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Aynak Mining Contract - April 8, 2008 (Initialing)


TABLE OF CONTENTS
PAGE



PART I: GENERAL RIGHTS AND OBLIGATIONS......................................................6
1 Definitions............................................................ 6
2 MCC’s General Rights with Respect to the Aynak Copper Deposit..................................7
3 MCC’s General Obligations with Respect to the Aynak Copper Deposit..........................8
4 Project Schedule..................................................................................................................9
5 Project Financing................................................................................................................9
6 Exploitation of Other Minerals or Other Natural Resources..............................................9
7 Third-Party Agreements....................................................................................................10
8 Government Right of Access............................................................................................10
9 Use of Subcontractors.......................................................................................................10
10 Cooperation of the Parties.................................................................................................10
PART H: MCC’S TECHNICAL COMMITMENTS AND OBLIGATIONS.................11
11 Commencement of Activities...........................................................................................11
12 Bankable Feasibility Study and Mine Development Plan................................................11
13 Construction Period..........................................................................................................12
14 Commercial Production Period.........................................................................................12
15 Environmental Protection.................................................................................................13
PART HI: MCC’S FINANCIAL COMMITMENTS AND OBLIGATIONS...................14
16 Premium............................................................................................................................14
17 Financial Assurance..........................................................................................................15
18 Minimum Expenditures....................................................................................................16
19 Relinquishment.................................................................................................................16
20 Tax Obligations.................................................................................................................16
21 Royalties...........................................................................................................................18
PART IV: MCC’S SOCIAL AND SUSTAINABLE DEVELOPMENT
COMMITMENTS AND OBLIGATIONS................................................................................20
22 Local and Regional Benefits.............................................................................................20
23 Resettlement and Compensation Plan...............................................................................21
24 Housing.............................................................................................................................21
25 Medical Facilities..............................................................................................................21
26 Schools..............................................................................................................................21
27 Entertainment and Shopping.............................................................................................22
28 Protection and Respect of Religious Belief......................................................................22
29 Government’s and Third Parties’ Right to Use Company’s Facilities.............................22
PART V: COMMITMENTS AND OBLIGATIONS CONCERNING PROJECT
INFRASTRUCTURE, FACILITIES AND MANAGEMENT................................................23
30 Railway.............................................................................................................................23
31 Power Supply....................................................................................................................23
32 Water Supply....................................................................................................................24
33 Phosphate, Limestone and Quartz (Silica) Supply...........................................................24

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34 Project Facilities................................................................................................................25


35 Control of Operations.......................................................................................................26


36 Project Security.................................................................................................................27


PART Vis OCCUPATION OF SURFACE AND OTHER RIGHTS................................27


37 General..............................................................................................................................27


PART VH: LOCAL PURCHASING: PROMOTION OF NATIONAL INTERESTS ...29


38 Services and Supplies.......................................................................................................29


PART VIII: EMPLOYMENT AND TRAINING OF AFGHAN NATIONALS................29


39 Employment of Afghan Nationals....................................................................................29


40 Training.............................................................................................................................30


41 Non-Afghan Personnel......................................................................................................30


42 Employee Accident Compensation...................................................................................31


PART IX: IMPORTS AND EXPORTS...............................................................................31


43 Imports..............................................................................................................................31


44 Exports..............................................................................................................................33


45 Cooperation.......................................................................................................................33


PART X: SUSPENSION OF OPERATIONS...................................................................23


46 General..............................................................................................................................33


PART XI: REVOCATION...................................................................................................24


47 Revocation for Cause........................................................................................................34


48 Notification and Remedy..................................................................................................35


49 Penalties............................................................................................................................36


PART XH: TERMINATION..................................................................................................37


50 Transfer of Property and Compensation at Termination..................................................37


51 Continuation of Rights and Duties....................................................................................38


52 Infrastructure.....................................................................................................................38


PART XIH: FORCE MAJEURE.............................................................................................38


53 General..............................................................................................................................38


54 Notice................................................................................................................................38


55 Disputes.............................................................................................................................39


PART XIV: SETTLEMENT OF DISPUTES.........................................................................39


56 Method of Dispute-Settlement..........................................................................................39


PART XV: REVIEW OF CONTRACT TERMS.................................................................40


57 Fiscal Provisions...............................................................................................................40


5 8 General Review.................................................................................................................41


PART XVI: DOMICILE; SERVICE OF PROCESS............................................................41


59 General..............................................................................................................................41


60 Notices..............................................................................................................................41


PART XVH: ASSIGNMENT.....................................................................................................41


Aynak Mining Contract - April 8, 2008 (Initialing)





61 General..............................................................................................................................41


PART XVIII: AGREEMENT PERIOD.....................................................................................43


62 General..............................................................................................................................43


PART XEX: RIGHT OF RENEWAL OF MINING CONTRACT.......................................43


63 General..............................................................................................................................43


PART XX: AMENDMENT....................................................................................................43


64 General..............................................................................................................................43


PART XXI: COMPLETE AGREEMENT.............................................................................44


65 General..............................................................................................................................44


APPENDICES





APPENDIX 1: LICENSE AREA............................................................................................45


APPENDIX 2: PROJECT SCHEDULE..................................................................................47


APPENDIX 3: REPORTS TO BE SUBMITTED...................................................................49


APPENDIX 4: DEVELOPMENT PLAN AND BUDGET.....................................................53


APPENDIX 5: ROYALTY DEFINITION..............................................................................54


APPENDIX 6: MCC PROPOSAL..........................................................................................56


APPENDIX 7: RAILWAY MEMORANDUM OF AGREEMENT.......................................57


APPENDIX 8: POWER SUPPLY MEMORANDUM OF AGREEMENT............................60


APPENDIX 9: WATER SUPPLY MEMORANDUM OF AGREEMENT............................63


APPENDIX 10: SECURITY MEMORANDUM OF AGREEMENT.......................................66


APPENDIX 11: PHOSPHATE, LIMESTONE AND QUARTZ (SILICA)


MEMORANDUM OF AGREEMENT...........................................................69






































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MINING CONTRACT FOR THE AYNAK COPPER DEPOSIT


Between





The Government of Afghanistan


And





MCC-Jiangxi Copper Consortium (“MCC”)





This Mining Contract is made this_day of_, 2008





between the Government of Afghanistan and MCC (the “Parties”).











Whereas





(A) MCC was selected as the preferred bidder, through a transparent, competitive


tender process conducted in accordance with international best practice, to


negotiate the legal rights and authorizations to undertake exploration,


exploitation, processing, smelting and sale of the Aynak Copper Deposit, as


more particularly described in this Mining Contract;


(B) The Ministry of Mines and MCC have agreed to enter into a Mining Contract


in accordance with the requirements of the Aynak public tender and the laws


of Afghanistan, including the Minerals Law, in order to effectuate and enforce


the promises and commitments made by MCC in its bid;


(C) The Mining Contract has been prepared by the Ministry of Mines and


submitted for Inter-Ministerial Committee endorsement and final approval by


the Council of Ministers pursuant to Article 7 of the Afghanistan Minerals


Law;


(D) The Ministry of Mines wishes to maximize the value of the Aynak Copper


Deposit to Afghanistan while promoting sustainable development and


protecting important environmental, social and economic aspects of Afghan


society. To that end, the Ministry of Mines requires that MCC shall start


commercial production within 60 months following the effective date of the


Mining Contract and that processing of ores proceed to final copper product


within Afghanistan; and





(E) MCC understands and acknowledges the importance of the Aynak Copper


Deposit to the development of Afghanistan’s economy, and agrees to fully





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PART L GENERAL RIGHTS AND OBLIGATIONS





1 Definitions








In this Mining Contract the following expressions (except where the context


otherwise requires) shall have the following meanings:


(a) Agreement Period: The term as set forth in Part XVII of this Mining Contract and


any extensions or other modifications to the term agreed to by the Parties.


(b) Associated Minerals: Minerals which geologically occur together with, are


inseparable from and must necessarily be mined and economically processed


together with the principal mineral. For the purposes of this Mining Contract,


Associated Minerals shall include, but not be limited to lead, zinc, gold, silver and


cobalt. In the event of disagreement between MCC and the Ministry of Mines as


to what constitutes an Associated Mineral, the Ministry of Mine’s judgment shall


prevail.


(c) Aynak Copper Deposit: The economically recoverable copper mineralization


located in the Aynak area of Logar province for which the Mineral Right will be


granted.


(d) Bankable Feasibility Study: A feasibility study prepared in sufficient depth and


detail so that the study would be normally acceptable to international lending


institutions.


(e) Commence Commercial Production: the first day, after the completion of testing,


on which product that is suitable for sale is produced.


(f) Effective Date of the Mining Contract: the date two months from the date on


which the Parties sign the Mining Contract and the Parties obtain final approval


from the National Development and Reform Commission, in the case of MCC and


the Council of Ministers, in the case of the Ministry of Mines.


(g) Environment: Physical factors of the surroundings of human beings, including


land, water, atmosphere, climate, sound, odors, tastes, artifacts, and biological


factors of animals and plants and the social factors of aesthetics.


(h) Exploitation: As defined in Article 3(13) of the Minerals Law, any activity by


which, from an identified deposit, exploration, pre-production development and


extraction of mineral substances takes place by means of open (surface) and/or


underground works for processing, use or sale.


(i) Exploration: As defined in Article 3(15) of the Minerals Law, any activity carried


out to discover, demarcate, or evaluate the quality and quantity or exploitation


potential of mineral substances.


(j) License Area: That land area described in Appendix 1 to this Mining Contract.





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(k) MCC-Jiangxi Copper Consortium (“MCC”): The entity comprised of China


Metallurgical Group Corporation and Jiangxi Copper Company Limited that was


selected as the Preferred Bidder during the Aynak Tender Process to negotiate and


conclude the Mining Contract with the Ministry of Mines and which will be


bound by the terms of the Mining Contract, jointly and severally, together with


any successor entities.





(l) Mineral Right: The rights to explore and exploit minerals granted by the


Afghanistan Minerals Law.


(m) Mining: All recovery activities aimed at the economic exploitation of a certain


ore deposit.


(n) Ministry of Mines: The Ministry of Mines of the Government of Afghanistan or


any successor entity, acting on behalf of the Government of Afghanistan with


respect to the Mining Contract and the Project.


(o) Month: All references to months in this Mining Contract shall be based on the


solar calendar specified in Article 18 of Afghanistan’s Constitution.


(p) Pollution: Any direct or indirect alteration of the physical, thermal, chemical,


biological, or radioactive properties of any part of the Environment by


discharging, emitting, or depositing wastes so as materially to affect any


beneficial use adversely, or to cause a condition which is hazardous or potentially


hazardous to public health, safety or welfare, or to animals, birds, wildlife, fish or


aquatic life, or to plants. The term “pollute” shall have a corresponding meaning.


(q) Processing: As defined in Article 3(38) of the Mnerals Law, ore dressing or other


metallurgical processes applied to ore or other mineral substances which results in


obtaining products for sale, including, without limitation, crushing, concentration,


beneficiation, smelting, washing and refining.





(r) Smelting: A metallurgical thermal processing operation in which the metal is


separated from non-metallic materials or other undesired metals with which it is


associated.


(s) The Project: MCC’s total operations under this Mining Contract.





(t) The Project Facilities: Facilities defined in Part V of this Mining Contract.


(u) Waste: Any matter, whether liquid, solid, gaseous or radioactive, which is


discharged, emitted or deposited in the Environment in such volume, consistency,


or manner as to cause an alteration of the Environment.


MCC’s General Rights with Respect to the Aynak Copper Deposit





(a) In consideration of MCC’s performance of the various commitments and


obligations specified in this Mining Contract, including any ancillary agreements





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appended to this Mining Contract, the Ministry of Mines, hereby grants to MCC


and MCC hereby accepts the exclusive Mineral Rights, as defined under Article


15 of the Minerals Law, to conduct all of the operations hereinafter described, for


the term set forth in Part XVIII, in the License Area and in such other areas as


may be approved by the Ministry of Mines.





(b) MCC shall have the exclusive right and shall receive the necessary licenses and


authorizations required under the Minerals Law to (i) search for and mine copper


and Associated Minerals within the License Area, (ii) concentrate, smelt, refine or


otherwise process such minerals within the License Area or elsewhere in


Afghanistan as specifically approved by the Ministry of Mines, and (iii) subject to


limitations specified in this Mining Contract and in the Minerals Law, to transport


or sell or otherwise dispose of such materials abroad.


(c) MCC shall be entitled to the protections provided by Article 94 of the Minerals


Law with respect to expropriation, nationalization, deprivation and confiscation of


any Mineral Substances produced pursuant to this Mining Contract or any assets


owned and/or used by MCC in conducting Mineral Activities pursuant to this


Mining Contract.


MCC’s General Obligations with Respect to the Aynak Copper Deposit





(a) MCC hereby accepts the obligations to conduct its operations and activities in





accordance with the terms of this Mining Contract and the applicable laws and


regulations of Afghanistan. The Parties acknowledge and agree that MCC shall


have a reasonable time period in which to modify its operations and activities to


incorporate legally required technological advancements or to achieve compliance


with new laws or regulations that may apply to the Project in the future. MCC


acknowledges and agrees that it shall conduct all such operations and activities in


a sound manner in accordance with best international mining engineering


standards and practices and in accordance with modem and accepted scientific


and technical principles applicable to the mining and processing of copper ore and


to beneficiating, smelting, and manufacturing operations. All operations and


activities under this Mining Contract shall be conducted in accordance with


environmental protection and reclamation plans approved by the Ministry of


Mines prior to the commencement of operations so as to avoid waste or loss of


natural resources, to protect natural resources against unnecessary damage, and to


prevent pollution and contamination of the environment. MCC shall take all


appropriate risk management measures to prevent damage to the rights and


property of the Government of Afghanistan or third parties. In the event of


negligence or carelessness on the part of MCC or its agents or of any


subcontractor carrying on operations or activities for MCC under this Mining


Contract, MCC will be liable for such injuries in accordance with the applicable


laws of Afghanistan.


(b) MCC shall install and utilize such internationally recognized modem safety


devices and shall observe such internationally recognized modem safety


precautions and risk management measures as are provided and observed








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internationally under conditions and operations comparable to those undertaken


by MCC under this Mining Contract.


(c) MCC shall observe internationally recognized measures, including risk





management measures, for the protection of the general health and safety of its


employees and of all other persons having legal access to the area covered by this


Mining Contract. MCC shall comply with such instructions as may from time to


time be given in writing by the Mine Inspectorate.





(d) MCC shall pay all applicable fees, rents, penalties and other non-tax charges to


the Ministry of Mines as set forth in this Mining Contract.





(e) Insofar as such obligations are not otherwise covered by the terms of this Mining


Contract, MCC shall comply with the terms of the Minerals Law and all other


applicable laws and regulations, from time to time in effect in Afghanistan.


4 Project Schedule








MCC shall commence activities in accordance with the schedule and commitments set


forth in Appendices II and VI of this Mining Contract. The Ministry of Mines agrees to grant


to MCC a two month preparation period immediately prior to the six month period during


which MCC must commence pre-exploitation activities. As a result, the effective date of this


Mining Contract shall be the date two months from the date on which the Mining Contract is


signed by the Parties, following approval by the Parties’ respective governments.


5 Project Financing








MCC shall have sole responsibility for financing the Project and determining the


terms on which said financing shall be obtained, including the extent to which the financing


shall be accomplished through issuance of shares of, or borrowing by MCC. MCC may, as


authorized by Article 23 of the Minerals Law, pledge such rights, licenses and authorizations


obtained in accordance with this Mining Contract, to secure financing for the Project.





