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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934
For the transition period from to
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Commission file Number 000-19182
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NORD PACIFIC LIMITED
(Exact name of registrant as specified in its charter)
BERMUDA NOT APPLICABLE
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
22 Church Street,
HAMILTON HM FX, BERMUDA NOT APPLICABLE
(ADDRESS of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (441) 292-2363
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK $.05 PAR VALUE
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( X)
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Aggregate market value of voting stock held by non-affiliates based on the
average of NASDAQ bid and asked ADR quotations as of March 14, 1997, was
$39,500,000.
The number of common shares outstanding as of March 14, 1997 was 9,515,654.
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement to be dated April 30, 1997.
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ITEMS 1 AND 2. BUSINESS AND PROPERTIES
General
Nord Pacific Limited ("the Company"), is engaged in
the production of copper and in the exploration for gold,
copper, nickel, cobalt and other minerals in Australia,
Papua New Guinea ("PNG"), Mexico, Canada and the United
States. As used herein the term "Company", unless the
context indicates otherwise, includes all subsidiaries.
The Company currently has a 40% interest in the
Girilambone Copper Mine which has been in production since
May 1993, a 50% interest in the Girilambone North Copper
Mines which have been in production since July 1996, a 100%
interest in the Tabar Islands Gold Project, which is in the
pre-development and exploration stages, a 35% interest in
the Ramu Nickel-Cobalt Project, which is in
the pre-development stage, and various interests in other
exploration properties.
The Company is presently attempting to raise
additional equity capital in Canada and Europe and has
filed a preliminary prospectus in Canada. In support of
this prospectus, an independent technical review of the
Company's mining and exploration properties, dated February
24, 1997, has been prepared by Watts, Griffis and McOuat,
Consulting Geologists and Engineers, of Toronto, Canada.
Certain of the information contained in this report has
been derived from this technical review.
FIGURE #1. Location of the Company's Mining and
Exploration Interests in Australia and PNG.
(MAP)
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Girilambone and Girilambone North Copper Mines, New South
Wales, Australia
The Girilambone project consists of three separate
joint ventures with Straits Mining Pty Limited ("Straits
Mining"), formerly Straits Resources Pty Ltd., an
Australian company. The Company has a 40% and a 50%
interest in two mining joint ventures and a 50% interest in
an exploration joint venture.
Construction of the Girilambone Copper Mine was
completed in May 1993. Total capital costs including
working capital were approximately $30 million. All new
equipment was used. The mine was originally expected to
produce approximately 14,000 metric tonnes ("tonnes" =
approximately 2205 pounds to a tonne) or approximately 31
million pounds of high purity copper each year for six
years from inception. Subsequently, additional orebodies
have been discovered at Girilambone North, and the reserves
re-calculated, that provide for a total project life of 10
years.
In 1994, a Stage 1 plant upgrade was undertaken by the
Company, which primarily allowed the processing of
additional heap leach solutions to help offset the negative
effects of winter temperatures on heap leaching process
rates. In 1995, the Company undertook a Stage 2 plant
expansion. The expansion increased electrowinning capacity
by 15% which allowed the Company to take advantage of
seasonally higher grade leach solutions, and the
construction of a third leach pad with its associated
services. Water supply was also expanded.
Mining activities by the Girilambone North Mining
Joint Venture commenced at the northern pits in May 1996.
To date, limited production of oxide copper mineralization
has been extracted from the North East and Hartmans Pits,
and pre-stripping is continuing at Hartmans Pit.
The mines produce high purity cathode copper from open
pits using heap leaching and the solvent extraction
electrowinning ("SX-EW") process. The mine is managed by
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an Australian company owned jointly by the Company and
Straits Mining.
In June 1996, following successful field tests, forced
aeration of heaps containing chalcocite sulphide ore was
introduced and has resulted in a significant increase in
the rate of copper leaching. Largely in consequence of
heap aeration, copper production at Girilambone has
increased significantly and since mid-1996 the plant has
been able to operate at its rated capacity of 17,000 tonnes
per annum (37,500,000 pounds) of copper or better. The
heap aeration has overcome the negative effects of low
winter temperatures on heap leaching operations, resulting
in a 55% increase in copper production in the second half
of 1996 as compared with the second half of 1995.
Copper production in 1996, at 16,281 tonnes (35.9
million pounds), was 27.4% greater than in 1995. In 1997
copper production is forecast to exceed 1996 levels. Total
copper production through December 31, 1996 was 47,159
tonnes.
Total proven and probable reserves of ore in all pits
not yet mined and placed on pads as of December 31, 1996
were estimated by the joint ventures to be 5,546,000 tonnes
of ore grading 0.88% copper containing approximately 48,810
tonnes of copper metal.
In addition, the heaps are estimated to contain 46,445
tonnes of copper. Stockpiles contain an additional 3,730
tonnes of copper.
The total copper in ore, heaps and stockpiles at
December 31, 1996 is estimated to be 98,985 tonnes (218
million pounds), supporting operations for a further six
years.
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In addition to copper ores, material containing low
grade gold mineralization has been mined and is being
stockpiled separately for possible processing at a later
date. The low grade stockpiles contained approximately
9,977 ounces of gold at December 31, 1996.
Girilambone Exploration
The Company has a 50% interest in exploration licenses
covering approximately 3,000 square kilometers (a square
kilometer is equal to 0.386 square miles) surrounding the
Girilambone and Girilambone North mines and beneath the
Girilambone open pit. The Company is the manager of the
exploration joint venture.
Exploration for the prime target of leachable copper
deposits has continued throughout the tenements with the
objective of the discovery of additional reserves for
treatment through the existing SX-EW treatment plant at
Girilambone.
The secondary exploration target is primary copper
(chalcopyrite) mineralization, and the program has been
successful in locating two massive sulfide bodies
containing chalcopyrite mineralization at the Tritton
prospect, about 14 miles southwest of the Girilambone mine.
A new treatment plant would be required to treat the ore if
the prospect is developed.
The copper resource at Tritton has been calculated at
9.75 million tonnes at a grade of 3.01% copper, containing
293,000 tonnes of copper metal, at depths of from 200
metres to 1,000 metres below surface. The mineralization
is still open at depth. The identified resource also
contains 65,000 ounces of gold and 3.4 million ounces of
silver. Feasibility studies on this project will commence
in 1997.
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The Tabar Islands Gold Project
The Tabar Islands are located in PNG approximately 80
km (kilometers) northwest of Lihir Island, the site of a
major gold deposit controlled by the RTZ Corporation Plc.,
and approximately 150 km north of Rabaul. The four islands
which make up the Tabar Islands are Simberi, Tabar, Tatau
and Mapua Islands.
In the past 14 years, approximately $26 million has
been spent by the Company and its former co-venturers on
exploration of the islands. A total of 21 prospects have
been identified, of which four, all located on Simberi
Island, have been substantially drill tested and are
estimated to contain resources of approximately 444,000
ounces of gold at 0.5 gram/tonne cut-off grade in the oxide
zone.
A feasibility study on the development of the oxide
resources was completed in 1996. However, the economics of
the project are marginal on the currently identified
mineable gold reserves of 217,800 ounces and depressed gold
price. Accordingly, exploration efforts to prove up
additional reserves are being undertaken in 1997. In
December 1996 the Company was granted a General Mining
Lease over these deposits.
In addition, a major exploration and drilling program
is planned in 1997-98, aimed primarily at sulfide gold
deposits on Simberi, Tatau and Tabar Islands. Exploration
will also be conducted on the near surface oxide
mineralization on Simberi Island.
The Ramu Nickel-Cobalt Project
Ramu is located on mainland PNG, 80 km southwest of the
port of Madang. The exploration license is held in joint
venture with Highlands Gold Properties Pty Limited
("Highlands"), which holds a 65% interest and is the
manager, and the Company, which holds a 35% contributing
interest.
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Highlands, as operator of the project, pursued a
program of reserve drilling, metallurgical testwork,
engineering studies and preparation of a Pre-Feasibility
Study which was completed in mid-1996.
Based on this study, the Company believes that the
Ramu Project could become one of the lowest cost nickel
producing properties in the world. Unit total operating
costs when full production levels are reached are estimated
to be approximately $1.39 per pound of nickel produced.
After cobalt credits, based on a cobalt price of $8.00 per
pound, these operating costs could be reduced to $0.67 per
pound of nickel. Capital costs for development are
estimated to be $763.7 million.
The Pre-Feasibility Study assumes a mine life of 20
years, although it is expected that once operations
commence will be extended. The Study projects annual
production of 32,670 tonnes (72 million pounds) of nickel
and 2,770 tonnes (6.1 million pounds) of cobalt, which will
generate an annual, average, after tax cash flow of $150
million (at a nickel price of $3.50/lb and cobalt price of
$8.00/lb) over its assumed 20 year life.
An independent report by Baring Brothers Burrows & Co
Ltd, commissioned by Highlands in 1996, gave a mid-point
valuation of $332 million for the Ramu project.
Work on a detailed feasibility study is expected to
commence in 1997 and it is expected that this program will
take approximately 18 months to complete and cost
approximately $20 million, 35% of which will be payable by
the Company. Development of the project will be dependent
on the results of this feasibility study and on the
availability of financing.
Other Exploration Interests
The Company has gold and copper exploration interests
in three separate joint ventures with major Australian
companies in the Cloncurry region in Queensland and in
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Western Australia. The Company also holds exploration
properties in Canada and Mexico.
Detailed Description of Properties
The following is a more detailed summary of the
Company's mining and exploration interests. The locations
are shown on Figure 1 on page 1. It should be noted that,
except for Girilambone Copper Mine, the Girilambone North
mines and the Simberi Gold Project, where ore reserves have
been delineated, reserves have not been defined on other
properties. No assurance can be given that economically
exploitable ore bodies exist at any other property until
the Company completes additional work, including further
drilling and feasibility studies incorporating all relevant
technical and economic factors. The ore reserve figures
presented in this report are estimates and no assurance can
be given that the indicated level of recovery of the
identified metals will be realized. Market price
fluctuations in the metals, as well as higher production
costs or reduced recovery rates, may impair the economic
recoverability those ore reserves containing relatively
lower grades of mineralization, resulting in a revision of
ore reserves.
1. GIRILAMBONE AND GIRILAMBONE NORTH COPPER MINES, NEW
SOUTH WALES, AUSTRALIA
The Girilambone and Girilambone North Copper mines are
located approximately 625km (390 miles) northwest of
Sydney, New South Wales, Australia. They consist of mining
leases, exploration licenses and surface rights owned by
the Company and Straits Mining. The mining leases are for
a term of 20 years and expire on August 5, 2013. The
exploration licenses are generally for terms ranging from
two to five years and are renewable, based upon compliance
with certain conditions. The properties are accessed by
paved highway from the town of Nyngan, NSW. Power is
supplied by the New South Wales state power agency on
commercial terms.
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The Girilambone area lies toward the northern end of
a zone known as the Lachlan Fold Belt, a large region of
Paleozoic rocks which can be traced from eastern Victoria
to northern New South Wales. A substantial proportion of
metal production by those states has been derived from this
belt which hosts a number of significant base metal mines.
In the mine area, the dominant rock types include quartzite
and chlorite schists. Copper mineralization occurs within
a quartzite horizon and in enclosing schists of the
Ordovician Girilambone Beds. A leached oxidized ore zone
lies over secondarily enriched chalcocite-dominated ore.
This grades into a primary sulfide zone at depth.
Mineralogy consists of malachite and copper oxide
minerals in the oxidized upper part of the orebody,
malachite/chalcocite in the middle of the orebody and
chalcopyrite in the underlying primary sulfide zone.
Native copper occurs in both the oxide and chalcocite
zones.
The Girilambone copper deposit and associated satellite
deposits were mined during the late 1800's and early 1900's
by underground methods and produced approximately 80,000
tonnes of ore averaging 2% copper.
The Company acquired an option to purchase the
Girilambone exploration license in 1989 and completed its
purchase in 1990. After conducting 46,000 feet of reverse
circulation and 8,000 feet of diamond drilling and
metallurgical and engineering studies, a feasibility study
containing favorable results was completed in 1991. Straits
Engineers Contracting Pty Limited ("Straits"), a Singapore
company, acquired interests in both the proposed mine (the
mining joint venture) and the surrounding exploration
ground (the exploration joint venture) in December 1991 and
subsequently assigned its interests to Straits Mining, an
Australian affiliate. Straits funded $6.9 million of
project development expenditures and made loans and
payments to the Company totaling $2.7 million in order to
earn its 60% share in the mining joint venture. Straits
also funded the initial $345,000 of
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exploration expenditure to earn its 50% interest in the
exploration joint venture.
The Girilambone Mining Joint Venture, in which the
Company has a 40% interest, is managed by a jointly owned
(40% by the Company and 60% by Straits Mining) management
company named Girilambone Copper Company Pty Limited
("Girilambone Copper Company").
Mining of the Girilambone orebody (Murrawombie pit)
commenced in late 1992, and construction of the processing
plant for the mine was completed in May 1993, and design
production rate was achieved in November 1993. The average
production rate envisaged over the six year mine life was
approximately 14,000 tonnes (31 million pounds) per year of
high-purity copper cathode. Production of copper in 1996
was 16,281 tonnes, with practically all the production
being London Metal Exchange ("LME") grade A equivalent, or
better (99.999% pure) copper metal. In 1994, a Stage 1
plant upgrade was undertaken for a total cost of $2.2 million
(the Company's share being $880,000), which consisted of the
installation of additional pumping capacity, a new mixer
settler, and additional water pumping capacity. A
multimedia strong electrolyte filter was also installed to
improve electrowinning operations. In 1995, a Stage 2
plant upgrade was undertaken in the third and fourth
quarters for a total cost of $1,100,000 (the Company's
share being $440,000) which was funded out of project cash
flow. The upgrade involved the installation of 12
additional electrowinning cells, construction and equipping
of a third leach pad, further upgrading of the raw water
system and some minor upgrading of the solvent extraction
plant. The upgrade was substantially completed by the end
of 1995. In addition, heap operating techniques were
trialed in order to improve copper production. As an
example, a rotary agglomerating drum was installed in 1995
to enable the agglomeration of ore with strong acid. Most
significantly, aeration of the heaps was trialed in early
1996 which resulted in dramatic improvement in production,
offsetting previous cold weather effects on leaching. All
new sulphide heaps are
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now being aerated, and older heaps are being re-stocked and
equipped with aeration facilities. Copper production in
1997 is forecast to increase over 1995 and 1996 levels.
The Company holds a 50% interest in a second mining
joint venture with Straits Mining, the Girilambone North
Mining Joint Venture. This joint venture is also managed
by Girilambone Copper Company. Following successful
feasibility studies carried out in 1995 and 1996, this
joint venture commenced mining operations in the
Girilambone North area in early 1996. Three orebodies are
being developed - North East Pit, Hartmans Pit and Larsens
East Pit, all located in close proximity to each other
approximately 2 miles northwest of Girilambone Mine and its
processing facilities.
The ore types at Girilambone North are similar to
those found at Girilambone, but of lower grade. Both the
copper oxides and supergene copper sulphides in the
northern pits are amenable to heap leaching. Ore from
these pits is being mined and trucked to the Girilambone
operations by the same mining contractor as being used at
Girilambone. The Girilambone facilities are then used to
crush and stack the Girilambone North ore on segregated
leach pads (for metallurgical and cost accounting purposes)
and then to heap leach and process the resulting solutions
to produce cathode copper.
Reserve Estimates
Estimated life-of-mine open-pittable, mineable copper
ore reserves at Girilambone and Girilambone North at
December 31, 1996, including material already mined, are
shown in the following table. These reserves were
determined by Girilambone Copper Company.
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GIRILAMBONE AND GIRILAMBONE NORTH RESERVES (0.2% COPPER
CUT-OFF)
Tonnes Copper Contained
Grade Copper
(million) (%) ('000
tonnes)
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Total Life of Mine
(Murrawombie, North East, Hartmans and Larsens East Pits)
Total Mineable Reserves 11.483 1.30 149.23
Total Recoverable Copper 125.43
Mined to December 31, 1996 5.937 1.69 100.42
(including stockpiles and heaps)
Remaining Mineable Reserves 5.546 0.88 48.81
Low grade gold mineralization has also been mined and
is being stockpiled separately for possible processing at
a later date. The low grade mined stockpiles contain
approximately 9,977 ounces of gold at December 31, 1996
(313,581 tonnes grading 1.02 g/t).
Mining Plan
The pits at Girilambone and Girilambone North are
being mined by conventional truck and shovel open pit
methods using a contract mining company which is
responsible for mining, crushing, screening and stacking
ore on the leach pads.
Ore Processing
Treatment of the copper ore is by the low cost and
environmentally friendly two-stage process of heap leaching
and solvent extraction-electrowinning ("SX-EW"). The SX-EW
process has been extensively used in the USA and Chile and
is a proven process.
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Heap Leaching
Once the oxide ore has been mined, crushed and stacked
on the leaching pads, a solution of water and sulfuric acid
is applied. The copper is leached into solution as copper
sulfate and routed to the solvent extraction plant for
processing.
In the case of chalcocite ore, ferric sulfate in the
presence of sulfuric acid and air, is used as the leachant,
and is aided by bacteria, dominantly THIOBACILLUS FERRO-
OXIDANS. This bacterial leaching process is now the
primary method of copper leaching as mining of the pit
deepens and more chalcocite is mined. The leached copper
solution from the chalcocite is also treated in the solvent
extraction-electrowinning plant. The installation of heap
aeration systems in 1996 overcame prior winter production
problems.
The SX-EW Process
The solvent extraction plant is a chemical extraction
plant in which the copper solution is extracted and
concentrated via an ion exchange chemical. The purified
and concentrated copper solution is pumped to the
electrowinning tankhouse where the copper is electroplated
out of solution onto stainless steel cathodes. This copper
can then be shipped directly to end-users with no further
refining or smelting being necessary.
Girilambone Financing Agreement
The Company had $4,245,000 million of debt outstanding
at December 31, 1996 under a financing agreement with the
Bank of Western Australia Ltd. ("BankWest"; formerly R&I
Bank) to fund its 40% share of development and construction
costs of Girilambone, including working capital. The total
capital cost, including funds previously invested by both
co-venturers, was approximately $30 million.
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The outstanding amount includes additional drawings of
$3.0 million for working capital and to fund the Company's
50% share of the development of the Girilambone North
deposits. The loan bears interest at LIBOR plus 1.85%
(7.54% at December 31, 1996). This facility is required to
be repaid quarterly in installments being the greater of
$425,000 or 70% of Available Cash Flow. In February 1997
the facility was restructured and an additional $980,000
was drawn down. The interest rate was also reduced to
Singapore Interbank Offered Rates ("SIBOR") plus 1.5%.
During the period the loan is outstanding, the Company
is required to build up each quarter a cash deposit in a
reserve account with BankWest sufficient to meet the next
quarterly principal repayment. All cash proceeds in the
reserve account must be first used to pay any project
costs, bank fees, interest and principal before any cash is
available to the Company.
Copper Sales
The Company sells its copper production under
contract through a marketing agent. In 1996, sales of
$13.8 million were made under contract primarily to two
Australian consumers, Metal Manufactures Limited and Crane
Enfield Metals Pty Ltd, at a price which is at a set
premium to the prevailing London Metals Exchange price at
the time the copper is delivered. The contracts are
intended to be ever-green contracts that are rolled over
annually and for 1997 are for a minimum of 82% of
production. The loss of either or both of such consumers
would not have any material adverse effect on the Company
because of the ongoing demand for the quality copper
produced at Girilambone.
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Copper Agreements
To mitigate the effect of price changes on
substantially all of its expected copper sales through
March 31, 1998, the Company has entered into swap and call
option agreements for 1997 and put option agreements for
the first quarter of 1998.
The swap and call option agreements are with a single
counterparty on a total of 13.2 million pounds of copper
that settle ratably each month during 1997. The swap
agreements lock in a fixed forward price as a floor, with
the purchase of call options above the floor permitting the
Company to benefit from an increase in copper price above
the call strike price. The copper swap agreements are
designated as hedges of anticipated copper sales, and gains
and losses under these agreements are deferred and
reflected as a component of sales when each contract
settles.
Under this combination swap and call option
arrangement, at the settlement date for each copper
contract during 1997, the Company receives a minimum of
$1.02 per pound plus the excess of market price (as
determined by the London Metals Exchange) over $1.11 per
pound. There was no cash outlay at the time these
contracts were entered into.
The put option agreements are with another
counterparty on a total of 4.0 million pounds of copper for
the first quarter of 1998. Under these agreements the
Company will receive market price for its copper sales but
with a guaranteed minimum price of $0.90 per pound, at a
cost of $0.08 per pound. There was no cash outlay at the
time these contracts were entered into.
Sales for the years ended December 31, 1996, 1995 and
1994, include $1,058,000 of gains and $1,080,000 and
$27,000 of losses, respectively, that were realized in
settlement of copper hedging contracts.
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Forward Currency Exchange Contracts
The Company has entered into forward exchange
contracts, expiring at various times through March 1998, to
hedge against potential Australian currency fluctuations
related to payment of a portion of the expected operating
costs of Girilambone. Realized and unrealized gains and
losses on these contracts are included in the results of
operations. For the year ended December 31, 1996, the
Company recognized a gain of $479,000 compared to a loss of
$279,000 in 1995 and a gain of $2,535,000 in 1994. At
December 31, 1996, the total of outstanding contracts was
$12,000,000 (A$15,200,000) compared to outstanding
contracts of $8,700,000 (A$13,200,000) at December 31,
1995.
The Company is exposed to copper price fluctuations
and currency risks in the event of non-performance by the
counterparties to the various agreements described above
but has no off balance sheet risk of accounting loss. The
Company anticipates, however, that the counterparties will
be able to fully satisfy their obligations under the
agreements. The Company does not obtain collateral or
other security to support financial instruments subject to
credit risk.
2. GIRILAMBONE EXPLORATION JOINT VENTURE ("GEJV")
The Company has a 50% interest in a joint venture with
Straits Mining covering approximately 3,000km(2) surrounding
the Girilambone and Girilambone North mines and beneath the
Girilambone pit. The Company is the manager of the
exploration program.
Exploration for additional reserves of copper suitable
for treatment at the existing SX-EW plant at Girilambone
mine is the primary objective of the exploration program
which is continuing throughout the tenements held by the
joint venture. Several occurrences of this nature are
known in the region.
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Chalcopyrite mineralization of the type discovered at
the Tritton prospect, 14 miles southwest of Girilambone, is
a secondary exploration target. A separate plant would be
required to treat this type of mineralization.
During 1996 the Company expended $2.2 million on
exploration and feasibility studies as its 50% share of
Joint Venture costs.
Exploration Methods
In 1996, shallow vacuum drilling geochemical sampling
programs were conducted at points along surveyed grids in
geologically and geochemically favorable areas. These
programs were successful in identifying anomalies in
copper, gold and lead-zinc. Seven areas will be tested by
deep reverse circulation ("RC") drilling in 1997.
Sirotem electromagnetic surveys, a modern geophysical
ground technique used to identify electrically conductive
zones possibly related to copper mineralization, were
conducted by the Company throughout 1996, and a number of
anomalies for further testing by deep drilling were
identified at Birrimba, Kurrajong, Lucknow, Oak, Acorn,
Rockdale West and Doughnut prospects.
In 1995-96, deep RC drilling was completed within
fifteen areas. At two of these, Double Tanks and
Budgerygar prospects, massive sulphide mineralization
with significant copper and gold content was intersected.
Additional deep drilling of these prospects is planned
for 1997. The Double Tanks prospect is adjacent to the
Girilambone North pits and will be the subject of a
mining pre-feasibility study in 1997.
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Bonnie Dundee Project Area
This project includes three copper prospects known as
Tritton, Budgerygar and Bonnie Dundee, the latter two
having been the subject of small scale mining activity in
the late 1800's. The deposits are approximately half a
mile apart along strike. The area is located 14 miles
southeast of the Girilambone mine.
Tritton Deposit
This is a significant new deposit discovered by the
Company in 1995 when a deep diamond drilling program over
Sirotem anomalies was successful in locating pyrite-
chalcopyrite sulfide mineralization to depths of several
hundred metres. In 1996, an additional ninety holes were
completed to vertical depths of 1,000 metres. This
drilling has defined a resource containing 293,000 tonnes
of copper which remains open at depth and along strike.
Two zones of mineralization have been intersected
consisting of the Upper and Lower Zones. The
mineralization outlined by the current intersections
extends continuously down dip for 1,100 metres through
these zones, except for an 80 metre gap between them. Each
of the zones has a strike length of at least 250 metres.
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The best intersections at 1% copper lower cut-off
obtained in 1996 were as follows:
Hole No From To Intersected Cu Au Ag
(m) (m) Width % ppm ppm
Upper Zone BDS048 252 264 12 21.18 1.49 164
BDS054 269 283 14 13.26 0.47 54
BDS074 319 335 16 4.41 0.25 7
Central Zone BDS029 594 613 19 4.14 0.10 8
BDS052A 533 544 11 6.81 0.18 15
BDS055 586 609 23 6.07 0.11 12
Lower Zone BDS095 748 779 31 2.28 0.26 12
BDS098 767 805 38 2.14 0.07 6
BDS107 885 899 14 3.41 0.21 15
BDS111 894 910 16 3.82 0.08 12
BDS113 985 995 10 3.22 0.16 15
BDS113 1011 1019 8 3.31 0.10 8
During 1996, a resource estimate was calculated using
a 1% copper lower cut-off to 1,000 metres vertical depth as
shown in the table below.
18
<PAGE>
TRITTON PROJECT
RESOURCES AS AT DECEMBER 1996
ZONE CLASSIFICATION TONNES Cu Au Ag
(Millions) % g/t g/t
UPPER MEASURED 0.65 6.22 0.4 21
INDICATED 0.76 4.17 0.33 12
INFERRED 0.24 2.74 0.3 10
SUB-TOTAL 1.65 4.76 0.3 15
LOWER INDICATED (TOP) 1.47 3.42 0.1 10
INDICATED (MIDDLE) 0.76 2.43 0.2 12
INFERRED 5.87 2.48 0.1 10
SUB-TOTAL 8.10 2.65 0.1 10
TOTAL MEASURED+INDICATED 3.64 3.87 0.2 13
INFERRED 6.11 2.49 0.1 10
GRAND TOTAL 9.75 3.01 0.2 11
CONTAINED METAL
COPPER - TONNES 293,000
GOLD - OUNCES 65,000
SILVER - OUNCES 3,400,000
Because of structural geology and variations in the
grade of copper, the Lower Zone was subdivided into the
Lower Zone Top (Central Zone) and the Lower Zone Bottom
(now known as the "Lower Zone"). This estimate was made
before the Lower Zone was subdivided. The Company intends
to re-calculate the resource in July 1997 in conjunction
with pre-feasibility studies.
Budgerygar Prospect
This prospect is contained within exploration licence
4038 which is held in a joint venture between the GEJV and
Central West Gold NL ("CWG"), an Australian company listed
on the Australian Stock Exchange. The GEJV has earned a
51% interest in the license and has the right to acquire up
to 100%.
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<PAGE>
The Company drilled a total of 39 deep RC holes within
EL4038 during 1995 and 1996. An inferred resource of
leachable copper mineralization totaling 2.4 million tonnes
at 0.63% copper and containing 15,120 tonnes of copper
metal was calculated during 1996 using a lower cut-off of
0.2% copper. The mineralization is of a type suitable for
treatment at the Girilambone plant and preliminary
feasibility studies are planned on this deposit for 1997.
Tabar Islands Gold Project
The Company holds an exploration license over the Tabar
Islands, namely Simberi, Tatau, Tabar and Mapua, and a
mining lease, granted in December 1996, over the eastern
part of Simberi Island. The mining lease is for a twelve
year period expiring December 3, 2008 and the exploration
licence is for a two year period expiring June 5, 1997.
Application for renewal of the exploration license has been
lodged.
Background
The Tabar Islands lie to the north of New Ireland in
Papua New Guinea, approximately 80 km northwest of Lihir
Island and 150 km north of Rabaul (refer Figure 1). The
Tabar Islands cover an area of approximately 270 square
kilometers. The Company acquired an exploration license
over the Tabar Islands in 1981 and after some preliminary
reconnaissance, farmed out a majority interest to Kennecott
Explorations (Australia) Limited ("Kennecott"), now a
subsidiary of RTZ Corporation Plc., and Niugini Mining
Limited. Kennecott as the operator discovered gold
mineralization and anomalies, but these apparently did not
meet its corporate investment criteria.
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<PAGE>
In 1993, the Company acquired the interests of both
Kennecott and Niugini Mining for payments totaling $1.57
million (A$2 million) of which half has been paid. The
remaining payment of $0.79 million (A$1,000,000) is payable
by December 3, 1998.
Kennecott and Niugini Mining have an option to re-
acquire 50% of the project if feasibility studies indicate
that any new mining project could produce 150,000 ounces or
more of gold annually. Exercise of the option would
require payment to the Company of 250% of the Company's
expenditure on the mine development area from July 1994 to
the date the option is exercised. Expenditures from July
1994 through December 31, 1996 totaled approximately $7.3
million. Current reserves indicate that production would
be less than 150,000 ounces of gold annually.
The Tabar Islands are part of a chain of islands which
include and are geologically similar to Lihir Island where
a very large world class gold mining project is presently
under development by companies unrelated to the Company.
Beginning in 1997, the operators of the Lihir project
expect it to produce an average of approximately 585,000
ounces of gold per annum for at least 15 years.
Stage of Development
Exploration since 1981, at a cost to the Company and
its former co-venturers of $26 million, has yielded
anomalous gold indications on three of the Tabar Islands.
Ten gold prospects have been identified on Simberi Island,
and a further 11 on Tatau and Tabar Islands.
The major oxide prospects on Simberi Island at South,
East and North Samat, Pigiput and Sorowar have been the
subject of over 700 drillholes during the exploration and
resource definition drilling phase, the majority of which
were drilled along ridges to test oxide mineralization in
the zone of weathering, 20-50 meters from surface .
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<PAGE>
On December 3, 1996, the Company was granted a 25
square kilometer 12 year mining lease to develop and
operate a gold mine on Simberi Island under which the
government of PNG will have no participating interest.
Once production has commenced, the Company will be required
to pay a production royalty of 2% of sales to the PNG
government. The development of the Simberi gold deposits
is based on a feasibility study prepared by an independent
engineering company in 1996.
The feasibility study proposes the extraction of
mineralization from the five oxide gold deposits on the
mining lease by simple open cut mining techniques. The
mining rate is expected to commence at an initial 600,000
tonnes per annum at the Samat deposits, and increase to a
final design rate of one million tonnes per annum at the
Sorowar and Pigiput deposits.
The feasibility study assumes a treatment plant will
be constructed at Pigiput Bay on the eastern side of
Simberi Island, in a modular manner to facilitate
relocation. The plant has been designed for single stage
crushing, although a second stage can be added later if
necessary. The crushing circuit is followed by open
circuit primary ball milling and closed circuit secondary
ball milling, with conventional cyanide leaching. This is
followed by carbon in pulp absorption, pressure desorption,
and conventional electrowinning of gold to produce dore
bars on site. It is expected that tailings will be
discharged by submarine outfall into the ocean at a depth
of 150 metres.
Estimated capital costs for development of the Simberi
Island Gold Project are approximately $20.4 million.
Average life of mine operating costs for the project are
currently estimated by the Company to be approximately $204
per ounce of gold produced. Production rates over the
estimated five year life of the mine are projected to
average approximately 40,000 ounces of gold per annum.
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<PAGE>
Due to the limited size of the proven and probable
reserves, coupled with the recent decline in the price of
gold, development of the project has been delayed pending
the discovery of additional reserves, or a significant
recovery in the gold price.
Estimates of Mineralization
The measured and indicated oxide resource of
approximately 341,700 ounces of gold, and inferred oxide
resource of approximately 105,400 ounces of gold on Simberi
Island are contained in several deposits all within a
prospective zone four kilometers long by two kilometers
wide. This zone is characterized by airborne geophysical
anomalies typical of epithermal alteration systems, as well
as widespread anomalous gold in rock chip and soil samples.
The tested prospects were selected on the basis of
anomalous gold values.
The ore reserve estimates for the five Simberi Island
deposits, as determined by the Company, are shown in the
table below.
<TABLE>
<CAPTION>
Simberi Oxide Gold Deposits
Reserve Estimates
PROVED RESERVE PROBABLE RESERVE TOTAL RESERVES
Tonnage Gold Gold Tonnage Gold Gold Tonnage Gold Gold
Pit Name 000t g/t ounces 000t g/t ounces 000t g/t ounces
- -------- ---- --- ------ ---- --- ------ ---- --- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sorowar 2,442 1.36 106,800 851 1.05 28,700 3,293 1.28 135,500
South Samat 169 5.21 28,300 18 3.28 1,900 187 5.02 30,200
North Samat 153 3.63 17,900 10 0.93 300 163 3.47 18,200
East Samat - - - 179 1.89 10,900 179 1.89 10,900
Pigiput 377 1.32 16,000 214 1.02 7,000 591 1.21 23,000
----- ---- ------- ---- ---- ------ ----- ---- -------
TOTAL 3,141 1.67 169,000 1,272 1.19 48,800 4,413 1.54 217,800
RESERVE (1) ----- ---- ------- ---- ---- ------ ----- ---- -------
----- ---- ------- ---- ---- ------ ----- ---- -------
(1) Totals may not match, due to rounding
</TABLE>
23
<PAGE>
Estimated ore reserves of 217,800 ounces of gold are
contained in these deposits. The potential for discovery
of new mineralization of both oxide and sulfide materials
elsewhere in the project area is considerable.
Exploration
During 1996, exploration programs on Simberi, Tatau
and Tabar Islands were extended. Reconnaissance
exploration was carried out at the Banesa prospect on Tabar
Island, and in the Talik and Sikim areas on Tatau Island.
Advanced exploration involving diamond and air core
drilling was carried out at Tugi Tugi gold prospect and at
Daramba copper-gold prospect, both on Tatau Island, and
over the oxide deposits in the Samat, Pigiput and Sorowar
areas and the Botlu area on Simberi Island. A limited
amount of additional oxide gold mineralization was
identified which is expected to increase the oxide gold
reserves.
A significant program of exploration is planned for
1997-98, aimed primarily at sulfide gold potential. In
addition, exploration will also be conducted on the near-
surface oxide mineralization on Simberi Island. This
program will include ground geophysics, bulldozer trenching
and drilling of RC and diamond core holes. Exploration of
gold and copper anomalies on Tatau and Tabar Islands is
also planned.
4. RAMU NICKEL-COBALT PROJECT
Background
Ramu is located approximately 80 km southwest of the
Port of Madang on the north coast of PNG. The Company
farmed into the property in 1978. Its co-venturer is
Highlands Gold Properties Pty Limited ("Highlands"), a
subsidiary of Highlands Gold Limited which was taken over
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<PAGE>
by Placer Pacific Limited in early 1997. The current
exploration license extension expires on February 26, 1998.
In 1992, the joint venture agreement was amended to
permit Highlands to increase its interest in the Joint
Venture. As manager of the joint venture, Highlands solely
funded a program of metallurgical testing and drilling. As
of December 31, 1996, K9.0 million (approximately US$7.0
million) had been expended by Highlands, and, accordingly,
the Company's interest was diluted to 35% and Highlands'
interest increased to 65%. The Company is currently
contributing its 35% share of costs to maintain its
interest in the project.
Another party, Eastern Pacific Mines, may elect within
180 days of receiving details of any proposed commercial
development of Ramu to participate in such development up
to 10%. The interest is to be acquired from the Company
and Highlands in proportion to their interests.
The license covers approximately 246 km2, of which
approximately 32 km2 is underlain by the mineralized
laterite containing nickel, cobalt and chromite.
Mineralization and Resource Estimates
The mineralization is contained in an extensive area
where a strong lateritic profile is developed over the
basic and ultrabasic bedrock. The lateritization process
is due in part to the effects of weathering under tropical
conditions, and is accentuated by the effects of regional
structures which have caused basins and depressions in
which the weathering and hence the degree of lateritization
is more intense. The latritic profile is up to 50 meters
thick, although thicknesses of 25-30 are more common,
occurring over an area of about 32 square kilometers.
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<PAGE>
By world standards the Ramu resource is large and,
although nickel grades are only average, cobalt grades are
relatively high, making nickel equivalent grades more
attractive. Further, from a drilling program carried out
in 1994 and 1995, it was concluded that increases in both
nickel and cobalt grades may be achieved by screening of
barren rocks from the saprolite horizon. The total
resource (measured and indicated) estimates for the central
Ramu area, using a cut-off grade of 0.5% nickel, are 24.2
million tonnes of ore with average grades of 0.90% nickel
and 0.08% cobalt. If surrounding areas are included the
inferred resource estimates, using the same cut-off grade,
are 110 million tonnes of ore with average grades of 0.9%
nickel and 0.1% cobalt.
Previous Feasibility Work
The Ramu deposit has been the subject of several
scoping studies and metallurgical testwork programs which
considered various process routes and project capacities.
Two of these studies, carried out in 1982 and 1989 by
independent engineering firms, determined that pressure
acid leaching would provide the most favorable treatment
process for the limonite zones. Later testwork done by a
major American research laboratory confirmed that the
Ramu laterite mineralization is amenable to treatment by
pressure acid leaching using autoclave technology, as
practiced at Moa Bay in Cuba since 1959.
Metallurgical recoveries from this process were
indicated to be high, with extraction rates above 90% for
both nickel and cobalt. In addition, the Ramu limonite
material, by virtue of its low magnesia content, has low
acid consumption relative to similar resources around the
world, a characteristic with favorable implications in
regard to processing costs.
26
<PAGE>
Feasibility Program
Highlands, as operator of the project, has pursued a
program of metallurgical testwork, engineering and pre-
feasibility studies. An extensive metallurgical
development program was undertaken in 1995 and 1996 by
Hydrometallurgical Research Laboratories ("HRL"), in
Brisbane, Queensland. HRL has developed a flowsheet that
addresses the processing of the Ramu ores. Specific
attention has been given to developing a solvent extraction
- - electrowinning ("SX-EW") circuit that would produce
electrowon nickel and cobalt hydroxide. In mid-1996 a
detailed Pre-Feasibility Study was completed which
confirmed the very large scale of the Ramu Project and
favorable economics.
The Company believes that the Ramu deposit could
become one of the lowest cost nickel producing properties
in the world. As reported in the Pre-Feasibility Study,
the capital costs for the development of the Ramu Project
are estimated to be $763.7 million. Annual total operating
costs when full production levels are reached are estimated
to be approximately $96.4 million and the unit operating
costs are estimated to be $32.12 per tonne of ore mined and
processed, or $1.39 per pound of nickel produced. After
cobalt credits, the Company believes these operating costs
could be reduced to as low as $0.67 per pound of nickel
based on a cobalt price of $8.00 per pound. If the Ramu
Project is developed, over its estimated minimum 20 year
mine life, the project is expected to produce approximately
630,000 tonnes (1.39 billion pounds) of nickel and 56,000
tonnes (123 million pounds) of cobalt.
Work on a detailed feasibility study is expected to
commence in 1997. This program will include detailed
drilling programs to define ore reserves, geotechnical
investigations, bulk sampling, metallurgical testing and
pilot plant work, detailed engineering studies, preparation
of an environmental management plan to meet contemporary
international standards, and negotiations with the
government and the financial community. It is
27
<PAGE>
expected that this program will take approximately 18 months
to complete and will cost approximately $20 million.
Late in 1996, Placer Pacific Limited launched an on-
market takeover bid for Highlands which was successfully
consummated in early 1997. Highlands is now a subsidiary
of Placer Pacific. An independent report by Baring
Brothers Burrows & Co Ltd, commissioned by Highlands in its
defense against the bid, valued the Ramu Project at between
$299 million and $366 million, with a mid-point valuation
of $332 million, after applying a 25% discount for the
present undeveloped status of the project. Subject to
successful underwriting, Placer Pacific proposes to float
off Highlands' interest in the Ramu Project and in other
exploration properties in a new public company, Highlands
Pacific Limited.
5. OTHER EXPLORATION PROPERTIES - AUSTRALIA
Cloncurry Region, Queensland
Monakoff - Copper/Gold Prospect
The Company holds exploration tenements at Monakoff in
the Cloncurry district of Queensland in a joint venture
with Placer Exploration Limited ("Placer") and BHP Minerals
Pty Limited ("BHPM"). Placer had previously earned a 76.3%
interest in the tenements by completing expenditure of
approximately $945,000 and the Company's interest is
presently 23.7%. BHPM has the right to earn a 51% interest
by the expenditure of $1.125 million, at which time the
Company's interest will be reduced to approximately 11.6%,
and a further 10% interest by the additional expenditure of
$562,000, at which time the Company's interest will be
approximately 9.2%.
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<PAGE>
Mount Dromedary - Copper/Gold Prospect
The Company holds exploration tenements at Mt.
Dromedary, which is also situated in the Cloncurry district
of Queensland. In 1996, CRA Exploration Pty Limited
("CRA") earned a 75% interest in the Mt. Dromedary
tenements by spending $780,000. Subsequently the Company
elected not to contribute to further expenditure and
converted its interest into a 10% free-carried interest
until a decision to mine is taken should further
exploration lead to the discovery of economic mineral
reserves.
Western Australia - Gold
The Company has one exploration joint venture in
Western Australia where joint venture partners are funding
the work.
6. OTHER EXPLORATION PROPERTIES - CANADA AND MEXICO
Canada
The Company recently signed a Letter-of-Intent with
Young-Shannon Gold Mines to earn up to a 65% interest in
the Chester Gold Project, located north of Sudbury,
Ontario. Between 1987 and 1991, drilling at this project
identified a zone containing 240,000 ounces of gold. Mine
development is permitted, there is an idle mill nearby, and
there is potential for early production.
