<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 2, 1994
Amax Gold Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-9620 06-119997
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
9100 East Mineral Circle
Englewood, Colorado 80112
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 643-5500
<PAGE>
Item 5. Other.
- - --------------
Refugio Project Financing
Amax Gold Inc.'s Chilean subsidiary Compania Minera Maricunga ("CMM"),
owned 50% by the Company and 50% by Bema Gold Corporation, has received
commitments from a group of international banks for a project loan of
approximately US$80 million for the construction of the Verde deposit of the
Refugio Project in central Chile.
The loan would be provided by Canadian Imperial Bank of Commerce,
Credit Lyonnais Canada, Deutsche Bank and NM Rothschild & Sons Ltd. and is
subject to closing documentation, final technical due diligence and equity
requirements. In addition, the bank commitments are subject a number of
conditions, including that CMM raise either approximately $40 million of
equity capital or approximately $35 million of equity capital and approximately
$5 million of additional debt financing. A draw down of the loan could occur as
early as October 1994. There can be no assurance that the conditions set
forth in the commitment letters, including that CMM obtain additional financing,
will be satisfied.
Total costs to develop the Refugio Project are estimated at US$120
million to US$130 million. Construction is presently scheduled to commence
in October 1994, with the first gold pour in early 1996. Flour Daniel Chile
commenced project engineering in June 1994.
Business Discussions
Amax Gold from time to time engages in discussions with other gold
companies about the possibility of a business combination. Recently the Company
and its advisors engaged in preliminary discussions with LAC Minerals Ltd.
("LAC") and its advisors about the possibility of a business combination between
Amax Gold and LAC. These discussions are not currently being pursued by the
Company or its advisors. The Company is aware of a number of other business
combination proposals pending with respect to LAC. No assurance can be given
that the Company will not resume discussions with respect to a business
combination with LAC or another company in the future.
<PAGE>
Item 7(c) - Exhibits.
- - --------------------
10.1 Commitment Letters for Refugio Project Financing
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 5, 1994 AMAX GOLD INC.
(Registrant)
By: /s/ PAUL J. HEMSCHOOT, JR.
-------------------------------------
Paul J. Hemschoot, Jr.
Vice President, Secretary and General
Counsel
<PAGE>
[LETTERHEAD OF CREDIT LYONNAIS CANADA APPEARS HERE]
August 2, 1994
CONFIDENTIAL
- - ------------
Compania Minera Maricunga
Nueva de Lyon 72
OF. 1801
Santiago, Chile
Attention: Albert G. Brantley
Amax Gold Inc.
9100 East Mineral Circle
Englewood, Colorado 80155
U.S.A.
Attention: Mark A. Lettes
Bema Gold Corporation
1400-510 Burrard Street
Vancouver, British Columbia
Canada V6C 3AS
Attention: Neil Woodyer
Re: Refugio Project Financing
Dear Sirs:
We refer to our recent discussions with you with respect to your interest in
obtaining commitments aggregating U.S. $80,250,000 in connection with the
project financing (the "Financing") of the Refugio gold mine (the "Mine") in
--------- ----
Chile. The terms and conditions of the proposed Financing are summarized in the
Compania Minera Maricunga Summary Indicative Terms and Conditions dated July 8,
1994 (the "Summary"). The Summary forms a part of the offer being provided in
-------
this letter and
<PAGE>
- 2 -
Compania Minera Maricunga
Amax Gold Inc.
Bema Gold Corporation
August 2, 1994
the basis upon which such offer is being extended and by your acceptance of this
letter you agree to the contents of the Summary. Capitalized terms used but not
defined in this letter are used as defined in the Summary.
On the terms, and subject to the conditions, set forth below and in the Summary,
Credit Lyonnais Canada ("CLC") and Credit Lyonnais ("CL") hereby jointly offer
to provide a commitment of U.S. $17,000,000 of the aggregate amount of the
Financing (CLC and CL together with any other bank or financial institution
making a similar commitment, referred to as a "Bank").
----
Our offer contained in this letter is subject to the conditions that, (i) no
later than 5:00 p.m. Denver time, November 30, 1994, (a) the documents described
in or otherwise contemplated by the Summary shall have been executed and
delivered in form and substance satisfactory to the Banks, shall be in full
force and effect and shall be substantially responsive in all material respects
to the requirements of the Summary and all other conditions precedent described
in or otherwise contemplated by the Summary shall have been satisfied (it being
understood that matters not clarified in the Summary are subject to the mutual
agreement of the parties) and (b) either (1) Deutsche Bank, NM Rothschild & Sons
Limited, Canadian Imperial Bank of Commerce, CLC, CL and /or ING Capital
Corporation shall have provided additional commitments for the Financing in the
amount of U.S. $4,750,000 and the relevant Banks and each of you shall have
amended and/or entered into letters with such Banks reflecting such altered or
new commitments, as the case may be, or (2) the Borrower's requirement to fund
the Construction Account with equity and/or subordinated debt (as set forth in
Conditions Precedent (ii) on page 18 of the Summary) shall be increased to U.S.
$39,750,000, (ii) no change shall have occurred that would materially adversely
affect the Borrower's or either Guarantor's ability to perform its undertakings
and obligations described in or otherwise contemplated by the Summary and (iii)
CLC and/or CL shall have been able to purchase political risk insurance
reasonably satisfactory to them.
In consideration of our agreements contained in this letter, you hereby agree to
pay to us no later than August 5, 1994 a facility fee in the amount of U.S.
$127,500, which is 50% of the aggregate facility fee due to us, with the
remainder of such facility fee due upon the execution of the credit agreement
contemplated by the Summary. The portion of the facility fee payable no later
than August 5, 1994 will not be refundable for any reason (such portion having
been fully earned for our work in relation to the Financing prior to the date
hereof) and will not be credited against any other amount due to us or any of
the other Banks, should the transactions contemplated by the Summary proceed.
<PAGE>
- 3 -
Compania Minera Maricunga
Amax Gold Inc.
Bema Gold Corporation
August 2, 1994
This letter is for your confidential use only and is based on the understanding
that, except as otherwise agreed between us, neither it nor any of the
transactions contemplated hereby will be disclosed by you to any other person or
entity, except that you may disclose it (i) in confidence to your accountants,
lawyers and other advisors for purposes related to the transactions contemplated
hereby (provided that such parties agree to maintain the confidentiality
hereof), (ii) for purposes of raising equity, (iii) for purposes of entering
into hedging facilities (provided that the relevant counterparties agree to
maintain the confidentiality hereof) and (iv) where disclosure is required by
applicable law.
If you agree with the terms of this letter, please sign and return to NM
Rothschild & Sons Limited, New Court, St. Swithin's Lane, London EC4P 4DU,
England (Attention: Michael A. Price) the enclosed copies of this letter no
later than 5:00 p.m. London time on August 5, 1994. If such copies of this
letter and copies of similar letters issued by NM Rothschild & Sons Limited,
Canadian Imperial Bank of Commerce and Deutsche Bank AG, New York Branch
containing commitments aggregating U.S. $80,250,000 and duly executed by each of
you have not been received by NM Rothschild & Sons Limited at the above address
prior to such time, our commitments and obligations will terminate at such time
(but without prejudice to the continuing effectiveness of the confidentiality
provisions referred to in the immediately preceding paragraph).
