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Title: |
Joint Venture Contract |
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Date: |
2005 |
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Preview shows 18KB of 72KB total |
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$39 |
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#1347900 |
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JOINT VENTURE CONTRACT
1. General Principles
THIS CONTRACT is made by and between YUNNAN NONFERROUS GEOLOGY AND MINING LTD OF YUNNAN PROVINCE and LUNA GOLD (CHINA) CORP. for the establishment of Xinlong Mineral Recources Co. Ltd. and the joint exploration and if successful mining of viable deposits discovered in the Gongguo and its surrounding area, approximately 420 km2 (hereinafter referred to as the "Gongguo Project" or the "Project Area") in Yunnan Province, People's Republic of China ("PRC") and other agreed projects in the PRC in accordance with the "Laws of the People's Republic of China on Chinese-Foreign Cooperative Enterprises" and other applicable relevant PRC laws and regulations, based on the principle of equality and mutual benefits and through friendly consultations. Unless the terms or context of this CONTRACT otherwise provide, the words and phrases set out in Appendix 1 shall have the meanings set out in that Appendix when used in this CONTRACT and the Appendices hereto.
2. Parties to this CONTRACT
2.1 The parties to this CONTRACT (hereinafter referred to jointly as the "Parties" and individually as a "Party") are
Yunnan Nonferrous Geology and Mining Ltd. of Yunnan Province ("Party A"), a company registered in Yunnan Province, PRC with its place of business at "No. 93 Remin East Road, Kunming, Yunnan Province 650051, P.R.C."
Fax: 86-871-3177670
Legal Representative: [to be filled in]
Position: *
Nationality: Chinese
Luna Gold (China) Corp., a subsidiary of Luna Gold Corp., or its associated company ("Party B"), registered in British Virgin Islands with its place of business at Suite 1600, 777 Dunsmuir Street, P.O. Box 10425, Pacific Centre, Vancouver, British Columbia, Canada V7Y 1K4
Fax: (1-604) 688-0094 with copy to Fax: (612) 9983 1682
Legal Representative: David DeWitt
Position: President
Nationality: Canadian
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3. Establishment of Joint Venture
3.1 Establishment of Joint Venture
In accordance with the "Law of PRC on Chinese-Foreign Co-operative Enterprises" and other applicable PRC laws and regulations, Party A and Party B hereby agree to establish a Sino-foreign cooperative joint venture company in Yunnan Province, PRC.
3.2 Name and Address
The Chinese name of the Company shall be:(tentative)
The English name of the Company shall be Xinlong Mineral Recources Co. Ltd. (Tentative)
The legal address of the Company shall be: No.93 Ren Min Dong Rd., Kunming, Yunnan Province, PRC.
3.3 Law
The Company shall be subject to the jurisdiction and protection of the laws and regulations of PRC. All activities shall be in compliance with the laws and regulations of PRC.
3.4 Limited Liability
The Company is a limited liability company. The liability of Party A and Party B shall be limited to the amount of their respective contributions.
3.5 Formation of the Company
The Company shall be established on the date of the issuance of its business license.
3.6 Prior Act and Indemnification
3.6.1 Subject to Article 3.6.2 below, neither Party shall be liable to the other Party for any loss or damages claimed by any third party arising from acts or events which occurred prior to and after the date of the establishment of the Company. Subject to the provisions in Article 3.4 above, the Company shall indemnify each Party against any and all losses, damages or liabilities suffered by each Party in respect of third party claims arising out of the operation of the Company.
3.6.2 The Company and Party B shall not be liable for any acts or omissions that have occurred in the activities of the Project Area prior to the assignment of the current Exploration Rights and Mining Rights to the Company, such acts or omissions to include, without limitation, environmental pollution; and the Company and Party B shall not be liable for any acts or omissions that might occur in the future as a result of Party A leasing the Xiaoganqin Mining Rights pursuant to that Lease Contract set out in Appendix 5 including without limitation any and all liabilities for environmental pollutions. In case of any claim against the Company and/or Party B for the liabilities for the foresaid acts and omissions, Party A shall use its best endeavours to hold the Company and/or Party B harmless from such claims and shall indemnify the Company and Party B against any damages and loss caused by such claims.