6 Exploitation of Other Minerals or Other Natural Resources








In the event that any other mineral or natural resources, other than Associated


Minerals, are discovered in the License Area and MCC wishes to mine, develop, or otherwise


exploit such mineral or other natural resources, MCC shall report such discovery to the


Ministry of Mines and request an amendment to this Mining Contract or, if required by the


Ministry of Mines, submit an application, in accordance with the applicable requirements of


the Minerals Law and the Mining Regulations, to develop such mineral or other natural


resource. Provided, however, that if, after six months from the date of such amendment


request or application, the Ministry of Mines and MCC fail to reach an agreement with regard


to the exploration and exploitation of such mineral or other natural resource^ the Ministry of


Mines shall have the right to negotiate and conclude an agreement with a third party.











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7 Third-Party Agreements





In the event that the Ministry of Mines authorizes a third party to explore and exploit


some mineral or other natural resource other than those which are the subject of this Mining


Contract within the License Area, but excluding the exploitation area, the Ministry of Mines


will exercise all reasonable precautions to minimize the impact of such third-party activities


on the activities and operations of MCC under this Mining Contract. The Ministry of Mines


will also require that such third party or parties make fair and reasonable compensation to


MCC for any loss of property rights sustained as a result of the establishment of additional


operations and for any unamortized development costs to the extent that such development


costs can be reasonably related to the discovery of such other mineral or other resources.


8 Government Right of Access


The Ministry of Mines reserves the right to access the License Area for the purpose of


any authorized investigation allowed by the laws of Afghanistan, provided that if damage


results to MCC’s property from such investigation, the Ministry of Mines agrees to provide


fair and reasonable compensation to MCC for such damage, except in cases where such


damage is caused by an act of MCC.


9 Use of Subcontractors








Without in any way detracting from MCC’s responsibilities and obligations under this


Mining Contract, MCC may engage subcontractors for the execution of such phases of its


operations as MCC deems appropriate. MCC will have full responsibility and assume all


risks related to the activities of its subcontractors in accordance with the terms and conditions


of this Mining Contract. The records of such subcontractors shall be made available to


Ministry of Mines’ inspectors as provided in Appendix 3.


10 Cooperation of the Parties





The Ministry of Mines will cooperate with MCC to the extent permitted under the





laws of Afghanistan and will take such actions as may be desirable to achieve the mutual


objectives of this Mining Contract. ?





(a) The Parties of this Mining Contract agree that they will at all times use their best


efforts to carry out the provisions of this Mining Contract to the end that the


Project may at all times be conducted efficiently and for the optimum benefit of


the Parties.


(b) MCC agrees to plan and conduct all operations under this Mining Contract in


accordance with the standards and requirements imposed elsewhere in this Mining


Contract for the sound and progressive development of the mining industry in


Afghanistan, to give at all times full consideration to the aspirations and welfare


of the people of Afghanistan and to the development of Afghanistan, and to


cooperate in promoting the growth and development of Afghanistan’s economic





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and social structure, and pursuant to the provisions of this Agreement, at all times


to comply with the laws and regulations of Afghanistan.


(c) At any time during the term of this Mining Contract, upon request by either party,


the Ministry of Mines and MCC may consult with each other to determine


whether in the light of all relevant circumstances the financial or other provisions


of this Mining Contract need revision in order to ensure that the Mining Contract


operates equitably and without major detriment to the interests of either Party.


Such circumstances shall include the conditions under which the mineral


production is carried out, including, but not limited to, the size, location and


overburden of mineral deposits, the quality of the mineral, the market conditions


for the mineral, the prevailing purchasing power of money and the terms and


conditions prevailing for comparable minerals ventures. In reaching agreement on


any revision of this Mining Contract pursuant to this paragraph, the Parties shall


ensure that no revision of this Mining Contract shall prejudice MCC’s ability to


retain financial credibility abroad and to raise finance by borrowing


internationally in a manner and on terms normal to the mining industry. Such


consultation shall be carried out in a spirit of cooperation with due regard to the


intent and objectives of the respective Parties. Both Parties desire to realize the


success of the Project for the benefit of the people of Afghanistan, the


development of the nation, and economic and social growth and development.


PART U: MCC’S TECHNICAL COMMITMENTS AND OBLIGATIONS





MCC shall perform, undertake or otherwise comply with the following requirements:





11 Commencement of Activities








The Parties acknowledge and agree that upon the effective date of this Mining


Contract, MCC will commence pre-exploitation activities related to the Aynak Copper


Deposit including, but not limited to, additional prospecting, drilling, sampling, as well as


activities related to the development of a Bankable Feasibility Study and Mine Development


Plan for the Aynak Copper Deposit. MCC’s commitments and obligations related to pre-


exploitation activities are more fully specified in Appendix 6 of this Mining Contract and are


specifically adopted and incorporated by reference into Part II of this Mining Contract as an


enforceable part of this Mining Contract. The commencement and performance of such


activities shall occur according to a schedule proposed by MCC and approved by the MoM


(the “Project Schedule”). The Project Schedule shall be incorporated into this Mining


Contract and be fully enforceable under this Mining Contract. MCC acknowledges and


agrees that it shall commence these activities as soon as economically practicable, but no


later than six (6) months, following the effective date of this Mining Contract.


12 Bankable Feasibility Study and Mine Development Plan


The Parties acknowledge and agree that MCC shall submit it’s Bankable Feasibility


Study for the Aynak Copper Deposit to the Ministry of Mines for review no later than three


(3) months following the completion of its pre-exploitation activities or within sixteen (16)


months of the effective date of this Mining Contract, whichever is earlier. MCC’s





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commitments and obligations concerning the preparation of a Bankable Feasibility Study for


the Aynak Copper Deposit are more fully specified in Appendix 6 of this Mining Contract


and are specifically adopted and incorporated by reference into Part II of this Mining


Contract as an enforceable part of this Mining Contract. The Project Schedule shall include


deadlines for the preparation of the Bankable Feasibility Study. Within one (1) month of its


completion of the Bankable Feasibility Study, MCC shall submit its Mine Development Plan


to the Ministry of Mines for review and approval. The Ministry of Mines shall use its best


efforts to complete its review of the Mine Development Plan within two (2) months of receipt


from MCC.


13 Construction Period








The Parties acknowledge and agree that MCC shall commence construction of Project


facilities and structures in accordance with the approved Project Schedule. Construction shall


be completed within sixty (60) months from the effective date of this Mining Contract.


MCC’s commitments and obligations related to construction of Project facilities and


structures are more fully specified in Appendix 6 of this Mining Contract and are specifically


adopted and incorporated by reference into Part II of this Mining Contract as an enforceable


part of this Mining Contract. The Parties acknowledge and agree that delays which occur


during the construction period shall be subject to the following conditions, if the delays are


not subject to the force majeure provisions of Part XIII of this Mining Contract. The


construction period shall be extended for any delay in the construction period which is not


caused by the fault of MCC. The construction period shall not be extended for any delay


which is caused by the fault of MCC, its subcontractors or any entities affiliated with MCC.


MCC shall promptly notify the Ministry of Mines in writing of any event which MCC


believes will delay the construction period. The Ministry of Mines shall reply in writing


within two weeks from the date of receipt of MCC’s notice. The Parties shall agree as to the


amount of time necessary to address the delay.


14 Commercial Production Period








The Parties acknowledge and agree that MCC shall commence commercial


production no later than sixty (60) months from the effective date of this Mining Contract.


MCC’s commitments and obligations related to operations and commercial production are


more fully specified in Appendix 6 of this Mining Contract and are specifically adopted and


incorporated by reference into Part II of this Mining Contract as an enforceable part of this


Mining Contract,









































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15 Environmental Protection








MCC’s commitments and obligations with respect to environmental protection are


more fully specified in Appendix 6 of this Mining Contract and are specifically adopted and


incorporated by reference into Part II of this Mining Contract as an enforceable part of this


Mining Contract. MCC has made broad commitments to the Ministry of Mines concerning


environmental protection including, without limitation, its commitment to comply with the


applicable environmental laws and regulations of Afghanistan, Afghanistan’s environmental


and social protection guidelines and policies, all World Bank Environmental and Social


Safeguard Policies, the Equator Principles and the Voluntary Principles on Security and


Human Rights. In the event of a conflict between the above referenced laws, regulations,


guidelines and policies, the Parties agree to adhere to the strictest applicable standard in order


to protect Afghanistan’s environment and people. In light of these commitments, the Parties


acknowledge and agree as follows:


(a) MCC shall manage its activities in a technically, financially, socially, culturally


and environmentally responsible manner to achieve the environmental protection


and sustainable development objectives and responsibilities required by this


Mining Contract, the laws of Afghanistan and any applicable international


conventions to which Afghanistan is or may become a signatory, including


without limitation the Kyoto Protocols.


(b) MCC shall prepare an environmental and social impact assessment in accordance


with the requirements of the Minerals Law, the Environment Law and the above


referenced environmental and social protection guidelines, principles and policies.


MCC shall, at a minimum, undertake the environmental and social impact


assessment program specified in Appendix 6 of this Mining Contract which is


specifically adopted and incorporated by reference into Part II of this Mining


Contract as an enforceable part of this Mining Contract. MCC shall submit its


environmental and social impact assessment program to the Ministry of Mines for


review and approval prior to commencing construction of project facilities and


structures. MCC acknowledges and agrees that the Ministry of Mines may require


additional assessment activities as a condition of approval.


(c) MCC shall prepare an environmental management plan that presents a detailed,


technically and scientifically sound approach to the management, mitigation or


elimination of Project impacts and risks to the environment and local residents.


At a minimum, MCC shall undertake the environmental management plan,


including all of the sub-plans identified by MCC, specified in Appendix 6 of this


Mining Contract which is specifically adopted and incorporated by reference into


Part II of this Mining Contract as an enforceable part of this Mining Contract.


MCC shall submit its environmental management plan to the Ministry of Mines


for review and approval prior to commencing mining operations or commercial


production. MCC acknowledges and agrees that the Ministry of Mines may


require additional or alternative environmental management provisions, including


ISO14001, as a condition of approval.


(d) MCC shall comply with the standards regulating the discharge or emission of


pollutants into the environment specified in Appendix 6 of this Mining Contract





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which are specifically adopted and incorporated by reference into Part II of this


Mining Contract as an enforceable part of this Mining Contract. MCC


acknowledges and agrees that it shall comply with additional or alternative


standards that may be required in the future by the Ministry of Mines in


connection with the enactment of new laws or the promulgation of new


regulations by the Government of Afghanistan. MCC further acknowledges and


agrees that it shall be subject to fines, penalties and fees in the event that MCC


breaches the terms of this Mining Contract, including without limitation,


emissions and discharge standards which MCC is required to comply with


pursuant to this Mining Contract.


(e) MCC shall not dispose of any overburden, waste rock, tailings, or waste created as





a result of its operations under this Mining Contract in an area or in a manner not


previously approved by the Ministry of Mines. MCC shall, when any overburden


dump or tailings impoundment established under this Mining Contract, ceases to


be utilized for such purpose, ensure that such structures are reclaimed in


accordance with the requirements of applicable laws and regulations and MCC’s


approved reclamation plan.


(f) MCC shall provide fair compensation, as determined by a mutually agreeable





third party, for any loss suffered by any local inhabitant resulting from any


damage done (whether to land, anything on land, water, or otherwise) or any


interference with any right to use land or water caused by MCC’s disposal of any


overburden removed in the course of, or tailings produced as a result of, its


operations under this Mining Contract.





(g) The Parties acknowledge and agree that MCC shall be responsible for the


preparation and submission of a final mine closure plan to the Ministry of Mines


for approval. At a minimum, the final mine closure plan should identify the


measures and financial requirements necessary to decommission the mine,


complete reclamation and rehabilitation and establish agreed upon post-mining


land uses.


PART ni: MCC’S FINANCIAL COMMITMENTS AND OBLIGATIONS





MCC shall perform, undertake or otherwise comply with the following requirements:


16 Premium











MCC acknowledges and agrees to pay the Ministry of Mines the amount of eight


hundred and eight million dollars (“USD 808,000,000.00”) for the rights specified in Section


2 of this Mining Contract (the “Premium”). The Parties agree that the Premium should be


paid to the Ministry of Mines in connection with certain milestones identified in the Project


Schedule specified in Section 4 of this Mining Contract. Failure by MCC to make scheduled


premium payments on time shall be subject to the non-performance provisions specified in


this Mining Contract. Within ten days of the effective date of the Mining Contract, MCC


shall pay to the Ministry of Mines the amount of eighty million, eight hundred thousand


dollars (“USD 80,800,000.00), which shall constitute ten percent (10%) of MCC’s premium


payment obligation. Immediately upon approval of the feasibility study, MCC shall pay to





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Aynak Mining Contract - April 8, 2008 (Initialing)





the Ministry of Mines the amount of one hundred sixty one million, six hundred thousand


dollars (“USD 161,600,000.00”), which shall constitute twenty percent (20%) of MCC’s


premium payment obligation. Immediately upon commencement of commercial production,


MCC shall pay to the Ministry of Mines the amount of five hundred-sixty five million, six


hundred thousand dollars (“USD 565,600,000”) which shall constitute the remaining seventy


percent (70%) of MCC’s premium payment obligation.


17 Financial Assurance








(a) In accordance with the Project Schedule developed and approved pursuant to


Section 4 of this Mining Contract, MCC shall submit to the Ministry of Mines as


security for performance of its commitments and obligations under this Mining


Contract an irrevocable bank guarantee in the amount of sixteen million, one


hundred sixty thousand dollars (“USD $16,160,000.00”) within 60 days of the


effective date of this Mining Contract. This amount is equivalent to two percent


(2%) of MCC’s total premium payment. This security deposit shall be released at


the commencement of commercial production. In the event that, during the time


period from the effective date of the Mining Contract to the commencement of


commercial production, MCC defaults in the making of minimum expenditure or


in undertaking working obligations or prematurely terminates its operations


without cause, or fails to make payments required under this Mining Contract to


the Ministry of Mines, or otherwise defaults in its obligations, all or part of such


security deposit shall be forfeited to the Ministry of Mines. Nothing in this


section shall limit the ability of the Ministry of Mines to invoke the sanctions or


remedies specified in this Mining Contract.


(b) In accordance with the Mine Development Plan and the reclamation and closure





requirements of the Environmental Management Plan developed and approved in


accordance with Section 15 of this Mining Contract, MCC shall submit to the


Ministry of Mines financial assurance sufficient to fund the reclamation and


closure requirements applicable to the Project. The amount of such financial


assurance shall be determined by the Ministry of Mines following review of


MCC’s reclamation and closure plan. MCC shall establish an Aynak Mine


Closure Fund or other appropriate financial assurance with the Ministry of Mines


within sixty (60) days of the Ministry of Mines’ determination of the amount of


financial assurance. MCC’s financial assurance shall be in a form which is issued


and guaranteed by an institution acceptable to the Ministry of Mines and


immediately available to the Ministry of Mines in the event that MCC’s


reclamation and closure obligations are not fulfilled. This financial assurance


requirement is in addition to the performance security requirements specified in


subsection (a) above.


























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Aynak Mining Contract - April 8, 2008 (Initialing)








18 Minimum Expenditures








(a) MCC shall, within 18 months of the effective date of this Mining Contract, and in


accordance with its approved Mine Development Plan, spend on the Project no


less than 90% of its proposed budget as defined in Appendices IV and VI on


exploration and development work within the License Area. Such expenses may


not include general organizational overhead and administrative expenses incurred


abroad.


(b) If at the end of 24 months from the effective date of this Mining Contract or any


time thereafter, it appears to the Ministry of Mines that MCC has seriously


neglected its obligations under this Mining Contract to develop the Project in


accordance with the agreed schedule and has failed to make the minimum


expenditures as provided in this Section, except where the failure is not


attributable to MCC, the Ministry of Mines may require MCC to deliver a


financial guarantee in a sum which shall not exceed the total outstanding


expenditure obligations remaining unfulfilled deposited in a new account and


notify the Ministry of Mines. Such guarantee may at the end of a 12 month period


be forfeited to the Ministry of Mines to the extent that MCC has failed to fulfill its


expenditure obligations.





