses and offices of the Company directly or


indirectly serving its activities under this Contract and to visit and question


personnel associated with those activities in accordance with Applicable Law.


(c) The MoMP shall, and shall ensure that any inspector or auditor shall, use such


information only for the purpose for which it was disclosed and not for any


other purpose and shall keep confidential all information provided to it or any


of its agents, advisors, representatives, officers, directors or employees by or


on behalf of the Company or otherwise obtained by it or any of its agents,


advisors, representatives, officers, directors or employees in connection with


the audit which relates to the Company or the business of the Company.


























909074811.12 45


 PART 5


OTHER RIGHTS AND OBLIGATIONS





14 MUTUAL OBLIGATIONS


14.1 Parties’ commitment to protecting human rights


(a) The Parties each commit themselves to the protection and promotion of the


human rights of all individuals affected by the Project, as those rights are


articulated in the United Nations' 1948 Universal Declaration of Human


Rights, the International Covenant on Civil and Political Rights, the


International Covenant on Economic, Social, and Cultural Rights, and


Applicable Law.


(b) In all dealings between security departments of the Company and the police,


military, or other security organs of the Government, the Parties each


undertake to comply with Applicable Law.


(c) The Company shall ensure that its operational policies reflect the


responsibility to respect human rights and that the policies have the objectives


of preventing, mitigating and remediating any potential or actual negative


human rights impacts from Mining Activity.


(d) The Company shall recognise and respect the rights, customs and traditions of


local communities;


(c) The Company shall remediate any negative human rights impacts from its


operations or relationships as soon as is practicable, including through, as


appropriate: (i) providing adequate compensation or other appropriate remedy


to any victim of the negative impact; (ii) removing or altering the cause of the


negative impact so as to avoid further negative impacts of the same type; (iii)


revising its operational policies and manuals to seek to prevent a recurrence of


the actions or failures to act leading to the violation; and (iv) such other


actions as may be necessary to avoid similar negative impacts in the future.


(f) The Government and the Company shall strive to cooperate to the maximum


extent possible to ensure the implementation of this Clause 14.1. They shall


seek the cooperation of local communities for this purpose.


14.2 Transparency obligations of the Company


Hie Company, its officers, directors and employees acknowledge and agree that they


are subject to the anti- bribery and anti-corruption provisions of the Minerals Law and


the relevant provisions of other Applicable Law (collectively, "Anticorruption


Laws"), and shall conduct their activities in accordance with their obligations under


the Anticorruption Laws.


|4.3 Other applicable norms


(a) The Parties acknowledge and agree that this Clause 14.3 and all payments


made by the Company, or any of its contractors, subcontractors, officers hr





909074811.12


directors to agencies or officials of the Government at any level shall be public


information and made public in accord with the EITI Principles and Criteria.


The MoMP shall collect, not less than annually, and publish reports


concerning Government revenues and other direct or indirect economic


benefits received by the Government from Mining Activities in accordance


with international best practices based on the EITI Principles and Criteria.


(b) The MoMP shall be authorised to, for the purposes of preparing such reports,


require the Company and all Government or public agencies and public


officers to, not less than annually, submit data, including production, financial


data, and other direct or indirect economic benefits received by them and all


amounts paid by them in connection with Mining Activities.


(c) The Company and the Government shall implement the EITI Principles and


Criteria and, where appropriate, the Company shall contribute to the


Government's implementation of the EITI Principles and Criteria by becoming


a supporting company of the EITI.


(d) The Company and the Government shall each comply with requirements of


the EITI Principles and Criteria with respect to all payments and reporting to


be made by either of them pursuant to this Contract. Breach by one Party of


these provisions shall not excuse compliance by the other Party.


15. GOVERNMENT ASSURANCES AND OBLIGATIONS


15.1 Approvals


The Government undertakes, so far as possible and in accordance with the terms of


this Contract and Applicable Law, to expeditiously provide all necessary licences,


approvals and assistance for the development and operation of the Project and as


otherwise may be reasonably required by the Company in relation to the rights


granted to it under this Contract.


15.2 Government guarantees


Subject to compliance with the Minerals Law, the Mining Regulations and other


Applicable Law, the Government guarantees to the Company:


(a) the right to organise its assets and its businesses as it deems fit;


(b) the right to employ sub-contractors and to recruit personnel needed to earn-


out Mining Activities, provided that priority shall be given by the Company to


employing local persons with equal or better qualifications;


(c) access to raw materials and water within the Mining Area, subject to


compliance with Applicable Law;


(d) free movement of personnel of the Company and those of its sub- contractors


within the State in compliance with Applicable Law; x----\








909074811.12 47


(e) subject to Clause 16.11 (Use of local goods and services) the freedom to


import goods and services necessary for Mining Activities;


(!) subject to Clause 16.12 (Processing and Refining of Mineral Substances) the


freedom to sell production from this Project in the internal markets of the State


and to export and sell such production on markets outside the State, in each


case in accordance with the customs law of the State; and


(g) subject to Clause 16.11 (Use of local goods and services) the facilitation of the


acquisition of all documents required for foreign personnel employed by the


Company and by its contractors and sub-contractors.


15.3 Expropriation


The Mineral Substances extracted or the assets used by the Company in conducting


Mining Activities during the terms of the Exploration Licence and the Exploitation


Licence may not be compulsorily expropriated by the Government except in


circumstances of public necessity. In the case of any such expropriation the


Government shall pay fair compensation to the Company in accordance with


Applicable Law and customary international law.


15.4 Non-discriminatory treatment


The Government shall not adopt any provision of Applicable Law that imposes a


material financial burden or material other burden solely on the Company or any of its


Affiliates, whether or not such provision specifically identifies the Company or any of


its Affiliates as the target thereof, provided that this provision shall not apply to any


Applicable Law reasonably intended to protect the safety, health, welfare or security


of the State or citizens thereof, to protect the Environment or any historic or cultural


artefacts or to fulfill rhe State's international obligations.


15.5 Role of Government in financing


(a) The Government acknowledges the Financing Plan, but is not obliged to


provide any funds or credits, issue guarantees or otherwise become liable


directly or indirectly for any financing of the Project.




the financing contemplated by the Financing Plan and shall not unreasonably


withhold or delay those approvals.


15.6 Expatriates


Subject to Clauses 6.9(h) (Exploitation Phase Obligations) and 16.11 (Use of local


goods and services) the Government shall issue such permits as may be required to


allow expatriates employed by the Company or by sub-contractors contracted by the


Company to work on the Project freely to enter into, work and reside in Afghanistan


in connection with the operations of the Project, and to depart from Afghanistan, so


long as they conduct themselves in accordance with Applicable Law. \








909074RI 1.12 48


16. COMPANY RIGHTS AND OBLIGATIONS


16.1 Affiliated Company Transactions


(a) Sales, leases, licences and other transfers of goods and services between the


Company and its Affiliates shall be at an arm's-length fee basis negotiated


between the parties in substantial accordance with the substantive principles


and guidelines set forth in the Transfer Pricing Guidelines for Multinational


Enterprises and Tax Administrations published by rhe OECD in 2010 (referred


to at www.oecd.org/ctp/tp/guidelines) or subsequent substantive guidelines


having a similar purpose and agreed to by the Parties.


(b) Any discounts or commissions allowed in transactions between the Company


and its Affiliates shall be no greater than the then current market rate so that


such discounts or commissions will not reduce the net proceeds below those


which it would have received if the parties had not been Affiliates. Upon


request of the MoMP, the Company shall provide to the MoMP documentation


of the prices, discounts and commissions, and a copy of all contracts and other


relevant documentation related to transactions with Affiliates.


(c) The Company shall sell the Mineral Substances in accordance with generally


accepted international business practices, at commercially reasonable prices,


and on commercially reasonable terms compatible with world market


conditions in the circumstances then prevailing.


(d) Without prejudice to the reporting and other requirements of this Contract, the


Company may market and export without further reference to the MoMP all


Mineral Substances and shall have sole control and management of sale of


such Mineral Substances, including the forward selling of such Mineral


Substances, and shall assume all risks therefore, provided that the Company


sells its products on arms' length terms.


16.2 Security/Afghan Public Protection Force


The Company understands and agrees that it shall conduct (at its own expense) a


security assessment of the Mining Area and, in consultation with Government,


prepare a security plan to protect Company employees and maintain security within


the Mining Area for the duration of the Project. The Company shall implement the


security plan at its own cost, including, to the extent required by Applicable Law, by


entering into a contract with the Afghan Public Protection Force for the provision of


security in accordance with that plan. The Company shall bear the cost of the services


provided by the Afghan Public Protection Force.


16.3 Development Obligations


(a) The Company shall exercise its rights and obligations under this Contract


according to the terms hereof and consistent with Good Industry Practice and


Applicable Law.


(b) The Company shall construct and provide the required facilitkJs and develop


the Project with due diligence, efficiency and economy. / / /


909074811.12 49


(c) The Company shall use commercially reasonable efforts to optimise the


recovery of Mineral Substances and to produce and market Mineral


Substances removed from the Mining Area al rates contemplated by the


Feasibility Study. All Mining Activity shall be conducted consistent with


Good Industry Practice, Applicable Law and the Exploitation Licence


Application Documents.


(d) The Company may not make any material changes to operations detailed in


any Exploitation Licence Application Document unless it first submits those


changes to the MoMP for comment and approval following the same


procedure set forth in Clauses 6.8(a) and 6.8(b) (Grant of Exploitation


Licence) in connection with the initial approval of such Exploitation Licence


Application Document.


16.4 Compliance with instructions from the MoMP


(a) The Company shall comply with the measures which are ordered by the


MoMP (including the cessation of activity) with a view to preventing or


removing the causes of any danger which Mining Activities inflict on the


public health, safety of work, protection of water resources and public utility


infrastructure.


(b) If the Company does not comply with such requirements and take urgent


corrective action, the corrections shall be made and implemented by the


relevant Government authorities without consultation with the Company, and


any expense incurred by the relevant Government authority shall be borne by


the Company.


16.5 Labour Standards


(a) The Company shall adhere to provisions of Applicable Law on labour.


(b) The Company, its Affiliates, contractors and subcontractors shall observe


guidance provided by Good Industry Practice, as well as internationally


recognised labour standards in relation to all International Labour


Organisation agreements to which the State is a Party, and shall respect as


provided therein the right of its employees to organise.


(c) The Company, its Affiliates, contractors and subcontractors shall not utilise


forced labour, nor shall die Company, its affiliates, contractors and


subcontractors utilise child labour, as outlined in the International Finance


Corporation Policy Statement on Forced Labor and Harmful Child Labor of


March 1998.





16.6 Health and Safety





(a) The Company shall observe Good Industry Practice for the protection of the


general health and safety of its employees and of all other persons contracted


by the Company having legal access to the Mining Area.








909074811.12 50


(b) The Company shall install and utilise such recognised modern safely devices


and observe such recognised modem safety precautions as are provided and


observed under Good Industry Practice. The Company shall maintain in a safe


and sound condition for the duration of this Contract all infrastructure and


equipment constructed or acquired in connection with the Project and required


for ongoing operations.


(c) The Company shall prepare and publish a health and safety plan and make


each of its employees, and all people present at the Project,, aware of the same.


(d) The Company shall ensure that all explosives used in connection with the


Project are stored, maintained and used in accordance with the Mining


Regulations and other Applicable Law.


(e) The Company shall train its employees in accordance with generally accepted


health and safety procedures and practices.


16.7 Expatriate Staffing


The Company shall, subject to the other provisions of this Contract (including Clauses


6.9(h) (Exploitation Phase Obligations) and 6.11 (Use of local goods and services)).


be entitled to employ expatriates in accordance with Applicable Law for the efficient


conduct of the operations of the Project in Afghanistan.


16.8 Accuracy of Information


The Company shall ensure that all factual information hereafter furnished by or on


behalf of the Company in writing to the MoMP for the purposes of or in connection


with this Contract will be true and accurate in all material respects on the date as of


which such information is dated or certified and such information shall not be


incomplete by omitting to state any material fact known to the Company or any of its


Affiliates necessary to make such information not misleading in any material respect.


16.9 Proposal Commitments


Without prejudice to the other undertakings of the Company contained in this


Contract the Company shall implement the specific undertakings contained in the


Proposal and referred to and described in Schedule 4 (Specific Proposal


Commitments).


16.10 Security for Performance; Financial Guarantee


By way of security for the performance of its obligations under this Contract the


Company shall arrange for the issue of successive on demand performance bonds in


respect of each of the Exploration Phase and the Exploitation Phase as set out in this


Clause. In the case of the Exploration Phase such bonds shall be substantially in the


form of Part I of Schedule 3 (Performance Bond) and in the case of the Exploitation


Phase such bonds shall be substantially in the form of Part 2 of Schedule 3


(Performance Bond) (or, in each such case, in a reasonably similar IbnnacciJPtable to


the MoMP). Each bond shall be issued by a bank or financial institution subject to the


jurisdiction of. and regulated by. the Government (including the .Central Bard) and





909074811 12 51


acceptable to the MoMP and the Central Bank. The bonds for the Exploration Phase


shall initially be in place for a period of three (3) years and ninety (90) Business Days


and the bonds for the Exploitation Phase shall initially be in place for a period


equivalent to die term of the initial Exploitation Licence provided that the bond for


the Exploitation Phase may be terminated 90 days after the Date of Commencement


of Commercial Production, such date to be evidenced by the delivery to the MoMP of


a certificate executed by the chief operating officer and president of the Company. In


the event that the Exploration Phase and/or the Exploitation Phase shall extend


beyond such initial period die Company shall ensure that bonds complying with the


provisions of this Clause 16.10 and in place for periods of not less than three (3) years


and ninety (90) Business Days (in the case of the Exploration Phase) or the term of


any subsequent Exploitation Licence subject to the right to terminate once


Commercial Production has commenced (in the case of the Exploitation Phase) shall


be issued and in full force and effect at all times during the Exploration Phase and the


Exploitation Phase.


