Document:

csmex10-1_050611.htm

 

EXHIBIT 10.1

 

Dayuan Gold Mine

Lease Agreement

Lessor(Party A):               Longkou Dayuan Gold Mining Co. Ltd.

Legal Representative:               LI CHENG LIANG

Lessee(Party B):               Yantai Jinguan Investment Ltd.

Legal Representative:               YANG JIANXI

Background

 

In order to extend attaining effective exploration and increased production efficiency of the mine as described below, Party A and Party B have agreed on the following terms regarding the leasing of the No. 1 mining well on the No. 117 mining area and all assets of the processing plant at the Dayuan gold mine (“the Lease Property”) to Party B under the principle of fairness.

1.           The Lease Property

 

The Lease Property refers to the No. 1 mining well on the No. 117 mine vein and all assets of the processing plant at the Dayuan gold mine currently held by Party A.

Please refer to Annex 1 for description of the fixed assets of the Lease Property

Please refer to Annex 2 for the certification list of the Lease Property

2.           Property Information and Term of Lease

 

	
2.1

	
Party A shall lease the No. 1 mining well on the No. 117 mine vein and all assets of the processing plant at the Dayuan gold mine to Party B.

	
2.2

	
The term of this lease shall last for 10 years from April 1, 2011 to April 1, 2021.

3.           Leasing Fee and Payment Term

 

3.1          Party B shall pay Party A a leasing fee of RMB13M per annum.

 

3.2          Payment Term

 

3.2.1       Party B had paid in advance RMB39M, equivalent to leasing fees for three (3) years, to Party A, of which RMB10M represents the security deposit for bidding the tender of the Lease Property.

 

	
3.2.2

	
Party B shall pay another RMB39M, equivalent to leasing fees for three (3) years, to Party A on or before September 30, 2011.

 

	
  

	
3.2.3  Party B shall pay the balance of RMB52M, equivalent to leasing fees for four (4) years, to Party A on or before March 1, 2017.

	
4.  

	
About the Lease

 

	
4.1  

	
Effective from the date of this agreement, Party B shall hold the right to manage and operate the Lease Property and shall be entitled to all revenue generated by the Lease Property.

 

	
4.2  

	
Party B shall self-finance and operate the Lease Property independently.

 

	
4.3  

	
All production equipment and facilities under the Lease Property shall be recorded in an asset list and be transferred to Party B upon the execution of this agreement. Upon the expiration of this agreement, Party B shall return the same assets (of residual value) to Party A. Party B may purchase new equipment and facilities at its own costs, depending on actual business needs. All the new purchases shall be owned by Party B upon expiration of this agreement. All maintenance costs related to the operation of the Lease Property shall be borne by Party B.

 

	
4.4  

	
Party B shall seek approval from Party A concerning any proposed plan of modifying or exploring aisles above or below the mining wells at the Dayuan gold mine for purpose of meeting the actual operating needs. All related costs shall be borne by Party B and all fixed assets resulted from this plan shall be owned by Party A upon expiration of this agreement.

 

	
4.5  

	
Party B and Party A shall bear their own tax during the term of the lease.

  

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5.             Rights and Obligations

5.1           Rights and Obligations of Party A

 

	
5.1.1

	
Party A shall have the right to monitor Party B to ensure the Lease Property operating in a legal way. Should Party B operate the Lease Property illegally that results in any administrative or financial obligations to Party A, Party B is obliged to rectify the operation according to the requirement of related government bodies and bear the related costs.

 

	
5.1.2

	
Party A shall have the right to monitor proper use of equipment and facilities of the Lease Property by Party B in order to prevent any possible damage or destruction.

 

	
5.1.3

	
During the lease term, Party A shall be restricted to interfere with the operation of the Lease Property.

 

	
5.1.4

	
Party A shall guarantee all conditions necessary for mining production in the Lease Property, including but not limited to legal mining rights, stable hydro and electricity supplies, normal production order in the mining area, land to accommodate normal production, etc.. Party A shall compensate Party B for any loss caused by shortage of the above.

 

	
5.1.5

	
Party A shall be liable to all claims and liabilities on the Lease Property that were borne prior to the execution of this agreement and is responsible for all losses incurred by Party B if the normal operation of the Lease Property is adversely affected by such claims or liabilities.

 

	
5.1.6

	
Party A shall return the security deposit to Party B upon the expiration of the lease term.

5.2               Rights and Obligations of Party B

 

	
5.2.1

	
Party B shall hold the right to manage and operate the Lease Property and shall be entitled to all revenue generated by the Lease Property.

 

	
5.2.2

	
Party B shall operate the Lease Property strictly in accordance with the PRC laws and regulations, and shall pay administration fees related to the

	
  

	
operation of the Lease Property. Should any law or regulation be violated, Party B shall be liable to any legal, administrative or economic consequences caused.

 

	
5.2.3

	
Party B shall be restricted to use the Lease Property as a guarantee or collateral to a third party. Under such circumstance, Party A shall have the right to revoke this agreement and all relevant costs shall be borne by the Party B.

 

	
5.2.4

	
Party B is obliged to pay the lease fee to Party A in accordance with this agreement.

