EXHIBIT 10.2
 
 
OPERATING AGREEMENT
 
between
 
KWAGGA GOLD (PROPRIETARY) LIMITED
 
and
 
WITS BASIN PRECIOUS MINERALS INCORPORATED
 

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TABLE OF CONTENTS
 
1.
 
DEFINITIONS AND INTERPRETATIONS
1
 
1.1
Definitions.
1
 
1.2
Number and Gender
7
 
1.3
Annexes
7
2.
 
TITLE TO ASSETS
7
 
2.1
Title
7
3.
 
MANAGER
8
 
3.1
Appointment of Manager
8
 
3.2
Powers and Duties of Manager
8
 
3.3
Manager Not Liable
11
 
3.4
Conduct of Operations
11
 
3.5
Termination
11
 
3.6
Payments to Manager
12
 
3.7
Transaction with Affiliates
12
 
3.8
Agent
12
 
3.9
Operation Contracts
12
4.
 
WORK PROGRAMS AND BUDGETS
13
 
4.1
Operations Pursuant to Programs
13
 
4.2
Presentation of Programs and Budgets
13
 
4.3
Feasibility Studies and Mine Construction Programs
13
 
4.4
Review and Approval of Proposed Work Programs and Budgets
14
 
4.5
Budget Overruns/Contingency Provision
15
 
4.6
Emergency or Unexpected Expenditures.
15
5.
 
ACCOUNTS AND SETTLEMENTS
15
 
5.1
Monthly Statements
15
 
5.2
Cash Calls
15
 
5.3
Failure to Pay Invoices
16
 
5.4
Audits
16
 
5.5
Manager's Own Funds
16
6.
 
OPERATING PLANS
16
 
6.1
Obligation to Pay Operating Costs and Overruns
16
 
6.2
Operating Plans
16
 
6.3
Excess Operating Costs and Overruns
17
 
6.4
No Agreement on Operating Plans
17
 
6.5
Suspension of Mining
17
 
6.6
Shut Down Plan
17
 
6.7
Bank Account
18
 
6.8
Loans
18
7.
 
DISTRIBUTIONS AND MARKETING
18
 
7.1
Distribution of Distributable Cash Flow
18

 
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7.2
Appointment of Manager as Marketing Manager
19
 
7.3
Power of Marketing Manager.
19
8.
 
TERMINATION
20
 
8.1
Termination by Expiration or Agreement
20
 
8.2
Continuing Obligations
20
 
8.3
Disposition of Assets on Termination
20
 
8.4
Continuing Authority
20
9.
 
ACQUISITION, ABANDONMENT AND SURRENDER OF PROPERTY
21
 
9.1
Surrender or Abandonment of Property
21
10.
 
INDEMNITIES
21
 
10.1
Indemnification of Manager
21
 
10.2
Indemnification of Kwagga
21
 
10.3
Limitation of Liability
21
11.
 
GENERAL PROVISIONS
22
 
11.1
Notices
22
 
11.2
Time
22
 
11.3
Force Majeure
23
 
11.4
Modification
23
 
11.5
Waiver
23
 
11.6
Interpretation and Severability
23
 
11.7
Governing Law
23
 
11.8
Further Assurances
24
 
11.9
Survival of Terms and Conditions
24
 
11.10
Enurement
24

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OPERATING AGREEMENT
 
THIS AGREEMENT is made as of the 12th day of December, 2007
 
BETWEEN:
 
KWAGGA GOLD (PROPRIETARY) LIMITED, a company incorporated under the laws of the
Republic of South Africa (Registration Number 98/07520/07)
 
("Kwagga")
 
OF THE FIRST PART
 
AND:
 
WITS BASIN PRECIOUS MINERALS LIMITED a company incorporated under the laws
of the United States of America
 
("WB")
 
OF THE SECOND PART
 
WHEREAS:
 
A.
Kwagga holds rights to a 100% interest in certain mineral properties in the
Republic of South Africa which are more particularly hereinafter described;

 
B.
Kwagga wishes to appoint WB to manage the exploration and evaluation, and if
feasible, the development and mining of gold and other metals and minerals
within such properties;

 
NOW, THEREFORE, this Agreement witnesses that for good and valuable
consideration, the receipt and sufficiency of which each of the parties
acknowledges, the parties hereto agree as follows:
 

1.
DEFINITIONS AND INTERPRETATIONS

 

1.1
Definitions.

 
(a) "Account" means the account maintained in accordance with the Accounting
Procedure showing the charges and credits accruing to Kwagga.
 
(b) "Accounting Procedure" means the procedure set forth in Annex B.
 

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(c) "Affiliate" means any person which directly or indirectly controls, is
controlled by, or is under common control with, a Party. For purposes of the
preceding sentence, "control" means possession, directly or indirectly, of the
power to direct or cause direction of management and policies through ownership
of voting securities, contract, voting trust, or otherwise. It is understood and
agreed that control of a company can be exercised by another company or
companies if such latter company or companies owns shares carrying more than 50%
of the votes exercisable at a general meeting (or its equivalent) of the first
mentioned company, and a particular company is deemed to be indirectly
controlled by a company or companies (the parent company or companies) if a
series of companies can be identified beginning with the parent company or
companies and ending with the particular company so related that each company of
the series except the parent company or companies is directly controlled by one
or more of the companies in the series.
 
(d) "Agreement" means this Operating Agreement, including all amendments and
modifications thereof, and all annexes which are attached hereto.
 
(e) "Assets" means the following:
 
(i) the Property and all plant and facilities located on the Project Area;
 
(ii) all equipment used in the Operations; all inventory; all property, tangible
and intangible, obtained or used by the Manager in connection with the conduct
of Operations, including without limitation all geological, geochemical,
geophysical, mining and metallurgical data, surveys, assays, drill cores, drill
cuttings, samples, sample residues, analyses, Feasibility Studies and other data
or information acquired in the course of Operations;
 
(iii) the rights of Kwagga to and under all licences, leases, and permits
relating to the Operations and/or the Project Area; and
 
(iv) all Products.
 
(f) "Bankable Feasibility Study" means a comprehensive description of the
construction, development, mining, processing, and marketing plan for a Mine
within the Project Area in such form and detail as is normally required by a
bank or other financial institution ("the bank") engaged in mining project
finance for purposes of determining whether the bank shall finance and/or
participate in the development of a Mine and Mining Operations in respect of the
whole or any part of the Project Area. The Bankable Feasibility Study shall
include the confirmation of the estimated recoverable reserves of Minerals and
source material the conduct of detailed drilling works, hydrological and
geotechnical works, geological, mining, metallurgical, economic, legal,
environmental, social and governmental studies, and metallurgical studies. The
Bankable Feasibility Study shall contain estimates of both capital and operating
costs and shall analyze how to proceed with mining operations to economically
and commercially extract the target mineral(s), identify the optimum structure
for the mining venture, and include reference to relevant financial aspects.
 
