HEADS OF AGREEMENT
    TRANS-CALEDON TUNNEL AUTHORITY
 “TCTA”
   ERGO MINING OPERATIONS PROPRIETARY LIMITED
  “Ergo”
    EAST RAND PROPRIETARY MINES LIMITED
  “ERPM”
    CROWN GOLD RECOVERIES PROPRIETARY LIMITED
  “CGR”
 “the Ergo Group”
 “the Parties”


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 1.
 INTRODUCTION
  These  Heads  of  Agreement  (“these  Heads”)  are  entered  into  in  an  effort  to alleviate  the  pollution  of  underground  aquifers  in  the  Central  Witwatersrand  Basin and surface water through contact with Acid Mine Drainage (“AMD”) and to lay the foundation for a long-term self-sustainable solution for AMD.
  TCTA, acting through directives issued by the Minister of Water and Environmental Affairs of the Republic of South Africa (“the Minister”) and the Department of Water Affairs (“DWA”), is to construct pumping and treatment facilities to intercept rising water levels and to prevent it from reaching the environmental critical level (“ECL”).
 2.
 BINDING NATURE
  The  Parties  agree  that  these  Heads  constitute  a  binding  agreement  between  the Parties  and  shall  create  binding  obligations  between  the  Parties.  The  Parties undertake in favour of each other to negotiate in good faith with each other and with all  relevant  authorities  (including  without  limitation)  the  Department  of  Mineral Resources  (“DMR”)  and  DWA  to  bring  about  the  conclusion  and  execution  of detailed  and  comprehensive  definitive  agreements  which  the  Parties  intend  to conclude  as  specified  in  clause  3  “Definitive  Agreements”  agree  that  any  changes  to  the  principles  set  out  in  these  Heads  resulting  from unforeseen  circumstances  shall  be  negotiated  in  good  faith  by  the  Parties  with reference to the circumstances then prevailing.
  Each  of  the  Parties  hereby  warrants  that  it  has  full  legal  capacity,  authority  and power, in terms of all corporate or statutory or regulatory rules and laws applicable to it, to enter into these Heads and to perform its obligations hereunder.
 3.
 DEFINITIVE AGREEMENTS
  The Parties record their firm intention to conclude or procure the conclusion of the Definitive Agreements, and hereby agree to negotiate exclusively and expeditiously with  each  other,  in  good  faith  the  terms  and  conditions  of  such  Definitive Agreements, in accordance with the provisions of and principles recorded in these Heads  with  a  view  to  concluding  such  Definitive  Agreements  (and  procuring  the fulfilment of any conditions to which such Definitive Agreements may be subject) by no  later  than  60  (sixty)  days  after  the  Signature  Date  by  the  last  signing  Party  (or such  later  date  as  the  Parties  may  agree  in  writing).  Such  Definitive  Agreements shall include, but not be limited to: 3.1.1
           such other agreements as may be necessary or requisite to give effect to the objectives contemplated in these Heads.
  Neither  Party  shall  be  entitled  to  resile  from  these  Heads  merely  because  the Definitive Agreements have not been concluded or signed. This does not derogate from  the  Parties’  obligations  to  negotiate  exclusively  and  expeditiously  with  each other in good faith the terms and conditions of such Definitive Agreements.
 4.
 PRINCIPLES OF AGREEMENTThe  Parties  hereby  agree  that  the  following  principles  shall  be  applicable  to  them and  binding  upon  them  and  shall  be  amplified  and  detailed  in  the  Definitive Agreements, namely:
  Grant of rights by ERPM - ERPM as owner of the remaining extent of portion 1 of the farm Driefontein 87 I.R. and the holder of certain surface right permits (“SRPs”) and servitudes over and in respect of the ERPM gold mine in Boksburg, grants to TCTA: 4.1.1
 the right of access in terms of a lease over the surface area on which the South  West  Vertical  Shaft  (“SWV”)  is  situated  demarcated  by  the co-ordinates  1:     26°13'2.65"S;  28°10'56.91"E;  2:      26°13'2.65"S;


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 28°10'57.22"E;  3:     26°13'3.36"S;  28°10'57.26"E  an d  4:     26°13'3.38"S; 28°10'57"E  on  the  sketch  plan  annexed  hereto  as  Ann exure  “A”  for  a period  of  10  (ten)  years  renewable  for  a  further  10  (ten)  years  for  a consideration of R1.00 (one Rand) per annum;
 