This letter, which may be executed in counterparts, shall be governed by
and construed and interpreted in accordance with the laws of New York.
Yours faithfully,
CREDIT LYONNAIS CANADA
By: SIGNATURE UNREADABLE
-----------------------
Title: VICE-PRESDENT
-----------------
<PAGE>
Compania Minera Maricunga
Amax Gold Inc.
Bema Gold Corporation
August 2, 1994
CREDIT LYONNAIS
By: /s/ SIGNATURE UNREADABLE
------------------------
Title: TITLE UNREADABLE
------------------
By:
------------------------
Title:
------------------
ACCEPTED AND AGREED TO THIS
3 DAY OF AUGUST, 1994
COMPANIA MINERA MARICUNGA
By: /s/ ALBERT BRANTLEY
---------------------------
Title: GENERAL MANAGER
---------------------
AMAX GOLD INC.
By: /s/ PAUL J. HEMSCHOOT, JR.
---------------------------
Title: VICE PRESIDENT
---------------------
BEMA GOLD CORPORATION
By: /s/ CLIVE JOHNSON
------------------------
Title: DIRECTOR
------------------
<PAGE>
[LETTERHEAD OF CANADIAN IMPERIAL BANK OF COMMERCE APPEARS HERE]
CIBC, Inc.
August 1, 1994
CONFIDENTIAL
- - ------------
Compania Minera Maricunga
Nueve de Lyon 72
OF. 1801
Santiago, Chile
Attention: Albert G. Brantley
Amax Gold Inc.
9100 East Mineral Circle
Englewood, Colorado 80155
U.S.A.
Attention: Mark A. Lettes
Bema Gold Corporation
1400-510 Burrard Street
Vancouver, British Columbia
Canada V6C 3A8
Attention: Neil Woodyer
Re: Refugio Project Financing
-------------------------
Dear Sirs:
We refer to our recent discussions with you with respect to your interest in
obtaining commitments aggregating U.S.$80,250,000 in connection with the project
financing (the "Financing") of the Refugio gold mine (the "Mine") in Chile. The
terms and conditions of the proposed Financing are summarized in the Compania
Minera Maricunga Summary Indicative Terms and Conditions dated July 8, 1994 (the
"Summary"). The Summary forms a part of the offer being provided in this letter
and the basis upon which such offer is being extended and by your acceptance of
this letter you agree to the contents of the Summary. Capitalized terms used
but not defined in this letter are used as defined in the Summary.
On the terms, and subject to the conditions, set forth below and in the Summary,
Canadian Imperial Bank of Commerce ("CIBC") or an affiliate hereby offers on a
several basis to provide a commitment of U.S.$17,000,000 of the aggregate amount
of the Financing (CIBC, together with any other bank or financial institution
making a similar commitment, referred to as a "Bank").
<PAGE>
Compania Minera Maricunga
Amax Gold Inc.
Bema Gold Corporation
August 1, 1994 Page 2
Our offer contained in this letter is subject to the conditions that, (i)
no later than 5:00 p.m. Denver time, November 30, 1994, (a) the documents
described in or otherwise contemplated by the Summary shall have been executed
and delivered in form and substance satisfactory to the Banks, shall be in full
force and effect and shall be substantially responsive in all material respects
to the requirements of the Summary and all other conditions precedent described
in or otherwise contemplated by the Summary shall have been satisfied (it being
understood that matters not clarified in the Summary are subject to the mutual
agreement of the parties) and (b) either (1) Deutsche Bank, NM Rothschild & Sons
Limited, CIBC, Credit Lyonnais and/or ING Capital Corporation shall have
provided additional commitments for the Financing in the amount of
U.S.$4,750,000 and the relevant Banks and each of you shall have amended and/or
entered into letters with such Banks reflecting such altered or new commitments,
as the case may be, or (2) the Borrower's requirement to fund the Construction
Account with equity and/or subordinated debt (as set forth in Conditions
Precedent (ii) on page 18 of the Summary) shall be increased to U.S.
$39,750,000,(ii) no change shall have occurred that would materially adversely
affect the Borrower's or either Guarantor's ability to perform its undertakings
and obligations described in or otherwise contemplated by the Summary and (iii)
CIBC shall have been able to purchase political risk insurance reasonably
satisfactory to it.
In consideration of our agreements contained in this letter, you hereby agree to
pay to us no later than August 5, 1994 a facility fee in the amount of U.S.
$127,500 which is 50% of the aggregate facility fee due to us, with the
remainder of such facility fee due upon the execution of the credit agreement
contemplated by the Summary. The portion of the facility fee payable no later
than August 5, 1994 will not be refundable for any reason (such portion having
been fully earned for our work in relation to the Financing prior to the date
hereof) and will not be credited against any other amount due to us or any of
the other Banks, should the transactions contemplated by the Summary proceed.
This letter is for your confidential use only and is based on the understanding
that, except as otherwise agreed between us, neither it nor any of the
transactions contemplated hereby will be disclosed by you to any other person or
entity, except that you may disclose it (i) in confidence to your accountants,
lawyers, and other advisors for purposes related to the transactions
contemplated hereby (provided that such parties agree to maintain the
confidentiality hereof), (ii) for purposes of raising equity, (iii) for purposes
of entering into hedging facilities (provided that the relevant counter parties
agree to maintain the confidentiality hereof) and (iv) where disclosure is
required by applicable law.
If you agree with the terms of this letter, please sign and return to N M
Rothschild & Sons Limited, New Court, St. Swithin's Lane, London EC4P 4DU,
England (Attention: Michael A. Price) the enclosed copies of this letter
no later than 5:00 p.m., London time on August 5, 1994. If such copies of
this letter and copies of similar letters issued by N M. Rothschild & Sons
Limited, Credit Lyonnais Canada and Deutsche Bank AG, New York Branch containing
commitments aggregating U.S.$80,250,000 and duly executed by each of you have
not been received by N M Rothschild & Sons Limited at the above address prior to
such time, our commitments and obligations will terminate at such time (but
without prejudice to the continuing effectiveness of the confidentiality
provisions referred to in the immediately preceding paragraph).
2
<PAGE>
Compania Minera Maricunga
Amax Gold Inc.
Bema Gold Corporation
August 1, 1994
This letter, which may be executed in counterparts, shall be governed by and
construed and interpreted in accordance with the laws of New York.
Yours faithfully,
CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ SIGNATURE UNREADABLE
------------------------
Title: Authorized Signatory
------------------------
ACCEPTED AND AGREED TO THIS
3 DAY OF August, 1994
- - --- ------
COMPANIA MINERA MARICUNGA
By: /s/ Albert Brantley
------------------------
Title: General Manager
------------------------
AMAX GOLD INC.
By: /s/ Paul J. Hemschoot, Jr.
------------------------
Title: Vice President
------------------------
BEMA GOLD CORPORATION
By: /s/ Clive Johnson
------------------------
TITLE: DIRECTOR
------------------------
3
<PAGE>
[LETTERHEAD OF N M ROTHSCHILD & SONS LIMITED APPEARS HERE]
August 1, 1994
CONFIDENTIAL
Compania Minera Maricunga
Nueva de Lyon 72
OF. 1801
Santiago, Chile
Attention: Albert G. Brantley
Amax Gold Inc.