(g) "Budget" means an estimate in reasonable detail of all Costs to be incurred
with respect to a Work Program (including the Costs of Required Operations, as a
line item) and a schedule of cash advances to be made in order to conduct
Operations under such Work Program.
 
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(h) "Budgetary Period" means the period during which the related Work Program
will be completed.
 
(i) "Costs" means "Allowable Costs" as defined in Article 2 of the Accounting
Procedures.
 
(j) "Development" means all preparation for the removal and recovery of
Products, including the development of a Mine and construction or installation
of a mill or any other improvements to be used for the mining, handling,
milling, processing or other beneficiation of Products.
 
(k) "Distributable Cash Flow" means the cash proceeds from the sale of Products
after deducting all Costs, including any taxes imposed on the Operations or
Kwagga and all royalties.
 
(l) "Dollars" or "$" means United States dollars.
 
(m) "EMPR" means the Environmental Management Program and any amendments thereto
from time to time, as approved by the relevant authority for the Mine in
accordance with the provisions of the Minerals Act and/or the MPRD Act.
 
(n) "Encumbrances" means mortgages, pledges, liens, charges, encumbrances and
security interests.
 
(o) "Exploration" means all activities directed toward ascertaining the
existence, location, quantity, quality or commercial value of deposits or
Products. Exploration may include all activities undertaken through to the
completion of a Bankable Feasibility Study, if any, but shall not include
construction of milling or processing facilities or commencement of commercial
mining operations on the Project Area.
 
(p) "First Commercial Production" means the first day of the month in which
Minerals from a Mine have been extracted and processed to yield Product for
forty-five (45) consecutive days at a rate, averaged over such 45-day period, of
not less than seventy percent (70%) of the average daily rate projected in the
Bankable Feasibility Study pursuant to which such Mine is developed. The
processing or shipping of bulk samples for testing purposes shall not be used
for the purposes of establishing the First Commercial Production.
 
(q) "First Funding Report" means a comprehensive written report prepared by the
Manager at the end of the First Funding Phase (as defined in the Kwagga
Shareholders Agreement) in respect of all Exploration conducted to date in, on
or under the Project Area, together with all primary and derived data relating
thereto and containing (without limitation) method statements, operational
statistics, reports concerning the mineral and surface title, drill logs, plans
and sections of drill holes, drill core photographs, analytical results,
interpretation and discussion of results, conclusions and recommendations for
the further Exploration, if any, to be conducted in respect of the Project Area
and/or the Development and Mining of the Project Area and a pro forma Work
Program and Budget in respect thereof.
 
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(r) "Force Majeure" means any cause beyond a Party's reasonable control, whether
or not foreseeable, including but not limited to: law, regulation, instructions,
requests, actions or inaction of any government or governmental, civil or
military entity; interference by aboriginals or individuals claiming ancestral
rights or rights to mine (including artisanal miners) or by groups representing
or claiming to represent such individuals; interference by environmentalists or
other activists; judgments or orders of any court; inability to obtain on
reasonably acceptable terms any public or private licence, permit, or other
authorisation that may be required to conduct Operations; weather; damage to or
destruction of mine, plant or facility; fire; explosion; flood; insurrection;
acts of war, whether declared or undeclared; riot, civil strife, insurrection or
rebellion; labour dispute; inability after diligent effort to obtain workmen or
material; delay in transportation; and acts of God.
 
(s) "Kwagga Shareholders Agreement" means the shareholders agreement between
Kwagga Gold (Barbados) Limited and MCI Resources (Proprietary) Limited (renamed
Shanduka Resources (Proprietary) Limited) respecting Kwagga.
 
(t) "LIBOR" means the London Inter Bank Offered Rate for the 90 day period as
quoted on the Reuter's Screen LIBO, rounded to the fourth decimal place.
 
(u) "Licence" means, collectively, the "old order rights" (as defined in
Schedule II of the MPRD) and "prospecting rights", "mining rights", "mining
permits" and "retention permits" (as such terms are defined in the MPRD) held by
or on behalf of Kwagga or the Manager, from time to time, respecting all or any
part of the Project Area and in respect of the farms which are listed in Annex A
attached to this Agreement, as amended from time to time.
 
(v) "Manager" means WB or any successor Manager.
 
(w) "Mine" means:
 
(i) any shaft, drill hole, open pit, tunnel, well or opening, underground or
otherwise, made or constructed after preparation of a Bankable Feasibility
Study, and from which Minerals have been or may be removed or extracted by any
method whatsoever, whether now known or hereafter developed, in quantities
larger than those required for purposes of sampling, analysis or evaluation;
 
(ii) mills and other facilities for the extraction, recovery, beneficiation,
treatment, processing and storage of Minerals and disposal of waste, including
tailings;
 
(iii) machinery, equipment, tools, buildings, facilities and improvements for
mining, processing, handling, and transporting Minerals, waste and materials;
and
 
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(iv) housing, offices, roads, airstrips, power lines, power generation
facilities, evaporation and drying facilities, pipelines, railroads,
infrastructure, and other facilities for any of the foregoing purposes.
 
(x) "Mine Construction Program" means a Work Program and Budget for the
excavation, development, construction, erection, installation, and expansion of
a Mine and associated facilities.
 
(y) "Minerals" means all precious stones, precious metals and base and rare
metals.
 
(z) "Minerals Act" means the Minerals Act, 1991 (Act No. 50 of 1991), as amended
from time to time.
 
(aa) "Mining" means the mining, extracting, producing, handling, milling,
beneficiation or other processing of Products and all operations and activities
incidental thereto.
 
(bb) "MPRD Act" means the Mineral and Petroleum Resources Development Act, 2002
(Act No. 28 of 2002), as amended from time to time.
 
(cc) "Operating Costs" means, for any period, all Costs incurred or chargeable,
directly or indirectly, by the Manager in connection with Operating Programs
including, without duplication and without limiting the generality of the
foregoing, the following:
 
(i) all reasonable costs of consulting, legal, accounting, insurance and other
services;
 
(ii) all Overruns of Operating Costs permitted or agreed under Section 6.3;
 
(iii) all Costs incurred or to be incurred relating to a temporary or permanent
shut-down of the facilities on or related to the Project Area, including costs
to be incurred after any shut-down; and
 
(iv) all Costs incurred with respect to Mining;
 
(v) all Costs incurred in respect of the marketing of the Products, including
transportation, commissions and/or discounts;
 
(vi) all Costs relating to capital expenditures relating to the Mine; and
 
(vii) all Costs relating to environmental compliance, pollution control,
reclamation and related matters.
 
All Operating Costs shall be determined in accordance with generally accepted
accounting principles (International Accounting Standard) applied consistently
from year to year, provided however that such costs shall not include any amount
in respect of amortization, depletion or depreciation of capital costs.
 