  
  28°11'0.87"E;  CC:     26°12'59.27"S;  28°11'1.73"E;  D D:     26°13'5.9"S; 28°11'1.81"E;  EE:     26°13'6.35"S;  28°10'59.87"E;  F F:     26°13'4.16"S; 28°10'53.87"E and GG:   26°12'58.01"S; 28°10'53.95" E (“the Plant Site”), which  land  will  be  required  by  TCTA  for  the  construction  of  a  water treatment plant;
 
  “B”
 hereto  as  “pipeline  routes  and  specifications”  in  respect  of  which  areas ERPM  holds  land  access  rights  and  indicated  with  blue  and  orange  lines as the treated water pipeline and the sludge pipeline respectively.
 Grant of rights by CGR:
 CGR as owner of pipelines which run from Boksburg eastwards to the Ergo slimes dam  complex  (“Ergo  Tailings  Dams”),  and  the  holder  of  SRPs  and/or  other entitlements grant to TCTA: 4.2.1  the  right  to  construct  pipelines  with  the  specification  and  route  as  depicted
 on  Annexure  “B”  hereto  and  indicated  with  an  orange  line  as  the  sludge pipeline; and
 
  Grant of rights by Ergo
 Ergo as the owner of the Ergo Tailings Dams as well as pipelines and similar land access  rights  hereby  grants  to  TCTA  the  right  to  partially  use  the  Ergo  Tailings Dams  for  the  deposition  of  up  to
  second) of by-product sludge emanating from the AMD treatment plant. Such use of the  Ergo  Tailings  Dams  by  TCTA  shall  be  conditional  upon  there  not  being  any capacity constraints arising to receive the materials from the Ergo Group in addition to  the  materials  emanating  from  TCTA’s  AMD  Project  and  shall  be  in  accordance with strict compliance with the tailings management programme of the Ergo Tailings Dam.
 
 terms  of  these  Heads  may  contravene  any  condition  of  any  surface  rights  permit, licence,  regulatory  provision,  private  arrangement  or  other  entitlement,  neither  the Ergo Group nor any of ERPM, CGR or Ergo will in any  way be  liable to TCTA for any  interruption,  loss  or  any  other  consequence  occasioned  by  such  third  party restriction or condition.
 
 and  other  equipment,  installations,  property  and  infrastructure  is  required  also  by any of ERPM, CGR and/or Ergo, TCTA’s use in terms of these Heads will be limited to  partial  or  shared  use  and,  other  than  in  respect  of  equipment,  infrastructure  or pipelines that TCTA has constructed, it will not compete with the requirements nor will it unreasonably interfere with or in any way inhibit the current or future operating activities of ERPM, CGR or Ergo. Such partial use shall be subject to the provisions of clauses 4.6 and 4.10 below.
 
 deposition of water and/or sludge, TCTA will outsource the management of its use to  the  operator  of  that  equipment,  installation,  infrastructure  or  property,  be  it ERPM, CGR or Ergo. TCTA shall be responsible for its pro rata share of the actual operation  and  maintenance  costs  of  the  equipment,  installations,  infrastructure  or property referred to above at the said actual costs on a pro rata basis.


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 purpose or capable of performing to the specifications required by TCTA and none of them warrant that there is an adequate supply of electricity, water and services to the  equipment,  installations,  property  and  infrastructure  for  TCTA  to  conduct  the activities contemplated by these Heads.
 
 endorsement of the State’s initiative to intervene and implement an AMD solution at the  expense  of  any  of  the  Ergo  Group’s  own  initiatives,  past,  present  or  in  future. Each member of the Ergo Group shall retain the right to defend or resist an action by any regulatory body to impose liability or unilaterally join them as a participant or contributor to the AMD initiative and anything associated with it beyond the scope of these Heads.
 