9100 East Mineral Circle
Englewood, Colorado 80155
U.S.A.
Attention: Mark A. Lettes
Bema Gold Corporation
1400-510 Burrard Street
Vancouver, British Columbia
Canada V6C 3A8
Attention: Neil Woodyer
Re: Refugio Project Financing
-------------------------
Dear Sirs:
We refer to our recent discussions with you with respect to your interest
in obtaining commitments aggregating U.S.$80,250,000 in connection with the
project financing (the "Financing") of the Refugio gold mine (the "Mine") in
--------- ----
Chile. The terms and conditions of the proposed Financing are summarized in the
Compania Minera Maricunga Summary Indicative Terms and Conditions dated July 8,
1994 (the "Summary"). The Summary forms a part of the offer being provided in
-------
this letter and the basis upon which such offer is being extended and by your
acceptance of this letter you agree to the contents of the Summary. Capitalized
terms used but not defined in this letter are used as defined in the Summary.
<PAGE>
Compania Minera Maricunga
Amax Gold Inc.
Bema Gold Corporation
August 1, 1994
On the terms, and subject to the conditions, set forth below and in the
Summary, N M Rothschild & Sons Limited ("NMR") hereby offers on a several basis
---
to provide a commitment of U.S.$21,250,000 of the aggregate amount of the
Financing (NMR, together with any other bank or financial institution making a
similar commitment, referred to as a "Bank").
----
Our offer contained in this letter is subject to the conditions that, (i)
no later than 5:00 p.m. Denver time, November 30, 1994, (a) the documents
described in or otherwise contemplated by the Summary shall have been executed
and delivered in form and substance satisfactory to the Banks, shall be in full
force and effect and shall be substantially responsive in all material respects
to the requirements of the Summary and all other conditions precedent described
in or otherwise contemplated by the Summary shall have been satisfied (it being
understood that matters not clarified in the Summary are subject to the mutual
agreement of the parties) and (b) either (1) Deutsch Bank, NMR, Canadian
Imperial Bank of Commerce, Credit Lyonnais Canada and/or ING Capital Corporation
shall have provided additional commitments for the Financing in the amount of
U.S.$4,750,000 and the relevant Banks and each of you shall have amended and/or
entered into letters with such Banks reflecting such altered or new commitments,
as the case may be, or (2) the Borrower's requirement to fund the Construction
Account with equity and/or subordinated debt (as set forth in Conditions
Precedent (ii) on page 18 of the Summary) shall be increased to U.S.$39,750,000,
(ii) no change shall have occurred that would materially adversely affect the
Borrower's or either Guarantor's ability to perform its undertakings and
obligations described in or otherwise contemplated by the Summary and (iii) NMR
shall have been able to purchase political risk insurance reasonably
satisfactory to it.
In consideration of our agreements contained in this letter, you hereby
agree to pay to us no later than August 5, 1994 a facility fee in the amount of
U.S.$159,375, which is 50% of the aggregate facility fee due to us, with the
remainder of such facility fee due upon the execution of the credit agreement
contemplated by the Summary. The portion of the facility fee payable no later
than August 5, 1994 will not be refundable for any reason (such portion having
been fully earned for our work in relation to the Financing prior to the date
hereof) and will not be credited against any other amount due to us or any of
the other Banks, should the transactions contemplated by the Summary proceed.
<PAGE>
Compania Minera Maricunga
Amax Gold Inc.
Bema Gold Corporation
August 1, 1994
This letter is for your confidential use only and is based on the
understanding that, except as otherwise agreed between us, neither it nor any of
the transactions contemplated hereby will be disclosed by you to any other
person or entity, except that you may disclose it (i) in confidence to your
accountants, lawyers, and other advisors for purposes related to the
transactions contemplated hereby (provided that such parties agree to maintain
the confidentiality hereof), (ii) for purposes of raising equity, (iii) for
purposes of entering into hedging facilities (provided that the relevant
counterparties agree to maintain the confidentiality hereof) and (iv) where
disclosure is required by applicable law.
If you agree with the terms of this letter, please sign and return to N M
Rothschild & Sons Limited, New Court, St. Swithin's Lane, London EC4P 4DU
(Attention: Michael A. Price) the enclosed copies of this letter no later than
5:00 p.m., London time, on August 5, 1994. If such copies of this letter and
copies of similar letters issued by Deutsche Bank AG, New York Branch, Canadian
Imperial Bank of Commerce and Credit Lyonnais Canada containing commitments
aggregating U.S.$80,250,000 and duly executed by each of you have not been
received by NMR at the above address prior to such time, our commitments and
obligations will terminate at such time (but without prejudice to the continuing
effectiveness of the confidentiality provisions referred to in the immediately
preceding paragraph).
This letter, which may be executed in counterparts, shall be governed by
the construed and interpreted in accordance with the laws of New York.
Yours faithfully,
per pro N M ROTHSCHILD & SONS
LIMITED
By: /s/ SIGNATURE UNREADABLE
--------------------------
Title: ASST. DIRECTOR
--------------------
By: /s/ SIGNATURE UNREADABLE
--------------------------
Title: DIRECTOR
--------------------
<PAGE>
Compania Minera Maricunga
Amax Gold Inc.
Bema Gold Corporation
August 1, 1994
ACCEPTED AND AGREED TO THIS
3 DAY OF AUGUST, 1994
COMPANIA MINERA MARICUNGA
By: /s/ ALBERT BRANTLEY
---------------------------
Title: GENERAL MANAGER
---------------------
AMAX GOLD INC.
By: /s/ PAUL J. HEMSCHOOT, JR.
---------------------------
Title: VICE PRESIDENT
---------------------
BEMA GOLD CORPORATION
By: /s/ CLIVE JOHNSON
---------------------------
Title: DIRECTOR
---------------------
<PAGE>
[LETTERHEAD OF DEUTSCHE BANK APPEARS HERE]
August 1, 1994
CONFIDENTIAL
Compania Minera Maricunga
Nueva de Lyon 72
OF. 1801
Santiago, Chile
Attention: Albert G. Brantley
Amax Gold Inc.
9100 East Mineral Circle
Englewood, Colorado 80155
U.S.A.
Attention: Mark A. Lettes
Bema Gold Corporation
1400-510 Burrard Street
Vancouver, British Columbia
Canada V6C 3A8
Attention: Neil Woodyer
Re: Refugio Project Financing
Dear Sirs
We refer to our recent discussions with you with respect to your interest in
obtaining commitments aggregating U.S.$80,250,000 in connection with the project
financing (the "Financing") of the Refugio gold mine (the "Mine") in Chile.
---------
The terms and conditions of the proposed Financing are summarized in the
Compania Minera Maricunga Summary Indicative Terms and Conditions dated July 8,
1994 (the "Summary"). The Summary forms a part of the offer being provided
-------
in this letter and the basis upon which such offer is being extended and by your
acceptance of this letter you agree to the contents of the Summary. Capitalized
terms used but not defined in this letter are used as defined in the Summary.
On the terms, and subject to the conditions, set forth below and in the
Summary, Deutsche Bank AG, New York Branch ("Deutsche Bank") hereby offers on
-------------
a several basis
<PAGE>
Compania Minera Maricunga
Amax Gold Inc.