 

	
5.2.5

	
Party B is restricted to cause any destructive exploration or destroy the transportation roadways in the Lease Property. Party B shall compensate Party A for any loss caused by the above.

 

	
5.2.6

	
Party B shall give priority to existing staff and workers at Dayuan mine to fill up the positions of winch engineers, electrical engineers, maintenance workers, and electricians, etc..

 

	
5.2.7

	
Party B is obliged to pay a deposit for safety production to Party A, under such circumstance, Party A shall have the right to properly use such deposit to resolve any accidents in the Lease Property as long as a written notice is sent to Party B. Party B is obliged to pay the outstanding amount afterwards.

6.                Safety Production

 

	
6.1

	
Party B shall have a nationally recognized certification for non-coal mine production, and shall strictly comply with all relevant state and local safety laws, regulations and safety production requirements.

 

	
6.2

	
During the Lease Term, Party B shall assume full responsibility for safety production (except the accidents caused by Party A), and bear related loss resulting therefrom.

 

	
6.3

	
Party B shall pay a deposit for safety production in an amount of RMB 5,000,000 to Party A. If Party A uses the deposit for resolving accidents, Party B is obliged to pay the outstanding amount afterwards.

 

	
6.4

	
Party B is obliged to immediately notify Party A for any accidents happened during the Lease Term.  Party A shall report the accidents to related authorities and provide assistance to mediate the accidents.

  

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6.5

	
Party B is obliged to prepare a scientific and rational safety production program and keep record in the project management department and safety production department of Party A.

 

	
6.6

	
During the Lease Term, should the act of Party B violate related safety production regulations, Party A is entitled to terminate the production of Party B, order Party B to rectify within a reasonable period, and impose appropriate penalties to Party B.

7.               Default

 

	
7.1

	
Either party shall not terminate this agreement unilaterally, otherwise the breaching party shall compensate to the other party. Should Party B terminate this agreement unilaterally, the paid lease fee shall not be refunded. Should Party A terminate this agreement unilaterally, Party A shall return in full the paid lease fee to Party B.

 

	
7.2

	
During the lease term, this agreement shall be terminated due to i) force majeure (substantial change in government policy, land expropriation, natural disaster or ceased operation of either party during lease term) or ii) invalid contract due to in conflict with existing laws and regulations. Party A and Party B shall equally share the benefit or loss due to such circumstances.

 

	
7.3

	
Should Party B fail to pay the lease fee as scheduled, Party B shall pay Party A an overdue penalty equivalent to 0.05% of the outstanding amount payable per day

 

	
7.4

	
For any cessation of mine production caused by Party A, Party A is responsible to compensate the loss incurred by Party B.

 

	
8.  

	
This agreement shall be deemed effective upon signing by both parties.

 

	
9.  

	
Matters not covered in this agreement shall be negotiated in a supplemental agreement which shall have the same legal effect with this agreement.

 

	
10.  

	
The contract is in quadruplicate with two copies for each party.

For any dispute, Party A and Party B shall negotiate. Should negotiation fail, either party shall resort to competent court for arbitration.

 

 

(Signatory Page)

Party A:                 Longkou Dayuan Gold Mining Co. Ltd.

Legal Representative:                                              Li Cheng Liang (sd.)

/s/ Li Cheng Liang

Date: May 6, 2011

Party B:                 Yantai Jinguan Investment Ltd.

Legal Representative:                                              Yang Jianxi (sd.)

/s/ Yang Jianxi

Date: May 6, 2011

  

3csmex10-2_050611.htm

 

EXHIBIT 10.2

 

 

Equipment Transfer Agreement

Transferor (hereinafter “Party A”): Longkou Datong Industry and Trade Co., Ltd.

 

Transferee (hereinafter “Party B”): Yantai Jinguan Investment Co., Ltd.

 

Whereas:

 

1. Longkou Datong Industry and Trade Co., Ltd. is a company registered and established under the laws in the PRC and in good standing, which has operated Dayuan Gold Mining Co., Ltd.’s No.117 Mining Area for the lease term from 2008 through 2011.

 

2. Yantai Jinguan Investment Co., Ltd. is a company registered and established under the laws in the PRC, in good standing and with its business scope mainly covering comprehensive gold mining operations.

 

3. During its leasing period of the Dayuan Gold Mine, Party A agrees to purchase certain equipment for operation.

 

4. Party A owns all the assets covered in the asset list attached hereto, and is the legal owner of the title of these assets.

 

5. Party A and Party B had entered into a Memorandum Of Understanding For Equipment Transfer on March 8, 2011 (“MOU”).

 

6. Given that Party A intends to transfer the assets it owned covered in the asset list at a consideration of RMB15,000,000, Party B intends to purchase the assets at a consideration of RMB15,000,000.

 

Therefore, Party A and Party B, through friendly negotiations and on the principles of cooperation and mutual benefit, hereby agree as follows:

 

Article 1 Definitions

Unless the context otherwise requires, the following terms shall have the meanings given to them below when used in this Agreement and its annex:

 

1. “Transfer” or “this transfer” means the transfer of the assets owned by Party A which are covered in the asset list, between Part A and Party B, as stated in this Agreement.