Mexico
The Company holds two exploration properties in Mexico
and is continuing to evaluate the possible acquisition of
precious and base metal properties.
29
<PAGE>
7. OTHER BUSINESS MATTERS
A. Risk Factors
Risk factors which may have a significant impact on the future
performance of the Company or the value of its shares include:
Risk of Mineral Exploration and Development
As the primary business of the Company is the exploration for and
commercial development of precious metals and other minerals, it is subject
to the substantial risks inherent in such activities. The Company is still
in the exploratory or pre-development phase of all operations except at the
Girilambone Copper Mine, and the adjacent Girilambone North Project.
Although exploration on several of the properties has resulted in discoveries
of mineralization, the magnitude and commercial feasibility of such
discoveries cannot be accurately determined until further exploration and
feasibility work is conducted.
Competition, Markets and Regulations
The mineral industry is extremely competitive. The ability of the
Company to benefit from undeveloped discoveries will depend upon its ability,
as discussed below, to obtain additional financing to develop those
properties and on other market factors beyond its control.
World market prices for precious metals, base metals (including copper),
and strategic minerals are subject to many variables and may fluctuate
widely, depending upon world supply and demand and on international economic
and political factors. Revenues that the Company may receive for the
minerals from any existing projects or from any
30
<PAGE>
future mineral discoveries are uncertain and no assurance can be made that
prices will be sufficient to warrant commencement or continuation of
commercial exploitation.
The Company has in place certain price protection agreements in respect
of its share of production from the Girilambone Copper Mine to reduce the
impact of fluctuations in copper prices through March 1998. However, if as a
result of a decline in copper prices the Company's realization on future
copper sales, after giving effect to the price protection agreements, were to
decrease significantly and remain at such level for any substantial period,
it might not be economically feasible to continue commercial production at
Girilambone and the Company might, with the consent of its co-venturer,
curtail or suspend some or all of its mining activities.
As the Company has interests in Australia, PNG, Canada, Mexico and the
United States, its operations will be subject to regulations in these
countries and could be adversely affected by unfavorable political
developments in these countries. In some countries, precious metals and
strategic minerals are sometimes considered to be national assets which may
cause impediments to mining operations. It is possible that the Company's
assets could be expropriated by governments and that the compensation
received, if any, may not reflect the true value of such assets. In
addition, governmental regulations often require local participation in
mining ventures, and the Company could be hindered in such countries if it is
unable to obtain local investors for its operations. Changes to applicable
environmental and safety regulations could restrict the Company's operations.
Foreign Exchange Risks
The Company has mining and exploration operations in several countries.
As a consequence, the Company's revenue and costs will be affected by
fluctuations in currency rates. The Company has certain forward currency
31
<PAGE>
exchange contracts in place in conjunction with its Girilambone Copper
Project borrowings intended to minimize the effect of certain of these
fluctuations. These contracts mature progressively through March 1998. Any
contracts not utilized by April 1998 can be rolled forward until such time as
the Company elects to utilize them.
Uninsured Risks
Exploration for and development of mineral deposits involve hazards which
could result in the Company incurring losses and liabilities to third
parties. The Company is not insured against all losses or liabilities that
could arise from its operations either because insurance is unavailable or
because the premium cost is excessive. If the Company incurs uninsured
losses or liabilities, the funds available for exploration and development
will be reduced and the Company's assets may be jeopardized. However, the
Company has insured some of its operational risks.
Additional Financing Required
The Company will need additional financing to commercially develop
properties such as Tabar and Ramu, should development be warranted. There
can be no assurances that such additional financing will be available in the
amounts and at the time necessary to continue exploration on or development
of a specific property.
Borrowing Risks
Interest charges on borrowings incurred by the Company may fluctuate
because of many factors. High interest rates could have an adverse effect on
the Company's operations.
32
<PAGE>
Employee Risks
The Company is generally non-unionized and the majority of its employees
are employed under contract or, in the case of seasonal field activities,
under short-term contract or as casual labor. Approximately 35-40% of staff
employed at the Company's Girilambone operations is unionized, all under one
union. There have been no labor disputes since mining operations began in
1992, and a new 2 year labor agreement was finalized in March 1997. The
Company's history of labor relations is excellent and management believes the
risk of material adverse effect due to labor unrest is small.
Title to Properties
With respect to most properties, the Company must expend certain amounts
annually in exploration or development (which amounts are subject to periodic
re-negotiations) as a condition to retaining title. Conditions imposed by
licenses and mining legislation must also be complied with. Consequently,
the Company could lose title to one or more properties or portions thereof if
license conditions are not complied with or if sufficient funds are not
available to meet annual expenditure requirements.
In PNG, proceedings were initiated in the National Court regarding the
constitutional validity of the Mining Act Chapter 195 which, INTER ALIA,
provided that minerals are the property of the State. These proceedings have
been discontinued. Should the PNG Supreme Court consider the constitutional
questions at some future time it is possible that it could result in mining
leases and other tenements in PNG being invalid, such that challenges could
be mounted as to their existence.
33
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The Mabo Decision
The decision of the High Court of Australia in MABO V. THE STATE OF
QUEENSLAND (1992) 107 ALR 1 may have an effect on the Australian tenements
and real property interests held by the Company. That case recognized that
native title to land in Australia survived the Crown's acquisition of
sovereignty. However, the acquisition of sovereignty exposed native title to
extinguishment by valid exercise of sovereign power inconsistent with the
continued right to enjoy native title. Where the Crown has validly alienated
land by granting an interest that is wholly or partially inconsistent with a
continuing right to enjoy native title, native title is extinguished to the
extent of the inconsistency. Thus native title has been extinguished by the
grant of rights to mine or by the conduct of mining operations pursuant to a
right to do so. The Company is not aware of any claim having been made nor
does it have any reason to believe that any claim will be made in respect of
any mining tenements or real property interests held by the Company in
Australia as a result of the Mabo decision.
In the area surrounding the Company's Girilambone mine the state
Department of Mineral Resources has reached the view that native title has
been extinguished and accordingly the Company believes that there is no risk
of successful claims for native title to its mining and exploration tenements
in that area.
Miscellaneous
The local laws of the countries outside the United States in which the
Company is conducting activities generally prohibit direct ownership of
mining rights and properties by non-domestic entities, but permit foreign
entities to own such rights and properties through domestic subsidiaries. To
obviate or reduce the risks of title complications, title is generally held
on behalf of the Company in the name of local nominees or local companies.
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<PAGE>
B. Mining in Australia
Mineral commodities are a major Australian export industry and mining is
generally encouraged by both federal and state governments, as long as
environmental guidelines are followed. Ownership of minerals is generally
vested in the state. The individual states and territories of Australia
establish and administer their own mineral policies. The states and
territories have the right to impose mineral royalties, being typically
several percent of the salable value of the mineral.
The various state and territorial governments administer exploration and
development through ministerial departments. Exploration licenses (giving
the licensees the right to explore but not develop and mine minerals) are
typically granted for two years, with renewals requiring increased
expenditure and partial relinquishment of ground. A person or company can
lodge an application for an exploration license if the ground is not held by
others and if they have the technical and financial resources to meet the
proposed work program. Foreign ownership restrictions generally do not apply
to exploration activities.
Development and mining of minerals requires granting of a mining lease.
The procedures and time taken to gain a mining lease vary considerably
between the states and territories. In general however, the basis for the
granting of a mining lease is demonstration by the applicant that the
exploration resource can be economically mined and that operations will
comply with environmental guidelines. Foreign investment guidelines must
also be satisfied in the granting of mining leases where certain capital
threshold amounts are exceeded. Currently the threshold for mining projects
is A$50 million ($37 million). The foreign investment guidelines generally
require 50% Australian ownership, however this can be negotiated or waived.
There are no restrictions on
35
<PAGE>
repatriation of foreign company income and it is not the policy of Australian
governments to take an equity interest in mining developments.
Australia taxes trading profits (including mining) and capital gains at
the rate of 36%. Sales of mining rights by a prospector can be exempt from
tax, and sale or joint venture by the Company of particular exploration
licenses or mining leases may qualify for that exemption, depending upon the
circumstances. Australia also has a withholding tax upon the payment of
interest, royalties or dividends to a non-resident which, varies from 10% to
39%, depending upon the country and the type of payment.
C. Mining in Papua New Guinea
PNG is a constitutional democracy and has a comprehensive mining law and
tax code. The PNG Mining Act is based on the premise that minerals in the
ground are the property of the State. Exploration, development and
exploration of minerals require approval of the PNG Government and are
administered by the Department of Mining and Petroleum. Prospecting rights
are obtained through application to the PNG Government for an Exploration
Licence which, if granted, is valid for two years and obligates the holder to
commit to a work plan and expenditure schedule. For large projects, prior to
development of a major minerals project, a Mining Development Contract must
be negotiated with the PNG Government which sets forth details as to the
administration of the mining operation, specific proposals committing the
developer to construction of facilities and implementing the operation. If
the PNG Government subsequently approves a Proposal for Development, a
Special Mining Lease is granted and the Mining Development Contract is
signed, allowing the development to proceed with the plans set forth in the
proposal. A failure to meet the stated commitments in the mining proposal
can result in termination of a Special Mining Lease and the forced sale to
the PNG Government of plant and equipment at its depreciated value. For
smaller
36
<PAGE>
mining projects a general Mining Lease may be granted for a term of
up to 21 years. Although under the Mining Act the government reserves the
right to take a participating interest up to 30% in such projects it has not
done so for any existing projects. However, local landowner participation is
strongly encouraged by the government.
PNG has consistently encouraged exploration for and development of
minerals. Development of major mineral projects is affected by two major
considerations, namely (1) taxation and royalties and (2) the Government's
entitlement to have an equity interest in mineral projects. It is a long
standing PNG Government policy to acquire an option to purchase an equity
interest in new major mining ventures; in practice this interest has not
exceeded 30% in major mining ventures. The maximum participation by the PNG
Government in any particular project, and the terms under which its interest
may be obtained, are negotiable and are usually negotiated prior to the
issuance of the Special Mining Lease. The PNG Government is not obligated to
commit to the exact extent of its participation until a Special Mining Lease
is granted. At the present time the PNG Government does not own an interest
in any project in which the Company has an interest.
Mining development projects in PNG may be undertaken by PNG
corporations, foreign corporations or by PNG or foreign corporations
participating in an unincorporated joint venture. The PNG income tax rate
for mining companies is currently 35% for PNG corporations (operating on a
Special Mining Lease) and 48% for foreign corporations, but accelerated
deductions for capital and exploration expenditures are allowed and special
tax relief may be granted during the initial years of mining. The rate of
tax for resident companies on a general mining lease (which applies to
smaller mining projects) was reduced to 25% from January 1, 1996. The
government also imposes on Special Mining Leases an additional profits tax at
the rate of 35% on after-tax cash flow when the rate of return exceeds 20%
or, at the operator's one-time option,
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<PAGE>
12% plus the average US prime rate. The dividend withholding tax rate is 17%
for resident companies. PNG does not have a capital gains tax.
In 1994 the PNG currency was first devalued by 12% and subsequently
allowed to float. During 1994 the effective devaluation against the US$ was
approximately 20% and in 1995 it was approximately 10%. In 1996 it was
relatively stable. This has had no material effect on the Company.
Political and Other Risks (PNG)
The country of PNG comprises the eastern half of a large land mass north
of Australia in the South Pacific. PNG was administered as a trust territory
by Australia from the end of World War I until it became independent in 1975.
The economy of PNG is based largely on minerals, petroleum, coffee, timber
and Australian economic aid. PNG has pro-western (particularly Australian)
ties and democratic elections. However, PNG is a third world country and any
investment is subject at any time to the potentially volatile effects of
political instability and economic uncertainty prevalent in such countries,
including civil strife and expropriation, excessive taxation and other forms
of government interference. PNG has experienced episodes of civil unrest and
breakdowns in law and order in certain locations in the past few years. In
the North Solomons Province of PNG such activity led to the closure of the
large Panguna (Bougainville) copper-gold mine in 1990 which has not reopened.
Other projects on mainland PNG have experienced brief closures due to
violence. The Company, however, is not aware of any such problems in areas
where it is conducting exploration.
D. Mining in Mexico
Mexico has a rich tradition of mining and encourages mineral development
and foreign investment. Mexico is a significant producer of at least 19
non-fuel mineral
38
<PAGE>
commodities, particularly silver, copper, lead and zinc.
Mexico has a comprehensive mining law that was amended in 1992 to simplify
and speed up the granting of mining concessions. All minerals are owned by
the government and are granted by exploration and mining concessions with
royalties to the government. Up to 100% direct foreign ownership and control
are now permitted for exploration and mining operations under certain
specified conditions and periods of terms. Taxes for mining in Mexico have
been reduced in the past few years by eliminating a 7% mine production tax
and are generally in line with US and Canadian levels of taxation. The
recent devaluation of the Mexican peso and the economic adversity resulting
therefrom should not have a significant negative effect on the Company.
E. Bermuda
The Company is incorporated in Bermuda which has no limitations on the
right of non-residents to vote or hold stock in the Company. Bermuda does
not restrict the payment of dividends, interest or other payments to
non-residents.
Under current Bermuda law, the Company is not required to pay any taxes
on either income or capital gains. The Company has received an undertaking
from the Minister of Finance in Bermuda that in the event of any such taxes
being imposed, the Company will be exempted from taxation until the year
2016. There is no tax treaty between the United States and Bermuda.
F. Organization
The Company was organized in 1988 for the purpose of acquiring all of
the assets, subject to the liabilities, of two limited partnerships (the
"Partnerships"). The Partnerships and Nord Resources Corporation
("Resources") owned all of the venture interests in Nord-Highlands Mineral
Venture-I a California joint venture ("Nord-
39
<PAGE>
Highlands"). On April 2, 1990, the Partnerships transferred all of their
assets, subject to their liabilities, to the Company in exchange for shares
of common stock of the Company (the "Exchange") and Resources relinquished
all rights it had in Nord-Highlands. The Partnerships then immediately
dissolved and liquidated and distributed the shares of the Company to their
respective limited partners. The Company, and its wholly-owned Bermuda
subsidiary, Nord Gold Company Limited, own 100% of the interests in
Nord-Highlands, which is the exploration and development arm of the Company
in Australia, PNG and other areas of the South Pacific. All activities of
the Company in the United States are carried out by Hicor Corporation, a
wholly-owned Delaware subsidiary.
Exploration activities in Mexico are carried out by a controlled Mexican
subsidiary named Compania Minera Nord Pacific de Mexico S.A. de C.V.
Nord Pacific is currently owned approximately 35% by Nord Resources
Corporation a Delaware corporation organized in 1971 and listed on the New
York Stock Exchange.
The Company's principal offices are located at 22 Church Street,
Hamilton HM FX Bermuda, telephone number (809) 292-2363. The US subsidiary
of the Company, Hicor Corporation, maintains offices at 6565 Americas Parkway
NE, Suite 650, Albuquerque, New Mexico 87110, telephone number (505) 884-8446.
Nord-Highlands maintains an address at c/o Nord Resources (Pacific) Pty.
Ltd., Level 15, 3 Spring Street, Sydney, NSW, 2000, Australia, telephone
number 02-9251-5166. The Company currently has nine employees, five of whom
are located in Australia, one in PNG and three in the United States.
Employees of the Girilambone Copper Mine are employed in the name of the
joint venture management company.
40
<PAGE>
G. Glossary of Technical Terms
chalcocite - a copper sulfide mineral.
chalcopyrite - a copper iron sulfide mineral.
kriging - a geostatistical technique for
estimating resources and reserves.
leaching - a dissolution of mineral components
from ore by appropriate chemicals.
laterite - a naturally leached iron and aluminum
rich rock, formed at the surface by
weathering in tropical conditions.
malachite - a green hydrated copper carbonate
mineral.
Ordovician - a geological period within the
Paleozoic Era.
ore - material which can be mined and/or
treated at a profit.
oxidized zone - zone in which sulphides have been
altered to oxides by surface waters.
Paleozoic - an era of geological time, from 245-570
million years ago.
quartzite - a compact siliceous rock formed of
silica of sedimentary origin.
reserve - part of a mineral deposit which could
be economically and legally extracted
or produced at the time of the reserve
determination.
resource - an identified in-situ mineral occurrence
from which minerals may be recovered.
schist - a medium to coarse grained metamorphic
rock with sub-parallel rientation of
micaceous minerals.
sulfide - a mineral compound characterized by
the linkage of sulfur with a metal.
41
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
None
42
<PAGE>
PART II
ITEM 5.MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
American Depository Receipts (ADR's) currently representing one share of
the Company's common stock, $.05 par value, currently trade on the NASDAQ
Stock Market National Market System under the symbol NORPY. On February 17,
1997, the Company's shareholders approved a reverse stock split whereby one
new share of common stock, $.05 par value per share ("New Common Stock"),
will be exchanged for every five shares of common stock, $.01 par value per
share ("Old Common Stock"). The effective date for the reverse stock split
was March 10, 1997. Each share of New Common Stock is equivalent to an ADR
currently trading on NASDAQ. The Company has applied to the NASDAQ Stock
Market to list the New Common Stock on the National Market System. The
Company will terminate the ADR program and delist the ADRs from the NASDAQ
Stock Market, which is expected to occur on or about June 10, 1997. Both the
New Common Stock and the ADRs will be listed in the NASDAQ Stock Market
during this transition period.
The Company's common stock traded on the Australian Stock Exchange
("ASX") under the symbol NDP from February 28, 1994, until, at the Company's
request, it was delisted on March 5, 1997.
The following is the quarterly range of real time sales prices for the
Company's common stock for the period from January 1, 1995 to September 25,
1995, as reported by NASDAQ. On August 7, 1995, the ADR's commenced trading
on NASDAQ and the prices below commencing on that date are the real time
sales prices for such ADR's. Effective September 25, 1995, the ordinary
shares of the Company were no longer traded on the NASDAQ System.
The conversion to ADR's on August 7, 1995 is reflected in the third and
fourth quarters of 1995. The quotations reflect inter-dealer prices, without
retail mark up, mark down or commission and may not necessarily represent
actual transactions.
43
<PAGE>
Sales prices of common shares have been adjusted to reflect the 1 for 5
reverse stock split which was effective March 10, 1997.
Per ADR
-------
1996 (US$) High Low
--------------------------------------
1st Quarter 5 1/2 3 7/16
2nd Quarter 9 3/4 4 1/2
3rd Quarter 8 4 3/8
4th Quarter 7 7/8 4 3/4
Per
Common Share Per ADR
------------ -------
1995 (US$) High Low High Low
---------------------------------------------------
1st Quarter 4 3/8 2 1/2
2nd Quarter 4 3/8 2 13/16
3rd Quarter 4 11/16 3 7/16 4 15/16 3 3/8
4th Quarter 5 1/8 3 1/8
Following is the quarterly range of stock prices for the Company's
common stock as reported by the Australian Stock Exchange from inception of
trading on February 28, 1994. Amounts are reported in Australian dollars.
1996 (A$) High Low
------------------------------------
1st Quarter 7 4.50
2nd Quarter 11.25 6.00
3rd Quarter 11.25 7.40
4th Quarter 8.75 6.50
1995 (A$) High Low
-----------------------------------
1st Quarter 4.50 3.10
2nd Quarter 5.00 3.10
3rd Quarter 6.00 3.75
4th Quarter 6.25 4.25
44
<PAGE>
The Company paid a dividend of $.05 per share totaling $468,000, with
respect to its 1994 earnings, from existing cash reserves on June 30, 1995 to
shareholders of record on June 6, 1995. The Company cannot give any
assurances concerning the extent and timing of future dividends, if any, as
they are dependent on the future profits, the financial position and
projected financial requirements of the Company.
The approximate number of equity security holders of record as of March
1, 1997 of the Company's ADR's and common stock was 115 and 340, respectively.
45
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
Year Ended December 31,
-----------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
SUMMARY OF OPERATIONS:
- ----------------------
<S> <C> <C> <C> <C> <C>
Sales $16,178 $14,074 $11,293 $ 4,674 $
Costs and Expenses:
Cost of sales 8,969 7,664 7,289 3,861
Abandoned and impaired projects 191 352 35 298 3
General and administrative 3,615 3,022 2,735 2,628 1,931
-------- -------- --------- -------- ---------
Total costs and expenses 12,775 11,038 10,059 6,787 1,934
-------- -------- --------- -------- ---------
Operating Earnings (Loss) 3,403 3,036 1,234 (2,113) (1,934)
Other Income (Expense):
Interest and other income 161 448 697 235 64
Interest and debt issuance costs (406) (604) (992) (969) ( 351)
Copper contracts (loss) (304)
Forward currency exchange contracts gain (loss) 497 (279) 2,535 14
Foreign currency transaction gain (loss) (114) (378) 515 (204)
-------- -------- --------- -------- ---------
Total Other Income (Expense) (166) (813) 2,755 (924) ( 287)
-------- -------- --------- -------- ---------
Earnings (Loss) Before Income Taxes 3,237 2,223 3,989 (3,037) ( 2,221)
Provisions for Income Taxes 2,620 1,120
-------- -------- --------- -------- ---------
Net Earnings (Loss) $ 617 $ 1,103 $ 3,989 $( 3,037) $( 2,221)
-------- -------- --------- -------- ---------
-------- -------- --------- -------- ---------
Net Earnings (Loss) Per Common and
Common Equivalent Share $ 0.06 $ 0.12 $ 0.43 $( 0.60) $( 0.45)
-------- -------- --------- -------- ---------
-------- -------- --------- -------- ---------
Dividends Paid Per Share $ 0.05
--------
--------
BALANCE SHEET DATA:
Working capital (deficiency) $( 3,088) $( 60) $ 4,017 $( 3,122) $( 1,650)
Deferred exploration costs 21,778 14,312 10,895 9,629 8,171
Total assets 39,741 34,666 32,850 22,605 10,827
Indebtedness 5,981 5,430 7,133 15,564 5,578
Shareholders' equity 24,209 23,460 22,813 3,441 3,261
CASH FLOW DATA:
Nord Pacific expenditures for:
Deferred exploration costs $ 8,154 $ 4,099 $ 1,611 $ 5,393 $ 678
Capital expenditures 771 1,569 727 3,893 42
</TABLE>
46
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
During the three year period ended December 31, 1996, cash of
$11,255,000 was provided by operating activities exclusively from the
Company's interest in the Girilambone copper project, including Girilambone
North ("Girilambone"). The Company expended $12,177,000 during the period for
its share of costs incurred to place ore under leach at Girilambone. Cash of
$17,844,000 was used to fund exploration and development activity and capital
expenditures during the period, primarily related to Girilambone and Tabar.
The Company's payments of long-term debt, net of additions, during the
three year period totaled $8,519,000. In February 1997, the Company
restructured the Girilambone Financing Agreement, the result of which
provided additional financing of $980,000, which was borrowed and used to
repay a loan from an Australian lender. The Girilambone Financing Agreement
requires that all cash proceeds generated from Girilambone operations be
deposited with the lender and must be used to pay any project costs, bank
fees, interest and principal, and to fund a reserve account with the lender,
before any cash is available to the Company. The reserve account is required
to carry a balance sufficient to meet the next quarterly principal payment.
The lender authorized the Company to utilize the funds from this reserve
account for working capital needs and exploration activity in 1996 and the
Company has reestablished this account with a balance of $800,000 at February
28, 1997.
During 1995, the Company paid a dividend totaling $468,000 from profits
earned in 1994. The extent and timing of future dividends are dependent on
the future profits and financial resources of the Company. In 1994, the
Company completed a public offering in Australia, from which it received
proceeds of $14,266,000 (A$20 million), of which $1,802,000 was used to pay
expenses associated with the offering.
47
<PAGE>
Cash was provided during the three year period by loans from Nord
Resources Corporation ("Resources") of $1,418,000, of which $416,000 was
repaid during the same period. In October 1996, Resources agreed to make
available to the Company, at Resources' discretion, up to $1,000,000 in the
form of an operating loan and up to an additional $1,000,000 to fund the
Company's reserve account required by the Girilambone lender, both payable on
demand. If any balance remains outstanding at the close of business on March
31, 1997, Resources has the option to convert any or all of the balance into
shares of common stock of the Company. The conversion price would equal the
average of the high and low sales price of the Company's common stock for a
twenty day trading period prior to and including March 31, 1997. During 1994,
in conjunction with the closing of the aforementioned Australian offering,
Resources converted $2,900,000 owed to it by the Company into 697,744 shares
of common stock of the Company.
The Company has filed a registration statement in Canada to sell up to
4,500,000 shares of its common stock in a public offering. In addition, Nord
Resources Corporation has agreed to purchase that number of shares of the
Company's common stock at the same purchase price as in the Canadian
offering, so that after completion of the Canadian offering, Nord Resources
Corporation would own approximately 30% of the Company's issued and
outstanding shares of common stock. Nord Resources Corporation currently owns
approximately 35% the Company's common stock. If the offering is successful,
proceeds are anticipated to be used to fund the Company's 35% share of the
cost of the feasibility studies at Ramu, additional exploration for gold at
Tabar, exploration and feasibility studies at Girilambone and for working
capital. There can be no assurance that the Canadian offering will be
completed.
The Company is in the exploration phase of all its projects except
Girilambone. Additional efforts on all exploration projects will be required
to determine the extent to which resources will be commercially viable and
whether the deferred exploration costs ultimately will be realized. If
commercially viable resources are identified, the Company
48
<PAGE>
will likely have to seek external sources of financing to fund development of
these resources.
The Company believes funds required for continued general exploration
activities in North America and for overhead expenses will be available from
cash provided by Girilambone operations. Cash required to continue major
exploration projects such as at Girilambone, Ramu and Tabar is expected to be
provided from proceeds of the Canadian offering. Should the Canadian offering
not proceed, expenditures on major exploration projects would have to be
curtailed until suitable alternative funding could be obtained. Should
development proceed on the Tabar gold project during 1997, the Company would
likely seek funds through debt financing.
Certain sections of this report contain forward-looking statements with
regard to mineral reserves, potential capital expenditures and future
operating costs. Such statements are based on management expectations, and in
some cases, independent engineering evaluations. However, there can be no
assurance that if development and construction do take place, that results
will be as estimated.
RESULTS OF OPERATIONS
During 1996, the Company recorded net earnings of $617,000 compared to
net earnings of $1,103,000 in 1995 and $3,989,000 in 1994. Operating earnings
were $3,403,000, $3,036,000 and $1,234,000 in 1996, 1995 and 1994,
respectively. Operating earnings increased duriing 1996 despite a
considerable decline in the copper sales prices realized by the Company. An
increase in copper sales prices was the major factor in the operating
earnings increase in 1995 compared to 1994. Copper sold during 1996 totaled
14,400,000 pounds, a 25% increase over 11,280,000 pounds of copper sold in
1995, which was an increase of 6% over the 10,645,000 pounds of copper sold
in 1994. During 1996, the Company received $1.05 per pound of copper sold
compared to $1.35 per pound received in 1995 and $1.06 per pound in 1994. The
copper hedging programs established by the Company
49
<PAGE>
resulted in an increase in revenue of $1,058,000 in 1996 and a decrase in
revenue of $1,080,000 in 1995 and $27,000 in 1994. Including the impact of
the copper hedging programs, the Company realized a net average selling price
per pound of copper of $1.13 in 1996 compared to $1.25 realized in 1995 and
$1.06 in 1994. The Company is required, under the terms of its financing
arrangements, to continue its copper hedging program during the period the
debt is outstanding. Copper production increased 29% in 1996 over 1995 due to
the initiation of modifications to the production process and 9% in 1995 over
1994. Cost of sales per pound of copper declined to $.62 in 1996 compared to
$.68 in 1995 and 1994. This decrease resulted from improved heap leaching
efficiency after the introduction of forced heap aeration and from additional
estimated reserves. Cost of sales as a percentage of sales increased slightly
to 55% in 1996 from 54% in 1995. The lower selling price of copper realized
was generally offset by higher copper recovery. A decline in the cost of
sales percentage to 54% in 1995 compared to 65% in 1994 was due primarily to
the higher copper sales prices realized in 1995.
Costs incurred for abandoned projects primarily related to several
exploration projects in Mexico which were abandoned based on unfavorable
drilling results. General and administrative expense increased 20% in 1996
compared to 1995 and 10% in 1995 compared to 1994. The change was primarily
due to an increase in overall exploration activities and costs associated
with regulatory requirements.
Interest and other income decreased during the three year period due to
less cash available for investment. Interest and debt issuance costs also
decreased as a result of repayment of debt under the Girilambone Financing
Agreement.
Fluctuations in gains and losses in the forward currency exchange
contracts and in foreign currency transactions are primarily a result of
changes in the relative strength of the Australian currency compared to U.S.
Currency. During 1996 and 1994, the Australian dollar strengthened compared
to the U.S. dollar, while it weakened in 1995. In addition, the
50
<PAGE>
Company had larger levels of foreign currency exchange contracts in place
during 1994 compared to 1995 and 1996. A loss of $304,000 was recorded in
1996 resulting from a decline in the market value of copper contracts which
were entered into in late 1995.
A provision for income tases in Australia of $2,620,000 and $1,120,000
was recorded in 1996 and 1995, respectively, resulting from profits generated
at Girilambone. Operating losses incurred in other taxing jurisdictions
cannot be used to offset taxable income generated in Australia. Although
Australian taxable income in 1996 was comparable to 1995 levels, the
provision was lower in 1995 as the Company benefitted from the use of net
operating loss carryforwards which had previously been subject to a valuation
allowance. Although the Company has recorded a provision for income taxes, no
income taxes are payable for 1996 or 1995 because of the use of operating,
exploration, and development loss carryforwards.
51
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements: Page
Independent Auditors' Report 53
Balance Sheets 54
Statements of Operations 56
Statements of Shareholders' Equity 57
Statements of Cash Flows 58
Notes to Financial Statements 59
ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS
None
52
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Nord Pacific Limited
Hamilton, Bermuda
We have audited the accompanying consolidated balance sheets of Nord Pacific
Limited and subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
each of the three years in the period ended December 31, 1996 (all expressed in
U.S. dollars). These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Nord Pacific Limited and
subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996 in conformity with accounting principles generally accepted in
the United States of America.
DELOITTE & TOUCHE
Chartered Accountants
Hamilton, Bermuda
March 14, 1997
53
<PAGE>
NORD PACIFIC LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1996 AND 1995
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
ASSETS (Note E) 1996 1995
- -------------------------------------------------- ---------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 439 $ 3,656
Accounts receivable (no allowance for
doubtful accounts is considered necessary):
Trade 1,868 1,172
Affiliates 21 40
Other 43 49
---------- ----------
1,932 1,261
Inventories:
Copper 131 88
Supplies 195 183
---------- ----------
326 271
Forward currency exchange contracts (Note F) 76 1,022
Premium on copper contracts (Note F) 1,193 348
Prepaid expenses 96 172
---------- ----------
TOTAL CURRENT ASSETS 4,062 6,730
RESTRICTED CASH (Note E) 1,080
FORWARD CURRENCY EXCHANGE CONTRACTS (Note F) 18
PREMIUM ON COPPER CONTRACTS (Note F) 311 960
DEFERRED COSTS ASSOCIATED WITH
ORE UNDER LEACH, net of accumulated amortization
of $8,569 in 1996 and $5,867 in 1995 (Note B) 7,897 5,606
PROPERTY, PLANT, AND EQUIPMENT at cost
less accumulated depreciation (Note C) 5,411 5,919
DEFERRED EXPLORATION AND DEVELOPMENT COSTS:
Girilambone, net of accumulated amortization
of $1,199 in 1996 and $799 in 1995 (Note B) 4,471 1,356
Exploration prospects (Note D) 17,307 12,956
OTHER 264 59
---------- ----------
$ 39,741 $ 34,666
---------- ----------
---------- ----------
</TABLE>
See notes to consolidated financial statements.
54
<PAGE>
NORD PACIFIC LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1996 AND 1995
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE AND PER SHARE AMOUNT)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY 1996 1995
- -------------------------------------------------- ---------- ----------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable:
Trade $ 1,595 $ 1,613
Affiliates 276 32
---------- ----------
1,871 1,645
Note payable - Nord Resources Corporation (Note G) 947
Accrued expenses 1,067 822
Deferred gain on copper contracts (Note F) 1,565
Payable on copper contracts (Note F) 393
Current maturities of long-term debt (Note E) 1,700 3,930
---------- ----------
TOTAL CURRENT LIABILITIES 7,150 6,790
LONG-TERM LIABILITIES:
Long-term debt (Note E) 3,334 1,500
Payable on copper contracts (Note F) 311 883
Deferred income tax liability (Note K) 3,740 1,120
Obligation under purchase agreement (Note D) 795 744
Retirement benefits (Note L) 202 169
---------- ----------
TOTAL LONG-TERM LIABILITIES 8,382 4,416
CONTINGENT LIABILITIES (Note M)
SHAREHOLDERS' EQUITY (Notes G, I and N):
Common stock, par value $.05 per share,
authorized - 20,000,000 shares, issued
and outstanding: 1996 - 9,515,654 and
1995 - 9,492,254 476 475
Additional paid-in capital 31,467 31,336
Accumulated deficit (8,532) (9,149)
Foreign currency translation adjustment 798 798
---------- ----------
24,209 23,460
---------- ----------
$ 39,741 $ 34,666
---------- ----------
---------- ----------
</TABLE>
See notes to consolidated financial statements.
55
<PAGE>
NORD PACIFIC LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
SALES (Note I) $ 16,178 $ 14,074 $ 11,293
COSTS AND EXPENSES:
Cost of sales (Note B) 8,969 7,664 7,289
Abandoned and impaired projects 191 352 35
General and administrative:
Nord Resources Corporation (Note G) 415 361 318
Other 3,200 2,661 2,417
---------- ---------- ----------
Total general and administrative 3,615 3,022 2,735
---------- ---------- ----------
Total costs and expenses 12,775 11,038 10,059
---------- ---------- ----------
OPERATING EARNINGS 3,403 3,036 1,234
OTHER INCOME (EXPENSE):
Interest and other income 161 448 697
Interest and debt issuance costs (406) (604) (992)
Forward currency exchange contracts
gain (loss) (Note F) 497 (279) 2,535
Foreign currency transaction gain (loss) (114) (378) 515
Copper contracts (loss) (Note F) (304)
---------- ---------- ----------
TOTAL OTHER INCOME (EXPENSE) (166) (813) 2,755
---------- ---------- ----------
EARNINGS BEFORE INCOME TAXES 3,237 2,223 3,989
PROVISION FOR INCOME TAXES (Note K) 2,620 1,120
---------- ---------- ----------
NET EARNINGS $ 617 $ 1,103 $ 3,989
---------- ---------- ----------
---------- ---------- ----------
NET EARNINGS PER COMMON
AND COMMON EQUIVALENT SHARE $ .06 $ .12 $ .43
---------- ---------- ----------
---------- ---------- ----------
AVERAGE COMMON AND COMMON EQUIVALENT
SHARES (In thousands) (Notes A and N) 10,053 9,559 10,800
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See notes to consolidated financial statements.
56
<PAGE>
NORD PACIFIC LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARES)
<TABLE>
<CAPTION>
Common Stock Additional
------------------------- Paid-in Accumulated
Shares Amount Capital Deficit
(Note N)
--------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE - December 31, 1993 5,585,075 $ 279 $ 16,137 $ (13,773)
Net earnings 3,989
Compensation relating to
restricted shares 16
Issuance of common stock 3,200,000 160 12,304
Stock option activity 6,522 3
Conversion of long-term debt
to common stock (Note G) 697,744 35 2,865
---------- ---------- ---------- ----------
BALANCE - December 31, 1994 9,489,341 474 31,325 (9,784)
Net earnings 1,103
Common stock issued relating to
stock bonus plan 2,913 1 11
Dividend paid ($.05 per share) (468)
---------- ---------- ---------- ----------
BALANCE - December 31, 1995 9,492,254 475 31,336 (9,149)
Net earnings 617
Compensation relating to options
issued to non-employees 45
Exercise of stock options 23,400 1 86
---------- ---------- ---------- ----------
BALANCE - December 31, 1996 9,515,654 $ 476 $ 31,467 $ (8,532)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See notes to consolidated financial statements.
57
<PAGE>
NORD PACIFIC LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN CASH 1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 617 $ 1,103 $ 3,989
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation 1,278 1,258 995
Amortization 3,259 2,736 3,043
Compensation relating to non-qualified options,
bonus shares and restricted stock 45 12 16
Unrealized (gain) loss on forward currency exchange
contracts 988 977 (2,017)
Foreign currency transaction loss (gain) 114 378 (515)
Abandoned and impaired projects 191 352 35
Deferred costs associated with ore under leach (4,992) (3,558) (3,627)
Deferred income taxes 2,620 1,120
Derivative financial instruments 304
Change in assets and liabilities:
Accounts receivable (764) (36) (226)
Inventories (45) (47) 171
Prepaid expenses 80 (139) 11
Accounts payable 158 709 (378)
Accrued expenses and other liabilities 339 525 (613)
---------- ---------- ----------
Net cash provided by operating activities 4,192 5,390 884
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (771) (1,569) (727)
Payment of obligation under purchase agreement (648)
Deferred exploration costs (8,154) (4,099) (1,611)
---------- ---------- ----------
Net cash (used in) investing activities (8,925) (6,316) (2,338)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt (1,185) (4,703) (5,771)
Additions to long-term debt 789 3,000 140
Net borrowings - Nord Resources Corporation 947 55
Stock option activity 87 3
Restricted cash 1,080 (56) 115
Issuance of common stock 14,266
Costs associated with issuance of common stock (265) (1,105)
Dividends paid (468)
---------- ---------- ----------
Net cash provided by (used in) financing activities 1,453 (2,227) 7,703
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS 63 (340) 596
---------- ---------- ----------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (3,217) (3,493) 6,845
CASH AND CASH EQUIVALENTS - beginning of year 3,656 7,149 304
---------- ---------- ----------
CASH AND CASH EQUIVALENTS - end of year $ 439 $ 3,656 $ 7,149
---------- ---------- ----------
---------- ---------- ----------
CASH PAID FOR INTEREST $ 384 $ 449 $ 950
---------- ---------- ----------
---------- ---------- ----------
NON-CASH TRANSACTIONS:
Purchase of derivative financial instruments (Note F) $ 311 $ 1,308
---------- ----------
---------- ----------
Conversion of long-term debt due to Nord Resources
Corporation into common stock (Note G) $ 2,900
----------
----------
</TABLE>
See notes to consolidated financial statements.
58
<PAGE>
NORD PACIFIC LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
(IN U.S. DOLLARS)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
COMPANY DESCRIPTION
Nord Pacific Limited (the "Company") operates in a single industry segment which
includes the exploration for and development and production of precious and base
metals and strategic mineral properties primarily in Australia and Papua New
Guinea. Exploration activity carried on in North America, including Canada and
Mexico, is primarily for gold.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements are prepared in conformity with accounting
principles generally accepted in the United States of America. The consolidated
financial statements include the accounts of the Company, its wholly-owned
subsidiaries, and its 40% interest in the Girilambone copper property in
Australia and its 50% interest in the Girilambone North Project (collectively
"Girilambone"). Financial statement amounts relating to Girilambone represent
the Company's proportionate interest in the assets, liabilities and operations
of Girilambone. All significant intercompany transactions are eliminated.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers all investments with a maturity of three months or less
when purchased to be cash equivalents. The carrying amount of cash and cash
equivalents approximates fair value.
INVENTORIES
Inventories are valued at the lower of cost (first-in, first-out method) or
market.
DEFERRED COSTS ASSOCIATED WITH ORE UNDER LEACH
Costs at Girilambone incurred with respect to ore under leach are deferred and
amortized using the units of production method over the estimated reserves.
Copper is projected to be recovered during the next 6 year period, based on the
present proven reserves and copper within the leach pads. The Company
continually evaluates and refines estimates used to determine the amortization
and carrying amount of deferred costs associated with ore under leach based upon
actual copper recoveries and operating plans.
59
<PAGE>
PROPERTY, PLANT AND EQUIPMENT
Non-mining property, plant and equipment is depreciated using the straight-line
method over the estimated useful lives of the assets. Property, plant and
equipment related to Girilambone is depreciated by the units-of-production
method over the estimated reserves.
DEFERRED EXPLORATION AND DEVELOPMENT COSTS
All costs directly attributable to prospecting, exploration and development are
deferred. Costs related to producing properties are amortized by the units-of-
production method over the estimated reserves. Deferred costs are carried at
cost, not in excess of anticipated future recoverable value, and are expensed
when a project is no longer considered commercially viable.
DEBT ISSUANCE COSTS
Professional fees and expenses relating to the issuance of debt are capitalized
and amortized over the term of the related borrowings.
FOREIGN CURRENCY TRANSLATION
The functional currency for operations conducted in Australia is the U.S.
dollar. Adjustments to U.S. dollar balances as a result of changes in the
exchange rate between U.S. dollars and Australian dollars are recognized
currently in the statement of operations as foreign currency transaction gains
and losses. Prior to March 31, 1993, the Australian dollar was the functional
currency for the Company's operations conducted in Australia, and the resulting
translation adjustments were accumulated as a separate component of
shareholders' equity through March 31, 1993.
FINANCIAL INSTRUMENTS
Gains and losses related to qualifying hedges of anticipated copper sales are
deferred and recognized in the statement of operations as a component of sales
at the settlement date.
Realized and unrealized gains and losses on forward currency exchange contracts
and other derivative financial instruments that do not qualify as hedges are
recognized currently in the statement of operations. Net unrealized gains and
losses are included as assets or liabilities in the balance sheet.
NET EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
Net earnings per common and common equivalent share for the years ended December
31, 1996 and 1995 is calculated using the treasury stock method. Net earnings
per common and common equivalent share is computed on a modified treasury stock
method during 1994 as options outstanding exceeded 20% of the Company's shares
outstanding at December 31, 1994. Under this method of computation, all
options outstanding are presumed exercised, and proceeds are deemed to be
applied to reduce borrowing with any excess proceeds applied to the purchase of
U.S. government securities. Net earnings and average common and common
equivalent shares are adjusted to include the effect of the above calculation in
determining the Company's net earnings per common and common equivalent share.