  
 organ of State to pay any amount, make any contribution, provide security or incur any costs directly or  indirectly related to AMD, such a member is entitled to offset the benefit TCTA and/or the State acquires as a result of the use of the equipment, installations,  property  and  infrastructure  in  terms  of  these  Heads  in  an  amount calculated in accordance with the methodology set out in Annexure “C” in respect of which a worked example is set out in Annexure “D” as read with Annexure “E”. Such  amount,  contribution,  provision  of  security  or  incurrence  of  costs  will  only become  enforceable  once  the  liability  for  and  quantum  of  same  has  been  finally determined,  and  once  the  aforementioned  benefit  has  been  finally  quantified, whereupon  the  latter  will  be  brought  into  account  with  and/or  deducted  from  the former.
 
 the option at its election, to acquire from TCTA at the full operating costs incurred by  TCTA  up  to  30  (thirty)  mega  litres  per  day  of  untreated  and/or  partially  treated AMD (“partially treated  AMD”)  water from the HDS Plant in accordance with the water  quality  specifications  as  directed  by  DWA  for  release  into  the  river  system. After the coming into operation of the long-term AMD solution, Ergo shall have the option at its election on an on-going basis, to acquire from TCTA at the full capital and operating costs incurred by TCTA, up to 30 (thirty) mega litres per day of fully treated  AMD  (“fully  treated  AMD  water”)  water  from  the  AMD  treatment  plant  in accordance with the water quality specifications as directed by DWA.
 
 of the Ergo Group, including, but not limited to any spillage, contamination, damage to property or pollution and any liability that arises from it of any kind, will not pass on to the Ergo member, but will remain with TCTA.
 
 constructed by TCTA in implementing these Heads shall at all times remain vested in TCTA.
 5.
 SUPPORT AND HARDSHIP
 The  Parties  undertake  at  all  times  to  do  all  reasonable  things,  perform  all reasonable  actions  and  take  all  reasonable  steps  to  procure  the  doing  of  all reasonable things, the performance of all reasonable actions, and the taking of all reasonable steps, as may be open to them and necessary or desirable or incidental to the putting into effect or maintenance of the terms, conditions, import and intent of these Heads.
 6.
 NOTICE AND COMMUNICATION
 Each Party hereby chooses its domicilium citandi et executandifor all purposes of and  in  connection  of  these  Heads  at  the  address  (and  telefax  number,  if  any) appearing below:  TCTA at: 1st Floor, Stinkhout Wing
 Tuinhof Building 265 West Street Centurion


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  Ergo, ERPM and CGR at:  First Floor (Left Wing) Block A Quadrum 1 Quadrum Office Park 50 Constantia Boulevard Constantia Kloof Ext 28 Roodepoort Telefacsimile No:  (011) 470-2618
 7.
 GOVERNING LAW
 These  Heads  shall  be  governed  by  and  interpreted  in  all  respects  in  accordance with the laws of the Republic of South Africa.
 8.
 DISPUTE RESOLUTION
 In  the  event  of  any  dispute  arising  between  the  Parties  in  respect  of  the interpretation  of,  breach  of  and/or  any  other  matter  arising  from  these  Heads,  the Parties  will  use  their  bona  fide  efforts  to  resolve  such  dispute  in  the  first  instance amicably  amongst  themselves  and  failing  resolution  within  30  (thirty)  days  of  the dispute  first  having  arisen,  such  dispute  may  be  referred  by  any  of  the  Parties  by written  notice  to  the  others,  for  arbitration  in  accordance  with  the  Rules  of  the Arbitration Foundation of South Africa.
 9.
 COUNTERPARTS
 The  Parties  may  sign  these  Heads  in  counterparts,  the  separately  signed documents  constituting  together  these  Heads.  A  facsimile  shall  constitute  a  valid counterpart for purposes hereunder.
  SIGNED AT
 ON
 2013
 
  TRANS-CALEDON TUNNEL AUTHORITY
      J. Ndlovo (Chief Executive Officer)
 SIGNED AT JOHANNESBURG ON 27 NOVEMBER  2012.
  ERGO MINING OPERATIONS PROPRIETARY PROPRIETARY LIMITED
      D.J. Pretorius (Chief Executive Officer)
 SIGNED AT JOHANNESBURG ON 27 NOVEMER 2012.
  EAST RAND PROPRIETARY MINES LIMITED


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     D.J. Pretorius (Chief Executive Officer)
 SIGNED AT JOHANNESBURG ON 27 NOVEMBER 2012.
 
  CROWN GOLD RECOVERIES PROPRIETARY LIMITED
      D.J. Pretorius (Chief Executive Officer)