The following definitions apply unless the context requires otherwise.

Act means the Mining Act 1992.

Applications means the applications for tenements under the Act listed in Part B of Schedule 1 and any tenements granted pursuant to those applications.

Bank means Australia and New Zealand Banking Group (PNG) Limited or any successor to, or assignee of, all or substantially all of the business of that bank.

Business Day means a day other than a Saturday, Sunday or public holiday in Brisbane or Port Moresby.

Commencement of Commercial Production means the last day of the calendar month in which for the first time the Refinery treats nickel and cobalt ore from the Special Mining Lease at an average daily rate over the month equivalent to 80% or more of the target rate set out in the Feasibility Study.

Completion Date means the date which is two Business Days after the date when the conditions precedent in clause 2.1 have been satisfied or waived in accordance with this Agreement.

Completion means the completion of the sale and purchase of the Sale Interest in accordance with clause 5.

Cut-Off Date means 15 April, 2000 or such later date agreed to in writing by the parties.

Deed of Assumption means the deed required by clause 16.6 of the Joint Venture Agreement, substantially in the form of the deed of assumption marked Annexure A.

Deed of Settlement and Release means the deed of settlement and release to be entered into between the Vendor, Nord Pacific, Ramu Nickel and Highlands Pacific, in the form of the deed marked Annexure B.

Encumbrance includes an interest or power:

(a)   reserved in or over any interest in any asset including, without limitation, any retention of title, caveat, equity, garnishee, writ of execution, right of executors, right of set-off, lease or licence to occupy; or

(b)   created or otherwise arising in or over any interest in any asset under a bill of sale, mortgage, charge, pledge, lien, trust or power,

whether existing or agreed to be granted or created, and also any third party right or interest including any royalty, net profit interest or carried interest, but does not include the State's State Equity Entitlement.

EPM means Eastern Pacific Mines Limited (company number 1-2774), a company incorporated in Papua New Guinea and having its registered office at C/- PricewaterhouseCoopers, Second Floor, ANZ Haus, Central Avenue, Lae.

Exploration Licences means the exploration licences listed in Part A of Schedule 1 and any tenement issued pursuant to or in substitution for those licences.

Feasibility Study means the feasibility study by Fluor Daniel Ltd and HA Simmons Ltd prepared on behalf of the Ramu Joint Venture dated November, 1998.

Financial Close means the date upon which the lender or lenders under the Project Financing have given an irrevocable commitment in writing to provide the Project Financing, subject only to conditions precedent to drawdown imposed as a term of the Project Financing.

Information means geological, geophysical or technical information, being information that relates to the presence, absence or extent of deposits of minerals in the area the subject of the Titles or is likely to be of assistance in determining the presence, absence or extent of deposits in that area and has been obtained from exploration or prospecting, or mining for minerals (including without limitation the books, records, accounts, seismic and interpretive data, notes, drawings, maps and other information (in various media) related to each of the Titles and Sale Interest).

Joint Venture Agreement means the agreement dated 17 November 1978 between Carpentaria Exploration Company Pty Ltd, Nord Exploration Company (Pty.) Ltd and Eastern Pacific Mines Pty Ltd, as amended or varied from time to time, whether before or after Completion.

Kina Equivalent means, in respect of a particular US$ amount on a particular date, the amount of Kina which can be purchased with that amount of US$ at the selling rate quoted by the Bank at the close of currency trading by the Bank on the Business Day prior to that date (or, if OML or the Purchaser sells that amount of US$ to the Bank in return for Kina at any time on that date or the Business Day prior to that date, the amount of Kina received by OML or the Purchaser, as the case may be, from the Bank for that amount of US$).

Management Committee means the operating or management committee established by the Joint Venture Agreement.

Minister means the Minister who for the time being is the Minister administering the Act.

Other Assets means all mining, drilling and exploration equipment, cash on hand, pre-paid expenses, accounts receivable and other liquid assets, and all assets held or used by the Participants in relation to the Ramu Joint Venture.

Orogen Option Agreement has the same meaning as that given to the term "Option Agreement" in section 2 of the Mineral Resources Development Company Pty Limited (Privatisation) Act 1996.

Participants means the participants in the Ramu Joint Venture from time to time.

