EXHIBIT 10.10
 
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Green Giant Project
Joint Venture Agreement
 
Energizer Resources Inc.
Energizer
 
and
 
Malagasy Minerals Limited
ACN 121 700 105
Malagasy
 
 
 

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Jackson McDonald
Lawyers
140 St Georges Terrace
Perth Western Australia 6000
t:
f:
w:
+61 8 9426 6611
+61 8 9481 8649
www.jacmac.com.au
Contact:
Reference:
Will Moncrieff
7141864

 
 
 

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Joint Venture Agreement
   

 
Table of contents
 

1. Interpretation   2             1.1
Definitions
    2     1.2
Interpretation
    11                 2. Commencement     12             3. Conditions
precedent     12               3.1
Conditions
    12     3.2
Best endeavours
    13     3.3
Waiver of conditions
    13     3.4
Non-satisfaction of conditions
    13                 4. Consideration     13               4.1
Sale and Purchase Agreement
    13                 5. Provision of Mining Information     13             6.
Acknowledgements by Parties     14             7. Establishment of JV Company
and its Board     14               7.1
Establishment
    15     7.2
Initial Shareholding Interests
    15     7.3
Adoption of constituent document
    15     7.4
Board members
    15     7.5
Appointment and removal of Directors
    15     7.6
Role and powers of the Board
    16     7.7
Meetings of the Board
    16     7.8
Notice of Board meetings
    16     7.9
Quorum
    17     7.10
Decisions of the Boards
    17     7.11
Voting
    17     7.12
Experts and advisers
    17     7.13
Minutes of meetings and records
    17                 8. Establishment of TenementCo     17               8.1
Establishment
    17     8.2
Management of TenementCo
    18     8.3
Appointment and removal
    18     8.4
Role of Country Manager
    18     8.5
Adoption of constituent document
    18                 9. Business of the JV Company and TenementCo     18      
      10. Co-operation of Shareholders     19  

 

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11. Right to explore and sublease     19               11.1
Grant of Subleases
    19     11.2
Covenants of Energizer in respect of the Exploration Permits
    20     11.3
Covenants in respect of the Exploration Permits
    21     11.4
Remedies of Malagasy
    21     11.5
Exercise of Other Mineral Rights
    22     11.6
Notice of activities
    22     11.7
Mutual indemnities
    23                 12. Surrender of Exploration Permits     23            
13. Transfer of Permits     24             14. Bankable Feasibility Study,
Funding Decision and Decision to Mine     24               14.1
Bankable Feasibility Study
    24     14.2
Funding Decision
    25     14.3
Obligation to Fund
    26     14.4
Decision to Mine
    26     14.5
Election to participate and formation of mining joint venture
    26     14.6
Establishment of Mining Area
    26     14.7
Holding of Mining Area
    27     14.8
Mining Area ceases to be Joint Venture Property
    27     14.9
Transfer of Mining Area
    27     14.10
Terms of Mining Joint Venture
    28     14.11
Agreement
    28                 15. Conversion to Exploitation Permits     28            
  15.1
Conversion
    28     15.2
Transfer of Exploitation Permits
    29     15.3
Holding of Exploitation Permits
    29     15.4
Approval of Mining Department
    29     15.5
Option Beneficial Holderto transfer Exploration Permits prior to conversion
    29     15.6
Avoidance of forfeiture of Permits
    30                 16. Environment and Mining Operations     30            
17. Industrial Mineral Rights     30               17.1
Holder of Permits and Industrial Mineral Rights
    30     17.2
Priority of exercise of Industrial Mineral Rights
    31     17.3
Exercise of Industrial Mineral Rights by the Beneficial Holder
    31     17.4
Suspension of Other Mineral Rights for duration of Mining Operations
    31     17.5
Transfer of Industrial Mineral Rights
    32     17.6
Transfer of Other Mineral Rights
    32     17.7
Co-mingling
    32  

 

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18. Operator     33               18.1
First Operator
    33     18.2
Functions of the Operator
    33     18.3
Operator to prepare Programs and Budgets
    34     18.4
Liability of Operator
    34     18.5
Indemnity of Operator
    34     18.6
Preserve Permits
    34     18.7
Reporting
    34     18.8
Change of Operator
    34                 19. Contributions to Joint Venture Costs     35          
  20. Right to dilute     35               20.1
Election not to fund
    35     20.2
Contributions where election not to fund
    35     20.3
Dilution
    36                 21. Disposal of Shares and pre-emption rights     39    
        22. Drag along     39             23. Tag along     40             24.
Royalties     40               24.1
Interest below 10%
    40     24.2
Transfer of Royalties
    40                 25. Representations and warranties     40              
25.1
Representations and warranties by Malagasy
    40     25.2
Representations and warranties by Energizer
    41     25.3
Disclaimer of liability by Energizer
    43                 26. Guarantee by Energizer     43             27.
Guarantee by Malagasy     43             28. Assignment     44             29.
Termination     44               29.1
Termination events
    44     29.2
Event of Default
    44     29.3
Effect of termination
    45     29.4
Continuing remedies
    45                 30. Force Majeure     45               30.1
Force Majeure
    45     30.2
Relief
    46     30.3
Labour disputes
    46     30.4
Resumption
    46  

 

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31. Dispute resolution     46               31.1
Application
    46     31.2
Dispute negotiation
    47     31.3
Arbitration
    47     31.4
Urgent relief
    47     31.5
Continued performance
    48                 32. Disputes as to Technical or Financial Matters     48
              32.1
Definitions
    48     32.2
Application
    48     32.3
Dispute negotiation
    48     32.4
Independent Expert
    48                 33. Expert determination     48               33.1
Referral to Independent Expert
    49     33.2
Appointment of Independent Expert
    49     33.3
Requirements of Independent Expert
    49     33.4
Rights of the Parties
    50     33.5
Confidentiality
    50     33.6
Determination
    50     33.7
Costs of Independent Expert
    50                 34. Status of Agreement and further acts     51          
  35. Relationship between Parties     51             36. Confidentiality and
public announcements     51               36.1
Confidentiality
    51     36.2
Conditions
    53     36.3
Notice to other Shareholders
    53     36.4
Indemnities
    54     36.5
Survival of confidentiality obligations
    54     36.6
Use of Mining Information in respect to Other Mineral Rights
    54  

 

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37. Notices     54             38. Miscellaneous     55               38.1
Governing law
    55     38.2
Amendments
    55     38.3
Primacy of this Agreement
    55     38.4
Language
    55     38.5
Waiver
    56     38.6
Consents
    56     38.7
Counterparts
    56     38.8
No representation or reliance
    56     38.9
Expenses
    56     38.10
Entire agreement
    56     38.11
Indemnities
    57     38.12
Severance and enforceability
    57     38.13
No merger
    57     38.14
Power of attorney
    57     38.15
Taxes
    57                 Schedule 1 – Exploration Permits and Area of Interest    
58             Schedule 2 – Industrial Minerals     59             Schedule 3 –
Map of Area of Interest     60             Schedule 4 – Net Smelter Return
Royalty     61             Executed as an agreement     66             Annexure
A – Form of Sublease Agreement     67  

 

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Joint Venture Agreement
   

 

Date:  2014

 
Parties
 
Energizer Resources Inc.
Energizer
141 Adelaide Street, West Suite 520, Toronto, Ontario, Canada
   
Malagasy Minerals Limited
ACN 121 700 105
Malagasy
15 Lovegrove Close, Mount Claremont, Western Australia

 
Background
 
A.  
Pursuant to the Tenement Acquisition Agreements:

 
(a)  
the Beneficial Holder acquired the Exploration Permits from MMR and is the
beneficial holder of the Exploration Permits;

 
(b)  
MMR is obliged to transfer the Exploration Permits to the Beneficial Holder.

 
B.  
In 2008, the Beneficial Holder applied to the Mining Department (the BCMM) for
the Exploration Permits to be transferred to the Beneficial Holder and, in 2009,
the Beneficial Holder received from the Mining Department Certificates of
Registration in its name in relation to each of the Exploration Permits.

 
C.  
From the time of the execution of the Tenement Acquisition Agreements until the
date of this Agreement, the Mining Department has not accepted and/or processed
applications for transfer, registration or renewal of mining permits or
interests in Madagascar and as a result the Beneficial Holder has been unable to
obtain delivery of the actual mining permits under Madagascan law for each of
the Exploration Permits.

 
D.  
As at the date of this Agreement, MMR is the Registered Holder of the
Exploration Permits.

 
E.  
The Parties agree and acknowledge that at the date of this Agreement, the Mining
Department (the BCMM) is:

 
(a)  
not accepting and/or processing applications for transfer, registration or
renewal of mining permits or interests in Madagascar and it is not presently
possible to obtain formal recognition of the renewal, partition, transfer or
registration of the Exploration Permits; or

 
(b)  
in the event that the Mining Department has recently recommenced accepting and
processing applications for transfer, registration or renewal of mining permits
or interests, there has not been sufficient time for the Beneficial Holder to
either:

 
(i)  
obtain delivery of the actual mining permits for each of the Exploration
Permits; or

 
(ii)  
gain sufficient knowledge of the Mining Department’s recommencement of these
activities to be confident that transfers of the Exploration Permits are
currently achievable.

 

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Joint Venture Agreement
   

 
F.  
By the Memorandum of Understanding Energizer and Malagasy agreed to participate
in a joint venture in respect of the Permits in relation to the Other Mineral
Rights subject to the Parties simultaneously entering into the Sale and Purchase
Agreement and the Mineral Rights Agreement.

 
G.  
The parties have agreed to establish a joint venture on the terms of this
Agreement, which supersedes and replaces the Memorandum of Understanding.

 
Agreement
 
1.  
Interpretation

 
1.1  
Definitions

 
In this Agreement, unless the context requires otherwise, the following
expressions will have the following meanings:
 
Accession Deed
a deed between the Parties to this Agreement and a third party pursuant to which
the third party assumes the obligations of the assigning Party to the extent of
the interest being assigned to the third party as if the third party was an
original party to this Agreement and is otherwise in a form satisfactory to the
non-assigning Party, acting reasonably.
   
Agreement
this agreement.
   
Area of Interest
the areas the subject of the Exploration Permits and identified by the area
shaded dark green in the map at Schedule 3.
    Bankable Feasibility Study a detailed report or reports prepared by or on
behalf of Malagasy and/or JV Company evaluating the feasibility of placing
mineral deposits within the Area of Interest, or any part thereof, into
production and operation as a mine, which detailed report or reports must
include, without limitation, a reasonable assessment of the mineable mineral
reserves and their amenability to metallurgical treatment, a complete
description of the work, equipment and supplies required to bring the mineral
deposits within the Area of Interest into mineral production and the estimated
cost thereof, a description of the mining methods to be employed and a financial
appraisal of possible mining operations. Such detailed report or reports must
be, in the opinion of the person or firm commissioning such report or reports,
or, in the event of a dispute between the Parties, in the opinion of such
qualified independent firm of consultants as Malagasy and/or JV Company selects
in good faith, in such form and of such substance which is normally accepted by
substantial, recognised financial institutions for the purpose of determining
whether to lend funds for the development of mineral deposits, and must include
and be supported by at least the following:         (a) a description of the
mining claims within the Area of Interest and that part of the mining claims
within the Area of Interest proposed to be the subject of a mine;         (b)
the estimated recoverable reserves of minerals and the estimated composition and
content thereof;         (c)
the procedure for the development, mining and production of Other Minerals from
the mining claims within the Area of Interest;

 

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(d)
results of mineral processing tests and ore amenability tests;
        (e) the nature and extent of the facilities which might be necessary to
acquire or construct, which may include ore processing facilities if the nature,
volume and location of the ore makes such ore processing facilities necessary
and feasible, in which event the study must also include a design for such ore
processing facilities;         (f) a detailed cost and timing analysis,
including a capital cost budget, of the total estimated costs and expenses
required to develop a mine on the mining claims within the Area of Interest and
to purchase, construct and install all structures, machinery, equipment, and
electricity connection or generation equipment required for such mine including
an ore processing facility, if so included in accordance with the terms hereof;
        (g) detailed operating cost estimates, including working capital
requirements for the initial three months of operation of the mine or such
longer period as may be reasonably justified;         (h) all description of
necessary environmental impact and mitigation studies and costs, including
planned rehabilitation of the mining claims within the Area of Interest with
estimated costs thereof;         (i) a critical path time schedule for bringing
the mining claims within the Area of Interest or any part thereof to commercial
production;         (j) such other data and information as are reasonably
necessary to substantiate the existence of a mineral deposit of sufficient size
and grade to justify development of a mine on the mining claims within the Area
of Interest, taking into account all relevant business, tax and other economic
considerations;         (k) disclosure of all price assumptions;         (l) a
transportation cost analysis;         (m) a proposed procedure or method of
disposing of tailings as required under the environmental and mining laws of all
Governmental Agencies having jurisdiction;         (n) a detailed discussion and
analysis of governmental requirements with respect to the development of a mine
on the mining claims within the Area of Interest including time schedules;      
  (o) details regarding any proposed financing of the project;         (p) a
discounted cash flow (net of income taxes) and return on investment analysis,
including an economic forecast for the life of the proposed mine; and        
(q) appropriate sensitivity analyses.

 

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Beneficial Holder
Energizer’s wholly owned subsidiary, Energizer Resources (Minerals) sarl, a
company incorporated under the laws of Madagascar, having its registered office
at Immeuble Tecno Mobile, Pres Lot 001 A Bis, Andranomena-Antehiroka,
Antananarivo 101, Madagascar.
   
Board
the board of Directors of JV Company or TenementCo (as the context requires).
   
Business
the business of JV Company and TenementCo as described in clause 9(a) and such
other business as the Shareholders may agree.
   
Business Day
a day which is not a Saturday, a Sunday or a public holiday in Ontario, Canada
or Perth, Western Australia.
   
Claim
in relation to a Party, any demand, claim, action or proceeding made or brought
by or against the Party, howsoever arising and whether present, unascertained,
immediate, future or contingent.
   
Commencement Date
the date on which all of the conditions in clause 3.1 are satisfied or waived.
   
Completion
has the meaning given to it in the Sale and Purchase Agreement.
   
Confidential Information
all information, documents, maps, reports, records, studies, forms,
specifications, processes, statements, formulae, trade secrets, drawings and
other data (and copies and extracts made of or from any such data) in written or
electronic form and whether reduced to writing or not, and at any time in the
possession or under the control of or readily accessible to any Party, including
the Mining Information, concerning:
 
(a) the existence or contents of this Agreement;
 
(b) Joint Venture Property;
 
(c) Joint Venture Operations;
 
(d) JV Company;
 
(e) TenementCo;
 
(f) the operations and transactions of a Party;
 
(g) the organisation, finance, customers, markets, suppliers, intellectual
property and know-how of a Party or a Related Body Corporate of a Party; and
 
(h) any other information obtained during the Term or in the course of the Joint
Venture,
 
that is not in the public domain (except by failure of a Party to perform and
observe its covenants and obligations under this Agreement) and that has been
obtained by a Party during the negotiations preceding the making of this
Agreement or the Memorandum of Understanding by or through or by being a Party
to this Agreement or the Memorandum of Understanding.

 

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Country Manager
has the meaning in clause 8.2.
   
Decision to Mine
has the meaning given to that term in clause 14.4(a).
   
Director
a director of JV Company.
   
Dispose
in relation to a person and any property, means to sell, transfer, assign,
surrender, create an Encumbrance over, declare oneself a trustee of or part with
the benefit or otherwise dispose of that property (or any interest in it or any
party of it) whether done before, on or after the person obtains any interest in
the property, including without limitation in relation to a share, to enter into
a transaction in relation to the share (or any interest in the share) which
results in a person other than the registered holder of the share:
 
(a) acquiring or having an equitable or beneficial interest in the share,
including, without limitation, an equitable interest arising under a declaration
of trust, an agreement for sale and purchase or an option agreement or an
agreement creating a charge or other Encumbrance over the share; or
 
(b) acquiring or having any right to receive (directly or indirectly) any
dividends or other distribution or proceeds of disposal payable in respect of
the share or any right to receive an amount calculated by reference to any of
them; or
 
(c) acquiring or having any rights of pre-emption, first refusal or other direct
or indirect control over the disposal of the share; or
 
(d) acquiring or having any rights of (direct or indirect) control over the
exercise of any voting rights or rights to appoint Directors attaching to the
share; or
 
(e) otherwise acquiring or having equitable rights against the registered holder
of the share (or against a person who directly or indirectly controls the
affairs of the registered holder of the shares) which have the effect of placing
the other person in substantially the same position as if the person had
acquired a legal or equitable interest in the share itself,
 
but excludes:
 
(f) a transaction expressly permitted by this Agreement; or
 
(g) a transaction conditional on each Shareholder consenting to it.
   
Encumbrance
any mortgage, bill of sale, lien, charge, pledge, writ, warrant, production
royalty, caveat (and all claims stated in the caveat), assignment by way of
security, security interest, title retention, preferential right or trust
arrangement, Claim, covenant, profit a pendre, easement, or any other security
arrangement or other right or interest of any third party and includes any other
arrangement having the same effect.
   
Energizer
Energizer Resources Inc., a company incorporated under the laws Minnesota,
United States of America.
   
Environmental Law
any law concerning environmental matters which regulates or affects the Permits,
and includes, but is not limited to, laws concerning land use, development,
pollution, waste disposal, toxic and hazardous substances, conservation of
natural or cultural resources and resource allocation including any law relating
to exploration for or development of any natural resource.

 

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Environmental Liability
any obligation, expense, penalty or fine under Environmental Law, including
rehabilitation and rectification work of whatsoever nature or kind.
   
Execution Date
the date of execution of this Agreement by the last of the Parties.
   
Exploitation Permit
a permit granted under the Mining Code in relation to the Area of Interest which
gives the holder an exclusive right to exploit authorised minerals, continue
exploration and research of such minerals and to build any permanent or
temporary structures.
   