The bonds issued in respect of each of the Exploration Phase and Exploitation Phase


shall each be issued for consecutive periods of twelve (12) months and ninety (90)


days. The Company shall ensure that the initial bond in respect of each of the


Exploration Phase and the Exploitation Phase is received by the MoMP no later than


thirty (30) Business Days prior to the start of the Exploration Phase or the


Exploitation Phase, as the case may be. Each subsequent bond shall be issued prior


to, or contemporaneously with, the expiry date of the prior bond. MoMP agrees that a


prior bond shall be immediately released upon the next successive bond being issued


such that there is only one bond in place at a time.


In the case of each bond issued during the Exploration Phase the maximum amount


capable of being demanded thereunder shall initially be equivalent to thirty percent


(30%) of the cost of Exploration activity originally committed to by the Company in


the programme referred to in Clause 5.l(c)(iv) (Company's obligations prior to


conducting Exploration activity) in respect of the twelve (12) month period to which


such bond relates.


In connection with each bond issued during the Exploration Phase:


(a) if the actual amount of expenditure in respect of Exploration activity during


any relevant twelve (12) month period is less than the amount provided for in


the programme referred to above then (unless the MoMP shall agree to such


deficit being added to the scheduled value of Exploration activity for the


following twelve (12) month period) an amount equal to thirty percent (30%)


of such deficit shall be capable of being drawn under the bond; and


(b) in die event that the amount of expenditure in respect of Exploration activity


during any twelve (12) month period is in excess of the amount provided for in


the programme referred to above then, for the purposes of calculating the


amount of die bond for the succeeding twelve (12) month period, such excess


shall be deducted from the amount of expenditures for Exploration activities


for such succeeding period.


In the case of any bond issued during the Exploitation Phase the maximum anyiunt


capable of being demanded thereunder shall be equivalent to thirty'pcrccnfc(3()$) of


909074811.12 52 / /C/


the cost of Exploration activity originally committed to by the Company in the


programme for die Exploration Phase which preceded such Exploitation Phase and


referred to Clause 5. l(c)(iv) (Company’s obligations prior to conducting Exploration


activity).


Upon the termination of this Contract and the satisfaction of all outstanding


obligations of the Company hereunder the MoMP shall arrange for the cancellation


and return of any bonds then outstanding. As set forth in the form of demand attached


to each bond, such bond shall be capable of being called in the event that (a) the


Company is in breach of this Contract and/or an Exploration Licence or. as the case


may be, an Exploitation Licence has been withdrawn or terminated under the


Minerals Law and such breach, withdrawal or termination is specified in the demand,


(b) as a result the MoMP has suffered a loss, and (c> the internal process of the MoMP


have resulted in a determination that the amount of such loss is not less than the


amount of the payment demanded thereunder.


16.11 Use of local goods and sendees


The Company shall employ only Afghan nationals as skilled, unskilled and vocational


labour in its Mineral Activities (projects) in accordance with the provisions of the


Minerals Law. The Company shall, in its recruitment of experts, give priority to


Afghan nationals having similar degree, skill and profession over foreign citizens.


The Company shall give priority to procure Afghan goods and services provided they


are substantially equivalent or similar to foreign goods in terms of quantity', quality


and price. During the Exploitation Phase, the Company shall give preference to goods


and services produced and offered in Afghanistan of comparative quality and cost. In


particular, the Company shall give preference to qualified Afghan construction


enterprises, construction materials and skills available in Afghanistan. Afghan sub-


contractors for road construction and transportation, and Afghan household


equipment, furniture and food.


16.12 Processing and Refining of Mineral Substances


The Company may freely sell its products or export its products abroad in accordance


with Applicable Law. To the extent required by Applicable Law the Company shall


use (where available on commercially competitive terms) processing and refining


facilities located in the State in order to produce refined Principal Metal from Mineral


Substances extracted from the Mining Area (including through the sale of such


Mineral Substances to entities owning refining or processing facilities in the State in


circumstances where such Mineral Substances will be processed and refined in such


facilities). To the extent that the same would result in a breach of the preceding


sentence the Company shall not be entitled to export any such unprocessed Mineral


Substances outside the State or sell such Mineral Substances to a third party.


17. INFRASTRUCTURE





17.1 Development of Infrastructure





The Company shall plan and develop the infrastructure required for tfee^evNopment


of the Project including any required infrastructure for electrical energy, process


909074811.12 53


water, potable water, communications, roads and transportation, railways facilities,


ports, airstrips and related facilities. All such infrastructure shall be planned,


developed, constructed and operated in a manner which is consistent with the


Proposal and the Feasibility Study and the other Exploitation Licence Application


Documents and which will ensure the optimal development and operation of the


Project and production of Mineral Substances in a maimer which is consistent with


the Proposal and the Feasibility Study and the other Exploitation Licence Application


Documents.


Without limiting the generality of the foregoing the Company shall:


(a) align its requirements for energy distribution with that of local villages;


(b) align with projects to improve the Afghan rail system - most probably in a


Northern direction at the Targhondi border with Turkmenistan;


(c) during the Exploration Phase, build a school in one of the villages south of


Herat closest to the licence site, or build other social infrastructure to be


agreed with the relevant local community (e.g.. Citizen Charter Program);


(d) during the Exploitation Phase, build additional social infrastructure as agreed


with the relevant local community;


(e) cooperate with various resource corridor initiatives that may be under way in


the areas close to Shaida; and


(f) the total value for these infrastructure investments shall be not less than


U.S.S200.000.


The Company shall construct such structures or zones for lite protection of buildings,


water sources and other facilities as may be ordered by the MoMP pursuant to the


Minerals Law. Mining Regulations and other Applicable Law.


17.2 Access to Infrastructure


To the extent commercially feasible, the Company shall endeavour to plan and


develop all forms of infrastructure (including the infrastructure for electrical energy,


process water, potable water, communications, and roads and transportation) in ways


that facilitates its shared use by others and its contribution to the sustainable social


and economic development of the area in which it is located. The Company shall also


endeavour to ensure that individuals from local communities arc able to access Project


infrastructure and sendees without payment of any cost. The Government will not


under Applicable Law close any public or private road giving access to the Mining


Area without first obtaining the written consent of the Company, except when such


closure is temporarily unavoidable as a result of emergency conditions threatening


public safety.














909074811.12 54


18. OBLIGATIONS OF CONTRACTORS AND SUBCONTRACTORS


18.1 Applicability of obligations to contractors and their subcontractors


(a) Any agreement between the Company and contractors or between contractors


and subcontractors shall contain appropriate terms by which the contractor or


subcontractor shall acknowledge, and where appropriate agree to be bound by,


the terms of this Contract to the extent applicable to the activities undertaken


by the contractor and its subcontractors.


(b) The Company shall ensure that its supervision and management of its


contractors and their subcontractors is sufficient to inform it of whenever the


practices of its contractors or their subcontractors may place them, or the


Company, at risk of violating this Contract.


(c) Nothing in this Contract shall exempt the Company from any and all


obligations under this Contract despite the delegation of such obligations to a


contractor or its subcontractors.


(d) The Company shall require its contractors and its subcontractors io obtain and


maintain such insurance coverage as an operator in the position of the


Company would require as a matter of Good Industry Practice. Tire failure of


any contractor or subcontractor to obtain and maintain such insurance


coverage shall not excuse the Company from any liabilities it may have under


this Contract or from any failure to carry insurance required by this Contract.

































































909074811-J2 55


 PART 6


ENVIRONMENTAL AND SOCIAL OBLIGATIONS





19. ENVIRONMENTAL AND SOCIAL OBLIGATIONS; CLOSURE


OBLIGATIONS


19.1 General


(a) All Mining Activities undertaken pursuant to the Licences shall be conducted


in compliance with international best practice standards for Environmental and


Social protection, including the Agreed Environmental and Social Standards.


(b) The MoMP, acting in coordination with the National Environmental


Protection Agency of Afghanistan, may periodically adopt or revise


substantive Environmental or Social protection standards established in the


Minerals Law. Mining Regulations, Environmental Law and/or any other


Applicable Law. For the avoidance of doubt the Company shall comply with


such revised standards.


(c) The Company shall comply with Environmental Laws and Social Laws in


force at any time during the period of this Contract including any provincial


and local laws, including laws relating to protection of water quality, air


quality, quality of land, the preservation of living natural resources, the


protection of biodiversity, the disposal of hazardous and non-hazardous wastes


and the establishment and maintenance of financial assurance in connection


with the rehabilitation, management and remediation of adverse


Environmental impact.


(d) Consistent with the basic policy of the MoMP to assure the availability,


sustainability and equitable distribution of the State's natural resources, the


Company shall manage its Mining Activities in a technically, financially,


socially, culturally and Environmentally and Socially responsible manner to


promote the general welfare of the State and the sustainable development


objectives and responsibilities as provided for in any Environmental Law or


Social Law.


(e) The Company shall at all times liaise with the National Environmental


Protection Agency in connection with Environmental and Social matters


relating to the Project including the Company's compliance with its obligations


contained in this Clause 19.


19.2 Closure obligations


(a) The Company shall submit an updated Closure Plan on a periodic basis with a


frequency of at least five (5) years.


(b) The Company shall, after Consultation with communities in the areas affected


by Mining Activities, deliver to the MoMP a proposed final Closure Plan not


later than twelve (12) months before the planned end of Commercial


Production. After review and comment by the MoMP (with or without*


modification), the Company shall deliver the final Closure Plan in a form


909074811.12 56 / / /


 which is responsive to any required modifications to the MoMP by the


planned end of Commercial Production. The final Closure Plan may be








amended by agreement between the Parties, during the performance of closure


activities, at the request of the Company or the MoMP. subject to any approval


required by Applicable Law.


(c) After cessation of Commercial Production, the Company shall continue to


perform the required Environmental management of the Mining Area as set


forth in the Environmental Management Plan and the final Closure Plan.


(d) After cessation of Commercial Production, the Company shall provide to the


MoMP every one hundred and eighty (180) days (or such alternative period as


may be agreed by the Parties from time to time) a report detailing progress in


the implementation of the final Closure Plan.


(e) Upon completion of the final Closure Plan, the MoMP shall inspect the


Mining Area and provide the Company with notice as to whether the


Company has completed closure in accordance with the final Closure Plan.





19.3 Guarantee for closure expenses





The Company shall within ninety (90) days of the grant of the Exploitation Licence,


provide a mine closure guarantee (the "Closure Guarantee") to the MoMP. The


purpose of the Closure Guarantee is to ensure the completion of the Closure Plan.





(a) The Closure Guarantee shall be in an amount calculated to be necessary to


implement the Closure Plan should the Company fail to implement the


Closure Plan during the five (5) year period covered by the then current


Closure Plan. The amount of the Closure Guarantee shall be updated any time


the Closure Plan is updated, or any update of the Closure Plan under Clause


19.2 (Closure Plan and closure obligations), so that it continues to be


sufficient to ensure dial all steps in the Closure Plan can be completed in a


satisfactory manner should the Company fail to implement the Closure Plan.


The amount of the Closure Guarantee will vary depending on the stage, size,


and other circumstances of the Mining Activities, but in any case must be


sufficient to cover all of the following potential classes of costs including:





(i) costs to rehabilitate areas disturbed by Mining Activities and offsite


Environmental and Social impacts of the Mining Activities; and








(ii) costs of implementing all mitigation and rehabilitation requirements


and commitments.


(b) The Closure Guarantee shall consist of financial assurance in the form


required by Applicable Law and may be in one of the following forms:





(i) a trust fund in a format approved by the MoMP;





(ii) an irrevocable letter of credit or financial guarantee from a bank


subject to the jurisdiction of, and regulated by, the Government and


acceptable to the MoMP: / \





90907481 M2 57


(iii) insurance in a format, in an amount, and issued by an entity, approved


by the MoMP; or


(iv) a performance bond in a format, in an amount and from an entity,


approved by the MoMP;


(c) The Closure Guarantee shall be consistent with the requirements of the


Minerals Law and the Mining Regulations.


(d) During the life of the Project, if there is any substantive change in the Mining


Activities, or there is any other event that means that the amount of the


Closure Guarantee (as determined by the MoMP) is no longer an accurate


estimate of the amount necessary to implement the Closure Plan should the


Company fail to implement it, the amount of the Closure Guarantee shall be


recalculated, and increased or decreased accordingly, and any additional


payment or repayment shall be promptly made and in any event within thirty


(30) Business Days of such determination.


(e) The MoMP shall return the Closure Guarantee to the Company within thirty


(30) Business Days following verification by the MoMP that the Company has


fulfilled all the obligations of the final Closure Plan. The MoMP is permitted


to inspect the Mining Area to confirm the obligations in the Closure Plan have


been fulfilled.