Bema Gold Corporation
August 1, 1994
to provide a commitment of U.S.$25,000,000 of the aggregate amount of the
Financing (Deutsche Bank, together with any other bank or financial institution
making a similar commitment, referred to as a "Bank").
----
Our offer contained in this letter is subject to the conditions that, (i) no
later than 5:00 p.m. Denver time, November 30, 1994, (a) the documents described
in or otherwise contemplated by the Summary shall have been executed and
delivered in form and substance satisfactory to the Banks, shall be in full
force and effect and shall be substantially responsive in all material respects
to the requirements of the Summary and all other conditions precedent described
in or otherwise contemplated by the Summary shall have been satisfied (it being
understood that matters not clarified in the Summary are subject to the mutual
agreement of the parties) and (b) either (1) Deutsche Bank, NM Rothschild & Sons
Limited, Canadian Imperial Bank of Commerce, Credit Lyonnais Canada and/or ING
Capital Corporation shall have provided additional commitments for the Financing
in the amount of U.S.$4,750,000 and the relevant Banks and each of you shall
have amended and/or entered into letters with such Banks reflecting such altered
or new commitments, as the case may be, or (2) the Borrower's requirement to
fund the Construction Account with equity and/or subordinated debt (as set forth
in Conditions Precedent (ii) on page 18 of the Summary) shall be increased to
U.S.$39,750,000, (ii) no change shall have occurred that would materially
adversely affect the Borrower's or either Guarantor's ability to perform its
undertakings and obligations described in or otherwise contemplated by the
Summary and (iii) Deutsche Bank shall have been able to purchase political risk
insurance reasonably satisfactory to it.
In consideration of our agreements contained in this letter, you hereby
agree to pay to us no later than August 5, 1994 a facility fee in the amount of
U.S. $187,500, which is 50% of the aggregate facility fee due to us with the
remainder of such facility fee due upon the execution of the credit agreement
contemplated by the Summary. The portion of the facility fee payable no later
than August 5, 1994 will not be refundable for any reason (such portion having
been fully earned for our work in relation to the Financing prior to the date
hereof) and will not be credited against any other amount due to us or any of
the other Banks, should the transaction contemplated by the Summary proceed.
This letter is for your confidential use only and is based on the
understanding that, except as otherwise agreed between us, neither it nor any of
the transactions contemplated hereby will be disclosed by you to any other
person or entity, except that you may disclose it (i) in confidence to your
accountants, lawyers and other advisors for purposes related to the transactions
contemplated hereby (provided that such parties agree to maintain the
<PAGE>
Compania Minera Maricunga
Amax Gold Inc.
Bema Gold Corporation
August 1, 1994
confidentiality hereof), (ii) for purposes of raising equity, (iii) for purposes
of entering into hedging facilities (provided that the relevant counterparties
agree to maintain the confidentiality hereof) and (iv) where disclosure is
required by applicable law.
If you agree with the terms of this letter, please sign and return to NM
Rothschild & Sons Limited, New Court, St. Swithin's Lane, London EC4P 4DU,
England (Attention: Michael A. Price) the enclosed copies of this letter no
later than 5:00 p.m. London time on August 5, 1994. If such copies of this
letter and copies of similar letters issued by NM Rothschild & Sons Limited,
Canadian Imperial Bank of Commerce and Credit Lyonnais Canada contained
commitments aggregating U.S.$80,250,000 and duly executed by each of you have
not been received by NM Rothschild & Sons Limited at the above address prior to
such time, our commitments and obligations will terminate at such time (but
without prejudice to the continuing effectiveness of the confidentiality
provisions referred to in the immediately preceding paragraph).
This letter, which may be executed in counterparts, shall be governed by
and construed and interpreted in accordance with the laws of New York.
Yours faithfully,
DEUTSCHE BANK AG, NEW YORK
BRANCH
By: /s/ GREGORY L. MORONEY
-----------------------
Title: DIRECTOR
-----------------
By: /s/ SANDRA E. BELL
-----------------------
Title: DIRECTOR
-----------------
ACCEPTED AND AGREED TO THIS
3 DAY OF AUGUST, 1994
COMPANIA MINERA MARICUNGA
By: /s/ Albert Brantley
------------------------
Title: GENERAL MANAGER
------------------
<PAGE>
Compania Minera Maricunga
Amax Gold Inc.
Bema Gold Corporation
August 1, 1994
AMAX GOLD INC.
By: /s/ PAUL J. HEMSCHOOT, JR.
---------------------------
Title: VICE PRESIDENT
---------------------
BEMA GOLD CORPORATION
By: /s/ CLIVE JOHNSON
---------------------------
Title: DIRECTOR
---------------------
<PAGE>
Compania Minera Maricunga
SUMMARY INDICATIVE TERMS AND CONDITIONS
The Project: The development, construction and mining of ore from the
Verde Gold Project (the "Project"), with development to
occur in accordance with the Revised Feasibility Study
prepared by Mineral Resource Development Inc. ("MRDI")
in December 1992 ("Revised Feasibility Study"), the
Updated Capital and Operating Cost Estimate prepared by
MRDI in February 1994 ("Updated Costs Report") and any
amendments thereto approved by the Technical Agent in
consultation with the Lenders. The Project is located in
North Central Chile.
Capital Cost: The total cost of the project is estimated to be US$120
Million.
Project Ownership: The Project is owned by Compania Minera Maricunga
("CMM") a Chilean mining company. CMM is owned as
follows:-
50% by Amax Gold Refugio, Inc. ("AGRI") a wholly owned
Delaware subsidiary of Amax Gold Inc. ("AGI"), by virtue
of AGRI's ownership of 100% of the Class B shares of
CMM; and
50% by Bema Gold (Bermuda) Ltd. ("Bema Bermuda"), a
wholly owned subsidiary of Bema Gold Corporation
("Bema") by virtue of Bema Bermuda's ownership of 100%
of the Class A shares of CMM.
Borrower: CMM, or an agreed upon Chilean Qualified Financial
Institution ("QFI"). The QFI will be approved by the
Chilean Central Bank and would only be used to
facilitate the initial dollar/gold conversion of the
loan and to expedite the Chilean Approval process.
Guarantors: AGI and Bema on a several basis, in proportion to their
ownership of CMM, until Economic Completion. Should the
current ownership interests change (with the consent of
the Lenders) whilst the Guarantees are outstanding then
the size of the Guarantees will be automatically
adjusted to account for the revised ownership structure.
Operator: CMM, with AGI maintaining Chairmanship of the Board of
CMM and the Technical Management Committee as governed
by the CMM Shareholder's Agreement dated 18th November,
1992 ("Shareholder's Agreement") between AGI and Bema
and any amendments thereto approved by the Lenders.
<PAGE>
2
Purpose: Exclusively to finance a portion of the construction and
development costs of the Project and its initial working
capital requirements.
Facility Amount: US$ 85 million, or the gold ounce equivalent thereof
(the "Facility"), which will be available in a single
drawdown to occur no later than [ date ].
For the avoidance of doubt, any drawings denominated in
gold ounces will be deemed to be at the price of
drawdown for the purposes of subsequent conversion and
monetary cap provisions.