Exploration
all activities and operations that have as their purpose the discovery,
location, delineation and further investigation of any Other Minerals, Other
Mineral deposits and ore, including drilling and trenching, the testing or
proving of those bodies, the conducting of pre-feasibility, viability and
amenability studies and the establishment and the administration of field
offices for the performance of any of these functions.
   
Exploration Area
the area of the Area of Interest that is not a Mining Area.
   
Exploration Operations
all Exploration activities conducted by JV Company and TenementCo in accordance
with this Agreement.
   
Exploration Permits
the exploration permits granted under the Mining Code listed in Schedule 1.
   
Funding Decision
a formal decision by JV Company to accept the provision of funding from a third
party, whether by way of a loan arrangement, the subscription of equity, the
acquisition of Joint Venture Property or a combination thereof, for the purposes
of commencement of construction of a mine in respect of a deposit of Other
Minerals within the Area of Interest.
   
Funding Decision Date
the date on which a Funding Decision is deemed to have been made pursuant to
clause 14.2(g).
   
Good Mining Practices
in relation to Exploration and Mining, those practices, methods and acts engaged
in or approved by a firm or body corporate which, in the conduct of its
undertaking, exercises that degree of safe and efficient practice, diligence,
prudence, and foresight reasonably and ordinarily exercised by skilled and
experienced operators engaged in the mining industry in Ontario, Canada.
   
Good Standing
in relation to a Permit, that:
 
(a) such permit is and remains in full force and effect; and
 
(b) such permit:
 
(i) is and remains not liable to cancellation, forfeiture or non-renewal; or
 
(i) is liable to cancellation, forfeiture or non-renewal where such liability
is:
 
A. not a result of the default of the holder of the permit or its subsidiaries;
 
B. solely a result of a compulsory surrender under the Mining Code; or
 
C. solely a result of a Political Event.

 

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Governmental Agency
any government or any governmental, semi-governmental, administrative, fiscal or
judicial body, responsible minister, department, office, commission, delegate,
authority, instrumentality, tribunal, board, agency, entity or organ of
government, whether federal, state, territorial or local, statutory or
otherwise, in respect of a sovereign state and includes any of them purporting
to exercise any jurisdiction or power outside that sovereign state.
   
Independent Expert
an expert independent of the Parties appointed under and for the purposes of
clause 33.
   
Industrial Minerals
the minerals listed in Schedule 2 of this Agreement.
   
Industrial Mineral Rights
all Mineral Rights with respect to Industrial Minerals.
   
Joint Venture
the joint venture constituted by this Agreement for the Exploration of, and if
warranted, the Mining of the Area of Interest, to be conducted by JV Company and
TenementCo pursuant to this Agreement, but does not include the Mining JV.
   
Joint Venture Costs
all costs, expenses and liabilities incurred in connection with Joint Venture
Operations including:
 
(a) all costs of establishing and maintaining JV Company and TenementCo;
 
(b) the costs of conducting Exploration Operations (including any Minimum
Expenditure Obligations);
 
(c) the costs of conducting Mining Operations;
 
(d) all rents, fees and taxes applicable to the Permits;
 
(e) all Outgoings in relation to Permits;
 
(f) the cost of all personnel engaged in the conduct of Joint Venture
Operations;
 
(g) the cost of all items of plant, equipment, machinery and vehicles used in
connection with Joint Venture Operations;
 
(h) a charge (not including any element of profit) for administrative and
overhead expenses incurred by the Operator, at a rate not exceeding 10% of items
of expense referred to in this definition;
 
(i) any costs of procuring and maintaining any insurance required for the
conduct of Joint Venture Operations in accordance with good industry practice;
 
(j) administrative, overhead, office and employment costs and expenses incurred
in connection with the conduct of Joint Venture Operations; and
 
(k) domestic and international travel expenses incurred in connection with the
conduct of Joint Venture Operations.
 
Joint Venture Operations
all activities of the Joint Venture under this Agreement including Exploration
Operations and if applicable, Mining Operations.

 

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Joint Venture Property
all property of whatsoever kind held or hereafter acquired or created by or on
behalf of JV Company or TenementCo for the purposes of the Joint Venture
including (without limitation):
 
(a) the Other Mineral Rights;
 
(b) rights under any Sublease;
 
(c) any Permits held by JV Company or TenementCo; and
 
(d) Mining Information.
 
JV Company
the company incorporated or to be incorporated under the laws of Mauritius as
described in clause 7.
   
Law
any statute, ordinance, code, regulation, law, by-law, local law, plan, planning
scheme, local structure plan, official directive, order, instrument,
undertaking, judicial, administrative or regulatory decree, judgement, ruling or
order.
   
Madagascar
the Republic of Madagascar.
   
Madagascar Development JV Company
has the meaning in clause 14.7(b).
   
Madagascan Government
the government of Madagascar.
Malagasy
Malagasy Minerals Limited ACN 121 700 105, a company incorporated under the laws
of Australia.
   
Material Adverse Effect
an unfavourable or adverse event, occurrence or circumstance, or the result
thereof, that causes the actual value of the Area of Interest or the Other
Mineral Rights to be materially impaired or devalued but does not include
anything that occurs as a result of a Political Event.
   
Mauritian Development JV Company
has the meaning in clause 14.7(b).
   
Mauritius
the Republic of Mauritius.
   
Memorandum of Understanding
the letter of understanding from Energizer to Mr Peter Langworthy, Non-Executive
Director of Malagasy, dated 22 October 2013 and signed by Energizer on 24
October 2013 and by Malagasy on 22 October 2013.
   
Mineral Rights
the right to explore for and mine minerals within the Area of Interest in
accordance with the Permits.
   
Mineral Rights Agreement
the document entitled “ERG Project Mineral Rights Agreement” between Energizer,
Malagasy and Madagascar-ERG Joint Venture (Mauritius) Limited dated on or about
the Execution Date.
   
Minimum Expenditure Obligations
the minimum expenditure which the holder of a Permit is required under the
Mining Code to incur in respect of that Permit in any given year.
   
Mining
all work of or associated with extraction of Other Mineral deposits by way of
commercial exploitation, including all preparatory development and incidental
work (other than Exploration) and to the extent agreed between the Parties may
include extraction, beneficiation, transportation, refining, processing and
marketing of minerals, including ore concentrates, matte and metals produced.

 

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Mining Area
the area of the Area of Interest determined under clause 14.6.
   
Mining Code
the body of legal provisions in force in Madagascar contained in the Law no
99-022 of 19/08/1999 containing the Mining Code as amended by Law no 2005-021 of
17/10/2005 as well as Decree no 2006-910 of 19/12/2006 setting out the
conditions of application of the Law no 99-022 of 19/08/1999 as amended by Law
no 2005-021 of 17/10/2005, as amended from time to time.
   
Mining Department
Bureau du Cadastre Minier de Madagascar (the Madagascar Mining Registry Office),
also known as the BCMM.
   
Mining Information
all technical information including (without limitation) geological, geochemical
and geophysical reports, surveys, mosaics, aerial photographs, samples, drill
cores, drill logs, drill pulp, assay results, maps and plans relating to the
Other Minerals in the Area of Interest or to Joint Venture Operations, whether
in physical, written or electronic form.
   
Mining JV
the joint venture to be constituted by this Agreement for Mining within the
Mining Area, to be conducted by the Madagascan Development JV Company as holder
of Other Mineral Rights within the Mining Area, on the terms specified in clause
14.10 of this Agreement.
   
Mining Operations
all Mining activities conducted by Mauritian Development JV Company and
Madagascar Development JV Company under this Agreement.
   
MMR
Madagascar Minerals and Resources sarl a company incorporated under the laws of
Madagascar, having its registered office at Lot VB81 A Ter, Ambatoroka,
Anatananarivo 101, Madagascar.
   
NewCo Madagascar
has the meaning in clause 14.5(b).
   
NewCo Mauritius
has the meaning in clause 14.5(b).
   
Operator
the person appointed as operator in accordance with clause 18 for the purposes
of managing, directing and controlling any and all Joint Venture Operations on
behalf of and as agent for JV Company, TenementCo and the Shareholders.
   
Other Mineral Rights
all Mineral Rights other than the Industrial Mineral Rights.
   
Other Minerals
all other minerals other than the Industrial Minerals.
   
Outgoings
all rents, rates, survey fees and other fees and charges under the applicable
legislation or otherwise in connection with a Permit.
   
Parties
the parties to this Agreement and Party means any one of them.
   
Permits
(a) the Exploration Permits;
 
(b) the Exploitation Permits;
 
(c) any licence, concession, permit or tenement which may hereafter be in force
or issued in lieu of or in relation to the same ground as the permits referred
to in paragraphs (a) or (b) of this definition;
 
(d) any permit, concession, licence or tenement that is a successor, renewal,
modification, extension or substitute for the permits referred to in paragraphs
(a), (b) or (c) of this definition; and
 
(e) all rights to mine and other privileges appurtenant to the mining tenements
and all ore and mineral-bearing material, sand, slimes, tailings and residues of
whatsoever nature located on and under the land the subject of a licence,
concession, permit or tenement referred to in paragraphs (a), (b), (c) or (d) of
this definition.

 

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Political Event
means any act, event or cause which is beyond the reasonable control of the
Party concerned (other than lack of or inability to use funds) resulting from
the action or inaction of any Governmental Agency including expropriation,
restraint, prohibition, intervention, requisition, requirement, direction or
embargo by legislation, regulation or other legally enforceable order.
   
Programs and Budgets
a program and budget for the conduct of Joint Venture Operations.
   
Purchase Price
has the meaning given to it in the Sale and Purchase Agreement.
   
Registered Holder
means the company that is registered with the Mining Department as the holder of
the Exploration Permits from time to time.
   
Related Body Corporate
in relation to a corporation, a corporation that is:
 
(a) a holding company of the first mentioned corporation;
 
(b) a subsidiary of the first mentioned corporation; or
 
(c) a subsidiary of a holding company of the first mentioned corporation.
 
Respective Proportion
in respect of a Shareholder, a proportion equal to the proportion (by value) of
the issued capital of JV Company or NewCo Mauritius (as the context requires)
held by that Shareholder from time to time.
   
Sale and Purchase Agreement
the document entitled “Sale and Purchase Agreement” between Energizer, Malagasy
and Madagascar-ERG Joint Venture (Mauritius) Ltd dated on or about the Execution
Date.
   
Share
a share in the capital of JV Company or NewCo Mauritius (as the context
requires).
   
Shareholder
a holder of Shares.
   
Shareholding Interest
a direct interest in Shares.
   
SIAC
the Singapore International Arbitration Centre.
Simple Majority
 
(a) in relation to a resolution of Directors, a resolution that is passed by an
affirmative vote of more than 50% of the votes cast by Directors entitled to
vote on the resolution; and
 
(b) in relation to a resolution of Shareholders, a resolution that is passed by
an affirmative vote of more than 50% of the votes cast by Shareholders entitled
to vote on the resolution.

 

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Sublease
has the meaning given to that term in clause 11.1.
   
Sublease Agreements
means the sublease agreements to be entered into by the Beneficial Holder and
TenementCo in relation to the relevant area / squares of each Exploration Permit
held by the Beneficial Holder within the Area of Interest, in the form set out
at Annexure A.
   
Tenement Acquisition Agreements
the agreement between MMR and the Beneficial Holder for the acquisition of the
Exploration Permits dated on or about July 9 2009.
   
TenementCo
the company incorporated or to be incorporated under the laws of Madagascar as
described in clause 8.
   
Term
the period from the Execution Date to the termination of this Agreement in
accordance with its provisions.
   
Trigger Date
The first to occur of the following:
 
(c) the Funding Decision Date; or
 
(d) the date on which a Bankable Feasibility Study is delivered to the
Shareholders in accordance with clause 14.1.

 
1.2  
Interpretation

 
(a)  
headings are for convenience; and

 
unless the context indicates otherwise:
 
(b)  
an obligation or a liability assumed by, or a right conferred on, 2 or more
persons binds or benefits them jointly and severally;

 
(c)  
a word or phrase in the singular number includes the plural, a word or phrase in
the plural number includes the singular, and a word indicating a gender includes
every other gender;

 
(d)  
if a word or phrase is given a defined meaning, any other part of speech or
grammatical form of that word or phrase has a corresponding meaning;

 
(e)  
a reference to:

 
(i)  
a party, clause, schedule, exhibit, attachment or annexure is a reference to a
party, clause, schedule, exhibit, attachment or annexure to or of this
Agreement;

 
(ii)  
a party includes that party’s executors, administrators, successors, permitted
assigns, including persons taking by way of novation and, in the case of a
trustee, includes a substituted or an additional trustee;

 
(iii)  
an agreement includes any undertaking, deed, agreement and legally enforceable
arrangement whether in writing or not, and is to that agreement as varied,
novated, ratified or replaced from time to time;

 
(iv)  
a document includes an agreement in writing and any deed, certificate, notice,
instrument or document of any kind;

 
(v)  
a document in writing includes a document recorded by any electronic, magnetic,
photographic or other medium by which information may be stored or reproduced;

 

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(vi)  
a document (including this Agreement) includes a reference to all schedules,
exhibits, attachments and annexures to it, and is to that document as varied,
novated, ratified or replaced from time to time;

 
(vii)  
legislation or to a provision of legislation includes any consolidation,
amendment, re-enactment, substitute or replacement of or for it, and refers also
to any regulation or statutory instrument issued or delegated legislation made
under it;

 
(viii)  
a person includes an individual, the estate of an individual, a corporation, an
authority, an unincorporated body, an association or joint venture (whether
incorporated or unincorporated), a partnership and a trust;

 
(ix)  
a right includes a power, remedy, authority, discretion or benefit;

 
(x)  
conduct includes an omission, statement or undertaking, whether in writing or
not;

 
(xi)  
an agreement, representation or warranty in favour of two or more persons is for
the benefit of them jointly and severally; and

 
(xii)  
an agreement, representation or warranty on the part of two or more persons
binds them jointly and severally;

 
(f)  
the word “includes” in any form is not a word of limitation;

 
(g)  
the words “for example” or “such as” when introducing an example do not limit
the meaning of the words to which the example relates to that example or to
examples of a similar kind;

 
(h)  
a reference to a day is to a period of time commencing at midnight and ending 24
hours later;

 
(i)  
if a period of time dates from a given day or the day of an act or event, it is
to be calculated exclusive of that day; and

 
(j)  
a reference to “A$”, “$” or “dollar” is to Australian currency.

 
2.  
Commencement

 
(a)  
The Parties acknowledge and agree that this Agreement commences with effect on
and from the Commencement Date.

 
(b)  
With effect on and from the Commencement Date, this Agreement replaces and
supersedes the Memorandum of Understanding, which is of no further force and
effect.

 
3.  
Conditions precedent

 
3.1  
Conditions

 
This Agreement is subject to and conditional upon:
 
(a)  
the execution of the Sale and Purchase Agreement;

 
(b)  
the execution of the Mineral Rights Agreement;

 

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(c)  
Completion pursuant to the Sale and Purchase Agreement; and

 
(d)  
the Parties having obtained all shareholder and regulatory approvals necessary
to achieve Completion and give effect to this Agreement including:

 
(i)  
TSX approvals;

 
(ii)  
ASX approvals; and

 
(iii)  
all necessary approvals under the relevant laws of Ontario, Canada, the United
States of America and Australia

 
3.2  
Best endeavours

 
Each of the Parties must use its best endeavours to procure satisfaction of the
conditions as soon as practicable following the date of this Agreement, and in
any event, not later than the Condition Satisfaction Date.
 
3.3  
Waiver of conditions

 
The conditions in clause 3.1 are included for the benefit of both Parties and
may only be waived by mutual agreement of the Parties.
 
3.4  
Non-satisfaction of conditions

 
In the event that the conditions in clause 3.1 are not satisfied within 60 days
following the date of this Agreement or such later date as the Parties may agree
in writing (Condition Satisfaction Date), then either Party may terminate this
Agreement by giving written notice to the other Party to that effect.
 
4.  
Consideration

 
4.1  
Sale and Purchase Agreement

 
This Agreement is executed in conjunction with the Sale and Purchase Agreement
and the Mineral Rights Agreement and the grant of the Other Mineral Rights to
Malagasy under this Agreement is in consideration of:
 
(a)  
Malagasy’s performance of its obligations under the Sale and Purchase Agreement
and the Mineral Rights Agreement; and

 
(b)  
Malagasy procuring that, on and from the commencement of commercial production
of Other Minerals from the Area of Interest, the JV Company or NewCo Mauritius
pay Energizer a royalty of an amount equal to one and a half percent (1.5%) of
net smelter returns of all Other Minerals produced from the Area of Interest
calculated in accordance with Schedule 4.

 
5.  
Provision of Mining Information

 
Subject to satisfaction of the conditions in clause 3.1, Energizer must promptly
provide to Malagasy copies of all Mining Information held by Energizer and the
Beneficial Holder in respect of the Permits.
 

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6.  
Acknowledgements by Parties

 
(a)  
The Parties acknowledge and agree that :

 
(i)  
as at the date of this Agreement, MMR is the Registered Holder and MMR will
remain the Registered Holder subject to the terms of this Agreement;

 
(ii)  
upon Energizer receiving notice from the Mining Department that the Mining
Department will from that time permit formal transfer and registration of
interests in, and transfers of, the Exploration Permits, Energizer must use its
reasonable endeavours to procure that MMR and the Beneficial Holder will do all
things necessary to transfer the Exploration Permits to the Beneficial Holder;
and

 
(iii)  
following a transfer in accordance with clause 6(a)(ii), the Exploration Permits
will remain with the Beneficial Holder other than any portion of an Exploration
Permit which is converted to an Exploitation Permit which will be dealt with in
accordance with clause 15.

 
(b)  
Energizer must use its reasonable endeavours to procure that the Beneficial
Holder and the Registered Holder will:

 
(i)  
perform all obligations expressed by this Agreement to be imposed on those
entities by this Agreement; and

 
(ii)  
execute all such documents as are necessary for those entities to be bound by
the obligations imposed on them, and to be entitled to exercise the rights
contemplated by this Agreement.