In February 1997, the Financial Accounting Standard Board issued Statement
("SFAS") No. 128, "Earnings Per Share." The Company has not adopted SFAS No.
128 in its December 31, 1996 financial statements and has not yet determined
what affect its adoption will have on subsequently filed financial statements.
60
<PAGE>
RESTATEMENT OF SHARE AND PER SHARE AMOUNTS
Pursuant to the 1 for 5 reverse stock split of the Company's common stock,
effective March 10, 1997, all share and per share amounts have been restated to
reflect the reverse stock split.
RECLASSIFICATIONS
Certain reclassifications have been made in the 1995 and 1994 consolidated
financial statements to conform to the classifications used in 1996. These
reclassifications had no effect on net earnings or shareholders' equity as
previously reported.
ACCOUNTING FOR IMPAIRMENT OF LONG-LIVED ASSETS
The Company has adopted Statement of Financial Accounting Standards ("SFAS") No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," which requires review for impairment of long-lived
assets whenever changes in circumstances indicate that the carrying amount of
the asset may not be recoverable. The adoption of SFAS No. 121 has had no
effect on the Company's financial statements for the year ended December 31,
1996.
.
ACCOUNTING FOR STOCK-BASED COMPENSATION
The Company measures compensation cost for stock options issued to employees
using the intrinsic value based method under Accounting Principles Board ("APB")
Opinion No. 25, "Accounting for Stock Issued to Employees."
B. GIRILAMBONE
The Company is a 40% joint venturer in the Girilambone Copper Property and a
50% joint venturer in the Girilambone North Copper Property ("Girilambone") in
Australia. In 1996 mining commenced in the Girilambone North Project area and
the ore from this property is being processed through the existing Girilambone
plant. All costs incurred during mine development have been capitalized and are
being amortized using the units of production method over the estimated
reserves. During 1996 and 1995 the estimated reserves were increased based on
improved ore grades. The effect of this change was to increase net earnings at
Girilambone by $120,000 ($.01 per share) and $188,000 ($.02 per share) in 1996
and 1995, respectively. Following is summarized balance sheet data of
Girilambone:
61
<PAGE>
<TABLE>
<CAPTION>
Amounts Included
Total Girilambone In Accompanying
Joint Ventures Financial Statements
------------------------- -------------------------
Balance Sheet Data December 31, December 31,
(In thousands) 1996 1995 1996 1995
- ------------------ ---- ---- ---- ----
<S> <C> <C> <C> <C>
Current assets $ 2,260 $ 817 $ 913 $ 327
Deferred costs associated with ore under
leach, net 18,648 14,015 7,897 5,606
Property, plant and equipment, net 12,494 13,651 5,019 5,460
Deferred exploration and development
costs, net 13,688 7,386 4,471 1,356
---------- ---------- ---------- ----------
Total assets 47,090 35,869 18,300 12,749
Current liabilities 3,412 2,437 1,436 975
---------- ---------- ---------- ----------
Partners' equity $ 43,678 $ 33,432 $ 16,864 $ 11,774
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Company's share of equity $ 18,535 $ 13,373
Less: Eliminations (1,671) (1,599)
---------- ----------
Net assets recorded by Company $ 16,864 $ 11,774
---------- ----------
---------- ----------
</TABLE>
Debt incurred related to Girilambone is the separate responsibility of each
venturer and is not included in the joint ventures' financial statements.
Copper production is distributed to each venturer based on its respective
ownership interest. Sale of copper is the responsibility of each venturer.
Cost and expense data related to the operation of the mine is as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Cost of Copper Sales:
Total Girilambone Venture $ 21,993 $ 19,161 $ 18,223
Included in Financial Statements 8,969 7,664 7,289
General and Administrative:
Total Girilambone Venture $ 569 $ 270 $ 235
Included in Financial Statements 257 108 94
</TABLE>
62
<PAGE>
C. PROPERTY, PLANT & EQUIPMENT
December 31,
1996 1995
---- ----
(In thousands)
Land $ 292 $ 285
Plant, mining and milling equipment 8,914 8,216
Furniture and fixtures 655 638
-------- --------
9,861 9,139
Less accumulated depreciation 4,450 3,220
-------- --------
$ 5,411 $ 5,919
-------- --------
-------- --------
D. DEFERRED EXPLORATION AND DEVELOPMENT COSTS
Exploration prospects include the following:
December 31,
1996 1995
---- ----
(In thousands)
Ramu $ 1,712 $ 1,511
Tabar Islands 13,167 8,666
Girilambone Exploration Area 2,207 2,635
Other 221 144
-------- --------
$ 17,307 $ 12,956
-------- --------
-------- --------
RAMU
The Company entered into an agreement with its Ramu joint venturer to dilute its
interest in the project. In return, the joint venturer was required to fund the
next 5,000,000 Kina (Papua New Guinea currency) of expenditures on the project.
As of December 31, 1996, the joint venturer has met and exceeded the required
expenditure level. The Company had elected not to contribute its share of
expenditures during the first three quarters of 1996, and its interest was
reduced to 35% at September 30, 1996. However, the Company is now funding its
share of expenditures on Ramu and intends to maintain its 35% interest. The
Company currently does not have sufficient resources to fund its share of future
commercial development costs, and would need to obtain additional funding for
such costs.
The Papua New Guinea government has a right to acquire an interest of up to 30%
in Ramu, at a price pro-rata to the accumulated exploration expenditure, at any
time prior to the commencement of mining. If it exercises this right, the
government is required to contribute to further exploration and development
expenditures in proportion to its equity in the project.
63
<PAGE>
Another party may elect within 180 days of receiving details of any proposed
commercial development of Ramu to participate in such development up to 10%.
The interest is to be acquired from the Company and the joint venturer in
proportion to their interests.
TABAR ISLANDS
In 1993 the Company increased its interest in the Tabar Islands project from 29%
to 100%. The remaining purchase price at December 31, 1996, of $795,000
(A$1,000,000) is payable in December 1998. On December 3, 1996, the Company
was granted a mining lease to develop and operate a gold mine on Simberi Island.
While the government of Papua New Guinea will have no participating interest,
once production has commenced, a royalty of 2% of sales will be payable to the
government.
The former joint venture owners have an option to reacquire 50% of the project
if feasibility studies indicate that the project could produce 150,000 ounces or
more of gold annually. Exercise of the option would require payment to the
Company of 250% of its cumulative expenditures for mine development from July
1994 to the date the option is exercised. Expenditures from July 1994 through
December 31, 1996, totaled approximately $7,300,000. Current reserves indicate
that production would be less than 150,000 ounces of gold annually.
GIRILAMBONE EXPLORATION AREA
The Company has a 50% interest in an exploration joint venture related to areas
adjacent to its Girilambone copper mine. Under the venture the Company is
required to fund its 50% share of exploration costs. Exploration efforts are
continuing in the Girilambone exploration area to identify additional mineable
reserves.
As the Company is still in the exploration and prefeasibility phase of all
projects except Girilambone and the Girilambone North Project, additional
efforts on all exploration properties will be required in order to determine the
extent to which resources will be commercially viable and whether the deferred
exploration and development costs ultimately will be realized.
E. INDEBTEDNESS
December 31,
1996 1995
---- ----
(In thousands)
Girilambone financing agreement $ 4,245 $ 5,430
Loan payable 789
-------- --------
5,034 5,430
Less current maturities (1,700) (3,930)
-------- --------
$ 3,334 $ 1,500
-------- --------
-------- --------
Maturities of long-term debt are as follows:
(In thousands)
1997 $1,700
1998 1,700
1999 1,634
64
<PAGE>
GIRILAMBONE FINANCING AGREEMENT
In February 1997, the Company finalized the restructuring of its financing
agreement with the Girilambone lender. The restructuring provides additional
financing of $980,000, increasing the amount of financing available to
$5,225,000, bearing interest at Singapore Interbank Offered Rates ("SIBOR") plus
1-1/2%. Principal payments are to be made quarterly beginning in March 1997 at
the greater of $425,000 or 70% of available cash flow. The amount available of
$980,000 was borrowed in February 1997 and the funds were used to repay the loan
payable described below. The restructured agreement also contains certain debt
coverage ratio requirements.
During the period the loan is outstanding, the Company is required to
maintain a reserve account with the lender sufficient to meet the next
quarterly principal repayment. All cash proceeds generated from Girilambone
operations are required to be deposited with the lender and must be used to
pay any project costs, bank fees, interest, principal, and funding required in
the reserve account before any cash is available to the Company. During 1996
the lender authorized the Company to utilize the funds from this reserve
account for working capital needs and exploration activity and the Company has
deposited $800,000 into this account as of February 28, 1997.
LOAN PAYABLE
At December 31, 1996, the Company had outstanding $789,000 under a loan facility
provided by an Australian lender. This amount was repaid on February 28, 1997
with funds from the restructured Girilambone Financing Agreement. Accordingly,
this loan is classified as long-term debt in the balance sheet.
F. FINANCIAL INSTRUMENTS
The Company utilizes certain financial instruments, primarily copper hedging
agreements and forward currency exchange contracts. These financial instruments
are utilized to reduce the risk associated with the volatility of commodity
prices and fluctuations in foreign currency exchange rates, particularly the
Australian dollar. The Company does not hold or issue financial instruments for
trading purposes.
COPPER AGREEMENTS
To mitigate the effect of price changes on substantially all of its expected
copper sales through March 31, 1998, the Company has entered into both swap and
call option agreements for 1996 and 1997 and put options for the first quarter
of 1998.
The Company entered into both swap and call option agreements with a single
counterparty on a total of 13.2 million pounds of copper which settle ratably
each month during 1997. The swap agreements lock in a fixed forward price as a
floor, with the purchase of call options above the floor permitting the Company
to benefit from an increase in copper price above the call price. The copper
swap agreements are designated as hedges up to the level of anticipated copper
sales, with gains and losses deferred and reflected as a component of sales when
each contract settles. The swap agreements with contract amounts in excess of
the anticipated copper sales and the call options do not qualify as hedges and
are recorded at market.
Under this combination swap and call option arrangement, at the settlement date
for each copper contract during 1997, the Company will receive $1.02 per pound
plus the excess of market price (as determined by the London Metals Exchange)
over $1.11 per pound.
65
<PAGE>
In November 1996, the Company purchased put options at a cost of $.08 per pound
of copper for 4.0 million pounds of copper maturing ratably each month from
January 1998 through March 1998. This hedging program guarantees that the
Company will receive a minimum of $.90 per pound of copper, and will benefit
from any copper price above $.90 per pound.
Sales for the years ended December 31, 1996, 1995 and 1994, include $1,058,000
of gains and $1,080,000 and 27,000 of losses, respectively, that were realized
in settlement of copper hedging contracts. The following table summarizes the
market value of the copper contracts determined based upon price quotes received
from the counterparty to the agreements.
<TABLE>
<CAPTION>
Number of Contracts Strike Price Fair Value
or Notional Amount Per Tonne Asset (Liability)
--------------------- ------------ -----------------
<S> <C> <C> <C>
At December 31, 1996:
Purchased call options 12 at 500 tonnes each $ 2,450 $ 142,000
Swap agreements 12 at 500 tonnes each 2,250 1,052,000
Purchased put options 3 at 600 tonnes each 1,984 273,000
At December 31, 1995:
Purchased call options 21 at 500 tonnes each $ 2,635 - 2,450 $ 1,142,000
Swap agreements 21 at 500 tonnes each 2,435 - 2,250 (1,218,000)
Purchased put options 3 at 500 tonnes each 2,350 2,000
Written call options 3 at 500 tonnes each 2,800 (59,000)
</TABLE>
A deferred loss on swap agreements of $164,000 is included in Premium on Copper
Contracts in the balance sheet at December 31, 1995.
FORWARD CURRENCY EXCHANGE CONTRACTS
The Company has entered into forward exchange contracts to protect against
Australian currency fluctuations related to payment of a portion of the expected
operating costs of Girilambone. Realized and unrealized gains and losses on
these contracts are included currently in the results of operations. For the
year ended December 31, 1996, the Company recognized a gain of $497,000
compared to a loss of $279,000 in 1995 and a gain of $2,535,000 in 1994 on these
contracts. Outstanding contracts at December 31, 1996, total $12 million and
mature in monthly installments of $800,000 at an average exchange rate of A$1.00
= U.S. $.7947. At December 31, 1995, outstanding contracts totaled $8,700,000.
The Company is exposed to copper price fluctuations and currency risks in the
event of nonperformance by the counterparties to the various agreements
described above but has no off balance sheet risk of accounting loss. The
Company anticipates, however, that the counterparties will be able to fully
satisfy their obligations under the agreements. The Company does not obtain
collateral or other security to support financial instruments subject to credit
risk.
The fair value of the Company's outstanding debt is not considered to be
materially different from its carrying amount.
66
<PAGE>
G. NORD RESOURCES CORPORATION
Nord Resources Corporation ("Resources") owns approximately 35% of the
outstanding common stock of the Company. In October 1996, Resources agreed to
make available to the Company, at Resources' discretion, up to $1,000,000 in the
form of an operating loan and up to an additional $1,000,000 to satisfy the
requirements of the Company's debt service reserve account with the Girilambone
lender. The loans are payable upon demand and bear interest at the prime rate
plus 1%. If any unpaid balance remains outstanding at the close of business on
March 31, 1997, Resources has the option to convert any or all of the unpaid
principal at that date into shares of common stock of the Company. The
conversion price would equal the average of the high and low sales price of the
Company's common stock for a twenty day trading period prior to and including
March 31, 1997. The amount owed to Resources under the operating loan at
December 31, 1996, was $947,000.
In February 1994, simultaneous with the closing of the Australian Offering,
Resources converted $2,900,000 owed it by the Company into 697,744 shares of
common stock of the Company at $4.15 per share.
Interest expense under loans from Resources was $7,000 and $24,000 for the years
ended December 31, 1996, and 1994, respectively. Resources provides certain
services to the Company under a management agreement. Resources is reimbursed
for all direct expenses and a portion of its overhead associated with the
operations of the Company.
H. OPERATING LEASES
The Company leases its office space and certain equipment under operating
leases. Certain of the leases contain renewal options and escalation clauses.
Minimum annual lease payments under non-cancelable lease obligations for the
years ended December 31 are as follows:
1997 $121,000
1998 74,000
1999 5,000
--------
$200,000
--------
--------
Rent expense for operating leases was $206,000, $238,000, and $239,000, for the
years ended December 31, 1996, 1995 and 1994, respectively.
I. SHAREHOLDERS' EQUITY
STOCK OPTION PLANS AND OTHER OPTION GRANTS
Under the Company's three stock option plans, options have been granted at
market price at date of grant (incentive stock options) and at or less than
market value at date of grant (non-qualified options). In addition, during
1996, 1995 and 1994, non-plan options totaling 224,000, 12,000 and 264,000
shares, respectively, have also been granted to officers and directors of the
Company at or in excess of market value at date of grant. During 1996, 1995 and
1994, non-plan options for 33,600, 10,000 and 24,000 shares, respectively, were
issued to certain consultants to the Company.
67
<PAGE>
Options are generally exercisable beginning six months to three years from date
of grant and expire over a five to ten year period from date of grant. At
December 31, 1996, 207,078 shares are available for future grant under the stock
option plans.
A summary of the status of the Company's stock option plans and non-plan options
as of December 31, 1996, 1995, and 1994 and changes during the years ending on
those dates is presented below:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS SHARES PRICE SHARES PRICE SHARES PRICE
- ------- ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Outstanding at Beginning of Year 1,342,400 $ 3.95 4,142,000 $ 4.72 603,200 $ 3.55
Granted 347,200 4.50 401,200 4.00 3,618,800 4.90
Exercised (23,400) 3.75 (12,922) 2.65
Forfeited (2,000) 4.40 (3,200,800) 4.95 (67,078) 4.20
---------- ---------- ----------
Outstanding at End of Year 1,664,200 4.05 1,342,400 3.94 4,142,000 4.72
---------- ---------- ----------
---------- ---------- ----------
Options Exercisable at Year-End 1,161,600 $ 3.95 910,400 $ 3.91 3,894,400 $ 4.74
Weighted average fair value of
options granted during year $ 1.87 $ 1.66
</TABLE>
The assumptions used in determining the fair value of options granted
during 1996 and 1995 are as follows:
Expected Volatility 55%
Expected Life of Grant Three Years
Risk-Free Interest Rate 5.03%
Expected Dividend Rate None
The following table summarizes information about stock option plans and
non-plan options at December 31, 1996:
<TABLE>
<CAPTION>
Options Outstanding
-------------------
Weighted-Average
Range of Exercise Prices Per Share Outstanding Contract Life Options Exercisable
---------------------------------- ----------- ---------------- -------------------
<S> <C> <C> <C>
$2.54 216,000 4.00 Years 216,000
3.91 36,000 5.25 36,000
4.00 395,000 3.13 206,000
4.26 272,800 6.17 272,800
4.38 113,200 7.25 113,200
4.45 272,000 2.25 272,000
4.50 347,200 4.08 33,600
4.95 12,000 7.00 12,000
---------- ----------- ----------
$2.54 - $4.95 1,664,200 4.15 Years 1,161,600
---------- ----------- ----------
---------- ----------- ----------
</TABLE>
68
<PAGE>
STOCK BONUS PLAN
The 1990 Stock Bonus Plan provides for the issuance of up to 80,000 shares of
common stock as incentive bonuses. At December 31, 1996, 76,193 shares have
been awarded and 3,807 shares are available for future award. During 1995, the
Company awarded 2,913 bonus shares under this plan at a weighted average price
of $4.00 per share.
A total of 1,875,085 shares have been reserved for exercise of stock options and
for award under the Stock Bonus Plan.
PUBLIC OFFERING
On February 15, 1994, the Company completed an offering of its common stock in
Australia. The offering consisted of 3,200,000 shares of the Company's common
stock together with 3,200,000 detachable options to purchase additional shares
of the Company's common stock. These options expired on June 30, 1995.
OTHER
The Company applies APB Opinion No. 25 in accounting for its stock option plans.
Accordingly, no compensation cost has been recognized for options granted to
employees. For the years ended December 31, 1996 and 1995, compensation related
to issuance of options to non-employees and bonus shares totaled $45,000 and
$12,000, respectively. Had compensation cost for the Company's option grants
been determined based on the fair value at the grant dates for awards under
those plans consistent with the method of SFAS No. 123, the Company's net
earnings and net earnings per common and common equivalent share would have been
reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995
---- ----
(In thousands)
<S> <C> <C> <C>
Net Earnings As reported $ 617 $ 1,103
Pro forma $ 1 $ 656
Net Earnings Per Common and
Common Equivalent Share As reported $ .06 $ .12
Pro forma $ - $ .07
</TABLE>
69
<PAGE>
J. SIGNIFICANT CUSTOMERS
Sales in 1996 include copper sales to two customers of $11,309,000 and
$2,521,000. Sales in 1995 include copper sales to two customers of $11,255,000
and $2,926,000. Sales in 1994 include copper sales to two customers of
$9,622,000 and $1,543,000. Management believes the loss of either or both of
these customers would not have any material adverse effect on the Company
because of the ongoing demand for the quality copper produced at Girilambone.
K. INCOME TAXES
Under Bermuda law, the Company is not required to pay any taxes in Bermuda on
either income or capital gains. The Company has received an undertaking from the
Minister of Finance in Bermuda that in the event any such taxes are imposed, the
Company will be exempted from taxation until the year 2016. Although the
Company is not subject to income taxes, it has subsidiaries which are subject to
income taxes in their respective foreign countries.
Net operating loss carryforwards of $4,100,000 which expire from 2005 through
2009 are available in the United States. These carryforwards are available only
to reduce the separate taxable income of the Company's United States subsidiary.
Exploration cost carryforwards of $800,000 and development cost carryforwards of
$2,300,000 are available in Australia. These carryforwards, subject to certain
restrictions, are available indefinitely only to reduce the separate taxable
income of the Company's Australian operations.
Exploration cost carryforwards of $15,900,000 are available in Papua New Guinea,
provided sufficient projects are developed in that country. Carryforwards
totaling $15,500,000 may be carried forward indefinitely against future earnings
in Papua New Guinea. Carryforwards totaling $400,000 expire between the years
2000 and 2007.
The principal deferred tax assets and (liabilities) for the United States,
Australia, Papua New Guinea and Mexico are as follows:
December 31,
1996 1995
---- ----
(In thousands)
Long-term deferred tax assets
and (liabilities):
United States:
Deferred tax assets:
Deferred compensation $ 68 $ 57
Net operating loss carryforwards 1,384 1,266
-------- --------
1,452 1,323
Deferred tax (liabilities) -
Depreciation (5) (11)
Valuation allowance (1,447) (1,312)
-------- --------
Total United States $ 0 $ 0
-------- --------
-------- --------
70
<PAGE>
Australia:
Deferred tax assets:
Exploration cost carryforwards 296 1,935
Development cost carryforwards 827 752
Other 203 74
-------- --------
1,326 2,761
Deferred tax (liabilities):
Unrealized gain on currency contracts (34) (368)
Deferred leach costs (2,843) (2,018)
Exploration and development costs (1,613) (1,040)
Depreciation (448) (397)
Other (128) (58)
-------- --------
(5,066) (3,881)
-------- --------
Total Australia $ (3,740) $ (1,120)
-------- --------
-------- --------
Papua New Guinea:
Deferred tax assets:
Exploration cost carryforwards $ 4,029 $ 3,208
Deferred tax liability:
Deferred exploration costs (3,891) (2,942)
Valuation allowance (138) (266)
-------- --------
Total Papua New Guinea $ 0 $ 0
-------- --------
Mexico:
Operating loss carryforwards $ 497 $ 308
Valuation allowance (497) (308)
-------- --------
Total Mexico $ 0 $ 0
-------- --------
-------- --------
A valuation allowance has been provided for 100% of the Company's net deferred
tax assets in the United States, Papua New Guinea and Mexico based on the
history of operating losses for the Company in these countries and limitations
on use of the carryforwards.
The Company had taxable income from its operations in Australia during 1996 and
1995, which required the utilization of all its trading loss carryforwards and a
portion of its development cost carryforwards.
71
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Currently payable:
Australia $ 2,934 $ 2,035 $ 1,150
Use of Australian carryforwards (2,934) (2,035) (1,150)
---------- ---------- ----------
0 0 0
Change in deferred income taxes 2,424 1,389 1,731
Change in valuation allowance 196 (269) (1,731)
---------- ---------- ----------
Provision for income taxes $ 2,620 $ 1,120 $ 0
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
Principal reasons for the differences between the income taxes at the statutory
U.S. rate and income tax expense as recorded:
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Income taxes at statutory U.S. tax rate $ 1,101 $ 756 $ 1,356
Permanent differences (34) 9 (6)
Difference between Australian and
U.S. tax rates 121 107 (53)
Non-deductible losses of subsidiaries 1,000 1,006 528
Effect of Australian tax rate increase
on deferred income tax assets (59)
Decrease in Australian valuation allowance (651) (1,975)
Other 432 (48) 150
---------- ---------- ----------
Income tax expense $ 2,620 $ 1,120 $ 0
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
72
<PAGE>
L. PENSION PLANS
The Company has a defined contribution pension plan covering certain employees
of its Australian operations. Under the terms of the plan, the Company
contributes an amount equal to 10% of the employees wages. Pension costs were
$47,000, $41,000 and $59,000, for the years ended December 31, 1996, 1995 and
1994 respectively.
The Company is obligated to pay a lump sum benefit that matches the difference,
if any, between the present value of an executive's retirement benefit under a
previous plan and the cash value of an insurance policy at retirement. At
December 31, 1996 and 1995, the cash surrender value of $209,700 and $174,100,
respectively, has been offset against the accrued retirement benefits liability.
Pension expense for the years ended December 31, 1996, 1995 and 1994, was
$68,000, $59,000 and $76,000, respectively. Pension expense for 1996, 1995 and
1994, included $42,000, $36,000 and $62,000, respectively, of service cost and
$26,000, $23,000, $14,000, respectively, of interest on the accrued benefit
obligation. The projected benefit obligation at December 31, 1996 and 1995 was
$501,000 and $413,000, respectively. The assumed discount rate, the estimated
rate at which the plan could settle its liabilities, was 7% in 1996 and 7.5% in
1995. The assumed rate of future pay increase was 5% in all years presented.
Pension expense and liability are determined on an annual basis.
M. EMPLOYMENT AGREEMENTS
The Company has agreements with two of its officers which contain change in
control provisions which would entitle one officer to receive 50% of his salary
and the other officer to receive 200% of his salary in the event of a change in
control of the Company and a change in certain conditions of their employment.
The maximum contingent liability under these agreements is approximately
$526,000 at December 31, 1996.
N. SUBSEQUENT EVENTS
A special meeting of shareholders was held on February 17, 1997, where approval
was given for 1) a reverse stock split whereby one new share of common stock,
$.05 par value per share ("New Common Stock"), will be exchanged for every five
shares of common stock, $.01 par value per share ("Old Common Stock"); 2) the
sale of up to 4,500,000 shares of New Common Stock in an offering in Canada; and
3) the Board of Directors to delist the Company's common stock from the
Australian Stock Exchange. There can be no assurance that the sale of common
stock in the offering in Canada will be completed.
The effective date for the reverse stock split was March 10, 1997. Each share
of New Common Stock is equivalent to an American Depository Receipt ("ADR")
currently trading on NASDAQ. The Company will terminate the ADR Program and
delist the ADRs from the NASDAQ Stock Market, which termination will be
effective on or about June 10, 1997. The Company has applied to the NASDAQ
Stock Market to list the New Common Stock on the National Market System. Both
the New Common Stock and the ADRs will be listed on the NASDAQ Stock Market
during a transition period. All shares and per share amounts have been restated
to reflect the reverse stock split.
Effective March 5, 1997, the Company's Common Stock was delisted from the
Australian Stock Exchange.
73
<PAGE>
O. DIFFERENCE BETWEEN U.S. AND CANADIAN GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States ("U.S. GAAP"),
which differ in certain respects from accounting principles generally accepted
in Canada ("Canadian GAAP"). The Company noted only one material
difference as it pertains to these consolidated financial statements. U. S.
GAAP under SFAS No. 123 requires options issued to non-employees to be valued
and a corresponding expense recorded in the financial statements. Canandian
GAAP has no similar requirement. The net result of this difference is that
under Canadian GAAP, earnings before income taxes and net earnings for the year
ended December 31, 1996, would be increased by $45,000 and general and
administrative expense would be reduced by the same amount.
74
<PAGE>
PART III
ITEM 10, 11, 12 AND 13.
The information required by Part III is incorporated by reference to
the Company's Proxy Statement to be dated April 30, 1997.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)1. Financial Statements: The financial statements of Nord Pacific
Limited are included in Part II, Item 8 of this Form 10-K.
(a)2. Financial Statement Schedules
None
(a)3. Exhibits
See "Exhibit Index" on Page 76
(b). Reports on Form 8-K
None
75
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
NORD PACIFIC LIMITED
By: /s/Edgar F. Cruft
-------------------
Edgar F. Cruft
Chairman of the Board and Chief Executive Officer
March 25, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated.
Signature Title Date
/s/Edgar F. Cruft Chairman, Chief Executive March 25, 1997
- ----------------------
Edgar F. Cruft Officer and Director
(principal executive officer)
/s/W. Pierce Carson President and Director March 25, 1997
- ----------------------
W. Pierce Carson
/s/Terence H. Lang Vice President, Treasurer March 25, 1997
- ----------------------
Terence H. Lang and Director
(principal financial & accounting officer)
/s/Leonard Lichter Director March 25, 1997
- ----------------------
Leonard Lichter
/s/Lucile Lansing Director March 25, 1997
- ----------------------
Lucile Lansing
/s/Michel J. Drew Director March 25, 1997
- ----------------------
Michel J. Drew
/s/John C.R. Collis Director March 25, 1997
- ----------------------
John C.R. Collis
/s/John B. Roberts Director March 25, 1997
- ----------------------
John B. Roberts
76
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit Numbered
Number Exhibit Page
- ------ ------- ----
3.1 Registrant's Amended Memorandum of Association. Reference is made
to Exhibit 3.2 to Registrant's 1993 Form 10-K.
3.2 Registrant's Amended By-Laws. Reference is made to Exhibit 3.3 to
Registrant's 1993 Form 10-K.
10.1 Amended Joint Venture Agreement of Nord-Highlands Mineral
Venture-I. Reference is made to Exhibit 10.1 in Registrant's
Registration Statement on Form S-4 (33-25683).
10.2 Trust Deed dated December 28, 1978 between Nord Australex Nominee
Pty. Ltd. and Nord Australex Limited Partnership. Reference is made to
Exhibit 10.4 in Registrant's Registration Statement on Form S-4
(33-25683).
10.3 Memorandum of Association and Articles or Association of Nord
Australex Nominees Pty. Ltd. Reference is made to Exhibit 10.5 in
Registrant's Registration Statement on Form S-4 (33-25683).
10.4 Deed of Acknowledgement dated February 6, 1981 of Nord Australex
Nominees Pty. Ltd. Reference is made to Exhibit 10.6 in Registrant's
Registration Statement on Form S-4 (33-25683).
10.5 Memorandum of Association and Articles of Association of Nord
Resources (Pacific) Pty. Ltd. Reference is made to Exhibit 10.7 in
Registrant's Registration Statement on Form S-4 (33-25683).
10.6 Management Agreement dated December 29, 1978 between Nord
Australex Nominees Pty. Ltd. and Nord Resources (Pacific) Pty. Ltd.
Reference is made to Exhibit 10.8 in Registrant's Registration Statement
on Form S-4 (33-25683).
10.7 Trust Deed dated December 29, 1978 between Nord Australex Nominees
(PNG) Pty. Ltd. and Nord Australex Limited Partnership. Reference is
made to Exhibit 10.9 in Registrant's Registration Statement on Form S-4
(33-25683).
77
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit Numbered
Number Exhibit Page
- ------ ------- ----
10.8 Memorandum of Association and Articles of Association of Nord
Australex Nominees (PNG) Pty. Ltd. Reference is made to Exhibit
10.10 in Registrant's Registration Statement on Form S-4 (33-25683).
10.9 Deed of Acknowledgment dated February 8, 1981 of Nord Australex
Nominees (PNG) Pty. Ltd. Reference is made to Exhibit 10.11 in
Registrant's Registration Statement on Form S-4 (33-25683).
10.10 Memorandum of Association and Articles of Association of Nord
Exploration Company (Pty.) Limited. Reference is made to Exhibit
10.12 in Registrant's Registration Statement on Form S-4 (33-25683).
10.11 Management Agreement dated December 29, 1978 between Nord
Australex Nominees (PNG) Pty. Ltd. and Nord Exploration Company
(Pty.) Ltd. Reference is made to Exhibit 10.13 in Registrant's
Registration Statement on Form S-4 (33-25683).
10.12 Joint Venture Agreement dated November 17, 1978 among Nord
Exploration Company (Pty.) Limited, Carpentaria Exploration Company
Pty. Ltd. and Eastern Pacific Mines Pty. Limited. Reference is made to
Exhibit 10.23 in Registrant's Registration Statement on Form S-4
(33-25683).
10.13 Deed of Variation dated November 29, 1986 among Nord Australex
Nominees (PNG) Ltd., Nord Exploration Company (PNG) Limited,
Carpentaria Exploration Company Pty. Ltd. and Eastern Pacific Mines
Pty. Limited. Reference is made to Exhibit 10.24 in Registrant's
Registration Statement on Form S-4 (33-25683).
10.14 Deed of Assignment dated October 3, 1987 among Carpentaria
Exploration Company Pty. Ltd. , Nord Australex Nominees (PNG)
Pty. Ltd., Eastern Pacific Mining Pty. Limited and Highlands Gold
Properties Pty. Limited. Reference is made to Exhibit 10.25 in
Registrant's Registration Statement on Form S-4 (33-25683).
10.15 Prospecting Authority No: 192 dated February 27, 1992 (Ramu River).
Reference is made to Exhibit 10.20 to Registrant's 1991 Form 10-K.
78
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit Numbered
Number Exhibit Page
- ------ ------- ----
10.16 Extension of Prospecting Authority No. 609 dated July 29, 1993 (Tabar
Islands). Reference is made to Exhibit 10.19 to Registrant's 1993 Form
10-K.
10.17 Management Agreement dated April 2, 1990 between Registrant and
Nord Resources Corporation. Reference is made to Exhibit 10.24 to
Registrant's Form 10-K for 1990.
10.18 Registrant's 1989 Stock Option Plan. Reference is made to Exhibit
10.25 to Registrant's Form 10-K for 1990.
10.19 Registrant's 1990 Stock Bonus Plan. Reference is made to Exhibit
10.26 to Registrant's Form 10-K for 1990.
10.20 Agreement dated April 2, 1990 between Registrant and Edgar F. Cruft,
W. Pierce Carson, Leonard Lichter and Terence H. Lang relating to
110,000 shares of Restricted Stock. Reference is made to Exhibit 10.29
to Registrant's Form 10-K for 1990.
10.21 Registrant's 1991 Stock Option Plan. Reference is made to Exhibit
10.31 to Registrant's 1991 Form 10-K.
10.22 Assumption agreement of W. Pierce Carson. Split Dollar Insurance and
Supplemental Compensation Plan. Reference is made to Exhibit 10.37
to Registrant's 1991 Form 10-K.
10.23 Joint Venture Agreement between Registrant and Straits Engineers
Contracting Pte Ltd. Reference is made to Exhibit 2.2 to Registrant's
Form 8-K filed on December 23, 1991.
10.24 Severance agreement. W. Pierce Carson dated April 1, 1992. Reference
is made to Exhibit 10.33 to Registrant's 1992 Form 10-K.
10.25 Severance agreement. Mark R. Welch dated April 2, 1992. Reference
is made to Exhibit 10.34 to Registrant's 1992 Form 10-K.
79
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit Numbered
Number Exhibit Page
- ------ ------- ----
10.26 Amendment to Ramu Joint Venture Agreement the Registrant and High-
lands Gold Ltd. dated May 13, 1992. Reference is made to Exhibit 10.36
to Registrant's 1992 Form 10-K.
10.27 Girilambone Mining Joint Venture Agreement between Registrant and
Straits Resources Pty. Ltd. dated August 26, 1992. Reference is made to
Exhibit 10.37 to Registrant's 1992 Form 10-K.
10.28 Girilambone Exploration Joint Venture Agreement between Registrant
and Straits Resources Pty. Lrd. dated August 26, 1992. Reference is made
to Exhibit 10.28 to Registrant's 1992 Form 10-K.
10.29 Girilambone Project Co-Ordination Agreement between Registrant and
Straits Resources Pty. Ltd. dated August 26, 1992. Reference is made to
Exhibit 10.39 to Registrant's 1992 Form 10-K.
10.30 Girilambone Variation Agreement between Registrant and Straits
Resources Pty. Ltd. dated August 26, 1992. Reference is made to Exhibit
10.40 to Registrant's 1992 Form 10-K.
10.31 Girilambone Facility Agreement between the Registrant and the R&I
Bank of Western Australian Ltd. dated January 12, 1993. Reference is
made to Exhibit 10.41 to Registrant's 1992 Form 10-K.
10.32 Girilambone Facility Agreement between Registrant and Rothschild
Australia Ltd. dated February 5, 1993. Reference is made to Exhibit
10.42 to Registrant's 1992 Form 10-K.
10.33 Commodity Swap Agreement between Registrant and R&I Bank of
Western Australia dated January 12, 1993. Reference is made to Exhibit
10.43 to Registrant's 1992 Form 10-K.
10.34 Commodity Option Agreement between Registrant and R&I Bank
of Western Australia dated January 12, 1993. Reference is made to
Exhibit 10.44 to Registrant's 1992 Form 10-K.
80
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit Numbered
Number Exhibit Page
- ------ ------- ----
10.35 Deed Polls regarding the Nord Australex Exploration (Australian)
Trust entered into by Nord Gold Company, Registrant and Nord-
Highlands Mineral Venture-I dated January 12, 1993. Reference is
made to Exhibit 10-45 to Registrant's 1992 Form 10-K.
10.36 Underwriting Agreement between Registrant and Prudential-Bache
Securities (Australia) Limited dated December 17, 1993. Reference
is made to Exhibit 10.50 to Registrant's 1993 Form 10-K.
10.37 Deed of Agreement between Registrant, Straits Engineers Contracting
PTE Ltd and Straits Resources Pty. Ltd. regarding Girilambone
Copper Project Joint Venture. Reference is made to Exhibit 10.53 to
Registrant's 1993 Form 10-K.
10.38 Purchase Agreement between Registrant and Kennecott Explorations
(Australia) Ltd. and Niugini Mining Limited dated August 30, 1993.
Reference is made to Exhibit 10.58 to Registrant's 1993 Form 10-K.
10.39 Nord Pacific Limited Stock Option effective April 7, 1994. Reference
is made to Exhibit 10.39 to Registrant's 1994 Form 10-K.
10.40 ADR Deposit Agreement with Bank of New York. Reference is made
to Exhibit 10.41 to Registrant's 1995 Form 10-K.
10.41 Copper hedge executed December 5, 1996 with Rothschild Australia
Limited.
10.42 Amended and Restated Facility Agreement between the Registrant
and Bank of Western Australia Ltd. dated February 28, 1997.
81
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit Numbered
Number Exhibit Page
- ------ ------- ----
10.43 Promissory Note between the Registrant and Nord Resources
Corporation dated October 24, 1996.
11.1 Computation of Earnings Per Share - 1994. Reference is made to
Exhibit 11.1 to Registrant's 1994 Form 10-K
22.1 Subsidiaries of Registrant. Reference is made to Exhibit 22.1 to
Registrant's 1992 Form 10-K.
24.1 Consent of Deloitte & Touche.
27.1 Financial Data Schedule
28.1 Assurance under The Exempted Undertaking Tax Protection Act, 1966,
issued by the Minister of Finance of the Island of Bermuda. Reference
is made to Exhibit 28.3 in Registrant's Registration Statement on Form
S-4 (33-25683).
82
<PAGE>
Exhibit 10.41
[LOGO]
ROTHSCHILD AUSTRALIA LIMITED
A.C.N. 008 458 366
03/12/1996 Our Reference: 58190
Nord Australex Nominees Pty Limited
Level 15
3 Spring Street
Sydney
ATTENTION : OPTION SETTLEMENTS
Rothschild Australia Limited confirms having sold to you the following
Average Copper Option on 28/11/1996:
Call or Put : Put
Strike Currency : US DOLLAR
Copper Quantity : 600 t
Strike Price : USD 1984.00
Premium per t : USD 173.00
Total Premium : USD 103,800.00
Premium Settlement Date : 03/02/1998
Option Expiry Date : 30/01/1998
Option Expiry Time : 11:00 London Time
Exercise Settlement Date : 03/02/1998
Averaging Start Date : 02/01/1998
Averaging Frequency (Days) : 1
Signed for and on behalf of
ROTHSCHILD AUSTRALIA LIMITED
SIGNATURE
....................................................................
(Authorised Signatories)
Please confirm your agreement with the terms of this transaction and return
immediately by FAX (Number 02-9323-2306).
Confirmed By : JOHN C. SYRIATOWICZ Date: 5/12/96
------------------ ---------
Position : JOHN C. SYRIATOWICZ
-------------------
SECRETARY
<PAGE>
Exhibit 10.41
[LOGO]
ROTHSCHILD AUSTRALIA LIMITED
A.C.N. 008 458 366
03/12/1996 Our Reference: 58195
Nord Australex Nominees Pty Limited
Level 15
3 Spring Street
Sydney
ATTENTION : OPTION SETTLEMENTS
Rothschild Australia Limited confirms having sold to you the following
Average Copper Option on 28/11/1996:
Call or Put : Put
Strike Currency : US DOLLAR
Copper Quantity : 600 t
Strike Price : USD 1984.00
Premium per t : USD 173.00
Total Premium : USD 103,800.00
Premium Settlement Date : 03/03/1998
Option Expiry Date : 27/02/1998
Option Expiry Time : 11:00 London Time
Exercise Settlement Date : 03/03/1998
Averaging Start Date : 02/02/1998
Averaging Frequency (Days) : 1
Signed for and on behalf of
ROTHSCHILD AUSTRALIA LIMITED
SIGNATURE
....................................................................
(Authorised Signatories)
Please confirm your agreement with the terms of this transaction and return
immediately by FAX (Number 02-9323-2306).
Confirmed By : JOHN C. SYRIATOWICZ Date: 5/12/96
------------------ ---------
Position : JOHN C. SYRIATOWICZ
-------------------
SECRETARY
<PAGE>
Exhibit 10.41
[LOGO]
ROTHSCHILD AUSTRALIA LIMITED
A.C.N. 008 458 366
03/12/1996 Our Reference: 58198
Nord Australex Nominees Pty Limited
Level 15
3 Spring Street
Sydney
ATTENTION : OPTION SETTLEMENTS
Rothschild Australia Limited confirms having sold to you the following
Average Copper Option on 28/11/1996:
Call or Put : Put
Strike Currency : US DOLLAR
Copper Quantity : 600 t
Strike Price : USD 1984.00
Premium per t : USD 173.00
Total Premium : USD 103,800.00
Premium Settlement Date : 02/04/1998
Option Expiry Date : 31/03/1998
Option Expiry Time : 11:00 London Time
Exercise Settlement Date : 02/04/1998
Averaging Start Date : 02/03/1998
Averaging Frequency (Days) : 1
Signed for and on behalf of
ROTHSCHILD AUSTRALIA LIMITED
SIGNATURE
....................................................................
(Authorised Signatories)
Please confirm your agreement with the terms of this transaction and return
immediately by FAX (Number 02-9323-2306).