(c) In connection with MCC’s obligations under this Part, MCC shall submit


quarterly reports to the Ministry of Mines setting forth the items and amounts in


expenditures during the preceding quarter. MCC shall support such reports with


documentation. Such reports shall be submitted to the Ministry of Mines on or


before 30 days after the end of the quarter. Reporting requirements are specified


in Appendix 3.





19 Relinquishment








(a) Subject to MCC’s obligations and liabilities under this Mining Contract, MCC


may, by written notice to the Ministry of Mines, relinquish all or any part of the


License Area at any time during the Agreement Period. Such notice shall comply


with the requirement of Article 24 of the Minerals Law.





(b) MCC shall, after consultation with the Ministry of Mines, relinquish any land


within the License Area which the parties determine is not needed by MCC for its


exploration and exploitation activities under this Mining Contract.


20 Tax Obligations





(a) Taxes shall be applied in accordance with the provisions of the Income Tax Law





of Afghanistan. The Government of Afghanistan and MCC acknowledge and


agree that, upon the grant of the Aynak Mineral Rights to MCC, MCC shall


qualify for treatment as a Qualified Extractive Industries Taxpayer (“QEIT”)


under Chapter 12 of the Income Tax Law.


Aynak Mining Contract - April 8, 2008 (Initialing)











(b) Maintenance of Accounting Books and Records


MCC shall submit accounting and income tax returns for the full term of


this Mining Contract in accordance with the provisions of Afghanistan’s


Income Tax Law. In determining MCC’s taxable income as defined in the


Income Tax Law, International Financial Reporting Standards using


sound, consistent, and generally accepted accounting principles as usually


used in the copper mining industry shall be employed, provided, however,


that where more than one accounting practice is found by the Government


of Afghanistan to prevail with regard to any item, the Government of


Afghanistan shall determine which practice is to be applied by MCC with


regard to the particular item.


MCC shall, at its offices in Afghanistan, maintain books of accounting


stated in United States Dollars in accordance with generally accepted


accounting principles. All payments to the Government of Afghanistan


shall be calculated in Afghanis in accordance with the official exchange


rate of the Da Afghanistan Bank and paid in Afghanis or in such other


currencies as may be acceptable to the Ministry of Finance or any


Government of Afghanistan agency which is a successor in function


thereto. MCC shall within a period as provided by the prevailing law and


regulations furnish annually to the Government of Afghanistan audited


financial statements prepared in accordance with International Financial


Reporting Standards together with production statistics in reasonable


detail. The accounts shall be audited by an internationally recognized


accounting firm acceptable to the Government of Afghanistan.


(iii) MCC shall permit the Ministry of Mines, through a duly authorized


representative, to inspect at all reasonable times the books of account and


records of MCC relative to any shipment, sale, utilization, or other


disposition of any ore or finished product. Such books of account and


records shall be maintained at MCC’s offices in Afghanistan. MCC shall


take reasonable steps to satisfy the Ministry of Mines by certificate of an


internationally recognized, competent independent party acceptable to the


Ministry of Mines as to all weights and analyses of finished product. Due


regard shall be given to any objection or representation made by the


Ministry of Mines as to any particular weight or assay of finished product


which may affect the amount of income tax payable by MCC.


(iv) The Government of Afghanistan shall be entitled to complete its audits of


MCC accounts in accordance with the Companies Law and the Income


Tax Law. MCC shall maintain all relevant records for a period of ten


years for each tax year that is necessary to audit MCC’s accounts. In the


event that MCC fails to maintain all relevant records and make available to


the Government of Afghanistan those records upon reasonable request, the


Government of Afghanistan shall be entitled to make reasonable estimates


of the information normally provided by such records and issue


assessments to income tax accordingly.


Aynak Mining Contract - April 8, 2008 (Initialing)








(c) In the event that the Government of Afghanistan enters into a contract or


agreement with a third party engaged in the mining or industrial sectors that,


based on the laws in force in Afghanistan at the time, affords more favorable


treatment with respect to the stability of fiscal or other tax terms than have been


granted to MCC under this Mining Contract, the Parties agree that the Mining


Contract shall be amended to apply the more favorable treatment to MCC.





21 Royalties





(a) MCC shall pay royalties on minerals mined and processed from the Aynak deposit


in accordance with the royalty details table attached to this Mining Contract as


Appendix 5. Royalties shall be paid in United States Dollars or such other


currency as may be mutually agreed and shall be paid on or before the last day of


the first month following the end of each calendar quarter. Each payment shall be


accompanied by a statement in reasonable detail showing the basis of computation


of royalties due in respect of production made during the preceding calendar


quarter.


(b) Royalties will be computed as follows:





(i) Metal Quantities


1. The tonnage or quantity of copper and Associated Minerals by weight





used in the computation shall be that quantity delivered for shipment or


for domestic sale. The quantity by weight of each mineral subject to


royalty shall be properly determined by internationally accepted assay


methods. The value of the Associated Minerals will be converted to


copper equivalent weight by using metal prices as defined below and


added to the tonnage of copper subject to the royalty calculation.


(ii) Metal Prices





1. For copper and Associated Minerals having a London Metal Exchange


(“LME”) price quotation or for which the saleable mineral content has


an LME price quotation. The price used in the computation shall be the


US Dollar price per unit for the same or most equivalent traded type of


grade of the Minerals concerned, calculated as the average of the LME


daily official settlement prices for the calendar quarter.


2. For those Associated Minerals having no London Metal Exchange





price quotation the price used in the computation shall be the average


calendar quarter US Dollar price as published in the Metals Week


Monthly Average Report for the calendar quarter.





(iii) Royalty Rates


1. The royalty rate is a sliding scale royalty based on the copper price and





is described in detail in Appendix 5. The formula for the calculation


is:





18


Aynak Mining Contract - April 8, 2008 (Initialing)











a. When the copper price is equal to or less than US$ 1.00/pound,


the royalty rate = 2.5% x 120%, or 3.0%;


b. When the copper price is greater than US$1.00/pound and


equal to or less than US$2.00/pound, the royalty rate is based


on:


Royalty rate = (10 x copper price (US$/ pound) - 7.5) x 120%;








c. When the copper price is greater than US$2.00/pound, the


royalty rate=15% x 130%, or 19.5%.





(iv) Tax shall not be payable on any construction materials obtained from the


License Area and used by MCC for public purposes such as but not limited


to roads, bridges, railways, port facilities, airports, community buildings,


housing or any other infrastructure used in relation to the Project.





(c) MCC agrees that any mining, processing or treatment of ore prior to domestic sale


or export shipment by MCC shall be conducted in accordance with best


international mining standards as are economically and technically feasible, and in


accordance with such standards MCC undertakes to use all reasonable efforts to


optimize the mining recovery of ore and metallurgical recovery of minerals from


the ore provided it is economically and technically feasible to do so, and shall


submit evidence to the Ministry of Mines of compliance with this requirement.





(d) If in the opinion of the Ministry of Mines, MCC is failing without good cause to


recover Minerals in accordance with paragraph (c) of this Section, it may give


notice in writing of such deficiency to MCC. Within three (3) months of the


receipt of this notice, MCC shall either:





(i) Commence work to improve its mining method, treatment and processing


facilities to the reasonable satisfaction of the Ministry of Mines provided


that MCC shall in no event be obliged to conduct mining, processing or


treatment activities otherwise than as provided in its approved Bankable


Feasibility Study, or


Submit to the Ministry of Mines evidence justifying its performance. In


the event that the Ministry of Mines remains unsatisfied with MCC’s


performance, the Ministry of Mines shall have the right to commission


independent technical studies to determine a fair average recovery rate


taking into account the nature of the proven reserve and the ore and the


economic and technical feasibility of achieving increased recovery by


MCC. Such studies shall be carried out by internationally recognized


consultants appointed by the Ministry of Mines and agreed to by MCC.





(iii) The Ministry of Mines and MCC shall have the right to prepare


submissions to the consultants. If the said consultants find that the


performance of MCC’s operations is not satisfactory, then the cost shall be





19


Aynak Mining Contract - April 8,2008 (Initialing)





borne by MCC. If it is found that MCC’s performance of its obligation is


satisfactory, then the cost shall be borne by the Ministry of Mines.


(iv) If following the completion of such studies, MCC fails within a reasonable





period to achieve the recovery rate indicated by such studies, the Ministry


of Mines shall have the right to increase the amount of royalty applicable


to the Minerals delivered for export shipment or domestic sale in


proportion to the extent that the recovery of such Minerals by MCC falls


short of the fair average rate indicated by such studies. However, at no


time shall the payment of such increased royalty, free MCC from the


obligation to perform in a manner consistent with its approved Bankable


Feasibility Study and Mine Development Plan.


(e) The Ministry of Mines may, in lieu of some or all of the royalties prescribed in


this Section, elect to receive a part of the finished product produced by MCC.


Such election may be made by the Ministry of Mines giving not less than one


year’s notice to MCC, and when made shall continue for such period as was stated


in the notice given by the Ministry of Mines. Delivery of finished product which


the Ministry of Mines has elected to take shall be effected at such times and points


of delivery as may be agreed upon by the Parties. When the Ministry of Mines


takes payment in kind, MCC shall be deemed to have paid royalties in an amount


equal to the value of the finished product delivered to the Ministry of Mines. The


value of the finished product delivered to the Ministry of Mines shall be


calculated on the basis of the same formula used to calculate MCC’s royalty


obligation.


PART IV: MCC’S SOCIAL AND SUSTAINABLE DEVELOPMENT





COMMITMENTS AND OBLIGATIONS


MCC shall perform, undertake or otherwise comply with the following requirements:


22 Local and Regional Benefits





In order to adequately address the social impacts of the Project and to maximize and





sustain the regional economic and social benefits which the Project will generate, MCC shall:


(a) Coordinate all of its studies of the Project’s infrastructure requirements impacts





with infrastructure studies undertaken by the national and local Governments with


a view toward integration of the infrastructure of MCC’s operations with that of


the province, region, and country; and


(b) Assist and advise the Government of Afghanistan in its planning of the





infrastructure and regional development which MCC may deem useful to the


Project and to existing and future industries and activities in the region of the


Project.








'V


20








/)


Aynak Mining Contract - April 8, 2008 (Initialing)








23 Resettlement and Compensation Plan








MCC shall be required to compensate local residents adversely affected by mine


development activities at or in the vicinity of Aynak. Compensation shall be determined


through the application of applicable Afghan law and internationally accepted principles of


fairness and reasonableness. The Parties acknowledge and agree that in the event that certain


residents will be required to move their residences, such residents will be properly resettled in


a location and condition that does not result in a diminishment of the resettled resident’s


standard of living or adversely impact the resident’s livelihood. Such resettlement shall be


conducted in accordance with World Bank Resettlement Guidelines. In addition, the Parties


acknowledge and agree that mine development and operations will impact surrounding


villages and residents. To address such impacts, MCC shall, in consultation with appropriate


governmental officials, develop and finance an aid program established for the benefit of the


surrounding villages and residents. At a minimum, MCC’s efforts in this area shall be


coordinated with the local and regional benefits specified in Section 22 of this Mining


Contract.


24 Housing








MCC shall provide housing facilities of sufficient quality and quantity for its


employees and their immediate families at a reasonable rental rate. The precise number, type


and location of such housing facilities shall be determined through the previously approved


social impact assessment prepared by MCC and in consultation with appropriate


governmental officials. MCC agrees that sufficient housing facilities shall be completed and


available prior to need for each stage of the Project’s development. MCC agrees that the


rules, regulations and standards established by the Ministries of Social Welfare, Rural


Rehabilitation and Development and Urban Development and Housing shall be followed in


satisfying its housing commitment.


25 Medical Facilities








MCC shall furnish such free medical care and attention to all its employees and


families of employees and to all Government of Afghanistan officials working in the area


covered by this Mining Contract as is reasonable and shall establish, staff, and maintain


sufficient dispensary, clinic, and hospital facilities which shall be reasonably adequate under


the circumstances. The Parties acknowledge and agree that management and oversight of


these medical facilities shall be subject to the rules, regulations and standards of the Ministry


of Health. MCC shall be responsible for the construction, management, salaries and


operating expenses of these facilities.


26 Schools








MCC shall provide, free of charge, adequate primary and secondary school education


for the children of all employees and residents of the area surrounding Aynak specified in the


approved social impact assessment. At a minimum, MCC shall construct adequate schools,


of sufficient size and with sufficient equipment to provide such primary and secondary








21


Aynak Mining Contract - April 8, 2008 (Initialing)





education. In addition, MCC shall provide adequate nursery and kindergarten facilities for its


employees’ use. In connection with its commitment to train and employ Afghan citizens set


forth in Sections 38 and 39 of this Mining Contract, MCC shall also establish an adequate


facility for vocational training. MCC agrees that the rules, regulations, and standards


established by the Ministry of Education shall be followed.


27 Entertainment and Shopping








MCC shall construct and fund the operation of adequate recreational activity centers


such as gymnasiums and sports fields for the use of employees and local residents. The


Parties acknowledge and agree that, prior to construction, MCC shall engage in consultation


with appropriate governmental officials concerning such recreational activities in order to


select the location and features of the recreational activities centers. In addition, MCC shall


construct a market/shopping area for the use and convenience of employees and local


residents. The Parties acknowledge and agree that, prior to construction, MCC shall engage


in consultation with appropriate governmental officials concerning the market/shopping area


in order to select the location and features of the market/shopping area.





28 Protection and Respect of Religious Belief








MCC has expressed its commitment to respect and protect the religious beliefs of the


Afghan people. To demonstrate this commitment, MCC shall provide employees and their


families with special places to conduct their religious activities. The Parties acknowledge


and agree that MCC shall engage in consultation with appropriate religious and governmental


officials concerning the implementation of its commitment to protect and respect religious


belief.


29 Government’s and Third Parties’ Right to Use Company’s Facilities





(a) MCC shall:





(i) Allow the public and the Government of Afghanistan to use free of charge


any roads located outside the Project Area constructed and/or maintained


by MCC, provided, however, that such use shall not unduly prejudice or


interfere with MCC’s operations hereunder;


(ii) Allow the Government of Afghanistan to have access over the License





Area, provided that such access does not unduly prejudice or interfere with


MCC’s operations hereunder.





(iii) Allow the Ministry of Mines and third parties to explore for and exploit


minerals and other substances within the License Area in accordance with


Part I, Section 7 of this Mining Contract.


Aynak Mining Contract - April 8,2008 (Initialing)








PART V: COMMITMENTS AND OBLIGATIONS CONCERNING PROJECT


INFRASTRUCTURE, FACILITIES AND MANAGEMENT


MCC shall perform, undertake or otherwise comply with the following requirements:


30 Railway


MCC has made a commitment to the Government of Afghanistan to construct, at


MCC’s sole expense, a railway associated with the Project. The Government of Afghanistan


has made a commitment to use its authorities to assist MCC in securing the land and route


necessary to construct the railway. The Parties acknowledge and agree that, as of the date of


this Mining Contract, the specific conditions and requirements for the route, construction and


operation of the railway have not been definitively established by the Parties. Nonetheless, in


order to conclude this Mining Contract in a timely manner, the Parties acknowledge and


agree that MCC’s commitment to construct a railway shall be memorialized in a


Memorandum of Agreement(“MOA”), attached as Appendix 7, which shall be adopted and


incorporated into this Mining Contract as an enforceable part of this Mining Contract. The


MOA requires the Parties to negotiate in good faith to conclude a railway agreement within


twelve (12) months of the effective date of this Mining Contract. The Parties acknowledge


and agree that the failure to conclude a railway agreement within this timeframe shall


constitute cause for the Parties to revoke this Mining Contract pursuant to Section 47 of this


Mining Contract.