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(dd) "Operating Program" means a Work and Budget Plan for an Operating Year
including, inter alia, the following information:
 
(i) a written plan of the proposed Mining Operations for the Operating Year,
including any plans for Exploration or for expansion of the facilities;
 
(ii) a detailed estimate of all Operating Costs plus a reasonable allowance (not
exceed ten per cent (10%)) for contingencies, on a monthly basis, including any
proposed cash calls;
 
(iii) an estimate of the quantity and quality of the ore to be mined and of the
quality of Products to be produced on a monthly basis;
 
(iv) a Rolling Budget; and
 
(v) such other facts as may be reasonably necessary to present the results
proposed to be achieved during the Operating Year.
 
(ee) "Operating Year" means the 12 month period commencing on [1 March] of each
year.
 
(ff) "Operations" includes any and every kind work directed toward ascertaining
the existence, location, quantity, and grade of Minerals and the development
thereof carried out under this Agreement on or in respect of the Project Area or
the Products derived therefrom, including, without limitation, Exploration,
Development and Mining.
 
(gg) "Party" or "Parties" means Kwagga and/or WB, or their successors in
interest.
 
(hh) "person" means any individual, partnership, limited partnership,
corporation, limited liability company, unincorporated organization or
association, trust (including the trustees thereof, in their capacity as such),
government (or agency or political subdivision thereof) or other entity.
 
(ii) "Production Decision" has the meaning assigned to it in Section 4.3(c).
 
(jj) "Products" means all ores, Minerals and mineral resources in any form
produced from the Project Area under this Agreement (including without
limitation all ore, concentrates and semi-processed and processed forms
thereof).
 
(kk) "Program Report" means a comprehensive written report prepared by the
Manager on completion of any particular phase (including, for the avoidance of
doubt, the First and Second Funding Phases (as defined in the Kwagga
Shareholders Agreement)) of Exploration, Development and/or Mining, as the case
may be, containing such information relating to and/or in connection with the
Project Area and the conduct of Operations as may be required by Kwagga and
including (but not limited to) the information required to be contained in the
First Funding Report.
 
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(ll) "Project Area" means the farms listed and attached as Annex A to this
Agreement.
 
(mm) "Property" means all interests, rights, and privileges (whether absolute or
conditional, whether existing or future) in real property, mineral rights,
and/or surface lands falling within the Project Area, including, without
limitation, all prospecting and mining authorisations, licences (including the
Licence), permits, leases, and other entitlements, which are acquired and held
subject to this Agreement whether pursuant to the Licence or otherwise.
 
(nn) "Required Operations" means all Operations and Costs of any kind required
to be carried out and incurred to maintain and keep the Assets in good standing
and free of default under any governmental or regulatory laws, rules or
regulations and shall include, without limitation, any financial assurances
required to be posted for environmental clean up purposes by statute or
regulation.
 
(oo) "Rolling Budget" means the detailed budgeted Costs to be incurred in
respect of Development and/or Mining Operations forecast over a three (3)
Operating Year period, adjusted annually in arrears to take account of actual
Costs incurred and progress made during the preceding Operating Year.
 
(pp) "Work Program" means a description in reasonable detail of proposed
Operations to be conducted and objectives to be accomplished by the Manager
within the Project Area for a year or any longer period, including the
preparation of a Bankable Feasibility Study.
 

1.2
Number and Gender

 
Words importing the singular number only shall include the plural and vice
versa, words importing the neuter gender shall include the feminine and
masculine genders and vice versa.
 

1.3
Annexes

 
Attached hereto and forming part of this Agreement are the following Annexes:
 
Annex A – Licence and Project Area
 
Annex B – Accounting Procedure
 

2.
TITLE TO ASSETS

 

2.1
Title

 
Title to the Assets shall be held in the name of Kwagga or such other person as
Kwagga and the Manager may designate from time to time.
 
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3.
MANAGER

 

3.1
Appointment of Manager

 
WB is hereby appointed as the Manager to manage and carry out Operations on
behalf of Kwagga. WB hereby agrees to serve as Manager.
 

3.2
Powers and Duties of Manager

 
Subject to and in accordance with the terms and provisions of this Agreement and
the direction and control of Kwagga (and its board of directors), the Manager
shall manage, supervise and conduct all administrative, financial, technical and
consultative services and other activity for and on behalf of Kwagga in respect
of all Operations and, without limiting the generality of the foregoing, the
Manager shall have the following rights, duties, obligations and
responsibilities:
 
(a) The Manager shall manage, direct and control all Operations in accordance
with Work Programs and Budgets prepared by it and approved by Kwagga.
 
(b) The Manager shall promptly advise Kwagga if it lacks sufficient funds to
carry out its responsibilities under this Agreement and of details of all
material events relating to the Operations and/or the Project Area (including
material results).
 
(c) The Manager shall:
 
(i) purchase or otherwise acquire all material, supplies, equipment, water,
utility and transportation services required for Operations, such purchases and
acquisitions to be made on the best terms available, taking into account all of
the circumstances;
 
(ii) obtain such customary warranties and guarantees as are available in
connection with such purchases and acquisitions; and
 
(iii) keep the Assets free and clear of all Encumbrances, except for those
existing at the time of, or created concurrent with, the acquisition of such
Assets, or liens which shall be released or discharged in a diligent manner, or
Encumbrances specifically approved by Kwagga or permitted hereby.
 
(d) The Manager shall take such action and incur such expenditures as are
required to examine, cure, and maintain the title and interests of Kwagga in and
to the Assets (including keeping the Licence in good standing), whether or not
such expenditures are the subject of an approved Work Program and Budget.
 
(e) The Manager shall:
 
(i) make or arrange for all payments required by leases, licences, permits,
contracts and other agreements related to the Assets;
 
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(ii) pay all taxes, assessments and like charges on Operations and Assets when
due, except taxes determined or measured by Kwagga's (sales revenue or) net
income. The Manager shall have the right to contest in the courts or otherwise,
the validity or amount of any taxes, assessments or charges if the Manager deems
them to be unlawful, unjust, unequal or excessive, or to undertake such other
steps or proceedings as the Manager may deem reasonably necessary to secure a
cancellation, reduction, readjustment or equalization thereof before the Manager
shall be required to pay them, but in no event shall the Manager permit or allow
title to the Assets to be lost as the result of the non-payment of any taxes,
assessments or like charges; and
 
(iii) do all other acts reasonably necessary to maintain the Assets.
 
(f) The Manager shall:
 
(i) apply for and obtain for Kwagga all permits, rights, authorisations,
licences and approvals necessary or appropriate for the Operations (including
temporary and permanent Mining rights);
 
(ii) comply (and require the compliance by all other persons providing services
to it in respect of the Operations to comply) with all applicable laws and
regulations (including the Minerals Act and the MPRD Act, as applicable);
 
(iii) notify promptly Kwagga of any allegations of substantial violation
thereof;
 
(iv) prepare and file all reports or notices required to be filed by or on
behalf of Kwagga in respect of the Operations; and
 
(v) as soon as reasonably possible after the Production Decision shall have been
made, prepare and procure the approval of an EMPR respecting the Mining
Operations.
 