19.4 Reporting requirements


(a) The Company shall report to the MoMP and the relevant administrative and


judicial authorities any serious, or fatal accident that occurs as well as any


imminent hazard that arises in connection with its Mining Activities.


(b) The Company shall immediately inform the MoMP and the Department for


Archaeological and Cultural Heritage of the Ministry of Information, Culture


and Tourism, upon discovery of the signs of archaeological, historical or


cultural relics or items if the Mining Activities of the Company reveal the


existence thereof. Fossils, rare minerals and any items contained in the


Archaeological and Cultural Heritage list shall also be regarded as


archaeological, historical or cultural relics. Where continued Mining


Activities would likely damage such archaeological, historical or cultural


relics, the Company shall cease Mining Activities at the site until the relevant


agencies give permission to resume Mining Activities. The Company shall


not move any of the archaeological, historical or cultural relics without


permission from the relevant authorities, but shall safeguard and maintain


them until they are moved by the relevant government officials. If the relevant


agency does not take action to transfer the found items within thirty (30) days


from notification, the expenses incurred by the Company after thirty (30) days


shall be compensated by the relevant Government agency.


19.5 Post-closure monitoring


The Company shall in Consultation with local community leaders, dpvefop and


implement a post-closure monitoring committee, with the mandate toXupervisa the


909074811 12 58


monitoring of geophysical stability, water quality, and rehabilitation of contaminated


sites and restoration of land for post-closure use. The post-closure monitoring shall


take place for a period after the cessation of Commercial Production, the length of


which shall be agreed in the Closure Plan.


20. RIGHTS OF CITIZENS OF THE STATE


20.1 Company grievance mechanism


(a) The Company shall, at its own expense, promptly respond to communities'


concerns related to the Project in accordance with IFC Performance Standards


as the same are in effect from time to time.


(b) Where not established under a Community Development Agreement, the


Company shall establish a grievance mechanism to receive and facilitate


resolution of the affected communities' concerns and grievances about the


Company's Environmental and Social performance in relation to the Project.


The grievance mechanism should be proportionate to the risks and adverse


impacts of the Project. The grievance mechanism should be established in


Consultation with the communities who are anticipated to use it, through an


understandable and transparent process that is culturally appropriate and


readily accessible to all segments of the affected communities, at no cost to the


affected communities and without retribution. The mechanism should not


impede access to judicial or administrative remedies. The Company shall


inform the affected communities about the mechanism in the course of its


community engagement process.


20.2 Forum for claims and disputes involving natural citizens of the State


A natural citizen of the State who has a claim or dispute regarding the Project may


submit such claim or dispute for resolution under Applicable Law.


20.3 Compensation


(a) The Company is liable to pay compensation for damages caused by its Mining


Activities to a third party in accordance with Applicable Law.


(b) If the MoMP determines that the Company has violated any provision of any


Applicable Law (including the Minerals Law or the Mining Regulations) the


Company may be liable to pay lines in accordance with the relevant


Applicable Law.


(c) If the Company breaches or fails to comply with the terms and conditions of


any Licence or fails to implement any written instruction received from the


MoMP then it shall be subject to a fine in accordance with the relevant


Applicable Law.


(dj If the Company breaches or fails to comply with the terms and conditions of


its approved Environmental Management Plan then it shall be liable to pay a


fine in accordance with the Mining Regulations. ----x.





909074811.12 59


21. LOCAL COMMUNITY DEVELOPMENT





21.1 Community Development Agreement


Within thirty (30) days after the Effective Date, the Company shall enter into


Consultation and negotiations with the objective of concluding one or more


community development agreements as described in this Clause 21.1 or agreements


with communities impacted by the Project, to promote sustainable development and


enhance the general welfare and quality of life of inhabitants, as well as to recognise


and respect the rights, customs, traditions and religion of the affected persons (each, a


"Community Development Agreement"). It is the objective of each of the Parties


that the Mining Activities shall be carried out in a manner that is consistent with the


continuing economic and social viability of centres of population that have formed


and which may form as a result of such operations during the term of this Contract.


Upon request of the MoMP at any time the Company shall consult with the MoMP


and with each affected community mutually to establish plans and programmes for the


implementation of this objective and thereafter the Company shall cooperate with the


MoMP with regards to its effort concerning the realisation of such plans and


programmes. Each Community Development Agreement shall be subject to


Applicable Law and shall:


(a) address both how local communities can take advantage of the development


opportunities presented by the Project, and how the Project's adverse impacts


can be mitigated;


(b) serve as the agreement that specifics how the Company’s obligation to spend


funds for local development shall be met;


(c) address Environmental, Social, and economic conditions during mining and


after mine closure, and the eventual transition from a mining economy to a


post-mining economy in the Mining Area as may be agreed upon among the


parties to such Community Development Agreement; and


(d) include a detailed Environmental and Social Impact Assessment or Screening


Report and an Environmental and Social Management Plan for the different


phases of the mining operations.


The Company shall comply with the terms and conditions of each Community


Development Agreement which it enters into.





21.2 Relationship of this Contract to Community Development Agreements





Where an inconsistency occurs between a provision in any Community Development


Agreement and the terms or conditions of this Contract, the provision of such


Community Development Agreement shall prevail unless this Contract specifically


states that the provision in this Contract shall prevail.





21.3 Local business development plan





The Company agrees to cooperate with the MoMP in carrying out the Government's


responsibilities by developing a local business development programmer promote





909074811.12 60


economic development and growth in the area of communities impacted by the


Project. Any such programme shall be modified from time to time to fit the existing


circumstances related to the particular operating phase (development, construction


and operation) in the life of the Project. The objective of this programme is to


increase the involvement of local suppliers and business with the development of the


Project.


21.4 Community Health


The Company agrees to cooperate with the MoMP in carrying out the Government's


responsibilities to provide subsidised medical treatment, care and attention at


acceptable standards to all inhabitants of the communities affected by the Project


consistent with the national health policy of the Government as set out in Applicable


Law or otherwise and to maintain an adequate and properly staffed dispensary or


hospital headed by a resident medical doctor. During the Term, the Company shall


maintain and operate or cause to be operated, health facilities to ensure the availability


in the Mining Area of medical treatment, care and attention in accordance with


Applicable Law. and such other improved standards as may be agreed between the


Parties. Such treatment, care and attention shall be free of charge for rhe Company's


employees and their resident spouses and dependents resident in or adjacent to the


Mining Area. Government officials and'or employees assigned to and regularly


employed in the Mining Area in an official capacity, and resident in or adjacent to the


Mining Area, and their resident spouses and dependants, shall, during the time of such


assignment, employment and residence, also be entitled to receive medical care on the


same basis as Company employees. The Company shall further provide reasonable


access to such health facilities to members of local communities for ambulatory or


emergency care.


22. EMPLOYMENT AND TRAINING OF LOCAL CITIZENS


22.1 Minimum employment levels


Tn selecting employees to carry out the Mining Activities under this Contract the


Company shall give preference to qualified and competent executives, officers,


engineers, consultants, technicians and skilled and semi-skilled labour who are


citizens of the State (and in doing so shall give preference to members of local


communities in priority to other citizens of the State)) and shall fulfil its commitments


set forth on Schedule 4 regarding the employment of Afghan citizens.


22.2 Investment in skills of local work force


The Company shall develop and implement an annual training plan with the


objectives of:


(a) organising training of its employees to upgrade employees' skills and


providing further practical experience;


(b) training employees in line with the Company's short and mid-term human


resource plans; and








909074X11.12 61


(c) upgrading selected employees' qualifications by enrolling them in studies


inside or outside the State on a contractual basis to further upgrade their


professional qualifications.


22.3 Labour training and capacity enhancement


The Company shall develop and implement a comprehensive training programme for


personnel in the State and carry out such programme for training and education in


order to meet the requirement for various classifications of skilled and semi-skilled


hill time employment for the Project.


22.4 Management training and capacity enhancement


The Company will develop the most advanced technical mining workers locally


through a two-part programme:


(a) recruit top students from the science facilities of Afghan universities and give


them the on-the-job training program highlighted in Clauses 22.2 and 22.3;


and


(b) for especially bright workers who did not have the chance to attend college,


the Company will develop a curriculum based on free-online courseware,


which allows die workers to have the same scientific base as their peers and


develop further professionally.


22.5 Health & safety


(a) The Company shall observe Good Industry Practice for the protection of the


general health and safety of its employees and of all other persons contracted


by the Company having legal access to the Mining Area.


(b) The Company shall install and utilise such recognised modem safety devices


and observe such recognised modem safety precautions as arc provided and


observed under Good Industry Practice. The Company shall maintain in a safe


and sound condition for the duration of this Contract all infrastructure and


equipment constructed or acquired in connection with the Project and required


for ongoing operations.


(c) The Company shall train its employees in accordance with generally accepted


health and safety procedures and practices.


(d) The Company shall construct, maintain, and operate health programmes and


facilities to serve its employees which programmes and facilities shall install,


maintain and use modem health devices and equipment and shall practice


modem health procedures and precautions in accordance with accepted


international medical standards. Any housing supplied by the Company shall


be built to a standard that provides a suitable living environment adequate for


health and well being, and which meet applicable sanitation standards.











909074811 12 62


 (e) The Company shall make a health and safety plan in relation to its activities


and it shall be made known to the employees and other individuals who enter


the Mining Area after it is approved by the MoMP.

































































































































































909074811.12 63


 PART?


REPRESENTATIONS AND WARRANTIES


23. REPRESENTATIONS AND WARRANTIES


23.1 Representations and Warranties of the Company


The Company represents and warrants to the MoMP as follows:


(a) The Company is a corporation duly organised, validly existing and in good


standing under the laws of the jurisdiction of its formation, and has the


coqiorate power and authority to execute, deliver and perform its obligations


under this Contract.


(b) This Contract has been duly authorised by all necessary corporate action on


the part of the Company, and this Contract constitutes a legal, valid and


binding obligation of the Company enforceable against the Company in


accordance with its terms, except as such enforceability may be limited by


applicable bankruptcy, insolvency, reorganisation, moratorium or other similar


laws affecting the enforcement of creditors' rights generally.


(c) The documents submitted by the Company during the Tender Process contain


complete and correct lists or tables setting forth the following information,


which is contained in Schedule 5 (Beneficial Ownership and Management) to


this Contract:


(i) the Company's shareholders;


(ii) the Company's and each shareholder's Affiliates showing forth, in each


case, its relationship to the Company or the shareholder and the


jurisdiction in which it is organised;


(iii) the directors and senior officers of the Company, each shareholder of


the Company, and each person or group deemed to Control the


Company; and


(iv) each person that is the ultimate beneficial owner of five percent (5%)


or more of (x) the voting rights ordinarily empowered to control the


management of the Company or (y) the rights to share in the profits of


the Company, and the chain through which such rights arc exercised.


(d) The execution, delivery and performance by the Company of this Contract will


not (i) contravene, result in any breach of, or constitute a default under any


agreement or instrument to which the Company is a party or by which it or


any of its properties arc bound or affected, (ii) conflict with or result in a


breach of any of the terms, conditions or provisions of any order, judgment,


decree, or ruling of any court, arbitrator or governmental authority applicable


to the Company or (iii) violate any provision of any statute or other rule or


regulation of any governmental authority applicable to the Company.








909074811.12 64


 (e) There are no actions, suits, investigations or proceedings pending or. to the


knowledge of the Company, threatened, against or affecting the Company or








any property of the Company in any court or before any arbitrator of any kind


or before or by any governmental authority that:


(i) call into question the right of the Company to enter into and perform


its obligations under this Contract; or


(ii) would, if resolved against the Company, materially adversely affect its


ability to perform its obligations under this Contract.


(f) Neither the Company nor any Affiliate of the Company has been determined


under any order, judgment, decree or ruling of any court, arbitrator or


governmental authority to be in material violation of (i) any Applicable Law,


ordinance, rule or regulation relating to the protection of the Environment or


(ii) any agreement pursuant to which it is entitled to extract Mineral


Substances under the laws of any jurisdiction.


(g) The Company has the experience, finance, expertise, technical know-how and


systems required for the conduct of the activities contemplated by this


Contract.


(h) None of the Company, any Affiliate of the Company or any person acting on


behalf of the Company or any Affiliate of the Company has made or promised


to make any payment or transfer of anything of value, directly or indirectly, to


or for the benefit of a State Official or a State Official's family member or to


an intermediary for payment to or for the benefit of a State Official or a State


Official's family member in connection with this Contract or the transactions


contemplated hereby.


(i) The Company is eligible to hold the Licences under Applicable Law.


(j) Any factual information provided by, or on behalf of. the Company in


connection with this Contract was true and accurate in all material respects as


at the date it was provided or as at the date (if any) at which it is slated.


(k) No information has been given or withheld that results in any information


provided by or on behalf of the Company in connection with this Contract


being untrue or misleading in any material respect.


(l) Neither the Company nor any of its respective agents, contractors,


subcontractors or employees or any of them or anyone acting on their behalf


has offered, given or agreed to give to any person employed by or on behalf of


any public body, any improper or dishonest gift, commission or consideration.


(m) No improper or dishonest commission has been paid or agreed to be paid by


the Company or on its behalf and. to the best of the Company's knowledge and


belief, by any of its respective employees, agents, contractors or


subcontractors in connection with this Contract.











