Document:

Exhibit 10.5.4

 

AMENDMENT NO. 3 TO PARTNER AGREEMENT

 

THIS AMENDMENT NO. 3 TO THE PARTNER AGREEMENT (“Amending Agreement”) is made as of March 30, 2018, and amends that certain Unanimous Omnibus Partner Agreement dated effective as of January 1, 2015 (as amended by amending agreements dated as of April 10, 2017 and June 30, 2017, collectively with amending agreements the “Partner Agreement”), entered into among MINERA PLATA REAL, S. DE R.L. DE C.V., a Mexico variable capital company (a “sociedad de responsabilidad limitada de capital variable” in Spanish) (“MPR”), OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V., a Mexico variable capital company, SERVICIOS SAN JOSÉ DE PLATA S. DE R.L. DE C.V., a Mexico variable capital company, LOS GATOS LUXEMBOURG S. AR. L., a Luxembourg limited liability company (“SSMRC Lux”), SUNSHINE SILVER MINING & REFINING CORPORATION, a corporation formed under the laws of the State of Delaware (“SSMRC”) and DOWA METALS & MINING CO., LTD., a corporation incorporated under the laws of Japan (“Dowa”).

 

WHEREAS, the Parties have agreed to enter into this Amending Agreement to confirm in writing the terms and conditions upon which they have agreed to amend the Partner Agreement; and

 

WHEREAS, except as specifically amended by this Amending Agreement, the terms and conditions of the Partner Agreement shall remain in full force and effect.

 

NOW THEREFORE, subject to the terms and conditions set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

 

Section 1               Defined Terms.

 

Unless expressly defined in this Amending Agreement, capitalized terms used in this Amending Agreement will have the meanings specified in the Partner Agreement.

 

Section 2               Amendments.

 

Notwithstanding the terms of the Partner Agreement (including Exhibit B thereof), Requisite Partner Approval shall be required in accordance with, and in the circumstances described in, Exhibit “A” attached hereto, and all applicable provisions of the Partner Agreement shall be deemed to be revised and amended in order to give effect to Exhibit “A”.

 

Section 3               Major Decisions

 

All Major Decisions passed by Requisite Partner Approval up to and including the date hereof are hereby approved, ratified, confirmed and adopted for all purposes by the Partners.

 

Section 4               Miscellaneous.

 

This Amending Agreement may be executed in counterparts and delivered by electronic means, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF the undersigned have caused this Amendment No. 3 to Partner Agreement to be executed by their respective duly authorized officers as of the date first written above.

 

	
 
    	
MINERA   PLATA REAL, S. DE R.L. DE C.V.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Philip Pyle
    
	
 
    	
 
    	
Name: Philip Pyle
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
OPERACIONES   SAN JOSÉ DE PLATA S. DE R.L. DE C.V.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Alberto M. Vazquez
    
	
 
    	
 
    	
Name: Alberto M.   Vazquez
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SERVICIOS   SAN JOSÉ DE PLATA S. DE R.L. DE C.V.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Alberto M. Vazquez
    
	
 
    	
 
    	
Name: Alberto M.   Vazquez
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
LOS   GATOS LUXEMBOURG S. AR. L.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Roger Johnson
    
	
 
    	
 
    	
Name: Roger Johnson
    

 

Signature Page to Amendment No. 3 to Partner Agreement

 

 

	
 
    	
SUNSHINE   SILVER MINING & REFINING CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Stephen Orr
    
	
 
    	
 
    	
Name: Stephen Orr
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
DOWA   METALS & MINING CO., LTD.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Akira Sekiguchi
    
	
 
    	
 
    	
Name: Akira Sekiguchi
    

 

 

EXHIBIT “A”

 

Exhibit “A” - Amendment No. 3 to Partner Agreement

 

 

Exhibit A

 

Unanimous Omnibus Partners Agreement — Requisite Partner Approval Requirements Protocol

 

Background

 

Appendix B to the Unanimous Omnibus Partners Agreement states:

 

“The following are considered “Major Decisions”, which require Requisite Partner Approval; provided, however that if such Major Decision was included in any Approved Program or Approved Budget, there shall not be a separate requirement to obtain Requisite Partner Approval prior to taking action in respect thereto....”