 
(c)  
The Shareholders must procure that the JV Company and TenementCo:

 
(i)  
perform all obligations expressed by this Agreement to be imposed on the JV
Company and TenementCo; and

 
(ii)  
execute all such documents as are necessary for those entities to be bound by
the obligations imposed on them, and to be entitled to exercise the rights
contemplated by this Agreement.

 
(d)  
The Parties acknowledge that they will use their respective best endeavours to
execute the Sublease Agreements contemporaneously with the signing of this
Agreement.

 
(e)  
The Parties acknowledge that Exploration Operations may only be conducted in
respect of those Other Minerals noted on the Permits or for which an
authorisation of the Mining Department has been received by the Registered
Holder acknowledging that those Other Minerals are the subject of the Permits.
Energizer will use its reasonable endeavours to procure that the Registered
Holder comply with their obligations under clause 11.2(d).

 
7.  
Establishment of JV Company and its Board

 

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7.1  
Establishment

 
The Parties have established, or will as soon as practicable after the
Commencement Date establish a new company as the JV Company, being a company
incorporated under the laws of Mauritius.
 
7.2  
Initial Shareholding Interests

 
(a)  
On establishment of JV Company, the initial Shareholders and their Shareholding
Interests in JV Company will be as follows:

 
Shareholder
 
Number of Shares
   
% Interest
 
Malagasy
    3       75 %
Energizer (or a Related Body Corporate of Energizer)
    1       25 %

 
(b)  
If required, each Shareholder must subscribe for, for nominal consideration, the
number of Shares specified in clause 7.2(a) next to its name.

 
7.3  
Adoption of constituent document

 
JV Company will adopt articles of association as its constituent document in
accordance with the laws of Mauritius and in a form that is consistent with the
terms of this Agreement.
 
7.4  
Board members

 
The Board will comprise three (3) representatives of Malagasy.
 
7.5  
Appointment and removal of Directors

 
(a)  
Malagasy shall have the right to appoint further Directors to the Board provided
the total number of Directors does not exceed that number permitted under the
articles of association of JV Company or by law.

 
(b)  
Following Trigger Date, and provided Energizer remains a Shareholder, Energizer
will be entitled to nominate one (1) Director to the Board.

 
(c)  
In circumstances where the office of Chairman of the Board becomes free, a new
Chairman shall be nominated by the Shareholder holding the majority of Shares at
that time.

 
(d)  
A person will be automatically removed as a Director without the need for any
other actions by the Shareholders or the Director if:

 
(i)  
the Shareholder who nominated the person as a Director ceases to be a
Shareholder.

 
(ii)  
the Shareholder that nominated the person as a Director gives written notice to
JV Company that the person ceases to be a Director; or

 
(iii)  
in such other circumstances as provided for in the articles of association of JV
Company.

 
(e)  
If a Shareholder that nominated a person as a Director gives written notice to
the other Shareholders that the person has ceased to be a Director pursuant to
clause 7.5(d)(ii), the Shareholder may (without the need for any other actions
by JV Company or the Directors) appoint another person as a Director to replace
the person who has ceased to be a Director.

 

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7.6  
Role and powers of the Board

 
(a)  
The business and affairs of the Joint Venture are to be under the control and
direction of the Board. All decisions of the Board must not breach the terms of
this Agreement or any Law. Except as otherwise provided in this Agreement, the
Board is to decide all matters in relation to the business and affairs of the
Joint Venture including:

 
(i)  
adoption of an accounting procedures manual for the Joint Venture and the
Operator;

 
(ii)  
appointment of independent auditors (if any);

 
(iii)  
delegation of matters to any sub-committees and the Operator;

 
(iv)  
giving directions to, and setting spending limits and other control mechanisms
for any sub-committees and the Operator;

 
(v)  
the surrender of the Joint Venture Property;

 
(vi)  
approval and revision of Programs and Budgets; and

 
(vii)  
other matters to be decided by the Board as specified in this Agreement.

 
(b)  
All decisions of the Board bind the Shareholders unless such decision is in
breach of this Agreement or any Law. Each Shareholder agrees to give effect to
those decisions provided such decision or the giving effect to such decision
does not breach this Agreement or any Law.

 
7.7  
Meetings of the Board

 
(a)  
The Board will meet:

 
(i)  
at least once each calendar year; and

 
(ii)  
at such other times as the Board may decide.

 
(b)  
Meetings of the Board may take place where the Directors are physically present
together, by telephone link-up or by audio-visual transmission.

 
(c)  
A Director may at any time, and the company secretary will on the request of a
Director, convene a meeting of the Directors.

 
7.8  
Notice of Board meetings

 
Notice of each meeting of the Board:
 
(a)  
must specify the time and the place of the meeting, but need not state the
nature of the business to be transacted;

 
(b)  
must be given to each Director not less than 5 days before the meeting; and

 
(c)  
may be given by telephone, facsimile transmission or electronic mail message,

 

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but the non-receipt by a Director of any notice of a Board meeting will not
affect the validity of the convening of the meeting.
 
7.9  
Quorum

 
The quorum for a Board meeting is a majority of the Directors entitled to attend
and vote at a meeting of Directors. If Energizer has a right to appoint a
Director under clause 7.5(b), then a quorum for a Board meeting must include the
representative of Energizer, unless Energizer agrees otherwise. If a quorum is
not present, then the Board meeting will be adjourned for at least 7 days until
such time as a quorum of Directors can be present.
 
7.10  
Decisions of the Boards

 
All resolutions of the Board may be passed by a Simple Majority vote of the
Directors.
 
7.11  
Voting

 
(a)  
Each Director may vote at a meeting of the Board.

 
(b)  
Each Director is entitled to one vote for each Share held by his nominating
Shareholder in JV Company, provided that the total number of votes cast by the
Directors appointed by his nominating Shareholder who vote on the matter shall
not exceed the number of Shares held by the nominating Shareholder in JV
Company. For example, if a Shareholder holds 3 Shares, the total number of votes
cast by all Directors nominated by that Shareholder shall be 3.

 
(c)  
In the case of equality of votes, the Chairman of the meeting will have a
casting vote.

 
7.12  
Experts and advisers

 
The Board may invite experts and advisers to attend any meeting of the Board.
 
7.13  
Minutes of meetings and records

 
(a)  
Minutes of Board meetings will be kept.

 
(b)  
On request, JV Company will provide copies of the agenda of Board meetings,
minutes of Board meetings and Board papers supporting such minutes to the
Shareholder who requests such information.

 
(c)  
On reasonable notice, any Shareholder and its advisers shall have access to
review and will be provided with copies of such of the records of JV Company and
TenementCo as reasonably requested from time to time.

 
(d)  
Energizer and its advisers will, at the cost of Energizer, have the right to
conduct an audit review of the records of JV Company and Tenement Co.

 
8.  
Establishment of TenementCo

 
8.1  
Establishment

 
(a)  
The Parties have established, or will as soon as practicable after the
Commencement Date establish, a company as TenementCo, being a company
incorporated under the laws of Madagascar for the purposes of holding the
Subleases.

 

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(b)  
All shares in TenementCo are or will be owned by JV Company.

 
(c)  
TenementCo has or will be incorporated for the time being as a Société á
Responsabilité Limitée.

 
8.2  
Management of TenementCo

 
(a)  
Malagasy has, or will as soon as practicable after the Commencement Date,
appoint the Gérant résident (Country Manager) of TenementCo, who will act in
accordance with the instructions provided to him by JV Company.

 
(b)  
Malagasy may after the Commencement Date, appoint additional Gérants of
TenementCo.

 
(c)  
Decisions of TenementCo will only be made in accordance with an instruction from
JV Company and will require the approval of a majority of managers (Gérants) of
TenementCo holding office from time to time.

 
8.3  
Appointment and removal

 
(a)  
Malagasy shall have the ability to appoint additional Country Managers or remove
and replace existing Country Managers of TenementCo subject to the total number
of Country Managers so appointed not exceeding that number provided for in the
constituent document of TenementCo or by law.

 
(b)  
If it hasn’t already done so, following the Trigger Date, Malagasy will consider
whether it is appropriate for TenementCo to remain incorporated as a Société á
Responsabilité Limitée company or whether it is more appropriate to convert to a
Société Anonyme company. If TenementCo is converted to a Société Anonyme company
at any time following the Trigger Date, and provided Energizer remains a
Shareholder of JV Company, Energizer will be entitled to nominate one (1)
director to the Board of TenementCo.

 
8.4  
Role of Country Manager

 
The role of the Country Manager is to carry out and implement the directions
received from JV Company in respect of the Business and to carry out the day to
day management of Joint Venture Operations.
 
8.5  
Adoption of constituent document

 
TenementCo has adopted, or will adopt, “statuts” as its constituent document in
accordance with the laws of Madagascar.
 
9.  
Business of the JV Company and TenementCo

 
(a)  
The business of JV Company will be to, through TenementCo:

 
(i)  
conduct Joint Venture Operations;

 
(ii)  
hold and administer the Other Mineral Rights;

 
(iii)  
hold and administer the Sublease Agreements and Subleases;

 

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(iv)  
upon the grant of Exploitation Permits over any part of the Area of Interest in
accordance with clause 15.1, hold and administer the Exploitation Permits; and

 
(v)  
conduct any Exploration Operations and or Mining Operations.

 
(b)  
The Shareholders agree and acknowledge that JV Company and/or TenementCo may
enter into agreements with third parties with respect to the use, operation or
other exploitation of any mining infrastructure which is located within the Area
of Interest or any in relation to any other Joint Venture Property, but any
agreement of this type must be entered into on arm’s length commercial terms.

 
10.  
Co-operation of Shareholders

 
Each Shareholder must:
 
(a)  
cooperate to:

 
(i)  
foster the development of the Business; and

 
(ii)  
ensure that JV Company and TenementCo can successfully carry on the Business in
accordance with all applicable laws and regulations;

 
(b)  
not use Confidential Information in a way which damages or is reasonably likely
to damage JV Company or TenementCo or any Shareholder, which obligation will
continue after a Shareholder has ceased being a Shareholder in JV Company and
survive termination of this Agreement. Nothing in this clause prevents Energizer
from using the Mining Information in relation to the exploration and development
of the Industrial Minerals;

 
(c)  
not unreasonably delay an action, approval, direction, determination or decision
required of the Shareholder;

 
(d)  
make approvals or decisions that are required of the Shareholder in accordance
with the terms and conditions of this Agreement; and

 
(e)  
provide such assistance as required by this Agreement, at the cost of JV
Company, as may from time to time reasonably be requested of it by JV Company or
TenementCo or which the Shareholders agree would assist in the development of
the Business, provided any costs incurred are reasonable out-of-pocket expenses
and do not relate to minor ad-hoc assistance which will be provided in good
faith.

 
11.  
Right to explore and sublease

 
11.1  
Grant of Subleases

 
(a)  
Energizer will procure that as soon as reasonably practicable during the Term,
the Beneficial Holder grants to TenementCo the Other Mineral Rights and the
exclusive right to carry out Exploration and Mining within the Area of Interest,
in accordance with the laws of Madagascar, for the purposes of identifying and
exploiting any Other Minerals within that area.

 
(b)  
Energizer will use its best endeavours to procure that as soon as reasonably
practicable during the Term, the Beneficial Holder and the Registered Holder
grant to TenementCo subleases over the Area of Interest on terms whereby, for
consideration which includes the benefit of Exploration Operations undertaken at
the cost of TenementCo:

 

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(i)  
TenementCo will, in accordance with the Mining Code, be the sole holder of the
Other Mineral Rights and have the exclusive right to conduct Exploration and
Mining within the Area of Interest; and

 
(ii)  
the Beneficial Holder will, in accordance with and as permitted under the Mining
Code, retain the exclusive right to Industrial Mineral Rights,

 
(each a Sublease).
 
(c)  
Subject to the Mining Code, the Subleases will be for the term of the Permits,
including for the term of any renewal of the Permits.

 
(d)  
Subject to clause 11.1(e), Energizer will use its reasonable endeavours to
procure that the Beneficial Holder and the Registered Holder must enter into the
Sublease Agreements and any other agreement(s) with TenementCo required by the
Mining Code to give effect to the exclusive right to carry out Exploration as
described in clause 11.1(a) and the Subleases as contemplated under clause
11.1(b).

 
(e)  
The Parties must use all reasonable endeavours to ensure the Sublease Agreements
and any other agreement contemplated by clause 11.1(d) are entered into by the
Registered Holder, the Beneficial Holder and TenementCo on, or as soon as
possible after, the Commencement Date.

 
11.2  
Covenants of Energizer in respect of the Exploration Permits

 
Energizer must use its reasonable endeavours to procure that the Beneficial
Holder and the Registered Holder, at the cost of JV Company, will:
 
(a)  
use all reasonable endeavours permitted under the laws of Madagascar to ensure
the Permits are renewed in the usual course for such periods as permitted by the
Mining Code, as requested by JV Company;

 
(b)  
do all such acts as are reasonably necessary to keep the Permits in Good
Standing which can only be done or performed by the registered holder of the
Permits, provided that the Registered Holder must give to JV Company adequate
prior notice of all such acts;

 
(c)  
use all reasonable endeavours to have the Sublease Agreements registered with
the Mining Department as soon as possible (provided in this case, the costs
associated with registration of the Sublease Agreements with the Mining
Department will be met 50% by the Beneficial Holder and 50% by JV Company); and

 
(d)  
apply to the Mining Department to add such of the Other Minerals to the Permits
as may be requested by JV Company from time to time to the extent those Other
Minerals are not already noted on the Permits.

 

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11.3  
Covenants in respect of the Exploration Permits

 
(a)  
Subject to clauses 11.2 and 17.3, during the Term, JV Company and TenementCo
must:

 
(i)  
do all such acts and make all such payments as are reasonably necessary to keep
the Permits in Good Standing;

 
(ii)  
comply with all Minimum Expenditure Obligations in respect of the Permits (if
any); and

 
(iii)  
contribute as sole contributors to all Outgoings.

 
(b)  
For the purposes of ensuring compliance with the obligations under this clause
11.3, Energizer may provide to JV Company or TenementCo (as the case may be) a
cash call (together with a copy of the supporting documentation (including any
invoice to the extent an invoice exists) to which the cash call relates) for the
amount required to be paid by JV Company or TenementCo pursuant to this clause
11.3 no more than 30 days prior to the due date for payment of such amount and
JV Company or TenementCo (as the case may be) has the option to satisfy the cash
call by:

 
(i)  
paying the amount referred to in the cash call to Energizer within 20 days of
receipt of the cash call; or

 
(ii)  
paying the amount referred to in the cash call direct to the third party to
which the relevant invoice or other supporting documentation relates on or
before the due date for payment noted in the cash call provided that the third
party will accept payment direct from JV Company or TenementCo (as the case may
be).

 
11.4  
Remedies of Malagasy

 
(a)  
If Energizer fails to procure any acts or omissions of any Beneficial Holder,
which constitutes a breach of clause 11.2 under this Agreement and which may, in
JV Company’s reasonable opinion, result in:

 
(i)  
the termination or non-renewal of a Permit;

 
(ii)  
a revocation of any permit, authority or approval necessary to maintain the Good
Standing of a Permit; or

 
(iii)  
loss of access to any part of the Area of Interest,

 
JV Company or TenementCo has the right, on each occurrence, to be appointed the
Beneficial Holder’s attorney for the purpose of taking whatever remedial steps
it considers necessary to remedy the breach.
 
(b)  
Any costs incurred by JV Company or TenementCo in exercising its rights pursuant
to clause 11.4(a) will be a debt due from the Beneficial Holder to JV Company
payable upon demand.

 
(c)  
The rights created by clause 11.4(a) are the sole remedy in respect to a breach
to which clause 11.4(a) applies.

 
(d)  
JV Company and TenementCo will not be liable to the Beneficial Holder for any
loss or damage suffered by the Beneficial Holder as a result of actions taken or
omissions made by JV Company in the course of exercising or purporting to
exercise its rights under clause 11.4(a) so long as JV Company has acted in good
faith.

 

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11.5  
Exercise of Other Mineral Rights

 
JV Company and TenementCo must, in the exercise of the Other Mineral Rights:
 
(a)  
comply with the conditions of the Permits (to the extent that those conditions
relate to the Area of Interest) as if TenementCo were the permit holder;

 
(b)  
comply with the requirements of the Mining Department, the Mining Code,
Environmental Laws and any other laws dealing with miners and the exploration
for and mining of minerals;

 
(c)  
be responsible for approvals required for activities on the Area of Interest;

 
(d)  
be responsible for the preparation and lodgement of any reporting obligations on
any work done on, and money expended in connection with the Area of Interest;

 
(e)  
comply with, adopt and exercise Good Mining Practices including rehabilitating
any ground disturbance;

 
(f)  
without prejudice to clause 17, use its reasonable endeavours to minimise
interference with the Beneficial Holder’s activities in planning, programming
and executing any exploration activity on the Exploration Permits;

 
(g)  
keep all drill holes, costeans, trenches, excavations, shafts and other workings
secure and safe and properly maintained and, where necessary, fenced; and

 
(h)  
not do or suffer to be done anything which will or may place in jeopardy the
Permits or render any of them liable to forfeiture.

 
11.6  
Notice of activities

 
(a)  
TenementCo must, at least 20 Business Days prior to commencing any program of
activity on the Area of Interest (Proposed Activity), give a notice to Energizer
(Notice of Proposed Activity) containing particulars of:

 
(i)  
the general nature of the Proposed Activity; and

 
(ii)  
the areas of the Area of Interest which TenementCo proposes to enter upon to
conduct the Proposed Activity and or to construct, operate and maintain
infrastructure in relation to the Proposed Activity.