909074811.12 65


(n) None of the Company, any Affiliate of the Company or any person acting on


behalf of the Company or any Affiliate of the Company has committed, and no


person to the Company's knowledge has committed, any of the following:


(i) the payment, transfer, offering, giving, receiving or soliciting of any


improper advantage (whether directly or indirectly) to influence the


action of any person holding a public office or function or a director or


official of a public international organisation (or any intermediary) in


connection with this Contract or the implementation of the Project


(including any procurement process or in the execution of any contract


in connection with this Contract); or


(ii) any act that improperly influences or aims to improperly influence any


term of this Contract or any other instrument executed in connection


with this Contract, the procurement process or the implementation of


the Project including collusion between tenderers.


For the purpose of this paragraph (n) the knowledge of each director and


officer of the Company shall be deemed to be the knowledge of the Company.


23.2 Representations and warranties of the MoMP.


The MoMP represents and warrants to the Company that on the Effective Date, the


execution, delivery and performance of this Contract will have received all necessary


governmental approvals and authorisations (including the approval of the Cabinet or


Commission, as may be relevant).


23.3 Deemed repetition of representations and warranties


Each of the representations and warranties contained in Clause 23.1 or 23.2 shall be


made on the Effective Date and shall be deemed repeated on the date of award of any


Licence in respect of the Mining Area.















































909074811.12 66


 PART 8


SURRENDER. BREACH. TERMINATION AND FORCE MAJEURE





24. SURRENDER





24.1 Surrender





(a) Subject to the requirements of Applicable Law. the Company may relinquish


its rights under this Contract by notice requesting such relinquishment to the











MoMP signed by an authorised Company representative on:


(i) ninety (90) days notice under this Contract at any time before the Date


of Commencement of Commercial Production; or


(ii) six (6) months notice under this Contract after the Date of


Commencement of Commercial Production.


(b) Li' die Company provides a notice requesting relinquishment under Clause


24.1(a), the MoMP agrees to process such request expeditiously and agrees


that such request will be approved in the following circumstances:


(i) If the Company has fulfilled all of its obligations set forth in the


Minerals Law, the Mining Regulations, the applicable Licenses, and


this Contract accrued to the date of the request for relinquishment with


respect to the area being relinquished and is not then in breach


hereunder;


(ii) If the Company has submitted documents and reports about its Mining


Activities according to the provisions of the Minerals Law and relevant


Mining Regulations;


(iii) If, following relinquishment, the retained Mining Area is contiguous;


and


(iv) If the Company has complied with its Closure Plan.


(c) If tltc MoMP does not notify the Company of its decision in respect of the


requested relinquishment within the relevant time frame specified in the notice


requesting relinquishment as set out in Clause 24.1(a) or if the Company


disagrees with the MoMP's decision and the Parties are unable to reach


agreement within a further period of sixty (60) days, the matter may be


referred by either Party for resolution pursuant to Clause 33 (Dispute


Resolution Mechanism).


(d) Once an effective relinquishment is made:


(i) the Company shall have no obligations and liabilities under this


Contract except as set forth by Applicable Law or as specifically


provided herein to the contrary and except for such obligations and


liabilities that may have accrued prior to the cflcctivencs^-el^such


relinquishment; and / \





109074811.12 67


(ii) any Licence granted to the Company in connection with the Mining


Area shall automatically and without further action be cancelled. The


MoMP shall immediately release the Performance Bond.


The Company shall not be entitled to any compensation or any other benefit as


a result of. or in connection with, any such relinquishment.


(e) Upon the relinquishment of the Company's rights under this Contract, the


following actions shall be taken:


(i) the buildings, and permanent installations constructed in the Mining


Area shall not be removed by the Company and shall automatically


become property of the State, without payment of compensation; and


(ii) the buildings, and permanent installations constructed or installed


outside the Mining Area, and the ownership thereof, shall, be disposed


of with the agreement of the Company and the owner of the land upon


or under which such property is located. If such an agreement is not


reached within a period of thirty (30) Business Days, such buildings,


and structures shall automatically become property of the State,


without payment of compensation.


The MoMP shall in both of the above mentioned cases, be the authority


responsible for administering the buildings and structures so disposed.


(f) Upon the relinquishment of the Company's rights under this Contract, all


geological and geophysical data, samples and other information relating to the


relinquished rights shall automatically be transferred to the MoMP without


payment of compensation.


25. TERMINATION BY THE MOMP


25.1 Termination on certain events


The MoMP may terminate this Contract and any Licence granted to the Company in


relation to the Mining Area then outstanding by giving thirty (30) Business Days


written notice to the Company, without prejudice to any other rights that the MoMP


may have, if any of the following events occur:


(a) (i) violation by the Company of any material term or obligation contained in


any Licence or this Contract, (ii) persistent or serious violation of any


provision of the Minerals Law or Mining Regulations while conducting


Mining Activities, (iii) the Company engaging in (or authorising or permitting


any other person, acting on its behalf, to engage in) any activity which would


constitute a violation of any Applicable Law relating to bribery or anti-


corruption, or (iv) material violation of Clause 16.9 (Proposal Commitments);


(b) delay or suspension of Exploration activities for a continuous period of more


than the period stipulated in the Minerals Law or Mining Regulations in


connection with the revocation of the Exploration Licence (or, iT-ncesuch


period is stipulated in the Minerals Law or Mining Regulations, the pchod





909074811.12 68


stipulated by the MoMP from time to time, or, if no such period is stipulated


by the MoMP, twelve (12) months) unless the period of delay or suspension is


approved by the MoMP in accordance with the terms of this Contract;


(c) delay or suspension of Exploitation for a period of more than the period


stipulated in the Minerals Law or Mining Regulations in connection with the


revocation of the Exploitation Licence (or, if no such period is stipulated in the


Minerals Law or Mining Regulations, the period stipulated by the MoMP from


time to time, or, if no such period is stipulated by the MoMP. twelve (12)


months) unless the period of delay or suspension is approved by the MoMP in


accordance with the terms of litis Contract;


(d) breach by the Company of any of its obligations pertaining to health and


safety of labour, human rights, protection of the Environment or protection of


affected communities as set out in this Contract;


(e) in the event the MoMP determines that termination is required as a result of


considerations of public interests and order;


(f) the Dale of Commencement of Commercial Production does not occur on or


before the date which is twelve (12) months after the date for the


commencement of production of Mineral Substances provided for in the


Feasibility Study;


(g) the Company fails to make a payment (including payment of Surface Rights


Fees, royalties or taxes) when due and then fails to make said payment within


thirty (30) days after the MoMP gives a notice of the failure to make said


payment;


(h) the Company dissolves, liquidates, becomes insolvent, conun its an act of


bankruptcy, makes an assignment for the benefit of creditors, petitions or


applies to any tribunal for the appointment of a trustee or receiver for itself, or


commences any proceedings concerning itself under a law concerning


bankruptcy, or insolvency other than for the purposes of corporate


reorganisation; and


(i) the occurrence of any other event or circumstance resulting in the termination


of any Licence under Applicable Law,


This Contract shall also automatically terminate upon the termination of all


Exploration Licences and the Exploitation Licences granted to the Company in


connection with the Mining Area.


25.2 Termination due to public necessity


In the event of any termination pursuant to Clause 25.1(c) {Termination on certain


events'} compensation shall be paid to the Company in accordance with Applicable


Law and customary international law.








909074811.12 69


26. CONSEQUENCES OF TERMINATION, ETC.


26.1 Retention of assets on surrender, expiration or termination by the MoMP


(a) On the expiration of this Contract, its termination by the MoMP, or the


surrender of this Contract by the Company, and subject to Clause 24.1(e)


(Surrender) and Clause 26.1(g) the MoMP has the option, within six (6)


months of the surrender, expiration or termination (the "Option Period")


(subject to the rights of third parties, if any) to acquire any or all other


property of the Company not otherwise required by the Company for Mining


Activities at the lesser of net depreciated book value for income tax purposes,


or at fair market value, whichever is the lesser.


(b) After tire expiry of the Option Period, the Company may sell to third parties


any property which the MoMP has not exercised its option to acquire, with


exception of any infrastructure of public or community use. such as, but not


limited to: roads, accesses, bridges, highways and in general any construction


different to the mining facilities that can contribute to the development of the


surrounding communities.


(c) The MoMP may require the Company to remove any property not acquired by


the MoMP or otherwise comply with the Closure Plan for the Mining Area.


(d) Any property not removed within six (6) months from the date of expiration,


surrender or termination, shall be deemed to be owned by the MoMP.


(e) The Company shall remain liable for all of its obligations accrued before the


effective date of the surrender, expiration or termination of this Contract and


also for the obligations that must be fulfilled after the surrender, expiration or


termination, except for completion of the Project and the related cost and


payment obligations specified in this Contract; provided, however, that the


Company shall remain liable for all of its obligations hereunder and under


Applicable Law (i) relating to Environmental and Social matters (including


any such obligations contained in the Baseline Environmental Assessment)


and (ii) relating to the Closure Plan even after the surrender, expiration or


termination of this Contract.


(f) Any building, and permanent installation constructed and affixed to land


outside the Mining Area covered by the Licences shall be disposed of with the


agreement of the owner of the land and the Company. If such an agreement


may not be reached, such buildings, and structures shall become property of


the State, without payment of cost.


(g) All the infrastructure built by the Company for public or community use shall


automatically become property of the State upon the surrender, expiration or


termination of this Contract and, for the avoidance of doubt, no purchase price


or other compensation shall be paid to the Company in connection therewith.


(h) Upon termination of this Contract, all geological and geophysical data,


samples and other information relating to the Mining Area shallIxffransfehcd


to the MoMP without any cost. / J


909074811.12 70


26.2 Access following expiration or termination


On the expiration of this Contract, its termination by the MoMP, or the surrender of


this Contract by the Company, the Company shall have the rights to access and use


the Mining Area for as long as the Company reasonably determines access is


necessary to permit it to fulfil, or discharge its continuing obligations under this


Contract.


26.3 Obligations following expiration, surrender or termination


(a) On the expiration, surrender or termination of this Contract under this


Contract, the Company must:


(i) make the Mining Area safe to the reasonable satisfaction of the MoMP


so as to prevent injury to persons, livestock or other property, and to


prevent offsite damage;


(ii) comply with the Environmental Management Plan and/or the Closure


Plan as required to avoid imminent damage to the Environment; and


(iii) otherwise comply with Applicable Law.


(b) If the Government intends to carry out Mining Activities subsequently in the


Mining Area, the Company may not take any action inconsistent with such


Mining Activities that the Government intends to carry out, subject to its


rights and obligations under this Contract and Applicable L.aw.


27. INDEMNIFICATION


27.1 Indemnification for breach of Contract


Without prejudice to Clause 27.2 any breach by the Company of any obligation


provided for in this Contract, shall entitle the MoMP to be indemnified by the


Company in an amount equal to the damage suffered by the State. The MoMP. in the


event of such breach, may retain as a set-off any amounts it or any other department


or ministry of the Government owes to the Company.


27.2 Indemnification of (he State, etc. by Company


The Company shall at all times indemnify and hold harmless the State, the


Government, the MoMP and their respective officers and agents from all claims and


liabilities for death or injury to persons or damage to property from any cause


whatsoever arising out of Mining Activities or otherwise in respect of the Project or as


a result of its failure to comply with any Applicable Law to which it is subject, and


shall agree to the jurisdiction of and be bound to participate in the proceedings of any


forum in which any such claims can be adjudicated.


27.3 Limitations on Liability


(a) hi no event shall the State, the Government or the MoMP be liabl£_for any


Environmental condition that results from the actions of the Company. \





909074811-12 71


(b) Each of the Parties shall assume the risk of injuries to its own employees,


agents and contractors, except for cases of willful misconduct or gross


negligence of another Party.


28. FORCE MAJEURE; SUSPENSION


28.1 Obligations of Party in event of Force Majeure


(a) Any failure on the part of a Party to comply with any of the terms, conditions


and provisions of this Contract (except any obligation of a Party to make


payment of money to the other Party) shall not be grounds for termination or


give the other Party any claim for damages insofar as such arises from Force


Majeure. if the first-mentioned Party:


(i) has taken all reasonable precautions, due care and reasonable


alternative measures with the objective of avoiding such failure and of


carrying out its obligations under this Contract; and


(ii) has given notice to the other Party of the occurrence of Force Majeure


on becoming aware of such an event.


(b) The first-mentioned Party shall take all reasonable measures to overcome the


Force Majeure and to fulfil the terms and conditions of this Contract with the


minimum of delay and shall give notice to the other Party on the restoration of


normal conditions. To the extent that, under Applicable Law as then in effect


any Licence then in effect is extended by any such period of Force Majeure


then the Term of this Contract shall be extended by such period.


28.2 Negotiation in event of Force Majeure


(a) If an obligation is suspended by reason of Force Majeure for more than twelve


(12) months, the Parties shall enter into good faith negotiations to revise the


terms of this Contract to reflect the changed circumstances, provided that this


Contract shall remain in effect during the period during which the Parties arc


negotiating the terms of any such revision.