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3.7 Change of Law
In the event that after the execution of this CONTRACT and any Appendices hereto, the issuance, amendment, supplement or rescission by government or any subdivision or agency thereof of any applicable tax, customs, foreign exchange or other laws, rules, regulations, policies or changes of any interpretations thereof may allow treatment to the Company or either of the Parties different to that agreed in this CONTRACT, both Parties shall take appropriate actions:
3.7.1 in case of a favourable change to enable the Company or that Party to receive that favourable treatment; or
3.7.2 in case of a detrimental change, the Parties shall meet to resolve how to deal with such changes but with the intent that the profit sharing arrangements and the management and the control of the Company shall not be altered from that provided in this CONTRACT. If agreement cannot be reached, then the relevant issues shall be determined in accordance with Article 17 of this CONTRACT.
4. Purpose, Scope and Scale of Business Operations
4.1 Purpose
The purpose of the Company is initially to conduct prospecting and exploration work on the Project Area (the "Pre-bankable Feasibility Study") and thereafter, if Party B considers the results of the Pre-bankable Feasibility Study justify it, to conduct a bankable feasibility study in respect to the Project Area (the "Bankable Feasibility Study") to investigate the viability of mining the metals including but not limited to gold and silver ore, copper, lead and zinc ores in the Project Area (the Pre-bankable Feasibility Study and the Bankable Feasibility Study hereinafter shall collectively be referred to as the "Bankable FS"). If the Board has determined to proceed with the Gongguo Project based on the Bankable FS, the Company shall thereafter conduct the mining operations within the Project Area, including without limitation, ongoing exploration, development, production and sale of gold, gold concentrate, other metals and minerals mined in any such mine or the Project Area, by adopting advanced and appropriate technologies and scientific management methods in order to achieve business results satisfactory to both Parties.
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4.2 Business Scope of the Company
4.2.1 The Company shall engage in prospecting, exploration, mining, development, production and sale of gold, gold concentrates, other metals and minerals (the "Products")
4.2.2 The Products shall be sold by the Company as stipulated by the prevailing PRC laws based on the international prices. IT BEING THE INTENT that the Company shall obtain an international marketing price permit as early as possible.
4.2.3 After the Parties agree that the activities of the Company may be extended to include other projects in the PRC, subject to the approval of the Board, Party A agrees to assist the Company in every way possible to achieve all agreed new activities.
4.3 Scale of Business Operations
The actual production scale, and the total amount of the investment required to develop, mine and produce Products from the Gongguo Project shall be decided by the Board based on the results of the Bankable Feasibility Study and the then prevailing market conditions.
4.4 Project Area
4.4.1 The Project Area is defined by the map in Appendix 2 and covers an area approximately 420 square kilometres. Party A currently holds three Exploration Rights, namely a. Sanqicun (61.71 sq. km); b. Gongguo (30.42 sq. km) and c. Waiyao - Xiamaizhang (29.84 sq km) and one Mining Right at Xiaoganqin (0.2 sq. km), within the Project Area. , The Exploration Rights are detailed in Appendix 3 attached hereto. The Mining Right at Xiaoganqin is located within the Exploration Right at Gongguo; details of the Xiaoganqin Mining Right are detailed in Appendix 4 attached hereto.
4.4.2 Party A shall provide all information on geology, past exploration and mining activities it or any of its related units has at its or any of its related unit's disposal to the Company so as to enable the Company to select new areas and apply for or accept the transfer of exploration and or mining rights in addition to the existing exploration right currently being held by Party A as included in the Appendix 2, Appendix 3 and Appendix 4.
4.4.3 Party A shall transfer all the exploration rights and/or any mining rights it or any of its related units currently holds within the Project Area to the Company upon the Company's request. With the Company's written consent as approved by the Board, Party A may, in its discretion, dispose of any of the rights that are not selected by the Company provided however that Party A is solely responsible for any liabilities associated with any rights that it may decide to dispose of in accordance with this Article 4.4.3
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4.4.4 If either Party or its related unit wishes to apply for exploration or mining right for any particular area within the Project Area, it must notify the Company first and grant the Company the first right of refusal to apply for exploration or mining right for such area. If the Company elects to file such application and apply for such exploration or mining right then the Company does not have to pay for such right. If the Company elects not to proceed with such application, then with the written consent of the Company, such Party or its related unit may act freely, including act jointly with a third party, provided that such Party shall be solely responsible for any liabilities associated therewith. This Article 4.4.4 shall not be applicable to the Pending Exploration Right Application as stipulated in Article 7.2.