 

Accordingly, Requisite Partner Approval (RPA) is not required if the expenditures are consistent with the Approved Budget.

 

Appendix B also states, in part, Major Decisions include...

 

·                  “costs, expenditure or commitment in excess of 10% per Expense Category contained in an Approved Budget “.

·                  “execution, termination, amendment, ....... under any contract (written or oral) to which the Corporation or any other subsidiary entity is a party:

 

·      relating to the purchase and sale of minerals or concentrates;

·      with an annual contract value of more than $500,000; or

·      with a term of longer than three years”.

 

Protocol

 

For purposes of this protocol:

 

·      the Approved Budget means the most recent Forecast approved by the Board of Managers and

·      unless otherwise extended, is effective only through June 30, 2019.

 

To improve efficiencies, the partners agree the protocol to be followed by the managing partner under an Approved Budget shall be:

 

Expenditures less than $500,000 above the estimate in the Approved Budget

 

The managing partner may proceed with any expenditure in the Approved Budget that is to be committed for at an amount less than $500,000 greater than the estimated amount in the Approved Budget without obtaining RPA.

 

Expenditures more than $500,000 above the estimate in the Approved Budget

 

To make decisions in these circumstances, the managing partner must:

 

·                  Calculate the remaining project costs that are based on estimates (RPCBE). Estimates would exclude those costs already incurred, under contract or under purchase orders.

·                  Calculate the remaining contingency (RC) in the project. The RC will initially be the amount in the Approved Budget. However, the RC will change based on new commitments and information after Board of Managers’ Forecast approval.

 

If the RC divided by the RPCBE is greater than 10%, the managing partner may proceed, without RPA, with any item in the Approved Budget, provided the expenditure does not: a) cause the RC to drop to or below 10%, or b) cause an Approved Budget category (i.e. Crushing and Conveying, Development Contract #3, Pumping Wells,

 

 

etc.) to exceed 110% of that category’s approved budget total. Conversely, the managing partner must obtain RPA before proceeding with any expenditure greater than $500,000 above either of the two thresholds.

 

If the RC divided by the RPCBE is equal to or less than 10%, the managing partner must obtain RPA before proceeding with any expenditure expected to exceed its Approved Budget amount by more than $500,000.

 

Expenditures outside the scope of the Approved Budget

 

For expenditures greater than $500,000 that are not contemplated in the Approved Budget, the managing partner must obtain RPA.

 

Scenario Examples

 

	
Scenario
    	
 
    	
A
    	
 
    	
B
    	
 
    	
C
    	
 
    	
D
    	
 
    	
E
    	
 
    	
F
    	
 
    
	
RPCBE
    	
 
    	
100,000,000
    	
 
    	
100,000,000
    	
 
    	
100,000,000
    	
 
    	
100,000,000
    	
 
    	
100,000,000
    	
 
    	
100,000,000
    	
 
    
	
RC
    	
 
    	
12,000,000
    	
 
    	
12,000,000
    	
 
    	
12,000,000
    	
 
    	
8,000,000
    	
 
    	
8,000,000
    	
 
    	
8,000,000
    	
 
    
	
RC%
    	
 
    	
12.0
    	
%
    	
12.0
    	
%
    	
12.0
    	
%
    	
8.0
    	
%
    	
8.0
    	
%
    	
8.0
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Approved Budget   Expenditure
    	
 
    	
2,000,000
    	
 
    	
2,000,000
    	
 
    	
2,000,000
    	
 
    	
2,000,000
    	
 
    	
2,000,000
    	
 
    	
2,000,000
    	
 
    
	
Expenditure
    	
 
    	
2,000,000
    	
 
    	
4,000,000
    	
 
    	
5,000,000
    	
 
    	
2,000,000
    	
 
    	
3,000,000
    	
 
    	
2,300,000
    	
 
    
	
RC% After   Expenditure
    	
 
    	
12.2
    	
%
    	
10.4
    	
%
    	
9.5
    	
%
    	
8.2
    	
%
    	
7.2
    	
%
    	
7.9
    	
%
    
	
Requisite   Partner Approval?
    	