(b) If the Parties cannot reach agreement to revise the term of this Contract as set


forth in Clause 28.2(a) within six (6) months of the end of the twelve (12)


month period referred to in Clause 28.2(a) then either Party will be entitled to


terminate this Contract upon written notice to the other. For the avoidance of


doubt the provisions of Clause 26.3 (Obligation.1; following expiration,


surrender or termination') shall apply following any termination under this


Clause.





28.3 Environmental Management and Closure Plan





In the event of temporary closure or a cessation of Mining Activity, the Company


shall be responsible for performing any and all Environmental management of the


Mining Area as set forth in the Environmental Management Plan. Should the MoMP


terminate this Contract as a result of a suspension of Mining Activities, tlje-Company


shall be required, following the approval of the MoMP. to implement the Closure


W0748II 12 72


 Plan, and the Company shall, upon notice from the MoMP and within thirty (30) days,


adjust the amount of the Closure Guarantee required under this Contract.










































































































































































909074811.12 73


 PART 9


ASSIGNMENT AND CONFIDENTIALITY





29. ASSIGNMENT





29.1 Third Party Assignment





(a) Except as provided under this Clause 29, neither the Company nor the MoMP


shall have the right to assign its rights and interest under this Contract to a





third party, without the prior written consent of the other Patty.


(b) The Company may transfer all, but no less than all, of its rights and interest


under this Contract to a third patty (such entity "Transferee"), with the prior


written consent of the MoMP, provided that the Transferee (i) would have


qualified to submit a Request for Proposal pursuant to the Tender Process, and


(ii) has the eligibility requirements for holding a Licence and otherwise


satisfies the criteria set forth in the Minerals Law and the Mining Regulations.





(c) The Company shall submit a notice of proposed transfer in a form prescribed


by the MoMP (the "Notice of Transfer") along with the prescribed fee to the





MoMP. The Notice of Transfer shall be provided to the MoMP at least thirty


(30) Business Days prior to the proposed transfer.


(d) The Notice of Transfer shall provide sufficient information to establish the


eligibility of the Transferee to hold the transferred Licence and shall be


accompanied by a copy of an agreement between the parties in connection


with the transfer or assignment which inter alia includes the Transferee's


binding commitment to provide adequate warranties or guarantees to fulfil the


Company's obligations under this Contract and the Minerals Law and Mining


Regulations.


(e) The MoMP shall review such notice and its accompanying documentation


within twenty (20) Business Days of receipt of such notice and documents.


(f) The MoMP shall not grant a consent to such assignment unless:





(i) the Transferee provides warranties, financial guarantees, and


performance bonds to the MoMP similar to those provided by the


Company under this Contract and the Licence to ensure that it will


comply with the obligations thereunder;


(ii) the Transferee is able to demonstrate the necessary' technical and


financial capabilities to undertake the approved work programme and


meet all the financial and other legal obligations imposed on the


Company;





(iii) tire Company has complied with:





(x) all of its obligations then due under this Contract, including but


not limited to payment of applicable taxes, royaliiesjmd-surfacc


rents and fees; A





909074811 12 74


(y) all the terms and conditions of the Licences; and


(z) die provisions of the Minerals Law and the Mining


Regulations,


at the time of such transfer or assignment; and


(iv) the transferee undertakes to re-register the transferred or assigned


Licence with the MoMP and assumes all the obligations and


responsibilities of the Company under die relevant Licences.


(g) If required, the MoMP may impose additional conditions on the Transferee


when approving the transfer or assignment of a Licence.


(h) Upon review of the Notice of Transfer if the MoMP determines that the


Transferee satisfies the requirements for transfer or assignment set forth in the


Minerals Laws and the Mining Regulations then it shall grant consent to such


transfer or assignment specifying the date from which such transfer or


assignment may take effect and any conditions that may be attached to such


transfer or assignment. Upon grant of such approval such transfer or


assignment shall be registered by the Mining Cadastre.


(i) Upon receipt of the Notice of Transfer, if the MoMP determines that the


proposed Transferee does not satisfy the applicable conditions, it shall


promptly notify the Parties of this determination in writing and shall include a


written explanation of the basis for its negative determination.


(j) For purposes of this Clause 29. a change of Control of the Company shall be


deemed a transfer by the Company of its rights, interests and/or obligations


under this Contract.


(k) The Company may transfer its interest in this Contract by way of security in


the manner set forth in Clause 29.5 (Assignment by way of security for


financing).


(l) The Company shall promptly notify the MoMP of any change in die holder of


any senior management office of the Company (including any change in the


chairman, chief executive officer, chief financial officer or chief operating


officer).


29.2 Assignment to Affiliate


The Company shall have the right to assign all (but not less than all) of its rights and


interest under this Contract to an Affiliate, subject to the prior written consent of the


MoMP. provided dial the Affiliate acknowledges and agrees to assume all of the


obligations of the Company under this Contract, has the capacity to perform those


obligations, and that the Company guarantees the obligations of the Affiliate on terms


and conditions, and pursuant to documentation, reasonably satisfactory to the MoMP.











909074811.12 75


29.3 Release





On any effective assignment or transfer of this Contract to a third party approved by


the MoMP, the Company shall be released from liabilities under this Contract to the


extent assumed by the third party.


29.4 Successors and assigns


Subject to the limitations on assignment and transfer contained in this Clause 29. this


Contract shall inure to the benefit of and be binding upon the successors and assigns


of the Parties.


29.5 Assignment by way of security for financing


(a) The Company shall have the right, with the prior written consent of the


MoMP, to mortgage, pledge, lien, charge, assign, hypothecate or otherwise


encumber all or part of its interest under this Contract for the purpose of


raising, from one or more third parties, financing for Mining Activities in


connection with the Project in a manner which is consistent with the Financing


Plan. As a condition to receiving consent, the mortgagee must agree upon


foreclosure to operate the Project and the related infrastructure, substantially


as an entirety, in accordance with the requirements of this Contract, and


transfer the mortgaged property as an entirety, including the entire Mining


Area and all related infrastructure necessary for the continued operation of the


Project, only to a single transferee that commits (i) to operate the Project in


accordance with the requirements of this Contract and Applicable Law; (ii) to


provide warranties or guarantees similar to those provided by the Company


and to comply with the obligations of the Company under this Contract, the


Licences and Applicable Law; and (iii) to demonstrate to the reasonable


satisfaction of the MoMP the necessary technical and financial capabilities to


undertake the approved work programme and meet all the financial and other


legal obligations imposed on the Company.


(b) The MoMP agrees that in the event of default by the Company that any such


person holding such mortgage, charge or other encumbrance shall be entitled


either to conduct operations on the same terms and conditions as the Company


under this Contract or, with the prior consent of the MoMP, to exercise any


power of sale granted by any such mortgage, charge or other encumbrance so


long as any purchaser at such sale commits to fulfil the obligations of the


Company under this Contract and the Minerals Law and Mining Regulations.


(c) Any restrictions on transfers of rights under this Contract or the Licences shall


also apply to transferees under mortgage foreclosure.


(d) All such pledges, grants, transfers, assignments, charges or other


encumbrances shall be recorded in the Mining Cadastre.


29.6 Requirement for consent by MoMP to assignment or transfer


Notwithstanding any other provisions of Clause 29, the Company acknowledges and


agrees that: s' A


909074811.12 76 / / s'


(a) It shall comply with the Minerals Law and Mining Regulations for the transfer


or assignment of any of the rights, obligations or Licences related to this


Contract; and


(b) Such rights, obligations and Licences shall not be transferred or assigned


without the prior written consent of the MoMP.


30. CONFIDENTIAL INFORMATION


30.1 Public documents


(a) This Contract, including all schedules hereto, shall be made available in full at


rhe MoMP's website. This Contract shall not constitute Confidential


Information. Without prejudice to the foregoing, there shall be a presumption


that any information regarding this Contract, or the activities taken under this


Contract is public, other than Confidential Information,


(b) The MoMP shall, no later than ten (10) Business Days following the execution


of this Contract, publish an announcement on the MoMP website summarising


the material terms of this Contract, including a summary' of the minimum


work obligations, the Royalty Rate, and other material revenues and benefits


that the State will derive from this Contract.


(c) All reports and submissions by the Company to the MoMP, and all responses


by the MoMP. are freely available on request to the MoMP or the Company,


provided that Confidential Information may be redacted prior to disclosure.


(d) The Company shall maintain written records of its documents and activities as


required under this Clause 30.1 (including all adopted updates, amendments to


this Contract and other documents, materials and information on payments and


reporting) and this Contract, and facilitate public access to non-Confidential


Information so as to facilitate informed participation by the public in any and


all Consultation required by this Contract. Such documents shall be


maintained at the following location and shall be available for access to all


members of the public during normal business hours:


Block #403, Noman Building, Beside Awcsta Hospital. Kolola Pushta. Kabul,


Afghanistan


Public access to these files shall be requested of the Company by no less than


five (5) Business Days prior written notice and a specific lime of meeting shall


be agreed by the Company and the party requesting access to the files prior to


access being granted to the public.


(e) On payment of a reasonable fee prescribed by the MoMP, any member of the


public shall be entitled to obtain a copy of this Contract from the appropriate


MoMP office or at the Company's offices listed above.


(f) The Confidential Information may be used by the MoMP for the purposes of


compiling public records, data and statistics, which may be published after


redacting the Confidential Information.





909074811.12 77


30.2 Certain information confidential


(a) Confidential Information shall be retained by the MoMP and the Company in


strictest confidence and shall not be disclosed to any third party without (he


express prior written consent of the other Party, which consent shall not be


unreasonably withheld, conditioned or delayed, provided that the Company's


consent shall be deemed given if the MoMP notifies the Company in writing


of an emergency situation where disclosure is required to protect the health,


safety, oror security of the citizens of the State. Notwithstanding the


foregoing, technical, geological and financial records and reports submitted


under Article 27 of the Minerals Law that are considered confidential under


Applicable Law shall become non-confidential on the earlier of ten (10) years


after creation or one (1) year after expiry or termination of the relevant


Licence or this Contract, as provided by Article 112 of the Minerals Law. The


Company agrees that, immediately following expiry or termination of the


relevant Licence or this Contract, geological information relating to the


Mining Ai ea and. if applicable, technical informat ion reasonably necessary for


the continuation of Mining Activities in the Mining Area shall not be deemed


Confidential Information and may be made available by MoMP to other


Persons for the purpose of engaging in Mining Activities in the Mining Area.


(b) "Confidential Information" shall mean:


(i) information (including technical, geological and mining information)


that is by law confidential under Applicable Law (including the


Minerals Law);


(ii) personnel matters, health records of individual employees, or other


documents in which employees or others have a reasonable expectation


of privacy and other matters that involve the privacy of individuals;


(iii) confidential legal matters, including advice from legal advisers; and


(iv) information disclosed to the other Party to this Contract designated as


"Confidential" by notice to the other Party at the time of its initial


disclosure to such Party, provided that such designation shall be


deemed to be a representation that the disclosing party has reasonably


determined after review of such information dial maintaining the


confidentiality of such information is necessary' to protect business


secrets or proprietary information.


(c) The term "Confidential Information" does not mean or include information


that:





(i) becomes publicly available other than as a direct or indirect result of


any breach of the provisions of this Clause 30;


(ii) was obtained by a Party from a third party who is not known by the


obtaining party to be under any obligation of confidentiality with


respect to such information;





909074811.12


 (iii) is required to be disclosed by Applicable Law (including in connection


with any disclosure of chemical or other processes required to be made


under any Environmental Law) by any law to which the Company or


its Affiliates is subject, by any court proceeding or arbitral award, or


by any applicable rule of a stock exchange;


(iv) is disclosed to Affiliates, professional advisers, potential providers of


finance or bona fide potential purchasers unless disclosed on terms that


such person or entity agrees to maintain the confidentiality of such


information on terms similar to those set forth in this Clause 30;; or


(v) the MoMP is entitled to disclose pursuant to Section (3) of Article 112


of the Minerals Law or other Applicable Law.





































































































909074811.12 79


 PART 10


MISCELLANEOUS PROVISIONS





31. NOTICES


31.1 General


Any communication to be made under or in connection with this Contract shall be


made in writing and shall be in both English and one or more of the official languages


of the State and unless otherwise stated (including as set forth in Clause 31.4) shall be


made by letter.


31.2 Addresses


The address (and the department or officer, if any. for whose attention the


communication is to be made) of each Party for any communication or document to


be made or delivered under or in connection with this Contract is that identified with


each Party's name below its signature hereto, or any substitute address or department


or officer as the Party may notify to the other Party by not less than five (5) Business


Days' notice.


31.3 Delivery Methods


(a) Any communication or document made or delivered by one person to another


under or in connection with this Contract will only be effective:


(i) if by way of letter, when it has been left at the relevant address or five


(5) Business Days after being deposited in the post postage prepaid in


an envelope addressed to it at that address,


(ii) and, if a particular department or officer is specified as part of its


address details provided under Clause 31.2 (Addresses), if addressed to


that department or officer.


(b) Any communication or document to be made or delivered to the MoMP will


be effective only when actually received by the MoMP and then only if it is


expressly marked for the attention of the department or officer identified under


the MoMP’s signature below (or any substitute department or officer as the


shall specify for this purpose).


31.4 Electronic communication


(a) Any communication to be made between the Parties under or in connection


with this Contract may be made by electronic mail or other electronic means,


if the MoMP and the Company:


(i) agree that, unless and until notified to the contrary, this is to be an


accepted form of communication;


(ii) notify each other in writing of their electronic mail address and/or any


other information required to enable the sending and receipt of


information by that means: and z'""'X


909074811.12 80 / j! J


(iii) notify each other of any change to their address or any other such


information supplied by them.