The Manager shall not be in breach of this provision if a violation has occurred
in spite of the Manager's good faith efforts to comply, and the Manager has
timely cured or disposed of such violation through performance, or payment of
fines and penalties.
 
(g) The Manager shall prosecute and defend, but shall not initiate without
approval of Kwagga, all litigation or administrative proceedings arising out of
Operations.
 
(h) The Manager shall obtain and maintain appropriate insurance for the benefit
of Kwagga and itself with respect to Operations being managed by it.
 
(i) The Manager shall have the right to carry out its responsibilities hereunder
through agents, Affiliates, consultants, sub-contractors or independent
contractors. If the Manager engages an Affiliate to provide services hereunder,
it shall do so on terms no less favourable than would be the case with unrelated
persons in arm's-length transactions.
 
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(j) The Manager shall perform or cause to be performed during the term of this
Agreement all work and make all payments required by all laws and regulations in
order to maintain the Project Area and the Licence in good standing.
 
(k) The Manager shall keep and maintain full, complete and accurate accounting
and financial records in accordance with Annex B and in accordance with
customary cost accounting practices in the mining industry.
 
(l) The Manager shall keep Kwagga advised of all Operations by submitting in
writing to Kwagga:
 
(i) quarterly progress reports which include statements of expenditures and an
update on Operations and the results thereof;
 
(ii) a detailed final Program Report within ninety (90) days after completion of
each Work Program and Budget, which shall include comparisons between actual and
budgeted expenditures and the results of the Work Program;
 
(iii) the First Funding Report not later than the earlier of:
 
(1) the end of the calendar month occurring at least 120 days before the
Existing Funding (as defined in the Kwagga Shareholders Agreement) is
anticipated to be fully expended; or
 
(2) the Repayment Date (as defined in the Kwagga Shareholders Agreement); and
 
(iv) such other reports as Kwagga and/or Kwagga Gold (Barbados) Limited may
reasonably request.
 
At the request of Kwagga Gold (Barbados) Limited, the Manager shall deliver all
or any of the foregoing reports to Wits Basin Precious Minerals Inc.
 
(m) At all reasonable times the Manager shall provide representatives of Kwagga
access to, and the right to inspect and copy all maps, drill logs, core tests,
reports, surveys, assays, analyses, technical, accounting and financial records,
and other information acquired in Operations.
 
(n) The Manager shall allow any representative of Kwagga, at such
representative's sole risk and expense, and subject to reasonable safety and
security regulations, to inspect the Assets and Operations at all reasonable
times, so long as the representative does not unreasonably interfere with
Operations.
 
(o) The Manager shall notify Kwagga of any material information affecting its
interest in the Project Area promptly upon the Manager having learned of such
information.
 
(p) The Manager shall perform all Required Operations.
 
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(q) The Manager shall arrange the financing for the funding of the Mine
Construction Program and shall, in its sole discretion, determine in agreement
with financial institutions, the ratio of debt to equity of the project
financing for the completion of the Mine Construction Program.
 
(r) The Manager shall procure from third parties professional or technical
services as may be required for the Operations.
 
(s) The Manager shall provide all administrative, financial, technical and
consultative services required to conduct Operations.
 
(t) The Manager shall open and maintain local and, where permitted by law,
off-shore bank accounts, in local or, where permitted by law, United States
dollar currencies in the name of Kwagga as approved by Kwagga, invest surplus
funds, arrange for overdraft facilities as are necessary to fund temporary short
falls in cash resources, arrange short-term, medium-term and long-term financing
arrangements and distribute Distributable Cash Flow to Kwagga.
 
(u) The Manager shall market, sell and arrange for the refining of the Products.
and
 
(v) The Manager may undertake all other activities reasonably necessary to
fulfil the foregoing.
 

3.3
Manager Not Liable

 
The Manager shall not be in default of any duty under Section 3.2 if its failure
to perform results from the failure of Kwagga to fund Operations in a timely
manner.
 

3.4
Conduct of Operations

 
The Manager shall conduct all Operations in accordance with the requirements of
the Minerals Act and the MPRD Act, as applicable, and in a good, workmanlike and
efficient manner, in accordance with sound Exploration, Development, Mining and
other applicable southern African industry standards and practices. The Manager
shall not be liable to Kwagga for any act or omission resulting in damages or
loss, except to the extent caused by or attributable to the Manager's wilful
misconduct or gross negligence.
 

3.5
Termination

 
The Manager may terminate this Agreement upon three (3) months' prior notice to
Kwagga.
 
This Agreement shall terminate if:
 
(a) a receiver, liquidator, assignee, custodian, trustee, or similar official
for a substantial part of the Manager's assets is appointed and such appointment
is neither made ineffective nor discharged within sixty (60) days after the
making thereof, or such appointment is consented to, requested by, or acquiesced
in by the Manager;
 
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(b) the Manager commences a voluntary case under any applicable bankruptcy,
insolvency or similar law now or hereafter in effect; or consents to the entry
of an order for relief in an involuntary case under any such law or to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, or other similar official of any substantial part of its
assets; or makes a general assignment for the benefit of creditors; or takes
corporate or other action in furtherance of any of the foregoing; or
 
(c) entry is made against the Manager of a judgment, decree or order for relief
affecting a substantial part of its assets by a court of competent jurisdiction
in an involuntary case commenced under any applicable bankruptcy, insolvency or
other similar law of any jurisdiction now or hereafter in effect.
 

3.6
Payments to Manager

 
Kwagga will compensate the Manager for its services and reimburse the Manager
for its Costs hereunder in accordance with the Accounting Procedure.
 

3.7
Transaction with Affiliates

 
The Manager may engage Affiliates to provide services, supplies, equipment or
machinery hereunder, provided that it shall do so on terms no less favourable
than would be the case with unrelated persons in arm's length transactions.
 

3.8
Agent

 
The Manager shall be the agent of Kwagga for the carrying out of services to be
rendered by it in accordance with this Agreement. Kwagga shall give the Manager
such evidence of authority as may be necessary or desirable, in the opinion of
the Manager, to perform its obligations hereunder. The Manager shall maintain
complete control over its employees and all of its subcontractors with respect
to performance of the Operations. Nothing contained in this Agreement or any
subcontract awarded by the Manager shall create any contractual relationship
between any subcontractor and Kwagga.
 

3.9
Operation Contracts

 
So far as practicable, all Operations shall be performed by the Manager using
its staff. Operations to be conducted by others shall, if possible, be conducted
on a competitive contract basis. The Manager, if it so desires, may employ its
own machinery, tools and equipment in conducting such Operations, and the
charges therefor shall be determined pursuant to the provisions of the
Accounting Procedure. The Manager shall employ its reasonable efforts to provide
in each contract entered into by it that the Parties shall have a right to audit
the books of the other contracting party or parties insofar as they relate to
the subject matter of such contract.
 