31 Power Supply


MCC has made a commitment to the Ministry of Mines to construct, at MCC’s sole


expense, one, four hundred (400) megawatt capacity coal fired power plant to supply


electrical power to the Project and to Kabul. The Ministry of Mines has made commitments


to MCC to make available sufficient coal resources for MCC’s use in the power plant and to


make available adequate land to establish the power plant. The Parties agree that the coal


resources shall be granted to MCC pursuant to a sole source process under the Minerals Law


and on the basis of MCC paying a reasonable royalty agreed to by the Parties. The Parties


also agree that MCC’s exploration, development, exploitation and use of the coal resources


shall be at MCC’s sole expense and in compliance with all applicable requirements under the


laws of Afghanistan, including those requirements concerning the payment of royalties and


income tax. The Parties agree that they will work co-operatively to locate suitable areas


where coal resources are likely to be of a sufficient quantity and quality to fuel the power


plant. MCC agrees that it will undertake all exploration, development, and exploitation


activities in the areas identified by the Parties. The Ministry of Mines agrees to provide all


necessary assistance with respect to making available information and licenses to plan and


expedite the necessary coal exploration and mine development. Upon identification by MCC


of a coal reserve of suitable quantity and quality, the Ministry of Mines will diligently


process the approvals necessary to allow MCC to exploit the coal reserve and fuel the power


plant. The Parties acknowledge and agree that, as of the date of this Mining Contract, the


specific conditions and requirements for the location, construction and operation of the power


plant, have not been definitively established by the Parties. With respect to the sale of


surplus power to the Government of Afghanistan by MCC, the Parties agree that the price of


surplus power shall be determined by the mutual agreement of the Parties. Nonetheless, in





23


Aynak Mining Contract - April 8, 2008 (Initialing)








order to conclude this Mining Contract in a timely manner, the Parties acknowledge and


agree that the Parties’ commitments concerning Project power supply shall be memorialized


in a MOA, attached as Appendix 8, which shall be adopted and incorporated into this Mining


Contract as an enforceable part of this Mining Contract. The MOA requires the Parties to


negotiate in good faith to conclude a power supply agreement within two(2) months of the


effective date of this Mining Contract and the negotiations can be extended for an additional


two (2) months if the Parties cannot reach agreement within the first two (2) months. The


Parties acknowledge and agree that the failure to conclude a power supply agreement within


this timeframe shall constitute cause to revoke this Mining Contract pursuant to Section 47 of


this Mining Contract.


32 Water Supply








MCC has made a commitment to the Government to construct water supply wells and


pipeline system, at MCC’s sole expense, in the vicinity of the Project to supply die Project’s


fresh water requirements. MCC has also committed to reuse and re-circulate process water to


the extent possible. The Government of Afghanistan has made a commitment to MCC to


make available sufficient water resources for MCC’s use in the Project. Subject to the


requirements of Section 37(c) of this Mining Contract concerning the protection of local


water use, the Parties agree in principle that MCC may obtain water from local water sources


to supply its needs. In the event that sufficient water is not available from these sources, the


Parties agree that they will work co-operatively to locate water supplies that are likely to be


of a sufficient quantity to meet MCC’s requirements. The Government agrees to provide all


necessary assistance with respect to making available information and licenses to plan and


expedite the necessary water supply development. Upon identification of water supplies of


suitable quantity, the Government will diligently process the approvals necessary to allow


MCC to utilize the water supplies. The Parties acknowledge and agree that, as of the date of


this MOA, the specific conditions and requirements for the location, construction and


operation of the water supply system have not been definitively established by the Parties.


Nonetheless, in order to conclude this Mining Contract in a timely manner, the Parties


acknowledge and agree that MCC’s commitments concerning water supply shall be


memorialized in a MOA, attached as Appendix 9, which shall be adopted and incorporated


into this Mining Contract as an enforceable part of this Mining Contract. The MOA requires


the Parties to negotiate in good faith to conclude a water supply agreement within three (3)


months of the effective date of this Mining Contract and the negotiations can be extended for


an additional three (3) months if the Parties cannot reach agreement within the first three (3)


months. The Parties acknowledge and agree that the failure to conclude a water supply


agreement within this timeframe shall constitute cause to revoke this Mining Contract


pursuant to Section 47 of this Mining Contract.


33 Phosphate, Limestone and Quartz (Silica) Supply


In order to fulfill its commitment to the Government to fund, construct and operate a


smelter in Afghanistan, MCC has requested that the Government provide access to deposits


of phosphate, limestone and quartz for MCC’s use in the Aynak Project. The Government


has made a commitment to MCC to make available potential sources of limestone and quartz


that MCC can use in the Aynak Project. In addition, the Government will use its best efforts


to make available potential sources of phosphate for MCC’s use in the Aynak Project. The


Aynak Mining Contract - April 8, 2008 (Initialing)








Parties agree that the phosphate, limestone and quartz resources shall be granted to MCC


pursuant to a sole source process under the Minerals Law and on the basis of MCC paying a


reasonable royalty agreed to by the Parties. The Parties also agree that MCC’s exploration,


development, exploitation and use of the phosphate, limestone and quartz resources shall be


at MCC’s sole expense and in compliance with all applicable requirements under the laws of


Afghanistan, including those requirements concerning the payment of royalties and income


tax. The Parties agree that they will work co-operatively to locate suitable areas where such


mineral resources are likely to be of a sufficient quantity and quality to meet MCC’s


requirements. The Government agrees to provide all necessary assistance with respect to


making available information and licenses to plan and expedite the necessary mineral


exploration and mine development. Upon identification of mineral reserves of suitable


quantity and quality, the Government will diligently process the approvals necessary to allow


MCC to exploit the mineral deposits. The Parties acknowledge and agree that, as of the date


of this Mining Contract, the specific conditions and requirements for the location and supply


of phosphate, limestone and marble have not been definitively established by the Parties.


Nonetheless, in order to conclude this Mining Contract in a timely manner, the Parties


acknowledge and agree that the Government’s commitments concerning phosphate,


limestone and marble shall be memorialized in a MOA, attached as Appendix 9, which shall


be adopted and incorporated into this Mining Contract as an enforceable part of this Mining


Contract. The MOA requires the Parties to negotiate in good faith to conclude a mineral


supply agreement within three (3) months of the effective date of this Mining Contract and


the negotiations can be extended for an additional three (3) months if the Parties cannot reach


agreement within the first three (3) months. The Parties acknowledge and agree that the


failure to conclude a mineral supply agreement within this time frame shall constitute cause


to revoke this Mining Contract pursuant to Section 47 of this Agreement.


34 Project Facilities








(a) Project facilities shall include, but not be limited to, the mines, processing


facilities, wastewater treatment, and transportation, communication, water supply,


power house, and other necessarily related facilities as set forth below, for which


MCC is, subject to the rights of third parties, authorized to construct and operate


in accordance with such reasonable safety regulations relating to design,


construction, and operation as required by best international mining practice and


the laws of Afghanistan. The facilities may include, but are not limited to:


(i) The mines and other operating facilities: development of mines will





require opening of roads, bridges, and storage areas, and may entail


construction of aerial tramways, conveyor belts, pipelines, and other


transportation facilities;





Additional roads, including roads to provide access to housing for MCC


personnel;





(iii) A modem wireless communications system that complies with Ministry of


Communication requirements;





(iv) Water supply facilities, including water dams, pumping stations,


purification systems, and distribution lines;


Aynak Mining Contract - April 8,2008 (Initialing)











(v) In addition, the project may require other buildings, workshops,


warehouses, storage areas, sewage disposal, foundries, machine shops,


repair shops, and all such additional or other facilities, plant and


equipment as MCC shall consider necessary for its operations or to


provide services or to carry on activities ancillary or incidental to such


operations. The Parties acknowledge and agree that the Government shall


make available appropriate land in Kabul on which MCC shall construct


an office. The land and all appurtenant structures shall be returned to the


Government upon the expiration of this Mining Contract.


(b) All Project Facilities shall be the personal property of MCC and may be





mortgaged, pledged or otherwise encumbered during the term of this Mining


Contract, with written notification to the Government, by MCC subject to the


provisions of Part XVII relating to Assignment and Part XII relating to


Termination of the Mining Contract.





(c) Subject to the security requirements that may be established in accordance with


the security agreement to be negotiated between the Parties pursuant to Section 35


of this Mining Contract, MCC shall be entitled to import necessary raw materials


and manufacture explosives solely for MCC’s use in connection with the Project.


Prior to commencing imports of the raw materials to manufacture explosives,


MCC shall provide the Government with a detailed inventory of the types and


amounts of raw materials to be imported, a transportation and storage security


plan, and a detailed calculation of the amount of explosives to be manufactured


and used in order to allow the Government to track the import of raw materials,


and the manufacture and use of explosives in connection with the Project. MCC


shall be required to maintain records of its raw material imports and explosives


manufacture and use and make such records available for Government review and


confirmation.


35 Control of Operations





MCC shall have full and effective control and management of all matters relating to





the operation of the Project including the production and marketing of its products in


accordance with sound, long-term policies. MCC may, subject to complying with the


applicable requirements of the Minerals Law and this Mining Contract and receiving


approval from the Ministry of Mines, make material expansions or modifications of the


Project Facilities, and may add new facilities, as MCC shall consider necessary for the


operation of the Project or to provide services or to carry on activities ancillary or incidental


to the Project. All such expansions, modifications, improvements, replacements, and


additions shall be considered part of the Project Facilities.





Subject to periodic review by the Government, MCC shall be entitled to maintain off¬


shore bank accounts in connection with the Project. MCC shall submit detailed quarterly


reports to the Ministry of Mines for each such off-shore bank account which provide


information concerning the use of each such account for Project purposes. In addition, MCC


shall be entitled to open and maintain local and foreign currency accounts in Afghanistan and


to freely convert and move foreign currency into and out of Afghanistan.





26


Aynak Mining Contract - April 8, 2008 (Initialing)











36 Project Security








The Parties acknowledge and agree that security for the Project is a necessary


condition for the successful construction and operation of the Project. The Parties


acknowledge and agree that the Government shall be responsible for the overall security of


the Project. The Parties also agree that MCC shall cooperate with the Government in taking


security measures requested by the Government The Parties further acknowledge and agree


that, as of the date of this Mining Contract, the specific conditions and requirements for the


establishment and maintenance of adequate Project security have not been definitively


established by the Parties. Nonetheless, in order to conclude this Mining Contract in a timely


manner, the Parties acknowledge and agree security commitments shall be memorialized in a


MOA, attached as Appendix 10, which shall be adopted and incorporated into this Mining


Contract as an enforceable part of this Mining Contract. The MOA requires the Parties to


negotiate in good faith to conclude a comprehensive security agreement within two (2)


months of the effective date of this Mining Contract. The Parties acknowledge and agree that


the failure to conclude a security agreement within this timeframe shall constitute cause to


revoke this agreement pursuant to Section 47 of this Mining Contract.





PART VI: OCCUPATION OF SURFACE AND OTHER RIGHTS





37 General








(a) Right to use land:


Subject to the provisions of this Mining Contract and Article 34 of the





Minerals Law, MCC shall have the right to enter and occupy any land


within the License Area for the purpose of undertaking operations and


activities under this Mining Contract. During the term of this Mining


Contract, MCC shall pay a nominal rent for its use of public lands,


whether inside or outside the License Area, calculated on a per hectare


basis. In the event that exemptions from the surface rent requirements of


the Minerals Law are established in the future, the Parties agree that the


Project shall be eligible to receive the benefits of such exemptions.


Subject to the applicable laws and regulations of Afghanistan, MCC shall


have the right to occupy and utilize for the duration of this Mining


Contract, or for a lesser period, the surface of such suitable areas outside


the License Area as may be necessary for the construction and operations


of roads, railways, and pipelines necessary for its activities and operations


under this Mining Contract. With regard to public lands lying outside the


License Area, MCC shall apply to the Government for the right to use such


land. The right to use such land shall not be unreasonably denied by the


Government. With regard to private lands lying either within or without


the License Area, the Government shall, at MCC’s expense, complete the


requirements necessary to obtain the rights to use the private land,


including the requirements for buying, leasing or transferring land or


relocating privately owned buildings, as may be necessary. MCC shall


make reasonable compensation, as determined by a mutually agreeable





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Aynak Mining Contract - April 8, 2008 (Initialing)








third party, for those owners of private lands who suffered economic loss


due to the aforesaid relocation.


Blasting or other dangerous operations may only be conducted in


accordance with the requirements of an approved blasting plan which


includes the type of explosive, blast design, blast frequency, blast distance,


and necessary safety precautions.


(b) Accessory works and installation:


Subject to the provisions of section (a) above, MCC shall have the right to





construct, maintain, alter, and operate the following types of facilities:





1. Industrial buildings and installations including mining, crushing,


milling, ore refining, leading and pumping stations, warehouses,


storage places and storage tanks;


2. Facilities for shipping;





3. Living accommodations and amenities, including but not limited to


hospitals;


4. Schools and recreational facilities, for MCC’s employees and their


families;


5. Other buildings, installations, and works necessary for MCC’s





operation and activities under this Mining Contract.


(ii) Rights of way shall be acquired and maintained in accordance with


applicable law and regulations.


(c) Subject to the approval of the Government and consistent with the requirements





specified in the water supply MOA attached as Appendix 9 to this Mining


Contract, MCC may appropriate and use water found within or outside the


License Area for MCC’s operations and activities under this Mining Contract.


For water appropriated from outside the License Area, the Government will


facilitate the acquisition of water resources. MCC shall not utilize agricultural


water or deprive any lands, villages, houses, or watering places for animals of a


reasonable supply of water insofar as such water has, through custom, been


utilized for such lands, villages, houses, or animals. Nor shall MCC interfere with


any water rights or existing uses of water enjoyed by any persons under the law of


Afghanistan.


(d) Subject to the approval of the Ministry of Mines, MCC may appropriate and use


gravel, sand, clay, or stone found within the License Area for purposes necessary


and useful to MCC’s operations and activities under this Mining Contract.


Provided, however, that such gravel, sand, clay, or stone shall be sold only with


the approval of the Ministry of Mines and subject to such conditions as may be


imposed (including conditions relating to fees to be paid to the Government) and


provided further that upon termination of this Mining Contract, any excavation





28


 shall be rehabilitated by MCC in accordance with its approved mine development,


environmental management and reclamation plans.





(e) MCC shall have the right to cut, appropriate and use the brushwood, undergrowth


and timber (except protected trees) which may be found on public lands within the


License Area, subject to the general forestry laws of Afghanistan. Such cutting,


appropriation, and use shall be permitted only to the extent necessary to the


operations and activities of MCC under this Mining Contract. Such cutting,


appropriation, and use may be for the purpose of facilitating ingress and egress


into and from the License Area, for the purpose of clearing land for the erection of


machinery, plant and buildings connected with MCC’s operations and activities,


and for the purpose of construction required for MCC’s operations and activities.


Provided, however, that such timber shall be sold by MCC only with the prior


approval of the Government and subject to such conditions as may be imposed


(including conditions relating to fees to be paid to the Government).


PART VII: LOCAL PURCHASING: PROMOTION OF NATIONAL INTERESTS


38 Services and Supplies





MCC, including its subcontractors, shall use its best efforts to purchase goods and


services in Afghanistan if there are available in Afghanistan goods and services of suitable


and reasonably comparable quality, and at no higher price than goods available from abroad.


In comparing prices of goods available in Afghanistan to the prices of goods imported by


MCC. the following conditions shall apply. For goods and services imported during the


construction period, customs duties shall not be added to the other expenses incurred up to


the time the imported goods are landed in Afghanistan. For goods and services imported


during operations, customs duties for raw materials shall be added to the other expenses. The


Parties agree that the process of comparing locally available goods and services to imported


goods and services shall not delay MCC’s construction activities or operations.


PART VHI: EMPLOYMENT AND TRAINING OF AFGHAN NATIONALS


39 Employment of Afghan Nationals


(a) MCC shall employ Afghan personnel, to the maximum extent practicable, and


upon terms which are acceptable to MCC, in all classifications of full-time


employment, for its operations in Afghanistan.