 
(b)  
TenementCo will, at the cost of Energizer, assay any exploration results for any
Industrial Minerals requested by Energizer provided that such request is
received within 20 Business Days after receipt of a Notice of Proposed Activity.

 
(c)  
Energizer will or will procure the Beneficial Holder to, at the cost of
Malagasy, assay any exploration results for any Other Minerals within the Area
of Interest requested by Malagasy provided that such request is received within
20 Business Days after receipt of a Notice of Proposed Activity.

 

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(d)  
TenementCo must provide to Energizer the results of TenementCo’s activities on
the Area of Interest by way of:

 
(i)  
quarterly reports; and

 
(ii)  
reports at such other times as is required by Energizer to enable the Beneficial
Holder to comply with statutory and Mining Departmental reporting obligations.

 
11.7  
Mutual indemnities

 
(a)  
JV Company and TenementCo each jointly and severally agree to indemnify, and
keep indemnified, and hold harmless Energizer and the Beneficial Holder and
their Related Bodies Corporate, directors, employees and consultants from and
against all Claims that may be made, brought against, suffered, sustained or
incurred by Energizer or the Beneficial Holder, arising out of any act or
omission (including any negligent act or omission) of JV Company or TenementCo
and in the course of the exercise of activities undertaken by JV Company or
TenementCo on the Area of Interest.

 
(b)  
Energizer agrees to indemnify, and keep indemnified, and hold harmless the
Shareholders and JV Company and their Related Bodies Corporate, directors,
employees and consultants from and against all Claims that may be made, brought
against, suffered, sustained or incurred by the Shareholders or JV Company,
arising out of any act or omission (including any negligent act or omission) of
Energizer or the Beneficial Holder and in the course of the exercise of
activities undertaken by them on the Area of Interest.

 
12.  
Surrender of Joint Venture Property

 
(a)  
Subject to clause 12(d), the Board of JV Company may resolve by Simple Majority
to surrender any of the Joint Venture Property (Surrendered Property).

 
(b)  
If the Board resolves to surrender the whole or any part of, the Joint Venture
Property pursuant to any compulsory relinquishment obligations under the Mining
Code, then it must consult with the Beneficial Holder and in good faith agree on
the areas to be surrendered under the compulsory relinquishment.

 
(c)  
If the Board resolves to surrender the whole or any part of, the Joint Venture
Property other than pursuant to any compulsory relinquishment obligations under
the Mining Code, the Operator must not give effect to that decision:

 
(i)  
if one of the Shareholders (acting through a Director) voted against that
resolution to surrender (Dissenting Party), until the Operator has first offered
in writing to transfer the relevant Joint Venture Property or part thereof to
the Dissenting Party for no consideration other than the cost of transfer and
the Dissenting Party has not accepted that offer within 14 days after it is
made; and

 
(ii)  
if there is no Dissenting Party or the Dissenting Party does not accept the
offer under clause 12(c), until the Operator has first offered in writing to
transfer the relevant Joint Venture Property or part thereof to the Beneficial
Holder for no consideration other than the cost of transfer and the Beneficial
Holder has not accepted that offer within 14 days after it is made.

 
(d)  
If the Dissenting Party or the Beneficial Holder accepts an offer under clause
12(c), the Operator, the Board and the JV Company must promptly do all things
reasonable to complete the transfer and give sole benefit and control of the
Surrendered Property to the Dissenting Party or the Beneficial Holder as the
case may be.

 

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(e)  
Where the Board resolves to surrender any of the Joint Venture Property, it
must:

 
(i)  
provide two (2) months written notice of the surrender to each Shareholder,
which identifies the specific Joint Venture Property which is to be surrendered;
and

 
(ii)  
ensure that, to the extent the surrender of Joint Venture Property applies or
relates to a Permit or Permits, that all Outgoings, Minimum Expenditure
Obligations (if any) and any payments reasonably necessary to keep the relevant
Permit(s) in Good Standing are paid to date and for one (1) year following the
date on which notice is given in accordance with clause 12(e)(i) above.

 
(f)  
On and from the transfer or surrender of any Joint Venture Property under this
clause 12:

 
(i)  
the Surrendered Property will cease to be Joint Venture Property for any purpose
under this Agreement; and

 
(ii)  
except as expressly provided elsewhere in this Agreement, the Shareholders, JV
Company and TenementCo will cease to have any rights or liabilities in respect
of the Surrendered Property, other than any rights or liabilities which have
accrued prior to the date of the resolution to surrender the Surrendered
Property.

 
13.  
Transfer of Permits

 
(a)  
Subject to clause 13(b), should the Beneficial Holder decide to Dispose of their
interest in any of the Permits, Energizer must procure that the Beneficial
Holder may only sell, transfer or otherwise dispose of that interest to any
person (Permit Transferee):

 
(i)  
provided the JV Company and TenementCo are given the opportunity to match any
bona fide third party offer as a right of first refusal for a period of 30 days
from the time of notice of the offer from the Beneficial Holder; and

 
(ii)  
the Permit Transferee enters into an Accession Deed.

 
(b)  
The Beneficial Holder may transfer the Permits to another wholly owned
subsidiary of Energizer provided that the transferee first enters into an
Accession Deed.

 
14.  
Bankable Feasibility Study, Funding Decision and Decision to Mine

 
14.1  
Bankable Feasibility Study

 
(a)  
At any time during the Term, the Board may direct the Operator to carry out a
Bankable Feasibility Study in respect of the Area of Interest, the costs of
which will form part of the Joint Venture Costs.

 

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(b)  
Throughout the completion of the Bankable Feasibility Study, the Operator will
provide the Shareholders with quarterly reports on the progress of the Bankable
Feasibility Study and such other information as a Shareholder may reasonably
request from time to time in order that such Shareholder can be kept informed of
the progress of the Bankable Feasibility Study in order that it will be in a
position to arrange finances to make a Decision to Mine in the time period
required by clause 14.4(a).

 
(c)  
Upon completion of a Bankable Feasibility Study referred to in clause 14.1(a),
the Operator must provide the Shareholders with a copy thereof.

 
14.2  
Funding Decision

 
(a)  
At any time during the Term, the Board may direct the Operator to engage with
third parties with a view to securing a Funding Decision in respect of the Area
of Interest. The costs of such engagement will form part of the Joint Venture
Costs.

 
(b)  
Throughout any engagement with third parties in relation to a possible Funding
Decision, the Operator will provide the Shareholders with quarterly reports on
the progress of such engagement and such other information as a Shareholder may
reasonably request from time to time in order that such Shareholder can be kept
informed of the progress of the engagement in order that it will be in a
position to arrange finances to make a Decision to Mine in the time period
required by clause 14.4(a).

 
(c)  
Upon a Funding Decision having been made, the Operator must give the
Shareholders written notice of the same together with such documents and other
evidence setting out that decision.

 
(d)  
Within 10 Business Days of service on it of a notice under clause 14.2(c), a
Shareholder may dispute that a Funding Decision has been made by giving written
notice to the Operator and the other Shareholders.

 
(e)  
If a Shareholder fails to give notices in accordance with clause 14.2(d) within
the 10 Business Day period referred to in that clause, the Shareholder will be
deemed to have accepted that a Funding Decision has been made.

 
(f)  
If a Shareholder gives notice to the Operator and the other Shareholders in
accordance with clause 14.2(d) within the 10 Business Day period referred to in
that clause, the dispute as to whether a Funding Decision has been made shall be
a dispute to which clause 30 applies and shall not, for the avoidance of doubt,
be dispute in relation to a Technical Matter or a Financial Matter as defined in
clause 32.1.

 
(g)  
A Funding Decision will be deemed to have been made:

 
(i)  
if no Shareholder gives notices in accordance with clause 14.2(d) within the 10
Business Day period referred to in that clause: on the date immediately
following the last day of the 10 Business Day period; or

 
(ii)  
if notices are given in accordance with clause 14.2(d) within the 10 Business
Day period referred to in that clause, and if the dispute is resolved with an
agreement or determination that a Funding Decision has been made: on the date of
such agreement or determination.

 

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14.3  
Obligation to Fund

 
On and from the Trigger Date, the Shareholders will fund Joint Venture Costs in
respect to the Mining Area in their Respective Proportions until such time as
external funding (other than that the subject of any Funding Decision) for the
development and commencement of Mining Operations has been procured.
 
14.4  
Decision to Mine

 
(a)  
Following the Trigger Date, the Shareholders may, by a Simple Majority, decide
to commence Mining Operations in respect of all or part of the Area of Interest
the subject of the Bankable Feasibility Study or the Funding Decision (as
applicable) (Decision to Mine). A Decision to Mine cannot be made earlier than
the date which is 90 days after the Trigger Date, unless otherwise agreed in
writing by all Shareholders.

 
(b)  
If the Shareholders make a Decision to Mine in accordance with clause 14.4(a),
JV Company must:

 
(i)  
use its reasonable endeavours to procure that the Beneficial Holder and the
Registered Holder apply for, as the case may be, any authorisation or permission
required under the Mining Code or other laws of Madagascar, including the
conversion of Exploration Permits into Exploitation Permits and relevant
environmental authorisations, the granting of which by the Mining Department or
other Governmental Agency of Madagascar is a condition to the implementation of
the Decision to Mine; and

 
(ii)  
be responsible for arranging project finance for the development and
commencement of the Mining Operations.

 
14.5  
Election to participate and formation of mining joint venture

 
(a)  
A Shareholder which did not vote in favour of the Decision to Mine may elect,
within 40 Business Days of the Decision to Mine, not to participate in the
Mining Operation the subject of the Decision to Mine. The Shareholders who do
not make such an election or who voted in favour of the Decision to Mine are
referred to as Mining Parties.

 
(b)  
Upon the expiration of the 40 Business Day election period provided for in
clause 14.5(a) (Mining JV Commencement Date), the Mining Parties will
incorporate a joint venture company under the laws of Mauritius (NewCo
Mauritius), the shareholders of which will be the Mining Parties, in the same
proportion as their respective Shareholding Interest in JV Company bear to each
other at the time a Decision to Mine is made, which will in turn will hold 100%
of the shares in a newly formed company in Madagascar (NewCo Madagascar).

 
14.6  
Establishment of Mining Area

 
(a)  
Within 30 Business Days after the Mining JV Commencement Date, the Parties will
meet to establish the boundaries of the Mining Area which is appropriate to
encompass all deposits of Other Minerals the subject of the Bankable Feasibility
Study or Funding Decision (as applicable), which deposits may be mined as a
single mining enterprise, together with any milling or concentrating plant and
other appropriate infrastructure and facilities necessary for the efficient
conduct of Mining Operations.

 
(b)  
In the event of disagreement, the boundaries established for the Mining Area
will be determined in accordance with clause 32 and will be the area reasonably
required for the Mining Operations the subject of a Decision to Mine and accords
with the Mining Code, Good Mining Practices and the Bankable Feasibility Study
(if any).

 

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14.7  
Holding of Mining Area

 
(a)  
Upon the incorporation of NewCo Mauritius and NewCo Madagascar and the
establishment of the Mining Area in accordance with clause 14.6, the Mining
Parties will consult with each other in good faith and make a determination as
to whether the Joint Venture Property within the Mining Area will be transferred
into NewCo Madagascar or whether the Joint Venture Property within the
Exploration Area (Exploration Assets) will be transferred to NewCo Madagascar,
leaving the Joint Venture Property within the Mining Area as the sole property
of JV Company for the Mining JV.

 
(b)  
After a determination is made under clause 14.7(a), the Mauritian company (being
NewCo Mauritius or JV Company) which through its Madagascan subsidiary (being
NewCo Madagascar or TenementCo), holds the property of the Mining JV within the
Mining Area from time to time will be known as the Mauritian Development JV
Company, the purpose of which will be to conduct Mining Operations in respect of
the Mining Area. The subsidiary in Madagascar of the Mauritian Development JV
Company which holds the property of the Mining JV within the Mining Area will be
known as the Madagascar Development JV Company.

 
(c)  
If the Exploration Assets are transferred into NewCo Madagascar then this
Agreement will apply in relation to the Exploration Assets as if NewCo Mauritius
and NewCo Madagascar were named herein in place of JV Company and TenementCo
respectively.

 
14.8  
Mining Area ceases to be Joint Venture Property

 
(a)  
On the Mining JV Commencement Date:

 
(i)  
the Mining Area will be segregated from the Area of Interest;

 
(ii)  
the Joint Venture Property within the Mining Area will cease to be held
beneficially by the JV Company or TenementCo (as applicable) as Joint Venture
Property and will be held solely by the Madagascar Development JV Company as
property of the Mining JV until transferred in accordance with clause 14.9; and

 
(iii)  
if JV Company is the Madagascar Development JV Company, those Shareholders who
are not Mining Parties must, at the cost of the Mining Parties, transfer all of
their interest in Madagascar Development JV Company to the Mining Parties on a
pro rata basis resulting in the Mining Parties holding Mining Venture Interests
consistent with clause 14.10(b), for consideration equal to 75% of the market
value of that interest as agreed between the Parties or, in the absence of
agreement, as determined by an independent expert appointed in accordance with
clause 33.2,.

 
(b)  
For the avoidance of doubt, a Shareholder who transfers all of their interest in
Madagascar Development JV Company under clause 14.8(a)(iii) will not be entitled
to receive a royalty under clause 24 in respect of the relevant Mining Area
which is transferred to the Mining Parties.

 
14.9  
Transfer of Mining Area

 
As soon as practicable after determination of the Mining Area:
 
(a)  
the Shareholders and Mining Parties must, and Energizer must use its reasonable
endeavours to procure that the Beneficial Holder and the Registered Holder will,
co-operate to prepare, execute and procure registration of such conditional
surrenders, applications, transfers, new sub-leases and other documents as may
be necessary to segregate the Mining Area and to vest the Joint Venture Property
within the Mining Area in Madagascar Development JV Company and (if necessary)
to vest the Joint Venture Property in the Exploration Area in NewCo Madagascar;
but

 
(b)  
if the Mining Parties decide to delay segregation, or segregation cannot
immediately occur due to matters outside of the control of the Beneficial
Holder, Shareholders or Mining Parties, the Shareholders and Mining Parties
will, and Energizer must use its reasonable endeavours to procure that the
Beneficial Holder and the Registered Holder will, implement such alternative
arrangements in order for Madagascar Development JV Company to have the sole
benefit and control of the Joint Venture Property within the Mining Area and for
the Shareholders to have the sole benefit and control of the Joint Venture
Property within the Exploration Area.

 

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14.10  
Terms of Mining Joint Venture

 
(a)  
Following the determination of the Mining Area and the conversion of the Permits
into exploitation permits under clause 15, the Mauritian Development JV Company
may proceed to implement Mining Operations within the Mining Area.

 
(b)  
The interest of each Mining Party in the Mauritian Development JV Company will
be in proportion to their relative Shareholding Interests in JV Company (Mining
Venture Interest) at the time a Decision to Mine is made or as they may
otherwise agree between themselves.

 
(c)  
If the then Operator is a Mining Party, then the Operator will be the operator
of the Mining Operations conducted by the Mauritian Development JV Company
through Madagascar Development JV Company (Mining Operator). Otherwise, the
Mining Parties will elect a Mining Operator by majority vote in proportion to
their respective Mining Venture Interests.

 
(d)  
The Mining Parties will contribute to the costs incurred by the Mauritian
Development JV Company in proportion to their respective Mining Venture
Interests to the extent additional funds are required by Mauritian Development
JV Company.

 
14.11  
Agreement

 
As soon as possible following the Mining JV Commencement Date, the shareholders
of the Mauritian Development JV Company (being the Mining Parties) will in good
faith enter into negotiations for and execute an appropriate agreement in place
of this Agreement in respect of the Mining Area for the Mining JV. The agreement
will:
 
(a)  
provide for all matters necessary for the planning, financing, construction,
commissioning and conduct of Mining Operations;

 
(b)  
otherwise reflect the terms of this Agreement where relevant; and

 
(c)  
provide for the execution of cross charges which encumber each Mining Party’s
Mining Venture Interest, and its interest in any contracts for, and the proceeds
of, sale of Other Minerals in favour of each other Mining Party and the Mining
Operator as security for its performance of its duties and obligations arising
under the agreement.

 
Until that agreement is executed, this Agreement and, in particular, clause
14.10 will continue to bind the Mining Parties.
 
15.  
Conversion to Exploitation Permits

 
15.1  
Conversion

 
The Parties acknowledge and agree that:
 
(a)  
in order to commence Mining Operations in respect of all or a part of the Area
of Interest, the Exploration Permits, to the extent they cover the Mining Area
(Current Permits) will be converted into Exploitation Permits; and

 

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(b)  
if the Shareholders make a Decision to Mine, the Parties must do all things
necessary to, as promptly as possible, have the Current Permits converted into
Exploitation Permits and to apply for all relevant environmental authorisations.

 
15.2  
Transfer of Exploitation Permits

 
(a)  
Energizer must use its reasonable endeavours to procure that any Exploitation
Permit issued by the Mining Department to the Beneficial Holder or the
Registered Holder is immediately transferred or, if for whatever reason the
Exploitation Permit cannot immediately be transferred, sub-leased (as
applicable) by the Beneficial Holder and/or the Registered Holder to Madagascar
Development JV Company as soon as possible after the grant of the Exploitation
Permit.

 
(b)  
The Parties acknowledge and agree that, in relation to this clause 15, it is the
preference of the Parties to have any Exploitation Permit issued by the Mining
Department to a Beneficial Holder or the Registered Holder immediately
transferred to Madagascar Development JV Company. However if such a transfer is
not possible for whatever reason, then the Parties will implement such
alternative arrangements in order for Madagascar Development JV Company to have
the sole benefit and control of the Exploitation Permit including entering into
new sub-leases in respect of the Exploitation Permits on terms and conditions
which are consistent with this Agreement.

 
(c)  
The Parties acknowledge and agree that on transfer of the Exploitation Permits
to Madagascar Development JV Company, Madagascar Development JV Company will
grant a sub-lease to Energizer or its nominee in respect to the Industrial
Mineral Rights within the Exploitation Permit on terms and conditions which are
consistent with this Agreement, including clause 17.