Confirmed By : JOHN C. SYRIATOWICZ Date: 5/12/96
------------------ ---------
Position : JOHN C. SYRIATOWICZ
-------------------
SECRETARY
<PAGE>
GIRILAMBONE MINING PROJECT
&
GIRILAMBONE NORTH PROJECT
AMENDED & RESTATED FACILITY AGREEMENT
DATE: 28 FEBRUARY 1997
BANK OF WESTERN AUSTRALIA LTD
ACN 050 494 454
("BANK")
AND
NORD AUSTRALEX NOMINEES PTY LTD
ACN 001 657 272
IN ITS CAPACITY AS TRUSTEE OF THE TRUST
("BORROWER")
AND
NORD GOLD COMPANY LIMITED
NORD PACIFIC LIMITED
NORD HIGHLANDS MINERAL VENTURE-1
("TRUST BENEFICIARIES")
CLAYTON UTZ
Barristers & Solicitors
BankWest Tower
108 St George's Terrace
PERTH WA 6000
AUSTRALIA
<PAGE>
TABLE OF CONTENTS
CLAUSE PAGE
1. DEFINITIONS AND INTERPRETATION 1
1.1 DEFINITIONS 1
1.2 CONSTRUCTION OF CERTAIN REFERENCES 26
1.3 INTERPRETATION 27
1.4 CURRENCY CALCULATIONS 28
1.5 REPAYMENT AND PREPAYMENT 29
1.6 DETERMINATION AND CERTIFICATE CONCLUSIVE 29
1.7 ACCOUNT BALANCES 29
1.8 CONSENT OF THE BANK 29
2. THE FACILITIES 29
2.1 (a) GRANT OF FACILITIES 29
(a) AMENDMENT AND RESTATEMENT 30
2.2 FINANCING OFFICE 30
3. CONDITIONS PRECEDENT 30
3.1 AUTHORISED OFFICER'S CERTIFICATE 30
3.2 CONDITIONS 30
3.3 CERTIFICATION 31
4. APPROVED PURPOSES 32
5. DRAWDOWN - GENERAL PROVISIONS 32
5.1 DRAWDOWN NOTICES 32
5.2 AVAILABILITY DATE 33
5.3 DRAWDOWN INDEMNITY 33
5.4 VARIATION TO DRAWDOWN NOTICES 33
5.5 BANK NOT OBLIGED TO PROVIDE DRAWINGS 33
5.6 NO RE-BORROWINGS 34
5.7 RENEWAL OF DRAWDOWN 34
5.8 EXISTING FACILITIES 34
6. INTEREST AND FUNDING PERIODS 34
6.1 FUNDING PERIODS 34
6.2 CALCULATION OF THE US$ RATE 34
6.3 VARIABLE INTEREST RATE 35
7. FIXED RATE FACILITY 35
(i)
<PAGE>
TABLE OF CONTENTS
CLAUSE PAGE
7.1 BORROWER MAY REQUEST FIXED RATE ADVANCE 35
7.2 FIXED RATE REQUEST 35
7.3 FIXED RATE CONFIRMATION 36
7.4 INTEREST 36
8. PERFORMANCE BOND FACILITY 36
8.1 NOTICE 36
8.2 OBLIGATION TO ISSUE 37
8.3 COUNTER-INDEMNITY FROM BORROWER 37
8.4 OBLIGATION TO REIMBURSE AND PAY INTEREST 37
8.5 OBLIGATIONS UNCONDITIONAL 38
9. TREASURY FACILITY 38
10. REPAYMENT 38
10.1 PAYMENT ON MATURITY DATE 38
10.2 REPAYMENT INSTALMENTS 39
10.3 TERMINATION DATE 39
10.4 INCREASE OF COMMITMENT AND EXTENSION OF AVAILABILITY PERIOD 39
11. PREPAYMENTS 39
11.2 UNWINDING COSTS 40
11.3 RISK MANAGEMENT AGREEMENTS 40
11.4 BENEFIT 40
12. CANCELLATION 40
13. FEES 41
14. PAYMENTS AND DELIVERIES 41
14.1 PAYMENTS 41
14.2 MANNER OF PAYMENT 41
14.3 SET-OFF 41
14.4 OVERDUE AND OTHER AMOUNTS 41
15. TAXES 42
15.1 NO DEDUCTION FOR TAXES AND NO SET-OFF OR COUNTERCLAIM 42
15.2 PAYMENT NET OF TAXES 42
15.3 SECTION 261 43
(ii)
<PAGE>
TABLE OF CONTENTS
CLAUSE PAGE
15.4 CURRENCY INDEMNITY 43
16. YIELD PROTECTION 43
16.1 MARKET DISTURBANCE - SUSPENSION NOTICE 43
16.2 MARKET DISTURBANCE PRIOR TO UTILISATION 44
16.3 MARKET DISTURBANCE RELATING TO OTHER UTILISATIONS 44
17. CHANGES IN LAW 45
17.1 INCREASED COSTS 45
17.2 MINIMISATION 45
17.3 ILLEGALITY 46
17.4 REPAYMENT OF INCREASED COSTS 46
17.5 MITIGATION OF INCREASED COSTS OR ADVERSE CIRCUMSTANCES 46
18. REPRESENTATIONS AND WARRANTIES 47
18.2 INFORM BANK IF REPRESENTATIONS AND WARRANTIES NOT TRUE 51
18.3 BORROWER'S CONTINUING REPRESENTATIONS AND WARRANTIES 51
19. UNDERTAKINGS 51
19.1 GOOD FAITH CONSIDERATION, ACCOUNTS AND INFORMATION TO BE PROVIDED
TO THE BANK 51
19.2 NEGATIVE PLEDGE COVENANTS - BORROWER 54
19.3 INSURANCE 55
19.4 GENERAL PROJECT COVENANTS 59
19.5 ENVIRONMENT 63
19.6 APPROVED BUDGET AND DEVELOPMENT PLANS 65
19.7 RATIOS 65
19.8 COVENANT TO PERFORM 66
20. EXPERTS 66
20.1 APPOINTMENT AND REPLACEMENT 66
20.2 DUTIES OF EXPERTS 66
20.3 COSTS OF EXPERTS 66
20.4 RELIANCE UPON EXPERTS 66
21. SPECIAL PURPOSE ACCOUNTS 67
21.1 MAINTAIN ACCOUNTS 67
21.2 MONEY TO BE PAID INTO BORROWER'S PROCEEDS ACCOUNTS 67
(iii)
<PAGE>
TABLE OF CONTENTS
CLAUSE PAGE
21.3 APPLICATION OF INSURANCE PROCEEDS 68
21.4 PAYMENTS TO BORROWER'S PROCEEDS ACCOUNTS 68
21.5 PROVISIONS - SPECIAL PURPOSE ACCOUNTS GENERALLY 68
21.6 CLAIM FORM 69
21.7 INTEREST 69
22. DEBT SERVICE RESERVE ACCOUNT 69
23. DEFAULT 70
23.1 EVENTS OF DEFAULT 70
23.2 NOTICE TO THE BORROWER 73
23.3 CONVERSION OF LOAN TO DOLLARS 73
24. INDEMNITY 74
25. RIGHTS OF SET-OFF 74
26. COSTS AND EXPENSES 75
26.1 BORROWER TO PAY BANK'S COSTS 75
26.2 CERTAIN COSTS TO THE ACCOUNT OF THE BANK 75
27. NOTICES 75
27.1 ADDRESS OF NOTICES 75
27.2 DEEMED RECEIPT 76
27.3 CHANGE OF ADDRESS OR FACSIMILE NUMBER 77
27.4 CONCLUSIVE EVIDENCE 77
28. ASSIGNMENT 77
28.1 THE SECURITY PROVIDER NOT TO ASSIGN 77
28.2 ASSIGNMENT BY THE BANK 77
28.3 BANK MAY PROVIDE INFORMATION 78
28.4 BANK SHALL INCLUDE TRANSFERS 78
28.5 SUB-PARTICIPATIONS NOT PROHIBITED 78
29. COUNTERPARTS 78
30. GOVERNING LAW 78
31. CONFLICT WITH OTHER TRANSACTION DOCUMENTS 78
(iv)
<PAGE>
TABLE OF CONTENTS
CLAUSE PAGE
32. CONFIDENTIALITY 78
33. MISCELLANEOUS 79
34. CURRENCY EXCHANGES 80
SCHEDULE 1 81
SCHEDULE 2 83
SCHEDULE 3 84
SCHEDULE 4 85
SCHEDULE 5 86
ANNEXURE A A-1
ANNEXURE B B-1
ANNEXURE C C-1
ANNEXURE D D-1
ANNEXURE E E-1
ANNEXURE F F-1
ANNEXURE G G-1
(v)
<PAGE>
THIS AMENDED & RESTATED AGREEMENT is made at Sydney on February 28, 1997
BETWEEN BANK OF WESTERN AUSTRALIA LTD ACN 050 494 454 of Level 7 Grosvenor
Place, 225 George Street, Sydney, New South Wales, Australia ("BANK")
AND NORD AUSTRALEX NOMINEES PTY LTD ACN 001 657 272 in its capacity as
trustee of the Trust of Level 15, 3 Spring Street, Sydney, New South
Wales, Australia ("BORROWER")
AND NORD GOLD COMPANY LIMITED ("NORD GOLD") and NORD PACIFIC LIMITED
("NORD PACIFIC") both companies incorporated in Bermuda, of Level 15,
3 Spring Street, Sydney, New South Wales, Australia and NORD
HIGHLANDS MINERAL VENTURE-1 ("NORD HIGHLANDS") a general partnership
formed under the laws of California, United States of America
(collectively the "TRUST BENEFICIARIES" and each a "TRUST
BENEFICIARY")
RECITAL
The Borrower and the Trust Beneficiaries have requested the Bank to provide the
Facilities under which financial accommodation will be made available to the
Borrower for Approved Purposes and the Bank has agreed to make available such
Facilities to the Borrower on the following terms and conditions.
IT IS AGREED
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement, the following terms shall, unless the context otherwise
requires, have the meanings set out below:
"ACCEPTABLE SALES CONTRACTS" means the sales contracts for the Borrower's
Proportion of Copper End Products made between the Borrower or an agent for
the Borrower as seller and a buyer of good financial standing, which:
(a) have been produced to and approved by the Bank;
(b) permit the Borrower to assign by way of mortgage all its rights under
such sale contracts to the Bank; and
(c) are acceptable as to their provisions to the Bank,
as such contracts may be varied or replaced from time to time with the
consent of the Bank.
"ACCOMMODATION DATE" means a Drawdown Date or a Renewal Date.
1.
<PAGE>
"ADVANCE" means the amount in US Dollars of a Drawdown or, where the
context so requires, the amount of any such outstanding Drawdown at the
relevant time and "ADVANCES" has a corresponding meaning.
"AGREEMENT" means this Agreement as may be varied, amended, supplemented,
novated or replaced from time to time and shall include any Schedules,
Annexures and Attachments.
"APPROVED BUDGET" means the budget (which includes the Financial Model)
submitted to the Bank in compliance with the Borrower's obligations under
the Existing Facility Agreement and approved by the Bank pursuant to the
terms of that agreement ("EXISTING APPROVED BUDGET"), as that budget may be
varied from time to time with the consent of the Bank or as required
pursuant to Clause 19.6.
"APPROVED PURPOSES" means the purposes set out in Clause 4.
"A$ PROCEEDS ACCOUNT" means the account in the name of the Borrower with
the Bank maintained at Level 7, Grosvenor Place, 225 George Street, Sydney,
New South Wales, Australia and designated Account No. 1 or such other
account as the Bank and the Borrower may agree from time to time.
"A$ RATE" means the Bank's cost of funds for the relevant period in
relation to funding the relevant moneys, as determined by the Bank in good
faith having regard to the Bill Rate.
"AUSTRALIAN LAW" means all legislation of the Parliament of the
Commonwealth of Australia or of any State or Territory or of any local,
municipal or shire authority now or hereafter in force and any rule,
regulation, ordinance, by-law, statutory instrument, policy, order or
notice or other action now or hereafter made under such legislation.
"AUTHORISATION" includes any consent, authorisation, registration,
agreement, notarisation, certificate, permission, licence, approval,
authority or exemption or, in relation to any act, matter or thing which
may be proscribed or restricted in whole or in part by Law or regulation if
a Government Agency intervenes or acts in any way within a specified period
after lodgement, registration or notification of such act, matter or thing,
the expiry of such period without such proscription, restriction,
intervention or action.
"AUTHORISED OFFICER" means:
(a) with respect to the Bank, any director or secretary of the Bank or
any employee of the Bank whose title includes the word "Manager" and
includes any person for the time being acting in any such position;
and
(b) with respect to the Borrower, the person or persons, or the person or
persons holding the positions, from time to time, nominated as an
authorised officer by the Borrower by notice in writing to the Bank,
such notice to be accompanied by specimen signatures of all persons
so appointed.
"AVAILABILITY DATE" for each Facility means the date on which each of the
Conditions Precedent have been satisfied or waived.
2.
<PAGE>
"AVAILABILITY PERIOD" means the period commencing on the Availability Date
and expiring on the first to occur of:
(a) the date on which the Facilities have been fully Drawn; and
(b) the date on which the Commitment is cancelled, or
such later date as may be agreed by the Bank.
"AVAILABLE CASH FLOW" means in relation to each consecutive Quarter (the
first of which shall commence 3 Business Days prior to 31 March 1997), the
amount in US Dollars calculated by the Bank in good faith as being the
difference between:
(a) the Borrower's Project Revenue for the relevant Quarter; and
(b) Project Operating Costs for that Quarter,
PROVIDED THAT:
(i) for the purpose of any such calculation all amounts paid into or
transferred from the A$ Proceeds Account shall be converted to US
Dollars at the Spot Rate of Exchange prevailing 3 Business Days prior
to the end of the relevant Quarter; and
(ii) for the purpose of determining the amount of Available Cash Flow on
each Repayment Date, each such calculation shall be made by the Bank
on or before 10:30am (Sydney time) on the relevant Repayment Date
(provided the Borrower shall have provided the relevant information
to the Bank to enable it to make such calculation) or as soon as
practicable after the date such information is provided to the Bank
"AVAILABLE COMMITMENT" means on any day, the difference between the
Facility Limit and the Facility Amount Outstanding.
"BANK" includes:
(a) any company, bank, financial institution or other person for which
the Bank is acting as agent or trustee and agent and which at any
time makes available financial accommodation to or for the account of
any person under this Agreement; and
(b) any successor of, assignee of or transferee from the Bank or any
person (whether of the whole or part of the interest of such person)
referred to in paragraph (a) of this definition.
"BENEFICIARY" means in respect of any Performance Bond, the person in whose
favour the Performance Bond is issued.
"BILL" means a bill of exchange as defined in the Bills of Exchange Act
1909 of the Commonwealth of Australia, (excluding cheques).
"BILL RATE" means the rate (being calculated on an annual percentage basis)
calculated
3.
<PAGE>
by the Bank by taking the average of the bid rates for a Bill having a
tenor comparable to the relevant period (excluding the highest and lowest
of such rates) published at or about 10:00am (Sydney time) on the relevant
date appearing on the page numbered "BBSW" on the Reuters Monitor Rates
Service, or such other page as may replace the "BBSW" page on that Service
for the purpose of displaying bid rates for Bills quoted by leading banks
at or about 10:00am (Sydney time) in the Sydney inter-bank market, and
rounding the resultant figure to the nearest 2 decimal places provided that
if on any such day after excluding the highest and lowest rates quoted only
two or fewer rates are published with respect to a period equivalent to
such period or any such rate or rates are not available on the Reuters
Monitor Rates Service on the relevant day then the Bill Rate shall be the
rate percent per annum (being calculated on an annual percentage basis as a
yield to maturity) quoted by the Bank to other leading banks at or about
10:00am (Sydney time) on the relevant day for a Bill having a face value
equal to the relevant amount, and a tenor equal to the relevant period.
"BORROWER'S PROCEEDS ACCOUNTS" means the A$ Proceeds Account and the US$
Proceeds Account or either of them.
"BORROWER'S PROJECT ASSETS" means all the right, title and estate of the
Borrower, both present and future, in, to, under or derived from Joint
Venture Assets (including, without limitation, its Participating Interests)
together with all the Borrower's right, title, interest and privileges
(both present and future) with respect to:
(a) Products;
(b) Sales Contracts;
(c) Risk Management Agreements;
(d) Insurance Policies;
(e) the Shares;
(f) the Cross Charges;
(g) margin call amounts deposited with the Bank pursuant to the
provisions of any Risk Management Agreement; and
(h) the Borrower's Proceeds Accounts,
and where the context permits shall include any part thereof.
"BORROWER'S PROJECT REVENUE" means, in relation to the relevant period, the
sum (in Dollars or US Dollars, as applicable) of:
(a) all proceeds of sale and other amounts accrued or paid to the
Borrower or for its account under or in respect of any of the Sales
Contracts or any other sale of Products during the relevant period;
(b) all moneys accrued to it or for its account in respect of any use,
lease, sale or other disposal of any Joint Venture Asset during that
period; and
4.
<PAGE>
(c) all other revenues (including its interest in any proceeds of
Insurances unless the Bank otherwise directs or this Agreement
otherwise requires) accrued to it and attributable to its
Participating Interests during that period,
and also includes any moneys which would have accrued to it during that
period but for the payer exercising any right of set-off, deduction, or
withholding or but for any assignment or direction made by or on behalf of
the Borrower.
"BORROWER'S PROPORTION" means:
(a) with respect to any particular amount relating to the Girilambone
Mining Joint Venture, as such amount stands at any time, the
proportion which the Girilambone Mining Participating Interest at any
time bears to that amount; and
(b) with respect to any particular amount relating to the Girilambone
North Joint Venture, as such amount stands at any time, the
proportion which the Girilambone North Participating Interest at any
time bears to that amount.
"BUSINESS DAY" means:
(a) with respect to a Cash Advance, a day on which trading banks are open
for business in Perth, Sydney and Singapore; and
(b) for the purposes of any other Advance and Clause 27.2, a day on which
trading banks generally are open for business in the relevant place.
"CASH ADVANCE" means each Advance made under the Cash Advance Facility.
"CASH ADVANCE FACILITY" means the cash advance facility described in Clause
2.1.
"CASH AMOUNT OUTSTANDING" means the outstanding amount described in
paragraph (a) of the definition "Facility Amount Outstanding".
"CASH CALL" means:
(a) in relation to the Girilambone Mining Joint Venture, the meaning
given to that term in clause 1.1 of the Girilambone Mining Joint
Venture Agreement; and
(b) in relation to the Girilambone North Joint Venture, the meaning given
to that term in clause 1.1 of the Girilambone North Joint Venture
Agreement.
"CASH FACILITY LIMIT" means the amount of US$6,800,000 (which includes the
principal amount of the Existing Cash Advances) or such lesser amount to
which that amount may be reduced or cancelled pursuant to this Agreement.
"COMMITMENT" means the Bank's obligation to provide the Facilities up to
the Facility Limit, subject to the terms and conditions of this Agreement.
"CONDITIONS PRECEDENT" means each condition precedent set out in Clause 3.
"CONSENT & PRIORITY DEED" means the consent and priority deed dated or
intended to be dated the same date as this Agreement made between AIDC
Australia Limited ACN
5.
<PAGE>
054 553 392, the Bank, the Borrower and Straits Mining Pty Ltd ACN 055 020
614.
"CONTROLLER" means any person described in section 419(1) of the
Corporations Law.
"CO-ORDINATION AGREEMENTS" means the Girilambone Mining Project
co-ordination agreement dated 26 August 1992 made between the Borrower and
the Other Participant and the Agreement Amending the Girilambone Mining
Project Coordination Agreement made 19 February 1997 between the same
parties.
"COPPER END PRODUCTS" means electrowon copper cathodes which conform to
British Standard 6017:1981 including amendment 5725 issued by the British
Standards Institution.
"CORPORATIONS LAW" means the "Corporations Law" within the meaning of the
Corporations (New South Wales) Act 1990 and, where applicable, the
corresponding legislation of any Relevant Jurisdiction.
"CROSS CHARGES" means the Girilambone Mining Cross Charge and the
Girilambone North Cross Charge.
"DEBT COVER RATIO" means in relation to any period the ratio of:
(a) Available Cash Flow for the relevant period; to
(b) all principal and interest payments due to be made during that
period,
as calculated by the Bank.
"DEBT SERVICE RESERVE ACCOUNT" means the account with the Bank in the name
of the Borrower maintained at Level 7, Grosvenor Place, 225 George Street,
Sydney, New South Wales, Australia (or such other branch as the Bank may
agrees) and designated Account No. or such other account as
the Bank and the Borrower may agree from time to time.
"DEED OF COVENANT" means the deed dated 12 January 1993 made between the
Bank, the Borrower, the Other Participant, Nord Gold, Nord Pacific, Straits
Engineers and the Project Manager wherein the parties agree to modify
certain of the Project Documents.
"DEED POLL" means the deed poll dated 19 December 1992 made by the Trust
Beneficiaries in favour of the Borrower.
"DEED OF RELEASE & INDEMNITY" means the deed of release dated 12 January
1993 made between the Bank, the Borrower, NRC and the Trust Beneficiaries
wherein (inter alia):
(a) NRC releases the Bank, the Borrower and the Trust Beneficiaries from
any claim it may have to or in respect of the Trust Fund; and
(b) the Trust Beneficiaries and NRC indemnify the Bank in respect of any
loss or damage that the Bank may suffer as a result of (inter alia)
the Borrower acting in breach of the Trust and/or the Trust
Beneficiaries not being beneficiaries of
6.
<PAGE>
the Trust.
"DEVELOPMENT PLAN" means the document described as the Girilambone Mining
Copper Project Development Plan submitted by the Borrower in compliance
with its obligations under the Existing Facility Agreement and approved by
the Bank pursuant to the terms of that agreement ("EXISTING DEVELOPMENT
PLAN"), as such plan may be amended from time to time with the consent of
the Bank or as may be required pursuant to Clause 19.6.
"DISCOUNT RATE" means the annual percentage rate determined by the Bank in
good faith (but whose determination shall be final and binding) having
regard to the residual term of the Facilities and the Margin.
"DOLLARS" and "$" means the lawful currency for the time being of the
Commonwealth of Australia.
"DRAWDOWN" means an Advance made pursuant to a Drawdown Notice or a Renewal
Notice and "DRAWING" and "DRAWNDOWN" have corresponding meanings.
"DRAWDOWN AMOUNT" means in relation to a Drawdown the amount of that
Drawdown as specified in the relevant Drawdown Notice.
"DRAWDOWN DATE" means the date referred to as such in Clause 5.1(c).
"DRAWDOWN NOTICE" means the notice referred to as such in Clause 5.1.
"ENVIRONMENT" has the meaning given to that term in Section 4 of the
Environmental Offences and Penalties Act, 1989 and "ENVIRONMENTAL" shall
have a corresponding meaning.
"ENVIRONMENTAL AUDIT" means a total assessment of the nature and extent of
any harm or detriment caused to, or the risk of any possible harm or
detriment which may be caused to any of the Joint Venture Assets, the
Project Land or the Project Facilities or any other property by any prior
or existing industrial process, activity, mining, waste, substance
(including any chemical substance) or noise which has been, or is,
undertaken or located on, or emanates from, the Joint Venture Assets, the
Project Land or the Project Facilities and includes, without limitation, a
site assessment.
"ENVIRONMENTAL CERTIFICATE" has the meaning given to that term in Clause
19.4(v).
"ENVIRONMENTAL CONSULTANT" means R.W. Corkery & Co Pty Limited ACN 002 033
712 or such other reputable Environmental consultant who may be appointed
by the Joint Venturers for the purpose of providing expert advice in
relation to Environmental matters.
"ENVIRONMENTAL COURT" means the Land and Environment Court of New South
Wales.
"ENVIRONMENTAL LAWS" means any Australian Law which relates to
Environmental matters, including without limitation:
(a) Biological Control Act, 1985;
7.
<PAGE>
(b) Catchment Management Act 1989;
(c) Clean Air Act, 1961;
(d) Clean Waters Act, 1970;
(e) Dangerous Goods Act, 1975;
(f) Environmentally Hazardous Chemicals Act, 1985;
(g) Environmental Offences and Penalties Act, 1989;
(h) Environmental Planning and Assessment Act, 1979;
(i) Hunter Water Board Act, 1987;
(j) Noise Control Act, 1975;
(k) Ozone Protection Act, 1989;
(l) Protection of the Environment Administration Act, 1991;
(m) Pollution Control Act, 1970;
(n) Soil Conservation Act, 1983;
(o) Unhealthy Building Land Act, 1990;
(p) Water Board Act, 1987;
(q) Water Supply Authorities Act, 1987; and
(r) Waste Disposal Act, 1970.
"ENVIRONMENTAL LICENCE" means any Authorisation required by any
Environmental Law.
"ENVIRONMENTAL PLAN" means the mining rehabilitation Environmental
management plans to be prepared with respect to the Projects as may be
amended by the Joint Venturers from time to time with the consent of the
Bank.
"EQUIVALENT AMOUNT" means on any day the amount of one currency into which
an amount in another currency is converted by the Bank using the Spot Rate
of Exchange.
"EVENT OF DEFAULT" means any of the events specified as events of default
in Clause 23.1.
"EVENT OF INSOLVENCY" means:
(a) a receiver, manager, receiver and manager, trustee, administrator,
Controller or similar officer is appointed in respect of the Borrower
or any asset of the Borrower but does not include any such
appointment if it is contested in good
8.
<PAGE>
faith and is terminated or stayed or enjoined within 30 days;
(b) a liquidator or provisional liquidator is appointed in respect of the
Borrower but does not include any such appointment if it is contested
in good faith and is terminated or stayed or enjoined within 30 days;
(c) any application is made in relation to the Borrower to a court for an
order, or an order is made or a resolution is passed, for the purpose
of:
(i) appointing a person referred to in paragraph (a) or (b)
above;
(ii) winding up the Borrower; or
(iii) proposing or implementing a scheme of arrangement,
but does not include any such application, order or
resolution if it is contested in good faith and is dismissed,
stayed, enjoined, revoked or set aside within 30 days;
(d) a moratorium of any of the Borrower's debts or an official assignment
or a composition or an arrangement (formal or informal) with the
Borrower's creditors or any similar proceeding or arrangement by
which the assets of the Borrower are subjected conditionally or
unconditionally to the control of the Borrower's creditors, or a
trustee, is ordered, declared, or agreed to, or is applied for and
the application is not withdrawn or dismissed within 30 days;
(e) the Borrower becomes, or admits in writing that it is, is declared to
be, or is deemed under any applicable Law to be, insolvent or unable
to pay its debts; or
(f) any writ of execution, garnishee order, mareva injunction or similar
order, attachment, distress or other process is made, levied or
issued against or in relation to any material asset of the Borrower
but does not include any such order or process if it is contested in
good faith and is terminated or stayed within 30 days,
and "INSOLVENCY" shall have a corresponding meaning.
"EXCHANGE OFFER AND SOLICITATION OF CONSENTS" means a document so entitled
and dated 31 January 1990 and issued by Nord Pacific pursuant to which it
solicited the consents of the partners of the Nord Australex Limited
Partnership (a New Mexico limited partnership) and Hicor Mineral
Exploration Series-1 (a California Limited partnership), that each of such
partnerships exchange its assets for shares of Nord Pacific.
"EXCLUDED TAXES" means any Taxes imposed by a Relevant Jurisdiction on the
net income of the Bank as a consequence of the Bank being resident of or
organised or doing business in that jurisdiction but not Taxes:
(a) which are calculated on or by reference to the gross amount of any
payments (without the allowance of any deduction) derived under any
Transaction Document or any other document referred to in any
Transaction Document by
9.
<PAGE>
the Bank; or
(b) which are imposed as a result of the Bank being considered a resident
of or organised or doing business in that Relevant Jurisdiction
solely as a result of it being a party to any Transaction Document or
any transaction contemplated by any Transaction Document.
"EXISTING CASH ADVANCES" means the advance(s) described in Schedule 4.
"EXISTING FACILITY AGREEMENT" means the facility agreement dated 21
December 1992 made between the Bank, the Borrower and Nord Resources
(Pacific) Pty Ltd ACN 001 445 601 ("NORD RESOURCES"), Nord Gold and Nord
Pacific as amended by letter agreement dated 19 December 1995.
"EXISTING PERFORMANCE BONDS" means the Performance Bonds described in
Schedule 3.
"EXISTING SECURITIES" means the securities described in Schedule 5.
"EXISTING TRUSTEE'S DEEDS OF COVENANT" means:
(a) the deed dated 21 January 1993 made between the Bank and the Trust
Beneficiaries wherein the Trust Beneficiaries provided certain
covenants in favour of the Bank as to the status of the Trust; and
(b) the deed dated December 1992 made between the Bank and the
Borrower wherein the Borrower provided certain covenants in favour of
the Bank as to the status of the Trust.
"EXPERT" has the meaning given to that expression in Clause 20 and shall
include the Environmental Consultant.
"EXPLORATION JOINT VENTURE AGREEMENT" means the Girilambone Exploration
Joint Venture Agreement established by:
(a) the Heads of Agreement;
(b) the variation agreement dated 26 August 1992 between the Borrower,
the Other Participant and Straits Engineers; and
(c) the Exploration Joint Venture Agreement dated 26 August 1992 between
the Borrower and the Other Participant,
as varied by the Co-ordination Agreements.
"FACE VALUE" means in respect of a Performance Bond, the maximum Dollar or
US Dollar (as applicable) amount payable to the Beneficiary under that
Performance Bond.
"FACILITIES" means the Cash Advance Facility, the Performance Bond Facility
and the Treasury Facility.
"FACILITY AMOUNT OUTSTANDING" in respect of the Facilities, at any time,
means the
10.
<PAGE>
aggregate of:
(a) the aggregate of the principal amount of all Advances which are
outstanding under the Cash Advance Facility;
(b) the Performance Bond Amount Outstanding; and
(c) the Bank's determination of the aggregate of the Bank's credit
exposure to the Borrower (in each case calculated by the Bank in its
discretion in accordance with its usual credit evaluation procedures)
(and where required expressed as an Equivalent Amount in US Dollars)
under each Treasury Transaction.
"FINAL RESERVE DATE" means the date determined by the Bank in good faith as
being the date that Proven Reserves will be exhausted, such determination
to be made having regard to the Financial Model and the Development
Plan(s).
"FINANCIAL MODEL" means the financial model reflecting the anticipated
economic results of the anticipated operation of the Projects, in the form
agreed between the parties as at the date of this Agreement, as such
financial model may be adjusted from time to time with the approval of the
Bank or as may be required to comply with Clause 19.6.
"FINANCIAL STATEMENTS" shall have the meaning given to that term in Section
9 of the Corporations Law and where applicable a comparable Law of a
Relevant Jurisdiction.
"FINANCING OFFICE" means:
(a) in relation to Drawdowns such office as the Bank may by notice in
writing to the Borrower specify as its financing office in relation
to all or specified Drawdowns; and
(b) for all other payments the Bank's head office in Sydney or such other
office as the Bank may specify from time to time.
"FIXED RATE" means the rate of interest per centum per annum quoted by the
Bank in accordance with Clause 7.2 as the fixed rate applicable for the
relevant period (being a period commencing on the relevant Accommodation
Date and terminating on the Termination Date), such rate to be determined
by the Bank in good faith having regard to the US$ Rate and the Margin.
"FIXED RATE CONFIRMATION" means a confirmation given by the Bank in
accordance with Clause 7.3 and in the form of Annexure D.
"FIXED RATE REQUEST" means a request made by the Borrower in accordance
with Clause 7.2 and in the form of Annexure C.
"FUNDING PERIOD" means a period for calculating or the fixing of the
interest rate for, and the funding of, an Advance (as applicable), such
period to commence on the relevant Drawdown Date or immediately upon the
expiration of the preceding Funding Period for the Advance.
"GIRILAMBONE MINING CROSS CHARGE" has the meaning given to that term in the
Girilambone Mining Joint Venture Agreement.
11.
<PAGE>
"GIRILAMBONE MINING JOINT VENTURE" means the joint venture established by
the Girilambone Mining Joint Venture Agreement.
"GIRILAMBONE MINING JOINT VENTURE AGREEMENT" means the mining joint venture
agreement:
(a) established by the Heads of Agreement;
(b) the joint venture agreement dated 26 August 1992 between the Borrower
and the Other Participant recording the terms of the Girilambone
Mining Joint Venture,
as amended by the Variation Agreement, Co-ordination Agreements and the
Deed of Covenant.
"GIRILAMBONE MINING JOINT VENTURE ASSETS" means all the right, title and
estate of the Joint Venturers, both present and future, in, to, under or
derived from the Girilambone Mining Project and includes (without
limitation) all the Joint Venturers' right, title, interest and privileges
with respect to:
(a) any ore stockpiled on Girilambone Mining Project Land;
(b) the Project Documents relating to the Girilambone Mining Joint
Venture;
(c) all Plant situated on Girilambone Mining Project Land or relating to
the Girilambone Mining Joint Venture;
(d) all stores, vehicles, equipment and other plant relating to the
Girilambone Mining Project;
(e) all buildings, erections, structures and other improvements erected
on, or affixed to, Project Land or used in connection with the
Girilambone Mining Project;
(f) all Insurance Policies relating to the Girilambone Mining Joint
Venture and all moneys payable thereunder;
(g) all choses in action in any way relating to the Girilambone Mining
Project;
(h) all contracts, agreements, permits, Licences and other rights which
relate to the development and operation of the Girilambone Mining
Project;
(i) all books of account, vouchers and other documents in any way
relating to the Girilambone Mining Project;
(j) the balance for the time being and from time to time standing to the
credit of any bank account maintained for the purposes of the
Girilambone Mining Project;
(k) all other contracts agreements, permits, Licences, franchises,
consents and other rights which relate to the development and
operation of the Girilambone Mining Project or the construction,
equipment, operation, maintenance or use
12.
<PAGE>
of the Girilambone Mining Project or the mining, production,
transportation, storage, treatment, processing or marketing of the
Products or which provide for the use by any third party of any of
the assets and property comprising the Girilambone Mining Project;
and
(l) the Girilambone Mining Project Land,
and where the context permits shall include any part thereof.
"GIRILAMBONE MINING PARTICIPATING INTEREST" means the 40% undivided
interest of the Borrower as tenant-in-common in the Girilambone Mining
Joint Venture Assets together with the Borrower's rights and obligations
under the Girilambone Mining Joint Venture Agreement.
"GIRILAMBONE MINING PROJECT" means the operation by the Joint Venturers to
the Girilambone Mining Joint Venture of a copper mine on the Girilambone
Mining Project Area situated 40 kilometres from Nyngan, New South Wales,
for the purposes of producing Copper End Products in commercial quantities.
"GIRILAMBONE MINING PROJECT AREA" means the area described as such in
annexure B to the Girilambone Mining Joint Venture Agreement.
"GIRILAMBONE MINING PROJECT LAND" means the Land identified as such in
Annexure G.
"GIRILAMBONE NORTH CROSS CHARGE" has the meaning given to that term in the
Girilambone North Joint Venture Agreement.
"GIRILAMBONE NORTH DEVELOPMENT COSTS" means the Borrower's Proportion of
all costs and expenses reasonably and properly suffered or incurred by the
Joint Venturers to the Girilambone North Joint Venture in causing the
Girilambone North Project to be developed in the manner contemplated in the
Approved Budget and does not include any expansion of the Girilambone North
Project beyond that contemplated in the Approved Budget or any exploration
costs.
"GIRILAMBONE NORTH JOINT VENTURE" means the joint venture established by
the Girilambone North Joint Venture Agreement.
"GIRILAMBONE NORTH JOINT VENTURE AGREEMENT" means the mining joint venture
agreement dated 19 February 1997 made between the Borrower, Straits Mining,
Nord Pacific and Nord Gold.
"GIRILAMBONE NORTH JOINT VENTURE ASSETS" means all the right, title and
estate of the Joint Venturers, both present and future, in, to, under or
derived from the Girilambone North Project and includes (without
limitation) all the Joint Venturers' right, title, interest and privileges
with respect to:
(a) any ore stockpiled on Girilambone North Project Land;
(b) the Project Documents relating to the Girilambone North Joint
Venture;
(c) all Plant situated on Girilambone North Project Land or relating to
the
13.
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Girilambone North Joint Venture;
(d) all stores, vehicles, equipment and other plant relating to the
Girilambone North Project;
(e) all buildings, erections, structures and other improvements erected
on, or affixed to, Girilambone North Project Land or used in
connection with the Girilambone North Project;
(f) all Insurance Policies relating to the Girilambone North Joint
Venture and all moneys payable thereunder;
(g) all choses in action in any way relating to the Girilambone North
Project;
(h) all contracts, agreements, permits, Licences and other rights which
relate to the development and operation of the Girilambone North
Project;
(i) all books of account, vouchers and other documents in any way
relating to the Girilambone North Project;
(j) the balance for the time being and from time to time standing to the
credit of any bank account maintained for the purposes of the
Girilambone North Project;
(k) all other contracts agreements, permits, Licences, franchises,
consents and other rights which relate to the development and
operation of the Girilambone North Project or the construction,
equipment, operation, maintenance or use of the Girilambone North
Project or the mining, production, transportation, storage,
treatment, processing or marketing of the Products or which provide
for the use by any third party of any of the assets and property
comprising the Girilambone North Project; and
(l) the Girilambone North Project Land,
and where the context permits shall include any part thereof.
"GIRILAMBONE NORTH PARTICIPATING INTEREST" means the 50% undivided interest
of the Borrower as tenant-in-common in the Girilambone North Joint Venture
Assets together with the Borrower's rights and obligations under the
Girilambone North Joint Venture Agreement.
"GIRILAMBONE NORTH PROJECT" means the mining operation conducted by the
Girilambone North Joint Venture on the Girilambone North Project Area.
"GIRILAMBONE NORTH PROJECT AREA" means the mining area delineated by
hatching on the map forming annexure B to the Girilambone North Joint
Venture Agreement.
"GIRILAMBONE NORTH PROJECT LAND" means the land identified as such in
Annexure G.
"GOVERNMENT AGENCY" means any government or any governmental, semi-
governmental, judicial or administrative entity.
14.
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"GUARANTEE" means any guarantee, indemnity or letter of credit giving rise
to legal liabilities, suretyship or any other obligation (whatever called
and of whatever nature):
(a) to pay, to purchase, to provide funds (whether by the advance of
money, the purchase of or subscription for shares or other
securities, the purchase of assets, rights or services, or otherwise)
for the payment or discharge of;
(b) to indemnify against the consequences of default in the payment of;
or
(c) otherwise to be responsible for,
any liability, obligation or Indebtedness or the Insolvency or the
financial condition of any other person.
"HEADS OF AGREEMENT" means the heads of agreement dated 13 December 1991
made between the Borrower, Straits Engineers, Nord Pacific and Nord Gold as
amended by the Deed of Covenant.
"INCOME TAX" has the meaning given to it in the Income Tax Assessment Act
1936 (Commonwealth).
"INDEBTEDNESS" means all indebtedness of the Borrower (including Guarantees
and other contingent obligations) with respect to any borrowing of money
(whether or not represented by bonds, debentures or other securities),
advances, credit or other financial accommodation (including without
limitation, liabilities in respect of debentures, loan capital,
subordinated loans, Bills, redeemable preference shares, convertible notes,
hire purchase and leasing liabilities, external Guarantees and bonds) which
in accordance with proper and generally accepted accounting principles
would be classified as a liability.
"INSURANCES" or "INSURANCE POLICY" means any insurances or insurance
policies which the Borrower is required by any Transaction Document to take
out or cause to be taken out in respect of any interest in the Mortgaged
Property or which is during the term of the Facilities in existence in
relation to any of the Joint Venture Assets.
"INTEREST PAYMENTS" means each payment of interest required to be made by
the Borrower pursuant to this Agreement.
"JOINT VENTURE ACCOUNT" means an account maintained by the Project Manager
in accordance with the requirements of clause 15.2 of the Girilambone
Mining Joint Venture Agreement and clause 15.2 of the Girilambone North
Joint Venture Agreement.
"JOINT VENTURE ASSETS" means the Girilambone Mining Joint Venture Assets
and the Girilambone North Joint Venture Assets.
"JOINT VENTURERS" means the Borrower and the Other Participant or either of
them.
"JOINT VENTURES" means the Girilambone Mining Joint Venture and the
Girilambone North Joint Venture.
"LAW" includes each Australian Law and Relevant Law.
15.
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"LICENCES" means each franchise, licence, certificate, document,
registration, permission, privilege, permit, authority or consent held by a
Joint Venturer in relation to the Joint Venture Assets, statutory or
otherwise, together with any variation or renewal of any of the foregoing.
"LIQUIDATION" includes provisional liquidation, official management,
administration arising out of insolvency, winding up, dissolution, scheme,
assignment for the benefit of creditors generally or any class of
creditors, arrangement or compromise with creditors generally or any class
of creditors and bankruptcy.
"LOAN" means, with respect to any day, the aggregate on the relevant day,
in the applicable currency of all Cash Advances on that day except any Cash
Advance which is to be cancelled on that day.
"LOAN LIFE COVER RATIO" at any time means the ratio of:
(a) the present value of Available Cash Flow for the period from the time
of calculation to the Termination Date discounted at the Discount
Rate on a continuous basis with annual rests; to
(b) the Cash Amount Outstanding,
as calculated by the Bank.
"MANAGEMENT AGREEMENT" means the Girilambone North Management Agreement
dated 19 February 1997 made between the Borrower, the Other Participant and
the Project Manager.
"MARGIN" means, with respect to any Drawdown, 1.5%.
"MATERIAL ADVERSE EVENT" means, an event that would, in the reasonable
opinion of the Bank, materially and adversely affect:
(a) the ability of the Borrower to perform its material obligations under
any of the Transaction Documents to which it is a party;
(b) the ability of the Bank to exercise any of its rights, remedies,
powers and privileges under any of the Transaction Documents; or
(c) the Projects, the Joint Venture Assets, the Borrower's Project
Assets, the Project Operating Costs or the Borrower's Project Revenue
and, as a result, the ability of the Borrower to perform its
obligations under any of the Transaction Documents or Project
Documents to which it is a party.