The following


percentages of all positions in each employment classification shall be held by


Afghanistan nationals within the periods agreed to by the Parties, starting with the


commencement of production. The classifications of employment for the purpose


of this Part shall include the following: managerial, technical, professional,


administrative, clerical and skilled labor:

















29


 Up to 3 years 5 years 8 years


Skilled labor 50 percent 100 percent 100 percent


Clerical and supervisory 50 percent 75 percent 85 percent


Technical 50 percent 75 percent 90 percent


Management; Profession 50 percent 75 percent 85 percent











;.«n . \MCC’s failure to achieve said percentages will be


considered a breach of contract in accordance with Section 47 of this Mining


Contract except where MCC can justify such failure on grounds acceptable to


the Government. The employment and the terms and conditions of such


employment and the discharge or disciplining of Afghan personnel shall be


carried out in compliance with the applicable labor laws and regulations of


Afghanistan.





4© Training








(a) MCC shall provide for the training of suitable persons of Afghanistan citizenship


in order to qualify them for skilled, clerical and supervisory, technical, and


management and professional posts in MCC’s operations and activities in


Afghanistan.


(b) Education Grants. MCC shall establish and cooperate in a program of foreign





scholarships for Afghan nationals and grants to educational institutions of


Afghanistan.


41 Nom-Afgia&ES Personnel











(a) Subject to the requirements of Sections 38 and 39 of this Part, MCC and its


subcontractors may bring into Afghanistan such non-Afghan personnel as in


MCC’s judgment are required to carry out construction and operations efficiently


aitd successfully, and at MCC’s request (which shall be accompanied by


information concerning the education, experience, and other qualifications of the


personnel concerned), the Government shall cause all necessary permits and visas


to be issued within a reasonable time period and without hampering the


continuous and efficient performance of MCC under this Mining Contract. In this


connection MCC shall have the right periodically to submit manpower


requirement plans and the Government will, within a reasonable time period


during which it will conduct its review of MCC’s proposal, thereupon issue the


necessary permits and visas for all personnel covered by any such plan subject


only to completion of the required security checks. MCC shall bear all costs


related to the issuance of such permits and visas for non-Afghan personnel. All


MCC employees entering Afghanistan shall respect the religious and cultural


traditions of Afghanistan.











30


Aynak Mining Contract - April 8, 2008 (Initialing)








(b) There shall at all times be equal treatment, facilities, and opportunities for all


employees, both Afghan and non-Afghan, in the same job classification regardless


of nationality.


42 Employee Accident Compensation


MCC shall be responsible for the medical and rehabilitation costs for any employee


injured performing his or her duties while employed by MCC at the Project. Injured


employees shall be entitled to return to the same or similar positions following recovery from


injury. In the event that an employee is killed performing his or her duties while employed


by MCC at the Project, MCC shall be responsible for the payment of an adequate death


benefit to the immediate family of the deceased employee.


PART IX: IMPORTS AND EXPORTS


43 Imports


This Mining Contract authorizes MCC, including its subcontractors, to import


into and for use in Afghanistan all equipment and materials, such as


machinery, supplies, and equipment necessary for the operation of the Project,


including its Kabul office, subject to the payment of the customs duties


specified in this Mining Contract. The import of equipment and materials by


MCC shall be in accordance with expedited customs procedures, by routes


selected by MCC and identified to the Government and any means of


transport. Prior to commencing imports, MCC shall provide a list of


equipment and materials to the Ministry of Mines for review and shall provide


all necessary documents required bv the Customs Office of the Ministry of


Finance, as necessary', for customs clearance. This authorization shall apply to


the following categories of imports:








(i) All of the capital assets, construction materials and raw materials


related to the Project including, but not limited to, machinery, machine


units, vehicles (excluding sedan cars), mine facilities and equipment,


smelter facilities and equipment, refinery facilities and equipment,


office equipment; appliances, office buildings, employee housing,


security facility equipment, schools, hospitals, domestic goods and


personal effects including ncusch...^ cr.o .iving equipment and goods


belonging to foreign personnel employed in the project and especially


•provided from abroad shall be exempted from the payment of import


duties during the construction period, which shall expire sixty (60)


months from _th o elective date of this Mining Contract unless extended


bv mutual agreement of the Parties:





(ii) During the operations period which shall commence immediately upon


expiration of the construction period. MCC shall be required to pav


ini1.:.or; duties c-rfo on rav. materials in accordance with the Customs


Law:





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Aynak Mining Contract - April 8, 2008 (Initialing)








lb) Re-exports. Any items imported by MCC or its subcontractors for use in


connection with the Project and no longer needed for such use may be sold


outside Afghanistan and re-exported free of all customs duties and levies. No


imported items shall be sold domestically except after compliance with


(c) customs and import laws and regulations which shall at the time of such sale


be in effect.


The exemption from import duties set forth in this Section shall not apply





where MCC, including its subcontractors, fails to use best efforts to purchase


goods in accordance with the requirements of Section 38 of this Mining


(d) Contract concerning local purchasing.


Subject to the requirements of Section 43(a) of this Mining Contract, the





Government, through the Ministry of Finance, shall have the right to inspect


and inventory any articles imported by MCC for which MCC claims import


(e) duty exemption.


Imports not exempted from duties under this Section shall be subject to the





payment of the appropriate duty in accordance with applicable Afghanistan


(0 law.


If MCC, including its subcontractors, intends to sell or transfer any articles


which have been imported free of duty under this Section, a declaration shall


be made to the Ministry of Finance before such sale or transfer is effected,


and, unless such goods are sold or transferred to another company or


(g) contractor entitled to the same exemption, such import duty shall be paid as


may be assessed by the Ministry of Finance in accordance with the customs


laws and regulations as from time to time in effect.


If MCC applies any article which has been imported free of duty under this


Mining Contract to a nonexempt purpose, a declaration shall be made to the


Ministry of Finance within thirty days of such initial use of nonexempt


purposes and such import duty shall be paid as may be assessed by the


(h) Ministry of Finance in accordance with the laws and regulations governing


customs.


In order to enjoy the benefits granted by this Part, all articles which are





imported and for which a duty exemption is claimed must be marked with the


(0 name or marks of MCC in a manner difficult to delete.


MCC, including its subcontractors, shall be liable for violations of the


requirements of Afghanistan’s Customs Law.


(j) MCC shall maintain depreciation records for all imported items subject to the


exemptions established by this Section and submit such records to the


Ministry of Finance annually.











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Aynak Mining Contract - April 8, 2008 (Initialing)








44 Exports








(a) MCC shall, subject to the conditions set forth in Part II, have the right to export


and sell free of customs duties all products obtained from its operations under this


Mining Contract.





(b) It is understood and agreed that exemption from customs duties shall not liberate


MCC, including its subcontractors, or its agents and personnel from the obligation


to fulfill all customs formalities necessary for statistical verification and other


purposes.


45 Cooperation











All imports and exports of articles under this Mining Contract shall be handled simply


and expeditiously and the Government will, at MCC’s request, cooperate with MCC in


making appropriate arrangements between MCC and the customs authorities to this end. The


Government agrees to establish a customs facility in the License Area, which shall be funded,


constructed and operated by MCC, to facilitate and complete the customs clearance of all the


import and export items. The Parties agree that import shipments will receive customs seals


at the border, but shall only be opened upon arrival at the Project’s customs facility.


PART X: SUSPENSION OF OPERATIONS


46 General








At any time after the effective date of this Mining Contract, MCC may notify the


Government that MCC is suspending, in whole or in part, its operations because in MCC’s .


judgment economic or other conditions make it necessary to do so. MCC may, following


consultation with the Government during which the Government will express its view as to


the basis for suspension, suspend operations and may continue such total or partial


suspension of operations for a period of up to six (6) months. MCC shall not be entitled to


suspend operations for a period of longer than six (6) months except where the Government


defaults under the Mining Contract; a force majeure exists that lasts longer than six (6)


months; or if the LME copper price continues to be lower than the break-even copper price,


identified in the Bankable Feasibility Study, for more than 6 months and MCC runs into a


loss, MCC shall, with the agreement of the Ministry of Mines, have the right to partially or


fully suspend the production operations until the LME copper price returns above the break¬


even copper price. In all other cases, MCC’s suspension of material operations for a period


of longer than six (6) months shall constitute cause for the Government to revoke the Mining


Contract pursuant to Section 47 of this Mining Contract. Suspension of operations shall not


relieve MCC of its obligations under this Mining Contract. MCC shall consult with the


Government and keep it fully informed regarding any suspension of operations under this


Part. During any suspension of operations, MCC shall remain obligated to comply with all


applicable provisions of Afghanistan’s Labor Law.


■r








33





Aynak Mining Contract - April 8, 2008 (Initialing)








PART XI: REVOCATION





47 Revocation for Cause





(a) In the event that:








(0 MCC fails to commence commercial production within 60 months of the


effective date of this Mining Contract as required by Section 13 and 14 of


(ii) this Mining Contract, or


No commercial shipment of finished product is made within 12 months


after commercial production, or


(iii) Any tax or other payment payable by MCC under this Mining Contract or


the laws of Afghanistan shall be in arrears or unpaid for a period of 6


calendar months, or


(iv) MCC assigns to a third party the whole or part of the rights held by it


under this Mining Contract without the previous written consent of the


Government provided in Part XVII, or


(v) MCC has knowingly submitted to the Government any false statements


which were a material consideration for the execution of this Mining


Contract, or


(Vi) MCC intentionally extracts any minerals other than copper ore, or


Associated Minerals without express authorization by the Government, or


(vii) MCC fails to produce fifty percent (50%) of its proposed copper


production rate, as defined in its Bankable Feasibility Study and Mine


Development Plan, during the first year of commercial production or


eighty percent (80%) of its proposed copper production rate for each


subsequent year, as measured in metric tonnes of finished product, or





(viii) MCC fails to comply with any final decisions by the arbitral tribunal in


controversy arising with the Government under this Mining Contract, or .


(ix) There exists any other material breach or nonobservance by MCC of any


of the terms, obligations, or conditions of this Mining Contract, or of any


law of Afghanistan, or


(x) MCC shall make or enter into any agreements for composition with


creditors that are unacceptable to the Government or shall go into


liquidation, whether compulsory or voluntary, or if a receiver is


appointed, other than for the purpose of reconstruction of the Project and


only if the interest expected by the Government under or from this Mining


Contract is materially or fundamentally damaged by such composition,


liquidation or reception, or


■Y


Aynak Mining Contract - April 8, 2008 (Initialing)








(xi) MCC fails to establish a smelter and refinery in accordance with Appendix


4 and 6 of this Mining Contract.


The Government may, subject to the provisions of this Part, revoke this Mining


Contract and be entitled to the rights specified in Section 49.


(b) In the event that:


The Government takes back or revokes the exclusive mineral right without


cause or legal justification, or


The Government allows other parties to exploit copper and associated


metals in the License Area in violation of this Mining Contract, or


(iii) MCC’s operations are interfered so seriously by the Government that


MCC is not able to maintain the normal operation, or


(iv) The Government fails to provide sufficient security for the Project in


accordance with the terms of an executed security agreement, or


(v) The Government fails to comply with any final decisions by the arbitral


tribunal in controversy arising with the Government under this Mining


Contract, or


(vi) There exists any other material breach or nonobservance by the


Government of any of the terms, obligations, or conditions of this Mining


Contract, or of the laws of Afghanistan.


MCC may, subject to the provisions of this Part, revoke this Mining Contract and be


entitled to the rights specified in Section 49.


(c) In the event that the Parties fail to conclude any of the definitive agreements


specified in the Memoranda of Agreement identified in Sections 30, 31, 32, 33


and 36 of this Mining Contract, the following conditions shall apply. If the failure


to conclude any of the agreements is due to the fault of the Government, the


Government will return the premium paid to the Government and compensate


MCC for its reasonable expenses incurred prior to termination. If the failure to


conclude any of the agreements is due to the fault of MCC, the Government shall


retain any premium paid to the Government and any property which the


Government is entitled to retain under this Mining Contract. If the failure to


conclude any of the agreements cannot be attributed to either Party, the Parties


shall submit the dispute to dispute resolution in accordance with Part XIV of this


Mining Contract. In the event the Parties fail to conclude any of the agreements,


MCC’s performance guarantee under Section 17(a) shall be returned to MCC.


48 Notification and Remedy








(a) In the event that the Government seeks to revoke this Mining Contract pursuant to


this Part, the Government shall give notice in writing specifying the particular


Y


35





Aynak Mining Contract - April 8, 2008 (Initialing)








breach and requiring, within three calendar months of such notice (or within such


extended time as the Government may deem fair having regard to the


circumstances of the particular case), to remedy the same or make reasonable


compensation to the Government, as the case may be, in a manner acceptable to


the Government. In the event that MCC seeks to revoke this Mining Contract


pursuant to this Part, MCC shall give notice in writing specifying the particular


breach and proposing a time period of at least three calendar months during which


the Government must remedy the breach.





(b) If MCC or the Government shall fail to comply with said notice, the Government


or MCC may, after the expiration of the time period for remedying the breach,


revoke this Mining Contract, provided, however, that where there is any dispute


between the Parties as to:


Whether there has been any breach or nonobservance by MCC or the





Government of any term, obligation, or condition of this Mining Contract,


or


(ii) Whether any breach or nonobservance is remediable or as to the manner in


which it should be remedied, MCC or the Government may, within one


year of notice refer the dispute to arbitration, and the Government or MCC


shall not exercise its power of revocation until the result of arbitration is


known, and then subject to the terms of the award. Provided, however,


that if MCC or the Government elects to refer the dispute to arbitration, it


shall be prompt in prosecuting its claim before the arbitral tribunal.


(c) Upon the revocation of this Mining Contract by the Government, all rights granted


to MCC hereunder shall terminate, subject to, and without prejudice to, any


obligation or liability imposed or incurred under this Mining Contract prior to the


effective date of revocation and subject to, and without prejudice to, the rights and


obligations of the parties under this Part. Upon the revocation of this Mining


Contract by MCC, MCC shall be entitled to the rights specified in Section 49 of


this Mining Contract.





49 Penalties








(a) Unless otherwise specifically provided for in this Mining Contract or any law


referred to in this Mining Contract and notwithstanding the Government’s right of


revocation under this Part, the penalty for any breach of this Mining Contract shall


be damages which shall be fixed by applicable laws and regulations currently in


effect or which may be enacted or promulgated in the future.





(b) Notwithstanding the provisions of this Part, in the event MCC shall be in default


in the making of any payment of money to the Government which MCC is


required to make pursuant to Part El, the period within which MCC must cure


such default shall be 30 days after the receipt of notice thereof. The penalty for


late payment shall be an interest charge on the amount as defined by the Ministry


of Finance, based on the current LIBOR rate (London Interbank Overnight Rate).








36


Aynak Mining Contract - April 8,2008 (Initialing)








PART XII: TERMINATION


50 Transfer of Property and Compensation at Termination








(a) In the event that this Mining Contract is revoked by the Government for cause


pursuant to Section 47:





Subject to the environmental protection and reclamation obligations


established in Part I of this Mining Contract, upon the expiration or earlier


revocation for cause of this Mining Contract, MCC shall leave, in good


and safe running order, the mine and its associated structures including,


but not limited to, all shafts, pits, and underground workings, all fixed


assets such as buildings, roads, railroad, or airstrips constructed by MCC


under this Mining Contract, and all plants and equipment necessary for the


continued operation of the mine, and the same shall revert to the


Government free of any liens, charges, encumbrances or liabilities and


shall become the property of the Government without compensation to


MCC.


(ii) Subject to any claims which the Government may have against MCC,


arising under this Mining Contract or otherwise, all normal stockpiles and


other liquid assets used by MCC in connection with its operations and


activities under this Mining Contract shall remain the property of MCC


and may be freely withdrawn, exported, sold, or otherwise disposed of in


accordance with applicable laws and regulations and the terms of this


Mining Contract, without payment of any duty, provided, however, that


the Government shall have the first right to purchase, at a fair price to be


determined between the parties, any such stockpiles or other liquid assets.