 
15.3  
Holding of Exploitation Permits

 
During the time between the granting of an Exploitation Permit and the formal
transfer or sub-lease of the Exploitation Permit to Madagascar Development JV
Company, must use its reasonable endeavours to procure that the Beneficial
Holder or Registered Holder to whom the Exploitation Permit was granted shall
hold the Exploitation Permit for Madagascar Development JV Company’s sole
benefit and agree:
 
(a)  
not to act in any manner which is detrimental to Madagascar Development JV
Company or the Exploitation Permit; and

 
(b)  
to act in accordance with Madagascar Development JV Company’s reasonable
instructions in relation to the Exploitation Permit provided these instructions
are not contrary to or breach of the Laws of Madagascar.

 
15.4  
Approval of Mining Department

 
Energizer must use its reasonable endeavours to procure that Beneficial Holder
and/or the Registered Holder will promptly apply for the approval of the Mining
Department or other relevant body for the transfer or sub-lease (as applicable)
of any Exploitation Permit issued to the Beneficial Holder or the Registered
Party in accordance with clause 15.1 and to do all other things reasonably
necessary to effect the transfer or sub-lease of the granted Exploitation
Permits to Madagascar Development JV Company as soon as possible after the grant
of the Exploitation Permit.
 
15.5  
Beneficial Holder may transfer Exploration Permits prior to conversion

 
The Beneficial Holder may fulfil its obligations under this clause 15 if the
Beneficial Holder and/or the Registered Holder transfer the Current Permits or
the Exploration Permits of which the Current Permits form part, to Madagascar
Development JV Company before any Exploitation Permit is issued, subject to
compliance with all applicable laws and conditions of grant of the relevant
Permits.
 

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15.6  
Avoidance of forfeiture of Permits

 
(a)  
If a Party is required to do anything in relation to this clause 15 which could
foreseeably result in any cancellation, forfeiture or suspension of the whole or
any part of a Permit, then:

 
(i)  
the Parties must consult with one another and in good faith agree to either:

 
A.  
proceed with the action; or

 
B.  
refrain from that action and undertake such alternative actions as agreed by the
Parties in order to transfer the relevant rights and interests in the Area of
Interest to the Madagascar Development JV Company; and

 
(ii)  
a Party must not proceed with any action that is wholly within its control and
could foreseeably result in any cancellation, forfeiture or suspension of the
whole or any part of a Permit without the other Parties’ consent; and

 
(b)  
if segregation or transfer under this clause 15 is temporarily unable to occur
due to matters outside of the control of the Permit Holders and the Parties, or
the Parties agree not to proceed with any transfer or segregation under clause
15.6(a), then the Parties and the Beneficial Holder agree:

 
(i)  
that the Sublease Agreements in respect of the relevant Exploration Permits
shall remain in place to ensure that the JV Company has its full interest and
benefit in the Area of Interest;

 
(ii)  
to implement all reasonable arrangements (whether set out in this clause 15 or
otherwise) to achieve a transfer or grant of the relevant legal interest in the
Area of Interest to the JV Company as soon as reasonably possible; and

 
(iii)  
until a transfer is effected in accordance with clause 15.6(b)(ii), Energizer’s
obligations under this Agreement to procure the required actions of the
Beneficial Holders and the Registered Holder shall continue in respect of the
relevant Permits.

 
16.  
Environment and Mining Operations

 
Prior to undertaking any Mining Operations within the Area of Interest, the
Parties must use all reasonable endeavours to ensure Madagascar Development JV
Company obtains all relevant environmental approvals necessary under Madagascan
law, including the approval of the environmental commitment plan (plan
d’engagement environnemental) and of the environmental impact study (Etude
d’impact environmental) and the issuance of an environmental authorisation
related to the proposed Mining Operations.
 
17.  
Industrial Mineral Rights

 
17.1  
Holder of Permits and Industrial Mineral Rights

 
(a)  
Upon Energizer receiving notice from the Mining Department that the Mining
Department will from that time permit formal transfer and registration of
interests in, and transfers of, the Exploration Permits, Energizer must use its
reasonable endeavours to procure that the MMR and the Beneficial Holder prepare,
execute and register such applications, transfers and other documents as may be
necessary to transfer the Permits from MMR to the Beneficial Holder.

 

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(b)  
The Parties agree and acknowledge that :

 
(i)  
subject to clause 15 and clause 17.1(a), MMR is the Registered Holder;

 
(ii)  
subject to clause 15, the Beneficial Holder is the beneficial holder of the
Permits;

 
(iii)  
subject clause 15, upon and from a transfer of the Permits in accordance with
clause 17.1 the Beneficial Holder will be the Registered Holder; and

 
(iv)  
the Beneficial Holder is the sole beneficial holder of the Industrial Mineral
Rights,

 
and no other party has any rights in the Permits or the Industrial Mineral
Rights other than as contemplated by this Agreement.
 
17.2  
Priority of exercise of Industrial Mineral Rights

 
Subject to clause 17.4, the Beneficial Holder, as the holder of the Industrial
Mineral Rights, and the JV Company must consult, co-operate and otherwise use
all reasonable endeavours not to interfere with:
 
(a)  
the exercise of the Other Mineral Rights by the JV Company; and

 
(b)  
the exercise of the Industrial Mineral Rights by the Beneficial Holder,

 
but to the extent such interference cannot reasonably be avoided, the exercise
of the Industrial Mineral Rights by the Beneficial Holder will have priority.
Without limiting the foregoing, the Beneficial Holder, as the holder of the
Industrial Mineral Rights, and JV Company must, prior to the commencement of
their respective seasonal exploration programmes on the Area of Interest,
consult with each other as to the contents of those programs and use reasonable
endeavours to ensure those programs are not incompatible.
 
17.3  
Exercise of Industrial Mineral Rights by the Beneficial Holder

 
Energizer must use its reasonable endeavours to procure that, in the exercise of
the Industrial Mineral Rights, the Beneficial Holder will:
 
(a)  
comply with all applicable laws and conditions of grant of the Permits; and

 
(b)  
not do or suffer to be done anything which will or may render a Permit liable to
cancellation or forfeiture.

 
17.4  
Suspension of Industrial Mineral Rights for duration of Mining Operations

 
Subject to clause 17.7, upon JV Company making a Decision to Mine, the
Industrial Mineral Rights of the Beneficial Holder will be suspended over the
Mining Area for the duration of the Mining Operations the subject of that
Decision to Mine.
 

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17.5  
Transfer of Industrial Mineral Rights

 
The Beneficial Holder may transfer, assign or otherwise dispose of the whole or
any part of the Industrial Mineral Rights to any person (IMR Transferee) subject
to:
 
(a)  
the Beneficial Holder giving the JV Company the opportunity to match any bona
fide third party offer for the Industrial Mineral Rights as a right of first
refusal for a period of 30 days from the time of notice of the offer from the
Beneficial Holder;

 
(b)  
the IMR Transferee being technically and financially able to perform the
obligations of the Beneficial Holder as the holder of the Industrial Mineral
Rights under this Agreement to the extent of the interest disposed of; and

 
(c)  
the IMR Transferee entering into a deed with JV Company and Shareholders whereby
the IMR Transferee agrees to be bound by, and assumes the obligations of the
Beneficial Holder as the holder of the Industrial Mineral Rights under this
Agreement (including the obligations under this clause) to the extent of the
interest to be disposed of.

 
17.6  
Transfer of Other Mineral Rights

 
(a)  
JV Company or TenementCo may transfer, assign or otherwise dispose of the whole
or any part of the Other Mineral Rights to any person (OMR Transferee) subject
to:

 
(i)  
subject to clause 17.6(b), JV Company giving the relevant Beneficial Holder the
opportunity to match any bona fide third party offer for the Other Mineral
Rights as a right of first refusal for a period of 30 days from the time of
notice of the offer from JV Company;

 
(ii)  
subject to clause 17.6(c), the OMR Transferee being technically and financially
able to perform the obligations of JV Company and TenementCo as the holder of
the Other Mineral Rights under this Agreement to the extent of the interest
disposed of; and

 
(iii)  
the IMR Transferee entering into a deed with the relevant Beneficial Holder
whereby the OMR Transferee agrees to be bound by, and assumes the obligations of
the Shareholders, JV Company and TenementCo as the holder of the Other Mineral
Rights under this Agreement (including the obligations under this clause) to the
extent of the interest to be disposed of.

 
(b)  
If the disposal to the OMR Transferee is on arms length commercial terms, clause
17.6(a)(i) shall not apply.

 
(c)  
If the IMR Transferee is a person that has technical and financial abilities
(insofar as such abilities are relevant to the performance of the obligations of
the holder of the Other Mineral Rights under this Agreement) that are equivalent
or greater to those of Malagasy as at the Execution Date, then the requirements
of clause 17.6(a)(ii) shall be deemed to be satisfied.

 
17.7  
Co-mingling

 
(a)  
If a deposit of Other Minerals is co-mingled or co-incident to a deposit of
Industrial Minerals then the Beneficial Holder and JV Company will negotiate in
good faith the terms on which they will jointly develop the Industrial Minerals
and Other Minerals, provided that, subject to clause 17.7(b), in no
circumstances will the exploration or development of a deposit of Industrial
Minerals impede the exploration or development of a deposit of Other Minerals.

 

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(b)  
The development of a deposit of Other Minerals that is co-mingled or co-incident
to a deposit of Industrial Minerals will prevail over the exploration or
development of the deposit of Industrial Minerals only in following
circumstances:

 
(i)  
the deposit of Other Minerals has been determined by a competent person to be an
orebody comprising a resource or reserve with a greater net present value than
the deposit of Industrial Minerals; and

 
(ii)  
the JV Company can demonstrate to the satisfaction of the Energizer, acting
reasonably, that the deposit of Other Minerals can and will be developed and
mined within the same timeframe as Energizer proposes to develop and mine the
deposit of Industrial Minerals.

 
In this clause 17.7(b), “reserve”, “resource” and “competent person” have the
meanings ascribed to those terms in the Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves prepared by the Joint
Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy,
Australian Institute of Geoscientists and Minerals Council of Australia and
known as the JORC Code.
 
(c)  
Subject to clause 17.7(d), if the Beneficial Holder and JV Company are unable to
negotiate the joint development of the Industrial Minerals and Other Minerals,
then as part of the development of the Other Minerals, JV Company will, on
receiving a written notification from Energizer, stockpile the Industrial
Minerals so that the Beneficial Holder may have the benefit of the development
of the Industrial Minerals once JV Company has ceased Mining.

 
(d)  
Any stockpiling costs associated with the development of Other Minerals
(including overburden and waste) will be at the expense of JV Company. Any costs
associated with the stockpiling of Industrial Minerals undertaken at the request
of Energizer which are not activities which would have been incurred by JV
Company in the course of Mining Operations in any event, including (but not
limited to) any ongoing environmental compliance costs, will be funded 100% by
Energizer.

 
18.  
Operator

 
18.1  
First Operator

 
Malagasy (or its nominee) will be the initial Operator and remain as Operator
until it is removed or resigns in accordance with the terms of this Agreement.
 
18.2  
Functions of the Operator

 
The Operator will:
 
(a)  
(by itself or through its employees, agents or contractors) manage, direct and
control any and all Joint Venture Operations on behalf of and as agent for JV
Company, TenementCo and the Parties, subject to the applicable laws of the
jurisdictions in which the abovementioned entities are incorporated;

 
(b)  
implement the Programs and Budgets approved by the Board; and

 
(c)  
implement the decisions of the Board and shall make all expenditures necessary
to comply with those instructions and directions.

 

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18.3  
Operator to prepare Programs and Budgets

 
The Operator shall prepare and submit Programs and Budgets for consideration and
approval by the Board, which shall be prepared for periods each of 12 months
duration commencing on 1 July.
 
18.4  
Liability of Operator

 
The Operator shall not have any liability to the Shareholders for losses
sustained or liabilities incurred if, in the circumstances of the particular
case, it has acted or refrained from acting in the course of performing in good
faith its obligations under this Agreement and has not been wilfully or grossly
negligent.
 
18.5  
Indemnity of Operator

 
Each Shareholder severally, to the extent of its Shareholding Interest must
indemnify and hold harmless the Operator (acting in that capacity), its
directors, employees, agents and contractors (Indemnified Persons) from and
against all damage, loss, expense or liability of any nature suffered or
incurred by the Indemnified Persons (including any claims made by third parties)
in connection with Joint Venture Operations, including any personal injury,
disease, illness or death, or physical loss of or damage to property, of the
Indemnified Persons or any third party, except, in respect of an Indemnified
Person, where that Indemnified Person has committed fraud or has been wilfully
or grossly negligent.
 
18.6  
Preserve Permits

 
The Operator must use all reasonable endeavours and comply with the directions
of JV Company to maintain the Permits in Good Standing, subject to receiving
sufficient funds to do so in accordance with the provisions of this Agreement.
 
18.7  
Reporting

 
The Operator will keep the Parties advised of all Joint Venture Operations and
will provide any information required to complete reports required to be
submitted by any Party under this Agreement, including under clause 11.6, the
Mining Code as well as any information required by the Parties to comply with
their respective obligations under the listing rules of any securities exchange.
 
18.8  
Change of Operator

 
(a)  
Malagasy will continue as Operator until:

 
(i)  
it ceases to hold a majority Shareholding Interest in JV Company; or

 
(ii)  
it resigns as Operator by giving 30 days' written notice to the other
Shareholders of JV Company of its intention to do so.

 
(b)  
On the resignation or removal of the Operator in accordance with clause 18.8(a),
JV Company shall, by way of a Shareholders’ resolution, appoint a new Operator.

 
(c)  
The resolution referred to in clause 18.8(b) above shall be passed by a Simple
Majority.

 

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19.  
Contributions to Joint Venture Costs

 
(a)  
Subject to clause 19(b), all Joint Venture Costs will be funded 100% by
Malagasy, including JV Company’s and TenementCo’s obligations under clause 11.3.

 
(b)  
Subject to clause 20, on and from the Trigger Date, all Joint Venture Costs in
respect to the Mining Area will be funded by the Mining Parties in their
Respective Proportions.

 
(c)  
From the time Energizer is required to contribute to the funding under clause
19(b) (Contribution Date), Energizer and its representatives will, at
Energizer’s expense and on reasonable notice, have the right to access, review
and audit the expenditure of Mauritian Development JV Company and Madagascar
Development JV Company.

 
(d)  
From the Contribution Date, Mauritian Development JV Company may, from time to
time by giving notice simultaneously to all Shareholders in Mauritian
Development JV Company, request those Shareholders to fund the Joint Venture
Costs in their Respective Proportions (Contribution Notice) and subject to
clause 20.1, within one month after notice is given, all Shareholders must fund
the amount specified in the notice.

 
(e)  
Subject to clause 20.3(c), payment of amounts which a Shareholder is required to
fund under this clause 19 and clause 20.2(d) shall be deemed to be the
subscription by that Shareholder for additional Shares in Mauritian Development
JV Company unless otherwise agreed by the Shareholders.

 
20.  
Right to dilute

 
20.1  
Election not to fund

 
A Shareholder may, by giving notice to Mauritian Development JV Company within
10 Business Days of receiving notice from Mauritian Development JV Company under
clause 19(d), elect not to fund part or all of the amount the subject of that
notice. For the avoidance of any doubt, a Shareholder may exercise its rights
under this clause in respect of any Contribution Notice and may elect to
contribute to future Contribution Notices after it has elected to dilute in
respect of a Contribution Notice.
 
20.2  
Contributions where election not to fund

 
If Mauritian Development JV Company receives notice of an election by a
Shareholder under clause 20.1 (Non-Contributing Shareholder), then:
 
(a)  
the Non-Contributing Shareholder will not be obliged to contribute the
contribution specified in the notice, and:

 
(b)  
Mauritian Development JV Company may give notice to the other Shareholders of
the total amount of Joint Venture Costs not funded by Non-Contributing
Shareholders (Shortfall);

 
(c)  
each other Shareholder (Contributing Shareholder) may, within 10 Business Days
after receiving a notice from Mauritian Development JV Company under clause
20.2(b), give notice to Mauritian Development JV Company that it wishes to fund
an additional amount of Joint Venture Costs up to the Shortfall (or, if there is
more than one Contributing Shareholder and if the total additional amount that
Contributing Shareholders wish to fund is greater than the Shortfall, Mauritian
Development JV Company will allocate to each Contributing Shareholder that gives
notice the proportion of the Shortfall that the amount of additional Joint
Venture Costs that the Contributing Shareholder wishes to fund bears to the
total additional Joint Venture Costs that all Contributing Shareholders wish to
fund); and

 
(d)  
each Contributing Shareholder must fund the amount of Joint Venture Costs
requested from the Contributing Shareholder under clause 20.2(c) and the
additional amount of Joint Venture Costs of which it gives notice to Mauritian
Development JV Company or which Mauritian Development JV Company allocates to it
under clause 20.2(c).

 

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20.3  
Dilution

 
(a)  
The Non-Contributing Shareholder’s percentage ownership of Mauritian Development
JV Company will be diluted according to the following formula:

 
 
I         =
A x 100
B

 

 
where:
 

 
 
I         =
the Non-Contributing Shareholder’s reduced percentage shareholding;

 
 
A       =
the total amount contributed to the funding of Mauritian Development JV Company
by the Non-Contributing Shareholder at the date of the calculation plus the
deemed contribution of the Non-Contributing Shareholder; and

 
 
B        =
total amount of all funding of Mauritian Development JV Company at the date of
the calculation plus the deemed contributions of all Parties,

 
and the percentage ownership in Mauritian Development JV Company of the
contributing Shareholder will increase by an amount equal to the reduction of
the percentage shareholding of the Non-Contributing Shareholder.
 