(a)     mining and processing the nickeliferous laterite ore body discovered within Exploration Licence No. 193 at Kurumbukari, Madang Province;

(b)     subsequent beneficiation, transportation, treatment and refining of that ore;

(c)     all processes associated with the above; and

(d)     development and construction of all infrastructure and equipment required in connection with the above processes,

as described in the Feasibility Study or in any amended or replacement feasibility study.

Project Agreements means the Vendor's rights and obligations (if any) under the agreements and other documents described in Schedule 3.

Project Financing means the financing approved by the Management Committee in accordance with the Joint Venture Agreement, and obtained by the Participants for the purpose of implementing the Project (but for the avoidance of doubt does not include any finance obtained by a Participant individually for such purpose or to finance payment or performance of its obligations under the Joint Venture Agreement).

Purchase Price is defined in clause 3.2.

Put Option Deed means the put option deed to be entered into between Highlands Pacific, Ramu Nickel, OML and the Purchaser, in the form of the deed marked Annexure C.

Ramu Joint Venture means the joint venture governed by the Joint Venture Agreement.

Refinery means the refinery to be constructed for treatment and refining of ore as part of the Project (which is currently contemplated by the Feasibility Study to be located at Basamuk, Madang Province).

Replacement Joint Venture Agreement means the agreement to be negotiated between Ramu Nickel, Highlands Pacific, the Purchaser and OML referred to in clause 2.1(f).

Sale Interest means a 31.5% undivided beneficial participating interest in the Ramu Joint Venture and includes, without limitation, a 31.5% beneficial interest in and to the Titles, the Project Agreements, the Information and the Other Assets.

Section 163AK Agreement means the agreement between the Vendor and the Purchaser under Section 163 AK of the Income Tax Act 1959, in the form of Schedule 2.

Special Mining Lease means the special mining lease applied for under the Act in respect of the Kurumbukari site for the purposes of implementing the Project.

State means the Independent State of Papua New Guinea.

State Equity Entitlement means the State's right under the Exploration Licences to acquire a 30% participating interest in the Project.

Titles means:

Warranties means the warranties in clauses 6.1 and 6.3.

Headings are for convenience only and do not affect interpretation. The following rules of interpretation apply unless the context requires otherwise.

This Agreement (other than clause 1, this clause 2 and clauses 7 to 19 (both inclusive)) is conditional on each of the following having occurred on or before the Cut-Off Date:

approval by the Minister under section 118(2)(a) of the Act of a transfer by or on behalf of the Vendor to the Purchaser of a 31.5% legal and beneficial interest in:

due execution by Ramu Nickel, the Vendor, Nord Pacific, the Purchaser, OML and, if it will still hold an interest in the Ramu Joint Venture following Completion, EPM of the Deed of Assumption and approval by the Minister under section 119(4)(a) of the Act of the Deed of Assumption, on terms and conditions satisfactory to the Purchaser;

due execution by Highlands Pacific, Ramu Nickel, the Vendor and Nord Pacific of the Deed of Settlement and Release and approval by the Minister under section 119(4)(a)of the Act of the Deed of Settlement and Release, on terms and conditions satisfactory to the Purchaser;

due execution by Highlands Pacific, Ramu Nickel, the Purchaser and OML of the Put Option Deed and approval by the Minister under section 119(4)(a) of the Act of the Put Option Deed, on terms and conditions satisfactory to the Purchaser; and

If each of the conditions in clause 2.1 are not satisfied or waived in accordance with this Agreement on or before the Cut-Off Date, any party may terminate this Agreement by giving each of the other parties five Business Days' notice to that effect. In the event of termination in accordance with this clause 2.2, no party will have any further rights or obligations under this Agreement, except in respect of breaches occurring prior to such termination

Each of the Parties shall use its best endeavours to ensure that each of the conditions in clause 2.1 are satisfied as soon as possible after the date of this Agreement and, without limiting the generality of the foregoing:

Subject to clause 6.4, the Warranties shall not merge on nor be extinguished by Completion or any other event.

Each party warrants to the other party that it has full corporate power and legal authority (including without limitation, all necessary State or other consents, authorities and approvals) to execute and to perform this Agreement and all other related agreements, that the execution and performance does not contravene any contractual, legal, equitable or other obligations of that party of any nature and that this Agreement constitutes a binding obligation of that party. The Warranties shall not merge on, or be extinguished by Completion or by any other event but shall remain in full force.