Administrative Agent N M Rothschild & Sons Limited
Technical Agent: Deutsche Bank
Co-Arrangers & Lenders
(the "Lenders"):
Canadian Imperial Bank of Commerce
Credit Lyonnais
Deutsche Bank
ING Capital Corporation
N M Rothschild & Sons Ltd
Facility Type: Amortising Term Loan Facility available in US Dollars
and/or Gold.
Dollar/Gold
Conversion: The Borrower, may at its option, in whole or in part,
convert borrowings from a Gold Loan to a Dollar Loan, or
vice versa, at any time on an interest rate
maturity/rollover date, subject to a minimum notice
period of 30 days, and further provided that no more
than two such conversions may occur within any 12 month
period; and that upon any conversion not more than one
tranche is denominated in US Dollars and not more than
one tranche is denominated in gold ounces; and that at
no time would such conversion result in aggregate
outstandings exceeding the Facility Amount adjusted for
Scheduled Repayments and Prepayments.
For the purpose of calculating the conversion of gold
drawings into US Dollar drawings, the conversion price
will be the price at which the gold loan was originally
drawn down, or if subsequently converted from US Dollars
into gold ounces, the price at which the conversion took
place.
<PAGE>
3
Availability: From the date of execution of a definitive loan
agreement and the satisfaction of all Conditions
Precedent up to the earlier of [ date ] and Economic
Completion.
Construction Account: All loan proceeds will be deposited in a segregated
offshore account (the "Construction Account"). Drawdowns
from the Construction Account will be for the sole
purpose of meeting an agreed construction expenditure
schedule as specified in the Engineering, Procurement,
and Construction Contract (the "EPC Contract") and other
project related costs in accordance with the budget
approved by the Technical Agent in consultation with the
Lenders, following the review by an independent
engineering firm (the "Approved Budget") appointed by
the Lenders (the "Independent Engineer").
Drawdowns under the Facility will be supported by a
monthly project Certificate which will detail the costs
incurred to-date, and confirm adhesion to the Approved
Budget, that there has been no technical development
which would or could materially adversely affect the
performance of the Project ( all of which will be
confirmed by the Independent Engineer) and that no
default exists or upon such drawdown would occur, under
any agreement.
Once the Project has attained Economic Completion any
funds remaining in the Construction Account, shall be
immediately be applied as a Mandatory Prepayment of the
-----------------------------------------
Facility.
---------
Scheduled
Repayments: Mandatory repayment of the Facility will occur in ten,
equal semi-annual installments commencing six months
after full Mechanical Completion (i.e. achievement of
Phase B of the Mechanical Completion Test under the EPC
contract), but no later than [ date ].
Accelerated
Prepayments: To the extent permissible under Chilean Law (to be
clarified prior to execution of full loan
documentation), commencing six months after Mechanical
Completion (i.e. achievement of Phase B of the
Mechanical Completion Test under the EPC contract), but
no later than [ date ], and on every repayment date
thereafter the net cashflow after interest and Scheduled
Repayments and after the required Capex and Debt Service
Reserves, remaining in the Proceeds Account (the "Excess
------------
Cashflow"), shall be applied against
------------------------------------
<PAGE>
4
Scheduled Repayments in inverse order of maturity, as
-----------------------------------------------------
follows:
-------
33.3% of the first US$10 million of Excess Cashflow and
-------------------------------------------------------
thereafter 50% of any additional Excess Cashflow.
------------------------------------------------
Monetary Cap: In the event that the aggregate market price of
outstandings under the facility denominated in gold
ounces exceeds the price at which such ounces were
originally drawn down by more than 33 1/3% for a period
of 20 consecutive days or 50% on any one Business Day
(the "Monetary Cap") then the Borrower shall be
required, to either:-
a) prepay such amounts as necessary to reduce the
aggregate outstandings to a level below the
Monetary Cap such payments being applied in inverse
-------------------------------------
order of maturity, or
------------------
b) provide collateral acceptable to the Lenders of an
equivalent value, or
c) convert all outstandings denominated in gold ounces
into US Dollars at the price at which such
outstandings were originally drawn (or subsequently
converted).
Mandatory prepayment
upon Loan Conversion: To the extent that the Borrower realises any gains
through the conversion of outstandings from gold ounces
to US Dollars and vice versa, such gains shall
immediately be applied to prepayment of the Facility, in
inverse order of maturity.
Cancellation: The Borrower may cancel any undrawn portion of the
Facility prior to Economic Completion, provided that the
Lenders are satisfied with the capacity of the Borrower
to achieve Economic Completion by no later than [date]
(the "Completion Date").
Prepayment: To the extent permissible under Chilean Law (such issue
to be clarified prior to the execution of full loan
documentation), the Borrower may make optional
prepayments of outstandings under the Facility providing
that such prepayments occur on the Scheduled Repayment
Dates, that a five day notice period of prepayment has
been given by the Borrower and that such prepayments are
in minimum multiples of US$5 million or the gold
equivalent thereof.
<PAGE>
5
Any prepayments will be applied against outstandings
under the facility in inverse order of maturity and will
include full reimbursement of any "breakage" cost
incurred by the Lenders as a result of such prepayment.
Denomination of
Principal Repayments
and Prepayments: Any principal Repayment or Prepayment relating to
outstandings denominated in gold ounces shall be made in
gold ounces and any principal Repayment or Prepayment
relating to outstandings denominated in US Dollars shall
be made in US Dollars.
Construction Contract: The Borrower will enter into an EPC Contract, upon
terms, and with a major international engineering
company acceptable to the Lenders (the "Construction
Contractor").
The Construction Contractor will guarantee, inter alia,
that:-
(i) The Project will be developed and constructed in
accordance with the Revised Feasibility Study, the
Updated Costs Report and Development Plan and
subsequent agreed engineering studies, as approved
by the Technical Agent in consultation with the
Lenders and the Independent Engineer.
(ii) The Project will be developed and constructed by
a certain date for an agreed upon total cost. Both
the date and the total cost will be defined in the
EPC Contract, together with penalties up to an
agreed amount.
(iii) The Project will be completed including the
installation and construction of plant, equipment
and services and the passing of certain physical
processing capability tests, as agreed with and
approved by the Technical Agent in consultation
with the Lenders following a review by the
Independent Engineer ("Mechanical Completion").
Mining Contract: The Borrower will enter into a mining contract (the
"Mining Contract"), with a mining company (the "Mining
Contractor") acceptable to the Lenders and upon terms
and with any amendments thereto, acceptable to the
Lenders. The Mining Contract will stipulate, inter alia,
a maximum cost per tonne of material moved.
<PAGE>
6
The Mining Contract will operate in accordance with the
Development Plan resulting from the Revised Feasibility
Study or any agreed modifications thereto. The Mining
Contract will have a minimum fixed duration of four
years with the Borrower's option to extend the mining
Contract thereafter.