(b) 
For the purposes of the above calculation, the deemed contribution of the
Shareholders will be as follows:

 
Energizer: one third of the actual funding provided by Malagasy to Mauritian
Development JV Company up until Energizer becomes liable to contribute to
funding pursuant to clause 19(b).
 
Malagasy: nil.
 
By way of examples, if Malagasy has expended $30 million prior to the date on
which Energizer becomes liable to contribute to funding pursuant to clause 19(b)
(Contribution Date), then:
 
(a) 
As at the Contribution Date:

 
 
(i)
the actual total funding contribution of the Shareholders will be:

 
 
Energizer:
nil

 
 
Malagasy:
$30 million

 
 
(ii)
the deemed contribution of the Shareholders will be:

 
 
Energizer:
one third of $30 million = $10 million

 
 
Malagasy:
nil

 

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(iii)
Energizer’s percentage ownership of Mauritian Development JV Company will be:

 
 
I
=
A x 100
B
 

 
 
=
10 million x 100

 
 
40 million

 
 
=
25%

 
 
(iv)
Malagasy’s percentage ownership of Mauritian Development JV Company will be:

 

 
I
=
A x 100
B
 

 
 
=
30 million x 100
 

 
 
40 million

 
 
=
75%

 
(b) 
If there is then a $10 million programme to which each of Energizer and Malagasy
contribute i.e. $2.5 million and $7.5 million respectively, then:

 
 
(i)
the actual total funding contribution of the Shareholders will be:

 
 
Energizer:
$2.5 million

 
 
Malagasy:
$37.5 million

 
 
(ii)
the deemed contribution of the Shareholders will be:

 
 
Energizer:
one third of $30 million = $10 million

 
 
Malagasy:
nil

 
 
(iii)
Energizer’s percentage ownership of Mauritian Development JV Company will be:

 

 
I
=
A x 100
B
 

 
 
=
12.5 million x 100

 
 
50 million

 
 
=
25%

 

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(iv)
Malagasy’s percentage ownership of Mauritian Development JV Company will be:

 

 
I
=
A x 100
B
 

 
 
=
37.5 million x 100
 

 
 
50 million

 
 
=
75%

 
(c) 
If there is then a $20 million programme to which Energizer elects NOT to
contribute but Malagasy does contribute 100% of the $20 million programme cost:

 
 
(i)
the actual total funding contribution of the Shareholders will be:

 
 
Energizer:
$2.5 million

 
 
Malagasy:
$57.5 million

 
 
(ii)
the deemed contribution of the Shareholders will be:

 
 
Energizer:
one third of $30 million = $10 million

 
 
Malagasy:
nil

 
 
(iii)
Energizer’s percentage ownership of Mauritian Development JV Company will be:

 

 
I
=
A x 100
B
 

 
 
=
12.5 million x 100
 

 
 
70 million

 
 
=
17.86%

 
 
(iv)
Malagasy’s percentage ownership of Mauritian Development JV Company will be:

 

 
I
=
A x 100
B
 

 
 
=
57.5 million x 100
 

 
 
70 million

 
 
=
82.14%

 

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(c)  
A reduction to a Shareholder’s Shareholding Interest shall be effected in such
manner as may be agreed between the Shareholders, or failing such agreement
within 30 Business Days after the dilution occurs, in the manner determined by
the Contributing Shareholders, including by means of:

 
(i)  
a transfer of Shares as between Shareholders;

 
(ii)  
the forfeiture or cancellation of some or all of the Non-Contributing
Shareholder’s Shares; or

 
(iii)  
the issue of new Shares to the Contributing Parties.

 
21.  
Disposal of Shares and pre-emption rights

 
A Shareholder of JV Company or NewCo Mauritius may transfer, assign or otherwise
dispose of the whole or any part of their Shares to any person (Share
Transferee) subject to:
 
(a)  
the transferring Shareholder giving the other non-transferring Shareholder the
opportunity to match any bona fide third party offer for the Shares as a right
of first refusal for a period of 30 days from the time of notice of the offer
from the transferring Shareholder;

 
(b)  
the Share Transferee being technically and financially able to perform the
obligations of the transferring Shareholder under this Agreement to the extent
of the interest disposed of (for avoidance of doubt if Malagasy is proposing to
sell its Shares then the purchaser must have the necessary skills to ensure JV
Company or NewCo Mauritius (as applicable) can manage the matters contemplated
by this Agreement); and

 
(c)  
the Share Transferee entering into a deed with the non-transferring Shareholder
whereby the Transferee agrees to be bound by, and assumes the obligations of the
transferring Shareholder under this Agreement (including the obligations under
this clause) to the extent of the interest to be disposed of.

 
22.  
Drag along

 
(a)  
Subject to clauses 21 and 22(b), if any third person (Offeror) provides to a
Shareholder or Shareholders who hold Shares representing not less than 50% of
the Shares on issue in the capital of the JV Company or NewCo Mauritius (as
applicable) (Majority Shareholder) a bona fide arm’s length offer to purchase
all of the Shares in JV Company or NewCo Mauritius (as applicable), and each
Share of the same class is proposed to be purchased for equal consideration and
on the same terms and conditions, then the Majority Shareholder may require each
other Shareholder (Minority Shareholder) by providing notice in writing to
transfer its Shares to the Offeror free from all Encumbrances on those same
terms and conditions.

 
(b)  
Clause 22(a) only applies where the Offeror has made a full cash offer to
purchase all of the Shares on issue in the capital of the JV Company or NewCo
Mauritius (as applicable).

 

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23.  
Tag along

 
(a)  
Subject to clauses 21 and 23(b), if the Majority Shareholder wishes to accept a
bona fide arm’s length offer for all of its Shares from an Offeror and does not
serve a notice in accordance with clause 22, then the Minority Shareholder may
require the Majority Shareholder to cause the Offeror to purchase all of the
Shares of the Minority Shareholder at a price per Share and on such other terms
and conditions as are no less favourable to those offered to the Majority
Shareholder by the Offeror for the Shares of the Majority Shareholder.

 
(b)  
Clause 23(a) only applies where the Offeror has made a full cash offer to
purchase all of the Shares on issue in the capital of the JV Company or NewCo
Mauritius (as applicable).

 
24.  
Royalties

 
24.1  
Interest below 10%

 
(a)  
If at any time a Shareholder’s Shareholding Interest in JV Company or NewCo
Mauritius is reduced to 10% or less, then that Shareholder will be deemed to
have assigned and transferred its remaining Shareholding Interest to the other
Shareholder in consideration for the other Shareholder procuring that JV Company
or NewCo Mauritius pay a royalty of an amount equal to two percent (2%) of net
smelter returns of all Other Minerals produced from the Area of Interest
calculated in accordance with Schedule 4.

 
(b)  
For the sake of clarity, if the diluting Shareholder is Energizer, the royalty
payable in accordance with clause 24.1(a) is in addition to the royalty payable
pursuant to clause 4.1(b).

 
24.2  
Transfer of Royalties

 
In circumstances where a royalty becomes payable in accordance with clause
4.1(b) or clause 24.1(a), the payee of the royalty may transfer, assign or
otherwise dispose of its interest in the royalty to any person (Royalty
Transferee) subject to:
 
(a)  
the payee of the royalty giving the payer of the royalty the opportunity to
match any bona fide third party offer for the royalty as a right of first
refusal for a period of 30 days from the time of notice of the offer from the
payee; and

 
(b)  
the Royalty Transferee entering into a deed with the payer of the royalty
whereby the Royalty Transferee agrees to be bound by, and assumes the
obligations of the payee under this Agreement (including the obligations under
this clause) to the extent of the interest to be disposed of.

 
25.  
Representations and warranties

 
25.1  
Representations and warranties by Malagasy

 
Malagasy represents and warrants to Energizer as at the Execution Date that:
 
(a)  
it is validly incorporated and subsisting under the laws of Australia;

 

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(b)  
the execution and delivery of this Agreement has been duly and validly
authorised by all necessary corporate action;

 
(c)  
it has corporate power and lawful authority to execute and deliver this
Agreement and to observe and perform or cause to be observed and performed all
of its obligations in and under this Agreement;

 
(d)  
there is no litigation or proceeding of any nature concerning Malagasy, pending
or threatened against them or a Related Body Corporate which may prevent or
impair Malagasy’s ability to enter into or perform its obligations in and under
this Agreement;

 
(e)  
this Agreement does not conflict with or constitute or result in a material
breach of or default under any agreement, deed, writ, order, injunction,
judgment, law, rule or regulation to which it is a party or is subject or by
which it is bound in a manner which may materially and adversely affect the
rights and interests of a Party under this Agreement; and

 
(f)  
it is solvent and is capable of performing its obligations under this Agreement.

 
25.2  
Representations and warranties by Energizer

 
(a)  
Energizer represents and warrants to Malagasy as at the Execution Date that:

 
(i)  
it is validly incorporated and subsisting under the laws of Minnesota, USA;

 
(ii)  
the execution and delivery of this Agreement has been duly and validly
authorised by all necessary corporate action;

 
(iii)  
it has corporate power and lawful authority to execute and deliver this
Agreement and to observe and perform or cause to be observed and performed all
of its obligations in and under this Agreement;

 
(iv)  
there is no litigation or proceeding of any nature concerning Energizer, pending
or threatened against them or a Related Body Corporate which may prevent or
impair Energizer’s ability to enter into or perform its obligations in and under
this Agreement;

 
(v)  
this Agreement does not conflict with or constitute or result in a material
breach of or default under any agreement, deed, writ, order, injunction,
judgment, law, rule or regulation to which it is a party or is subject or by
which it is bound in a manner which may materially and adversely affect the
rights and interests of a Party under this Agreement; and

 
(vi)  
it is solvent and is capable of performing its obligations under this Agreement.

 
(b)  
Subject to clause 25.3, Energizer represents and warrants to Malagasy as at the
Execution Date, and to Malagasy, JV Company and TenementCo as at the date of
execution of the Subleases that to the best of its knowledge:

 
(i)  
subject to it being able to procure each of the actions of the Registered Holder
contemplated by this Agreement, it has full right, power and authority to grant
the Subleases to TenementCo in accordance with this Agreement;

 

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(ii)  
its subsidiaries, the Beneficial Holder, are the beneficial holders of the
Exploration Permits.

 
(iii)  
no person other than the Registered Holder, Energizer and/or Energizer’s Related
Bodies Corporate has any proprietary rights of any nature in respect of the
Exploration Permits and they have not granted to any person any rights to own or
possess any interest or any rights to explore or prospect for minerals or to
mine the same in any part of the land comprising the Exploration Permits;

 
(iv)  
the Exploration Permits are free of any Encumbrances except to the extent of any
conditions imposed under the Mining Code on the Exploration Permits;

 
(v)  
there is no litigation or proceeding of any nature concerning the Exploration
Permits, pending or threatened against them or any other person which may
defeat, impair, detrimentally affect or reduce the right, title and interest of
JV Company or TenementCo in the Exploration Permits or the interest therein,
including any plaint seeking forfeiture of the Exploration Permits;

 
(vi)  
to the best of its knowledge, the Exploration Permits have been duly marked off,
granted and applied for in accordance with the Mining Code;

 
(vii)  
the Exploration Permits are in full force and effect and in Good Standing and
not liable to cancellation or forfeiture for any known reasons and they are not
in breach or contravention of any of the terms and conditions upon which the
Exploration Permits were granted or of any other rule, regulation or provision
of the Mining Code or any other statute concerning, affecting or relating to the
Exploration Permits;

 
(viii)  
there are no facts or circumstances that could, under the currently applicable
laws of Madagascar, give rise to the cancellation, forfeiture or suspension or
grant of the Exploration Permits when renewed, that could have a Material
Adverse Effect;

 
(ix)  
except as disclosed to Malagasy before the Execution Date, there are no
agreements or dealings in respect of the Exploration Permits;

 
(x)  
there is not in existence any current compensation agreement with the owner or
occupier of any land which is subject to the Exploration Permits;

 
(xi)  
there are no Environmental Liabilities relating to or affecting the Exploration
Permits, nor are there any circumstances relating to the Exploration Permits
which may reasonably be expected to give rise to future Environmental
Liabilities, except to the extent of any report, study or assessment required to
be lodged pursuant to the Mining Code or other regulation in relation to the
Exploration Permits;

 
(xii)  
the Mining Information is complete and accurate in all material respects; and

 
(xiii)  
the Exploration Permits have been granted in respect of all of the ground
described in the Exploration Permits.

 

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25.3  
Disclaimer of liability by Energizer

 
Energizer is not liable for any loss arising from a breach of the warranties and
representations in clause 25.2(b) to the extent such loss is:
 
(a)  
caused or contributed to by any failure of Energizer to procure certain acts or
omissions of the Registered Holder provided that Energizer used its reasonable
endeavours to procure such acts or omissions;

 
(b)  
a result of the Registered Holder withholding information from, or providing
misleading information to, Energizer provided that Energizer did not know that
information was being withheld or that the information provided was misleading;

 
(c)  
a result of a Political Event;

 
(d)  
disclosed by Energizer to Malagasy or is known by Malagasy at or prior to
Completion;

 
(e)  
in excess of the total amount of the Purchase Price; or

 
(f)  
caused or contributed to by a breach by Malagasy or its Related Bodies Corporate
or their respective obligations under this Agreement.

 
26.  
Guarantee by Energizer

 
(a)  
Energizer agrees to guarantee to Malagasy the due performance and observance by
the Beneficial Holder of each and every obligation of the Beneficial Holder
under:

 
(i)  
this Agreement; and

 
(ii)  
any Sublease Agreement entered into by the Parties in accordance with this
Agreement.

 
(b)  
Energizer agrees to indemnify Malagasy in relation to any loss suffered as a
result of the Beneficial Holder failing to perform or observe any of their
obligations under:

 
(i)  
this Agreement; and

 
(ii)  
any Sublease Agreement entered into by the Parties in accordance with this
Agreement.

 
27.  
Guarantee by Malagasy

 
By executing this Agreement, Malagasy guarantees to Energizer and the Beneficial
Holder the due performance and observance by each of JV Company and TenementCo
of each and every obligation of JV Company and TenementCo under this Agreement
other than those obligations of JV Company and TenementCo under this Agreement
that relate to a Mining Area.
 

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28.  
Assignment

 
(a)  
No Party may assign, sublet, licence or otherwise transfer or part with,
mortgage, encumber or in any way deal with its interest under this Agreement
otherwise than in accordance with the provisions of this Agreement.

 
(b)  
At any time during the Term, Malagasy may assign all or any of its rights or
obligations under this Agreement as a matter of right to any Related Body
Corporate of Malagasy without Energizer’s consent, provided that the assignee
enters into an Accession Deed.

 
29.  
Termination

 
29.1  
Termination events

 
This Agreement terminates immediately upon the occurrence of:
 
(a)  
any unanimous agreement by the Shareholders to that effect;

 
(b)  
in relation to any Party, that Party ceasing to hold any Shares in JV Company;
and

 
(c)  
TenementCo ceasing to have any rights to any of the Other Mineral Rights.

 
29.2  
Event of Default

 
(a)  
Should a Party fail to do, execute or perform any material act or thing which
such Party is obliged to do, execute or perform pursuant to this Agreement
(Event of Default), the aggrieved Party may give the defaulting Party a notice
requiring the defaulting Party to remedy such Event of Default within a period
of 30 days following service of the notice or if such default is not capable of
being remedied within such period of 30 days then within such further period as
the aggrieved Party or Parties shall deem reasonable.

 
(b)  
If a Party serves a notice of default under clause 29.2(a) and such default
remains un-remedied upon expiry of the period specified in such notice for
rectification, the aggrieved Party may terminate this Agreement forthwith upon
the service of a further notice in writing to that effect and upon the service
of such further notice this Agreement shall terminate forthwith without
prejudice to the rights and remedies of the aggrieved Party at law or otherwise
howsoever arising.

 
(c)  
Clause 29.2(a) does not apply to any Event of Default for which another remedy
is provided in this Agreement. By way of example, clause 29.2(a) does not apply
to a failure to contribute to a Contribution Notice under clause 19 but instead
clause 20 would apply to such failure to contribute.

 

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29.3  
Effect of termination

 
(a)  
Termination of this Agreement releases each Party from any further performance
of any liability under this Agreement but does not:

 
(i)  
affect any provision of this Agreement expressed to operate or have effect after
termination; or

 
(ii)  
have any prejudicial effect on any accrued right of any Party in relation to any
breach or default under this Agreement by any other Party occurring before
termination.

 
(b)  
If this Agreement is terminated in accordance with clause 29.2, the aggrieved
Party has an option to acquire the defaulting Party’s rights and interests under
this Agreement at:

 
(i)  
a value determined by the Parties negotiating in good faith; or

 
(ii)  
in the absence of agreement under clause 29.3(b)(i) above, a discount of 10% to
market value as determined by an independent expert appointed in accordance with
clause 33.2.

 
29.4  
Continuing remedies

 
Each Party, following termination of this Agreement under this clause 29,
retains any right against any other Party under this Agreement in relation to
any breach or default by that other Party that accrued before termination, in
addition to any other right provided by law, except to the extent that the
liability of that other Party is excluded or limited under any provision of this
Agreement.
 
30.  
Force Majeure

 
30.1  
Force Majeure

 
In this clause 30 Force Majeure means any act, event or cause which is beyond
the reasonable control of the Party concerned (other than lack of or inability
to use funds), including:
 
(a)  
act of God, accident of navigation, war (whether declared or not), sabotage,
insurrection, civil commotion, national emergency (whether in fact or law),
martial law, fire, lightning, flood, earthquake, landslide, storm or other
severe adverse weather conditions, explosion, power shortage, strike or other
labour difficulty (whether or not involving employees of a Party concerned),
epidemic, quarantine, radiation or radioactive contamination;

 
(b)  
action or inaction of any government or governmental or other competent
Governmental Agency (including any court) including expropriation, restraint,
prohibition, intervention, requisition, requirement, direction or embargo by
legislation, regulation or other legally enforceable order;

 
(c)  
delay in the grant of access to a Permit;

 
(d)  
inability to secure, on commercially acceptable terms, rights of access to a
Permit from the owners, occupiers, lessees, custodians, trustees, native title
claimants or holders of any land to which the Permit relates;

 
(e)  
breakdown of plant, machinery or equipment or shortages of labour,
transportation, fuel, power, plant, machinery, equipment or material; and

 
(f)  
any other cause which by the exercise of foresight or due diligence, a Party is
unable to prevent or overcome.