(b) Any electronic communication made between the MoMP or the Company will


be effective only when actually received in readable form and in the case of


any electronic communication made to the MoMP only if it is addressed in


such a manner as the MoMP shall specify for this purpose.


31.5 Maintenance of Local Office


The Company shall establish and maintain an office in Kabul and shall designate a


specified individual employed by the Company and located at that office as the


Company's representative in Kabul for purposes of receiving communications from


the MoMP in connection with this Contract. The Company shall ensure that such


individual is available during normal working hours in Kabul for purposes of


receiving such communications.


32. APPLICABLE LAW


This Contract shall be governed by and construed in accordance with the laws and


regulations of the State, including applicable international treaties, conventions and


bilateral investment treaties to which the Slate is a party (collectively, "Applicable


Law").


33. DISPUTE RESOLUTION MECHANISM


33.1 Early Warning procedure


(a) Notwithstanding the Company and the MoMP's respective duties and


obligations under this Contract to give each other certain specific notices and


responses within pre-defined timescales, the Company or the MoMP, as the


case may be, shall give written notice (an "Early Warning") to the other


Party as soon as the Party becomes aware during the course of this Contract of


any matter whatsoever that could involve a dispute, controversy, difference or


claim that may exist between the Parties in connection with or relating to this


Contract.


(b) Within seven (7) days of the issue of an Early Warning either Party shall be


entitled upon giving the other Party reasonable written notice slating a


convenient lime and place, lo call a meeting (an "Early Warning Meeting")


which both the Company and the MoMP shall attend. Failure of either Party


to attend an Early Warning Meeting as aforesaid shall denote that the Early


Warning procedure set out in this Clause 33.1 has been completed.


(c) At the Early Warning Meeting both the Company and the MoMP shall:


(i) co-operate in making and considering proposals which aim to avoid,


alleviate or reduce the effect of the matter which is the subject of the


Early Warning; and;








90907481 1.12 81


(ii) determine the actions required to be undertaken by the Company and /


or the MoMP to implement the agreed decisions arising from Clause


33.1(c)(i);


The MoMP shall record the proposals considered and the decisions made at


the Early Warning Meeting and shall issue a copy of the said record to the


Company, as soon as reasonably practicable.


(d) For the avoidance of doubt, completing the Early Warning procedure is a pre-


condition to continuing to resolve any matters) which form(s) the subject of


(an) Early Warning(s) by means of the mechanisms set out at Clauses 33.2 to


33.4 (inclusive).


33.2 Notice of Dispute


(a) In the event that the Parties are unable to resolve the matter(s) which form(s)


the subject of (an) Early Waming(s). and only in circumstances where the


Early Warning procedure set out in Clause 33.1 has been completed, if a Party


considers that a dispute, controversy, difference or claim still exists between


the Parties in connection with or relating to this Contract (a "Dispute"), it


shall notify the other Party of such Dispute in writing as soon as practicable


and in any event within seven (7) days of completing the Early Warning


procedure set out in Clause 33.1 (a "Dispute Notice"). A Dispute Notice


shall specify the nature of such Dispute.


(b) The Parties will enter into formal good faith negotiations for a minimum


period of fifteen (15) Business Days from the date of the Dispute Notice, and


to this end. each of them shall designate in writing to the other Party from time


to time a senior management representative who shall be authorised to


formally resolve and agree between them any Dispute in connection with this


Contract and, to exercise the authority of such Parly to enter into a binding


settlement agreement.


(c) For the avoidance of doubt, completing the procedure set out in this Clause


33.2 is a pre-condition to continuing to resolve any Dispute by means of the


mechanisms set out at Clauses 33.3 to 33.5 (inclusive).


33.3 Technical Dispute Resolution Procedure


(a) If the Parties cannot resolve a Dispute pursuant to the procedures set out in


Clause 33.2, and in circumstances where the Parties consider die Dispute to be


technical in nature ("Technical Dispute"), a Party may require by sending a


written notice to the other Party within thirty (30) Business Days from the end


of the period stipulated in Clause 33.2(b) that such Dispute be submitted to an


Independent Expert who, once appointed, shall be designated to consider and


decide the issues raised by such Dispute.


(b) Where a Party disagrees that the Dispute is a Technical Dispute, such Party


shall serve a written notice of objection within five (5) Business Days of


referral of the Dispute to the Independent Expert. The written notice of


objection shall be served on both the Independent Expert and/tfic otheXParty.


909074811.12 82 / ✓ ✓


 Within five (5) Business Days of the date of the objection notice, the


Independent Expert shall decide whether the Dispute is a Technical Dispute.

















1’he Independent Expert has sole jurisdiction to decide that a dispute is a


Technical Dispute regardless of whether a Party has served a written notice of


objection in accordance with this Clause 33.3(b). The Independent Expert's


decision on whether a Dispute is technical is final.


(c) Within fifteen (15) Business Days of the appointment of an Independent


Expert, or within fifteen (15) Business Days of the hidependent Expert's


decision that a Dispute is a Technical Dispute in accordance with Clause 33.3


(b). each of the MoMP and the Company shall submit to the Independent


Expert a notice (a "Position Notice") setting forth in detail such Party's


position in respect of the issues in Dispute. Such Position Notice will include


supporting documentation, if appropriate.


(d) The Independent Expert shall complete all proceedings and issue his decision


with reasons with regard to the Technical Dispute as promptly as reasonably


possible, but in any event within fifteen (15) Business Days of the date on


which both Position Notices are submitted unless the Independent Expert


reasonably determines that additional time is required in order to give


adequate consideration to the issues raised. In such case the Independent


Expert shall specify- the additional period required, which period shall not


exceed ten (10) Business Days unless the MoMP and the Company agree


otherwise.


(c) In resolving a Technical Dispute, the Independent Expert shall (i) consider all


facts and circumstances he deems reasonable given the nature of the Technical


Dispute; and (ii) choose either the position of the MoMP as set forth in the


MoMP's Position Notice or the position of the Company as set forth in the


Company's Position Notice.


(f) If the Independent Expert should fail to notify the Parties of his decision with


respect to any Technical Dispute referred to him pursuant to this Clause 33.3


within the time-limit specified in Clause 33.3(d), any Party may give notice


within twenty (20) Business Days after expiration of such time-limit that the


Technical Dispute is to be decided by arbitration pursuant to Clause 33.4,


whereupon the Independent Expert shall give no further consideration to the


Technical Dispute and shall not issue a decision.


(g) The decision of the Independent Expert regarding a Technical Dispute shall be


final and binding on the Parties unless written notice of dissatisfaction with the


decision is given by one Party to the other Party, with a copy to the


Independent Expert, within twenty (20) Business Days of such Party's receipt


of the Independent Expert's decision, in which event such Technical Dispute


may be settled by arbitration pursuant to Clause 33.4. provided that a Party


commences such arbitration within fifty (50) Business Days from the date of


receipt by a Party of the written notice of dissatisfaction. If no arbitration is so


commenced within fifty (50) Business Days of the issuance of the notice of


dissatisfaction, the Independent Expert's decision shall be final and binding








909074811.12 83


upon the Parties, notwithstanding the notice of dissatisfaction given by the


relevant Party.


(h) The Party that has initiated the submission of a Technical Dispute to an


Independent Expert by giving notice in accordance with the provisions of this


Clause 33.3 shall pay one hundred (100) percent of all fees and expenses of


the Independent Expert including any advance on account of such fees and


costs set by the Independent Expert. All fees and costs of the Independent


Expert shall be borne or reimbursed by the losing Party determined by the


Independent Expert's decision, unless a Party has given notice in accordance


with the provisions of Clause 33.3(g) that the Technical Dispute is to be


decided by arbitration prior to the rendering of a decision by the Independent


Expert. In such event, the Party that initiated the submission of a Technical


Dispute to the Independent Expert shall bear all such fees and costs and shall


be entitled to claim for reimbursement of such fees and costs in the arbitration.


Each Party shall bear its own costs (including costs of its advisors or


consultants) with respect to a Technical Dispute submitted to an Independent


Expert.


33.4 ICSID arbitration


(a) In the event that the Parlies are unable to resolve a Dispute in accordance with


Clause 33.2 within the period stipulated in Clause 33.2 . or in the case of a


Technical Dispute, in accordance with Clause 33.3, the Parlies shall submit


any such Dispute to the International Centre for Settlement of Investment


Disputes ("ICSID") to be finally resolved by arbitration pursuant to the


Convention on the Settlement of Investment Disputes between States and


Nationals of Other States (the "Convention") and conducted in accordance


with the Arbitration Rules of ICSID as at present in force.


(b) The Parties acknowledge that the transaction to which this Contract relates is


an investment.


(c) The arbitral tribunal shall consist of a panel of three (3) arbitrators, comprising


two (2) arbitrators, one (1) appointed by each Party, and an arbitrator, who


shall be the President of the tribunal, appointed by agreement of the Parlies or,


failing such agreement, by the Chairman of the Administrative Council of


ICSID.


(d) The following applies to any arbitration pursuant to this Clause 33.4:


(i) the venue of any hearings shall be the Permanent Court of Arbitration


at The Hague or any other place agreed by the Parties; and


(ii) the language of the arbitration shall be English.


(c) The arbitration award shall be final and binding on the Parties. Judgment on


the arbitration award may be entered by any court having jurisdiction over it


or over the award debtor or its assets. The decision of the arbitrators shall be


public. Any monetary award shall be assessed and payabteinDoIlars








909074SI1.12 84


(determined at the Prevailing Market Rate of Exchange if the award involved


an obligation expressed in any currency other than Dollars).


(f) Without prejudice to the power of the arbitral tribunal in relation to


provisional measures, either Party may request any judicial or other authority


to order any provisional or conservatory measure, including attachment, prior


to the institution of the arbitration proceeding, or during the proceeding, for


the preservation of its rights and interests.


(g) The right of the Company to refer a Dispute to ICSID pursuant to this Clause


33.4 shall not be affected by the fact that the Company has received full or


partial compensation from any third party with respect to any loss or injury


that is the subject of the Dispute.


(h) In any arbitration proceeding conducted pursuant to this Clause 33.4. the fees


and expenses of the members of the arbitral tribunal as well as charges for the


use of the facilities of ICSID shall be borne equally by the Parties.


(i) The law governing this Clause 33.4 is the Applicable l.aw. The Parties submit


to jurisdiction in the Courts of England and Wales for the limited purpose of


enforcing the agreement to arbitrate in this Clause 33.4.


33.5 UNCITRAL arbitration


(a) In the event that the Parties are unable to submit any Dispute to ICSID


pursuant to Clause 33.4 or in the event that ICSID shall decline to hear such


arbitration, any such Dispute shall be referred to and finally resolved by


arbitration in accordance will) the UNCITRAL Arbitration Rules as at present


in force (the "Rules").


(b) The arbitral tribunal shall consist of a panel of three (3) arbitrators comprising


two (2) members and a chairman to be appointed in accordance with the


Rules.


(c) The following applies to any arbitration pursuant to this Clause 33.5:


(i) the venue of any hearings shall be England and Wales;


(ii) the language of the arbitration shall be English: and


(iii) the seat of the arbitration shall be England and Wales.


(d) The arbitration award shall be final and binding on the Parties. Judgment on


the arbitration award may be entered by any court having jurisdiction over it


or over the award debtor or its assets.


(e) Without prejudice to the power of the arbitral tribunal in relation to


provisional measures, either Party may request any judicial or other authority


to order any provisional or conservatory measure, including attachment, prior


to the institution of the arbitration proceeding, or during the proceeding, for


the preservation of its rights and interests. / )





900074811.12 85


 (f) In any arbitration proceeding conducted pursuant to this Clause 33.5, the fees


and expenses of the members of the arbitral tribunal as well as charges for the


use of the facilities of the venue shall be borne equally by the Parties.





(g) The law governing this Clause 33.5 is the Applicable Law. The Parties submit


to jurisdiction in the Courts of England and Wales for the limited purpose of


enforcing the agreement to arbitrate in this Clause 33.5.


34. PERIODIC REVIEW


This Contract shall upon written request of a Party, be subject to periodic review once


every five (5) years after the Effective Date for the purpose of good faith discussions


to consider any proposed modification(s) to this Contract as may be necessary or


desirable in the light of any substantial changes in circumstances that may have


occurred during the previous five (5) years, or experience gained in that period. The


Parties agree always to be open to discussing any matter which may help maximise


the positive development benefits of the Project, or minimise its undesirable impacts,


nothing herein shall preclude a Party from requesting the other Party to initiate


discussions regarding any provision herein, provided that this Contract shall remain in


effect during the period during which the Parties are conducting such discussions.


35. ANCILLARY PROVISIONS


35.1 Entire Contract


This Contract and the documents referred to within, contain the entire understanding


and agreement of the Parties with respect to the subject matter of this Contract and


supersede all prior agreements and understandings as between the Parties except


where noted herein. All schedules to this Contract are incorporated by reference and


form pail of this Contract; provided, however, that in the event of any inconsistency


between the terms of this Contract and the terms of the Minerals Law and/or the


Mining Regulations and/or any other Applicable Law the terms of the Minerals Law


and/or Mining Regulations and/or such other Applicable Law, as the case may be,


shall prevail.