In the event that the Government fails to exercise such right of purchase


within ninety days after the termination of concession, MCC may remove


such stockpiles and other liquid assets.





(b) In the event that this Mining Contract is revoked by MCC for cause pursuant to


Section 47:


(i) MCC shall be entitled to receive fair compensation from the Government.





For the purposes of this Mining Contract, the term “fair compensation”


may include any or all of the following components: premium payments,


investment and working capital, purchased inventory, and partially


finished or finished products produced through MCC’s investment. The


actual amount of fair compensation shall be determined by the Parties


either through agreement or by arbitration. The Parties shall endeavor to


reach agreement on the amount of compensation which is fair under the


circumstances of the revocation. In the event that the Parties cannot reach


agreement on the amount that constitutes fair compensation, the amount of


fair compensation shall be determined by an international arbitration


tribunal or pursuant to Section 55 of this Mining Contract.








37


Aynak Mining Contract - April 8,2008 (Initialing)








51 Continuation of Rights and Duties





Rights and obligations which have come into effect prior to the termination of this


Mining Contract and rights and obligations relating to transfer of currencies and properties


which have not yet been completed at the time of such termination, shall continue in effect


for the times necessary or appropriate fully to exercise such rights and discharge such


obligations.


52 Infrastructure








At the end of the term as provided in Part XVIII or upon termination of the Mining


Contract as provided in this Part XII, or when no longer needed by MCC, and at no cost to


MCC, any such property of MCC in Afghanistan moveable and immovable, as shall be in use


for public purposes such as roads, schools, and hospitals, shall be transferred as a gift to the


Government.


PART XHI: FORCE MAJEURE





53 General








Any failure by the Government or any of its Ministries or subdivisions, or by MCC, to


cany out any of its obligations under this Mining Contract shall not be deemed a breach of


contract or default if such failure is cause by force majeure. If, through force majeure, the


fulfillment by either Party of any terms and conditions of this Mining Contract is delayed,


curtailed or prevented, then, anything in this Mining Contract to the contrary


notwithstanding, the time period for fulfilling the obligation thereby affected and the term of


this Mining Contract specified in Part XVIII shall each be extended for a period equal to the


total of the periods during which such causes or their effects were operative. For purposes of


this Mining Contract, force majeure shall include wars, insurrections, civil disturbances,


blockades, embargoes, strikes and other labor conflicts, riots, epidemics, earthquakes, storms,


floods, or other adverse weather conditions, explosions, fires, lightning, orders or directions


of any government de jure or de facto or instrumentality or subdivision thereof, and acts of


God or the public enemy. Provided, however, that only such loss, damage or injury as could


not have been avoided by the taking of proper precautions, due care or such reasonable


alternative measures as aforesaid shall be regarded as the consequences of any failure caused


by force majeure.


54 Notice


The Party whose ability to perform its obligations as affected by force majeure shall,


as soon as possible after the occurrence, notify the other Party thereof in writing, stating the


force majeure and identifying the additional time period necessary to address the force


majeure. The Parties shall agree as to the amount of time necessary to address the force


majeure and the parties shall endeavor to do all reasonable within their power to remove such


cause and resume activities within the agreed upon time period; provided, however, that


neither party shall be obligated to resolve or terminate any disagreement with third parties,





38


Aynak Mining Contract - April 8,2008 (Initialing)








including labor disputes, except under conditions acceptable to it or pursuant to the final


decision of any arbitral, judicial, or statutory agencies having jurisdiction to finally resolve


the disagreement. As to labor disputes, the Government and MCC will cooperate in a joint


endeavor to alleviate any conflict which may arise.


55 Disputes


Any differences regarding interpretation or application of this Part, including


differences concerning the period by which the terms of this Mining Contract and of rights


and obligations thereunder should be extended, shall, if not otherwise amicably resolved, be


determined through means of settlement stipulated under Part XTV.


PART XIV: SETTLEMENT OF DISPUTES


56 Method of Dispute-Settlement


(a) If, during this Mining Contract or thereafter, there shall be any question or dispute


with respect to the structure, meaning, or effect of this Mining Contract, or arising


out of or in connection with this Mining Contract, either Party shall have the right,


subject to no conditions precedent, to refer the dispute to the International Centre


for Settlement of Investment Disputes (“ICSID”) for settlement by conciliation


and/or arbitration as hereinafter provided. Any of the parties to such dispute may


commence conciliation or arbitration proceedings by giving notice to the other


party and to the Secretary-General of ICSID (including in such notice a statement


of the question or dispute and of the claim or contention of the Party giving the


notice). The assignment, transfer, lease or pledge of Mineral Right or any part


thereof by MCC as per provisions of Section 60 of this Mining Contract shall not


prejudice MCC’s rights under this Section 55.


(b) The Rules of Conciliation and Arbitration of ICSID shall govern the conciliation


and arbitration. The place of conciliation or arbitration shall be such as may be


agreed by the parties and in default of agreement shall be as provided in the Rules


of ICSID.


(c) Pending the issue of a decision or award, the operations or activities that shall


have given rise to the arbitration need not be discontinued, but if the decision or


award recognizes that a complaint was justified, provision may be made in the


award for such reparation or compensation in respect of such continued operations


and activities as shall be decided by the arbitrator to be appropriate.


(d) The decision of the arbitrator shall be final and binding upon the parties to this


Mining Contract and upon any person who participated as a party in such


arbitration proceedings, and he shall comply in good faith with the decision.


(e) Should ICSID be replaced by, or its functions substantially devolve upon or be


transferred to, any new international body of similar type and competence, the


function of the Arbitration Tribunal of ICSID provided by this Article shall be








39


Aynak Mining Contract - April 8,2008 (Initialing)








exercisable by the chief officer of such international body without further


agreement among the parties hereto.


(f) Principles of fairness and good faith shall apply during the arbitration if no


applicable law or regulation exists.


(g) If the services of ICSID are unavailable to the parties to this Mining Contract,


then such unsettled dispute shall be referred to the Arbitration Institute of the


Stockholm Chamber of Commerce for arbitration pursuant to the Rules of


Arbitration of the United Nations Commission on International Trade Law


(“UNCITRAL”). The place of the arbitration shall be in Stockholm and the


arbitration tribunal shall be composed of three arbitrators appointed in accordance


with the Rules of UNCITRAL. The award of the arbitration tribunal shall be final


and binding on the Parties to this Mining Contract and on any persons who


participated as a party in such arbitration proceedings. Both Parties agree to


accept the jurisdiction of the said Arbitration Institute of the Stockholm Chamber


of Commerce and execute voluntarily the award of the said Arbitration Tribunal


of this Arbitration Institute of the Stockholm Chamber of Commerce.


(h) The arbitration fee shall be borne by the losing party.


PART XV: REVIEW OF CONTRACT TERMS


57 Fiscal Provisions





(a) The parties shall, at five-year intervals from the effective date of this Mining


Contract, review the economic terms of this Mining Contract to determine


whether the Mining Contract shall be amended to provide for an adjusted


allocation of economic benefits between MCC and the Government.


(b) In undertaking such review, the Parties shall bargain in good faith with a view


toward providing a fair and equitable division of profits in light of the economic


factors prevailing at the time of the review.


(c) In undertaking such review the Parties shall be guided by, but not limited to,


consideration of the following factors:


(i) the economic value of the license,





terms of other copper agreements of comparable investment size and


resource conditions negotiated by the Government within the five-year


period preceding the date of review,


(iii) terms of other copper agreements of comparable investment size and


resource conditions negotiated by MCC within the five-year period


preceding the date of review,


(iv) terms of other copper agreements of comparable investment size and


resource conditions negotiated by third parties .





40


Aynak Mining Contract - April 8,2008 (Initialing)








(d) Disputes arising pursuant to this Section shall be resolved in accordance with the


requirements of Section 55 of this Mining Contract.


58 General Review








(a) The Parties shall, at 5 year intervals from the effective date of this Mining


Contract, review the Mining Contract (excluding those sections covered in Section


56 above) to determine whether, in the light of changed circumstances, the Mining


Contract should be amended.


(b) The Parties agree that they shall each carry out such review in good faith and shall


give due regard to the legitimate interests of the other party.


(c) Disputes arising pursuant to this Section shall be resolved in accordance with the


requirements of Section 55 of this Mining Contract.


PART XVI: DOMICILE; SERVICE OF PROCESS


59 General








MCC shall be domiciled and licensed to do business in Afghanistan, be subject to the


jurisdiction of Afghan courts for disputes that are not subject to the dispute resolution


provisions specified in Section 55 of this Mining Contract, and shall maintain an office or


agent in Afghanistan for receipt of service of process or notification or other official or legal


communication.


60 Notices





(a) Notices for the purpose of this Mining Contract shall be sufficiently served if





delivered or sent by registered post: /< S


(i) In the case of the Government, to the Ministry of Mines.


(ii) In the case of MCC, to the manager of the Kabul office.





All notices, requests or other communications required by, provided for in, or


relative to this Mining Contract shall be in writing. E-mails and facsimiles


shall be considered as written communications.


PART XVII: ASSIGNMENT


61 General








In accordance with the requirements of Article 23 of the Minerals Law, MCC may not


assign, transfer, lease or pledge, the mineral rights or any part thereof granted under this





41


Aynak Mining Contract - April 8,2008 (Initialing)








Mining Contract or any rights, privileges, liabilities or obligations granted or imposed by this


Mining Contract, or any interest in the mineral rights without the previous consent in writing


of the Government. The consent of the Government shall not be required where (i) the


assignment is solely for the purpose of providing security for the financing of the Project or


(ii) the assignment is to another company controlled by MCC through share-holding,


provided that the Government shall be informed of any such assignment within thirty days of


the assignment.


(a) The Government shall not give its consent unless it is satisfied:


(i) That the proposed assignee is itself of good reputation or is a member of a


group or groups of companies of good reputation or is owned by a


company or companies of good reputation;


(ii) that there is likely to be available to the proposed assignee either from its


own resources or through other companies in the group of which it is a


member, or otherwise, sufficient technical knowledge, experience and


know-how and sufficient financial resources to enable it effectively to


carry out a program satisfactory to the Government for the operations


hereunder; and


(iii) That the proposed assignee is in all other respects acceptable to the


Government. The Government may impose such conditions on the


assignment as it considers appropriate.


The assignee shall have all the rights and privileges and shall assume all the liabilities


and obligations of the assignor with respect to what is assigned without relieving MCC of


such liabilities and obligations unless the Government expressly consents to such a release.



























































42


Aynak Mining Contract - April 8,2008 (Initialing)








PART XVIII: AGREEMENT PERIOD





62 General








This Mining Contract shall continue in force for a period of 30 years following the


effective date of this Mining Contract. As provided in Section 62, this Mining Contract is


subject to renewal in accordance with the terms and conditions specified in Article 22 of the


Minerals Law, and other applicable provisions of this Mining Contract. It is understood and


agreed that if, at any time, MCC shall propose a substantial new investment in the Project or


shall require an extension of the term of this Mining Contract in order to facilitate additional


financing, long-term sales contracts or otherwise, and in any event at least five years prior to


the expiration date of this Mining Contract, the Government will give sympathetic


consideration to a request by MCC to extend the term of this Mining Contract to permit


continuation of the Project on the basis of long-term planning and sound mining and


operating practices and to assure continuing employment of those devoting their time and


efforts to the success of the Project.


PART XIX: RIGHT OF RENEWAL OF MINING CONTRACT





63 General








(a) This Mining Contract can be renewed for consecutive five year periods until


exhaustion of the deposits being exploited on the same conditions except those


relating to taxation, royalty payments, land rent, and other provisions relating to


MCC’s fulfillment of its financial obligations to the Government.


(b) Provided however, that such rights of renewal are subject to MCC’s fulfillment of


its obligations under this Mining Contract.





PART XX: AMENDMENT





64 General /> / \








This Mining Contract may be amended by the mutual agreement of the Parties. Each


amendment shall be in writing and shall be effective according to the specific terms of the


amendment. \ \
































43


Aynak Mining Contract - April 8, 2008 (Initialing)











PART XXI: COMPLETE AGREEMENT


65 General











This Mining Contract, consisting of the above Parts 1-XX1, Sections l-65_and


Appendices I-I I, constitutes die complete agreement of the Parties and shall become


effective in accordance with the terms of this Mining Contract. This Mining Contract shall


be executed in English in four (4) originals with each Party holding two (2) originals and in


Dari. In the event that a dispute arises under this Mining Contract, between the English and


Dari versions, the English text shall be definitive as to the terms, conditions, rights and


obligations of the Parties under this Mining Contract.











Agreed:














































































































44


Aynak Mining Contract - April 8, 2008 (Initialing)











APPENDIX 1: LICENSE AREA














The Aynak Exploration and Exploitation areas are defined as follows:





Coordinates of the Aynak Reserved Areas








Exploration Area - D Area = 106.332 km2





Points Longitude Latitude Decimal Degrees





A 69° 16’ 00" 34° 14’ 30" 69.26666E 34.24166N





B 69° 25' 30" 34° 14' 30" 69.425E 34.24166N


C 69° 25’ 30" 34° 19’ 30" 69.425E 34.325N





D 69° 16' 00" 34° 19’ 30” 69.26666E 34.325N


H 69° 16' 00" 34° IT 30” 69.26666E 34.29167N





G 69° 20' 00" 34° IT 30" 69.33333E 34.29167N





F 69° 20' 00" 34° 15’ 00" 69.33333E 34.25N


E 69° 16’ 00" 34° 15’ 00" 69.26666E 34.25N











Exploitation Area - E Area = 28.357 km2


E 69° 16' 00" 34° 15'00" 69.26666E 34.25N





F 69° 20' 00" 34° 15' 00" 69.33333E 34.25N





G 69° 20' 00" 34° IT 30" 69.33333E 34.29167N


H 69° 16’ 00" 34° IT 30" 69.26666E 34.29167N











The following graphic depicts the relative positions of the points described above:





































































































45


 Avnak Mining Contract - Anril 8. 2008 (Initialing)





69.26666,34 325 S3.425 34 325


D- ■Q





Aynak Exploration Area = 106.332 km2








66.26666 34.26167


























69 42S, 34 24166




















The Exploitation Area (“E”) provides sufficient coverage for the development of the


resources and reserves of the Aynak Central and Western mineralized zones. As defined in


the Mineral Laws of Afghanistan, Article 3:13, Exploitation “means any activity which, from


an identified Deposit (the Central and West Aynak zones), exploration, pre-production


development and extraction of Mineral Substances (all contained minerals) takes place by


means of open [surface] and/or underground works, from a natural Deposit or an Artificial


Deposit for its processing, using or selling.”





The Exploration Area (“D”) covers other known copper prospects and land with


potential for discovery of additional economic mineralization. As defined in the Mineral


Laws of Afghanistan, Article 3:15, Exploration “means any activity carried out to discover


Mineral Substances, to demarcate it, to evaluate the quality and quantity of the reserves


contained within it, or to evaluate the possibilities of exploiting it.”


Ultimately, successful negotiation and execution of an Agreement to exploit the


copper and other associated minerals at the Aynak copper deposit, will include the right to


undertake a program of exploration, development, construction, mining, processing,


marketing and sales under terms and subject to the conditions of the Agreement and on the


basis of laws and regulations of the Islamic Republic Afghanistan.
































Y 46








Aynak Mining Contract - April 8, 2008 (Initialing)











APPENDIX 2: PROJECT SCHEDULE


Schedules taken from MCC Proposal (Appendix 6 of this Mining Contract). Modified to reflect months and quarters.