 

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30.2  
Relief

 
If, as a direct result of Force Majeure, a Party becomes unable, wholly or in
part, to perform any of its obligations or to exercise a right under this
Agreement:
 
(a)  
that Party is to give the other Party prompt notice of the Force Majeure with
reasonably full particulars and, insofar as known to it, the probable extent to
which it will be unable to perform, or be delayed in performing its obligation
or exercising its right;

 
(b)  
that obligation, other than an obligation to pay money, is suspended and the
time for performing that obligation or for exercising that right is extended but
only so far as and for so long as it is affected by the Force Majeure; and

 
(c)  
the affected Party is to use all possible diligence to overcome or remove the
Force Majeure as quickly as possible.

 
30.3  
Labour disputes

 
Clause 30.2(c) does not require the affected Party to:
 
(a)  
settle any strike or other labour dispute on terms contrary to its wishes; or

 
(b)  
contest the validity or enforceability of any law, regulation or legally
enforceable order by way of legal proceedings.

 
30.4  
Resumption

 
The obligation of the affected Party to perform its obligations, resumes as soon
as it is no longer affected by the Force Majeure.
 
31.  
Dispute resolution

 
31.1  
Application

 
This clause 31 applies to any dispute or difference (dispute) (other than a
dispute to which clause 32 applies) arising between the Parties in relation to:
 
(a)  
this Agreement or its interpretation;

 
(b)  
any right or liability of any Party under this Agreement; or

 
(c)  
the performance of any action by any Party under or arising out of this
Agreement, whether before or after its termination.

 

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31.2  
Dispute negotiation

 
(a)  
A Party must not commence legal proceedings in relation to a dispute or refer a
dispute to arbitration under this Agreement, unless that Party has complied with
this clause 31.

 
(b)  
A Party claiming that a dispute has arisen must notify the other Party
specifying details of the dispute.

 
(c)  
Each Party must refer a dispute to an authorised officer of that Party for
consideration and use its best efforts to resolve the dispute through
negotiation within seven (7) Business Days following the dispute notification or
longer period agreed between the Parties.

 
(d)  
Each Party must refer the dispute to its chief executive officer, in the event
that the authorised officers of the Parties fail to resolve the dispute within
the specified period.

 
(e)  
Each Party must following reference to its chief executive officer use its best
efforts to resolve the dispute by agreement or through an agreed mediation
procedure.

 
(f)  
A Party in compliance with this clause 31.2 may terminate the dispute resolution
process by notice to the other Party at any time after seven (7) Business Days
following reference of the dispute to its chief executive officer.

 
(g)  
A Party is not required to comply with this clause 31.2 in relation to any
dispute where the other Party is in breach of or default under this clause 31.2
in relation to that dispute.

 
31.3  
Arbitration

 
Each Party must submit any dispute which remains unresolved following the
negotiation process specified in clause 31.2 to arbitration under the
Arbitration Rules of SIAC in accordance with the following procedures:
 
(a)  
the arbitration will be conducted by three arbitrators, who will be appointed as
agreed by the Parties or, failing such agreement, by the Deputy President of
SIAC or his or her nominee;

 
(b)  
the arbitration will be conducted in English;

 
(c)  
each Party is entitled to legal representation at any arbitration; and

 
(d)  
any arbitration will be conducted in Singapore, or at such other place as the
Parties may agree.

 
31.4  
Urgent relief

 
A Party may at any time apply to a court of competent jurisdiction for any
equitable or other remedy for reasons of urgency, despite anything contained in
this clause 31.
 

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31.5  
Continued performance

 
A Party must continue to perform any obligation or liability of that Party in
compliance with this Agreement relating to any issue in dispute, despite and
during any dispute negotiation or arbitration being conducted under this clause
31.
 
32.  
Disputes as to Technical or Financial Matters

 
32.1  
Definitions

 
In this clause 32:
 
(a)  
Technical Matter means a matter which is capable of determination by reference
to Mining knowledge or practice; and

 
(b)  
Financial Matter means a matter which is capable of determination by audit or
reference to financial or accounting records, knowledge or practice.

 
32.2  
Application

 
(a)  
This clause 32 applies to any dispute arising between the Parties in relation to
a Financial Matter or a Technical Matter.

 
(b)  
This clause 32 does not prevent any Party from seeking urgent interlocutory or
declaratory relief from a court of competent jurisdiction where, in that Party's
reasonable opinion, that action is necessary to protect that Party's rights.

 
32.3  
Dispute negotiation

 
A Party claiming that a dispute in relation to Financial Matters or Technical
Matters has arisen must notify the other Party specifying details of the dispute
and convene a meeting of the senior management of the Parties within 10 Business
Days of the notice of dispute to discuss the dispute with the aim of resolving
it.
 
32.4  
Independent Expert

 
If the dispute is not resolved by negotiations between the senior management of
the Parties within 20 Business Days of the first meeting between senior
management under clause 32.3 and the Dispute relates to a Financial Matter or a
Technical Matter, either Party may submit the dispute to an Independent Expert
for determination in accordance with clause 33.
 
33.  
Expert determination

 

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33.1  
Referral to Independent Expert

 
Wherever under this Agreement:
 
(a)  
a Party submits a dispute in accordance with clause 32; or

 
(b)  
the Parties agree that a dispute between them will be resolved by an Independent
Expert; or

 
(c)  
a dispute is required by this Agreement to be determined by an Independent
Expert,

 
then the dispute may be referred by either Party to an Independent Expert under
this clause 33.
 
33.2  
Appointment of Independent Expert

 
The procedure for the appointment of an Independent Expert will be as follows:
 
(a)  
the Parties must endeavour to agree upon the identity of a single Independent
Expert to whom the dispute will be referred for determination as soon as is
reasonably practicable;

 
(b)  
if the Parties are unable to agree upon the identity of a single Independent
Expert within 20 Business Days, the Parties will, as soon as practicable
thereafter:

 
(i)  
in the case of a Financial Matter, request the President of Chartered
Accountants in Australia to appoint the Independent Expert; and

 
(ii)  
in the case of a Technical Matter, request the President of the Australian
Institute of Mining and Metallurgy to appoint the Independent Expert; and

 
(c)  
within 10 Business Days of appointment, the Independent Expert must set a time
and place for receiving the Parties’ submissions.

 
33.3  
Requirements of Independent Expert

 
(a)  
The Independent Expert will be required to have appropriate commercial and
practical experience and expertise in the area of the dispute.

 
(b)  
Any person nominated to act as an Independent Expert will be required to fully
disclose any interest or duty prior to that person’s appointment. If that person
has or may have any interest or duty which conflicts with their appointment as
Independent Expert, then that person may not be appointed except with the
agreement of all parties to the dispute.

 
(c)  
Any person nominated to act as an Independent Expert must, before they are
appointed, confirm in writing that they are able to resolve the dispute within a
reasonable time.

 
(d)  
The Independent Expert appointed under clause 33.2 will act as an expert and not
as an arbitrator.

 

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33.4  
Rights of the Parties

 
Each Party:
 
(a)  
may be legally represented at any hearing before the Independent Expert;

 
(b)  
is entitled to produce to the Independent Expert any materials or evidence which
that Party believes is relevant to the dispute; and

 
(c)  
must make available to the Independent Expert all materials requested by the
Independent Expert and all other materials which are relevant to the Independent
Expert’s determination.

 
33.5  
Confidentiality

 
Unless otherwise agreed by the Parties involved in the determination by the
Independent Expert, all material and evidence made available for the purposes of
the determination must be kept private and confidential.
 
33.6  
Determination

 
(a)  
The Independent Expert must make a determination on the dispute within 70
Business Days of appointment and must determine what, if any, adjustments may be
necessary between the Parties. The determination of the Independent Expert:

 
(i)  
must be in the form of a written report;

 
(ii)  
will be final and binding upon the Parties except in the case of bias, fraud,
manifest mistake or error; and

 
(iii)  
will be kept private and confidential unless otherwise agreed to by all Parties
involved in the determination.

 
(b)  
If the Independent Expert does not determine the dispute within 70 Business Days
of appointment, either Party may terminate the appointment by written notice and
a new Independent Expert will be appointed within 10 Business Days in accordance
with the procedure set out in clause 33.2.

 
33.7  
Costs of Independent Expert

 
The costs in relation to a determination by the Independent Expert will be dealt
with as follows:
 
(a)  
the costs of the Independent Expert will be apportioned between the Parties in
such proportions as the Independent Expert thinks fit, otherwise the Parties
will each bear their own costs; and

 
(b)  
the Parties will each bear their own costs incurred in the preparation and
presentation of any submissions or evidence to the Independent Expert.

 

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34.  
Status of Agreement and further acts

 
(a)  
The Parties agree that this Agreement is binding upon them and intend that this
Agreement is legally enforceable in accordance with its terms.

 
(b)  
Each Party must promptly do all further acts and execute and deliver all further
documents (in form and content reasonably satisfactory to that Party) required
by law or reasonably requested by any other party to give effect to this
Agreement and the transactions contemplated by this Agreement.

 
35.  
Relationship between Parties

 
(a)  
Nothing in this Agreement is to be construed so to constitute a Party a partner,
agent or representative of any other Party or to create any partnerships or
trust for any purpose howsoever except to the extent to which the operator is
the agent of the Parties. No Party will be under any fiduciary or other duty to
the other which will prevent it from engaging in or enjoying the benefits of any
competing endeavours subject to the express provisions of this Agreement.

 
(b)  
No Party will have any authority to act on behalf of any other Party, except as
expressly provided in this Agreement. Where a Party acts on behalf of another
without authority, such Party must indemnify the other from any losses, claims,
damages and liabilities arising out of any such act.

 
(c)  
Each Party has the unrestricted right to engage in and receive the full benefit
of any competing activities outside the area the subject of the Joint Venture
Operations.

 
(d)  
Any agreement which is entered into by JV Company, TenementCo or the Operator on
behalf of JV Company or TenementCo in the performance of its functions and
obligations under this Agreement with a Shareholder, a Related Body Corporate of
a Shareholder or an officer or director of a Shareholder or a Related Body
Corporate of the Shareholder must:

 
(i)  
be on terms no less commercially reasonable in the particular circumstances of
the agreement than would have been the case had the agreement been entered into
on normal arm’s length commercial terms with a third party who is not a
Shareholder, a Related Body Corporate of a Shareholder or an officer or director
of a Shareholder or a Related Body Corporate of a Shareholder; and

 
(ii)  
be entered into in good faith in the best interests of the Joint Venture.

 
36.  
Confidentiality and public announcements

 
36.1  
Confidentiality

 
Subject to clause 36.6, each Party (for this clause Recipient) who is in
possession or control of or has access to Confidential Information of another
Party or a Related Body Corporate of another Party (Owner) must use that
Confidential Information only for the purposes of acts contemplated by this
Agreement, and keep that Confidential Information confidential and not disclose
it or allow it to be disclosed to any third party except:
 
(a)  
if the information is at the time generally and publicly available other than as
a result of breach of confidence by the Recipient;

 
(b)  
if the information is at the time lawfully in the possession of the proposed
recipient of the information through sources other than the Recipient;

 

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(c)  
by the Recipient to legal and other professional advisers and other consultants
and officers and employees of:

 
(i)  
the Recipient; or

 
(ii)  
the Recipient's Related Bodies Corporate,

 
in any case requiring the information for the purposes of this Agreement or any
transaction contemplated by it, or for the purpose of advising that Party in
relation thereto;
 
(d)  
with the prior written consent of the Owner;

 
(e)  
to the extent required by law or by a lawful requirement of any Governmental
Agency having jurisdiction over the Recipient or any of its Related Bodies
Corporate;

 
(f)  
if required in connection with legal proceedings or arbitration relating to this
Agreement or for the purpose of advising the Recipient in relation thereto;

 
(g)  
if and to the extent that it may be necessary or desirable to disclose to any
Governmental Agency in connection with applications for consents, approvals,
authorities or licenses in relation to this Agreement;

 
(h)  
to the extent required by a lawful requirement of any stock exchange having
jurisdiction over the Recipient or any of its Related Bodies Corporate;

 
(i)  
if necessary to be disclosed in any prospectus or information memorandum to
investors or proposed or prospective investors:

 
(i)  
for an issue or disposal of any shares or options in the Recipient or any of its
Related Bodies Corporate;

 
(ii)  
for an issue of debt instruments of the Recipient or any of its Related Bodies
Corporate; or

 
(iii)  
for the purposes of the Recipient obtaining a listing on any stock exchange of
any shares, options or debt instruments;

 
(j)  
if necessary to be disclosed to a professional investor or investment adviser
for the purposes of enabling an assessment to be made about the merits or
otherwise of an investment in the Recipient or any of its Related Bodies
Corporate;

 
(k)  
if necessary to be disclosed to an existing or bona fide proposed or
prospective:

 
(i)  
financier of the Recipient or of any of its Related Bodies Corporate; or

 
(ii)  
rating agency in respect of the Recipient or of any of its Related Bodies
Corporate;

 
(l)  
if necessary to be disclosed to any bona fide proposed or prospective:

 
(i)  
transferee of any property to which the information relates or of any shares in
the Recipient or any Related Body Corporate of the Recipient;

 
(ii)  
financier of such transferee providing or proposing or considering whether to
provide financial accommodation; or

 
(iii)  
assignee of rights under the Recipient's financing documents; or

 

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(m)  
if necessary to be disclosed to legal and other professional advisers and other
consultants and officers or employees of any of the persons referred to in
clause 36.1(j), 36.1(k), or 36.1(l).

 
36.2  
Conditions

 
(a)  
In the case of a disclosure under clause 36.1(c) or 36.1(d) and, where
appropriate, under clause 36.1(e), and 36.1(f), the Party wishing to make the
disclosure must inform the proposed recipient of the confidentiality of the
information and the Party must take such precautions as are reasonable in the
circumstances to ensure that the proposed recipient keeps the information
confidential.

 
(b)  
In the case of a disclosure under clause 36.1(g), 36.1(h) and 36.1(i), the Party
wishing to make the disclosure may only do so:

 
(i)  
with the written consent of both Parties, which must not be unreasonably
withheld or delayed; or

 
(ii)  
to the extent required by law, the official rules of the relevant stock exchange
or any Governmental Agency, but if any Party is required to make any such
announcement, it must promptly notify the other Party, where reasonably
practicable and lawful to do so, before the announcement is made and must confer
with the other Party and consider any comments of the other Party regarding the
timing and content of such announcement or any action which the other Party may
reasonably elect to take to challenge the validity of such requirement, subject
at all times to the disclosing Party’s obligations under law, the official rules
of the relevant stock exchange or any Governmental Agency.

 
(c)  
In the case of a disclosure under clause 36.1(j), 36.1(k) or 36.1(l) or (in the
case of legal and other professional advisers and other consultants only)
36.1(m) the Party wishing to make the disclosure must not make any disclosure
unless:

 
(i)  
in the case of a disclosure under clause 36.1(j), 36.1(k) or 36.1(l) the
proposed recipient has first entered into and delivered to the Shareholders a
confidentiality undertaking in a form acceptable to the other Shareholders; or

 
(ii)  
in the case of a disclosure under clause 36.1(m) the principal or employer of
the proposed recipient has first entered into and delivered to the Shareholders
a confidentiality undertaking in a form acceptable to the other Shareholders
which will incorporate a warranty by the principal or employer of the proposed
recipient that the proposed recipient is under an obligation of confidentiality
to the principal or employer and that the principal or employer will enforce
that obligation to the fullest extent that the law or equity allows upon being
called upon to do so by any of the Shareholders.

 
36.3  
Notice to other Shareholders

 
Each Party must:
 
(a)  
promptly inform each other Party of any request received by that Party from any
person described in clause 36.1(e) to disclose information under that clause;

 
(b)  
inform all other Shareholders as soon as reasonably practicable after
information is disclosed by the Party under clause 36.1(e) and

 
(c)  
not disclose any information under clause 36.1 unless all other Shareholders
have been informed of the proposed disclosure.

 

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36.4  
Indemnities

 
Each Party indemnifies each other Party against any costs, losses, damages and
liabilities suffered or incurred by that other Party arising out of or in
connection with any disclosure by the first-mentioned Party of information in
contravention of this clause 36.
 
36.5  
Survival of confidentiality obligations

 
The obligations of confidentiality imposed by this clause 36 survive the
termination of this Agreement and any person who ceases to be a Party continues
to be bound by those obligations.
 
36.6  
Use of Mining Information in respect to Other Mineral Rights

 
Nothing in this clause 36 prevents Energizer from using the Mining Information
in relation to the exploration and development of the Industrial Minerals.
 