35.2 Survival of certain provisions


Notwithstanding termination of this Contract by cither pally or for any reason,


including a termination due to a finding that this Contract or a portion thereof is void,


invalid, or unenforceable, Clauses 27 (Indemnification), 30 (Confidential


Information), 31 (Notices), 32 (Applicable law), 33 (Dispute Resolution Mechanism),


and 39 (Good Faith) shall survive such termination and shall remain effective as to


any matters which are the subject of this Contract or which arise out of, in relation to


or in connection with this Contract. Moreover, any such termination shall be without


prejudice to rights, duties and obligations that have accrued prior to termination and,


notwithstanding such termination, such provisions of this Contract as arc reasonably


necessary for the full enjoyment and enforcement of such rights, duties and


obligations shall survive such termination for the period necessary, including Clauses


16.10 (Security for Performance; Financial Guarantee), 19 (Environmental and


social obligations: Closure Obligations), 26 (Consequences of Ternu»atton>£tc.). and





909074811 12 86


the other provisions of this Agreement that, by their terms, apply following


termination or expiration hereof.


35.3 Amendment


This Contract shall not be amended, modified, or supplemented except by an


instrument in writing signed by the Parties. Any purported amendment, modification


or supplement of this Contract not in writing signed by the Parties shall be null and


void.


35.4 Severability


If and for so long as any provision of this Contract shall be deemed to be determined


to be invalid for any reason whatsoever, such invalidity shall not affect the validity or


operation of any other provision of this Contract except only so far as shall be


necessary to give effect to the construction of such invalidity, and any such invalid


provision shall be deemed severed from this Contract without affecting the validity of


the balance of this Contract. Upon such determination that any term or other provision


is invalid and unenforceable, the Parlies shall negotiate in good faith to modify this


Contract so as to effect the original intent of the Parties as closely as possible in order


that the transactions contemplated by this Contract can be consummated as


contemplated.


35.5 Limitations on Waiver


(a) The rights of each party under this Contract:


(i) may be exercised as often as necessary;


(ii) shall be the exclusive and sole remedies of the parties with respect to


any breach, default, or notice of termination under this Contract or any


dispute relating thereto or otherwise relating to this Contract or its


subject matter; and


(iii) may be waived only in writing and speciIleally.


(b) Delay in exercising or non-cxcrcisc of any such right is not a waiver of that


right.


36. GOVERNING LANGUAGE


This Contract will be provided and executed in the English language and the Dari,


language with each Party retaining one copy in each language and the Parties agree


that in the event of any legal dispute in the interpretation of this Contract, the English


language version shall prevail.


37. FURTHER ACTS


(a) The Parlies, subject to the terms and conditions of this Contract, shall use all


reasonable efforts to take, or cause to be taken, all action, and to do, or cause


to be done, all things necessary, proper or advisable under Applicable Law, to





909074811.12 87


consummate and make effective the transactions contemplated by this


Contract.


(b) If at any time during the Tenn of this Contract any further action is necessary


or desirable to carry out the purposes of this Contract, the Parties shall take, or


cause to be taken, all such necessary or convenient action, and to execute,


deliver and file, or cause to be executed, delivered and filed, all necessary or


convenient documentation.


(c) Without prejudice to the provisions of Clause 40(a) (A'o effect on Applicable


Law, etc.) the Company will from time to time take such actions as may be


necessary or advisable to ensure that the terms of this Contract and the


performance by the Company of its obligations hereunder are consistent with,


and in compliance with, the Minerals Law, the Mining Regulations and other


Applicable Law. in each case as the same might be in effect from time to


time,, provided, however, that the Parties agree that the Parties shall comply at


all times with the Minerals Law, the Mining Regulations and other /Xpplicable


Law as then in effect without regard to whether any amendment to this


Contract has been executed to reflect any changes or amendments to the


Minerals Law, the Mining Regulations or other Applicable Law. The


foregoing provisions of this Clause 37(c) shall not, and shall not be deemed to,


constitute a waiver or any other dilution of the rights and remedies available to


the MoMP arising out of any breach by the Company of the terms and


Conditions of this Contract.


38. DUPLICATE ORIGINALS


This Contract may be executed in one or more counterparts, each of which shall be an


original, but all of which together shall constitute one and the same instrument, and it


shall not be necessary in making proof of this Contract to produce or account for more


than one original.


39. GOOD FAITH


The Parties to this Contract shall have a simple obligation to act in good faith in all


matters related to this Contract.


40. NO EFFECT ON APPLICABLE LAW, ETC.


(a) The breach of certain Applicable Laws may have certain specified


consequences under this Contract as set forth in greater detail herein. For the


avoidance of doubt nothing in this Contract amends, or is intended to amend,


any Applicable Law and the rights and remedies available to any person


(including the State, the Government and the MoMP) in connection with any


breach of Applicable Law shall continue as provided for in such, or any other,


Applicable Law.


(b) Without prejudice to the generality of Clause 40(a) the Minerals Law. the


Mining Regulations and other Applicable Law in Afghanistan shall apply with


full force and effect with respect to the Company and the development of the


Project and notwithstanding any term of or provision of thi

909074811.12 88


the avoidance of doubt, any Licence shall be governed by, and shall be


capable of being terminated in accordance with, the Minerals Law, the Mining


Regulations and other Applicable Law in Afghanistan).


EXECUTION:





The Parties have shown their acceptance of the tprm<


contract after the Schedules. °f this Contract by executing it as a












































































































































909074811.12 89


 SCHEDULE 1


MINING AREA











The Shaida Mining Areas is defined by the following coordinates:





License Corner Easting Northing


NW 385537 3755863


Shaidal NE 401337 3755863


SE 401337 3740063


SW 385537 3740063





Coordinates are given in UTM Zone 41N, WGS 84 datum.











































































































909074811.12 90


 SCHEDULE 2


destination schedule1








Part 1 - The Minerals Lass





Section of Minerals Description Section of Contract


1___Lass-___________


_________5(1) Ownership of Minerals 3 3 | 3 9


7 Duties and Authorities of Ministry of 23,3.1,3.2


Mines


59(2). 66(2) & 90(3) Duties of Environmental Protection 19.1(e)


Department________


16 Eligibility for grant of a License and 23.l(i)


Entry into Contract


19(2) & (4) Bidding____ Preamble


23 Minerals Development Contract 23.2


110(1) Mining Contract subject to Applicable 3.6


Law______


________24________ Boundaries of License Area 4.1(c)


70 & 77 Overlapping Areas ---_y______________


4.1(d)


48, 56 & 68 Extension of term ol licence 2.2, 4.1(b)


.___________29___________ Transfer ol License --------------------‘i__________________________________________


29


30 Relinquishment of a License Area 4.2,25.1


33 Revocation of a License 25


__________51__________ Rights ol Exploration License Holder 3.1


________22________ __Validity ol License 2.2(b)


49 Exploration License Area 4.1(a)


52 Obligations of Exploration License 3.1(b), 5.2. 16


Holder


55 Urant of an Exploitation License 6


58 R'ghts of an Exploitation License Holder 3.2


33 Associated substances 3.2


56 Dotation of an Exploitation License 2.2(c)


57 Exploitation License Area 4.1(c)





___60________ 5.2, 6.9


59(5) & 66(4) Construction of Infrastructure 17


102 Processing of Minerals 15.1


103 I ransportation and storage of Products 15.1


obtained from Mineral Activities


104 Sale and export of Mineral products 15.1


Competencies for Mining Activities 23.1(g)


82 Payment of Surface Rent --------


7.1


27 Reporting 12.2(g)


----------


Inspection 13.2_______________________


51(1) and 58 Occupation of Land 17.1


________55(2) Expropriation for public use 15.7








1 For Minerals Law and Mining Regulations as in effect on the Effective Date.


909074811.12 91





Section of Minerals Description Section of Contract


Law


39 Obligations of the Mineral Rights Holder 15.7


regarding the Landowner


106 Handover of infrastructure 26.4(g)


115 Compliance with the Inspectorate 16.4


instructions


86(1)2 Health and Safety Plan 16.6. 22.5


108 Use of Explosives 16.6(d)





Prohibition of Forced Employment 14.1(e)


89 Environmental Protection during 5.1(c)


Exploration


89 Environmental Protection during 6.3


Exploitation


91 Financial Guarantee for environmental 19.3


protection and


Rehabilitation


88 Reporting of Incidents 19.4(a)


109 Reporting the Discovery of Historical 19.4(b)


and Cultural Relics


81 Payment of Taxes 10


81 Mineral Activities subject to Taxation 9, 10.12.2


and Custom Duties


Powers of Ministry of Finance 10.1(a), 10.5


Duration of Fixed Taxes 10.1(a)


83 Mineral Royalties 8


97 Transferability of Capital 11


98 State Guarantees 15.2


Compensation 15.3


93 Dispute Resolution Authorities 33


93 Submission of dispute to authorities 33


93 Submission of dispute to arbitration 33


93 Submission of dispute to courts 33


99 & 100 Transparency in Mineral Activities 14.2


112 Confidentiality 30


Complying with International 3.6


Conventions


















































909074811.12 92


 Part 2 - The Mining Regulations





Section of Mining Description Section of Contract


Regulations


8 Bidding Requirements Preamble


11 Bidding Documents Preamble


16(2) Evaluation of Bids Preamble


20 Mining Contracts General


21 Contract Registration and Publication 30.1


23 Issuance of Exploration Licence 2.3


26 Application for an Exploration Licence 6.1


27 Fee payment 5.2(m)


29 Issuance and Registration of Exploration 2.2(b). 2.3(a)


Licence


30 Obligation of the Exploration Licence 5.2


Holder


32 No Transfer or Assignment of 29


Exploration Licences


33 Relinquishment of Areas Covered by 4.2


Exploration Licence


34 Renewal of Exploration Licence 2.2(b)


35 issuance of Exploitation Licence 6.8


36 Maximum Area Allowed "Mining .Area"


37 Bid requirements for Exploitation 6.1


Licence


38 Application for an Exploitation Licence 2.3(b)


41 Issue and Registration of Exploitation 2.2(c). 2.3(b)


Licence


42 Responsibilities of Exploitation Licence 6.8


Holder


43 Transfer or Assignment of an 29.1(b)


Exploitation Licence


44 Relinquishment of an Exploitation 4.2


Licence area


45 Renewal of Exploitation Licence 2.2(c)


73 Obligation to Pay Mineral Royalties 8


74 Efficient Recovery of Mineral 8.5


Substances


75 Surface Rights Fees 7


76 Manner and Place of Payment of Surface 7


Rights Fees


78 Procedures for Withdrawal or 25


Termination


79 Effect of Withdrawal or Termination 25


86 ESP Documentation Requirements for 6.1


Exploration Licences and Authorisations


87 ESP Documentation Requirements for 6.3


Exploitation Licences and Authorisations


88 International Best Practice Obligation 19.X ? F


909074811.12 93 / /7 /

















Section of Mining Description Section of Contract


Regulations


89 Financial Assurance for Reclamation and 19.3


Environmental Remediation


90 Air Quality Control


91 Compensation for Damages from 20.3(a)


Mineral Activities


92 Evaluation of Claim lor Damages 20.3(a)


93 Verification 25


95 Violations of the Terms and Conditions 20.3(b)


of a Licence


96 Violation of Environmental Regulations 20.3(c)









































































































































909074811.12 94


 SCHEDULE 3





Part 1





FORM OF PERFORMANCE BOND - Exploration Phase


To: Ministry of Mines and Petroleum of the Government of the Islamic Republic of


Afghanistan (the "Beneficiary").


This performance bond (this "Bond") is made on [•] by [insert name of issuing Bank] a


company organised under die laws of [insert relevant Jurisdiction] whose registered office is


situated at [•] (the "Bank").


In this Bond "Mining Contract" means the mining contract relating to the Shaida Project,


dated [•]: between the Beneficiary and Silk Road Mining and Development (the "Mining


Contract").


Name and address of Beneficiary: [Ministry of Mines and Petroleum of the Government of


the Islamic Republic of Afghanistan].


The Bank has been informed that Silk Road Mining and Development, a company organised


under the laws of Afghanistan and duly licensed in Afghanistan (hereinafter called the


"Company") is entering into the Mining Contract following a successful bid in response to


the Beneficiary’s request for proposal ("RFP"). The conditions of the Mining Contract and


the RFP require the entering into the Mining Contract to be supported by a performance


bond. Any capitalised terms used in this Bond shall, unless defined in this Bond, have the


meaning ascribed to them in the Mining Contract.


The Bank hereby unconditionally and irrevocably undertakes to pay the Beneficiary (waiving


all rights of objection and defence save in the case of fraudulent demand) the amount as set


out in the Beneficiary's demand, upon receipt by the Bank of the Beneficiary's demand in


writing, substantially in the form set out in Schedule 1 (the "Demand"). Multiple Demands


may be issued under this Bond.


Any Demand must contain a signature of the Beneficiary's authorised representative. The


Bank agrees that the Bank will fulfil its obligations under this Bond without proof or


conditions and that receipt by the Bank of a Demand in accordance with this paragraph shall


be conclusive evidence of its liability to pay the Beneficiary the sum demanded provided


such sum, together with the amounts of any previous Demands, do not in the aggregate


exceed [*]2 or such lesser amount as the Beneficiary may notify to the Bank from time to


time.