 
    	
No
    	
 
    	
No
    	
 
    	
Yes
    	
 
    	
No
    	
 
    	
Yes
    	
 
    	
No
    	
 
    

 

Request for RPA

 

When RPA is required, at least five business days before commitments must made for the activities under the RPA, the managing partner will provide a memorandum describing the activities, cost and construction milestones for the expenditures compared to the Approved Budget. The impact on the RC will also be identified.

 

Exhibit B Other Provisions

 

All other Exhibit B provisions must be followed.

 

Project Spending, Forecasts and Additional Information

 

The managing partner will provide information to all partners to ensure spending activities and cost trends are transparent. Operations and Management Committee meetings will report on all projects in accordance with the projects established in the accounting system (ERP) which may differ slightly from the contractor (e.g. M3) information. Actual expenditures and cost-to-complete estimates are required to comply with this RPA protocol to ensure cost overruns are identified early and the contingency amount adjusted. Furthermore, RPA may be required for an expected overrun.Exhibit 10.5.5

 

AMENDMENT NO. 4 TO PARTNER AGREEMENT

 

This Amendment No. 4 to Partner Agreement (this “Amendment”) is dated as of May 30, 2019, and amends the Unanimous Omnibus Partner Agreement (“Partner Agreement”), among MINERA PLATA REAL, S. DE R.L. DE C.V., a Mexico variable capital company (a “sociedad de responsabilidad limitada de capital variable” in Spanish) (“MPR”), OPERACIONES SAN JOSÉ DE PLATA S. DE R.L. DE C.V., a Mexico variable capital company (“Operaciones”), SERVICIOS SAN JOSÉ DE PLATA S. DE R.L. DE C.V., a Mexico variable capital company (“Servicios”) (MPR, Operaciones, and Servicios, collectively, the “LGJV”), SUNSHINE SILVER MINING & REFINING CORPORATION, a corporation formed under the laws of the State of Delaware (“SSMRC”) and DOWA METALS & MINING CO., LTD., a corporation incorporated under the laws of Japan (“Dowa”) (Dowa and SSMRC, each a “Partner”, and together, the “Partners”) effective as of January 1, 2015, as previously amended.

 

Background

 

A.            Dowa, SSMRC and the LGJV previously agreed to jointly explore, develop and operate a silver-zinc-lead mine located in the State of Chihuahua, Mexico (the “Los Gatos Project”) by entering into the Partner Agreement;

 

B.            The Partners directly and indirectly own all of the equity interests of the LGJV, with Dowa owning 30% and SSMRC owning 70% of such equity interests;

 

C.            Pursuant to the Partner Agreement, the Partners are required to make certain capital contributions proportional to each Partner’s equity interest in the LGJV;

 

D.            To meet the ongoing capital needs of the Los Gatos Project, on January 23, 2018, the LGJV and the Partners entered into a Loan Agreement, as amended (the “Dowa-MPR Loan”), pursuant to which Dowa advanced $65,677,987.07 to MPR to be repaid on or before June 30, 2019;

 

E.            In addition to the Dowa-MPR Loan, Dowa has advanced US$210,000,000 to the Borrowers pursuant to the terms of a Term Loan Agreement dated July 11, 2017, as amended;

 

F.             SSMRC will make a capital contribution to MPR of $18,200,000 on or before May 31, 2019 (the “SSMRC Capital Contribution”);

 

G.            Within one Business Day after SSMRC makes the SSMRC Capital Contribution, the Partners will cause MPR to use all of the proceeds thereof to make a partial repayment of the Dowa-MPR Loan in the amount of $18,200,000 to Dowa (the “Partial Repayment”).  Immediately after receipt of the Partial Repayment, $7,800,000 of the Dowa-MPR Loan balance will be converted and deemed to be a capital contribution to LGJV by Dowa (the “Dowa Contribution”);

 

 

H.            After application of the Partial Repayment and conversion of the Dowa Contribution, the remaining balance of the Dowa-MPR Loan, including interest, will be approximately $42,937,355.33 (the “Remaining Balance”).  The Remaining Balance will also be converted and deemed to be a capital contribution to LGJV by Dowa that dilutes SSMRC’s ownership interest in the LGJV (the “Dilutive Contribution”);

 

I.             Once the Dowa Contribution and the Dilutive Contribution are made, Dowa will own a 48.518% equity interest in the LGJV, and SSMRC will own a 51.482% equity interest in the LGJV; and

 

J.             The Parties wish to amend the Partner Agreement to reflect such change in ownership interests in the LGJV, and other changes stipulated by the Memorandum of Understanding dated April 16, 2019 among the LGJV and the Partners (“MOU”).