No Description Y1 Y2


I 2 34 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7


INVESTIGATION AND STUDY





1.1 Geologic investigation and research for Aynak deposit


1.2 Investigation on potential copper resources


1.3 Hydrogeological condition at mine site





1.4 Environmental background investigation


1.5 Investigation on auxiliary and raw materia) resources





EXPLORATORY DRILLING AT SITE AREA


2.1 Verification for exploratory hole





2.2 Supplementary exploratory drilling at central area


2.2 Prospecting bore hole at west area





PROCESSING AND SMELTING SAMPLING AND TEST


ROCK MECHANICS TEST





WATER SOURSE EVALUATING


6 DEVELOPMENT SCHEME RESEARCH


6.1 PrefeasibHity study








6.2 Environmental management scheme


6.3 Feasibility study





6.4 Pit snutoff scheme





Fig. 3-2 Due diligence and pre-development plans























47


Aynak Mining Contract - April 8, 2008 (Initialing)








Year Y1 Y2 Y3 Y4 Y5


Quarter m. 21 21 2_ 21 21 2i £ 21 21 21 Q3 04 Qi Q2 Q3 24








EFFE C'TIVENESS OF MC


DUE DILIGENC E


V enfication Dulling LEGEND


Data Collecting and Analysing Due Diligence


Resources Modelling Preconstruction work


pre-dem;lopmext Purchasmg


Infill Drilling and Bulk Sampling Construction





Test and Research Commissioning


Feasibility Study mmwmm mm m


Basic Engineering


Detail Design


PURCHASING


CONSTRUCTION


Open Pit Prestripping





Concentrator Construction


Smelter Construction


SX-EW Plant


Township C onstnicoon


Infrastructure Construction


COMMISSIONING








Months 1 1 10 13 16 19 22 25 23 31 31 37 10 43 46 49 52 55 53


Fig. 4-9-1 Schedule of project execu ion


Aynak Mining Contract - April 8,2008 (Initialing)





APPENDIX 3: REPORTS TO BE SUBMITTED


Subject to the promulgation of reporting requirements in the Mining Regulations as may be


adopted by the Ministry of Mines in the future, the following reports shall be prepared and


submitted by MCC to the Ministry of Mines:


1. Reports to the Government and Records to be Maintained


(a) With respect to the Company’s obligation to pay taxes on net income, the


Company shall submit such information and documents as required in the Income


Tax Law.


(b) With respect to MCC’s exploratory and mining activities, MCC shall submit such


information and documents as required in Section 4 below.


(c) In addition, the following shall be delivered to the Government: Environmental


Reports, Social Reports and Other Reports as may be required by the Ministry of


Mines.


(d) MCC shall furnish to the Ministry of Mines all other information of whatever kind


which the latter may request in order that the Ministry of Mines may be fully


apprised of the Company’s exploration and exploitation activities.


(e) All information furnished to the Government shall be in English and translated


into one of the official languages of Afghanistan. All translations shall be


acceptable to the Ministry of Mines. All financial data shall be recorded in [US


Dollars].


(f) MCC shall maintain all original records and reports relating to its activities and


operations under this Agreement including all documents relating to financial and


commercial transactions with Independent Parties and Affiliates in its principal


office in Afghanistan. These records and reports shall be opened to inspection by


the Government through an authorized representative during normal working


hours. Such reports and records shall be maintained in the English language and


all financial data shall be recorded in [US Dollars].


(g) The provisions of this Schedule shall apply to MMC’s co-participants, affiliates,


contractors, and subcontractors to the extent that such co-participant, affiliate,


contractor, or subcontractor carries out operations and activities in furtherance of


the Company’s obligations, activities and operations under this agreement.


2. Confidential Reports


(a) Any information supplied by the Company shall (except with the consent in


writing of the Company which shall not be unreasonably withheld) be treated by


all persons in the service of the Government as confidential, but the Government


shall nevertheless be entitled at any time to make use of any information received


from the Company for the purposes of preparing and publishing aggregated


returns and general reports on the extent of prospecting or mining operations in


Afghanistan, promoting mineral exploration and development in Afghanistan and








49


Aynak Mining Contract - April 8, 2008 (Initialing)








for the purpose of any arbitration or litigation between the Government and the


Company.


(b) All records, reports, plans, maps, charts, accounts, and information which the


Company is or may be from time to time required to supply under the provisions


of this Agreement shall be supplied at the expense of the Company. MCC shall


supply such information in three paper copies and a digital form as prescribed


from time to time.


3. Reasonable Inspection


Any person or persons authorized by the Government shall be entitled at all


reasonable times to enter into and upon any part of the premises of the Company and inspect


its work, activities, and operations to insure the proper implementation by the Company of


the provisions of any law applicable to the work, activities and operations of the Company,


including the provisions of this Agreement and any regulations and decisions issued for the


implementation of any applicable law.


4. Progress Reports


(a) The Company will keep the Government, through the Ministry of Mines advised


concerning the Company’s operations through submission of quarterly progress


reports, beginning with the first quarter following the Date of this Agreement, as


to the progress and results of the Company’s development operations and


activities under this Agreement. All reports shall be supplied in a form as agreed


by the Parties.


(b) The Company shall file with the Ministry of Mines a summary of its geological


and metallurgical investigations, all geological, geophysical, topographic, and


hydrographic data obtained from the general survey and exploration and a sample


representative of each principal type of copper-bearing mineralization encountered


in its investigations.


(c) Exploration Reports. Quarterly reports relating to any exploration activities shall


include:


(i) The results of geological and geophysical investigations and


proving of ore deposits in the exploration area and the sampling of


such deposits, including but not limited to the following to be supplied


in 3 paper copies and a digital form as prescribed from time to time:


i. Copies of all raw and processed digital data, survey parameters and


reports resulting from all geophysical and geochemical surveys;


ii. Copies of all geological and other technical reports including reports


on reserve estimates, mining, environmental and social assessments;


iii. Copies of all drill logs including hole location and elevation, all


descriptions of all formations intersected and depths, all geophysical


down hole logs, analyses of all samples taken, and appropriate core


splits from holes on the Exploitation and Exploration licenses;


50





Aynak Mining Contract - April 8, 2008 (Initialing)








iv. MCC shall maintain a core library from all drilling at properties on


the Exploration and Exploitation licenses. The Ministry of Mines


will have access to the Core Library.





The results of any general reconnaissance of the various sites of


proposed operations and activities under this Agreement;


(iii) Information concerning the selection of routes for roads and


railways;


Information concerning the planning of suitable townsites,





including information of suitable water and power supplies for the


townsites and other facilities;





(v) Such other plans and information as to the progress of operations in


the exploration area as the Ministry of Mines may from time to time


reasonably require.


(d) Exploitation Reports:


The Company shall submit to the Ministry of Mines a monthly





statistical report beginning with the first month following the


commencement of mining operations which shall set forth the number


and location of the workings on which work was begun during the


preceding month; the number of workmen employed thereon at the end


of the month, a list of the equipment at the workings at the end of the


month and a brief description of the work in progress at the end of the


month and of the work contemplated during the following month.


The Company shall furnish to the Ministry of Mines quarterly


reports beginning with the first quarter following the commencement


of the exploitation period concerning the progress of its operations in


the License Area. This report shall specify in full:


i. Those workings in which ore is considered to have been found,


regardless of whether the deposits are deemed to be commercial or


not (together with all data relative to the estimated volumes of the


reserves, ,the kind or kinds of such ore encountered, and the analyses


thereof) the number and description of workings which have been


placed in commercial production and the full particulars concerning


the disposition of such production; the number of workmen


employed on each such working as of the work in progress at the end


of the quarter in question and of the work contemplated during the


ensuing quarter.


ii. The work accomplished during the quarter in question with respect to


all installations and facilities directly or indirectly related to its


exploitation program such as, but not limited to, those accessory


works and installations described in Part IV hereof, together with the


work contemplated for the ensuing quarter with respect to the same


installations and facilities and indicating actual and estimated


Y


51











Aynak Mining Contract - April 8, 2008 (Initialing)








investment in such installations and facilities made, committed, or to


be committed with respect to such installations and facilities.


iii. The Company shall furnish to the Ministry of Mines an annual report


beginning with the first complete year following the First Mining


Day which shall include:


The number and description of the workings which were in





progress at the end of the year preceding the years in


question (with a showing as to which are in commercial


production); the number and description of workings


abandoned during the year; the production of each of the


workings, regardless of whether in commercial production


or not, with a full description of the kind and quality and


analysis of ore produced from each working, the number of


workings on which activities are continuing at year end, but


which have not gone into commercial production.


(b) The total volume of ores, kind-by-kind, broken down


between volumes mined, volumes transported from the


mines and their corresponding destination, volumes


stockpiled at the mines or elsewhere in Afghanistan,


volumes sold or committed for export (whether actually


shipped from Afghanistan or not), volumes actually shipped


from Afghanistan (with full details as to purchaser,


destination and terms of sale), volumes refined, processed


and/or manufactured within Afghanistan with full


specifications as to the intermediate products, byproducts,


or final products, outtumed with Afghanistan (with full


showing as to the disposition of such intermediate products,


byproducts or final products and of the terms on which they


were disposed); and


(c) Work accomplished and work in progress at the end of the





year in question with respect to all of the installations and


facilities related to the exploitation programs, including, but


not limited to those referred to in this Schedule herein,


together with a full description of all work programmed for


the ensuing year





iv. Monthly and quarterly reports shall be submitted to the Ministry of


Mines in quadruplicate within thirty days of the end of the month or


quarter in question, as the case may be. Annual reports shall be


submitted in quadruplicate within ninety days of the end of the year


in question.




















52


Aynak Mining Contract - April 8, 2008 (Initialing)








APPENDIX 4: DEVELOPMENT PLAN AND BUDGET


See Appendix 6 for the MCC Proposal Development Plan. This is to be replaced by the


Development Plan and Budget resulting from the completion of the Feasibility Study.





































































































At


53





Aynak Mining Contract - April 8, 2008 (Initialing)








APPENDIX 5: ROYALTY DEFINITION


Section 21 of Mining Contract: Royalties


(a) MCC shall pay royalties on minerals mined and processed from the Aynak deposit


in accordance with the royalty details below. Royalties shall be paid in United


States Dollars or such other currency as may be mutually agreed and shall be paid


on or before the last day of the first month following the end of each calendar


quarter. Each payment shall be accompanied by a statement in reasonable detail


showing the basis of computation of royalties due in respect of production made


during the preceding calendar quarter.


(b) Royalties will be computed as follows:


(i) Metal Quantities


1. The tonnage or quantity of copper and Associated Minerals by weight


used in the computation shall be that quantity delivered for shipment or


for domestic sale. The quantity by weight of each mineral subject to


royalty shall be properly determined by internationally accepted assay


methods. The value of the Associated Minerals will be converted to


copper equivalent weight by using metal prices as defined below and


added to the tonnage of copper subject to the royalty calculation.


(ii) Metal Prices


1. For copper and Associated Minerals having a London Metal Exchange


(“LME”) price quotation or for which the saleable mineral content has


an LME price quotation. The price used in the computation shall be


the US Dollar price per unit for the same or most equivalent traded


type of grade of the Minerals concerned, calculated as the average of


the LME daily official settlement prices for the calendar quarter.


2. For those Associated Minerals having no London Metal Exchange


price quotation the price used in the computation shall be the average


calendar quarter US Dollar price as published in the Metals Week


Monthly Average Report for the calendar quarter.


(iii) Royalty Rates


1. The royalty rate is a sliding scale royalty based on the copper price.


The formula for the calculation is:


a. When the copper price is equal to or less than US$ 1.00/pound,


the royalty rate = 2.5% x 120%, or 3.0%;


b. When the copper price is greater than US$ 1.00/pound and


equal to or less than US$2.00/pound, the royalty rate is based


on:











54


Aynak Mining Contract - April 8, 2008 (Initialing)





Royalty rate = (10 x copper price (US$/ pound) - 7.5) x 120%;


and


c. When the copper price is greater than US$2.00/pound, the





royalty rate=15% x 130%, or 19.5%.


(iv) Royalty shall not be payable on any construction materials obtained from


the License Area and used by MCC for public purposes such as but not


limited to roads, bridges, railways, port facilities, airports, community


buildings, housing or any other infrastructure used in relation to the


Project.





Royalty Rate

















Gross Royalty




































































Y 55








Aynak Mining Contract - April 8, 2008 (Initialing)








APPENDIX 6: MCC PROPOSAL


The MCC Avnak Financial and Technical Proposal is adopted and incorporated by reference


in its entirety in this Mining Contract. The definitive version of MCC’s Proposal is


maintained in the Ministry of Mines office in Kabul. Afghanistan.





























































































































V


56





Aynak Mining Contract - April 8,2008 (Initialing)








APPENDIX 7: RAILWAY MEMORANDUM OF AGREEMENT



























































































































































y


57








Aynak Mining Contract - April 8, 2008 (Initialing)








MEMORANDUM OF AGREEMENT CONCERNING MCC’s RAILWAY


COMMITMENT


l. Parties


This Memorandum of Agreement (“MOA”) is entered into this_day of_, 2008 by


and between the Government of Afghanistan (“Government”) and MCC-Jiangxi Copper


Consortium (“MCC”), collectively known as the “Parties.”


II. Purpose of MOA


The purpose of this MOA is to incorporate MCC’s binding commitment to the Government


to construct and operate a railway, at its own cost and consistent with the terms specified in


MCC’s letter dated September 25,2007 into the Aynak Mining Contract as an enforceable


part of the Aynak Mining Contract. The Parties acknowledge and agree that, as of the date of


this MOA, the specific conditions and requirements for the route, construction and operation


of the railway have not been definitively established by the Parties, thereby precluding the


Parties from concluding a definitive railway agreement at the same time as the Aynak Mining


Contract. Nonetheless, in order to conclude the Aynak Mining Contract in a timely manner


and to recognize the importance which the Government places on MCC’s commitment


concerning the railway, the Parties acknowledge and agree that MCC’s railway commitment


shall be memorialized in this MOA which shall be adopted and incorporated into the Aynak


Mining Contract as an enforceable part of the Aynak Mining Contract. The Parties


acknowledge and agree that this MOA shall be binding on the Parties and shall form the basis


for a definitive railway agreement to be negotiated and concluded by the Parties.


m. Commitments of the Parties


MCC has made the following commitments to the Government concerning the railway in its


September 25, 2007 letter:


1. MCC will conduct reconnaissance (survey) and prepare a feasibility study according


to the schedule provided in MCC’s August 16, 2007 letter.


2. Upon completion of the feasibility study and on the basis of the railway project being


feasible, MCC will build the railway on a “BOOT” (Build, Own, Operate, and Transfer)


basis.


2.1 MCC will arrange 100% financing for the construction of the railway.


2.2 MCC will design and build the railway on its own.


2.3 MCC will own the railway and be responsible for the overall operation and


management of the railway upon completion of the railway construction and


commencement of operations.


3. Within the two years before the full recovery of MCC’s investment, the Government


should form an operating entity (or joint venture operating entity with MCC) to work together


with MCC for the purpose of studying and formulating relevant issues and policies regarding


the operation and management of the railway following its take-over by the Government.








58


Aynak Mining Contract - April 8,2008 (Initialing)





4. After the full recovery of MCC’s investment, MCC will transfer the railway to the


Government.


5. MCC will provide free training concerning the maintenance, operation and


management of the railway.


The Government has made a commitment to MCC to use its authorities to assist MCC in


securing the land and route necessary to construct the railway. The Parties agree that the


feasibility study shall be provided to the Government for review. In the event that the


Government disagrees with the conclusions of the feasibility study, the Government may


retain an independent expert to review the feasibility study.


IV. Definitive Agreement


Based on the scope of MCC’s commitments specified above, the Parties shall use their best


efforts to conclude a definitive railway agreement on mutually acceptable terms and


conditions. Pursuant to section 30 of the Aynak Mining Contract, the Parties shall negotiate


in good faith to conclude a definitive railway agreement within 12 months of the effective


date of the Aynak Mining Contract. The Parties acknowledge and agree that the failure to


conclude a railway agreement within this timeframe shall constitute cause to revoke the


Mining Contract pursuant to Section 47 of the Mining Contract.