Any Demand shall be in writing and either delivered by hand or sent by recorded post to the


Bank at [insert address], marked for the attention of [insert name]. The Demand will be


deemed to be received by tire Bank:





(a) if delivered by hand, on the date it is delivered;








" Amount referred to in Clause 16.10 of the Mining Contract.


909074811.12 95


(b) if sent by recorded post or internationally recognised courier, on the day it is received.


Any Demand must be received by the Bank at this office on or before the [•] ' (the "Expiry


Date").





Upon the Expiry Date this Bond shall expire and no later than 21 days from the Expiry Date


this Bond shall be returned to the Bank, provided always that this Bond shall remain in full


force and effect in respect of any Demand received up to and including the Expiry Date.


The Bank agrees that all sums payable under this Bond shall be paid to the Beneficiary in full


and shall be free of any present or future taxes, levies, duties, charges, fees or withholdings


and without any deduction, restriction, conditions, withholding, set-off or counterclaim or


cross-claim whatsoever.


The Bank confirms that this Bond shall not be impaired, reduced, discharged or affected by:


(a) any amendments, alterations or supplements to the Mining Contract or any


concession, release, waiver or other indulgence granted to the Company;


(b) any invalidity, illegality or unenforceability in or of the terms of the Mining Contract


or any other agreement or arrangement to which the Company is or may become a


party;


(c) any disability, incapacity, change in ownership or change in status of the Company;


(d) any bankniptcy. insolvency or other such proceedings or any change in the


constitution of the Company;


(e) any dispute between the Beneficiary and the Company or any compromise of a


dispute;


(f) any other security or bond taken, or granted or released by die Company and/or the


Beneficiary to the Bank or by any other person;


(g) any other act or omission which in the absence of this provision, might operate to


exonerate the Bank;


(h) any forbearance or delay on the part of the Beneficiary in asserting any of its rights


against the Company; or


(i) any breach of the Mining Contract by the Beneficiary.


and the Bank hereby waives any requirement for notice to be given to it of any such event.


No failure or delay by the Beneficiary in exercising any right or remedy shall operate as a


waiver and nor shall any single or partial exercise or waiver of any right or remedy preclude


the Beneficiary’s further exercise or the exercise of any other right or remedy.


This Bond shall be governed by and construed in accordance with the laws of the Islamic


Republic of Afghanistan ("Afghanistan") including international treaties mid bilateral


5 One year from the date of the Bond. / A 7


909074811.12 96


investment treaties to which Afghanistan is a party. Any dispute, controversy or claim arising


out of, under or in connection with this Bond shall be settled by arbitration in accordance


with the UNCITRAL Arbitration Rules as at present in force.


The original of this Bond is drafted in English. If this Bond is translated into any other


language, the English language text shall prevail.


IN WITNESS WHEREOF, the authorised representatives of the parties have indicated their


agreement to be firmly bound by these presents by having signed below:


Date:


For the Bank:


By:


Receipt Acknowledged


For the Beneficiary:


By:


















































909074811 .12 97


 Schedule 1





Form or Demand


Date of Demand:


Date of Bond:


Company: Silk Road Mining and Development


Bank:


During the Exploration Phase (a) the Company is in breach of Clause [•] of the Mining


Contract and/or an Exploration Licence has been withdrawn or terminated under the Minerals


Law, (b) as a result the Beneficiary has incurred a loss, and (c) the internal processes of the


Beneficiary have resulted in a determination that the amount of such loss is not less than the


amount of the payment demanded hereunder.


The Beneficiary hereby gives the Bank notice of payment due from the Bank to the


Beneficiary of a sum of US$ [•].


This Demand is signed by the person named below who is an authorised representative of the


Beneficiary and authorised to act on behalf of [Ministry of Mines and Petroleum of the


Government of the Islamic Republic of Afghanistan] as the Beneficiary under the Bond:


Capitalised terms used in this Demand have the meanings provided in the Bond.


For the Beneficiary


Signed:


Name:


Official Position: [To be signed only by the Minister or the Deputy Minister of the


Ministry of Mines and Petroleum]






































909074R11.12 98


 Parti





FORM OF PERFORMANCE BOND - Exploitation Phase


To: Ministry of Mines and Petroleum of the Government of the Islamic Republic of


Afghanistan (the "Beneficiary")


This performance bond (this "Bond") is made on [•] by [insert name of issuing Bank] a


company organised under the laws of [insert relevant jurisdiction] whose registered office is


situated at [•] (die "Bank").


hi this Bond "Mining Contract" means the mining contract relating to the Shaida Project,


dated [•], between the Beneficiary and Silk Road Mining and Development (the "Mining


Contract").


Name and address of Beneficiary: /Ministry of Mines and Petroleum of the Government of


the Islamic Republic of Afghanistan].


The Bank has been informed that Silk Road Mining and Development a company organised


under the laws of Afghanistan and duly licensed in Afghanistan (hereinafter called the


"Company") is entering into the Mining Contract following a successful bid in response to


the Beneficiary's request for proposal ("RFP"). The conditions of the Mining Contract and


the RFP require the entering into the Mining Contract to be supported by a performance


bond. Any capitalised terms used in this Bond shall, unless defined in this Bond, have the


meaning ascribed to them in the Mining Contract.


The Bank hereby unconditionally and irrevocably undertakes to pay the Beneficiary's


(waiving all rights of objection and defence save in the case of fraudulent demand) the


amount as set out in the Beneficiary's demand, upon receipt by the Bank of the Beneficiary's


demand in writing, substantially in the form set out in Schedule 1 (the "Demand"). Multiple


Demands may be issued under this Bond.


Any Demand must contain a signature of the Beneficiary's authorised representative. The


Bank agrees that the Bank will fulfil its obligations under this Bond without proof or


conditions and that receipt by the Bank of a Demand in accordance with this paragraph shall


be conclusive evidence of its liability to pay the Beneficiary the sum demanded provided


such sum. together with the amounts of any previous Demands, do not in the aggregate


exceed [*]4.


Any Demand shall be in writing and either delivered by hand or sent by recorded post to the


Bank at [insert address], marked for the attention of [insert name]. The Demand will be


deemed to be received by die Bank:


(a) if delivered by hand, on the date it is delivered;


(b) if sent by recorded post or internationally recognised courier, on the day it is received.














4 Amount referred to in Clause 16.10 of the Mining Contract.


909074811.12 1


Any Demand must be received by the Bank at this office on or before the [•]’ (the "Expiry


Date").


Upon the Expiry Date this Bond shall expire and no later than 21 days from the Expiry Date


this Bond shall be returned to the Bank, provided always that this Bond shall remain in full


force and effect in respect of any Demand received up to and including the Expiry Date.


The Bank agrees that all sums payable under this Bond shall be paid to the Beneficiary in full


and shall be free of any present or future taxes, levies, duties, charges, fees or withholdings


and without any deduction, restriction, conditions, withholding, set-off or counterclaim or


cross-claim whatsoever.


The Bank confirms that this Bond shall not be impaired, reduced, discharged or affected by:


(a) any amendments, alterations or supplements to the Mining Contract or any


concession, release, waiver or other indulgence granted to the Company; or


(b) any invalidity, illegality or unenforceability in or of the terms of the Mining Contract


or any other agreement or arrangement to which the Company is or may become a


party; or


(c) any disability, incapacity, change in ownership or change in status of the Company; or


(d) any bankruptcy, insolvency or other such proceedings or any change in the


constitution of the Company; or


(e) any dispute between the Beneficiary and the Company or any compromise of a


dispute; or


(f) any other security or bond taken, or granted or released by the Company and/or die


Beneficiary to the Bank or by any other person;


(g) any other act or omission which in the absence of this provision, might operate to


exonerate the Bank;


(h) any forbearance or delay on the part of the Beneficiary in asserting any of its rights


against the Company; or


(i) any breach of the Mining Contract by the Beneficiary.


and the Bank hereby waives any requirement for notice to be given to it of any such event.


No failure or delay by the Beneficiary in exercising any right or remedy shall operate as a


waiver and nor shall any single or partial exercise or waiver of any right or remedy preclude


the Beneficiary's further exercise or the exercise of any other right or remedy.


This Bond shall be governed by and construed in accordance with the laws of the Islamic


Republic of Afghanistan ("Afghanistan") including international treaties and bilateral


investment treaties to which Afghanistan is a party. Any dispute, controversy or claim arising





5 One year from the date of the Bond.


909074K 11.12 2


out of, under or in connection with this Bond shall be settled by arbitration in accordance


with the UNCITRAL Arbitration Rules as at present in force.


The original of this Bond is drafted in English. If this Bond is translated into any other


language, the English language text shall prevail.


IN WITNESS WHEREOF, the authorised representatives of the parties have indicated their


agreement to be firmly bound by these presents by having signed below:











Date:


For the Bank:











By:


Receipt Acknowledged


For the Beneficiary:


By:















































909074811-12 3


 Schedule 1





Form of Demand


Date of Demand:


Date of Bond:


Company: Silk Road Mining and Development


Bank:


During the Exploitation Phase (a) the Company is in breach of Clause [•] of the Mining


Contract and/or an Exploitation Licence has been withdrawn or terminated under the


Minerals Law, (b) as a result the Beneficiary has suffered a loss, and (c) the internal


processes of the Beneficiary have resulted in a determination that the amount of such loss is


not less than the amount of the payment demanded hereunder.


The Beneficiary hereby gives the Bank notice of payment due from the Bank to the


Beneficiary of a sum of USS [Insert Bond Amount}


This Demand is signed by the person named below who is an authorised representative of the


Beneficiary and authorised to act on behalf of [Ministry of Mines and Petroleum of the


Government of the Islamic Republic of Afghanistan] as the Beneficiary under the Bond:


Capitalised terms used in this Demand have the meanings provided in the Bond.


For the Beneficiary


Signed:


Name:


Official Position: [To be signed only by the Minister or the Deputy Minister of the


Ministry of Mines and Petroleum |









































909074811.12 4


 SCHEDULE 4


SPECIFIC PROPOSAL COMMITMENTS





1. EXPLORATION COMMITMENTS


The Company shall commit to the following programmes and expenditure as


specified in the Proposal:


1.1 Subject to surrender and termination, a three year exploration programme consisting


of:


(a) a minimum exploration expenditure of:


(i) US$4,200,000 in Year 1 (including costs planned for Year 1 that are


incurred prior to the beginning of Year I);


(ii) US$5,600,000 in Year 2; and


(iii) US$10,500,000 in Year 3; and


(b) a total committed expenditure over a three year period of US$20,300,000


1.2 This exploration expenditure will include the following tecluiical programmes:


(a) a surface sampling geochemical programme;


(b) ground geophysical programmes;


(c) an exploration drilling programme:


(d) an Environmental Mitigation Plan;


(e) an exploration camp with security; and


(f) exploration access roads.


1.3 This exploration expenditure will include the following social infrastructure


programmes:


(a) the Company will work to ensure, to lire extent possible, that all infrastructure


investments will be dual use for both the project and the local community;


(b) construction of a school in one of the villages south of Herat closest to the


licence site, or construction of other social infrastructure to be agreed with the


local community;


(c) co-operation with various resource corridor initiatives that may be under way


in the areas close to Shaida;


(d) alignment of the project’s requirements for energy distribution with that of the


local villages;


909074811.12 5 /A


 (e) the total value for these infrastructure investments shall be not less than


U.S.$200,000;


(f) preferred employment of local Afghans as specified under the heading


“Commitment to employ and train Afghans" in the Proposal; and


(g) technical training of local Afghan geologists as specified under the heading


“Commitment to employ and train Afghans” in the Proposal.








































































































909074811.12 6


 SCHEDULE 5








BENEFICIAL OWNERSHIP AND MANAGEMENT











Company shareholders Samuel Dean Sidiqi


Christopher Logan


Company's and each shareholder's Affiliates and


relationship to the Company or the shareholder


Directors and senior officers of tire Company, each Samuel Dean Sidiqi - Director


shareholder and each person deemed to Control the Christopher Logan - Director


Company


Each ultimate beneficial owner of 5% or more of the Samuel Dean Sidiqi - 60% legal and beneficial


voting rights empowered to control (he management of ownership


the Company or rights to share in the profits of the Christopher Logan - 40% legal and beneficial


Company (full details of the chain through which the


rights are exercised). ownership








































































































909074811.12


EXECUTION of this Mining Contract:


The MoMP





SIGNED by NARGIS NEMAN, duly ()


authorised for and on behalf of the \


Ministry of M ines and Petroleum of the


Government of the Islamic Republic of


Afghanistan:





Address: Ministry of Mines and


Petroleum. Kabul-


Afghanistan


Facsimile no: Not Applicable


Electronic mail address: LSMC@momp.2ov.af


For the attention of: The Ministry of Mines and


Petroleum, GolRA





The Company


SIGNED by SAMUEL DEAN SID1QI, )





Director, duly authorised for and on behalf )


of Silk Road Mining:





Address: Block # 403, Noman


Building, Beside Awesta


Hospital, Kolola Pushta,


Kabul. Afghanistan


Facsimile no: Not Applicable


Electronic mail address: sam@silkroad-mining.com


For the attention of: Samuel Dean Sidiqi



































909074811.12 2