 

Agreements

 

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned hereby agree as follows:

 

Section 1.  Amendments

 

1.1.                            Section 1.1 of the Partner Agreement is hereby amended to add the following new defined terms:

 

“Option Shares” shall have the meaning specified in the Option Agreement.

 

“Option Agreement” shall mean the Option Agreement dated May 30, 2019 among Dowa and SSMRC Parent, the Corporation and OpCo, as it may be amended, restated, supplemented or modified from time to time.

 

“Priority Distribution Agreement” shall mean the Priority Distribution Agreement dated May 30, 2019 among Dowa, SSMRC Parent, the Corporation and OpCo, as it may be amended, restated, supplemented or modified from time to time.

 

“SSMRC Guarantees” shall mean the SSMRC Guarantee (as defined by the Term Loan Agreement) and the Guarantee (as defined by the Working Capital Facility), as they may be amended, restated, supplemented or modified from time to time.

 

“Term Loan Agreement” shall mean the Term Loan Agreement, dated July 11, 2017, among Dowa, SSMRC Parent and the Joint Venture Entities, as amended, and as it may be further amended, restated, supplemented or modified from time to time.

 

“Working Capital Facility” shall mean the Working Capital Facility Agreement, dated May 30, 2019, among Dowa, SSMRC Parent, and the Joint Venture Entities, as it may be amended, restated, supplemented or modified from time to time.

 

2

 

1.2.                            Section 4.1 is of the Partner Agreement is hereby amended by adding the following to the end thereof:

 

“As of May 30, 2019, the Partners have the following Participating Interests in each of the Corporation and OpCo:

 

	
Dowa
    	
48.518%
    
	
 
    	
 
    
	
SSMRC Parent
    	
51.482%”
    

 

 

1.3.                            Section 5.3 of the Partner Agreement is hereby amended by adding the following Section 5.3(b) immediately following Section 5.3(a):

 

“(b)                           Dowa will have the right to designate one individual to be seconded to the Corporation for the purpose of monitoring the Los Gatos Project’s financial situation, including, without limitation, accounting, tax and cashflow, until the later of: (i) repayment in full of the Working Capital Facility; and (ii) receipt by Dowa of the Priority Distribution Payment (as defined in the Priority Distribution Agreement).  Such individual will have full access to all information relating to the Los Gatos Project’s operations at both the mine site and the Chihuahua office.  All costs associated with such individual’s secondment to the Corporation will be borne by the Los Gatos Project.”

 

1.4.                            Section 12.1 of the Partner Agreement is hereby amended by adding the following Section 12.1(e) immediately following Section 12.1(d):

 

“(e)                            Notwithstanding any provision of this Partner Agreement, including Sections 6.1, 6.8, 8.1 and 10.1, upon a default by SSMRC Parent, the Corporation, OpCo, or EmployerCo, under this Agreement or a default under the Term Loan Agreement, the Working Capital Facility or the SSMRC Guarantees, in each case that is not cured within the applicable cure period, if any, Dowa may, by notice in writing to SSMRC Parent: (i) permanently terminate SSMRC Parent’s rights to any future consideration under Section 12.1(c); (ii) become the new service provider to the Operator; (iii) permanently remove OpCo as the Operator and either: (1) become the new Operator; or (2) appoint a third party to act as Operator or service provider, at Dowa’s sole discretion; and/or (iv) appoint a majority of the three Managers for each of the Corporation, OpCo, and EmployerCo.  In the event that SSMRC Parent’s role as service provider to the Operator is terminated, it will remain liable for any acts or omissions up to the time of termination.”