"MATURITY DATE" means, with respect to any Advance, the last day of the
term of the Drawdown of such Advance unless such last day would fall on a
day which is not a Business Day, in which event the Maturity Date shall be
the immediately preceding Business Day.
"MINE" means the mining operations and Mining Plant operated and conducted
on the Girilambone Mining Project Area in accordance with the Mining
Contract.
16.
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"MINERALS" shall have the meaning given to that term in the Mining Act.
"MINING ACT" means the Mining Act 1992 (New South Wales).
"MINING CONTRACT" means the Open Pit Mining Crushing, Screening, Conveying
and Stacking Contract between the Joint Venturers and MacMahon Construction
Pty Ltd ACN 007 611 485 dated 4 January 1993 as amended from time to time
with the consent of the Bank.
"MINING PLANT" means the crushing, screening, conveying, stacking
facilities and related facilities constructed on the Girilambone Mining
Project Area.
"MINING TENEMENT" has the meaning given to the term "authority" in the
Mining Act.
"MONTH" means a calendar month.
"MORTGAGED PROPERTY" means in relation to a Security Provider, the property
mortgaged, charged or assigned by that Security Provider in or under any of
the Securities.
"NEW DEEDS OF COVENANT" means:
(a) the document dated or intended to be dated the same date as this
Agreement and entitled the "Trust Beneficiaries' Deed of Covenant"
made between the Bank and the Trust Beneficiaries; and
(b) the document dated or intended to be dated the same date as this
Agreement entitled "Trustee's Deed of Covenant" made between the Bank
and the Borrower.
"NRC" means Nord Resources Corporation of 8150 Washington Village Drive,
Dayton, Ohio, United States of America.
"OFFICER" means a director or secretary for the time being of the Security
Provider.
"ORIGINAL FACILITY AGREEMENT" means the facility agreement dated 21
December 1992 made between the Bank (formerly R&I Bank of Western Australia
Ltd), the Borrower and Nord Resources, Nord Gold and Nord Pacific as
completion guarantors.
"OTHER PARTICIPANT" means Straits Mining Pty Ltd ACN 055 020 614.
"PARTICIPATING INTERESTS" means the Girilambone Mining Participating
Interest and the Girilambone North Participating Interest.
"PARTNERSHIP" means the partnership originally constituted by a joint
venture agreement dated 1 November 1979 and made between Highlands Energy
Corporation and NRC the current partners of which are Nord Gold and Nord
Pacific.
"PERFORMANCE BOND AMOUNT OUTSTANDING" means on any day, the Face Value of
each Performance Bond which is outstanding and not due to expire on that
day.
"PERFORMANCE BOND FACILITY" means the facility described in Clause 8 for
the provision
17.
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of Performance Bonds.
"PERFORMANCE BOND FACILITY LIMIT" means the sum of US$303,000 (which
includes any amount payable under the Existing Performance Bonds).
"PERFORMANCE BOND" means a bond to be issued by the Bank pursuant to Clause
8.
"PERMITTED SECURITY INTEREST" means:
(a) any Security Interest which the Bank has consented to and is the
subject of a Subordination Deed, provided that no such Security
Interest may be given if an Event of Default has occurred and is
subsisting;
(b) a lien arising by operation of Law or equity and charges arising by
statute and in either case where there is no default in connection
with the lien or charge unless such default is being contested in
good faith and adequate provision, if necessary, is made therefor;
(c) a right of title retention in connection with the acquisition of
goods in the ordinary course of business on the usual terms of sale
of the supplier where there is no default in connection with the
relevant acquisition unless such default is being contested in good
faith and adequate provision, if necessary, is made therefor;
(d) the Cross Charges;
(e) the Project Manager's Lien provided by the Borrower in favour of the
Project Manager; and
(f) the Security Interests listed in Schedule 2 (if any).
"PLANT" means the plant constructed or situated on the Project Area and
which is used in connection with the operations of either Joint Venture.
"POLLUTION" has the meaning given to that term in Section 5 of the
Pollution Control Act, 1970 and includes, without limitation, air
pollution, pollution of water or the emission of noise.
"POTENTIAL EVENT OF DEFAULT" means an event, omission or circumstance
which, with the giving of notice or the passing of time, or both, would
become an Event of Default.
"PRODUCTS" means all Copper End Products and other Minerals derived in the
course of all activities carried out by the Joint Venturers in relation to
the Projects.
"PROJECT AREA" means the Girilambone Mining Project Area and the
Girilambone North Project Area.
"PROJECT DOCUMENTS" means any or all of the following:
(a) all documents or agreements evidencing any of the terms and
conditions applicable to any Project Land;
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(b) all agreements with mining and other contractors for the conduct of
the Projects;
(c) the Co-ordination Agreements;
(d) the Approved Budget;
(e) any Environmental Plan;
(f) the Heads of Agreement;
(g) the Joint Venture Agreements;
(h) the Exploration Joint Venture Agreement;
(i) the Management Agreement;
(j) the Mining Contract;
(k) the Sales Contracts;
(l) the Shareholders Agreement;
(m) the Variation Agreement;
(n) the Deed of Covenant and the deed of covenant dated 19 February 1997
made between the Other Participant, the Borrower and the Trust
Beneficiaries;
(o) the Deed Poll;
(p) the agreements listed in Schedule 1; and
(q) any other material document or agreement entered into by or on behalf
of the Borrower, the Joint Venturers, the Project Manager or the
Trust Beneficiaries with respect to the Projects.
"PROJECT FACILITIES" means the Mining Plant, the Plant and any other
equipment and accessories used in connection with the Projects.
"PROJECT LAND" means the land described in as such in Annexure G and the
Project Tenements together with all other rights, titles, estates and
interest (whether freehold or leasehold) now owned by or on behalf of the
Joint Venturers and with respect to either of the Projects in any real
property and all buildings, fences, structures, Plant, machinery, fixtures,
tailings and equipment now or in the future affixed to such real property
other than those properties specifically excluded by agreement in writing
with the Bank.
"PROJECT MANAGER" means any person appointed as such under clause 10.1 of
the Girilambone Mining Joint Venture Agreement and/or the Girilambone North
Joint Venture Agreement provided such appointment is made with the consent
of the Bank, such consent not to be unreasonably withheld or delayed.
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"PROJECT MANAGER'S LIEN" means the charge and lien granted by the Joint
Venturers in favour of the Project Manager pursuant to part 17 of the
Girilambone Mining Joint Venture Agreement and/or part 17 of the
Girilambone North Joint Venture Agreement.
"PROJECT OPERATING COSTS" means the Borrower's Proportion of the following
operating costs associated with the operation of the Projects:
(a) mining, crushing, leaching, processing and site administration costs;
(b) reasonable management charges;
(c) freight and marketing costs;
(d) insurance and handling expenses;
(e) sales expenses; and
(f) scheduled capital expenditures,
as calculated by the Bank in good faith, BUT shall not include:
(g) Repayment Instalments, Interest Payments, fees or other financing
charges or amounts payable under the Transactions Documents; or
(h) amounts outlaid to comply with any Law, to acquire additional Joint
Venture Assets, or to expand the Mine or any other Project Facilities
beyond their scope as budgeted for in the Approved Budget, unless in
each such case those expenditures have been expressly budgeted for in
the Approved Budget with the approval of the Bank or unless the Bank
in its absolute discretion consents to those amounts forming part of
the Project Operating Costs.
"PROJECT REPORT" has the meaning given to that term in Clause 19.1(b)(iii).
"PROJECT TAXES" means all Taxes (other than Income Tax or any withholding
tax) which are imposed or assessed:
(a) in respect of the ownership or use of, or any dealings with, or by
reason of any activity carried on or in connection with any Joint
Venture Asset; or
(b) by reason of any activity carried on in connection with or for the
purpose of the Projects,
and includes without limitation any amounts payable to any Government
Agency.
"PROJECT TENEMENTS" means:
(a) the Project Tenements described as such in Annexure G;
(b) all other Mining Tenements acquired for or in relation to the
Projects;
(c) all renewals, extensions, modifications, substitutions,
consolidations and variations of any of the foregoing; and
20.
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(d) all subdivisions of or applications for any of the foregoing.
"PROJECTS" means the Girilambone Mining Project and the Girilambone North
Project.
"PROVEN RESERVES" shall have the meaning ascribed to the terms "Proved Ore
Reserves" and "Probable Ore Reserves" in the Australasian Code for
Reporting of Identified Mineral Resources and Ore Reserves prepared by a
joint committee of the Australian Institute of Mining and Metallurgy and
Australian Mining Industry Council.
"QUARTER" means a calendar quarter and "QUARTERLY" shall have a
corresponding meaning.
"RATE" has the meaning given to that term in Clause 6.3.
"RELATED CORPORATION" means, with respect to a corporation, another
corporation which is a related body corporate of the first mentioned
corporation within the meaning of section 50 of the Corporations Law and,
where applicable, a comparable Law of a Relevant Jurisdiction.
"RELEVANT JURISDICTIONS" means in relation to a party, the country and/or
(where relevant) State in which such party is incorporated or is a
resident.
"RELEVANT LAWS" means in relation to a person, the Laws of its Relevant
Jurisdictions and the laws of any other jurisdiction to which it may be
subject in relation to the context in which "Relevant Laws" is used.
"RENEWAL DATE" means the Maturity Date in relation to the relevant
outstanding Advance.
"RENEWAL NOTICE" means a notice from the Borrower to the Bank requesting a
renewal of Advance in accordance with Clause 5.7.
"REPAYMENT DATE" means:
(a) each Maturity Date; and
(b) the last day of the months of December, March, June and September in
each year during so long as any part of the Loan remains outstanding
with the first Repayment Date being 31 March 1997.
"REPAYMENT INSTALMENTS" means the repayment instalments to be made in
accordance with Clause 10.2.
"RESERVE LIFE COVER RATIO" means the ratio of:
(a) the present value of Available Cash Flow calculated from the date of
this Agreement to the Final Reserve Date discounted at the Discount
Rate on a continuous basis with annual rests; to
(b) the Cash Amount Outstanding,
as calculated by the Bank.
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"RETIRE" means:
(a) in relation to any unexpired Performance Bond, to pay the Face Value
and any other moneys payable with respect to such Performance Bond to
the issuer of the Performance Bond or to cause all liability of the
issuer under the Performance Bond to be extinguished; and
(b) in relation to any Treasury Transaction, the Borrower entering into
each transaction or document required to ensure that the Bank has no
liability (actual or contingent) under the Treasury Transaction.
"RISK MANAGEMENT AGREEMENT" means any agreement entered into by the
Borrower during the term of the Facilities which is a currency exchange,
discounted swap, forward or future rate transaction, a confirmation of any
swap, currency exchange or forward rate transaction or other document
howsoever called:
(a) under which the Borrower manages or hedges its currency or interest
risks in relation to either of its Participating Interests or in
relation to the Facilities; or
(b) under which the Borrower manages its commodity price risks in
relation to either of its Participating Interests.
"SALES CONTRACTS" means the contracts specified in Annexure F together with
any other Acceptable Sales Contracts and all other sales contracts entered
into by the Borrower or an agent for the Borrower with any party for the
sale of Products and which are approved of by the Bank.
"SAME DAY FUNDS" means:
(a) in the case of Dollars, a bank cheque or other immediately available
funds received during normal banking hours; and
(b) in the case of US Dollars, funds settled through the New York
Clearing House Interbank Payments System or in such other manner of
payment in US Dollars as the Bank may specify to the Borrower as
being customary at the time for the settlement of international
transactions of the type contemplated by this Agreement so as to
allow funds to be cleared on the same day as they are paid.
"SECURED MONEYS" means each and every amount now or at any time in the
future falling within any of the following categories:
(a) all moneys which are owing and payable or may become owing and
payable (including any contingent obligation) by the Borrower to the
Bank under any Transaction Document;
(b) all moneys which the Bank is or may become entitled to debit or
charge to any account of the Borrower, in any manner and on any
account, whether as principal debtor or surety or otherwise and
whether alone or jointly with any other person, pursuant to any
Transaction Document;
(c) all moneys which are payable by reason of the Bank at the request of
the Borrower drawing, accepting, paying, endorsing or discounting any
bill of
22.
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exchange, order, draft, cheque, promissory note or negotiable
instrument pursuant to any Transaction Document;
(d) all moneys which are payable by reason of the Bank issuing,
endorsing, accepting, confirming or entering into any letter of
credit, confirmed order, letter of confirmation or any other
instrument, transaction or credit facility in respect of which or on
which the Bank is liable for, on account of or on behalf of the
Borrower pursuant to any Transaction Document;
(e) all moneys now or in the future owing by the Borrower to the Bank
under any judgment, order, deed or other thing into which any present
or future obligation of the Borrower to the Bank under any
Transaction Document becomes merged;
(f) amounts referred to in other clauses of this Agreement as being added
to or forming part of the Secured Moneys;
(g) interest which is due, owing and unpaid pursuant to any Transaction
Document and which has not been turned into principal; and
(h) amounts which are reasonably foreseeable as likely after that time to
fall within any of paragraphs (a) to (g) above,
and where the context permits shall include any part of such moneys.
"SECURITIES" means any or all of the following securities, in form and
substance satisfactory to the Bank:
(a) the Existing Securities;
(b) a registered fixed and floating charge by the Trust Beneficiaries
over the whole of their equitable interest in any Borrower's Project
Assets;
(c) a registered mortgage by the Borrower over any of the Borrower's
Project Assets;
(d) registered mortgages by the Borrower over its Participating Interest
in any Project Land (other than Project Tenements) not included in
the Existing Securities;
(e) registered mining mortgages by the Borrower over its Participating
Interest in any Project Tenements not included in the Existing
Securities;
(f) deeds dated or intended to be dated the same date as this Agreement
amending certain of the the Existing Securities;
(g) the New Deeds of Covenant;
(h) any security agreed from time to time by the Security Provider to be
collateral to any of the above securities.
"SECURITY INTEREST" means any mortgage, charge, pledge, lien,
hypothecation, assignment, security interest or other encumbrance by way of
security (other than liens
23.
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arising by operation of Law and charges arising by statute and, in either
case, in respect of which no default has occurred unless such default is
being contested in good faith and adequate provision has been made
therefor) or any instalment arrangement involving title retention,
preferential right or arrangement or trust arrangement, the effect of any
of which is the creation of security (howsoever ranking).
"SECURITY PROVIDER" means the Borrower and each other party who provides
any security in favour of the Bank to secure any of the Secured Moneys.
"SHAREHOLDERS AGREEMENT" means the shareholders agreement dated 20 December
1992 made between the Borrower, the Other Participant and the Project
Manager as such agreement may be amended from time to time with the consent
of the Bank.
"SHARES" means the 40 shares in the Project Manager registered in the name
of the Borrower.
"SIBOR" in relation to a Funding Period for an Advance, means the rate
percent per annum determined by the Bank to be the arithmetic mean (rounded
upwards, if necessary, to the nearest one sixteenth of 1%) of the rates
displayed at or about 11:00am (Singapore time) on the second Business Day
before the Drawdown Date for that Advance on the Reuters Monitor Screen at
page reference SIBO by each of the banks listed on that page for the making
of deposits in US Dollars by that bank for a term equal or similar to the
Funding Period of the Advance.
"SPECIAL PURPOSE ACCOUNTS" means the Borrower's Proceeds Accounts and the
Debt Service Reserve Account.
"SPOT RATE OF EXCHANGE" means the spot rate of exchange quoted to the
market by the Bank at the relevant time on the relevant day for its sale or
purchase (as the case may be) of one currency against another for
settlement in 2 Business Days time.
"STRAITS ENGINEERS" means Straits Engineers Contracting Pte Ltd ARBN 010
637 797 of 17 Tuas Crescent, Jurong, Singapore, Republic of Singapore.
"SUBORDINATION DEED" means:
(a) in relation to NRC and Nord Pacific, the subordination deed dated 12
January 1993;
(b) in relation to any other party required to enter into a subordination
deed with the Bank, a deed in a form and substance acceptable to the
Bank.
"SUBSIDIARY" means, with respect to a corporation, a corporation deemed to
be a subsidiary of the first mentioned corporation by virtue of Section 46
of the Corporations Law and where applicable a comparable Law of a Relevant
Jurisdiction.
"TARGET LEVEL" means:
(a) for the first Month of any Quarter, the sum of $400,000;
(b) for the second Month of any Quarter, the sum of $800,000;
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(c) for the third Month of any Quarter the amount that the Bank
determines in its discretion that the Borrower will require to make
all payments (whether in the nature of fees, interest or Repayment
Instalments) due to the Bank on the on the last day of the relevant
Quarter,
PROVIDED THAT for the purposes of this definition the first Quarter shall
commence on 1 January 1997.
"TAX" and "TAXES" mean all income, stamp and other taxes, levies, imposts,
deductions, charges, duties, compulsory loans and withholdings whatsoever
(including financial institutions duty, debits tax or other Taxes whether
incurred by, payable by return or passed on to the Bank) together with
interest thereon and penalties, if any, and charges, fees or other amounts
made on, or in respect thereof except any amount payable under a covenant
or stipulation which is void under Section 261 of the Income Tax Assessment
Act 1936 (Commonwealth), and "TAXATION" shall be construed accordingly.
"TERMINATION DATE" means 30 September 2000.
"TRANSACTION DOCUMENTS" means this Agreement, each instrument required to
be entered into by the Borrower or the Trust Beneficiaries pursuant to this
Agreement (including the Securities), any instrument entered into pursuant
to the Securities, any Risk Management Agreement, any Treasury Instrument,
any other facility entered into with the Bank for the purposes of hedging,
management or control of interest rate or foreign exchange currency risk or
commodity price risk relating to this Agreement, the New Deeds of Covenant,
the Consent and Priority Deed and any other instrument which the parties
hereto agree from time to time should be treated as a Transaction Document.
"TREASURY FACILITY" means the US Dollar hedging facility described in
Clause 9 for an amount up to the Treasury Facility Limit.
"TREASURY FACILITY LIMIT" means the amount of US$30,000,000 (which includes
any exposure under any existing Treasury Transaction).
"TREASURY INSTRUMENT" means each document between the Bank and the Borrower
evidencing or confirming the terms of a Treasury Transaction.
"TREASURY TRANSACTION" means each transaction entered into between the Bank
and the Borrower pursuant to the Treasury Facility.
"TRUST" means the bare trust between the Borrower as trustee and the Trust
Beneficiaries as beneficiaries, created or resulting from:
(a) the establishment of the Nord Australex Exploration (Australian)
Trust ("ORIGINAL TRUST") by deed of trust dated 28 December 1978
between the Borrower as trustee and Nord Australex Limited
Partnership as beneficiary ("TRUST DEED");
(b) the assignment by the Nord Australex Limited Partnership on 1
November 1979 of their rights, title and interest as beneficiary of
the Original Trust to the Nord Highlands by:
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(i) deed of assignment dated 1 November 1979 between the Nord
Australex Limited Partnership and Nord Highlands; and
(ii) as evidenced by the deed of acknowledgement dated 6 February
1981 executed by the Borrower as trustee of the Original
Trust;
(c) Exchange Offer and Solicitation of Consents; and
(d) the termination of the Nord Australex Limited Partnership on or about
2 April 1990,
as evidenced by the Deed Poll.
"TRUST DEED" has the meaning given to that expression in the definition of
the Trust.
"TRUST FUND" means all of the assets and income of the Trust from time to
time.
"US DOLLARS" and "US$" means the lawful currency for the time being of the
United States of America.
"US$ PROCEEDS ACCOUNT" means an account in the name of the Borrower with
the Bank in Sydney, New South Wales, Australia designated Account No. 1 or
such other account as the Borrower and the Bank may agree on from time to
time.
"US$ RATE" means the Bank's costs of funds relevant to the Funding Period
for providing the relevant Advance under the Facilities, as determined by
the Bank, in good faith having regard to SIBOR.
"VARIATION AGREEMENT" means the variation agreement dated 26 August 1992
made between the Borrower, Straits Engineers and the Other Participant.
1.2 CONSTRUCTION OF CERTAIN REFERENCES
Except to the extent that the context requires otherwise, any reference in
this Agreement to:
(a) an "AGENCY" of a state includes, at any particular time any
agency, authority, central bank, department, government,
legislature, minister, ministry, official or public or statutory
person (whether autonomous or not) or, or of the government of,
that State or any political sub-division in or of that State;
(b) the "ASSETS" of a person shall be construed as a reference to the
whole or any part of its business, undertaking, property, assets
and revenues present or future (including uncalled capital,
called but unpaid capital and any right to receive revenues);
(c) a "CONSENT" also includes an approval, authorisation, exemption,
filing, Licence, order, permission, recording or registration
(and references to obtaining consents shall be construed
accordingly);
(d) one person being "CONTROLLED" by another person or to "CONTROL"
that
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person means:
(i) control of the composition of the Board of Directors of the
relevant corporation;
(ii) control of more than half of the voting power of the
relevant corporation; or
(iii) control of more than half of the issued share capital of the
relevant corporation excluding any part thereof which
carries no right to participate beyond a specified amount in
the distribution of either profit or capital;
(e) a "DIRECTIVE" includes any present or future directive,
regulation, request or requirement (in each case, whether or not
having the force of Law but, if not having the force of Law, the
compliance with which is in accordance with the general practice
of persons to whom the directive is addressed);
(f) the "DISSOLUTION" of a person also includes the winding-up,
liquidation or administration under insolvency of that person,
and any equivalent or analogous procedure under the Law of any
jurisdiction in which that person is incorporated, domiciled or
resident or carries on business or has assets and "DISSOLVED"
shall be construed accordingly;
(g) a "LAW" includes common law, principle or doctrine of equity, and
any constitution, decree, judgment, legislation, order,
ordinance, regulation, statute, statutory instrument, treaty or
other legislative measure, in each case of any jurisdiction
whatever (and "LAWFUL" and "UNLAWFUL" shall be construed
accordingly); and
(h) a "PERSON" includes any individual, corporation, firm,
partnership, joint venture, association, organisation, trust,
state or agency of a state (in each case, whether or not having
separate legal personality).
1.3 INTERPRETATION
In this Agreement, unless the context otherwise requires:
(a) (SINGULAR AND PLURAL): words importing the singular number shall
include the plural number and vice versa;
(b) (GENDER): references to any gender shall include every other
gender;
(c) (PARTY): references to each of the parties hereto shall include
references to each of their respective successors and permitted
assigns;
(d) (CORPORATION): references to a corporation shall include a person
and vice versa;
(e) (HEADINGS): headings are used for convenience only and shall not
affect the interpretation of this Agreement;
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(f) (CLAUSES ETC): references to Clauses, Annexures, Schedules and
Attachments are references to clauses, annexures, schedules and
attachments to this Agreement;
(g) (LAWS): all references to any Law, whether statutory or
otherwise, or any order, ordinance, regulation, rules or by-law
made under or pursuant thereto shall include all amendments, or
consolidations of, or any such Law, order, ordinance, regulation,
rule or by-law passed in substitution therefor or in lieu thereof
from time to time;
(h) (BILLS): references to the drawing, acceptance, indorsement of,
or other dealing with a Bill, or to any party to a Bill, shall
mean a drawing, acceptance, indorsement of, or other dealing
with, or a party to, a Bill within the meaning of the Bills of
Exchange Act, 1909 of the Commonwealth of Australia;
(i) (MONTHLY): references to "monthly" mean a period commencing on
any day of a Month and ending on the numerically corresponding
day in the next succeeding Month, except that, where a
numerically corresponding day does not occur in such next
succeeding Month, such period shall end on the last day of such
next succeeding Month;
(j) (AGREEMENTS ETC): references to any agreement, deed, instrument
or document (including, without limitation, this Agreement) shall
be deemed to include references to the agreement, deed,
instrument or document as varied, supplemented, novated or
replaced from time to time in accordance with the terms thereof
and, if applicable, as permitted by this Agreement;
(k) (DUE DATE): where any determination or monetary payment under
this Agreement is due on a day which is not a Business Day such
determination or payment shall be made on the next succeeding
Business Day, except where such next succeeding Business Day
occurs in the next succeeding Month, in which case such
determination, payment or delivery shall be made on the Business
Day immediately preceding such day;
(l) (JOINT AND SEVERAL): an agreement, representation or warranty on
the part of two or more persons binds that person or those
persons jointly and severally and an agreement, representation or
warranty in favour of two or more persons is for the benefit of
them jointly and severally;
(m) (DEFINED MEANINGS): where any word or phrase is given a defined
meaning, any other part of speech or grammatical form in respect
of that word or phrase has a corresponding meaning; and
(n) (ACCOUNTING TERMS): all accounting terms used in this Agreement
have the meaning given to them under Australian accounting
standards and statements of accounting concepts.
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1.4 CURRENCY CALCULATIONS
Any reference in this Agreement to "EQUIVALENT" on any date in one currency
("FIRST CURRENCY") of an amount denominated in another currency ("SECOND
CURRENCY") is a reference to the amount, as determined by the Bank in good
faith, of such first currency which could be purchased with that amount of
such second currency at the Spot Rate of Exchange quoted by the Bank on
such date for the purchase of such first currency with such second currency
for delivery on the second Business Day thereafter.
1.5 REPAYMENT AND PREPAYMENT
In this Agreement a reference to the Borrower being required to "REPAY" or
"PREPAY" all or part of the Secured Moneys means that it shall make
payments to the Bank in the manner required by this Agreement which have
the result, or it shall in such other manner as this Agreement provides, do
all things necessary to ensure that in the case where an Advance is
outstanding, there is received by the Bank:
(a) the principal of that Advance; and
(b) interest due in respect of that Advance.
References to "REPAID", "REPAYABLE", "PREPAID", "PREPAYABLE", "REPAYMENT"
and "PREPAYMENT" mean the effecting of the foregoing.
1.6 DETERMINATION AND CERTIFICATE CONCLUSIVE
Except where otherwise provided in this Agreement any determination or
certificate by the Bank provided for in this Agreement as to any matter,
fact or thing (including, without limitation, interest, fees and exchange
rates) shall, in the absence of manifest error, be conclusive and binding
upon the parties to this Agreement.
1.7 ACCOUNT BALANCES
In this Agreement references to the aggregate credit balance of a Special
Purpose Account shall be to such balance after deducting therefrom any
fees, imposts, charges, commissions or duties attaching to the account.
1.8 CONSENT OF THE BANK
Unless otherwise expressly stated herein, any authority, approval, consent
or other power to be given by the Bank under any Transaction Document shall
be in writing and may be given or withheld in the manner and at the time
determined by the Bank in its absolute discretion without giving any
reason.
2. THE FACILITIES
2.1 (a) GRANT OF FACILITIES
The Bank agrees to continue to provide the Existing Cash Advance(s)
and to provide to the Borrower:
(i) (CASH ADVANCE FACILITY:) further Cash Advances in US
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Dollars up to an amount equal to the difference between the
Cash Facility Limit and the amount of the Existing Cash
Advance(s);
(ii) (PERFORMANCE BOND FACILITY): the provision of the Performance
Bonds up to the Performance Bond Facility Limit;
and
(iii) (TREASURY FACILITY): the Treasury Facility up to the
Treasury Facility Limit,
upon the terms and conditions of this Agreement.
(a) AMENDMENT AND RESTATEMENT
The parties acknowledge that this Agreement amends and restates the
Existing Facility Agreement and is a Transaction Document for the
purposes of each of the Securities.
2.2 FINANCING OFFICE
Each Advance made available by the Bank shall be made by, and maintained
at, the relevant Financing Office of the Bank.
3. CONDITIONS PRECEDENT
3.1 AUTHORISED OFFICER'S CERTIFICATE
This Agreement is conditional upon receipt by the Bank, in form and
substance satisfactory to it, of certificates of an Authorised Officer of
the Security Provider substantially in the form of Annexure E.
3.2 CONDITIONS
The obligation of the Bank to make any Drawdown is conditional upon receipt
by the Bank, not later than 3 Business Days prior to the first Drawdown
Date, in form and substance satisfactory to the Bank, of the following:
(a) (PROJECT DOCUMENTS): a duly executed and (where applicable) stamped
counterpart of each Project Document;
(b) (TRANSACTION DOCUMENTS AND OTHER DOCUMENTS): a copy (duly certified
by the Security Provider which is a party thereto to be a true and
complete copy) of each duly executed and (where applicable) stamped
Transaction Document;
(c) (REGISTRATION OF SECURITIES): a certificate of registration of each
of the Securities required to be registered and evidence that all
consents required to the assignment of interests in the Transaction
Documents pursuant to the Securities have been obtained;
(d) (AUTHORISATIONS): a certified copy of each Authorisation obtained or
necessary to be obtained in connection with the execution, validity,
performance and
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enforceability of each Transaction Document and the Projects;
(e) (INSURANCES): evidence that the Insurances have been taken out, are
current and for an unexpired term of at least 12 Months or such
shorter period as the Bank may agree that the Insurances are in full
force and effect, together with copies of all policies in respect of
the Insurances, certified to be true and complete copies by the
Borrower;
(f) (TITLE AND SEARCHES): the results of searches and enquiries with
respect to the Project Land and evidence that the Joint Venturers
have good title to such Project Land;
(g) (REPLIES TO REQUISITIONS): replies to all requisitions raised by, or
on behalf of, the Bank in respect of the Projects;
(h) (AUTHORISED SIGNATORIES): a copy of the signatures of each Authorised
Officer, certified to be a true and complete copy by the Security
Provider;
(i) (FINANCIAL DATA AND ACCOUNTS): such financial data and statements
regarding the Security Provider as requested by the Bank including
each of their last audited annual accounts and most recent accounts,
certified as true and complete copies by the Security Provider to
which they relate;
(j) (BANK'S LEGAL OPINION): legal opinions of Counsel to the Bank,
covering such matters as the Bank deems necessary or appropriate;
(k) (BORROWER'S LEGAL OPINIONS): legal opinions in respect of the
Security Provider from Counsel to the Borrower;
(l) (APPROVALS ETC): copies of all governmental and regulatory approvals,
exemptions and interpretations from Australian and United States
governmental bodies with respect to financial regulatory matters that
are deemed necessary or appropriate by the Bank, certified to be true
and complete copies by the person to whom they are addressed;
(m) (CERTIFICATES): certificates from the Borrower as requested by the
Bank confirming the truth and accuracy of the representations and
warranties of such parties made in any Financing Document;
(n) BORROWER RISK MANAGEMENT): evidence that the Borrower has entered
into a sufficient number of Risk Management Agreements to satisfy the
requirements of the Bank pursuant to this Agreement;
(o) (OTHER REQUIREMENTS): such other agreements, documents, instruments,
certificates and opinions as the Bank may reasonably request,
PROVIDED THAT the Borrower shall not be obliged to provide any document if
such document was provided to the Bank in connection with the Original
Facility Agreement and the Borrower certifies to the Bank that the relevant
document has not been amended since the date the relevant document was
previously provided to the Bank, PROVIDED FURTHER if the Bank permits any
Drawdown prior to all of the above conditions being satisfied the Bank will
not be deemed to have waived any such condition and
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conditions and may require any such condition or conditions to be satisfied
prior to permitting any further Drawdown.
3.3 CERTIFICATION
For the purposes of this Clause 3 and unless otherwise provided, a document
shall be deemed to be certified if it is certified by an Authorised Officer
of the Security Provider, as applicable, to be a true copy of the original
document of which it purports to be a copy.
4. APPROVED PURPOSES
The proceeds of Drawings or renewals of Drawings may only be applied by the
Borrower for the following purposes:
(a) (CASH ADVANCE FACILITY): in relation to the Cash Advance Facility, to
pay Girilambone North Development Costs and any other purpose
approved by the Bank in its discretion;
(b) (PERFORMANCE BOND FACILITY): in relation to the Performance Bond
Facility, to comply with additional requirements under the Mining Act
with respect to the Projects; and
(c) (TREASURY FACILITY): in relation to the Treasury Facility, to be used
to hedge the Borrower's US Dollar receivables for conversion into
Dollars.
5. DRAWDOWN - GENERAL PROVISIONS
5.1 DRAWDOWN NOTICES
If the Borrower wishes to make a Drawdown the Borrower shall give a notice
to the Bank substantially in the form of Annexure A ("DRAWDOWN NOTICE")
which notice shall:
(a) (DRAWDOWN): specify whether the Drawdown is under the Cash Advance
Facility, the Performance Bond Facility or the Treasury Facility;
(b) (AMOUNT): where applicable specify the amount in US Dollars of the
required Drawdown;
(c) (DRAWDOWN DATE): specify the day (being a day during the Availability
Period) on which the Borrower wishes to make such Drawdown which day
shall be a Business Day occurring not less than 3 Business Days after
the day the Bank receives the relevant Drawdown Notice ("DRAWDOWN
DATE");
(d) (PURPOSE): specify the purpose or purposes for which the Drawdown is
required;
(e) (FUNDING PERIOD): where applicable specify the Funding Period;
(f) (REPEAT OF REPRESENTATIONS AND WARRANTIES): be deemed to constitute a
representation and warranty by the Borrower that, as at the date of
the relevant Drawdown Notice:
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(i) the representations and warranties contained in Clause
18.0(a)()A.0)a)1 are true and correct, as if given on such
date, subject only to such qualifications as are set out in
such Drawdown Notice; and
(ii) no Event of Default or Potential Event of Default is
subsisting or will result from such Drawdown; and
(g) (IRREVOCABLE): be effective upon receipt by the Bank and once given
shall be irrevocable.
5.2 AVAILABILITY DATE
The Borrower shall not be entitled to make Drawdowns prior to the
Availability Date.
5.3 DRAWDOWN INDEMNITY
If the Borrower has given the Bank a Drawdown Notice and if, in the
reasonable opinion of the Bank, the Borrower fails to fulfil any Condition
Precedent and, as a result of such failure, the Bank determines not to make
the relevant Drawdown Amount available to the Borrower on the relevant
Drawdown Date or the Borrower fails, other than for a reason acceptable to
the Bank, to borrow the relevant Drawdown Amount on the relevant Drawdown
Date, the Borrower shall indemnify the Bank against any cost, loss or
expense incurred by the Bank as a result of such failure.
5.4 VARIATION TO DRAWDOWN NOTICES
Notwithstanding any other provisions of this Agreement, the Bank may vary,
or require the Borrower to vary, Drawdown Notices or Renewal Notices to
ensure compliance with the provisions of this Agreement relating thereto
provided that the variation is to rectify matters of a minor, typographical
or technical nature and the Bank may reject any such notice which does not
comply with the provisions of this Agreement.
5.5 BANK NOT OBLIGED TO PROVIDE DRAWINGS
Notwithstanding any other provisions of this Agreement, the Bank shall not
be obliged to provide a Drawing or a renewal of a Drawing under any portion
of the Facilities if:
(a) (EXCEEDS CASH FACILITY LIMIT): the aggregate of each Cash Advance or
renewed Cash Advance to be provided on an Accommodation Date would
exceed the Cash Facility Limit;
(b) (EXCEEDS PERFORMANCE BOND FACILITY LIMIT): the aggregate of the Face
Value of each Performance Bond would exceed the Performance Bond
Facility Limit;
(c) (EXCEEDS TREASURY FACILITY LIMIT): the Bank determining that the
requested utilisation of the Treasury Facility would cause the
Borrower to exceed the Treasury Facility Limit;
(d) (EVENT OF DEFAULT HAS OCCURRED): an Event of Default has occurred and
has not been waived by the Bank; or
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(e) (REPRESENTATION OR WARRANTY QUALIFIED): any representation or
warranty is qualified pursuant to Clauses 5.1(f) to an extent which,
in the Bank's reasonable opinion, would materially adversely affect
the ability of the Borrower to perform any of its obligations under
any Transaction Document to which it is a party.
5.6 NO RE-BORROWINGS
Subject to Clause 10.4, any Advance Prepaid or Repaid may not be re-
borrowed by the Borrower.
5.7 RENEWAL OF DRAWDOWN
Not less than 3 Business Days prior to any Maturity Date and so long as no
Event of Default or Potential Event of Default has occurred, the Borrower
may give notice to the Bank that the Borrower intends to renew an Advance
on such Maturity Date, which notice, inter alia, shall be substantially in
the form and to the effect of Annexure B and shall specify the aggregate US
Dollar amount of the Advances to which the Renewal Notice relates and to be
continued on such Renewal Date.
5.8 EXISTING FACILITIES
The parties acknowledge and agree that this Agreement amends and restates
the Existing Facility Agreement. Immediately upon satisfaction or waiver
of the Conditions Precedent, the Existing Cash Advance, Existing
Performance Bonds and any existing Treasury Transaction shall be deemed to
be Drawdowns made under this Agreement and notwithstanding anything else
contained in this Agreement each such Existing Cash Advance, Existing
Performance Bond and Existing Treasury Transaction shall, as from such
date, be deemed to be governed by the terms of this Agreement. For the
avoidance of doubt, subject to Clause 10.4, any such existing Advances
which are Prepaid or Repaid, may not be reborrowed by the Borrower.
6. INTEREST AND FUNDING PERIODS
6.1 FUNDING PERIODS
Funding Periods in respect of Advances shall comply with the following:
(a) (PERIOD): subject to the other provisions of this Clause 6 and
Clauses 7.2 and 8, Funding Periods shall be for a period of 3 Months
and shall end of 31 December, 31 March, 30 June or 30 September;
(b) (SAME MATURITY DATE): the Borrower must ensure that all Cash Advances
have the same Maturity Date;
(c) (WHERE NOT A BUSINESS DAY): should a Funding Period end on a day
which is not a Business Day, such Funding Period shall be extended to
the next Business Day in the same Month, or if not, the preceding
Business Day; and
(d) (NOT EXPIRE AFTER TERMINATION DATE): no Funding Period shall expire
on a day which is later than the Termination Date.
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6.2 CALCULATION OF THE US$ RATE
On each Accommodation Date of a Cash Advance the Bank shall:
(a) (DETERMINE RATE): determine the US$ Rate on the relevant Drawdown
Date and, if applicable the Fixed Rate;
(b) (GIVE NOTICE): give a notice to the Borrower which notice shall
state:
(i) the amount of Cash Advance the subject of such Drawdown or
renewal of a Drawdown; and
(ii) the US$ Rate on the Drawdown Date and, if applicable the
Fixed Rate.
6.3 VARIABLE INTEREST RATE
Subject to Clause 7, the Borrower shall pay interest on the Loan in US
Dollars in accordance with the following provisions:
(a) (RATE OF INTEREST): interest shall be payable in respect of the Loan
at a rate percentum per annum equal to the aggregate of:
(i) the US$ Rate; and
(ii) the Margin,
("RATE");
(b) (BANK TO CALCULATE RATE): on the first day of each Funding Period the
Bank shall calculate the amount of interest payable in respect of
that Funding Period and shall notify the Borrower of such amount and
any determination of the US$ Rate by the Bank under this Agreement
shall, in the absence of manifest error, be conclusive and binding on
the Borrower;
(c) (METHOD OF CALCULATION): interest shall be calculated on the Loan at
the Rate per annum for the relevant Funding Period on a daily basis
of the actual days elapsed during a year of 360 days; and
(d) (MANNER OF PAYMENT): the Borrower shall pay such accrued interest in
arrears on the last day of the relevant Funding Period.
7. FIXED RATE FACILITY
7.1 BORROWER MAY REQUEST FIXED RATE ADVANCE
The provisions of this Clause 7 set out the manner in which the Borrower
may request the Bank to make Cash Advances at a Fixed Rate.
7.2 FIXED RATE REQUEST
(a) (ISSUE REQUEST): The Borrower may issue a Fixed Rate Request which
shall be given to the Bank not less than 3 Business Days before the
relevant
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Accommodation Date and shall specify:
(i) the Accommodation Date;
(ii) the amount of the Cash Advance;
(iii) the Funding Period.
(b) (BANK QUOTE): Following the receipt of a Fixed Rate Request, the Bank
will quote to the Borrower the Fixed Rate which will apply to the
relevant Cash Advance and the Borrower shall promptly notify the Bank
whether it accepts such quotation.
(c) (NOTIFICATION AND ACCEPTANCE): Notification and acceptance under this
Clause 7.2 may be made by telephone. The Borrower will immediately
confirm telephone acceptance of the quotation by facsimile to the
Bank.
7.3 FIXED RATE CONFIRMATION
(a) (GIVE CONFIRMATION): If the Borrower accepts a Fixed Rate (in this
clause "THE RELEVANT FIXED RATE") in accordance with Clause 7.2, the
Bank shall promptly give the Borrower a Fixed Rate Confirmation
specifying:
(i) the relevant Fixed Rate;
(ii) the amount of the relevant Cash Advance;
(iii) the relevant Accommodation Date; and
(iv) the Funding Period.
(b) (CONFIRMATION CONCLUSIVE EVIDENCE): The Fixed Rate Confirmation
issued by the Bank, except in the case of manifest error, shall for
all purposes be conclusive evidence of the matters stated in such
confirmation.
(c) (BORROWER GIVE DRAWDOWN NOTICE): Without limiting the generality of
Clause 7.3, upon receipt of a Fixed Rate Confirmation the Borrower
shall give the Bank a Drawdown Notice completed in accordance with
the Fixed Rate Confirmation and otherwise in accordance with this
Agreement.
7.4 INTEREST
The Borrower shall pay interest in respect of any Cash Advance pursuant to
this Clause 7 calculated at the Fixed Rate. Such interest shall be
calculated on a daily basis from the actual days elapsed during a year of
360 days and shall be paid Quarterly in arrears in US Dollars the first of
such payments to be made on the first Repayment Date which falls after the
Accommodation Date of such Cash Advance made subject to the Fixed Rate.