(a)   The aggregate of all claims and demands that may be made by the Purchaser in respect of the Warranties shall not exceed the sum of the Purchase Price, costs associated with the purchase under this Agreement and legal costs, on a solicitor and own client basis, incurred by the Purchaser in enforcing the Warranties.

(b)   The Purchaser shall not be entitled to make any claim or demand against the Vendor, and the Vendor shall have no liability, for breach of any Warranty unless:

the claim is made by notice by the Purchaser to the Vendor setting out reasonably complete particulars of the claim; and

the notice of claim is given by the Purchaser no later than one year after the Completion Date.

(c)   In the event of any claim or demand being made by a third party after Completion, which involves or could involve the Vendor in liability to the Purchaser under this Agreement, the Purchaser shall promptly notify the Vendor and provide it with details of the claim or demand and the Purchaser shall, at the Vendor's direction and expense, including all legal and accounting expenses and the reasonable expense of collating and preparing all relevant materials, take any appropriate action that the Vendor may reasonably require, including prosecution of any appeals or actions. The Purchaser shall, in furtherance of this, make its books and records available to the Vendor for inspection and copying during normal business hours and reasonably co-operate with the Vendor in any preparation for the hearing.

For the avoidance of doubt, nothing in this Agreement or in any agreement or deed contemplated by this Agreement shall limit or restrict in any way:

(a) the right of the State to acquire up to a 30% participating interest in the Ramu Joint Venture under the terms of any exploration licence; or

(b) the rights of OML or the Purchaser under the Orogen Option Agreement.

OML hereby guarantees in favour of each of the other parties to this Agreement (other than the Purchaser) the due and punctual performance by the Purchaser of the Purchaser's obligations under this Agreement.

The guarantee given by OML under clause 8.1 is not affected by any release or discharge of the Purchaser, nor by any amendment to this Agreement which is binding on all parties to this Agreement.

Unless otherwise agreed by the parties, all information obtained by the Purchaser under this Agreement shall be kept confidential up until Completion.

This Agreement and the agreements and deeds expressly contemplated by it contain the entire agreement of the parties with respect to their subject matter. They set out the only conduct relied on by the parties and supersede all earlier conduct by the parties with respect to their subject matter.

Any notice given under this Agreement:

must be in writing addressed to the intended recipient at the address shown below or the address last notified by the intended recipient to the sender:

must be signed by a person duly authorised by the sender; and

will be taken to have been given or made:

(in the case of delivery in person or by post) when delivered, received or left at the above address; and

(in the case of facsimile) on receipt by the sender of the answerback code of the recipient at the end of the transmission,

but if delivery or receipt occurs on a day on which business is not generally carried on in the place to which the communication is sent or is later than 4 pm (local time) it will be taken to have been duly given or made at the commencement of business on the next day on which business is generally carried on in the place.

This Agreement may be amended only by another agreement in writing executed by all parties.

All remedies, rights, undertakings, obligations or agreements of the parties arising by law, this Agreement or otherwise shall be cumulative and none shall be in limitation of any other. Each party may follow any remedy to which that party is entitled by law, this Agreement or otherwise, concurrently or successively at that party's option.

Each party shall take all steps, execute all documents and do everything reasonably required by any other party to give effect to any of the transactions contemplated by this Agreement.

Each party shall bear its own costs and expenses in connection with the preparation, negotiation and execution of this Agreement, except that the Purchaser shall bear any stamp duty payable in connection with this Agreement or the transfer of the Sale Interest under it.

This Agreement is governed by the laws of Papua New Guinea. The parties submit to the non-exclusive jurisdiction of courts exercising jurisdiction there.

Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction will be ineffective in that jurisdiction to the extent of the prohibition or unenforceability. That will not invalidate the remaining provisions of this Agreement nor affect the validity or enforceability of that provision in any other jurisdiction.

No failure to exercise and no delay in exercising any right, power or remedy under this Agreement will operate as a waiver. Nor will any single or partial exercise of any right, power or remedy preclude any other or further exercise of that or any other right, power or remedy. No waiver of any provision of, or consent to any departure from, this Agreement by any of the parties shall be effective unless in writing and then only in the specific instance and for the purpose for which it is given.

This Agreement may be executed in any number of counterparts. All counterparts taken together will be taken to constitute one agreement.