 

2. “Transferred assets” means all the assets covered in the asset list, transferred by Party A to Party B, in accordance with this Agreement.

 

Article 2 Transfer Object

 

The transfer object under this Agreement is the equipment purchased and used in No.117 Mining Area of Dayuan Gold Mine by Party A during its leasing period.

 

1. The names, models, specifications and quantities of the equipments to be transferred are listed in detail in the asset list.

 

2. Party B intends to purchase the aforementioned transfer object, and, after the transfer, to own the title of the transfer object.

 

 

  

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Article 3 Transfer Price

 

1. The final agreed overall price of the Transferred assets is RMB15,000,000.

 

2. The overall contract price covers the title of the assets and auxiliary equipment, taxes, and all the expenses to be incurred in the Transfer and technology services, including providing technological documents and graphics.

 

3. The contract price is fixed and unconditional.

 

Article 4 Payment of Transfer Price

 

The overall contract price as stated in Article 3 of this contract shall be paid by Party B to Party A via bank transfer in the following manner and installments.

 

1.According to the MOU, Party B had already paid Party A a deposit of RMB 12,000,000 within three days of the signing of the document.

 

2.Party B had further paid Party A the second deposit of RMB2,780,000 in accordance with the MOU.

 

3.  The balance due shall be payable on or before May 10, 2011.

Article 5 Transfer of Equipment Graphics and Documents

 

1.Time of Transfer: on the date that Party A receives the first deposit from Party B, Party A shall arrange both parties to carry out the delivery of transferred assets.

 

2.Place of Transfer: mining well and processing plant in No.117 Mining Area of the Dayuan Gold Mine.

 

3.The entire asset transfer process shall be completed on the date that Party A received the balance due from Party B, and all personnel from Party A shall evacuatefrom the premises.

 

4.   Party A shall deliver to Party B all the graphics and documents used for operational purposes during its leasing period of No.117 Mining Area (including electronic versions of the graphics and documents).

 

Article 6 Representations and Warranties

 

Each Party in this Agreement hereby represents and warrants to the other Parties that:

 

1.   All the information represented and warranted by each Party is genuine, complete and accurate.

 

2.   Each Party has full capacity for civil conduct, fully capable of exercising the rights to operate independently and to divide and administer its owned assets.

 

3.   Each Party has all the rights, authorizations and approvals required to sign this Agreement, and has all the rights, authorizations and approvals required to fully perform all the obligations under this Agreement.

 

4.   All relevant provisions in this Agreement shall become effective and binding obligations upon the signing of this Agreement by Party A and Party B.

 

5.   Neither the signing of this Agreement nor the performance of any obligation under this Agreement shall contradict, violate, or breach any Party’s terms of the business license, articles of association, or any laws and regulations, or any approval by any government offices and agencies, or any provision in any contract or agreement with signed by one of the Parties in this Agreement.

 

6.   As of today’s date, no such issue exists that might violate the laws, or might hinder either Party from performing its obligations under this Agreement.

 

 

  

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7.   To the best of the knowledge of the two parties, there exists no such pending or threatened lawsuit, arbitration, other legal or administrative procedure, or government investigation that is concerned with any provision in this Agreement, or might hamper either Party’s capacity to sign this Agreement or perform its obligations under this Agreement.

 

8.   Each Party has disclosed to the other Party all the documents it possesses pertaining to the transaction in this Agreement, and has, in these documents, neither provided any false statement on important facts nor omitted any statement on important facts which causes the contents of the documents to be inaccurate.

 

9.   Party A warrants that none of the assets to be transferred has been seized, and that there is no mortgage, pledge, or guarantee on any unsettled debt attached to the assets to be transferred.

 

Article 7 Disputes Resolution

 

Any dispute arising from or in connection with the performing of this Agreement shall be resolved by both parties through friendly negotiations. In case no resolution can be reached by both parties, either party may file a lawsuit in the People’s Court of China in accordance with relevant laws.

 

Article 8 Miscellaneous

 

1.   This Agreement, since its effective date, is binding on both Parties. Neither the rights nor the obligations under this Agreement shall be amended, unless a supplemental agreement is signed by both Parties.

 

2.   Should any provision of this Agreement be held to be invalid or ineffective, such provision shall not affect the validity of the remainder of this Agreement.

 

3.   In case of anything not covered herein in this contract or the content of any provision being ambiguous, both Parties shall come to rational explanations of this contract, based on the principles and purpose of this contract, transaction norms, and the contents of pertaining provisions, and in accordance with common understanding. Such explanations shall be binding, unless in violation of law or of this contract.

 

4.   This Agreement shall become effective after the legal or authorized representatives of both Parties signed their names with corporate seal (if applicable).

 

5.   This Agreement is signed in quadruplicate. Party A and Party B shall hold two copies respectively and each copy has equal legal effects.

 

6.   This contract is signed in Longkou, China, on May 6, 2011.

 

Article 9 Annex

 

Asset List

 

SIGNATURES:

Party A:             (sd.)

Representative:   LI WEI DONG

Party B:             (sd.)

Representative:   YANG JIANXI

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