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8. PERFORMANCE BOND FACILITY
8.1 NOTICE
In addition to any other information required to be included in a Drawdown
Notice, each Drawdown Notice relating to a Drawing under the Performance
Bond Facility shall specify:
(a) (NATURE OF PERFORMANCE BOND): whether the Borrower requires a
Performance Bond;
(b) (BENEFICIARY): the name and address of the Beneficiary;
(c) (LIABILITIES ASSURED): reasonable details of the liabilities which
are to be assured by the Performance Bond;
(d) (DRAWDOWN DATE): the Drawdown Date, being a Business Day not earlier
than 7 days (or such lesser period as may be agreed by the Bank)
after the Drawdown Notice is given to the Bank;
(e) (FACE VALUE): the Face Value in US Dollars and the Equivalent Amount
in Dollars; and
(f) (OTHER INFORMATION): such other information as may be necessary to
enable the Bank to prepare and issue the Performance Bond.
8.2 OBLIGATION TO ISSUE
Subject to this Agreement, on the proposed Drawdown Date for any
Performance Bond, the Bank will issue in the form approved, the Performance
Bond specified in the relevant Drawdown Notice by delivering such
instrument to or to the order of the Beneficiary.
8.3 COUNTER-INDEMNITY FROM BORROWER
The Borrower:
(a) (BORROWER TO INDEMNIFY): will indemnify and hold harmless and keep
the Bank indemnified and held harmless from and against all
liabilities, losses, damages, claims, costs, demands and actions
which the Bank may suffer or incur in connection with such
Performance Bond and any payment made pursuant to it, except to the
extent that any such liability, loss, damage, claim, cost, demand or
action results from the gross negligence of the Bank; and
(b) (AUTHORITY TO PAY UNDER PERFORMANCE BOND): irrevocably directs the
Bank to pay without further confirmation or investigation from or by
it any demand appearing or purporting to be validly made pursuant to
any Performance Bond. Where any Performance Bond calls for
certificates or other documents, the Bank may assume, without
investigation, that the certificates or documents tendered are duly
signed by the person by whom they appear to be signed and are genuine
and correct. Without prejudice to any other rights of the Borrower,
the Borrower agrees to reimburse the Bank immediately on written
demand for
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any amounts paid by the Bank pursuant to any such demand, in the
currency paid by the Bank.
8.4 OBLIGATION TO REIMBURSE AND PAY INTEREST
The Borrower agrees to pay to the Bank on demand all moneys demanded from
or paid by the Bank with respect to any Performance Bond together with
interest on those moneys, which interest will accrue at the rate specified
in Clause 14.4 and be payable in the manner provided in that clause and
calculated from the date payment is made by the Bank under any such
Performance Bond to the date the Bank is paid the relevant amount in full.
8.5 OBLIGATIONS UNCONDITIONAL
The Borrower's obligations under this Clause 8 are absolute and
unconditional. They will not be subject to any reduction, termination or
other impairment by any set-off, deduction, counterclaim, agreement,
defence, suspension, deferment or otherwise and the Borrower will be not
released, relieved or discharged from any obligations under this Agreement,
nor shall such obligations be prejudiced or affected, for any reason
including without limitation:
(a) any falsity, inaccuracy or forgery of or in any demand, certificate
or declaration or other document which on its face purports to be
signed or authorised pursuant to a Performance Bond;
(b) any failure by the Beneficiary of a Performance Bond or the Bank to
enquire whether any cable, telex or facsimile has been inaccurately
transmitted or received from any cause or has been sent by an
unauthorised person;
(c) the impossibility or illegality of performance of or any invalidity
of or affecting any Performance Bond or any other agreement;
(d) any act of any Government Agency or arbitrator, including any Law,
judgment, decree or order at any time in effect in any jurisdiction
affecting any of the terms of any Transaction Document or any other
document delivered pursuant to any Transaction Document; or
(e) any time, waiver or other indulgence granted by the Bank.
9. TREASURY FACILITY
If the Borrower proposes that the Bank enter into a treasury transaction in
relation to any required interest rate or currency hedging and if:
(a) the Bank in its discretion agrees to enter into such proposed
treasury transaction; and
(b) the Bank and the Borrower reach agreement as to the terms and
conditions of the transaction and the Borrower executes all documents
required by the Bank in relation to such transaction,
then the Bank and the Borrower will enter into such transaction.
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10. REPAYMENT
10.1 PAYMENT ON MATURITY DATE
The Borrower shall repay each Advance on its relevant Maturity Date.
10.2 REPAYMENT INSTALMENTS
The Borrower will Repay the Loan by Quarterly instalments on each Repayment
Date by repayment instalments which shall be the greater of:
(a) 70% of Available Cash Flow for the Quarter ending on the relevant
Repayment Date; and
(b) US$425,000.
10.3 TERMINATION DATE
Notwithstanding anything else contained in this Agreement, on the
Termination Date the Borrower shall pay to the Bank the amount of the Loan
remaining outstanding on that date together with all other amounts then
owing under this Agreement whether on account of principal, interest, fees,
costs, losses, expenses, indemnities or otherwise and shall Retire all
outstanding Performance Bonds and Treasury Transactions.
10.4 INCREASE OF COMMITMENT AND EXTENSION OF AVAILABILITY PERIOD
(a) The Bank acknowledges that further economically recoverable reserves
may be proved by the Joint Venturers before the Termination Date and,
if such reserves are so proved and the Borrower so requests, the Bank
will, having regard to the extent of such reserves, consider in good
faith any proposal by the Borrower to increase the Available
Commitment under this Agreement, extend the Availability Period and
permit Drawings of amounts Repaid.
(b) The Borrower acknowledges that any Drawings pursuant to paragraph (a)
above, will be subject to the Bank's usual credit approval procedures
and if approved will be on terms and conditions reasonably acceptable
to the Bank which will include the payment of a re-drawing fee to the
Bank.
11. PREPAYMENTS
11.1 Unless otherwise expressly provided in this Agreement, the Borrower shall
not Prepay any part of the Loan other than in accordance with the following
provisions:
(a) if the Borrower desires to Prepay the Loan or part thereof, it will
Repay the amount the subject of the Prepayment to the Bank together
with any interest, fees or other amount due or payable with respect
to such Prepayment under this Agreement;
(b) an Advance shall only be Prepaid on a Business Day;
(c) the Borrower shall give to the Bank not less than 30 days prior
written notice of the relevant Prepayment which notice, once given,
shall be irrevocable and
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binding on the Borrower;
(d) the Borrower shall pay the Bank all Advances nominated to be Prepaid
on the date specified in the relevant notice to Prepay together with
all interest due up to the date such Prepayment is to be made and
other moneys due and payable with respect to such Prepayment;
(e) unless the Bank otherwise agrees a Prepayment shall be made in an
amount of not less than US$1,000,000 and in integral multiples of
US$500,000;
(f) Prepayments shall be applied against Repayments due under Clause 10
in inverse order of maturity; and
(g) upon the making of a Prepayment the Cash Facility Limit shall be
reduced by the amount of such Prepayment.
11.2 UNWINDING COSTS
Without limiting anything else contained or implied in this Agreement, the
Borrower shall indemnify and keep indemnified the Bank against all costs
and expenses suffered or incurred by the Bank as a result of the Borrower
exercising its right to Prepay Advances, such costs and expenses to include
(without limitation) all losses, costs and expenses which the Bank may
incur to any person in relation to providing such Advances to the Borrower.
If as a result of the Borrower exercising its right to Prepay Advances a
benefit accrues to the Bank, such benefit shall be paid to the Borrower by
the Bank.
11.3 RISK MANAGEMENT AGREEMENTS
The Borrower acknowledges that the Bank has entered into Risk Management
Agreements for the purposes of this Agreement and will be funding the
Facilities by borrowing moneys from the market; accordingly, if any amount
is Prepaid by the Borrower under the Facilities or prior to its Maturity
Date for any reason, the Borrower may be obliged to close out Risk
Management Agreements, other than put option arrangements to ensure that it
does not breach the provisions of Clause 19.4(u) and the Borrower covenants
that it shall pay to the Bank on demand such amounts as the Bank determines
are necessary to compensate the Bank for any losses, costs or expenses
which the Bank may incur by reason of the closing out of any Risk
Management Agreement or the cancellation or early Repayment of any such
Advance as a result of such Prepayment.
11.4 BENEFIT
The Bank acknowledges that if any benefit accrues to it as a result of any
Risk Management Agreement being closed out, that benefit shall be paid to
the Borrower.
12. CANCELLATION
The Borrower may cancel any unutilised portion of the Facilities without
penalty at any time prior to the expiration of the Availability Period (in
a minimum of US$1,000,000 and in integral multiples of US$500,000) on
giving not less than 30 days written notice to the Bank. Any cancellation
under this Clause 12 shall effect a corresponding
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reduction of the Cash Facility Limit, Performance Bond Facility Limit or
Treasury Facility Limit (as applicable).
13. FEES
In addition to any other fees payable under this Agreement, the Borrower
shall pay the following fees to the Bank:
(a) (ESTABLISHMENT FEE): a non-refundable establishment fee of $40,000,
receipt of which is acknowledged by the Bank; and
(b) (MANAGEMENT FEE): an annual management fee of $20,000 payable on the
first anniversary of the date of this Agreement and yearly
thereafter.
14. PAYMENTS AND DELIVERIES
14.1 PAYMENTS
Payments to be made to the Bank shall be made not later than 2:00pm in the
place of payment in Same Day Funds and:
(a) (DOLLARS): in the case of payments denominated in Dollars, to the
Bank's Financing Office for moneys payable in Dollars; and
(b) (US DOLLARS): in the case of payments denominated in US Dollars, to
the Bank's Financing Office for Drawdowns.
14.2 MANNER OF PAYMENT
Unless otherwise expressly provided in this Agreement, or as agreed between
the Borrower and the Bank, payments to be made by the Bank to the Borrower
under this Agreement shall be made not later than 2:00pm (Sydney time) on
the due date to the Joint Venture Accounts, the A$ Proceeds Account or the
US$ Proceeds Account nominated by the Borrower prior to the relevant
payment date.
14.3 SET-OFF
Notwithstanding any provision of this Agreement to the contrary, if, on any
day, one party is obliged to pay an amount to the other party under this
Agreement and that other party is obliged to pay an amount to the first
mentioned party under this Agreement, such obligations shall be
automatically satisfied and discharged and, if the amount one party would
otherwise have been obliged to pay exceeds the amount the other party would
otherwise have been obliged to pay, such obligations shall be replaced by
an obligation on the part of the party by whom the larger amount would
otherwise have been payable to pay to the other party the excess of the
larger amount over the smaller amount.
14.4 OVERDUE AND OTHER AMOUNTS
If the Borrower shall fail to make payment when due of any sum of money
payable to the Bank under this Agreement (whether at its stated maturity,
by acceleration or otherwise) then, to the fullest extent permitted by Law,
the Borrower shall pay interest
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to the Bank on such unpaid sum for each day during the period from and
including its due date to but excluding the day such amount is received in
full by the Bank (after as well as before judgment) at the rate per cent
per annum which is the sum of:
(a) (RATE): in the case of moneys outstanding in Dollars, the A$ Rate and
in the case of all moneys payable in US Dollars, the US$ Rate (each
such rate to be recalculated at the end of each Quarter); and
(b) (MARGIN): the Margin plus 2%.
Such interest shall be calculated on the basis of a year of 365 days in
relation to amounts due in Dollars and 360 days in relation to amounts due
in US Dollars, accrue daily and be payable from time to time on demand by
the Bank.
15. TAXES
15.1 NO DEDUCTION FOR TAXES AND NO SET-OFF OR COUNTERCLAIM
All payments to be made by the Borrower to the Bank under any Transaction
Document, whether of principal, interest or other amounts due thereunder,
shall be free of any set-off or counterclaim and without deduction or
withholding for any present or future Taxes unless the Borrower is
compelled by Law to deduct or withhold an amount.
15.2 PAYMENT NET OF TAXES
If:
(a) the Borrower is legally compelled to make any deduction or
withholding on account of Taxes;
(b) the Bank is legally compelled to make any deduction or withholding on
account of Taxes from any payment made to it;
(c) the Bank does not receive a payment to which it is entitled under a
Transaction Document free and clear of Taxes;
(d) the Bank is obliged to pay any Taxes (other than Excluded Taxes) in
respect of a payment made or to be made by the Borrower under a
Transaction Document,
then:
(e) where any of the above apply, the Borrower shall on demand by the
Bank pay to the Bank such additional amounts as may be necessary to
ensure that the Bank receives when due a net amount (after payment of
any Taxes, other than Excluded Taxes) equal to the full amount which
it would have been entitled to receive and retain had the deduction
or withholding not been made or had the payment been free and clear
of Taxes or had the Bank not been obliged to pay any Taxes in respect
of the payment;
(f) where paragraph (e) applies in relation to the Bank, the Borrower
shall on demand by the Bank pay to the Bank an amount equal to the
amount required
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to be paid, or paid, in respect of or as a result of any deduction or
withholding or payment of Taxes to which the paragraph applies; and
(g) in addition to paragraph (e), where paragraph (a) applies, the
Borrower shall:
(i) pay to the appropriate Government Agency any amount deducted
or withheld in respect of Taxes; and
(ii) within 14 Business Days after making the deduction or
withholding provide to the Bank evidence satisfactory to it
of that payment having been made.
15.3 SECTION 261
The Borrower acknowledges that section 261 of the Income Tax Assessment Act
1936 (Commonwealth) may render void its Obligation to make a payment under
Clause 15.2. However the Borrower warrants to the Bank that even if this
is the case, and it would not otherwise be obliged to make the payment, it
will make the payment contemplated by Clause 15.2 and that it is in its
interest to do so. The Borrower acknowledges that the Bank has relied on
the warranty in this Clause 15.3 in entering into the Transaction Documents
and any breach of that warranty is to the detriment of the Bank. However,
failure by the Borrower to make a payment under this Clause 15.3 does not
constitute an Event of Default.
15.4 CURRENCY INDEMNITY
No payment to the Bank under this Agreement or any other Transaction
Document pursuant to any judgment or order of any court or otherwise shall
operate to discharge the obligations of any party in respect of which it
was made, unless and until payment in full shall have been received in such
currency as the case may require ("AGREED CURRENCY"). To the extent that
the amount of any such payment shall, on actual conversion into the Agreed
Currency, fall short of the amount of the relevant obligation expressed in
the Agreed Currency, the Bank shall have a further and separate cause of
action against any party for the recovery of such amount as shall, after
conversion to the Agreed Currency, be equal to the amount of the shortfall.
16. YIELD PROTECTION
16.1 MARKET DISTURBANCE - SUSPENSION NOTICE
The Bank may promptly give notice ("SUSPENSION NOTICE") containing a
summary of the reasons for the giving of such a notice, to the Borrower
whenever, prior to the commencement of a Funding Period for any Advance:
(a) the Bank determines in good faith that:
(i) by reason solely of circumstances disrupting the relevant
market, adequate and fair means do not exist for
ascertaining the US$ Rate applicable to such Advance during
such Funding Period; or
(ii) deposits in the relevant market are not available in the
ordinary course of business to the Bank to fund the Advance
for a term equal to such
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Funding Period; or
(b) by reason of any change in or in the application of any applicable
Law or of any change in national or international financial,
political or economic conditions, exchange rates or exchange
controls, it is in its reasonable opinion impracticable for it to
fund or continue to fund such Advance during such Funding Period by
deposits obtained in the relevant market,
PROVIDED that the protection of this Clause 16 shall extend to voluntary
compliance by the Bank with restraints, guidelines, or policies not having
the force of Law but generally adhered to by responsible bankers or
financial institutions similarly situated.
16.2 MARKET DISTURBANCE PRIOR TO UTILISATION
Upon the issuance of a Suspension Notice prior to the initial Funding
Period, then:
(a) the Bank in good faith shall endeavour to establish a reasonable
alternative basis for the provision of such Advance and shall consult
with the Borrower in relation to the same;
(b) pending such consultation the Bank shall not be obliged to provide
such Advance;
(c) if such alternative basis is agreed, it shall apply in accordance
with its terms; and
(d) if an alternative basis is not agreed within 30 days of such
Suspension Notice, the obligation of the Bank to provide such Advance
shall cease.
16.3 MARKET DISTURBANCE RELATING TO OTHER UTILISATIONS
(a) Upon the issuance of a Suspension Notice prior to any subsequent
Funding Period the Bank shall:
(i) maintain the Advance; and
(ii) in consultation with the Borrower provide within 30 days a
reasonable alternative basis ("SUBSTITUTE BASIS") for
maintaining such Advance,
and shall notify the Borrower of the Substitute Basis.
(b) Without limitation, a Substitute Basis may be retroactive to the
beginning of the relevant Funding Period and may include an
alternative method of fixing the US$ Rate (which shall reflect the
cost to the Bank of funding from other sources plus the Margin).
(c) The Borrower shall pay interest, fees and other amounts in accordance
with the Substitute Basis, which shall continue to apply to that
Advance until it expires or is revoked.
(d) If the Borrower determines that it does not wish the Advance or the
relevant part to which the Substitute Basis applies to continue it
shall forthwith notify
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the Bank and, within 30 days of such notification (during which
time the Substitute Basis shall continue to apply), it shall Repay
to the Bank together with interest and fees (in accordance with the
Substitute Basis) and all other amounts payable to the Bank under
this Agreement, and thereupon the Commitment of the Bank shall be
cancelled.
(e) During the period when any Substitute Basis is in force, the Bank
shall consult with the Borrower periodically, but at least once in
each Month, and determine whether any of the circumstances referred
to in Clause 16.1 still apply.
(f) If it determines those circumstances do not still apply the Bank
shall notify the Borrower revoking the Substitute Basis with effect
from a date specified by the Bank.
17. CHANGES IN LAW
17.1 INCREASED COSTS
Whenever the Bank in good faith determines that it is affected by any
change in, any making of, or any change in the interpretation or application
by any Government Agency of, any Law, official directive or request
(including, without limitation, with respect to Taxation (other than an
Excluded Tax) or reserve, liquidity, capital adequacy, special deposit or
similar requirement) and as a result:
(a) the effective cost to the Bank of making, issuing, funding or
maintaining any Advance outstanding or to be provided is in any way
increased; or
(b) any amount paid or payable to or received or receivable by the Bank
from the Borrower or the effective return to the Bank from the
Borrower under this Agreement is in any way reduced,
(including, without limitation, by reason of the Bank being required to
make a payment or foregoing or earning reduced interest or other return on
any amount calculated by reference in any way to the amount of any Advance
or any other amount paid or payable or received or receivable under this
Agreement) then:
(c) the Bank shall promptly notify the Borrower giving details of the
basis upon which the notification is given; and
(d) on demand from time to time the Borrower shall pay for the account of
the Bank the amount certified by an Authorised Officer of the Bank to
compensate it for the increased cost or reduction described in
paragraph (a) or (b) above.
This Clause 17.1 shall apply with respect to official directives or
requests which have any of the results described above, whether or not
those directives or requests have the force of Law, but if not having the
force of Law, the observance of which is in accordance with the practice of
responsible bankers or financial institutions.
17.2 MINIMISATION
Without derogating from the provisions of Clause 17.5, if the Bank has
acted in good faith it shall not be a defence to a claim under Clause 17.1
that any cost, reduction or
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payment referred to in this Clause 17 could have been avoided. At the
request of the Borrower, the Bank shall negotiate in good faith with the
Borrower with a view to finding a means by which any such cost, reduction
or payment or the effect of any unlawfulness or impracticability referred
to in Clause 17.1 can be minimised.
17.3 ILLEGALITY
Notwithstanding anything else contained in this Agreement, if the making
of, or a change in, or in the interpretation or application by any
Government Agency of any Law makes it unlawful or impracticable for the
Bank to make, issue, fund or maintain any Advance or any Commitment, or in
any other material respect to give effect to any of its obligations under
this Agreement then:
(a) the Bank may, by notice to the Borrower, terminate its Commitment;
(b) notwithstanding Clause 11.0(a)()A.0)a)1 (but subject to Clauses 11.1,
11.2 and 11.3), the Borrower may by notice to the Bank immediately
cancel that Commitment and Repay to the Bank the Loan, together with
all interest, fees and other Secured Moneys payable to the Bank under
this Agreement; and
(c) if required by the Law, or if necessary to prevent or remedy a breach
of the Law, the Borrower will Repay all the Loan together with all
interest, fees and other Secured Moneys payable to the Bank under
this Agreement.
Repayment under paragraph (c) above shall be made forthwith, but if in the
reasonable opinion of the Bank acting on the advice of its legal advisers
delay in Repayment is permitted by, or will not cause a breach of the Law
it shall be made on the latest permitted day.
17.4 REPAYMENT OF INCREASED COSTS
Notwithstanding Clause 11.0(a)()A.0)a)1 (but subject to Clauses 11.1, 11.2
and 11.3), if the Borrower receives a demand from the Bank under Clause
17.1(d) the Borrower may at any time within the period of 60 days after
such demand notify the Bank that it wishes, on a specified date not less
than 5 days nor more than 15 days after its notification, to Repay the Loan
to the Bank together with interest and fees and all other Secured Moneys
payable by it under this Agreement. Any such notice shall be irrevocable
and the Borrower shall Repay in accordance with such notice. On the date
for such Repayment the Commitment of the Bank shall be cancelled.
17.5 MITIGATION OF INCREASED COSTS OR ADVERSE CIRCUMSTANCES
If, in respect of the Bank, circumstances arise which would or would upon
the giving of notice or the making of a demand result in:
(a) the termination or cancellation of its Commitment pursuant to Clause
17.3;
(b) a Repayment under Clause 17.4;
(c) a Payment of an amount to be made pursuant to Clause 17.1; or
(d) a claim for indemnification,
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then, without in any way limiting, reducing or otherwise qualifying the
obligations of the Borrower under any such clause, the Bank shall,
promptly after becoming aware of such circumstances and the possible
results thereof referred to above, notify the Borrower, take such
reasonable steps as may be reasonably open to it to mitigate the effects
of such circumstances including the transfer of its Financing Office to
another jurisdiction or the transfer of its rights and obligations under
this Agreement to another financial institution acceptable to the
Borrower and willing to participate in the Facilities provided that the
Bank shall be under no obligation to take any such steps, if, in the bona
fide opinion of the Bank, such steps would or might result in a Material
Adverse Event.
18. REPRESENTATIONS AND WARRANTIES
18.1 The Borrower represents and warrants to the Bank and covenants with the
Bank as follows:
(a) (STATUS): it is duly incorporated and validly existing and has all
requisite power to own its property and assets and it is duly
qualified to carry on business under the Laws in each place where
it carries on business;
(b) (POWERS AND AUTHORITY):
(i) it has full corporate power and authority to execute,
deliver and perform each Transaction Document to which it is
a party and to observe the terms and conditions of each such
Transaction Document;
(ii) each of the Transaction Documents to which it is a party has
been duly authorised, executed and delivered by it or on its
behalf and constitutes legal, valid and binding obligations
enforceable against it in accordance with the terms thereof
subject to any Law from time to time affecting generally the
enforcement of creditor's rights and the discretionary
nature of certain equitable remedies;
(iii) so far as it is aware no Event of Default or Potential Event
of Default has occurred (and is continuing), or would result
from the execution, delivery or performance of each
Transaction Document to which it is a party;
(iv) the execution, delivery and performance by it of each
Transaction Document to which it is a party does not, and
will not, violate, in any respect any provision of:
A. any Law, Authorisation, order or decree of any
Government Agency;
B. its Memorandum or Articles of Association; or
C. any Security Interest, deed, agreement or other
undertaking or instrument, to which it is a party or
which is binding upon it or any of its assets and does
not, and will not, result in the creation or imposition
of any Security Interest, or restriction
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of any nature, on any of its assets pursuant to the
provisions of, or accelerate the date of payment of,
any obligation existing under any Security Interest,
deed, agreement or other undertaking or instrument;
(c) (ACCOUNTS):
(i) it has furnished to the Bank copies of its most recently
prepared audited consolidated balance sheet and the audited
consolidated profit and loss account for the year ended on
the date of that balance sheet and such balance sheet and
profit and loss account have been prepared in accordance
with accounting standards generally accepted in Australia
(or, in its place of incorporation, in the case of the
Security Provider incorporated outside Australia) and
consistently applied and give a true and fair view of its
profit or loss and state of affairs and its Subsidiaries (if
applicable);
(ii) since the date of the most recently prepared audited balance
sheet referred to above, there has been no change in its
financial condition, or results of operations, which is
likely to cause a Material Adverse Event. It has no
obligation (contingent or otherwise), liabilities for Taxes,
or other outstanding financial obligations, such that its
ability to perform its obligations under any Transaction
Document to which it is a party is likely to be materially
impaired, except as disclosed in such balance sheet and
profit and loss account or otherwise disclosed in writing to
the Bank prior to the date of this Agreement;
(iii) as at the date of each audited balance sheet referred to in
sub-paragraph (c)(i) above, it has good and marketable title
to all the assets of which ownership is reflected in such
audited balance sheet except for assets that have been
disposed of as permitted by this Agreement and except to the
extent disclosed to auditors at the time of preparation of
such balance sheet and all such assets are free and clear of
any Security Interest, except as reflected in such balance
sheet or as otherwise disclosed in writing to the Bank prior
to the date of this Agreement;
(d) (NO LITIGATION): other than notified to the Bank prior to the date
of this Agreement there is no litigation, proceeding or dispute
pending or, to its knowledge, threatened against it, or any other
person, the determination of which is likely to cause a Material
Adverse Event and it is not in breach of any Law, or of any order
of a court or competent authority;
(e) (NO DEFAULT UNDER SECURITY INTEREST): it is not in default with
respect to a liability or series of liabilities exceeding $200,000
under any Security Interest, deed, agreement, undertaking or
instrument to which it is a party or by which it or its assets may
be bound, and no event has occurred which, with the giving of
notice, the passing of time or the satisfaction of some other
condition, would constitute such a default under any such Security
Interest, deed, agreement, undertaking or instrument;
(f) (COMPLIANCE WITH APPLICABLE LAWS): it is conducting its business
and operations in material compliance with all Laws and is in
material compliance
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with all applicable guidelines and policy statements (whether or
not having the force of Law), non-compliance with which is
likely to cause a Material Adverse Event;
(g) (FILINGS): it has filed all corporate notices and returns and
effected all registrations with the Australian Securities
Commission or similar office in each of its Relevant
Jurisdictions, the failure to file or register which may cause a
Material Adverse Event, and all such filings are current, complete
and accurate;
(h) (SECURITIES): the obligations of the Borrower under this Agreement
are secured by the Securities and rank first in priority of
payment over all of the Security Provider's other secured,
unsecured and unsubordinated obligations except for the Permitted
Security Interests;
(i) (AUTHORISATIONS):
(i) all Authorisations, if any, from any Government Agency now
obtainable and as and when required in order to operate the
Projects and in connection with the payment of moneys and
with the execution, delivery, validity or enforceability of
the Transaction Documents have been obtained or effected or,
if not now required will be obtained or effected as and when
so required, are in full force and effect to the extent now
obtained or effected and true copies thereof have been
delivered or will be delivered as and when obtained or
effected to the Bank;
(ii) in the case of Authorisations required or advisable for
performance or enforcement of the Project Documents or in
connection with the Projects, Authorisations of a routine
nature or those which are not presently required but which
are desirable, it has no reason to believe they will not be
obtained at or prior to the time that they are required to
be obtained.
(iii) all fees which are due and payable in connection with any
such Authorisations have been paid; and
(iv) there has been no default in the performance of any of the
terms or conditions of any such Authorisations which would
allow withdrawal or cancellation of an Authorisation or
allow any person to prevent or enjoin the activity permitted
by an Authorisation;
(j) (PROJECT INFORMATION): other than to the extent that variations
have been notified in writing to the Bank prior to the date of
this Agreement:
(i) the copies of the documents establishing the Trust and the
Project Documents delivered to the Bank are true, correct
and complete copies of such documents and constitute or
evidence all material relevant agreements and understandings
in respect of the Projects to which it is a party or of
which it is aware;
(ii) to the best of its knowledge and belief all information
contained in answers to requisitions, the Project Documents,
and in any
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memorandum or report given to the Bank by it or on its
behalf in connection with the Projects, the Borrower
or the Transaction Documents will be true and correct as at
the date of such documents, memorandum or report and will
not at such date, by the omission of material or otherwise,
be misleading;
(iii) to the best of its knowledge and belief all projections
contained in the Project Documents have been prepared with
due care and skill and, where appropriate, by independent
experts to whom the Project Manager or Joint Venturers have
supplied all relevant and material information; and
(iv) to the best of its knowledge and belief:
A. all factual information contained in the Development
Plan(s), Approved Budget and Financial Model is true in
all material respects as at the date of this Agreement
and is not, by the omission of information or
otherwise, misleading; and
B. all estimates or opinions comprised in the Development
Plan(s), Approved Budget and Financial Model are bona
fide and reasonably arrived at, the arithmetic of all
calculations contained therein is accurate in all
material respects and the assumptions upon which such
calculations are based are and remain as at the date of
this Agreement reasonable;
(k) (PROJECT WARRANTIES): to the best of its knowledge and belief:
(i) the Project Manager and each Joint Venturer are in
compliance with all material covenants, terms and conditions
in respect of each Project Tenement registered in its name
or owned by it and no event has occurred or condition exists
or, with the giving of notice or the passing of time, or
both, would exist, which would permit the cancellation,
termination, forfeiture or suspension of any such tenement;
(ii) there are no actions, suits, or proceedings at Law or in
equity by or before any Government Agency or arbitrator
pending or, to its knowledge, threatened which, if
successful, would permit or result in the cancellation,
suspension, forfeiture or termination of any of the Project
Tenements;
(iii) the Joint Venturers are the legal and beneficial owners of
the Projects and the Joint Venture Assets and no other
person has any interest, estate or title to the Projects or
Joint Venture Assets; and
(iv) the Joint Venturers are not directly or indirectly obliged
under any agreement or other arrangement for advance sale,
to deliver any Copper End Products at some future time other
than pursuant to Acceptable Sales Contracts;
(l) (JOINT VENTURE INTERESTS): the Borrower has a 40% interest as a
tenant-in-common in the Girilambone Mining Project and a 50%
interest as a tenant-in-
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common in the Girilambone North Project;
(m) (ENVIRONMENTAL MATTERS):
(i) the Borrower is not aware of any outstanding requirements of
any Government Agency relating to the Environmental impact
of the Mine, the Plant or other matter relating to the
Projects.
(ii) the Borrower has not received, nor to its knowledge has the
Project Manager or the Other Participant received, any
adverse information with respect to compliance with all
Environmental Laws and any Authorisations required pursuant
to any Environmental Law;
(n) (NO MATERIAL ADVERSE EVENT): no change in the economic viability,
business, construction or operation of the Projects has occurred
or to the Borrower's knowledge is likely to occur which would
result in a Material Adverse Event occurring;
(o) (ROYALTIES): except for any resources rent Tax and royalties,
payable to any Government Agency the Joint Venturers are under no
obligation to pay any royalty or any other moneys based on the
quantity or price of Products (whether in their original state or
otherwise).
(p) (TAXATION): it has complied in all material respects with all
Taxation Laws in all Relevant Jurisdictions, has paid all Taxes
properly payable by it prior to the date on which any penalties
attach thereto for non-payment and no claims have been asserted
against it with respect to Taxes which is likely to cause a
Material Adverse Event or for which no adequate provision has been
made in its accounts (to the extent its auditors require such
provision to be made).
18.2 INFORM BANK IF REPRESENTATIONS AND WARRANTIES NOT TRUE
The Borrower agrees that if at any time after the execution of this
Agreement it should become aware of any act, matter, thing or
circumstance by which any of the representations and warranties in Clause
18.0(a)()A.0)a)1 will not be true, it will notify the Bank forthwith.
18.3 BORROWER'S CONTINUING REPRESENTATIONS AND WARRANTIES
(a) The representations and warranties set forth in paragraphs (a),
(b), (c), (d), (e), (f), (h), (j), (k)(i), (k)(ii), (k)(iii), (l),
(m) and (n) of Clause 18.0(a)()A.0)a)1 shall survive the execution
of this Agreement and be continuing representations and warranties
which shall be deemed to be repeated and given by the Borrower on
each day of this Agreement.
(b) The representations and warranties set forth in Clause
18.0(a)()A.0)a)1, other than the paragraphs described in paragraph
(a) of this Clause 18.2, shall survive the execution of this
Agreement and be continuing representations and warranties which
shall be deemed to be repeated and given by the Borrower on each
Drawdown Date.
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19. UNDERTAKINGS
19.1 GOOD FAITH CONSIDERATION, ACCOUNTS AND INFORMATION TO BE PROVIDED TO THE
BANK
In addition to the other undertakings under this Agreement the Borrower
covenants with the Bank that, during the term of this Agreement:
(a) (GOOD FAITH CONSIDERATION): it will give good faith consideration
to any proposal or action which the Bank may request with respect
to any Transaction Document or the transactions contemplated under
this Agreement;
(b) (REPORTING REQUIREMENTS): it will each furnish or cause to be
furnished to the Bank:
(i) as soon as practicable (and in any event not later than 120
days after the close of each of its financial years) copies
of its audited consolidated Financial Statements and its
Subsidiaries prepared in accordance with generally accepted
accounting standards in Australia (or the place in which the
Subsidiary is incorporated, as applicable) consistently
applied and audited by a registered company auditor;
(ii) after the first half of each of its financial years) copies
of the unaudited consolidated Financial Statements referred
to in Clause 19.1(b)(i) in respect of such half-year;
(iii) as soon as practicable (and in any event not later than 30
days after the end of each Month) a project report ("PROJECT
REPORT") in relation to each Project, each of such reports
to be in a form and substance acceptable to the Bank;
(iv) as soon as practicable at the end of each Month (but no
later than 7 days after the end of the relevant Month) a
report detailing all hedging arrangements, Treasury
Transactions and Risk Management Agreements on foot or
entered into by the Borrower during that Month, such report
to be in a form and content acceptable to the Bank;
(v) as soon as practicable (and in any event not later than 120
days after the close of each of the Joint Venture's
financial year), copies of the audited Financial Statements
of each Joint Venture prepared in accordance with generally
accepted accounting standards in Australia for special
purpose accounts consistently applied and audited by a
registered company auditor;
(vi) as soon as practicable (and in any event not later than 60
days after the first half of each of each Joint Venture's
financial year) copies of the unaudited Financial Statements
referred to in Clause 19.1(b)(v) in respect of such
half-year;
(vii) as soon as practicable (and in any event not later than 31
January in each year for that year) the Development Plan for
the Projects;
(viii) as soon as practicable following the end of each Quarter
(the first
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Quarter to expire on 31 December 1996) a rolling cash flow
forecast in relation to each Project, each such forecast
to be in a form and content acceptable to the Bank;
(ix) as soon as practicable copies of all final reports prepared
by any technical consultant with respect to the Projects;
(x) as soon as practicable copies of all material notices,
advices (other than advices subject to legal professional
privilege), statements or other material information issued
or received by it in relation to each Project Document;
(xi) at the same time as they are despatched or published, all
material notices, reports, circulars, statements and other
information or documents despatched by the Borrower to its
shareholders, option holders and note holders (or any class
thereof), if listed, to the home stock exchange on which it
is listed, its creditors generally or published as public
notices; and
A. as soon as practicable copies of all notices served on
it by the home stock exchange on which it is listed;
(xii) as soon as practicable after any change of its Authorised
Officers, a new list of its Authorised Officers with copies
of the signatures of any new Authorised Officers, certified
by an Officer of the Borrower; and
(xiii) such additional financial or other information as the Bank
may from time to time reasonably require;
(c) (NOTICE OF CERTAIN EVENTS AND OTHER INFORMATION): it will
forthwith after becoming aware of same, give notice to the Bank
of:
(i) any Event of Default or Potential Event of Default;
(ii) any litigation affecting it, where the amount or possible
amount involved is greater than $500,000;
(iii) any proposal by any Government Agency to acquire its assets
or business or a substantial part thereof;
(iv) any notice, order or other document received from any
Government Agency threatening cancellation, termination,
forfeiture or suspension of any of the Project Tenements;
(v) any actions, suits or proceedings, at Law or in equity, by
or before any Government Agency or arbitrator pending or
threatened which, if successful, would permit or result in
the cancellation, suspension, forfeiture or termination of
any of the Project Tenements;
(vi) all deeds, agreements, instruments and understandings which
are material in the context of the Projects;
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(vii) any event that has occurred or condition which exists or,
with the giving of notice or the passing of time, or both,
would exist, which would permit the cancellation,
termination, forfeiture or suspension of any of the Project
Tenements;
(viii) any material amendment to, or departure from, the Approved
Budget affecting profits anticipated in the Financial Model
during the course of managing, developing and operating
the Projects;
(ix) any notice or other document received from any party to any
of the Project Documents threatening cancellation,
termination or suspension of such Project Documents or any
works to be carried out thereunder;
(x) any litigation, proceeding or dispute, pending or threatened
against the Borrower or any other person, the determination
of which is likely to cause a Material Adverse Event; and
(xi) any other matter or thing which has resulted or is likely to
result in a Material Adverse Event occurring,
and shall forthwith after receipt of same, give copies of such
notices, orders, agreements, documents and other instruments to
the Bank.
19.2 NEGATIVE PLEDGE COVENANTS - BORROWER
The Borrower covenants during the term of this Agreement that it will
not, without the prior consent of the Bank:
(a) (SECURITY INTERESTS): create, assume, incur or suffer to exist, or
permit to be created, assumed, incurred or suffered to exist, any
Security Interest over any of its assets, except for a Permitted
Security Interest;
(b) (LOANS): lend money or otherwise provide financial accommodation
to, subscribe for capital in or give any Guarantee, bond,
indemnity, undertaking or similar instrument or security or enter
into any similar transactions to secure the financial or other
obligations of any person or otherwise in any manner whatsoever
become the surety, or become liable, for the obligations or
indebtedness of any person, other than Guarantees given in favour
of any Government Agency in respect of any exploration or mining
permits granted pursuant to any mining legislation or indemnities
given to the provider of any such Guarantees PROVIDED THAT it
shall not be entitled to provide such financial accommodation or
provide any Guarantee described above if an Event of Default or
Potential Event of Default has occurred;
(c) (DISPOSAL OF ASSETS): in any manner dispose of, sell, assign,
lease or part with, or share in, the possession of or otherwise
deal with, directly or indirectly, any of its assets except for:
(i) assets which have a value (when taken alone or when
aggregated with any other such asset which has been in any
manner disposed of, sold, assigned, leased or otherwise
dealt with during the immediately preceding period of one
year) not exceeding $250,000 and such assets
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are disposed of, sold, assigned, leased or are otherwise
dealt with, in the ordinary course of its ordinary business;
(ii) the disposal of surplus assets which are not required in
connection with the Projects and such disposal is approved
of by the Bank;
(iii) any disposal of any asset (other than a Percentage Interest
or any property comprising Joint Venture Assets) to a
Related Corporation of the Borrower or a Trust Beneficiary;
or
(iv) any other disposal expressly permitted or required under any
Transaction Document.
(d) (INDEBTEDNESS): create, incur or suffer to exist any Indebtedness
except:
(i) the Loan and its other obligations under this Agreement and
any Risk Management Agreement;
(ii) usual trade and similar credit entered into or created in
relation to the Projects and being in the ordinary course of
its ordinary business up to a maximum of $1,200,000;
(iii) Indebtedness permitted pursuant to Clause 19.2(b); or
(iv) Indebtedness which is subordinated, provided the Bank is
satisfied with the terms and enforceability of the
subordination provisions;
(e) (CAPITAL EXPENDITURE): incur or outlay or agree to incur or outlay
any Indebtedness of a capital nature exceeding in aggregate more
than $500,000 in any one of its financial years except in
accordance with the projected capital expenditure envisaged by the
Approved Budget or otherwise approved by the Bank PROVIDED THAT
this covenant does not extend to Indebtedness with respect to
capital and exploration expenditures where such expenditure
relates to the Borrower's Participating Interests in each of the
Projects.
19.3 INSURANCE
(a) (GENERAL OBLIGATION): The Borrower undertakes to the Bank that it
will effect and maintain with substantial and reputable insurers
such insurance cover over and in respect of its or its
Subsidiaries assets in such manner and to such extent as is
reasonable and customary for a business enterprise engaged in the
same or similar business in the same or similar locality.
(b) (PROJECT INSURANCE): The Borrower undertakes to the Bank, that:
(i) The Borrower shall at its own cost and in the name of itself
and the Bank as loss payee for their respective rights and
interest insure or cause to be insured:
A. such of its interest in the Joint Venture Assets as is
of an insurable nature and keep it insured for full
replacement value against loss or damage by such risks
as are normally insured
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against by an operator in the Australian mining
industry for mines and mining facilities of
comparable type and scale to the Projects;
B. its Products and keep it insured for its estimated full
sale value for all insurable risks associated with
loss, theft, destruction or damage for whatever cause
in connection with its production, storage, transport
or sale;
C. against business interruption with respect to the
Borrower's Participating Interests for such amount as
the Bank may reasonably require from time to time; and
D. against such other risks as the Bank reasonably
determines should be taken out by a prudent operator in
the Australian mining industry of a mine and mining
facilities of a comparable type and scale as the
Projects.
(ii) (PUBLIC RISK INSURANCE): The Borrower will or will cause to
be effected and maintained public risk insurance with
respect to the Projects for an amount not less than
$15,000,000 or its equivalent or such other amount as may be
agreed between the Bank and the Borrower from time to time.