4.4.5 The Company may, at any time during the term of this Contract, relinquish part of the Project Area or may decide to relinquish the entire area comprising the Project Area. Either Party has the right to apply for exploration or mining right for the relinquished area, provided that such Party shall be solely responsible for any liabilities associated therewith. Upon either Party's request, the Company will assist such Party to do so.
5. Registered Capital, Total Amount of Investment and Profit Distribution Ratio
5.1 Registered Capital
5.1.1 The initial registered capital of the Company shall be US$3.05 million which is the amount estimated by Party B required to complete the initial exploration work program in the Project Area.
(A) Party B shall be responsible for subscribing for the initial US$3.05 million worth of registered capital according to the schedule in Article 6.2.2.
(B) Any additional contribution to and increase of the Company's registered capital shall be done in accordance with Article 6.8 and Article 11.
5.2 Total amount of investment
The total amount of investment by the Company shall be US$ 6.1 million.The Company may satisfy the difference between its registered capital and its total amount of investment by procuring loans.
5.3 Profit Distribution Ratio
Subject to Article 12, the profit generated by the Company shall be distributed to the Parties in proportion to their respective equity interest percentage, as adjusted from time to time in accordance with this Contract.
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6. Provision of Cooperative Conditions
6.1 Cooperative Conditions to be Provided by Party A
Party A shall provide the following as its initial cooperative condition (the "Initial Cooperative Conditions") to the Company at the establishment of the Company:
(A) the exclusive Gongguo Exploration Right (Exploration License No. 5300000430029) and Xiaoganqin Mining Right including any rights that any of its related units currently hold in the Project Area Party A will apply to the relevant government agency to transfer these Exploration and Mining Rights to the Company within 30 days of the Company being granted its business licence.
(B) Party A warrants that it will not renew or extend the term of the Lease Contract of Xiaoganqin No. 1 Ore Body ("Lease Contract") it executed with Huang Xinglang ("Lessee") and that, when this contract for the Xiaoganqin Mining Right expires, it will not enter into any other contracts on the Xiaoganqin Mining Right with any other party or parties other than the Company and/or Party B. A copy of the said Lease Contract is attached hereto as Appendix 5 and a map detailing the boundaries of the leased portion of the Mining Right as provided in the said contract (including the exact co-ordinates thereof) is attached as Appendix 6. Party A also warrants that the Lessee's activities within the Project Area and the performance of the Lease Contract will not interfere with or influence the Company's exploration, mining, construction and development; otherwise, Party A shall compensate the Company for any loss caused such interference and influence.
(C) Party A shall, immediately after the issuance of the Company's business license, provide the Company with legal access to all part of the Project Area, including the area covered by the Lease Contract, for the purpose of undertaking exploration work and preparing a geological report.
(D) all reports prepared in respect of, the Project Area to enable the Company to carry out initial exploration and complete the Bankable FS.
(E) all data and plans with respect to the geology, exploration and mining within the Project Area at its or any of its related unit's disposal or obtainable as provided in Article 4.4.2.;
(F) Party A will provide technical staff and facilities to the Company at the request of the Company or the General Manager as long as the costs of such technical staff and facilities are competitive in accordance with international industry standards and approved by the Company or the General Manager; and
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(G) Party A will have priority to be contracted to perform exploration work by Company as long as the contract charges will not be higher than any other contractors and they can satisfy the Company and the General Manager that the contract is carried out in a professional and business like manner and meet the standards required by the Company and the General Manager. Each contract will be negotiated and signed by Party A or its associated unit as the Contractor and the Company as the client.
(H) If the Board has determined to proceed with the development, mining and production of the Gongguo Project based on the results of the Bankable FS, then Party A shall:
a. assist the Company to apply for the exclusive Mining Right in the Project Area in accordance with PRC laws;
b. assist the Company to apply or secure for any land use rights required and requested by the Company.
c. Provide additional funding in accordance with Article 11;
d. assist the Company in obtaining any other approvals, licenses or registration necessary for mining operations.
6.2 Cooperative Conditions to be Provided by Party B
6.2.1 Party B shall, subject to Article 6.7.1 and Article 18.3.2, provide the following assets as its initial Cooperative Conditions:
(A) Cash in an amount of US$ 3.05 million as contribution to the Company's registered capital.
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