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4.
WORK PROGRAMS AND BUDGETS

 

4.1
Operations Pursuant to Programs

 
Except as otherwise provided in this Article 4, Operations shall be conducted,
Costs shall be incurred and Assets shall be acquired only pursuant to approved
Work Programs and Budgets approved by Kwagga. Each Work Program shall describe
in reasonable detail the full scope, direction and nature of the proposed
Operations, including, where appropriate, but not limited to: geologic research
and reconnaissance to be undertaken; property and mineral interest acquisition
proposals; proposed engineering studies and mining and construction plans; a
long-range plan for the mining of all mineable reserves which logically would be
mined under good mining practices; the kind and capacity of any plant or milling
facilities to be acquired or constructed; a plan for delivery of Product; and
the estimated period of time required to complete the proposed Operations. Each
Budget shall include all anticipated Costs and expenses including, but not
limited to: operation and maintenance expenditures, capital expenditures, a
statement of expected cash calls and the rentals, filing fees, or other payments
required to maintain the Project Area and the Licence in good standing during
the Budgetary Period. Each request for funds to acquire capital items shall be
delivered in accordance with Section 5.2 and shall include a description of such
items in reasonable detail. Each Work Program shall be deemed to permit all
expenditures required to permit the Manager to perform its duties hereunder and
the incurring and payment of all Costs in relation thereto.
 

4.2
Presentation of Programs and Budgets

 
Except as otherwise provided for herein, proposed Work Programs and Budgets
shall be prepared by the Manager for a period of twelve (12) months or any other
reasonable longer or shorter period determined by the Manager. The first Work
Program and Budget shall be prepared by the Manager at such time as it considers
appropriate. At least sixty (60) days prior to the expiry of each Work Program
(based on its Budgetary Period), a proposed Work Program and Budget for the
succeeding Budgetary Period shall be prepared by the Manager and submitted to
Kwagga. In the event that, during a Budgetary Period, the Manager determines
that, based upon the results of the current Work Program, it is desirable to
revise such Work Program and the related Budget, the Manager shall have the
right to prepare a revision thereto and submit the same to Kwagga for approval.
In the event that Kwagga does not approve a proposed revision to a Work Program
and Budget, the current Work Program and Budget shall be carried out, without
change.
 

4.3
Feasibility Studies and Mine Construction Programs

 
(a) If the Manager is of the opinion that it is justified to prepare a Bankable
Feasibility Study, it may propose that a Work Program and Budget for a Bankable
Feasibility Study be prepared. Such proposal shall be made in writing to Kwagga
and shall include the data upon which the Manager has based its opinion. Kwagga
shall review the proposal. If such proposal is approved, the Manager shall
submit a Work Program and Budget for a Bankable Feasibility Study to Kwagga
within sixty (60) days of the approval, which Work Program and Budget shall be
reviewed in accordance with Section 4.4.
 
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(b) Upon approval by Kwagga, the Manager shall prepare a Bankable Feasibility
Study in accordance with the approved Work Program and Budget therefor. Upon
completion of the Bankable Feasibility Study, the Manager shall submit the
Bankable Feasibility Study to Kwagga for review in accordance with Section 4.4,
at which time Kwagga shall decide whether further work is required to complete
the Bankable Feasibility Study or the Bankable Feasibility Study is complete. In
the event that the Bankable Feasibility Study recommends the construction of a
Mine, the Manager shall submit (along with such Bankable Feasibility Study) a
Mine Construction Program to Kwagga for review and approval in accordance with
Section 4.4. In the event that the Bankable Feasibility Study does not recommend
the construction of a Mine, the Manager shall prepare and submit a proposed Work
Program and Budget for the succeeding Budgetary Period in accordance with
Section 4.2.
 
(c) If Kwagga determines that the Bankable Feasibility Study is complete, it
shall then decide whether development of a mine is warranted. If Kwagga makes a
positive decision (a "Production Decision"), it shall then instruct the Manager
to prepare an overall Work Program and Budget consistent with the Bankable
Feasibility Study for all Operations through to the end of Development. Until
Operations have then been completed through to the end of Development, each Work
Program and Budget approved pursuant to this Article 4 (it being contemplated
that the overall Work Program and Budget will be implemented through incremental
Work Programs and Budgets approved pursuant to this Article 4) shall be
consistent with the overall Work Programs and Budget.
 

4.4
Review and Approval of Proposed Work Programs and Budgets. 

 
Within thirty (30) days after submission of a proposed Work Program and Budget,
or within ninety (90) days after submission of a proposed Mine Construction
Program, Kwagga shall:
 
(a) approve the proposed Work Program and Budget;
 
(b) propose modifications to the proposed Work Program and Budget;
 
(c) reject the proposed Work Program and Budget and require a new submission
from the Manager;
 
Kwagga shall provide written notice of its decision to the Manager forthwith
after making the same. In the event that Kwagga approves a Work Program and
Budget, it shall have irrevocably committed to pay all of the Costs thereof and
the Manager shall not be required to carry out any Operations in any month
unless and until it shall have been paid in full the amount of the applicable
invoice submitted to Kwagga pursuant to Section 5.2.
 
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4.5
Budget Overruns/Contingency Provision

 
The Manager shall immediately notify Kwagga as soon as practicable prior to any
material departure from an approved Work Program and Budget. If the Manager
exceeds the Budget, then the excess up to 10% of the amount of the Budget shall
be for the account of Kwagga unless the overrun is due to the gross negligence
or wilful default of the Manager. The excess to the extent that it is greater
than 10% of the Budget shall also be for the account of Kwagga if the overrun is
approved by it, which approval may be given retroactively.
 

4.6
Emergency or Unexpected Expenditures.

 
In case of emergency, the Manager may take any reasonable action it deems
necessary to protect life, limb or property, to protect the Assets or to comply
with law or government regulation. The Manager may also make reasonable
expenditures for unexpected events which are beyond its reasonable control and
which do not result from a breach by it of its obligations under Section 3.4.
The Manager shall promptly notify Kwagga of the emergency or unexpected
expenditure, and the Manager shall be reimbursed for all resulting costs by
Kwagga.
 

5.
ACCOUNTS AND SETTLEMENTS

 

5.1
Monthly Statements

 
The Manager shall promptly submit to Kwagga monthly statements of account
reflecting in reasonable detail the charges and credits to the Account during
the preceding month under this Agreement.
 

5.2
Cash Calls

 
Prior to the last day of each month the Manager shall submit to Kwagga an
invoice for the estimated Costs for the next month, together with a
reconciliation of the Costs actually incurred during the preceding month against
the estimated Costs contained in the invoice delivered in respect of such
preceding month. Within ten (10) days after receipt of each invoice, Kwagga
shall advance to the Manager such estimated amount, as reconciled. Time is of
the essence of payment of such invoices. If the amount billed for the estimated
Costs was less than the actual Costs incurred or charged during that month, the
Manager may bill Kwagga for the difference at any time, which Kwagga will pay
within ten (10) days following receipt of the applicable invoice. With the
concurrence of Kwagga, the Manager may establish more frequent billing cycles to
minimize account balances. Each monthly invoice will be accompanied by the
Manager's forecast of Costs over the succeeding three (3) months, provided that
the Manager shall not be bound thereby.
 