(iii) (POSITIVE INSURANCE OBLIGATIONS): The Borrower shall:
A. give to the Bank a certificate of currency for each
Insurance Policy together with a copy of each such
Insurance Policy or such other evidence of the terms of
that policy which is acceptable to the Bank;
B. duly and punctually pay or cause to be paid all
premiums, stamp duties charges and other expenses
necessary for effecting and keeping in full force and
effect each Insurance Policy;
C. from time to time, when required by the Bank, produce
to the Bank evidence, to the satisfaction of the Bank,
that each Insurance Policy is current and in full force
and effect and that all premiums due in respect thereof
have been paid; and
D. procure that each Insurance Policy is issued on such
terms and conditions as would be required by a prudent
operator in the Australian mining industry for mines
and mining facilities of substantially comparable type
and scale to the Projects.
(iv) (GENERAL INSURANCE OBLIGATIONS):
A. Except as otherwise notified by the Borrower and agreed
by the Bank, each Insurance Policy shall be primary
insurance and the insurers under such Insurance Policy
shall be liable without right of contribution from any
other coverage effected by the Bank or the Borrower
covering a loss which is also covered
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under such Insurance Policy.
B. If default is made by the Borrower in effecting or
maintaining any Insurance Policy or if any Insurance
Policy, due to any cause, becomes void or voidable, the
Bank, but without any obligation so to do and without
prejudice to the Bank's other rights and remedies under
the Transaction Documents, may effect and maintain that
Insurance Policy at the cost of the Borrower which
shall forthwith upon demand Repay to the Bank all
premiums and other money from time to time paid or
payable by the Bank in respect thereof.
C. To the extent it is reasonably possible to do so the
Borrower shall not at any time do or suffer to be done
to the Joint Venture Assets or upon the Project Land
any act, matter or thing whereby any material Insurance
Policy may be or become void or voidable.
D. The Borrower shall effect Insurance Policies and shall
ensure that the interests of the Bank as loss payee is
noted thereon and shall do all things necessary and
provide all documents, evidence and information
necessary to enable the Bank to collect or recover any
moneys due or to become due to the Bank in accordance
with this Clause 19.3 in respect of any Insurance
Policy and for that purpose will permit the Bank to sue
in its name.
E. The Borrower shall, or shall procure, that its insurers
or insurance brokers will, give the Bank such
information concerning the Insurance Policies or as to
any other matter which may be relevant to the Insurance
Policies as the Bank may reasonably request, including
without limitation, details of any variation made to
the terms of any Insurance Policy or any other
insurance in relation to the Joint Venture Assets or to
third party risks in relation thereto which is
effected.
F. The Borrower shall, as soon as possible in the
circumstances, notify the Bank of any material claim in
excess of $500,000 under any Insurance Policy or of the
occurrence of any event giving rise to any material
claim thereunder and the Bank, in conjunction with the
Borrower, shall make, enforce, settle or compromise any
and every such claim in respect of such insurance and
demand, sue for, recover, receive and give discharges
for all money payable by virtue thereof and if any such
insurance proceeds come into the hands of the Borrower
such moneys shall be applied in repairing, restoring,
reinstating or replacing the property in question or
mitigating the loss suffered by it pursuant to Clause
19.3(b)(iv)G.
G. If any Joint Venture Asset is damaged or destroyed
during the term of the Facilities, the insurance moneys
shall be applied as follows:
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1) if the Borrower produces evidence to the
reasonable satisfaction of the Bank that
application of such moneys towards repair or
reconstruction of the Joint Venture Assets will
not materially affect the Borrower's ability to
perform its obligations under each Transaction
Document to which it is a party, then the
insurance moneys may be applied towards the repair
or reconstruction of the Joint Venture Assets; or
2) if the Bank is not satisfied as required by Clause
19.3(b)(iv)G.1) then the insurance moneys shall be
used to Repay moneys which are then due and owing
and if money is not then due and owing, the
insurance moneys shall be deposited in an interest
bearing account with a financial institution
(including a Related Corporation of the Bank)
acceptable to the Bank. Upon the deposit being
made, the Borrower, as beneficial owner, shall
absolutely assign to the Bank the benefit of the
debt created by the deposit and any interest
payable from time to time in respect of it as
further security for the payment of moneys
pursuant to this Agreement, but if the Borrower
pays to the Bank all moneys in accordance with the
provisions of this Agreement, the Bank (at the
written request of the Borrower) shall reassign
the debt and interest to the Borrower.
H. Before entering into any Insurance Policy it shall
disclose to the proposed insurer all facts which are
material to the insurer's risk and shall thereafter
perform and observe its obligations under each
Insurance Policy.
I. All Insurance Policies shall:
1) provide that there shall be no recourse against
the Bank for payment of premiums or any other
amount;
2) provide that if the insurers cancel such insurance
for any reason whatsoever or if the same is
allowed to lapse for non-payment of premium or if
it is proposed to make material changes in policy
terms and conditions, such cancellation, lapse or
change shall not be effective as to the Bank for
30 days after written notice by such insurers to
the Bank of such cancellation or lapse or of any
material change in policy terms and conditions;
and
3) to the extent it is reasonably possible to do so,
provide that in respect to the interests of the
Bank, the insurance shall not be invalidated by
any action or inaction of the Borrower or any
other person (other
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than the Bank) and shall insure the interests of
the Bank, regardless of any breach or violation
of any warranties, declarations or conditions
contained in such policies by the Borrower or
any other person (other than by the Bank).
19.4 GENERAL PROJECT COVENANTS
The Borrower covenants with the Bank as follows:
(a) (PROJECT DOCUMENTS): it will duly and punctually comply with its
obligations under, or in respect of, the Project Documents to
which it is a party;
(b) (DEVELOP PROJECT): it will use its best endeavours to ensure that:
(i) the Projects are managed, developed and operated:
A. so as to cause the Joint Venture Assets to be
diligently operated, maintained, developed, repaired
and preserved and so as to cause ore to be diligently
mined and Copper End Products to be produced and sold
in a good and workmanlike manner as would a prudent
mine operator and producer of Copper;
B. in accordance with generally accepted mining practices
and in compliance with all Laws and Authorisations and
any lawful directions, notices or orders made under
such Laws and Authorisations; and
C. in compliance with the Environmental Plan and all
applicable Environmental Laws relating to prevention or
damage to and Pollution of the Environment so that no
claims are made against the Borrower or the Joint
Venturers in respect of any such Environmental Law;
(ii) the Borrower and the Other Participant will enter into all
agreements and obtain all leases, Licences, easements and
rights necessary for the operation of the Projects;
(iii) personnel with the appropriate skill and expertise are
employed to manage the Projects;
(c) (TAX): it will pay when due all Taxes payable by it other than
Taxes for which it has set aside sufficient reserves (in
accordance with generally accepted accounting principles
consistently applied) and which are being contested in good faith
(except where failure to pay such Taxes would cause a Material
Adverse Event or prejudice the Securities). It will pay the
proper amount of any such contested Taxes after the final
determination or settlement of such contest;
(d) (ENFORCE PROJECT DOCUMENTS): it will enforce all its rights,
privileges, powers and remedies under the Project Documents to
which it is a party where failure
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to do so would in the reasonable opinion of the Bank be likely
to have a material adverse effect on the ability of the Borrower
to perform its obligations under each Transaction Document to
which it is a party and it will not exercise any right or power
under any Project Documents in a manner which might cause a
Material Adverse Event;
(e) (PROTECTION OF JOINT VENTURE ASSETS): it will take or defend or
cause to be defended all such legal proceedings at the reasonable
request of the Bank, but at its own cost, as may be reasonably
necessary or desirable for the preservation, protection or
recovery of all or any part of the Joint Venture Assets;
(f) (PAY GIRILAMBONE NORTH DEVELOPMENT COSTS): it will duly and
punctually pay or cause to be paid all Girilambone North
Development Costs, Project Operating Costs and the Borrower's
Proportion of all other duties, charges and other outgoings
payable by it in connection with each Joint Venture or the
Projects;
(g) (PROOF OF OBSERVANCE): it will, at the reasonable request of the
Bank, provide proof to the reasonable satisfaction of the Bank of
the extent to which the terms and conditions contained or implied
in any of the Transaction Documents to be observed or performed,
have been, and continue to be, materially observed or performed;
(h) (NOT TO AMEND PROJECT DOCUMENTS): it will not at any time without
the consent of the Bank:
(i) terminate, rescind, discharge (otherwise than by
performance) or materially amend or vary any of the
provisions of the Project Documents or grant any material
consent, waiver, time or indulgence in respect of any of the
foregoing; or
(ii) give or cause circumstances to arise which would (with the
giving of notice or lapse of time or both or otherwise) give
any other party legal grounds to do anything described in
Clause 19.4(h)(i) as against it.
(i) (BREACH OF PROJECT DOCUMENTS): it will promptly notify the Bank
giving full details thereof and its remedial proposals as soon as
it becomes aware of:
(i) a material breach by any party of any Project Documents or
other contract or sub-contract relating to either Project;
or
(ii) any event which will or may materially and adversely affect
the rate of recovery of Products, the delivery or shipment
of Products under Sales Contracts;
(j) (PROJECT LAND, TRANSACTION DOCUMENTS AND PROJECT DOCUMENTS):
it will not at any time, without the prior consent of the Bank:
(i) do, or permit or omit or suffer to be done, any act, matter
or thing whatsoever, the doing, commission or omission of
which may, directly or indirectly, render it in breach of,
or liable for breach of, any of the
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terms or conditions of or relating to any Project Land,
Transaction Document or Project Documents which is likely
to cause a Material Adverse Event;
(ii) exercise, or purport to exercise, any right, power,
authority or discretion to terminate, rescind or otherwise
end, any Project Tenement or Transaction Document or accept,
or purport to accept, any modification, amendment or
variation of a Project Tenement or Transaction Document
which modification, amendment or variation the Bank
reasonably determines is likely to cause a Material Adverse
Event or accept, or purport to accept, any repudiation,
rescission or termination of any Project Tenement or
Transaction Document which repudiation, rescission or
termination is likely to cause a Material Adverse Event ;
(iii) permit, allow, waive, release, discharge, forgive or
otherwise accept (as the case may be) any act, omission or
other conduct whatsoever which constitutes a breach of, or
default in complying with, the terms or conditions expressed
or implied in any Project Documents or any Transaction
Document which act, omission or other conduct is likely to
cause a Material Adverse Event; or
(iv) by any act or omission give, or cause circumstances to arise
which would give, any other party legal grounds to
terminate, rescind or vary any term or condition expressed
or implied in any Project Documents or Transaction Document
which termination, rescission or variation is likely to
cause a Material Adverse Event;
(k) (MINUTES OF MEETINGS): promptly after preparation, it will provide
a copy of all minutes of all meetings of committees established
under the Project Documents or otherwise constituted by the Joint
Ventures, including, without limitation, the management committee,
authorised and confirmed as correct minutes by the chairman
(howsoever named) of each committee meeting;
(l) (UPDATES TO FINANCIAL MODEL): promptly upon request, it will
provide such information and other assistance as is necessary or
desirable to enable the Bank to update the Approved Budget
(including the Financial Model) from time to time, to reflect
available current information on the Projects.
(m) (DISMANTLING, ALTERATION OR REMOVAL OF PLANT): it will not and
will not permit any other party to dismantle, alter or remove from
the Project Land any part of the Plant without the prior written
consent of the Bank except in any case where such dismantling,
alteration or removal shall in its opinion be rendered necessary
by reason of carrying on the Projects and in case of the
dismantling, alteration or removal of any such Plant, shall
replace the same by other plant of a similar nature and of not
less quality and that it shall when necessary renew and replace
all moveable plant, fixtures, fittings, equipment, machinery,
motor vehicles, accessories, tools, implements, utensils and other
effects of a like nature now used or hereafter to be used for the
purposes of or in connection with the Projects when and as the
same shall become useless or shall be worn out or destroyed or
damages;
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(n) (OPERATION OF PLANT): it will not take or permit any action the
result of which would be that the Plant would not remain capable
of operating in a manner that will enable the Borrower to meet all
of its obligations under each Transaction Document to which it is
a party;
(o) (ACCEPTABLE SALES CONTRACTS): it will ensure that sufficient
Acceptable Sales Contracts are maintained for the Borrower's
Proportion of Copper End Products to enable the Borrower to
generate the cash flow forecast in the Approved Budget;
(p) (CASH CALLS): it will duly and punctually pay or cause to be paid
all Cash Calls or other amounts however described required to be
paid by it under or in connection with the Joint Venture
Agreements;
(q) (CASH CALL NOTICES): it will forthwith deliver to the Bank a copy
of each notice given in relation to a Cash Call, together with a
breakdown of the amounts the subject of such Cash Call;
(r) (OTHER JOINT VENTURERS' DEFAULT): it will forthwith advise the
Bank of the happening of any of the following events under the
Project Documents and provide the Bank with a true copy of any
relevant document:
(i) the failure by a Joint Venturer to duly pay a Cash Call; or
(ii) the issue by any Joint Venturer of a default certificate
under either Joint Venture Agreement;
(s) (NO PREJUDICIAL ACTION): the Borrower shall not vote (personally
or by proxy), at any Joint Venture operating or management
committee meetings or otherwise, in favour of any resolution or
determination to surrender the Project Tenements or any of them
(other than for the purposes of amalgamation or consolidation
previously approved by the Security Trustee or compulsory
reduction), to cease or reduce the level of mining operations
current at the date hereof or otherwise to do or not to do any
act, matter or thing that could cause a Material Adverse Event;
(t) (NO ASSIGNMENT): it will not assign, nor permit or suffer any
other party to any Project Documents or Transaction Document to
which it is a party to assign, any of its rights thereunder unless
such assignment is permitted pursuant to this Agreement;
(u) (RISK MANAGEMENT AGREEMENTS): in relation to Risk Management
Agreements:
(i) the Borrower must at all times during the term of this
Agreement maintain sufficient Risk Management Agreements to
cover all Project Operating Costs which the Bank determines
are likely to be payable by the Borrower during the
following period of 12 Months PROVIDED THAT the Borrower
must not commit at any one time more than 70% of future US
Dollar receivables as determined by the Bank having regard
to the Approved Budget under Risk Management Contracts or
any other hedging agreement;
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(ii) it will ensure that the Borrower enters into and maintains a
price risk protection programme with the Bank on terms
acceptable to the Bank, in respect of so much of the
Borrower's Proportion of all Copper End Products as in the
Bank's opinion is necessary or desirable to ensure that the
Borrower will at all times be able to meet Project Operating
Costs and all Repayments due under the Transaction Documents
PROVIDED HOWEVER the Borrower must not commit at any one
time more than the Borrower's Proportion of 75% of Copper
End Products (as determined by the Bank having regard to the
provisions of the Approved Budget) under Risk Management
Agreements or any other hedging agreements;
(iii) without limiting sub-paragraph (ii) above, the Borrower must
at all times during the term of this Agreement maintain a
Copper price risk programme (at a minimum price of US$0.90
per pound) on terms acceptable to the Bank such programme to
cover the following period of 12 Months and provide
protection for the Borrower with respect to all Repayments,
Project Operating Costs and Cash Calls in relation to any
capital expenditure) which are forecast to be paid during
the following 12 Months, such amounts to be determined by
the Bank having regard to the Approved Budget;
(iv) it will not allow any party (other than the Bank) to:
A. close out, cancel, rescind, terminate or determine;
B. concur in the closing out, cancellation, rescission,
termination or determination of; or
C. accept any repudiation of or take any action which
renders terminable,
any Risk Management Agreement or any of the covenants,
agreements or obligations expressly or impliedly contained
therein without the prior consent of the Bank, such consent
not to be unreasonably withheld or delayed; and
(v) without limiting the generality of any of the other
provisions contained in this Agreement, at any time after an
Event of Default has occurred the Bank may and is hereby
irrevocably authorised by the Borrower in the Bank's
absolute discretion at any time and from time to time
thereafter without notice to the Borrower to close-out any
or all of the Risk Management Agreements and the Borrower
shall indemnify the Bank in relation to any loss incurred by
the Bank as a result of such action; and
(v) (ENVIRONMENTAL CERTIFICATE): it will upon request by the Bank
provide at the cost of the Borrower a certificate by the
Environmental Consultant ("ENVIRONMENTAL CERTIFICATE") certifying
the adequacy of the Environmental Plan or compliance with the
Environmental Plan or such other matter or matters as the Bank may
nominate, such certificate to be in a form and substance
satisfactory to the Bank.
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19.5 ENVIRONMENT
(a) (ENVIRONMENTAL OBLIGATIONS): The Borrower will and will use its
best endeavours to procure that the Other Participant and the
Project Manager will:
(i) comply with all Environmental Laws and obtain all necessary
Environmental Licences;
(ii) if there is any non-compliance with Environmental Laws,
ensure that:
A. the impact on the relevant property and the Environment
is minimised; and
B. steps can be and are taken as quickly as possible to
rectify the non-compliance and to ensure the
non-compliance does not re-occur and to eliminate or
reduce any danger of Pollution arising from such
non-compliance; and
(iii) ensure that nothing is done which would lead to, or be
likely to lead to, or result in, the revocation, suspension,
modification or non-renewal of any Authorisation obtained
under any Environmental Laws.
(b) (PROVIDE ENVIRONMENTAL NOTICES ETC): The Borrower will or shall
procure that the Project Manager will provide to the Bank a copy
of:
(i) any material claim or violation of any Environmental Law or
Environmental Licence relating to or arising from any
activity undertaken on the Mortgaged Property;
(ii) each Environmental Audit or Environmental Licence relating
to any of the Mortgaged Property; and
(iii) all material notices or documents receiving or relating to
compliance with any Environmental Law or Environmental
Licence.
(c) (ENVIRONMENTAL CONSULTANTS): The Borrower agrees that:
(i) the Bank is entitled at any time, where in its reasonable
opinion, a Material Adverse Event has occurred or is likely
to occur as a result of any Environmental damage, to engage
an independent Environmental Consultant to undertake a
review of the Projects (or any one or more of them) to
ensure compliance with all relevant Environmental Laws and,
at any time, to appoint an independent Environmental
Consultant to consider the adequacy of the policies with
respect to the Projects and Environmental matters and to
report to the Bank;
(ii) it will co-operate with any such consultant appointed by the
Bank and provide that party with access to all books,
records, agreements and other relevant data or information
in the possession of or available to the Bank and shall
ensure that such party has access to each of the Projects;
and
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(iii) it will comply with all reasonable requirements of the Bank
concerning the application of Environmental Laws to the
Projects or the Mortgaged Property.
19.6 APPROVED BUDGET AND DEVELOPMENT PLANS
(a) (PROVIDE APPROVED BUDGET AND DEVELOPMENT PLAN): The Borrower has
supplied to the Bank the Existing Approved Budget and the Existing
Development Plan.
(b) (UPDATE APPROVED BUDGET AND DEVELOPMENT PLAN): The Borrower
shall ensure that each of the Existing Approved Budget and
Existing Development Plan and each subsequent Approved Budget and
Development Plan:
(i) are updated on an annual basis or more frequently upon the
reasonable request of the Bank and that each such document
is amended as necessary;
(ii) are approved by the board of directors of the Borrower on or
before 1 July each year (or earlier if required by the
Bank);
(iii) include all of the information which the Bank reasonably
requests to be included in each such document;
(iv) are in a form acceptable to the Bank,
and shall provide each such document to the Bank as soon as it has
been approved by the board of directors of the Borrower.
(c) (SECURITIES): It will do all acts, matters and things on its part
necessary to cause each of the Securities to which it is a party
to be registered as a charge or mortgage, as the case may be,
under the applicable Law of the Relevant Jurisdiction and shall
obtain all necessary consents and approvals to effect such
registration.
19.7 RATIOS
(a) (MAINTAIN RATIOS): The Borrower covenants with the Bank that at
all times during the term of this Agreement:
(i) the Loan Life Cover Ratio shall exceed 1.5:1;
(ii) the Debt Cover Ratio shall exceed 1.2:1; and
(iii) the Reserve Life Cover Ratio shall exceed 1.8:1.
(b) (REPORT QUARTERLY): Not later than at the end of each Quarter, the
Borrower shall provide a certificate signed by 2 Authorised
Officers which certifies whether in their opinion as at the date
of such certificate, the Borrower is in compliance with its
obligations with respect to the Loan Life Cover Ratio and the Debt
Cover Ratio.
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(c) (REPORT ANNUALLY): Not later than at the end of each year, the
Borrower shall provide a certificate signed by 2 Authorised
Officers which certifies whether in their opinion as at the date
of such certificate, the Borrower is in compliance with its
obligations with respect to the Reserve Life Cover Ratio.
19.8 COVENANT TO PERFORM
The Borrower covenants that it will duly and punctually perform each of
its undertakings and covenants contained or implied in the Transaction
Documents to which it is a party.
19A TRUST BENEFICIARIES' COVENANTS
Each of the Trust Beneficiaries hereby grant any authority or waiver
and give any consent which may be required in order to permit the
Borrower to:
(a) enter into, observe and perform its obligations under the
Transaction Documents and the transactions contemplated by them; and
(b) perform such other acts, matters and things which the Borrower
deems reasonably necessary or desirable in connection with the
Transaction Documents or Project Documents.
20. EXPERTS
20.1 APPOINTMENT AND REPLACEMENT
The Bank at any time during the term of this Agreement, by notice in
writing to the Borrower, may with the consent of the Borrower, such
consent not to be unreasonably withheld or delayed, appoint any
independent consultant with appropriate expertise (as determined by the
Bank) (each an "EXPERT") to provide advice to the Bank in relation to any
of the matters set out in Clause 20.2 or replace any Expert by another
suitably qualified person PROVIDED THAT the issues advised upon are (in
the reasonable opinion of the Bank) material in the context of either of
the Projects or the Joint Ventures.
20.2 DUTIES OF EXPERTS
(a) (ROLE OF EXPERT): Without limiting any other part of this
Agreement, on the instructions of the Bank (which instructions may
be specified or general), the appropriate Expert shall check the
valuation of any material Joint Venture Asset, amount of any Cash
Call, any calculation of Girilambone North Development Costs, any
calculation of Available Cash Flow, any Project Report, any
calculation or estimate of Project Operating Costs, the quantum of
Proved Reserves, the calculation of any of the ratios set out in
Clause 19.7, the amount of any Project Taxes, provide advice with
respect to compliance with any Environmental Law and make such
other checks or reports as the Bank, acting reasonably, requires.
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20.4 RELIANCE UPON EXPERTS
The Bank shall be entitled without further enquiry to accept and rely
upon the advice of any Expert given in pursuance of this Agreement or any
other Project Document.
21. SPECIAL PURPOSE ACCOUNTS
21.1 MAINTAIN ACCOUNTS
The Borrower will continue to maintain with the Bank the Special Purpose
Accounts. and will not withdraw funds from any Special Purpose Account
other than in the manner permitted by this Agreement.
21.2 MONEY TO BE PAID INTO BORROWER'S PROCEEDS ACCOUNTS
(a) (MONEYS TO BE DEPOSITED): The Borrower, to the full extent to
which it is able to do so or procure another or others to do so,
will ensure that the following are paid directly into the US$
Proceeds Account or the A$ Proceeds Account, as applicable:
(i) all moneys required to be paid into a Borrower's Proceeds
Account by virtue of this Agreement;
(ii) all proceeds arising from the sale or other disposal
(including sales or disposals on a forward or option basis)
of Products;
(iii) all amounts payable in respect of a Participating Interest
in:
A. any sale, resumption or other disposition of Joint
Venture Assets including surplus material, equipment or
personal property; or
B. any property taken in kind under either Joint Venture
Agreement;
(iv) any refunds received from the Minister for Mines in respect
of performance bonds provided in satisfaction of conditions
attached to any Project Land; and
(v) all other money forming part of the Borrower's Project
Revenue and all receipts in any way arising or derived from
or with respect to the Joint Venture Assets or the Projects
including all moneys becoming due pursuant to any Project
Agreement.
(b) (ADDITIONAL MONEYS AND DIRECT PAYMENT): The Borrower to the full
extent to which it is able will:
(i) direct or cause each buyer of Products from the Borrower to
pay the entire proceeds of sale or other disposal of
Products to the credit of the US$ Proceeds Account;
(ii) direct or cause each party to the Project Documents to make
all
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payments required to be made to it thereunder (including,
without limitation, payments of liquidated damages or in
respect of warranty claims) to the credit of the relevant
Borrower's Proceeds Account; and
(iii) take all other action reasonably available to it to ensure
that all amounts which are required to be paid into a
Borrower's Proceeds Account are directly so paid (and that
all such amounts which are not directly so paid constitute
trust funds in the hands of the recipient until paid into
the relevant Borrower's Proceeds Account).
(c) (DISPOSAL OF PRODUCTS): The Borrower will:
(i) use its best endeavours to ensure that the Project Manager
sells or otherwise disposes of Products (including sale or
disposal on a forward or option basis):
A. for cash; and
B. on an arm's length basis.
(ii) not without the consent of the Bank, take any Joint Venture
Assets (other than Products) in kind unless it is
immediately sold for cash and such cash is deposited into
the relevant Borrower's Proceeds Account in accordance with
the provisions of this Clause 21.
21.3 APPLICATION OF INSURANCE PROCEEDS
Whenever any person is entitled to receive any amount under any Insurance
Policy then unless such proceeds are immediately and directly applied
with the prior approval of the Bank pursuant to Clause 19.3(b)(iv)G:
(a) in payment of costs already incurred or committed to replace,
restore, repair or otherwise remedy the loss, damage or liability
suffered; or
(b) to make a Prepayment,
the Borrower will use its best endeavours to ensure that any such
proceeds are paid into the relevant Borrower's Proceeds Account.
21.4 PAYMENTS TO BORROWER'S PROCEEDS ACCOUNTS
On any day, provided no Event of Default has occurred and is subsisting
and the balance of moneys in the Debt Service Reserve Account has reached
the Target Level required on that day, the balance of moneys held in the
Borrower's Proceeds Accounts may be utilised by the Borrower at its
discretion.
21.5 PROVISIONS - SPECIAL PURPOSE ACCOUNTS GENERALLY
The Borrower shall upon request produce or cause to be produced to the
Bank:
(a) (COPY OF INVOICES): a copy of each invoice for receipt of
Girilambone North Development Costs and Project Operating Costs
paid or payable during the
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relevant Repayment period; and
(b) (OTHER INFORMATION): such other information and documentation as
the Bank may require in its discretion so as to be satisfied that
the relevant funds are being applied in payment of bona fide
Girilambone North Development Costs and Project Operating Costs.
21.6 CLAIM FORM
Any request by the Borrower to the Bank to apply funds to enable payment
by the Borrower of Girilambone North Development Costs and Project
Operating Costs shall be accompanied by a certified copy of the relevant
Cash Call.
21.7 INTEREST
(a) Amounts standing to the credit of the A$ Proceeds Account shall
bear interest at such rate percent per annum as the Bank is then
paying on comparable deposits lodged with it for 11:00am call such
deposit shall be calculated on the basis of a 365 day year on the
actual number of days elapsed and shall be credited to the
relevant account on the last day of each Month.
(b) Any amount standing to the credit of the US$ Proceeds Account and
the Debt Service Reserve Account shall bear interest from the date
of deposit until the date any amounts are applied pursuant to
Clause 21.4 of this Agreement at such rate as the Bank is then
paying on comparable deposits lodged with it for a period of 30
days. Such interest shall be calculated on the basis of a 360 day
year on the actual number of days elapsed and shall be credited to
the relevant account on the last day of each 30 day period.
21.8 (a) The Borrower shall ensure that any amount required by this
Agreement to be deposited in a Borrower's Proceeds Account shall
if such amount is denominated in US Dollars be deposited in the
US$ Proceeds Account and if denominated in Dollars be deposited in
the A$ Proceeds Account.
(b) In transferring funds from the Borrower's Proceeds Accounts the
Bank will in accordance with Clause 21.4:
(i) FIRSTLY, transfer moneys from the US$ Proceeds Account
to satisfy amounts due in US Dollars; and
(ii) SECONDLY, transfer moneys from the A$ Proceeds Account
to satisfy amounts due in Dollars.
(c) If on the last day of the relevant Quarter the Borrower's
obligation to pay moneys described in Clause 21.4 has not been
satisfied by a transfer from the relevant Borrower's Proceeds
Account and there are moneys in a Borrower's Proceeds Account
denominated in a currency other than the currency of the amounts
due, the Bank may make any necessary currency exchange and
transfer to ensure that all amounts required to be paid in
accordance with Clause 21.4 are satisfied prior to any balance
being made available to the Borrower.
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22. DEBT SERVICE RESERVE ACCOUNT
(a) The Borrower will ensure that sufficient deposits are made to the
Debt Service Reserve Account so that the credit balance in that
account is equal to the Target Level.
(b) Moneys held in the Debt Service Reserve Account shall be applied
on each Repayment Date against any Repayment Instalment or other
amount due to be made by the Borrower to the Bank on the Relevant
Repayment Date.
23. DEFAULT
23.1 EVENTS OF DEFAULT
Each of the following events shall constitute an Event of Default:
(a) (NON-PAYMENT): the Borrower defaults in the due payment of any
moneys or delivery of any moneys to the Bank at the time and in
the manner specified in any Transaction Document to which it is a
party PROVIDED THAT the Bank shall give notice in writing to the
Borrower demanding payment of any such moneys and if such default
is remedied immediately or within such longer period as the notice
specifies, an Event of Default shall be deemed not to have
occurred;
(b) (BREACH OF TRANSACTION DOCUMENT): the Borrower or the Project
Manager defaults in any material respect in the performance of any
other covenant, agreement or undertaking on its part contained in
any Transaction Document to which it is a party which default is
likely to cause a Material Adverse Event and such default, if
capable of remedy, is not so remedied within 14 days, of the
earlier of:
(i) the Borrower or the Project Manager becoming aware of such
failure; or
(ii) notice to the Borrower or the Project Manager of such
failure by the Bank;
(c) (BREACH OF PROJECT DOCUMENT): the Borrower defaults in any
material respect in the performance of any covenant, agreement or
undertaking on its part contained in any of the Project Documents
in any respect which the Bank determines is likely to cause a
Material Adverse Event and such default, if capable of remedy, is
not so remedied within 14 days of the earlier of:
(i) the Borrower becoming aware of such failure; or
(ii) notice to the Borrower of such failure by the Bank;
(d) (BREACH OF REPRESENTATIONS, WARRANTIES ETC): any representation,
warranty or statement made or deemed to be made by the Borrower in
any Transaction Document to which it is a party or any certificate
or notice issued under any Transaction Document to which it is a
party shall not be complied with, or shall prove to be false or
misleading, in either case, in any respect which the Bank
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determines is likely to cause a Material Adverse Event and the
fact or circumstance giving rise to such untruth if capable of
remedy, is not remedied within 14 days of notice of such fact by
the Bank or the date in which the Borrower first becomes aware of
such breach;
(e) (EVENT OF INSOLVENCY): an Event of Insolvency occurs with respect
to the Borrower;
(f) (COMPROMISE OR ARRANGEMENT): without the prior consent of the
Bank, any compromise or arrangement within the meaning of the
Corporations Law is proposed by the Borrower or is made between
the Borrower and its creditors or any of them or any class of them
or any application is made to any court by the Borrower for an
order summoning a meeting of its creditors;
(g) (EXECUTION OR DISTRESS): execution or any distress is levied
against the Borrower or any of its assets in an amount in excess
of $250,000 (or its equivalent) and such execution shall not be
stayed or satisfied within 30 days;
(h) (CEASES TO CARRY ON BUSINESS ETC): the Borrower without the prior
consent of the Bank or as permitted by a Transaction Document,
ceases or threatens to cease to carry on its business, or leases,
sells or disposes of any of its assets other than for the purpose
of carrying on its business and such lease, sale or disposal is in
the opinion of the Bank likely to cause a Material Adverse Event;
(i) (FAILURE TO PAY INDEBTEDNESS): the Borrower fails to pay any other
Indebtedness exceeding $250,000 (or its equivalent) when due and
payable within applicable grace periods or, by reason of breach or
default on the part of the Borrower, any moneys payable by it
become due prior to the date when they would otherwise have become
due unless the rights of the person to whom the Indebtedness is
owed or who has declared such sum to be due is being contested by
the Borrower in good faith, or the Borrower fails to honour any
Guarantee or indemnity in respect of an amount, or obligations
relating to a liability when called upon to do so and which
failure or becoming due, in the opinion of the Bank, has or may
cause a Material Adverse Event;
(j) (REDUCTION OF CAPITAL): without the prior consent of the Bank, the
Borrower reduces or attempts to reduce its issued share capital;
(k) (SECTION 188(2) OR 205(1) RESOLUTIONS): the Borrower passes a
resolution pursuant to Section 188(2) or 205(1) of the
Corporations Law;
(l) (APPROPRIATION OF PROPERTY): all or part of any property used by
the Borrower the ownership, possession or control of which
property is seized or otherwise expropriated, nationalised,
confiscated or acquired through any governmental action, or
intervention of any Government Agency or custody or control of
such property or part thereof shall be assumed by any Government
Agency and, even after taking into account any compensation which
is payable, the seizure, expropriation, nationalisation,
confiscation or acquisition will in the reasonable opinion of the
Bank be likely to cause a Material Adverse Event;
(m) (AUTHORISATIONS NOT OBTAINED OR RENEWED ETC): any Authorisation or
Licence which in the opinion of the Bank is necessary for any
Security Provider to
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perform any obligation under any Transaction Document to which
it is a party is not obtained, when required, or renewed or is
revoked, terminated, suspended, cancelled or withheld;
(n) (TRANSACTION DOCUMENTS AFFECTED):
(i) all or any part of any provision of any Transaction Document
is terminated (other than in accordance with its terms) or
is or becomes void, illegal, invalid or unenforceable or of
limited force and effect;
(ii) any Security Provider or any other person terminates,
rescinds or avoids all or any part of any material provision
of any Transaction Document (other than in accordance with
its terms); or
(iii) any Security Provider alleges or claims that an event as
described in Clause 23.1(n)(i) has occurred or that it is
entitled as described in Clause 23.1(n)(ii),
and, in the case of Project Documents, the Bank determines in good
faith that any such event would be likely to cause a Material
Adverse Event;
(o) (THREATENED FORFEITURE): the Project Manager, the Borrower or
Other Participant receives any notice of default in relation to
any Project Land threatening forfeiture thereof as a result of
such default (unless such notice allows or requires the remedying
of such default and the default is remedied within the time
allowed by such notice);
(p) (PROJECTS ABANDONED): either Project is abandoned or placed on a
"care and maintenance" basis and in the reasonable opinion of the
Bank the occurrence of such event is likely to cause a Material
Adverse Event;
(q) (SECURITY PREJUDICED): without action, omission or default on the
part of the Bank and other than as permitted under any Transaction
Document, any Security fails or ceases to be a binding and
enforceable first ranking registered security over the Borrower's
Project Assets;
(r) (NORD PACIFIC): Nord Pacific ceases to have a beneficial
entitlement in 100% of the issued share capital of the Borrower
or, in the reasonable opinion of the Bank Nord ceases to be
controlled by Nord Pacific;
(s) (DISPOSAL OF INTEREST IN TRUST): Nord Pacific or Nord Gold
disposes of any of its beneficial interest in the Trust or the
Trust Fund without the consent of the Bank;
(t) (MATERIAL ADVERSE EVENT): without limiting the operation of any
other Event of Default, if, in the Bank's reasonable opinion, a
material adverse change has occurred in the financial condition of
the Borrower sufficient to cause a Material Adverse Event;
(u) (DETRIMENTAL ACTION BY SECURITY PROVIDER): any Security Provider
shall do any act, deed, matter or thing, or permit or suffer any
act, deed, matter or thing to be done, whereby, directly or
indirectly, any of the Securities shall, in the
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reasonable opinion of the Bank, become materially deteriorated
or materially lessened in value other than through mining
operations in the ordinary course of its ordinary business;
(v) (ENVIRONMENTAL EVENT): if, pursuant to any Environmental Law, any
Government Agency requires the cessation or suspension of Project
operations, modifications to any Joint Venture Asset or Project
Facilities, the abatement of any alleged nuisance, the conduct of
a clean up or restoration programme, the payment of any
compensation or any other act, matter, thing or payment that in
the reasonable opinion of the Bank is likely to cause a Material
Adverse Event.
23.2 NOTICE TO THE BORROWER
Notwithstanding anything else contained or implied in this Agreement, if
an Event of Default shall occur, the Bank may do either or both of the
following by notice to the Borrower:
(a) (DEMAND MONEYS ETC): declare the Secured Moneys to be immediately
due and payable and the Borrower shall forthwith pay to the Bank
the Secured Moneys to the Bank and Retire all outstanding
Performance Bonds and Treasury Transactions;
(b) (CANCEL AVAILABLE COMMITMENT): where the Facility Amount
Outstanding is less than the Facility Limit, cancel the Available
Commitment), such cancellation to be effective upon the giving of
such notice.
The Borrower shall also pay to the Bank such additional amounts as may be
necessary to compensate the Bank for any costs, losses and expenses
resulting from any Event of Default. No waiver of any Event of Default
shall constitute a waiver of any other or any succeeding Event of Default
except to the extent expressly provided in such waiver.
23.3 CONVERSION OF LOAN TO DOLLARS
(a) (CONVERSION): Without limiting the generality of any of the other
provisions herein contained in this Agreement, at any time after
an Event of Default has occurred and is subsisting the Bank may
and is hereby irrevocably authorised by the Borrower in the Bank's
absolute discretion at any time and from time to time thereafter
without notice to the Borrower to convert the Loan from US Dollars
to Dollars at the Spot Rate of Exchange. Following a conversion
as aforesaid, the Bank shall notify the Borrower of the details
thereof. All moneys expended and costs incurred by the Bank in
such conversion shall thereafter be deemed an Advance in Dollars
as from the date such moneys are expended or costs are incurred,
Repayable forthwith upon demand and upon which there shall accrue
daily interest calculated on a basis of a 365 day year (compounded
every 90 days) from the date of such Advance at the rate per annum
equal to the aggregate of the A$ Rate determined as at the date
the Advance is deemed to be made (and thereafter determined on
each date upon which the interest is compounded) plus the Margin
plus 2%.
(b) (INDEMNITY): The Borrower shall indemnify and keep indemnified the
Bank against all losses, damages, costs and expenses suffered,
incurred or sustained
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by the Bank in maintaining US Dollar liabilities of the Borrower
following an Event of Default or funding a conversion of the
Loan to Dollars.
24. INDEMNITY
(a) (GENERAL): As a separate and independent undertaking given in
consideration of the Bank's obligations under this Agreement and
which shall survive the termination of this Agreement the Borrower
hereby indemnifies, and shall keep indemnified, the Bank, its
employees, agents and every person appointed by the Bank under any
Transaction Document and every receiver and attorney appointed
under any of the Securities, against any reasonable costs,
charges, expenses and liabilities and against any action,
proceeding, claim, loss and demand which may occur or arise by
reason of any of the following:
(i) any failure of the Borrower to perform, or being unable to
perform, any of its obligations under any Transaction
Document to which it is a party; or
(ii) the proper exercise, or purported proper exercise, of any of
the powers, authorities or discretions vested in the Bank,
any receiver, receiver and manager or any attorney pursuant
to any Transaction Document,
and the Bank, its employees, agents and every person appointed by
the Bank under any Transaction Document and every receiver,
receiver and manager and attorney appointed under any of the
Securities shall be entitled to be so indemnified and the Bank,
any receiver and any attorney may apply any amount received by
them pursuant to any of the Transaction Documents in satisfaction
of the Borrower's or the Security Provider's obligations under
such indemnity.
(b) (OTHER INDEMNITIES): Without limiting anything else contained in
this Agreement, the Borrower shall indemnify and keep indemnified
the Bank against the following losses or other costs save for
where they arise as a result of the negligence or wilful
misconduct of the Bank, its agents, employees or attorneys, losses
that arise from the acquisition, use or disposal of hazardous
substances or contaminants or material breaches of any
Environmental Law relating to either Project.
25. RIGHTS OF SET-OFF
Upon the occurrence and during the continuation of any Event of Default,
the Bank is hereby authorised at any time, and from time to time, without
notice to any Security Provider (any such entitlement to notice being
expressly waived), to the Borrower or any other person, set-off and apply
any moneys standing to the credit of a Special Purpose Account, and all
deposits (general or special, time or demand, provisional or final) at
any time held and other Indebtedness or obligation at any time owing by
the Bank to, or for the credit or account of the Borrower against any and
all of their respective obligations now or hereafter existing under this
Agreement irrespective of whether the Bank shall have made demand under
this Agreement and although such obligations may be unmatured and the
Bank agrees to promptly notify the Borrower after any such set-off and
application, provided that, the failure to give such notice shall not
affect the validity of such set-off and application.
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26. COSTS AND EXPENSES
26.1 BORROWER TO PAY BANK'S COSTS
The Borrower shall pay or reimburse on demand by the Bank all reasonable
costs and expenses (including costs of legal advisers and other
professional fees calculated on a full indemnity basis) incurred by the
Bank:
(a) (TRANSACTION DOCUMENTS): in connection with the negotiation,
preparation, execution, delivery, stamping and registration of or
any waiver or amendment of, or supplement or other modification
to, any Transaction Document;
(b) (PARTICIPATION): in connection with the obtaining of persons to
enter into a participation arrangement with the Bank other than
costs incurred by an incoming participant;
(c) (ADMINISTRATION OF TRANSACTION DOCUMENTS): in connection with the
administration of the Transaction Documents any subsequent
consent, agreement or approval under any Transaction Document;
(d) (EXPERTS): in connection with the appointment of any Expert and
all costs and disbursements of each Expert in discharging its
responsibilities to the Bank with respect to the Facilities or any
Transaction Document or the Bank and the Borrower;
(e) (ENFORCEMENT): in connection with the proper enforcement or
attempted enforcement of, or the preservation or proper exercise
or proper attempted exercise of, any right, remedy or claim under
any Transaction Document.