Conditions relating
to the Contract Mining: a) In the event that the Mining Contract expires or is
----------
cancelled (for whatever reason) by the Borrower or
the Mining Contractor it will be an obligation of
the Borrower upon terms no worse than the original
Mining Contract to either:-
i) immediately continue the mining operation with
its own workforce and equipment. In such a
situation, it will be an obligation of the
Borrower to provide the necessary funding for
the mining operations, without this in any way
diminishing or otherwise affecting the other
obligations of the Borrower under the Facility;
or
ii) to exercise its option to take over, at a
reasonable cost, the Mining Contractor's
equipment and workforce. Such option not to be
overruled by the Mining Contractor's obligations
to third parties.
b) The Mining Contract, will include, inter alia:-
i) Performance bonding for the Mining Contractor in
favour of the Borrower.
ii) Appropriate insurance of the Mining Contractor
(i.e. loss of or damage to equipment and
production interruption).
iii) The ability of the Borrower to contract out
through the Performance Bonding if necessary.
iv) The obligation of the Mining Contractor to
conduct his operation, particularly regarding
human and industrial relations, in such a
manner so as to avoid to the extent possible
interruptions of work arising from strikes or
other willful actions (limitation of acceptance
of force majeure).
<PAGE>
7
v) A termination clause for extraordinary cancellation
of the Contract by the Borrower in the case of
wilful misconduct by the Mining Contractor and/or
in the case of technical and/or economic jeopardy
of the Project.
Hedging: The Borrower will be required to maintain (either
directly or through assignment by the respective
Shareholders) sufficient gold price hedging, with
counterparties acceptable to the Lenders, to cover
operating costs, on-going capital expenditures and debt
service, on a two-and-a-half year rolling basis, until
12 months after the final projected maturity date of the
Facility, as reflected in the Development Plan, but in
any event committed gold price hedging (i.e. hedging
where the Borrower is obliged to deliver a fixed number
of ounces at fixed price on a specific date--"Committed
Hedging") should at no times exceed 50% of forecast
production in any one Period.
The Borrower will also be required (either directly or
through assignment by the respective Shareholders) to
establish Interest rate protection satisfactory to the
Lenders.
Proceeds Account: All gold production shall immediately be sold outside of
Chile and the sale proceeds deposited in a segregated
offshore bank account (the "Proceeds Account"). The
Proceeds Account shall have a minimum balance at all
times post Economic Completion, equal to Scheduled Debt
Service (the "Debt Service Reserve") and forecast
capital expenditures (the "Capex Reserve") for the next
six months, as contemplated in the Development Plan.
Withdrawals from the Proceeds Account will be applied
firstly to agreed expenditures contemplated in the
Development Plan, Scheduled Debt Service and taxes, the
Debt Service and Capex Reserves. Thereafter withdrawals
may be made for Accelerated Prepayments and then
Dividend Payments.
Dividend Payments may only be made however, on an annual
basis and then only if the Borrower and Guarantors are
in full compliance with all of the covenants, and that
the making of a Dividend Payment would not result in a
breach of any of the covenants. Under no circumstances
may be made prior to the achievement of Economic
Completion.
<PAGE>
8
Foreign Investment
Contract: The CMM Shareholders will maintain their Foreign
Investment Contract (Decree Law 600) with the State of
Chile in a form and substance acceptable to the Lenders.
Completion Guarantees: In addition to the EPC Contractor's guarantees, AGI will
fund 100% of all cost overruns to Mechanical Completion.
Until the Project has achieved Economic Completion
through the passing of a Completion Test (the parameters
of which are to be determined) together with evidence
that a balance has been built up in the Proceeds Account
sufficient to fund the next six months Scheduled Debt
Service and capital expenditure, AGI and Bema, will, on
a several basis in proportion to their ownership
interest in CMM, unconditionally guarantee all
obligations of the Borrower.
It shall be a condition of each Completion Guarantee
that Economic Completion be achieved by no later than
[ date ].
Whilst the initial guarantees shall each represent 50%
of the Facility Amount, should there be any subsequent
amendment to AGI and Bema's ownership interests in CMM
(with the consent of the Lenders, such consent not to be
unreasonably withheld), then either AGI or Bema's
percentage liability under such guarantee shall either
decrease or increase on a pro rata basis commensurate
with the percentage ownership change.
Once Economic Completion has been achieved, the Facility
will become non-recourse to AGI and Bema, except with
respect to ongoing environmental warranties.
Specific
Guarantor Support: a) Bema
Whilst the Completion Guarantee is outstanding,
Bema will at all times maintain an escrow account
in favour of the Lenders (the "Bema Escrow")
consisting of the following:-
(i) Cash of Can$ 10,000,000
(ii) Cash of US$ 10,000,000 (proceeds of Bema's loan
from AGI)
<PAGE>
9
b) AGI
Whilst the Completion Guarantee is outstanding,
AGI shall either:-
i) Maintain cash dedicated to the Project in amount
of not less than US$25 million (charged to the
Lenders),
or, to the extent acceptable to the Lenders:-
ii) Assign to the Lenders the benefit of US$25
million of availability under the Cyprus Amax
DOCLOC, or
iii) Maintain US$25 million of unused availability
under the Cyprus Amax DOCLOC and procure a letter
from Cyprus Amax to the effect that Cyprus Amax
will direct any drawing under this US$25 million
availability under the DOCLOC to be used for the
sole purpose of meeting AGI's guarantee
obligations under this Facility.
Independent Engineer:
The Lenders will engage, at the Borrower's expense, a
mutually acceptable independent mining engineering
company (the "Independent Engineer"). The Independent
Engineer, acting for the Lenders, will, inter alia:-
i) Undertake a full technical and environmental
review of the Project, which shall include, but
not be limited to, ore reserves, permitting,
metallurgical testwork and construction and
operating cost estimates. In conjunction with the
Borrower, a Development Plan shall be devised and
approved, based upon the results of the technical
& environmental review, and incorporating the
Revised Feasibility Study and Updated Costs
Report together with any agreed revisions or
amendments thereto.
ii) Monitor the construction of the Project on a
monthly basis; monitor and approve disbursements
under the Construction Account; and review,
approve and certify the passing of Mechanical and
Economic Completion Tests.
<PAGE>
10
iii) Post Economic Completion, provide ongoing
analysis of the performance of the Project and
monitor such performance against the Project
Covenants on an ongoing basis; conduct site-
visits to the Project as required and provide
other services to the Lenders as appropriate and
in accordance with normal industry practices.
Security: The Facility will be secured, without limitation, by:-
i) A first priority charge/mortgage over all of the
assets of CMM and/or the Borrower, including all
real property, mining concessions, plant,
machinery and equipment; electric, water and
other material supplies contracts; product sales
and tolling contracts; insurance contracts and
any other material contracts.
ii) First priority lien over all bank accounts of CMM
and/or the Borrower, including the Construction
Account and the Proceeds Account.
iii) The Bema Escrow until attainment of Economic
Completion.
iv) Assignment of all gold and interest rate hedging
contracts entered into in respect of the Project.
v) Assignment of the EPC Contract.
vi) Assignment of the Mining Contract.
vii) A pledge of all of the outstanding A and B shares
of CMM and any other direct or indirect
ownership interests of the Guarantors.
viii) Acknowledged assignment of any and all rights
under the Chilean DL600 Foreign Investment
Contract.
ix) Assignment of the Guarantors' rights under the
Shareholders' Agreement, By-Laws and Refugio
Project Agreement.