In the event that the Manager, acting reasonably, determines that Kwagga is
required to incur Costs which are not part of an approved Work Program and
Budget and which are required to be incurred in respect of Required Operations,
the Manager shall be entitled to include such costs in the invoice delivered to
Kwagga pursuant to the preceding paragraph of this Section 5.2, (as if such
amount was required to be incurred in respect of an approved Work Program and
Budget) or, if Manager is not delivering such an invoice, it shall be entitled
to deliver to Kwagga a separate invoice in respect of such Costs.
 
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5.3
Failure to Pay Invoices

 
Any payments not made when due under Section 5.2 shall bear interest from the
date due at an annual rate equal to LIBOR plus 2%.
 

5.4
Audits

 
The Manager shall order an annual audit of the accounting and financial records
maintained by it in accordance with the Accounting Procedure and will use
reasonable commercial efforts to cause the audit report to be provided within
one hundred and twenty (120) days of the Kwagga's fiscal year-end and will
promptly provide a copy thereof to Kwagga. All written exceptions to and claims
upon the Manager for discrepancies disclosed by such audit shall be made not
more than three (3) months after receipt of the audit report. Failure to make
any such exception or claim within the three (3) month period shall mean the
audit is correct and binding upon Kwagga. The audits shall be conducted by one
of PricewaterhouseCoopers, Deloitte Touche Tohmatsu International, KPMG
International or Ernst & Young as selected by the Manager, from time to time,
and the costs thereof shall be for the Account.
 

5.5
Manager's Own Funds

 
Nothing in this Agreement obliges the Manager to utilize its own funds in any
Work Program and it may suspend or cease any Work Program upon the failure or
apprehended failure of Kwagga to make timely payment of any amount for which it
is liable hereunder without liability to Kwagga.
 

6.
OPERATING PLANS

 

6.1
Obligation to Pay Operating Costs and Overruns

 
Kwagga shall be liable to pay all Operating Costs incurred under Operating
Plans, including (notwithstanding Section 4.5) Operating Cost Overruns up to but
not exceeding ten per cent (10%) of the Costs budgeted in the Operating Plan. It
is acknowledged and agreed that Operating Cost Overruns shall be determined
based upon the Operating Costs incurred during each Operating Year and upon all
budgeted items.
 

6.2
Operating Plans

 
At least ninety (90) days prior to the date the Manager anticipates that First
Commercial Production will occur, the Manager will propose and deliver to Kwagga
an Operating Plan for the first Operating Year. Subsequently, at least ninety
(90) days before the commencement of each Operating Year, the Manager shall
propose an Operating Plan for that Operating Year by delivery thereof to Kwagga.
Within not less than thirty (30) days and not more than forty five (45) days
after delivery of a proposed Operating Plan hereunder, the Manager shall convene
a meeting of Kwagga to review the same. The proposed plan, as the same may be
amended following Management Council review, shall be the Operating Plan for the
ensuing Operating Year.
 
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6.3
Excess Operating Costs and Overruns

 
Except as herein provided, the Manager shall have the power and authority to
deviate from or make modifications to Operating Plans from time to time, in
accordance with good engineering and mining practices provided that Manager
shall not be entitled to make material deviations or modifications to Operating
Plans without the prior approval of Kwagga. If it appears to the Manager that
Operating Costs will exceed those estimated under an Operating Plan, the Manager
shall immediately give written notice to Kwagga outlining the nature and extent
of the additional Costs ("Operating Cost Overruns") and the reasons therefor. If
Operating Cost Overruns are estimated to exceed by ten per cent (10%) the
Operating Costs estimated under the Operating Plan, the notice of the Manager
shall contain a notice of a meeting of Kwagga, to be held no sooner than ten
(10) days after the date of delivery of the notice, together with a proposed
amendment to the Operating Plan. The meeting of Kwagga shall be convened to
review, amend (if deemed appropriate) and approve same. If Kwagga fails to
approve the amended Operating Plan, the Manager shall curtail Operations until
submission of the Operating Plan for the ensuing Operating Year.
 

6.4
No Agreement on Operating Plans

 
If a proposed Operating Plan is not approved by Kwagga, then the most recently
approved Operating Plan shall be extended as applicable and implemented by the
Manager.
 

6.5
Suspension of Mining

 
At any time subsequent to the date of First Commercial Production, the Manager,
may, on at least 45 days notice to Kwagga recommend that Mining Operations be
suspended. The Manager's recommendations will include a shut-down plan for the
mine and a Budget therefor, in reasonable detail, of the Operations to be
performed to maintain the Assets during the period of suspension and the Costs
estimated to be incurred, as well as details with respect to the activities
required to recommence Operations and the estimated time and Costs to accomplish
the same. Such plan shall be implemented within 90 days after it is approved,
with or without variation, by Kwagga. Kwagga may direct the Manager to
recommence Mining Operations at any time thereafter.
 

6.6
Shut Down Plan

 
If for three (3) successive Operating Years or for such shorter period as Kwagga
may determine, the Operating Plan reflects only the payment of Required
Operations on the Project Area, the Manager shall prepare a shut-down plan for
the Mine and a Budget therefor which shall be implemented within ninety (90)
days after it is approved, with or without variation, by Kwagga. Kwagga shall
pay or to the satisfaction of the Manager provide security for the entire Cost
of the shut-down Budget.
 
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If no Management Council approval is obtained within one hundred and twenty
(120) days after submission to it of the Manager's proposed shut-down plan, the
Manager shall cause a reputable firm of public accountants (the "Selling Agent")
to conduct an offer of sale of the Assets on an all cash, sealed bid basis, and
requiring any bidder to assume, and indemnify the Manager and Kwagga against,
all reclamation and environmental liabilities related to the Project Area and
the Operations. If no offer in accordance with the terms hereof is received by
the Selling Agent within the time stipulated by it, the Manager shall, unless
otherwise directed by Kwagga, prepare and implement a shut-down plan and Kwagga
shall pay the costs of implementation thereof.
 

6.7
Bank Account

 
Kwagga agrees that prior to the scheduled date of First Commercial Production,
it shall deposit in a separate interest bearing bank account in its name the
amount of the working capital requirements for the initial four (4) months of
Mine Operations or such longer period as may be set out in the applicable
Bankable Feasibility Study. All revenues from the Mine's Operations shall be
deposited in such bank account. All cheques and other withdrawals from such bank
account shall require the signature of an officer of Kwagga.
 