26.2 CERTAIN COSTS TO THE ACCOUNT OF THE BANK
Except where an Event of Default has occurred or is subsisting or
circumstances have arisen which entitles the Bank to appoint an Expert in
relation to a matter which in the reasonable opinion of the Bank is
material in the context of either of the Girilambone Mining Project, the
Girilambone North Project or the Joint Ventures, the Borrower shall not
be liable to the Bank for any travelling expenses or costs of site visits
in relation to monitoring the Girilambone Mining Project to ensure
compliance by the Borrower, the Other Participant or the Trust
Beneficiaries with the provisions of any Transaction Document.
27. NOTICES
27.1 ADDRESS OF NOTICES
Any notice, demand, request, consent, certificate or other communication
given under any Transaction Document shall be in writing signed by, or
under the name of, an Authorised Officer of the party giving such
communication and shall be delivered by hand or transmitted by facsimile
addressed:
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(a) in the case of the BANK, to:
BANK OF WESTERN AUSTRALIA LTD
Level 7
Grosvenor Place
225 George Street
Sydney
New South Wales
Australia
Attention: Chief Manager, Sydney Office
Facsimile Number: International + (02) 9338 2260
Telephone Number: International + (02) 9338 2222; and
(b) in the case of the BORROWER, to:
NORD AUSTRALEX NOMINEES PTY LTD
Level 15
3 Spring Street
Sydney
New South Wales
Australia
Attention: The Company Secretary
Facsimile Number: International + (02) 9565 1308
Telephone Number: International + (02) 9565 1655.
27.2 DEEMED RECEIPT
Except as otherwise specified herein, any notice, demand, request,
consent, certificate or other communication given by one party to the
other shall be deemed to be received by the addressee:
(a) (DELIVERY): (in the case of delivery in person or by post or
cable) when delivered; or
(b) (FACSIMILE): (in the case of the facsimile) on receipt by the
sender of a transmission report recording receipt by the
addressee's facsimile number as notified in Clause 27.1 or
notified pursuant to Clause 27.3 (provided that if the time of
dispatch is not before 5:00pm (local time) on a Business Day in
the place to which such notice, request, demand or other
communication is sent, it shall be deemed to have been received at
the commencement of business on the next following Business Day in
such place),
to the party to which such notice, request, demand or other communication
is required or permitted to be given under this Agreement addressed to
its address as shown in this Agreement or at such address as the relevant
addressee may specify for such purpose to the others by notice in
writing.
76.
<PAGE>
27.3 CHANGE OF ADDRESS OR FACSIMILE NUMBER
In the event that a party changes its address or facsimile number it
shall, prior to the date of such change, notify the other party of such
change and thereafter such new address or facsimile number shall be the
address or facsimile number, as the case may be, of the first-mentioned
party for the purposes of this Agreement.
27.4 CONCLUSIVE EVIDENCE
Any notice, demand, request, consent, certificate or other communication
under this Agreement received by the Bank by facsimile bearing a
facsimile of the signature of an Authorised Officer of the Borrower, as
applicable, shall be conclusive evidence for all purposes and on which
the Bank is entitled to rely.
28. ASSIGNMENT
28.1 THE SECURITY PROVIDER NOT TO ASSIGN
This Agreement shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns PROVIDED however the Borrower
shall not assign this Agreement nor any of its rights, duties and
obligations under this Agreement without the prior written consent of the
Bank.
28.2 ASSIGNMENT BY THE BANK
The Bank may with the consent of the Borrower (such consent not to be
unreasonably withheld or delayed) at any time, transfer by way of
assignment or novation all or part of the Bank's rights, benefits or
obligations under this Agreement to any one or more reputable banks or
other lending institutions resident in Australia if:
(a) (BANK AS AGENT): the Bank acts as agent for any assignee on terms
reasonably acceptable to the Borrower;
(b) (AUTHORISATIONS): all necessary Authorisations are obtained;
(c) (NO ADDITIONAL COST TO BORROWER): as of the date when made, such
transfer will not result in any additional cost to the Borrower;
and
(d) (WITH CONSENT OF BORROWER): in respect of an assignment or
transfer of obligations:
(i) to a bank, the Borrower has given its prior consent (such
consent not to be unreasonably withheld or delayed);
(ii) to a lending institution not being a bank and being located
within Australia, the Borrower has given its prior consent
(such consent not to be unreasonably withheld or delayed),
and in each case the assignee executes a document in form and
substance to the reasonable satisfaction of the Bank and the
Borrower agreeing to be bound by the provisions of this Agreement.
77.
<PAGE>
28.3 BANK MAY PROVIDE INFORMATION
The Bank may with the prior consent of the Borrower (which shall not
unreasonably be withheld or delayed) disclose to a proposed assignee or
transferee information about the Borrower or its or their respective
business, assets and financial condition as the Bank shall consider
appropriate.
28.4 BANK SHALL INCLUDE TRANSFERS
If the Bank transfers its rights, benefits or obligations under this
Agreement all references in this Agreement to the Bank shall thereafter
(save as herein otherwise expressly provided) be construed as a reference
to the Bank and its transferee or transferees or, in the case of a
transfer of the whole of the Bank's rights, benefits or obligations, to
its transferee or transferees alone.
28.5 SUB-PARTICIPATIONS NOT PROHIBITED
The Bank may enter into sub-participation arrangements (being a right to
share in the financial effects of this Agreement without any rights to
receive information which is not available to any other third party) in
relation to all or part of the Bank's rights and benefits without
obtaining the consent of the Borrower.
29. COUNTERPARTS
This Agreement may be signed in one or more counterparts and any
counterpart or set of counterparts signed by the parties hereto shall
constitute an original of this Agreement for all purposes.
30. GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with,
the Laws from time to time in force in the State of New South Wales and
the parties hereby submit to the non-exclusive jurisdiction of the courts
of that State and the courts which hear appeals therefrom.
31. CONFLICT WITH OTHER TRANSACTION DOCUMENTS
In the event that any provision of this Agreement is inconsistent with
any provision of any other Transaction Document the provision of this
Agreement shall prevail to the extent of such inconsistency.
32. CONFIDENTIALITY
Each of the parties hereto shall, and shall cause each of its Related
Corporations and its respective officers, employees and agents to, keep
this Agreement, the Securities and the documents given or entered into
pursuant hereto and thereto and the transactions contemplated hereby and
thereby, confidential and shall not disclose or allow to be disclosed any
information relating thereto to any person except:
(a) (CONSENT): with the consent of the party providing the information
(which consent is not to be unreasonably withheld);
78.
<PAGE>
(b) (REQUIRED BY LAW): if required by Law or by the United States
Securities Commission, any other Government Agency or any stock
exchange;
(c) (LEGAL ACTION): in connection with any action contemplated or
legal proceedings taken in relation to the Transaction Documents;
(d) (GENERAL PUBLIC INFORMATION): where the information is generally
and publicly available;
(e) (RELATED CORPORATION): to a Related Corporation or the auditors or
legal advisers of the recipient, provided the Related Corporation
undertakes to observe this Clause 32 and the recipient is
responsible for any breach by the Related Corporation; or
(f) (POTENTIAL PARTICIPANTS): to a potential sub-participant or risk
participant of its interest under the Transaction Documents or to
any other person who is considering entering into contractual
relations with the Bank in connection with the Transaction
Documents subject to that person undertaking in writing to observe
this Clause 32.
33. MISCELLANEOUS
(a) No failure to exercise and no delay in exercising on the part of
the Bank any right, power or privilege under any of the
Transaction Documents shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege
preclude any other or further exercise thereof, or the exercise of
any other right, power or privilege.
(b) The provision of all statutes now or hereafter in force whereby
any or all of the powers, rights and remedies of the Bank, and the
obligations of the Borrower under this Agreement may be curtailed,
suspended, postponed, defeated or extinguished shall not apply to
this Agreement and are expressly excluded so far as this lawfully
can be done.
(c) No mortgage, charge, Guarantee, indemnity or other security now or
hereafter held by the Bank shall in any way prejudicially affect
the powers, remedies, rights and provisions herein contained or
implied.
(d) Nothing herein contained shall merge, extinguish, postpone, lessen
or otherwise prejudicially affect any Security Interest now or
hereafter held by the Bank or any right or remedy which the Bank
now has, or hereafter may have, against any Security Provider or
any other person.
(e) If at any time any provision of this Agreement is, or becomes,
illegal, invalid or unenforceable in any respect, under the Law of
any applicable jurisdiction, neither the legality, validity or
enforceability of the remaining provisions of this Agreement, nor
the legality, validity or enforceability of such provision under
the Law of any other jurisdiction shall, in any way, be affected
or impaired thereby.
79.
<PAGE>
34. CURRENCY EXCHANGES
The Security Provider authorises the Bank to effect such currency
exchanges as are necessary to implement any set-off right of the Bank or
any other of its rights contained or implied in any Transaction Document.
80.
<PAGE>
SCHEDULE 1
1.1 LICENCE AND COMPENSATION AGREEMENTS
All documents (including exchange of correspondence) evidencing:
(a) 3/6/986 An assessment of compensation
for Benjamin Albert Austin in
respect of this land was made
under Section 122 of the
Mining Act, 1973 on 14
September 1992 by the Chief
Warden.
(b) 4030/134 (Lot Rem 4 Sec 6 in DP986) An assessment of compensation
for Christina Larsen in
respect of this land was made
under Section 122 of the
Mining Act, 1973 on 14
September 1992 by the Chief
Warden.
(c) 4030/133 (Lot 5 Sect 6 in DP986) An assessment of compensation
for Elizabeth Florence Ovenden
in respect of this land was
made under Section 122 of the
Mining Act, 1973 on 14
September 1992 by the Chief
Warden.
(d) Part of 2/814976 and 3/814976 An access agreement with
Stuart Russell McNickle and
Catherine Ruth McNickle as
tenants in common in equal
shares, previously in place in
respect of this land, is being
renegotiated. This land lies
within the south eastern
corner of ML1280. The land
was previously subject of
Exploration Licence 3138,
however it is now within
Mining Lease 1280 (it ceased
to be part of Exploration
Licence 3138 pursuant to
Section 70(2) of the Mining
Act, 1973 upon the grant of
Mining Lease 1280).
(e) 34/751320 A deed was executed on 6
August 1991 between the
registered proprietors Bruce
Raymond Chesson and Bronwyn
Gail Chesson of the one part
and the Borrower of the other
part conferring on the
Borrower permission to lay and
maintain a pipeline over part
of the land.
On 19 August 1992 a licence to
construct
81.
<PAGE>
a pipeline for the purpose of
conveying water from MPL294 to
ML1280 was granted under
Section 174 of the Mining Act,
1973 as Licence No. 7.
(f) 35/751320 A deed was executed on 6
August 1991 between the
Registered Proprietors Bruce
Raymond Chesson and Bronwyn
Gail Chesson of the one part
and the Borrower of the other
part conferring on the
Borrower permission to lay and
maintain a pipeline over part
of the land.
On 19 August 1992 a licence to
construct a pipeline for the
purpose of conveying water
from MPL294 to ML1280 was
granted under Section 174 of
the Mining Act, 1973 as
Licence No. 7.
(g) 39/751320 A deed was executed dated 23
December 1991 between the
registered proprietor Reginald
Alfred Rowland and the
Borrower allowing the Borrower
to occupy part of the land the
subject of the deed (for the
purposes of pump station) and
creating an easement over part
of the land (for the purposes
of pipeline).
On 19 August 1992 a licence to
construct a pipeline for the
purpose of conveying water
from MPL294 to ML1280 was
granted under Section 174 of
the Mining Act, 1973 as
Licence No. 7.
(h) 1/751320 Grant of permission to the
Borrower to lay a pipeline
across Crown land dated 28
February 1992. Permission of
William Patrick Pearce dated
26 July 1991 in favour of the
Borrower to lay pipes over the
Land. (Special lease 1963/7
Nyngan to William Patrick
Pearce expired 31/12/91).
On 19 August 1992 a licence to
construct a pipeline for the
purpose of conveying water
from MPL294 to ML1280 was
granted under Section 174 of
the Mining Act, 1973 as
Licence No. 7.
82.
<PAGE>
SCHEDULE 2
SECURITY INTERESTS
Nil
83.
<PAGE>
SCHEDULE 3
EXISTING PERFORMANCE BOND(S)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
DUE NO. DETAILS FACE VALUE
<C> <S> <S> <S>
- -------------------------------------------------------------------------------------------------
13/03/97 96/0013 Mineral Lease 4950 $1,500.00
- -------------------------------------------------------------------------------------------------
07/03/97 96/0010 ELA54 Cobar $5,000.00
- -------------------------------------------------------------------------------------------------
07/03/97 96/0009 ELA432 Cobar $5,000.00
- -------------------------------------------------------------------------------------------------
22/06/97 96/0002 MLA2 Cobar $125,000.00
- -------------------------------------------------------------------------------------------------
13/04/97 95/0008 Exploration Licence Application 78 Cobar (Invoice Nord) $5,000.00
- -------------------------------------------------------------------------------------------------
03/08/97 93/0022 EL4422 $5,000.00
- -------------------------------------------------------------------------------------------------
03/08/97 93/0021 EL 3932 $5,000.00
- -------------------------------------------------------------------------------------------------
03/08/97 93/0020 EL 3931 $5,000.00
- -------------------------------------------------------------------------------------------------
03/08/97 93/0019 EL 3930 $5,000.00
- -------------------------------------------------------------------------------------------------
03/08/97 93/0018 EL 3929 $5,000.00
- -------------------------------------------------------------------------------------------------
03/08/97 93/0017 EL 3928 $5,000.00
- -------------------------------------------------------------------------------------------------
03/08/97 93/0016 EL 3709 $5,000.00
- -------------------------------------------------------------------------------------------------
03/08/97 93/0015 EL 3708 $5,000.00
- -------------------------------------------------------------------------------------------------
03/08/97 93/0014 EL 3707 $5,000.00
- -------------------------------------------------------------------------------------------------
03/08/97 93/0013 EL 3706 $5,000.00
- -------------------------------------------------------------------------------------------------
03/08/97 930012 EL 3138 $5,000.00
- -------------------------------------------------------------------------------------------------
08/03/97 Mining Purpose Lease 294 $400.00
- -------------------------------------------------------------------------------------------------
08/03/97 Mining Purpose Lease 295 $400.00
- -------------------------------------------------------------------------------------------------
08/03/97 Mining Lease 1280 $100,000.00
- -------------------------------------------------------------------------------------------------
TOTAL $297,300.00
- -------------------------------------------------------------------------------------------------
</TABLE>
84.
<PAGE>
SCHEDULE 4
EXISTING CASH ADVANCE(S)
Cash Advance of $4,245,000 due to be repaid 28 February 1997.
85.
<PAGE>
SCHEDULE 5
EXISTING SECURITIES
5.1 The deed entitled "Project Charge Girilambone Copper Project" dated 19
December 1992 made between the Bank and the Borrower.
5.2 The deed entitled "Project Charge Girilambone Copper Project" dated 19
December 1992 made between the Bank and the Trust Beneficiaries.
5.3 The deed entitled "Fixed and Floating Charge" dated 19 December 1992 made
between the Bank and the Borrower.
5.4 The deed of assignment entitled "Deed of Assignment of Contract by Way of
Security - Girilambone Copper Project (Mining Contract)" dated 19
December 1992 made between the Borrower and the Bank.
5.5 The deed of assignment entitled "Deed of Assignment of Contract by Way of
Security - Girilambone Copper Project (Construction Contract)" dated 19
December 1992 made between the Borrower and the Bank.
5.6 The deed of mortgage dated 19 December 1992 made between the Borrower and
the Bank.
5.7 The Real Property Act mortgage over part 18/751315 being Lot 2 in DP
827919 dated 19 December 1992 made between the Borrower and the Bank -
Registered No. U205801.
5.8 The Real Property Act mortgage over part 2/184976 and 3/184976 being Lot
1 in DP 8333281 dated 19 December 1992 made between the Borrower and the
Bank - Registered No. U205803.
5.9 The Real Property Act mortgage over the land described in annexure B
dated 27 January 1993 made between the Borrower and the Bank - Registered
No. I083722.
5.10 The Deed of Release and Indemnity and the Existing Trustee's Deeds of
Covenant.
5.11 Each other document described as a Security for the purposes of the
Existing Facility Agreement.
86.
<PAGE>
EXECUTED as an agreement.
SIGNED for and on behalf of )
BANK OF WESTERN AUSTRALIA LTD )
ACN 050 494 454 )
by )
)
/s/ Steve Blakely ) /s/ Steve Blakely
......................... ) .......................
Name ) Signature
)
the duly authorised agent of its Attorney )
pursuant to Power of Attorney dated )
25 February 1997 and who declares that he has )
not received any notice of the revocation of his )
written agency in the presence of: )
/s/ Richard Hurford
......................................
(Signature of Witness)
/s/ Richard Hurford
......................................
(Name of Witness in Full)
87.
<PAGE>
SIGNED SEALED AND DELIVERED for )
and on behalf of )
NORD AUSTRALEX NOMINEES )
PTY LTD ACN 001 657 272 )
in its capacity as Trustee of the Trust )
by J C Syriatowicz )
its Attorney pursuant to a Power of )
Attorney dated )
and registered Book No. )
and who declares that he has not received )
any notice of the revocation of such )
Power of Attorney in the presence of: )
/s/ Jeffery Goss
......................................
(Signature of Witness)
Jeffery Goss
......................................
(Name of Witness in Full)
SIGNED for and on behalf of )
NORD GOLD COMPANY LIMITED by J C ) /s/ J.C. Syriatowicz
Syriatowicz its Attorney under a Power ) .......................
of Attorney dated and who declares ) (Signature)
that he has not received any notice of the )
revocation of such Power of Attorney in the )
presence of: )
/s/ Jeffery Goss
......................................
(Signature of Witness)
/s/ Jeffery Goss
......................................
(Name of Witness in Full)
88.
<PAGE>
SIGNED for and on behalf of )
NORD PACIFIC LIMITED by J C ) /s/ J C Syriatowicz
Syriatowicz its Attorney under a Power of ) .......................
Attorney dated and who declares ) (Signature)
that he has not received any notice of the )
revocation of such Power of Attorney in the )
presence of: )
/s/ Jeffery Goss
......................................
(Signature of Witness)
Jeffery Goss
......................................
(Name of Witness in Full)
SIGNED for and on behalf of )
NORD HIGHLANDS MINERAL ) /s/ J C Syriatowicz
VENTURE-1 by J C Syriatowicz its ) .......................
Attorney under a Power of Attorney dated ) (Signature)
and who declares that he has not )
received any notice of the revocation of )
such Power of Attorney in the presence of: )
Jeffery Goss
......................................
(Signature of Witness)
Jeffery Goss
......................................
(Name of Witness in Full)
89.
<PAGE>
ANNEXURE A
AMENDED & RESTATED FACILITY AGREEMENT
DRAWDOWN NOTICE
{INSERT DATE}
TO: BANK OF WESTERN AUSTRALIA LTD ACN 050 494 454 ("BANK")
ATTN: {INSERT NAME}
FROM: NORD AUSTRALEX NOMINEES PTY LTD ACN 001 657 272 in its capacity as
trustee of the Trust ("BORROWER")
RE: DRAWDOWN NOTICE
This notice is given pursuant to clause 5.1 of the Amended & Restated Facility
Agreement ("FACILITY AGREEMENT") dated {INSERT DATE} between the Bank and the
Borrower and the parties described as the Trust Beneficiaries. Terms defined in
the Facility Agreement shall bear such defined meanings when used herein.
The Borrower hereby irrevocably gives notice that it wishes to make a Drawdown
under the Facility described in Item 1 below on the date set out in Item 3
below. The amount of the Advance the subject of such Drawdown is set out in
Item 2 below. The term of such Drawdown is set out in Item 4 below.
Such Drawdown is required for the purpose or purposes set out in Item 5 below.
ITEM 1 : Cash Advance Facility, - {SPECIFY WHICH FACILITY IS
Performance Bond Facility APPLICABLE
or Treasury Facility
ITEM 2 : Amount - {INSERT AMOUNT IN US
DOLLARS}
ITEM 3 : Date of proposed Drawdown - {INSERT DATE}
ITEM 4 : Term of Drawdown - {INSERT FUNDING PERIOD}
ITEM 5 : Purpose(s) - {INSERT PURPOSE(S)}
1.
<PAGE>
ANNEXURE B
AMENDED & RESTATED FACILITY AGREEMENT
RENEWAL NOTICE: ADVANCE
{INSERT DATE}
TO: BANK OF WESTERN AUSTRALIA LTD ACN 050 494 454 ("BANK")
ATTN: {INSERT NAME}
FROM: NORD AUSTRALEX NOMINEES PTY LTD ACN 001 657 272 in its capacity as
trustee of the Trust ("BORROWER")
RE: RENEWAL NOTICE
This notice is given pursuant to clause 5.7 of an Amended & Restated Facility
Agreement ("FACILITY AGREEMENT") dated {INSERT DATE} between the Bank and the
Borrower and the parties described as the Trust Beneficiaries. Terms defined in
the Facility Agreement shall bear such defined meanings when used herein.
The Borrower hereby irrevocably gives notice that it wishes to renew a Drawdown
with respect to the Advance described in Item 1 in relation to the Facility
specified in Item 2 on the date set out in Item 4 below. The amount of the
Advance the subject of such Drawdown is set out in Item 3 below. The term of
such renewed Drawdown is set out in Item 5 below.
ITEM 1 : Advance Being Renewed - {PROVIDE DETAILS OF
RELEVANT ADVANCE}
ITEM 2 : Cash Advance Facility, - {SPECIFY RELEVANT FACILITY}
Performance Bond Facility
or Treasury Facility
ITEM 3 : Amount - {INSERT AMOUNT IN US
DOLLARS}
ITEM 4 : Renewal Date - {INSERT DATE}
ITEM 5 : Term of Drawdown - {INSERT FUNDING PERIOD}
The Borrower represents and warrants that:
(a) the representations and warranties in clause 18 of the Facility Agreement
on the part
1.
<PAGE>
of the Borrower are true as though they had been made at the date of this
Renewal Notice and the Renewal Date specified above in respect of the facts
and circumstances then subsisting; and
(b) no Event of Default or Potential Event of Default is subsisting or will
result from the Drawing.
SIGNED BY
NORD AUSTRALEX NOMINEES PTY LTD
ACN 001 657 272
in its capacity as trustee of the Trust
by {INSERT NAME OF AUTHORISED OFFICER}
..................................
2.
<PAGE>
ANNEXURE C
AMENDED & RESTATED FACILITY AGREEMENT
FIXED RATE REQUEST
TO: BANK OF WESTERN AUSTRALIA LTD ACN 050 494 454
FIXED RATE REQUEST NO. [ ]
NORD AUSTRALEX NOMINEES PTY LTD ACN 001 657 272 in its capacity as trustee of
the Trust ("BORROWER") hereby gives you a Fixed Rate Request pursuant to clause
7 of the Amended & Restated Facility Agreement dated ** 1997 between the
Borrower and yourselves and the Trust Beneficiaries ("FACILITY AGREEMENT").
Terms defined in the Facility Agreement have the same meanings where used
herein. The following particulars are given pursuant to clause 7 of the
Facility Agreement.
1. The relevant Accommodation Date is [ ].
2. The aggregate amount of Advances it is desired to discount at a Fixed Rate
is [SPECIFY IN US DOLLARS].
3. The Funding Period during which the Fixed Rate is desired is [ ]
to [ ].
4. The Borrower represents and warrants that:
(a) the representations and warranties of the Borrower set out in
clause 18 of the Facility Agreement are true as if made at the
date of this request; and
(b) no Event of Default or Potential Event of Default has occurred
and is continuing or would result from this request.
DATED the day of 1997
1.
<PAGE>
SIGNED SEALED AND DELIVERED for )
and on behalf of )
NORD AUSTRALEX NOMINEES )
PTY LTD ACN 001 657 272 )
in its capacity as Trustee of the Trust )
by )
its Attorney pursuant to a Power of )
Attorney dated )
and registered Book No. )
and who declares that he has not received )
any notice of the revocation of such )
Power of Attorney in the presence of: )
...................................
(Signature of Witness)
...................................
(Name of Witness in Full)
** Insert applicable information
2.
<PAGE>
ANNEXURE D
AMENDED & RESTATED FACILITY AGREEMENT
FIXED RATE CONFIRMATION
TO: NORD AUSTRALEX NOMINEES PTY LTD in its capacity as trustee of the Trust ACN
001 657 272
FIXED RATE CONFIRMATION NO. [ ]
BANK OF WESTERN AUSTRALIA LTD ACN 050 494 454 refer to your Fixed Rate Request
No. [ ] dated [ ] ("REQUEST") and hereby give you a Fixed
Rate Confirmation pursuant to clause 7.3 of the amended and restated facility
agreement made the [ ] day of [ ] 1997 between yourselves and
ourselves and the Trust Beneficiaries therein referred to ("FACILITY
AGREEMENT"). Terms defined in the Facility Agreement have the same meanings
where used herein. The following particulars in relation to the proposed
provision of Advances at a Fixed Rate are given pursuant to clause 7.3 of the
Facility Agreement and subject to the provisions of the Facility Agreement.
1. Fixed Rate.
2. Aggregate Amount of Advances to be provided at the Fixed Rate.
3. Relevant Accommodation Date.
4. Funding Period.
....................................
For and on behalf of
BANK OF WESTERN AUSTRALIA LTD
ACN 050 494 454
1.
<PAGE>
ITEM 6 : Name of Beneficiary (in - {INSERT NAME OF BENEFICIARY}
the case of a Performance
Bond)
The Borrower represents and warrants that:
(a) the representations and warranties in clause 18 of the Facility Agreement
on the part of the Borrower are true as though they had been made at the
date of this Drawdown Notice and the Drawdown Date specified above in
respect of the facts and circumstances then subsisting; and
(b) no Event of Default or Potential Event of Default is subsisting or will
result from the Drawing.
SIGNED BY
NORD AUSTRALEX NOMINEES PTY LTD
ACN 001 657 272
in its capacity as trustee of the Trust
by {INSERT NAME OF AUTHORISED OFFICER}
..................................
* Delete if inapplicable
2.
<PAGE>
ANNEXURE F
SALES CONTRACTS
1.
<PAGE>
ANNEXURE G
1. PROJECT LAND
TITLE REFERENCE
PROJECT: GIRILAMBONE MINING
AUTO CONSOL 738-177 (Lot 6 Sec 1 in
DP986, Lot 8 Sec 3 in DP986)
8/1/986
9/1/986
AUTO CONSOL 644-162 (Lot 4
Sec 2 in DP986, Lot 7 Sec 2 in DP986)
AUTO CONSOL 952-1 (Lot 8
Sec 4 in DP986, Lot 10 Sec 4 in DP986)
21/920633
22/920633
7/5/986
AUTO CONSOL 740-5 (Lot 8 Sec 5
in DP986, Lot 10 Sec 5 in DP986)
9/5/986
4/10/986
4/14/986
AUTO CONSOL 14511-23 (lots 8-11
Sec 14 in DP986)
AUTO CONSOL 14064-171 (Lots 1-4
Sec 1 in DP986, Lot 6 Sec 2 in DP986
Lot 7 Sec 3 in DP986, Lots 1-3 Sec 4
in DP986, Lot 7 Sec 4 in DP986, Lot 4
Sec 5 in DP986, Lot 6 Sec 5 in DP986,
Lots 6-8 Sec 10 in DP986, Lots 4-7 Sec 11
in DP986, Lot 1 Sec 14 in DP986, Lot 3
Sec 14 in DP986, Lot 5 Sec 14 in DP986,
Lot 7 Sec 14 in DP986, Lot 1 Sec 15 in
1.
<PAGE>
DP986, Lots 3-7 Sec 15 in DP986,
Lots 6-8 Sec 16 in DP986 and Lot 10
Sec 16 in DP986)
AUTO CONSOL 15249-125 (Lots 28, 33,
42, 100, 145 in DP751315)
AUTO CONSOL 6795-137 (Lots 2, 3 in
DP751315)
AUTO CONSOL 8645-101 (Lots 1-13, 15-17
and 19-20 in DP4472)
1/822426
1/822427
1/822428
2/827919
1/833281
21/861603
22/861603
Vol 14064 Folio 172
161/605753
21/829375
22/829375
412/618374
413/618374
334/623204
4151/712894
14/261826
17/261826
41/595519
2.
<PAGE>
36/605220
PROJECT: GIRILAMBONE NORTH
34/864483
35/864483
147/824129
1/827919
2/833281
12/858163
2. MINING TENEMENTS
COBAR, NEW SOUTH WALES
Mining Lease 1280
Mining Lease 1383
Mining Lease 4950
Mining Purposes Lease 294
Mining Purposes Lease 295
Exploration Licence 3138
Exploration Licence 3706
Exploration Licence 3707
Exploration Licence 3708
Exploration Licence 3709
Exploration Licence 3712
Exploration Licence 3928
Exploration Licence 3929
Exploration Licence 3930
3.
<PAGE>
Exploration Licence 3931
Exploration Licence 3932
Exploration Licence 4038
Exploration Licence 4422
Exploration Licence 4828
Exploration Licence 4961
Exploration Licence 4962
Exploration Licence 5010
EAST MURCHISON FIELD, WESTERN AUSTRALIA
Mining Lease 53/97
Mining Lease 53/98
Mining Lease 53/99
CLONCURRY, QUEENSLAND
Exploration Permit for Mining 6961
Exploration Permit for Mining 7051
Exploration Permit for Mining 7085
Exploration Permit for Mining 8127
Exploration Permit for Mining 8833
Exploration Permit for Mining 10492
This list may be varied or added to by way of exchange of letters between the
Bank and the Borrower.
4.
<PAGE>
ANNEXURE E
AMENDED & RESTATED FACILITY AGREEMENT
AUTHORISED OFFICER'S CERTIFICATE
Amended & Restated Facility Agreement dated **, 1997 to
provide a facility for the lending of money between BANK OF
WESTERN AUSTRALIA LTD ACN 050 494 454 ("BANK") and NORD
AUSTRALEX NOMINEES PTY LTD ACN 001 657 272 in its capacity
as trustee of the Trust ("BORROWER") and the parties named
as the Trust Beneficiaries in that document
- --------------------------------------------------------------------------------
I, ** of ** hereby certify as a Condition Precedent to the effectiveness of the
above-mentioned Amended & Restated Facility Agreement (hereinafter called the
"FACILITY AGREEMENT") that:
1. I am an Authorised Officer of the Borrower;
2. the resolutions annexed hereto as Attachment I are a true copy of
resolutions passed by the Board of Directors of the Borrower at a duly
convened meeting thereof in conformity with the memorandum and
articles of association of the Borrower held on ** at which a quorum
was present throughout;
3. such resolutions are in full force and effect on the date of this
certificate;
4. annexed hereto as Attachment II is a specimen signature of each of the
Authorised Officers referred to in such resolutions and such
signatures are the usual signatures of each such person;
5. the copy of memorandum and articles of association of the Borrower
provided to the Bank on ** 1997 remain true and correct copies as of
the date of this certificate;
6. the Borrower is {not}* a party to a Trust Deed to facilitate
borrowings;
*{7. the execution and performance of the Facility Agreement by the
Borrower will not result in the Borrower breaching or being in default
under any covenant or obligation on its part contained in such Trust
Deed; and}
*{8. no Event of Default or Potential Event of Default has occurred and is
continuing or would result from the execution and performance of the
Facility Agreement.}
Any term defined in the Facility Agreement shall bear such defined meaning when
used herein.
DATED: **
......................................
Authorised Officer
* Delete if inapplicable
** Insert applicable information
1.
<PAGE>
ATTACHMENT I
EXTRACT OF RESOLUTIONS OF THE BOARD OF DIRECTORS
BORROWER
PASSED AT A MEETING HELD ON **
- --------------------------------------------------------------------------------
PRODUCED to the meeting was the **, 1997 draft of an Amended & Restated Facility
Agreement ("FACILITY AGREEMENT"), providing for, inter alia, Nord Australex
Nominees Pty Ltd ACN 001 657 272 in its capacity as trustee of the Trust
("COMPANY") to borrow money from Bank of Western Australia Ltd ACN 050 494 454.
RESOLVED THAT:
1. the Company enter into and accept the Facility Agreement by signing the
Facility Agreement;
2. ** and ** and each of them severally be and are hereby {authorised in the
name and on behalf of the Company to execute the Facility Agreement and any
other document required in connection with the Facility Agreement,
including without limitation, any of the Securities to which the Company is
a party and any notice relating to the Facility Agreement, with such
changes as either of them deems fit}* {appointed the attorneys of the
Company to execute the Facility Agreement and any other document required
in connection with the Facility Agreement, including without limitation,
any of the Securities to which the Company is a party and any notice
relating to the Facility Agreement, with such changes as either of them
deems fit, and that the Common Seal of the Company be affixed accordingly
to a Power of Attorney substantially in the form of the document produced
to the meeting giving effect to such appointment}*; and
3. the execution of the Facility Agreement or any other document in connection
with the Facility Agreement (including without limitation, any of the
Securities to which the Company is a party and any notice relating to the
Facility Agreement) by ** or ** shall be conclusive evidence to all persons
that the relevant document has been executed in form and substance approved
by the Directors of the Company and that by signing such Facility Agreement
the Company has entered into the Facility Agreement.
This is the Attachment I referred to in my certificate dated **.
.......................................
Authorised Officer
* Delete inapplicable alternative
** Insert applicable information
2.
<PAGE>
ATTACHMENT II
SPECIMEN SIGNATURES
NAME: SIGNATURE:
.............................. ..............................
.............................. ..............................
This is the Attachment II referred to in my Certificate dated **.
..............................
Authorised Officer
** Insert applicable information
3.
<PAGE>
Exhibit 10.43
PROMISSORY NOTE
$2,000,000.00 (US) October 24, 1996
ON DEMAND, FOR VALUE RECEIVED, the undersigned NORD PACIFIC LIMITED
(the "Maker"), a corporation duly organized and existing under the laws of
Bermuda, having a principal place of business at 22 Church Street, Hamilton,
HM11, Bermuda, hereby promises to pay to the order of NORD RESOURCES
CORPORATION (the "Payee"), at 8150 Washington Village Drive, Dayton, Ohio
45458, or at such other place as the Payee may, from time to time, direct by
written notice to Maker, the outstanding principal amount hereunder, which
shall be equal to the aggregate amount of those amounts set forth under the
column titled "Advance" on the grid (the "Grid") attached hereto and hereby
made a part hereof, with interest thereon at the "Prime Rate" (as defined
below) plus one (1%) percent (the "Interest Rate").
All amounts advanced hereunder shall be at the sole discretion of the
Payee and nothing stated herein is intended to, nor shall be deemed to,
create any obligation on behalf of the Payee to advance any funds to Maker
hereunder. All amount advanced hereunder shall be endorsed by the holder
hereof on the Grid. In no event shall the aggregate amount of all advances
(including any interest accrued thereon) made hereunder exceed TWO MILLION
($2,000,000.00) DOLLARS in United States currency.
Notwithstanding anything to the contrary contained herein, all amounts
of principal and interest outstanding under this Note shall be due and
payable within five (5) days after the closing of any public offering of
securities of Maker.
Interest on any amounts advanced under this Note at the Interest Rate
shall accrue and be computed from the date of each advance until the date of
payment of the principal balance hereof, and shall be due and payable on or
before the fifth (5th) calendar day of each month during the term of this
Note. All payments of principal and interest on this Note shall be made at
the office of Payee set forth above.
The term "Prime Rate" as used shall mean the prime (base) rate
published by The Chase Manhattan Bank, N.A., as such rate may be adjusted
from time to time. In the event The Chase Manhattan Bank, N.A. shall, at any
time while amounts remain due to Maker from Payee under this Note, cease to
publish its prime rate, then the "Prime Rate" hereunder shall be the prime
(base) rate published in the Wall Street Journal, as such rate may be
adjusted from time to time.
In the event that any amount of principal or interest under this Note
is then outstanding as of March 31, 1997, the Payee, or holder of this Note,
shall have the option to convert any or all of the then outstanding amount
due under this Note, including accrued and unpaid interest, into fully paid
and non-assessable shares of the common stock, $.01 par value (the "Common
Stock"), of Maker (the "Conversion Shares") at a conversion price per share
equal to the average of the high and low daily trading prices of the Common
Stock on the NASDAQ National Market System (converted into American Deposit
Receipts if then being traded thereon instead of Common Stock) for a period
of twenty (20) trading days prior to and including March 31, 1997 (the
"Conversion Value").
In the event of conversion in full, Maker's delivery to Payee of the
fixed number of shares of Common Stock into which this Note is convertible
will cancel Maker's obligation to pay the
<PAGE>
outstanding principal amount of this Note, plus accrued interest, for the
period from the issue date of this Note to the Conversion Date.
In the event of partial conversion, the Conversion Value of the
Conversion Shares will be used first to pay any accrued and unpaid interest
with the remainder reducing the then unpaid principal balance due hereunder.
Such reduction will be properly reflected on the Grid.
In an Event of Default (as hereinafter defined) occurs or is
continuing, then the Payee may declare the principal and interest accrued on
the principal balance of this Note to be due and payable immediately, by
a notice in writing to Maker, and upon any such declaration such principal
and interest shall become immediately due and payable. If an Event of Default
specified in paragraphs (b) or (c) of the definition of "Event of Default"
below occurs, the principal of this Note, and accrued interest hereon, shall,
IPSO FACTO, become immediately due and payable without any declaration or
other act by any person. Maker hereby agrees to pay all reasonable costs and
expenses of Payee (including, without limitation, reasonable attorneys' fees)
in connection with any collection proceeding relating to this Note. In
addition to the foregoing and notwithstanding anything to the contrary
contained in this Note, if the Conversion Date occurs on or after an Event of
Default, Payee shall continue to have the right to convert this Note into
Conversion Shares, if the Payee elects to do so.
For purposes hereof, each of the following events shall constitute an
"Event of Default":
(a) default in the timely payment of the principal and accrued
interest of this Note upon demand by Payee;
(b) the entry of a decree or order by a court having jurisdiction over
the parties hereto and the subject matter hereof, adjudging Maker a
bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of
or in respect of Maker under bankruptcy or similar law or any
other applicable law, or appointing a receiver, liquidator, assignee,
trustee, sequestrator or other similar official of Maker or of
any substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree
or order unstayed and in effect for a period of thirty (30)
consecutive days; or
(c) the institution by Maker of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or the filing by
it of a petition or answer or consent seeking
reorganization or relief under Federal bankruptcy law or any other
applicable Federal or state law, or the consent by it to the
filing of such petition or to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator or similar official of
Maker or of any substantial part of its property, or the making by
it of an assignment for the benefit of creditors, or the admission
by it in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by Maker in
furtherance of any such action.
All payments hereunder shall be made in lawful money of the United
States of America.
-2-
<PAGE>
All amounts paid, transferred or issued to Payee pursuant to the
Agreement and this Note shall be made free and clear of, and without any
deduction or withholding on account of, taxes imposed by the United States of
America. If Maker is required to make any deduction or withholding on account
of any such tax then:
(i) the amount to be paid, transferred or issued to Payee shall be
increased to the extent necessary to ensure that after the making of
that deduction or withholding, Payee receives on a net after tax basis
what it would have received had no such withholding been required or
made; and
(ii) Maker shall indemnify Payee on an after tax basis against any
such tax and all claims, liabilities and related costs and expenses of
Payee in connection with the imposition or assertion of any such tax.
Notwithstanding anything to the contrary in this Note, if the Note is
assigned in whole or in part and such deduction or withholding is required
from the amount to be paid, transferred or issued pursuant to the Agreement
and this Note to the assignee whereas it would not have been required had it
been paid, transferred or issued to the original Payee, the provisions of
this paragraph shall not apply.
This Note shall be governed by and construed in accordance with the laws
of the State of New York. Any provision hereof which may prove unenforceable
under any law shall not affect the validity or any other provision hereof.
The Maker hereby waives presentment, demand for payment, notice of dishonor,
protest and notice of protest, and any or all other notices or demands in
connection with this Note. The liability of the Maker shall be unconditional
and shall not be in any manner affected by any indulgence whatsoever granted
or consented by the Payee, including, but not limited to, any extension of
time, renewal, waiver or other modification. Any failure of the Payee to
exercise any right hereunder shall not be construed as a waiver of the right
to exercise the same or any other right at any time and from time to time
thereafter.
NORD PACIFIC LIMITED
By: [SIGNATURE]
--------------------------------
Name:
Title:
-3-
<PAGE>
Exhibit 24.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in (i) Registration Statement
No. 33-41147 of Nord Pacific Limited on Form S-8, (ii) Registration Statement
No. 33-51752 of Nord Pacific Limited on Form S-8, (iii) Registration
Statement No. 33-84654 of Nord Pacific Limited on Form S-8, (iv) Registration
Statement No. 33-95514 of Nord Pacific Limited on Form S-8 and (v)
Registration Statement No. 33-21159 of Nord Pacific Limited on Form S-8 of
our report dated March 14, 1997, appearing in the Annual Report on Form 10-K
of Nord Pacific Limited for the year ended December 31, 1996.
DELOITTE & TOUCHE
Chartered Accountants
Hamilton, Bermuda
March 21, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
NORD PACIFIC LIMITED FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 439
<SECURITIES> 0
<RECEIVABLES> 1,868
<ALLOWANCES> 0
<INVENTORY> 326
<CURRENT-ASSETS> 4,062
<PP&E> 9,861
<DEPRECIATION> 4,450
<TOTAL-ASSETS> 39,741
<CURRENT-LIABILITIES> 7,150
<BONDS> 3,334
0
0
<COMMON> 476
<OTHER-SE> 23,733
<TOTAL-LIABILITY-AND-EQUITY> 39,741
<SALES> 16,178
<TOTAL-REVENUES> 16,178
<CGS> 8,969
<TOTAL-COSTS> 8,969
<OTHER-EXPENSES> 191
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 406
<INCOME-PRETAX> 3,237
<INCOME-TAX> 2,620
<INCOME-CONTINUING> 617
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 617
<EPS-PRIMARY> .06
<EPS-DILUTED> 0
</TABLE>