<PAGE>
11
Interest: Interest will be levied on a floating rate basis at a
margin over US$ LIBOR and/or US$ LIBOR minus GOFO (in
the case of gold drawings) of:-
2.875% per annum Pre Economic Completion*
2.500% per annum Post Economic Completion**
The Borrower may select Interest periods of 1, 2, 3, or
6 months, or other such periods as may be agreed between
the Borrower and Lenders from time to time. All interest
payments will be made net of encaje, taxes, duties or
other withholdings, on the last day of each interest
period. For the avoidance of doubt, interest payments on
any outstandings denominated in gold ounces will be
payable in gold ounces, and interest on any outstandings
denominated in US Dollars will be payable in US Dollars.
(* The pre-completion margin of 2.875% p.a. is a blended
rate reflecting the relative perceived creditworthiness
of the Guarantors, as follows:-
AGI 1.75% p.a.
Bema 4.00% p.a.)
(**The Post-Completion margin of 2.500% p.a. is based on
the Lenders being able to secure acceptable Political
Risk Insurance as required, at a cost of 0.750% p.a.
Should the cost of such Insurance be in excess of 0.750%
then the Post-Completion margin shall be increased
accordingly to compensate those Lenders to whom such
excess cost applies.)
Fees: i) The Borrower shall pay to each Lender a Participation
Fee of 1.50% flat based upon each Lender's commitment to
the Facility. The Borrower shall pay each Lender 50% of
its Participation Fee upon receipt and acceptance of a
firm commitment letter, and the Balance at Facility
Closing. In the event that Borrower elects not to
proceed with the Facility, then the 50% paid by the
Borrower upon acceptance of a commitment shall be non-
refundable.
ii) The Borrower shall pay, quarterly in arrears, a
Commitment Fee of 0.375% per annum on any available but
undrawn amounts under the Facility from the earlier of
[date] and the date of Facility closing.
<PAGE>
12
Principal
Covenants on
the Borrower: Customary for a Facility of this type, including, but
not limited to the following:-
(i) The Borrower will not be permitted to assume any
additional indebtedness other than this Facility, unless
such indebtedness is provided on a subordinated basis,
the terms of such subordination being satisfactory to
the Lenders.
(ii) The Borrower will not be permitted to issue guarantees
to third parties other than those that may be
contemplated under this Facility without the prior
agreement of the Lenders.
(iii) The Borrower will not be permitted to dispose of any
material assets without the prior consent of the Lenders
(subject to appropriate carve-out provision).
(iv) Throughout the term of the facility the Borrower either
directly or through assignment from the Shareholders)
shall maintain sufficient hedging to cover all on-going
capital and operating costs, debt service and taxes on a
two-and-a-half year rolling basis (see Conditions
Precedent) until 12 months after the final projected
maturity date of the Facility, as reflected in the
Development Plan, with the further provision that
Committed Hedging should at no times exceed 50% of
forecast gold production in for any one Period.
(v) The Borrower will not liquidate or enter into any
merger, amalgamation or any other corporate
re-organisation.
(vi) The Borrower will not make any material acquisitions
without the prior consent of the Lenders.
(vii) The Borrower will not create any liens or other
encumbrances over any of its assets without the prior
consent of the Lenders.
(viii) The Borrower shall not agree to any material amendments
or modifications of any material contracts, agreements
or permits without the prior consent of the Lenders.
(ix) The Borrower shall maintain a current ratio of not less
than 1.0x.
<PAGE>
13
(x) The Borrower shall maintain a Tangible Net Worth
of not less than { }million. (Such level to be
determined based upon tas review of the book Net
Tangible Assets of the Borrower and projected net
income levels).
(xi) Until the Facility is repaid in full the
Borrower will provide adequate insurance
for the Project Assets for full
replacement value against loss or
destruction; and the Borrower will provide
adequate insurance for third party
liability, business interruption and
reduction or cessation of production
caused by losses or destruction of the
Project Assets.
In each case the Lenders shall be named as
"loss-payees" and the adequacy and
suitability of the insurance shall be
determined by an independent Insurance
Advisor acting on behalf of the Lenders.
(xii) The Borrower will not use the proceeds of
drawings under the Facility, equity, subordinated
debt or project cashflow, for any purpose other
than those contemplated in the Development Plan
or the Facility Documentation.
(xiii) The Borrower will not permit, facilitate or
consent to any breach of the Guarantors'
Covenants.
(xiv) The Borrower will achieve Mechanical Completion
by no later than { date } and Economic
Completion by no later than { date }.
(xv) The Borrower will use its best efforts to assist
the Lenders, where necessary, in obtaining and
maintaining Political Risk Insurance and in the
collection by the Lenders of any amounts falling
due thereunder.
Other: Compliance with laws and enviromental
regulations, maintenance of (and adherence to)
applicable permits, maintenance of proper records
which shall be available to the Lenders for
inspection at any time, preservation of rights
under the Foreign Investment Contract maintenance
of corporate existence, no change in business,
maintenance and operation of the Project in a
safe manner in accordance with prudent mining
industry standards, maintenance of appropriate
insurance (including loss of Project assets,
business interruption, third party liability, and
commitment of main contractors to provide for
adequate insurance cover), no cessation or
abandonment, prompt and timely payment of taxes,
etc.
<PAGE>
14
Project
Covenants: Based upon the Development Plan on a forward looking
basis over the life of the Project, the project
financing covenants will be applied to the Project to
monitor its performance. These covenants (the
"Project Covenants") will include specifically the
following:-
(i) During each six monthly period the Net Cash Flow,
defined as forecast sales revenues, taking into
account existing hedging and sales arrangements, less
forecast operating and capital costs (including
taxes), must exceed interest costs and scheduled debt
repayments by at least 25%.
(ii) The Loan Life Ratio, defined as:
NPV of Net Cash Flow over the remaining life of the
Loan Aggregate outstandings under the Facility
must always exceed 1.5 and
(iii) The Project Life Ratio, defined as:
NPV of Net Cash Flow over the remaining life of the
Project Aggregate outstandings under the Facility
must always exceed 2.0
The Loan Life and Project Life Ratios will be
re-calculated six monthly based upon the Development
Plan agreed at the time of first drawdown, together
with any amendments thereto agreed by the Lenders.
Compliance with these and other covenants will be
monitored by the Technical and Administrative Agents
in consultation with the Lenders, based upon a report
prepared semi-annually by the Independent Engineer, or
at other times as required by the Lenders.
Reserve Covenant: Proven and Probable recoverable reserves at the
---------
Project, must not be less than { }% of the amount
drawn under the Facility at any time, of which
Probable Reserves should not be more than { }%.
It will be a requirement that all amounts drawn under
the facility are repaid in full from not more than 70%
of the Proven and Probable reserves in situ when the
Facility was initially drawn. For the avoidance of
doubt, this will be an on-going covenant.
<PAGE>
15
Based upon the Development Plan and any Approved
variations thereto, there must at all time be projected
to be a cushion of 30% of the original Proven and
Probable Reserves left to be mined after the scheduled
Final Maturity of the Facility.
Financial Information: Over and above the performance reports prepared by the
Independent Engineer, the Borrower and/or the Guarantors
will be required to furnish the Lenders with:
(i) Quarterly financial statements for the Borrower and the
Guarantors;
(ii) Annual audited financial statements for the Borrower and
the Guarantors.