6.8
Loans

 
Subject to the approval of Kwagga, the Manager may obtain and operate a line of
credit and/or obtain other debt financing with recognized banks or other
financial institutions for the purposes of funding Operations (including the
Mine Construction Program); provided that in the event that any such bank or
financial institution requires any guarantees or other financial assurances
from:
 
(a) any of the direct or indirect shareholders of Kwagga, such operating line or
financing shall not be established unless the affected person consents thereto;
or
 
(b) Kwagga, it shall provide the same.
 
For the purposes of securing of such indebtedness, the Manager shall have the
right to grant, as agent on behalf of Kwagga, and Kwagga hereby agrees to grant,
to any lender providing funding to Kwagga pursuant to Sections 3.2(r) and/or
6.8, an Encumbrance over all or part of the Assets and its interests in this
Agreement.
 

7.
DISTRIBUTIONS AND MARKETING

 

7.1
Distribution of Distributable Cash Flow

 
After the date of First Commercial Production, all Distributable Cash Flow shall
be distributed to Kwagga on a monthly basis within thirty (30) days following
the end of each month.
 
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7.2
Appointment of Manager as Marketing Manager

 
The Manager shall act as Kwagga's marketing manager with respect to the
marketing and sale of all Products. In that capacity, the Manager shall have the
following powers and duties:
 
(a) enter into, manage and administer smelting, refining and sales contracts;
 
(b) ensure that the smelting, refining, marketing, sale, and transportation of
Products comply with applicable laws;
 
(c) perform or cause to be performed, for the account of Kwagga, all of its
obligations pursuant to smelting, refining, and sales contracts and similar
agreements relating to the sale and marketing of Products;
 
(d) keep good relations with customers, including providing them with
information and notifications related to Products and, upon request, by
delivering certificates of origin;
 
(e) keep and maintain, in accordance with generally accepted accounting
principles (International Accounting Standard), books of accounts and such other
records pertaining to the smelting, refining and other sales and marketing
activities; and
 
(f) retain services of experts and consultants as the Manager may deem advisable
or necessary to perform its duties under this Section 7.2.
 

7.3
Power of Marketing Manager.

 
In performing its duties under Section 7.2, the Manager shall have full
authority over all marketing activities. Notwithstanding any provision hereof to
the contrary, the Manager shall not be entitled to engage in forward sales,
future trading or commodity options trading or other price hedging, price
protection or other speculative arrangements respecting any of the Products,
without the prior approval of Kwagga.
 

7.4
Final Structure of Marketing Arrangements

 
Notwithstanding the provisions of Sections 7.2 and 7.3, it is acknowledged and
agreed that at the time when a Production Decision is made, Kwagga and the
Manager shall determine the most effective structure for marketing and selling
the Products, with a view to minimizing taxes and complying with all then
applicable laws and regulations; provided that, in any event, the Manager shall
have the exclusive right to act as Kwagga's marketing manager with respect to
the marketing and sale of all Products and shall be compensated for such
services regardless of the structure agreed upon as contemplated in this Section
7.4.
 
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8.
TERMINATION

 

8.1
Termination by Expiration or Agreement

 
This Agreement shall terminate as expressly provided in this Agreement, unless
earlier terminated by written agreement.
 

8.2
Continuing Obligations

 
On termination of this Agreement under Section 3.5 or 8.1, Kwagga shall remain
liable for continuing obligations hereunder (including contingent obligations)
until final settlement of all accounts and for any liability, whether it accrues
before or after termination, if it arises out of Operations during the term of
the Agreement.
 

8.3
Disposition of Assets on Termination

 
Promptly after termination under Section 3.5 or 8.1, the Manager shall take all
action necessary to wind up Operations, and all costs and expenses incurred in
connection with the termination of Operations shall be expenses chargeable to
Kwagga. The Assets shall first be paid, applied, or distributed in satisfaction
of all liabilities of Kwagga to third parties. Before distributing any funds or
Assets to Kwagga, the Manager shall have the right to segregate amounts which,
in the Manager's reasonable judgment, are necessary to discharge continuing
obligations (including contingent obligations and Required Operations, including
decommissioning and long-term monitoring and care) or to purchase for the
account of Kwagga, bonds or other securities for the performance of such
obligations. Thereafter, any remaining cash and all other Assets shall be
distributed to Kwagga unless otherwise provided herein or otherwise agreed.
 

8.4
Continuing Authority

 
On termination of this Agreement under Section 3.5 or 8.1, the Manager shall
have the power and authority to do all things on behalf of Kwagga which are
reasonably necessary or convenient to:
 
(a) wind-up Operations;
 
(b) complete any transaction and satisfy any obligation, unfinished, unsatisfied
or contingent, at the time of such termination or withdrawal; and
 
(c) undertake all Required Operations
 
if the transaction or obligation arises out of Operations prior to such
termination or withdrawal. The Manager shall have the power and authority, to
grant or receive extensions of time or change the method of payment of an
already existing liability or obligation, prosecute and defend actions on behalf
of Kwagga, mortgage Assets, and take any other reasonable action.
 
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9.
ACQUISITION, ABANDONMENT AND SURRENDER OF PROPERTY

 
In the event that the Manager determines that it is necessary or desirable to
acquire public or private land, usage rights and/or mineral interests or rights
within the Area of Interest, it shall acquire the same on behalf of Kwagga,
whereupon the same shall become part of the Licence and the Project Area and
Annex A shall be amended accordingly. The costs of identifying, negotiating the
acquisition of and acquiring such lands, interest and rights shall be treated as
Allowable Costs.
 

9.1
Surrender or Abandonment of Property

 
Kwagga may authorize the Manager to surrender or abandon part or all of the
Property, in a manner consistent with any agreement under which such Property
was acquired and to terminate all or part of the Licence or the Project Area.
 

10.
INDEMNITIES

 

10.1
Indemnification of Manager

 
Kwagga shall indemnify and hold harmless the Manager and its directors,
officers, employees, agents and representatives from and against all claims,
debts, demands, suits, actions and causes of action whatsoever, and all losses,
damages, fines, penalties, liabilities including without limitation
environmental liabilities, costs and expenses (including legal expenses)
whatsoever, which may be brought, made against, suffered or incurred by any of
them arising out of or in connection with any act or omission after the date
hereof of Kwagga or of the Manager or any of its subcontractors or the employees
or agents of Kwagga, the Manager or any of its subcontractors, unless such act
or omission constitutes gross negligence or wilful misconduct on the part of the
Manager.
 

10.2
Indemnification of Kwagga

 
The Manager shall indemnify and hold harmless Kwagga and its directors,
officers, employees, agents and representatives from and against all claims,
debts, demands, suits, actions and causes of action whatsoever, and all losses,
damages, costs and expenses (including legal expenses) whatsoever, which may be
brought, made against, suffered or incurred by any of them arising directly from
any act or omission after the date hereof of the Manager which constitutes gross
negligence or wilful misconduct on the part of the Manager.
 