 

1.5.                            Article 18 of the Partner Agreement is hereby amended by adding the following Section 18.11 immediately following Section 18.10:

 

“18.11 Right to Transfer

 

Notwithstanding any provision of this Partner Agreement, Dowa will have the absolute right to sell all or any portion of the Option Shares to any third party other than a Restricted Person (which, for greater certainty, will be deemed not to

 

3

 

include any Japanese mining, smelting or trading company, regardless of whether such company is considered to be a competitor of the Joint Venture Entities or any of the Parties or their affiliates) without consent of any Party if SSMRC Parent does not exercise its option under the Option Agreement on or before June 30, 2021 and pay the Exercise Price (as defined in the Option Agreement) in accordance with the terms of the Option Agreement.”

 

1.6.                            Section 19.1 of the Partner Agreement is hereby amended by adding the following Section 19.1(e) immediately following Section 19.1(d):

 

“(e)                            with respect to SSMRC Parent, any of SSMRC Parent or the Joint Venture Entities defaults in its obligations under: (i) the Term Loan Agreement; (ii) the Working Capital Facility; or (iii) the SSMRC Guarantees, and such default is not cured within the applicable cure period under such agreements, if any.

 

Section 2.  Miscellaneous

 

2.1.                            Acknowledgement.  SSMRC hereby expressly acknowledges that the transactions contemplated by the MOU constitute the last instance of Dowa agreeing to provide financial support to the LGJV that is disproportionate to its Participating Interest.

 

2.2.                            Severability.  The determination that any provision of this Amendment is invalid or unenforceable will not affect the validity or enforceability of the remaining provisions or of that provision under other circumstances.  Any invalid or unenforceable provision will be enforced to the maximum extent permitted by law.

 

2.3.                            Counterparts.  This Amendment may be executed in two or more counterparts, each of which will be deemed an original, and all of which together will constitute one agreement.

 

2.4.                            Governing Law.  This Amendment and the rights and obligations of the parties hereunder will be construed in accordance with and be governed by the internal laws of the state of New York without regard to its conflicts of laws principles.

 

2.5.                            Further Assurances.  Each party will at its own expense do, make, execute or deliver all such further acts, documents and things in connection with this Amendment as reasonably required from time to time for the purpose of giving effect thereto, all promptly upon request.

 

[Signature page immediately follows]

 

4

 

IN WITNESS WHEREOF, each of the parties hereto, by their officers duly authorized, has executed this Amendment as of the date first above written.

 

	
 
    	
MINERA   PLATA REAL, S. DE R.L. DE C.V.
    
	
 
    	
 
    
	
 
    	
By:  
    	
/s/ Roger Johnson
    
	
 
    	
 
    	
Name: 
    	
Roger Johnson
    
	
 
    	
 
    	
Title: 
    	
Treasurer
    
	
 
    	
 
    
	
 
    	
OPERACIONES   SAN JOSÉ DE PLATA S. DE R.L. DE C.V.
    
	
 
    	
 
    
	
 
    	
By:  
    	
/s/ Roger Johnson
    
	
 
    	
 
    	
Name: 
    	
Roger Johnson
    
	
 
    	
 
    	
Title: 
    	
Treasurer
    
	
 
    	
 
    
	
 
    	
SERVICIOS   SAN JOSÉ DE PLATA S. DE R.L. DE C.V.
    
	
 
    	
 
    
	
 
    	
By:  
    	
/s/ Roger Johnson
    
	
 
    	
 
    	
Name: 
    	
Roger Johnson
    
	
 
    	
 
    	
Title: 
    	
Treasurer
    
	
 
    	
 
    
	
 
    	
SUNSHINE   SILVER MINING & REFINING CORPORATION
    
	
 
    	
 
    
	
 
    	
By:  
    	
/s/ Stephen Orr
    
	
 
    	
 
    	
Name: 
    	
Stephen Orr
    
	
 
    	
 
    	
Title: 
    	
Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
DOWA   METALS & MINING CO., LTD.
    
	
 
    	
 
    
	
 
    	
By:  
    	
/s/ Toshiaki Suyama
    
	
 
    	
 
    	
Name: 
    	
Toshiaki Suyama
    
	
 
    	
 
    	
Title: 
    	
President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00314-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00314-of-00352.parquet"}]]