V. Miscellaneous


1. This MOA and the Parties’ actions in implementing this MOA shall be subject to the


applicable provisions of the Aynak Mining Contract, including without limitation, the


provisions of the Aynak Mining Contract concerning dispute resolution, default and


termination.


2. This MOA may be modified by the written agreement of the Parties.





IN WITNESS WHEREOF, the Parties hereby execute this MOA by the signatures of their


authorized representatives:


Ministry of Mines MCC-Jiaisgxl Copper Consortiums





 Aynak Mining Contract - April 8, 2008 (Initialing)











APPENDIX 8: POWER SUPPLY MEMORANDUM OF A













































































































































































60


Aynak Mining Contract - April 8, 2008 (Initialing)








MEMORANDUM OF AGREEMENT CONCERNING POWER SUPPLY


I. Parties


This Memorandum of Agreement (“MO A”) is entered into this_day of_, 2008 by


and between the Government of Afghanistan (“Government”) and MCC-Jiangxi Copper


Consortium (“MCC”), collectively known as the “Parties.”


II. Purpose of MOA


The purpose of this MOA is to incorporate the Parties’ commitments to each other with


respect to the location, construction and operation of the power supply for the Aynak Project


into the Aynak Mining Contract as an enforceable part of the Aynak Mining Contract. The


Parties acknowledge and agree that, as of the date of this MOA, the specific conditions and


requirements for the location, construction and operation of the power supply have not been


definitively established by the Parties, thereby precluding the Parties from concluding a


definitive power supply agreement at the same time as the Aynak Mining Contract


Nonetheless, in order to conclude the Aynak Mining Contract in a timely manner and to


recognize the importance which the Parties place on development of an adequate power


supply for the Aynak Project, the Parties acknowledge and agree that the Parties’ power


supply commitments shall be memorialized in this MOA which shall be adopted and


incorporated into the Aynak Mining Contract as an enforceable part of the Aynak Mining


Contract. The Parties acknowledge and agree that this MOA shall be binding on the Parties


and shall form the basis for a definitive power supply agreement to be negotiated and


concluded by the Parties.


in. Power Supply Commitments


MCC has made a commitment to the Ministry of Mines to construct, at MCC’s sole expense,


one, four hundred (400) megawatt capacity coal fired power plant to supply electrical power


to the Project and to Kabul. The Ministry of Mines has made commitments to MCC to make


available sufficient coal resources for MCC’s use in the power plant and to make available


adequate land to establish the power plant. The Parties agree that the coal resources shall be


granted to MCC pursuant to a sole source process under the Minerals Law and on the basis of


MCC paying a reasonable royalty agreed to by the Parties. The Parties also agree that


MCC’s exploration, development, exploitation and use of the coal resources shall be at


MCC’s sole expense and in compliance with all applicable requirements under the laws of


Afghanistan, including those requirements concerning the payment of royalties and income


tax. The Parties agree that they will work co-operatively to locate suitable areas where coal


resources are likely to be of a sufficient quantity and quality to fuel the power plant. MCC


agrees that it will undertake all exploration, development, and exploitation activities in the


areas identified by the Parties. The Ministry of Mines agrees to provide all necessary


assistance with respect to making available information and licenses to plan and expedite the


necessary coal exploration and mine development. Upon identification by MCC of a coal


reserve of suitable quantity and quality, the Ministry of Mines will diligently process the


approvals necessary to allow MCC to exploit the coal reserve and fuel the power plant. The


Parties acknowledge and agree that, as of the date of this Mining Contract, the specific


conditions and requirements for the location, construction and operation of the power plant,


have not been definitively established by the Parties. With respect to the sale of surplus


Aynak Mining Contract - April 8,2008 (Initialing)





power to the Government of Afghanistan by MCC, the Parties agree that the price of surplus


power shall be determined by the mutual agreement of the Parties.


IV. Definitive Agreement


Based on the scope of power supply commitments described above, the Parties shall use their


best efforts to conclude a definitive power supply agreement on mutually acceptable terms


and conditions. Pursuant to section 31 of the Aynak Mining Contract, the Parties shall


negotiate in good faith to conclude a power supply agreement within two (2) months of the


effective date of the Mining Contract. The Parties agree that the negotiations can be extended


for an additional two (2) months if the Parties cannot reach agreement within the first two (2)


months. The Parties acknowledge and agree that the failure to conclude a power supply


agreement within this timeframe shall constitute cause to revoke this Mining Contract


pursuant to Section 47 of this Mining Contract.


V. Miscellaneous


1. This MOA and the Parties’ actions in implementing this MOA shall be subject to the


applicable provisions of the Aynak Mining Contract, including without limitation, the


provisions of the Aynak Mining Contract concerning dispute resolution, default and


termination.


2. This MOA may be modified by the written agreement of the Parties.








IN WITNESS WHEREOF, the Parties hereby execute this MOA by the signatures of their


authorized representatives:


Ministry of Mines MCC-Jiangxi Copper Consortium


Aynak Mining Contract - April 8, 2008 (Initialing)











APPENDIX 9: WATER SUPPLY MEMORANDUM OF AGREEMENT
















































































































































































63


Aynak Mining Contract - April 8, 2008 (Initialing)








MEMORANDUM OF AGREEMENT CONCERNING WATER SUPPLY


I. Parties


This Memorandum of Agreement (“MOA”) is entered into this_day of_, 2008 by


and between the Government of Afghanistan (“Government”) and MCC-Jiangxi Copper


Consortium (“MCC”), collectively known as the “Parties.”


II. Purpose of MOA


The purpose of this MOA is to incorporate the Parties’ commitments to each other with


respect to the location, construction and operation of the water supply for the Aynak Project


into the Aynak Mining Contract as an enforceable part of the Aynak Mining Contract. The


Parties acknowledge and agree that, as of the date of this MOA, the specific conditions and


requirements for the location, construction and operation of the water supply have not been


definitively established by the Parties, thereby precluding the Parties from concluding a


definitive water supply agreement at the same time as the Aynak Mining Contract.


Nonetheless, in order to conclude the Aynak Mining Contract in a timely manner and to


recognize the importance which the Parties place on development of an adequate water


supply for the Aynak Project, the Parties acknowledge and agree that the Parties’ water


supply commitments shall be memorialized in this MOA which shall be adopted and


incorporated into the Aynak Mining Contract as an enforceable part of the Aynak Mining


Contract. The Parties acknowledge and agree that this MOA shall be binding on the Parties


and shall form the basis for a definitive water supply agreement to be negotiated and


concluded by the Parties.


III. Water Supply Commitments


MCC has made a commitment to the Government to construct water supply wells and a


pipeline system, at MCC’s sole expense, in the vicinity of the Project to supply the Project’s


fresh water requirements. MCC has also committed to reuse and re-circulate process water to


the extent possible. The Government of Afghanistan has made a commitment to MCC to


make available sufficient water resources for MCC’s use in the Project. Subject to the


requirements of Section 37(c) of this Mining Contract concerning the protection of local


water use, the Parties agree in principle that MCC may obtain water from local water sources


to supply its needs. In the event that sufficient water is not available from these sources, the


Parties agree that they will work co-operatively to locate water supplies that are likely to be


of a sufficient quantity to meet MCC’s requirements. The Government agrees to provide all


necessary assistance with respect to making available information and licenses to plan and


expedite the necessary water supply development. Upon identification of water supplies of


suitable quantity, the Government will diligently process the approvals necessaiy to allow


MCC to utilize the water supplies. The Parties acknowledge and agree that, as of the date of


this MOA, the specific conditions and requirements for the location, construction and


operation of the water supply system have not been definitively established by the Parties.


IV. Definitive Agreement


Based on the scope of the general water supply commitments described above, the Parties


shall use their best efforts to conclude a definitive water supply agreement on mutually


acceptable terms and conditions. Pursuant to section 32 of the Aynak Mining Contract, the


Aynak Mining Contract - April 8, 2008 (Initialing)








Parties agree to negotiate in good faith to conclude a water supply agreement within three (3)


months of the effective date of the Mining Contract. The Parties agree that the negotiations


can be extended for an additional three (3) months if the Parties cannot reach agreement


within the first three (3) months. The Parties acknowledge and agree that the failure to


conclude a water supply agreement within this timeframe shall constitute cause to revoke the


Mining Contract pursuant to Section 47 of the Mining Contract.


V. Miscellaneous


1. This MOA and the Parties’ actions in implementing this MOA shall be subject to the


applicable provisions of the Aynak Mining Contract, including without limitation, the


provisions of the Aynak Mining Contract concerning dispute resolution, default and


termination.


2. This MOA may be modified by the written agreement of the Parties.


IN WITNESS WHEREOF, the Parties hereby execute this MOA by the signatures of then-


authorized representatives:


Ministry of Mines MCC-Jiangxi Copper Consortium




































































65


Aynak Mining Contract - April 8, 2008 (Initialing)


Aynak Mining Contract - April 8, 2008 (Initialing)








MEMORANDUM OF AGREEMENT CONCERNING SECURITY


I. Parties


This Memorandum of Agreement (“MOA”) is entered into this_day of_, 2008 by


and between the Government of Afghanistan (“Government”) and MCC-Jiangxi Copper


Consortium (“MCC”), collectively known as the “Parties.”


II. Purpose of MOA


The Parties acknowledge and agree that the establishment and maintenance of acceptable


security for the Project is a necessary condition for the successful construction and operation


of the Project. The Parties further acknowledge and agree that security is the general


responsibility of the Government, although specific security tasks may be the responsibility


of MCC. The purpose of this MOA is to incorporate the Parties’ commitment to develop,


install and maintain adequate security structures, procedures and personnel for the Project


into the Aynak Mining Contract as an enforceable part of the Aynak Mining Contract. The


Parties acknowledge and agree that, as of the date of this MOA, the specific conditions and


requirements for the establishment and maintenance of adequate Project security have not


been definitively established by the Parties, thereby precluding the Parties from concluding a


definitive security agreement at the same time as the Aynak Mining Contract. Nonetheless,


in order to conclude the Aynak Mining Contract in a timely manner and to recognize the


importance which the Parties place on security, the Parties acknowledge and agree that the


Parties’ security commitments shall be memorialized in this MOA which shall be adopted


and incorporated into the Aynak Mining Contract as an enforceable part of the Aynak Mining


Contract. The Parties acknowledge and agree that this MOA shall be binding on the Parties


and shall form the basis for a definitive security agreement to be negotiated and concluded by


the Parties.


ID. Security Commitments


The Parties acknowledge and agree that the Government shall be responsible for the overall


security of the Project. The Parties also agree that MCC shall cooperate with the Government


in taking security measures requested by the Government.


IV. Definitive Agreement


Based on the scope of the security commitments specified above, the Parties shall use their


best efforts to conclude a definitive security agreement on mutually acceptable terms and


conditions. Pursuant to section 35 of the Aynak Mining Contract, the Parties shall negotiate


in good faith to conclude a definitive security agreement within 2 months of the effective date


of the Aynak Mining Contract. The Parties acknowledge and agree that the failure to


conclude a security agreement within this timeframe shall constitute cause to revoke the


Mining Contract pursuant to Section 47 of the Mining Contract.




















67


-V





Aynak Mining Contract - April 8, 2008 (Initialing)





V. Miscellaneous


1. This MOA and the Parties’ actions in implementing this MOA shall be subject to the


applicable provisions of the Aynak Mining Contract, including without limitation, the


provisions of the Aynak Mining Contract concerning dispute resolution, default and


termination.


2. This MOA may be modified by the written agreement of the Parties.





IN WITNESS WHEREOF, the Parties hereby execute this MOA by the signatures of then-


authorized representatives:


Ministry of Mines MCC-Jiangxi Copper Consortium






















































































68


Aynak Mining Contract - April 8, 2008 (Initialing)








IV. Definitive Agreement


Based on the scope of the commitments described above, the Parties shall use their best


efforts to conclude a definitive agreement concerning these minerals on mutually acceptable


terms and conditions. Pursuant to section 33 of the Aynak Mining Contract, the Parties agree


to negotiate in good faith to conclude a mineral supply agreement within three (3) months of


the effective date of the Mining Contract and the negotiations can be extended for an


additional three (3) months if the Parties cannot reach agreement within the first three (3)


months. The Parties acknowledge and agree that the failure to conclude a mineral supply


agreement within this time frame shall constitute cause to revoke this Mining Contract


pursuant to Section 47 of this Agreement.


V. Miscellaneous


1. This MOA and the Parties’ actions in implementing this MOA shall be subject to the


applicable provisions of the Aynak Mining Contract, including without limitation, the


provisions of the Aynak Mining Contract concerning dispute resolution, default and


termination.


2. This MOA may be modified by the written agreement of the Parties.


IN WITNESS WHEREOF, the Parties hereby execute this MOA by the signatures of their


authorized representatives:


Ministry of Mines MCC-Jiangxi Copper Consortium













































































71


Aynak Mining Contract - April 8, 2008 (Initialing)








MEMORANDUM OF AGREEMENT CONCERNING PHOSPHATE, LIMESTONE


AND QUARTZ (Silica) SUPPLY





I. Parties


This Memorandum of Agreement (“MOA”) is entered into this_day of_, 2008 by


and between the Government of Afghanistan (“Government”) and MCC-Jiangxi Copper


Consortium (“MCC”), collectively known as die “Parties.”


H. Purpose of MOA


The purpose of this MOA is to incorporate the Parties’ commitments to each other with


respect to the location and supply of phosphate, limestone, quartz) identified by MCC as


necessary for the operation of the Aynak Project into the Aynak Mining Contract as an


enforceable part of the Aynak Mining Contract. The Parties acknowledge and agree that, as


of the date of this MOA, the specific conditions and requirements for the location and supply


of these minerals have not been definitively established by the Parties, thereby precluding the


Parties from concluding a definitive agreement concerning these minerals at the same time as


the Aynak Mining Contract. Nonetheless, in order to conclude the Aynak Mining Contract in


a timely manner and to recognize the importance which the Parties place on the location and


supply of these minerals for the Aynak Project, the Parties acknowledge and agree that the


Parties’ commitments concerning these minerals shall be memorialized in this MOA which


shall be adopted and incorporated into the Aynak Mining Contract as an enforceable part of


the Aynak Mining Contract. The Parties acknowledge and agree that this MOA shall be


binding on the Parties and shall form the basis for a definitive agreement concerning these


minerals to be negotiated and concluded by the Parties.


IH. Commitments Concerning Phosphate, Limestone and Quartz


In order to fulfill its commitment to the Government to fund, construct and operate a smelter


in Afghanistan, MCC has requested that the Government provide access to deposits of


phosphate, limestone and quartz for MCC’s use in the Aynak Project. The Government has


made a commitment to MCC to make available potential sources of limestone and quartz that


MCC can use in the Aynak Project. In addition, the Government will use its best efforts to


make available potential sources of phosphate for MCC’s use in the Aynak Project. The


Parties agree that the phosphate, limestone and quartz resources shall be granted to MCC


pursuant to a sole source process under the Minerals Law and on the basis of MCC paying a


reasonable royalty agreed to by the Parties. The Parties also agree that MCC’s exploration,


development, exploitation and use of the phosphate, limestone and quartz resources shall be


at MCC’s sole expense and in compliance with all applicable requirements under the laws of


Afghanistan, including those requirements concerning the payment of royalties and income


tax. The Parties agree that they will work co-operatively to locate suitable areas where such


mineral resources are likely to be of a sufficient quantity and quality to meet MCC’s


requirements. The Government agrees to provide all necessary assistance with respect to


making available information and licenses to plan and expedite the necessary mineral


exploration and mine development. Upon identification of mineral reserves of suitable


quantity and quality, the Government will diligently process the approvals necessary to allow


MCC to exploit the mineral deposits.


Aynak Mining Contract - April 8, 2008 (Initialing)











APPENDIX 11: PHOSPHATE, LIMESTONE AND QUARTZ (SILICA)


MEMORANDUM OF AGREEMENT

























































































































































































69