37.  
Notices

 
Each communication (including each notice, consent, approval, request and
demand) under or in connection with this Agreement:
 
(a)  
must be in writing;

 
(b)  
must be addressed as follows (or otherwise notified by that Party to the other
Party from time to time):

 
To Energizer or the Beneficial Holder
Energizer Resources Inc
        Attention: Chief Executive Officer         Address:
Energizer Resources Inc.
141 Adelaide Street
West Suite 520
Toronto, Ontario
CANADA
        Facsimile:   +1 416.364.2753      
To Malagasy
Malagasy Minerals Limited         Attention: Company Secretary         Address:
Malagasy Minerals Limited
15 Lovegrove Close
Mount Claremont
Western Australia 6010
AUSTRALIA
        Facsimile:  +61 8 9284 3801      

 

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(c)  
must be signed by the Party making it or (on that party’s behalf) by the
solicitor for or any attorney, director, secretary or authorised agent of that
Party;

 
(d)  
must be delivered by hand or posted by prepaid post to the address, or sent by
fax to the number, of the addressee; and

 
(e)  
is taken to be received by the addressee:

 
(i)  
(in the case of prepaid post sent to an address in the same country) on the
third day after the date of posting;

 
(ii)  
(in the case of prepaid post sent to an address in another country) on the fifth
day after the date of posting;

 
(iii)  
(in the case of fax) at the time in the place to which it is sent equivalent to
the time shown on the transmission confirmation report produced by the fax
machine from which it was sent; and

 
(iv)  
(in the case of delivery by hand) on delivery;

 
but if the communication is taken to be received on a day that is not a working
day or after 5.00 pm, it is taken to be received at 9.00 am on the next working
day (“working day” meaning a day that is not a Saturday, Sunday or public
holiday, and is a day on which banks are open for business generally, in the
place to which the communication is posted, sent or delivered).
 
38.  
Miscellaneous

 
38.1  
Governing law

 
This Agreement is governed by and must be construed according to the law
applying in Ontario, Canada.
 
38.2  
Amendments

 
This Agreement may only be varied by a document signed by or on behalf of each
of the Parties.
 
38.3  
Primacy of this Agreement

 
The Parties agree that this Agreement has primacy over any ancillary agreement
contemplated by this Agreement, including the Sublease Agreements and, in the
case of inconsistency, the terms and conditions of this Agreement will prevail.
Each Party agrees that it will procure that any subsidiary of it will comply
with the terms of this Agreement notwithstanding any inconsistency between this
Agreement any ancillary agreement contemplated by this Agreement which a
subsidiary of a Party is a party to.
 
38.4  
Language

 
Where this Agreement or any ancillary agreement to this Agreement, including the
Sublease Agreements, is written and signed in any other language other than
English (including French), both versions are equally valid. However, in the
case of inconsistency, the Parties agree that the English version of the
relevant agreement shall prevail.
 

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38.5  
Waiver

 
(a)  
Failure to exercise or enforce, or a delay in exercising or enforcing, or the
partial exercise or enforcement, of a right provided by law or under this
Agreement by a Party does not preclude, or operate as a waiver of, the exercise
or enforcement, or further exercise or enforcement, of that or any other right
provided by law or under this Agreement.

 
(b)  
A waiver or consent given by a Party under this Agreement is only effective and
binding on that Party if it is given or confirmed in writing by that Party.

 
(c)  
No waiver of a breach of a term of this Agreement operates as a waiver of
another breach of that term or of a breach of any other term of this Agreement.

 
38.6  
Consents

 
A consent required under this Agreement from a Party may be given or withheld,
or may be given subject to any conditions, as that Party in its absolute
discretion thinks fit, unless this Agreement expressly provides otherwise.
 
38.7  
Counterparts

 
This Agreement may be executed in any number of counterparts and by the Parties
on separate counterparts. Each counterpart constitutes an original of this
Agreement and all together constitute one agreement.
 
38.8  
No representation or reliance

 
(a)  
Each Party acknowledges that neither Party (nor any person acting on a Party’s
behalf) has made any representation or other inducement to it to enter into this
Agreement except for representations or inducements expressly set out in this
Agreement.

 
(b)  
Each Party acknowledges and confirms that it does not enter into this Agreement
in reliance on any representation or other inducement by or on behalf of the
other Party, except for representations or inducements expressly set out in this
Agreement.

 
38.9  
Expenses

 
Except as otherwise provided in this Agreement, each Party must pay its own
costs and expenses in connection with negotiating, preparing, executing and
performing this Agreement.
 
38.10  
Entire agreement

 
To the extent permitted by law, in relation to its subject matter this
Agreement:
 
(a)  
embodies the entire understanding of the Parties, and constitutes the entire
terms agreed by the Parties; and

 
(b)  
supersedes any prior written or other agreement of the Parties.

 

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38.11  
Indemnities

 
(a)  
Each indemnity in this Agreement is a continuing obligation, separate and
independent from the other obligations of the Parties, and survives termination,
completion or expiration of this Agreement.

 
(b)  
It is not necessary for a Party to incur expense or to make any payment before
enforcing a right of indemnity conferred by this Agreement.

 
(c)  
A Party must pay on demand any amount it must pay under an indemnity in this
Agreement.

 
38.12  
Severance and enforceability

 
Any provision, or the application of any provision, of this Agreement that is
void, illegal or unenforceable in any jurisdiction does not affect the validity,
legality or enforceability of that provision in any other jurisdiction or of the
remaining provisions of this Agreement in that or any other jurisdiction.
 
38.13  
No merger

 
The rights and obligations of the Parties under this Agreement do not merge on
completion of any transaction under this Agreement, and survive the execution
and delivery of any assignment or other document entered into for the purpose of
implementing any transaction under this Agreement.
 
38.14  
Power of attorney

 
(a)  
Each attorney who signs this Agreement on behalf of a Party declares that the
attorney has no notice from the Party who appointed him that the power of
attorney granted to him, under which the attorney signs this Agreement, has been
revoked or suspended in any way.

 
(b)  
Each Party represents and warrants to each other that its respective attorney or
authorised officer who signs this Agreement on behalf of that Party has been
duly authorised by that Party to sign this Agreement on its behalf and that
authorisation has not been revoked.

 
38.15  
Taxes

 
Any value added or goods and services taxes (including TVA) that may be imposed
by any authorities in connection with this Agreement and any registration taxes,
imposts, fees and costs in relation to the registration of this Agreement or the
Sublease Agreements or the rights created thereunder, will be for the account of
and the liability of JV Company and JV Company will indemnify and hold the
Beneficial Holder harmless against any liability for the same, provided that
under no circumstances may JV Company be liable or accountable for any capital
gains tax or income tax liability of any Beneficial Holder.
 

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Schedule 1 – Exploration Permits and Area of Interest
 
The Area of Interest within the Exploration Permits described below is set out
using graticular block references in Annexure A to this Agreement.
 
Item
Exploration Permit
1.
12306
2.
12814
3.
12887
4.
12888

 
 
 
 

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Schedule 2 – Industrial Minerals
 
Vanadium
Lithium
Aggregates
Alunite
Barite
Bentonite
Vermiculite
Carbonatites
Corundum
Dimension stone, other than labradorite
Feldspar, other than labradorite
Fluorspar
Granite
Graphite
Gypsum
Kaolin
Kyanite
Limestone / Dolomite
Marble
Mica
Olivine
Perlite
Phosphate
Potash – Potassium minerals
Pumice
Quartz
Staurolite
Zeolites
 

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Schedule 3 – Map of Area of Interest
 
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Schedule 4 – Net Smelter Return Royalty
 
The royalties referred to in clause 4.1(b) and clause 24.1(a) of the Agreement
are to be calculated and paid by the Payer to a Payee in accordance with this
Schedule 4.
 
S4.1  
Definitions

 
In this Schedule, unless otherwise defined below or the context requires
otherwise, expressions defined in the Agreement of which this Schedule forms
part have the same meaning as in the Agreement and the following expressions
will have the following meanings:
 
Adjustment means any adjustment that may be made by the Payer to the Royalty
Records:
 
(a)  
which arise from a subsequent adjustment to the amount paid to a Payer based on
the actual Products recovered after refining;

 
(b)  
to correct any accounting or recording errors from previous Quarters;

 
(c)  
which are otherwise made in accordance with this Agreement; or

 
(d)  
which are agreed by the Parties.

 
Carried Forward Deduction means the amount of Deductions that exceeds the Gross
Revenue in a Quarter, which may then be carried forward and deducted from Gross
Revenue in subsequent Quarters.
 
Deductions means all costs paid or incurred by the Payer, in US dollars or in US
Dollar Equivalent, in relation to the sale of Product extracted and recovered
from the Mining Area after mining and milling or other initial processing within
or adjacent to the Mining Area, and include:
 
(a)  
all costs of smelting and refining and retorting the ore and minerals extracted
from the Mining Area, including Penalties for impurities and all umpire charges
and other processor deductions;

 
(b)  
all road, sea and rail freight, transportation, security and incidental costs
and expenses, including forwarding, shipping, demurrage, delay and insurance
costs, incurred between the outer boundary of, or adjacent to, the Mining Area
and the point of delivery of the Products into a Refinery, including the cost of
transport to and between any Refinery or other places of treatment;

 
(c)  
handling and incidental costs and expenses including agency, banking, assaying,
sampling, weighing, loading, unloading, stockpiling and storage;

 
(d)  
actual sales costs, and reasonable marketing, representation, agency and
brokerage costs in respect of the Product subject to the Royalty;

 
(e)  
administrative and other general overhead costs that are directly attributable
and reasonably allocable to the costs set out in paragraphs (a) to (d) above, as
agreed with the Payee;

 
(f)  
Carried Forward Deductions;

 

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(g)  
shipping agency fees;

 
(h)  
bank charges on sales receipts and payments;

 
(i)  
government charges on banking transactions;

 
(j)  
all taxes (excluding taxes based on income of the Payer), royalties, duties,
levies and charges lawfully imposed by an Authority,, including carbon emission
licence fees, charges, fuel excise (net of any fuel tax credits) and carbon
trading taxes in any way connected with the transportation or sale of the
Products from the Mining Area, including any value added or goods and services
taxes (but not if subject to an input tax credit, which is actually claimed and
received); and

 
(k)  
any other incidental charge or expense incurred between the outer boundary of,
or adjacent to, the Mining Area up to the point of delivery of the Products into
a Refinery, including on-site transport and storage,

 
but does not include:
 
(l)  
any exploration, development, construction, mining, crushing, treatment or
concentrating costs incurred by the Payer within or adjacent to the Mining Area;
or

 
(m)  
where Products are loaded, treated, milled, processed, transported or unloaded
outside the Area of Interest in a Refinery wholly or partially owned by the
Payer or a shareholder, Related Body Corporate or Related Entity of the Payer,
any costs and expenses that are in excess of those which would be paid or
incurred by the Payer on arm’s length terms, or which would not be Deductions if
those Products were processed by a third party.

 
Exchange Rate means the average of the spot rate of exchange during the relevant
period for the purchase of one currency against another currency as set by the
usual bank for the Payer or another recognised and reputable banking institution
chosen by the Payer, acting reasonably.
 
Gross Revenue in respect of an expired Quarter means the aggregate of:
 
(a)  
the total amounts actually received by the Payer from the sale of Product to the
owner or operator of a Refinery, in US dollars, or in US Dollar Equivalent,
(Sales) including the proceeds received from an insurer in the case of loss of,
or damage to, the Products (net of any excess paid in respect of that
loss),during the expired Quarter, less any refunds, claims or discount, where
Sales are effected on an arms-length basis on normal commercial terms; and

 
(b)  
if Sales are effected on any other basis than on an arms-length basis on normal
commercial terms, or if Product is disposed of otherwise than by sale (whether
immediate or for future delivery) during the expired Quarter, the fair market
value of the Product so sold or otherwise disposed of during the expired Quarter
in US dollars, or in US Dollar Equivalent, as determined in accordance with
paragraph S4.8.

 
Month means calendar month.
 
Net Smelter Return means Gross Revenue and Adjustments (whether plus or minus)
for the relevant Quarter minus Deductions for that Quarter.
 

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Payee means Energizer or any subsequent party entitled in accordance this
Agreement to receive payment of the Royalty.
 
Payer means Madagascar Development JV Company, or any subsequent mining
development company established by Malagasy and Energizer for the exploitation
of Other Minerals within the Mining Area.
 
Penalty means a charge made by a Refinery, in addition to normal refining costs,
for removing from the Product minerals or other substances where the cost of the
removal exceeds the value of those minerals or other substances.
 
Refinery means a smelter, refinery or other processing facility.
 
Product means the Payer’s share of any Other Minerals or product derived from
the processing of Other Minerals extracted and recovered from the Miining Area
which is capable of being sold or otherwise disposed of..
 
Quarter means the period of three consecutive Months commencing 1 January, 1
April, 1 July or 1 October in any year, other than the first Quarter which
commences on the date the Payee become entitled to the Royalty under clause
24.1(a) of the Agreement and expires on the date immediately preceding the next
to occur of 1 January, 1 April, 1 July or 1 October, and Quarterly has the
corresponding meaning.
 
Royalty means:
 
(a)  
in the case of a Royalty under clause 24.1(a) of this Agreement, 2% of the Net
Smelter Return; and

 
(b)  
In the case of a Royalty under clause 4.1(b) of this Agreement, 1.5% of the Net
Smelter Return.

 
US Dollar Equivalent means, where sum to which this Agreement relates is not
stated in US dollars, the amount determined by converting the amount in foreign
currency into US dollars at the Exchange Rate existing when the relevant revenue
was earned or receivable, or the relevant expenditure was incurred, by the
Payer.
 
S4.2  
Calculation of Net Smelter Return

 
The Payer will calculate the Net Smelter Return Quarterly from the date on which
Product is first produced from the Mining Area.
 
S4.3  
Reporting

 
Within 30 days of the end of each Quarter, the Payer will provide the Payee with
a statement setting out in reasonable detail the calculation of the Royalty due
to the Payee from the Payer for the previous Quarter and any adjustments
occasioned by errors in any previous accounting.
 

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S4.4  
Time for payment of Royalty

 
Within 30 days of the end of each Quarter, the Payer must pay to the Payee the
Royalty plus or minus any adjustments in accordance with paragraph S4.3.
 
S4.5  
Audits and adjustments

 
(a)  
The Payer’s records that relate to the calculation of the Net Smelter Return and
the Royalty for a Quarter (Royalty Records) shall be open to inspection and
review by the Payee’s external auditors for a period of 12 Months after the end
of such Quarter, at the Payee’s cost. If not reviewed in that 12 Month period
the Royalty payment for that Quarter will be taken to be in full and final
satisfaction of the Payer’s obligations in respect of that payment.

 
(b)  
If an audit carried out pursuant to paragraph S4.5(a) (Audit) discloses that the
Payer has made an overpayment of the Royalty or has made an underpayment of the
Royalty of 5% or less, then the Payee will be responsible for payment of the
costs of the Audit and the Payer will (as the case may be):

 
(i)  
deduct the amount of any such overpayment from its next Royalty payment to the
Payee; or

 
(ii)  
add the amount of any such underpayment to the next Royalty payment it makes to
the Payee.

 
(c)  
If an Audit discloses an underpayment by the Payer of more than 5%, then the
costs of the Audit shall be borne by the Payer and the amount of the
underpayment will be paid by the Payer to the Payee within 14 days after
delivery of the Audit report to the Payer.

 
S4.6  
Assignment

 
(a)  
The Payer must not sell, assign or otherwise dispose of or encumber the whole or
part of its interest in the Mining Area without first requiring the assignee or
other such party to enter into a covenant with the Payee on terms to the
satisfaction of the Payee (acting reasonably) binding it to observe and perform
all the terms and conditions of these procedures as from the effective date of
assignment or encumbrance.

 
(b)  
Subject to the Payer not exercising the Royalty Option in accordance with clause
24.2(a), the Payee may only assign, sell or otherwise dispose of the whole (but
not a part) of its rights and interest in or under the Royalty (Relevant
Interest), other than to a Related Body Corporate of the Payee to which this
paragraph (b) does not apply, if it first offers to the Payer the opportunity to
acquire the Relevant Interest for consideration equal to that offered by the
proposed assignee. If the Payer does not accept the offer within 30 days, the
Payee may proceed with the assignment, sale or disposal to the proposed assignee
within 90 days and on terms no more favourable to the proposed assignee than
those offered to the Payer. If the Payer accepts the offer then settlement of
the assignment of the Relevant Interest to the Payer shall occur within 60 days
thereafter.

 
S4.7  
Hedging and Disposal of Intermediate Product

 
(a)  
All profits and losses resulting from the Payer engaging in any commodity
futures trading, option trading, metals trading, gold loans or any combination
thereof, or other hedging or price protection arrangements or mechanisms are
excluded from calculations of the Net Smelter Return.

 
(b)  
The Payer must not dispose of, or allow for commingling of, any ore from the
Mining Area or any intermediate product unless it has ensured that it has access
to all information necessary in order to calculate the Royalty.

 

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S4.8  
Reference to expert

 
(a)  
If any dispute or difference arises between the Parties in connection with, the
calculation of the Net Smelter Return or the Royalty, the Parties undertake with
each other to use all reasonable endeavours, in good faith, to settle the
dispute or difference by negotiation.

 
(b)  
If any dispute referred to in paragraph S4.8(a) has not been resolved within a
reasonable time of not less than 14 days, either Party may refer the matter in
issue to an Independent Expert for determination and clause 33 of the Agreement
applies.

 
(c)  
Prior to resolution of the dispute, the Parties must continue to perform their
respective obligations under this Agreement including all pre-existing
obligations the subject of the dispute, except only:

 
(i)  
an obligation to make a payment to the other Party, where that payment is a
subject of the dispute; or

 
(ii)  
to the extent that lack of resolution of the dispute prevents such performance.

 
(d)  
Nothing in this clause prevents a Party from commencing proceedings in any court
where proceedings are required to obtain urgent interlocutory relief.

 

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Joint Venture Agreement
   

 
Executed as an agreement
 
Executed by Energizer Resources Inc.
by its duly authorised representative:
         
/s/ Richard Schler
 
/s/ Peter Liabotis
Richard Schler
CEO
 
Peter Liabotis
CFO
     
Executed by Malagasy Minerals Limited ACN 121 700 105 in accordance with section
127 of the Corporations Act 2001 (Cth) by or in the presence of:
         
/s/ Graeme Raymond Boden
 
/s/ Natasha Lee Forde
Signature of Director
 
Signature of Director or Secretary
     
Graeme Raymond Boden
 
Natasha Lee Forde
Name of Director in full
 
Name of Director or Secretary in full

 

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Joint Venture Agreement
   

 
Annexure A – Form of Sublease Agreement
 
 
 
 
 
 
 
 
 
 

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