10.3
Limitation of Liability

 
Notwithstanding anything to the contrary in this Agreement, no Party shall be
liable to another in contract, tort or otherwise for special or consequential
damages including, without limiting the generality of the foregoing, loss of
profits.
 
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11.
GENERAL PROVISIONS

 

11.1
Notices

 
All notices, payments, and other required communications ("Notices") to the
Parties shall be in writing, and shall be addressed respectively as follows:
 
If to WB:
 
Wits Basin Precious Minerals Inc.
900 IDS Center, 80 South 8th Street
Minneapolis, MN 55402-8773
Attn: Mark D. Dacko
Telecopier: +1 (612).395-5276
 
If to Kwagga:
 
C/O Lonmin Platinum
Northdowns Office Park
17 Georgian Crescent
Bryanston East
Johannesburg
South Africa

Attn: Peter McElligott

Telecopier: +27 516 1442
 
All Notices shall be given (1) by personal delivery to the addressee, or (2) by
electronic communication, with a confirmation sent by registered or certified
mail return receipt requested, or (3) by registered or certified mail or
commercial carrier return receipt requested. All Notices shall be effective and
shall be deemed delivered (1) if by personal delivery on the date of delivery if
delivered during normal business hours and, if not delivered during normal
business hours, on the next business day following delivery, (2) if by
electronic communication on the next business day following receipt of the
electronic communication, and (3) if solely by mail or commercial carrier on the
next business day after actual receipt. A Party may change its address by Notice
to the other Parties.
 

11.2
Time

 
Time is of the essence of this Agreement.
 
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11.3
Force Majeure

 
Except for the obligation to make payments when due hereunder, the obligations
of a Party shall be suspended to the extent and for the period that performance
is prevented by any Force Majeure. The affected Party shall promptly give notice
to the other Party of the suspension of performance, stating therein the nature
of the suspension, the reasons therefor, and the expected duration thereof. The
affected Party shall resume performance as soon as reasonably possible.
 

11.4
Assignment

 
Neither party may assign its rights and obligations under this Agreement without
the prior written consent of the other party; provided that, either party may
assign its rights and obligations under this Agreement to a controlled
subsidiary of such party without the prior written consent of the other party.
For purposes of this Section 11.4, the term “controlled subsidiary” of a party
shall include any entity of which (i) such party possesses, directly or
indirectly, fifty percent (50%) or more of the beneficial ownership or voting
power, (ii) such party possesses, directly or indirectly, twenty-five percent
(25%) or more of the beneficial ownership or voting power and has the ability to
control the composition of the board of directors or other governing body of the
entity or (iii) such party otherwise has the capacity to dominate the
decision-making in relation to the financial and operating policies of the
entity so that the entity operates with such party to achieve collective
objectives..
 

11.5
Modification

 
No modification of this Agreement shall be valid unless made in writing and duly
executed by the Parties.
 

11.6
Waiver

 
The failure of a Party to insist on the strict performance of any provision of
this Agreement or to exercise any right, power or remedy upon a breach hereof
shall not constitute a waiver of any provision of this Agreement or limit that
Party's right thereafter to enforce any provision or exercise any right.
 

11.7
Interpretation and Severability.

 
In the event that any condition, covenant or other provision of this Agreement
is held to be invalid or void by any court of competent jurisdiction, the same
shall be deemed severable from the remainder of this Agreement and shall in no
way affect any other condition, covenant or other provision of this Agreement.
If such condition, covenant or other provision shall be deemed invalid due to
its scope or breadth, such condition, covenant or other provision shall be
deemed valid to the extent of the scope or breadth permitted by law.
 
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11.8
Confidentiality

 
With the exception of disclosures to parent companies or as required by law,
both Parties agree to keep confidential the terms and conditions of this
Agreement and any other information regarding each other’s business which they
may learn as a result of carrying out this contract.
 

11.9
Publicity

 
No announcements of any nature whatsoever will be made by or on behalf of a
Party relating to this Agreement without the prior written consent of the other
Party, save for any announcement or other statement required to be made in terms
of the provisions of any law (or by the rules of any securities exchange on
which the shares of either of the Parties may be listed, where applicable), in
which event the Party obliged to make such statement will first consult with the
other Party in order to enable them in good faith to attempt to agree the
content of such announcement, which (unless agreed) must go no further than is
required in terms of such law or rules. This will not apply to a Party wishing
to respond to the other Party which has made an announcement of some nature in
breach of this clause.
 
This Section 11.9 shall not apply to any disclosure made by a Party to its
professional advisors or consultants, provided that they have agreed to the same
confidentiality undertakings, or to any judicial or arbitral tribunal or
officer, in connection with any matter relating to this Agreement or arising out
of it.
 

11.10
Breach

 
If a Party ("Defaulting Party") commits any breach of this Agreement and fails
to remedy such breach within 10 (ten) business days of written notice requiring
the breach to be remedied, then the Party giving the notice ("Aggrieved Party")
will be entitled, at its option –
 
(a) to claim immediate specific performance of any of the Defaulting Party's
obligations under this Agreement, with or without claiming damages, whether or
not such obligation has fallen due for performance; or
 
(b) to cancel this Agreement, with or without claiming damages, in which case
written notice of the cancellation shall be given to the Defaulting Party, and
the cancellation shall take effect on the giving of the notice.
 
(c) The Aggrieved Party's remedies in terms of this clause 11.10 are without
prejudice to any other remedies to which the Aggrieved Party may be entitled in
law.
 

11.11
Dispute Resolution

 
In the event of there being any dispute or difference between the Parties
arising out of this Agreement, the said dispute or difference shall on written
demand by either Party be submitted to arbitration in Johannesburg in accordance
with the AFSA rules, which arbitration shall be administered by AFSA.
 
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11.12
Governing Law

 
This Agreement shall be governed by and interpreted in accordance with the laws
of South Africa.
 

11.13
Further Assurances.

 
Each of the Parties agrees that it shall take from time to time such actions and
execute such additional instruments as may be reasonably necessary or convenient
to implement and carry out the intent and purpose of this Agreement.
 

11.14
Survival of Terms and Conditions

 
The following sections shall survive the termination of this Agreement, to the
full extent necessary for their enforcement and the protection of the Party in
whose favour they run: Sections 3.3, 3.4, 3.6, 3.8, 5.3, 6.6, 8.3, 8.4, 10.1,
10.2, 10.3 and 11.8.
 
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11.15
Enurement

 
This Agreement shall be binding upon and inure to the benefit of the Parties and
their respective successors.
 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
 
Wits Basin Precious Minerals Incorporated
   
Per:
/s/ H. Vance White
 
Name: H. Vance White
 
Title: Chairman
       
Per:
   
Name:
 
Title:
   
Kwagga Gold (Proprietary) Limited
   
Per:
/s/ Christopher John Davies
 
Name: Christopher John Davies
 
Title: Vice President
       
Per:
   
Name:
 
Title:

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