(iii) Monthly Project Performance reports.
(iv) A quarterly Compliance Certificate from the Borrower and
each of the Guarantors confirming compliance with the
respective Covenants.
(v) A quarterly certificate from AGI, confirming the value
-------------------------------------------------------------
of gold work-in-progress leach pad inventory, such value
--------------------------------------------------------
to be determined in accordance with GAAP.
-----------------------------------------
(vi) An Annual audited certification of AGI's gold work in
--------------------------------------------------------------
progress leach pad inventory.
-----------------------------
(vii) Other such information as the Lenders may reasonably
require.
Other principal Covenants
on the Guarantors, to include:
A) AGI
(i) Until Economic Completion, AGI shall not permit
Consolidated Indebtedness to exceed 55% of Shareholders'
Equity. Where Consolidated Indebtedness is defined as
total funded debt (short term and long term) less the
--------
amount of the DOCLOC that is either undrawn, or is
-----------------------------------------------------
allocated in support of such debt.
----------------------------------
(ii) AGI shall maintain its ownership of CMM either directly
or indirectly at a minimum of 50% throughout the full
term of the Facility.
<PAGE>
16
(iii) Until Economic Completion, AGI shall maintain a
Net Worth of not less than US$ 180 million.
----------------
(iv) AGI will not relinquish operating control of the
Project.
(v) The Chairman of CMM will at all times be an AGI
appointee.
(vi) Until Economic Completion, AGI shall maintain a
positive Working Capital balance (defined as
Current Assets less Current Liabilities) of not
less than US$10m. For the purposes of calculating
------
this covenant:-
(a) Included in the definition of Current Assets
shall be:-
(i) any undrawn and unallocated
---
availability under the DOCLOC;
(ii) gold work-in-progress leach pad
------------------------------------------
inventory (the value of such inventory
------------------------------------------
to be determined in accordance with GAAP).
------------------------------------------
(b) Excluded from the definition of Current
Assets shall be:
(i) any cash or DOCLOC availability that
-------------------
has been pledged as collateral under
this Facility, and
(ii) cash that is in the Construction
Account, Proceeds Account, Debt
Service Reserve and Capex Reserve, and
(iii) the US$10 million loan from Amax Gold
to Bema (should it become classed as a
Current Asset for accounting
purposes).
(c) Excluded from the definition of Current
Liabilities shall be any short term debt or
current portions of long term debt that
benefit from an allocation or pledge of the
DOCLOC.
(vii) Until Economic Completion AGI shall not assign or
pledge any portion of the DOCLOC in favour of
obligations other than those obligations
currently in existence, except as contemplated
under this Facility.
(viii) Other covenants typical to a financing of this
type.
<PAGE>
17
B) Bema
(i) Bema shall maintain its ownership of CMM either
directly or indirectly at a minimum of 50%
throughout the full term of the Facility.
(ii) Until Economic Completion, Bema shall not incur
any additional indebtedness.
(iii) Until Economic Completion, Bema shall maintain a
Net Worth of not less than Can$ 50 million plus
equity raised subsequent to 29/06/94.
(iv) Until Economic Completion, Bema will not sell,
grant any lien, assign or create any encumbrance
upon any material assets including marketable
securities, except for the sole purpose of
meeting liquidity or hedging requirements
associated with the Refugio Project.
(v) Until Economic Completion, Bema shall maintain a
positive Working Capital balance (defined as
Current Assets less Current Liabilities) of
not less than Can$ 2 million.
For the purposes of calculating this covenant:-
a) Excluded from the definition of Current
Assets shall be:
(i) the Cash Collateral pledged in support
of this Facility, and
(ii) cash in the Construction Account,
Proceeds Account, Debt Service Reserve and
Capex Reserve.
b) Excluded from the definition of Current
Liabilities shall be:
(i) the current portion of Long Term debt,
and
(ii) the US$10 million loan from Amax Gold.
(vi) Until Economic Completion, Bema shall not make
dividend distributions, without the prior
consent of the Lenders.
(vii) Other covenants typical to a financing of this
type.
<PAGE>
18
Representations & Warranties,
to include without limitation:
i) Corporate organisation, existence and good
standing of the Borrower and the Guarantors.
ii) Corporate power and authority of the Borrower and
the Guarantors to enter into the proposed
Facility and the documents contemplated thereby.
iii) Typical Material Adverse Change clause.
iv) No material litigation.
v) No default under this or existing Facility
Agreements.
vi) Compliance with all material environmental and
governmental laws and regulations.
vii) Lenders have a valid and perfected security
interest in all collateral required under the
Facility.
Conditions Precedent,
to include:
(i) Satisfactory technical due diligence and the
finalisation of the Development Plan, acceptable
to all parties, which satisfies the Project
Covenants indicated above.
(ii) The Borrower shall initially provide evidence to
the Lenders that it has funded the Construction
Account with equity proceeds/subordinated debt in
an amount of not less than US$35 million and
thereafter that such monies have been expended in
accordance with the Development Plan prior to any
drawing under this Facility.
(iii) Satisfactory Environmental Review and
confirmation that the Project does and will
continue to comply with all environmental laws
and regulations.
(iv) Evidence that there is appropriate insurance
cover in respect of insurable project risks,
including inter alia, public liability, physical
plant and business interruption.
<PAGE>
19
(v) The Borrower has in place (either directly or
through assignment) sufficient gold price
hedging to cover operating costs, on-going
capital expenditures and debt service, on a
two-and-a-half year rolling basis. until 12
months after the scheduled maturity of the
Facility as reflected in the Development Plan.
(vi) Satisfactory documented clarification of the
Shareholders Agreement dealing with inter alia,
dilution provisions.
(vii) The raising by AGI of at least US$ 50 million in
equity, preferred or convertible preferred
stock.
(viii) The Specific Guarantor Support.
(ix) The establishment of the DOCLOC in an amount of
not less than US$100 million and/or another
similarly related committed liquidity backstop
from Cyprus-Amax, either of which to be upon
terms acceptable to the Lenders and to be of a
tenor no shorter than 12 months past the date of
----------------
Economic Completion, as contemplated in the
----------------------
Development Plan.
-----------------
(x) Satisfactory independent review of tax and
insurance issues.
(xi) Satisfactory determination of the method of
--------------------------------------------------
valuation of gold work-in-progress leach pad
--------------------------------------------
inventory, such methodology to be approved by
---------------------------------------------
an independent SEC registered accounting firm and
-------------------------------------------------
confirmed to be in accordance with GAAP.
----------------------------------------
(xii) Satisfactory Loan and Security Documentation, and
-----
legal opinions related thereto.
Events of Default: Standard and customary for a Facility of this
type including those related to Political Risk,
with the proviso that an Event of Default by one
of the Guarantors in relation to the collateral
and financial covenants prior to Economic
Completion, shall not necessarily in itself
constitute an Event of Default by the Borrower or
the other Guarantor.
Costs & Expenses: All legal and out-of-pocket expenses of the
Lenders (including those of the Independent
Engineer and the Insurance Advisor) will be for
the account of the Borrower, whether or not the
transaction proceeds.
Governing Law: New York (Chile for Security documents).
