Document:

Exhibit 10.1

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE REDACTED PORTIONS OF THIS EXHIBIT. THE REDACTIONS ARE INDICATED WITH “*[Redacted]*”.  A COMPLETE VERSION OF THIS AGREEMENT AND EXHIBIT HAS BEEN FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION.

 

 

TERRANE METALS CORP., as Seller

 

 

and

 

 

LS-NIKKO COPPER INC., as Buyer

 

 

 

COPPER CONCENTRATE SALES AGREEMENT

 

 

 

Dated June 29, 2012

 

 

CONTENTS

 

	
ARTICLE 1
    	
INTERPRETATION
    	
1
    
	
 
    	
 
    	
 
    
	
ARTICLE 2 .
    	
CONCENTRATE SOURCE AND QUALITY
    	
8
    
	
 
    	
 
    	
 
    
	
ARTICLE 3 .
    	
QUANTITY
    	
10
    
	
 
    	
 
    	
 
    
	
ARTICLE 4 .
    	
SHIPMENT, DELIVERY AND DISCHARGE CONDITIONS
    	
11
    
	
 
    	
 
    	
 
    
	
ARTICLE 5 .
    	
TITLE AND RISK OF LOSS
    	
16
    
	
 
    	
 
    	
 
    
	
ARTICLE 6 .
    	
INSURANCE
    	
16
    
	
 
    	
 
    	
 
    
	
ARTICLE 7 .
    	
PRICE
    	
16
    
	
 
    	
 
    	
 
    
	
ARTICLE 8 .
    	
PAYMENT
    	
22
    
	
 
    	
 
    	
 
    
	
ARTICLE 9 .
    	
WEIGHING, SAMPLING, MOISTURE DETERMINATION
    	
26
    
	
 
    	
 
    	
 
    
	
ARTICLE 10 .
    	
ASSAYS
    	
27
    
	
 
    	
 
    	
 
    
	
ARTICLE 11 .
    	
FORCE MAJEURE
    	
29
    
	
 
    	
 
    	
 
    
	
ARTICLE 12 .
    	
REFEREES
    	
31
    
	
 
    	
 
    	
 
    
	
ARTICLE 13 .
    	
REPRESENTATIONS AND WARRANTIES
    	
32
    
	
 
    	
 
    	
 
    
	
ARTICLE 14
    	
MISCELLANEOUS
    	
34
    
	
 
    	
 
    	
 
    
	
SCHEDULE “A”
    	
ANTICIPATED CONCENTRATE SPECIFICATIONS
    	
40
    
	
 
    	
 
    	
 
    
	
SCHEDULE “B”
    	
UMPIRES
    	
41
    

 

 

THIS AGREEMENT is dated June 29, 2012 and made between:

 

TERRANE METALS CORP., a company duly incorporated and existing under the laws of the Province of British Columbia, Canada (“Seller”);

 

- and -

 

LS-NIKKO COPPER INC., a company duly incorporated and existing under the laws of the Republic of Korea (“Buyer”)

 

WHEREAS:

 

	
(A)
    	
Seller   owns, is developing and will produce Concentrate from the Mt. Milligan   copper-gold mine, mill and related facilities located near Fort St. James,   British Columbia, Canada (the “Mt. Milligan Project”);   and
    
	
 
    	
 
    
	
(B)
    	
Buyer   is a processor of copper-bearing raw materials, involved in the purchase of   copper concentrates and sales of refined metals.
    

 

Now therefore, in consideration of the premises and mutual covenants and agreements contained herein, the Seller agrees to sell and deliver to Buyer, and Buyer agrees to purchase from Seller, Concentrate on the following terms and conditions.

 

IT IS AGREED that:

 

ARTICLE 1           INTERPRETATION

 

1.1                                                                                 Definitions

 

Defined terms in this Agreement, which may be identified by the capitalisation of the first letter of each principal word thereof, have the meanings assigned to them in this Section 1.1.

 

	
“Affiliate”
    	
 
    	
means   in relation to a Party, a company that directly or indirectly controls or is   controlled by or is under common control of the same person which controls   such Party; and control means ownership by one company of at least fifty   percent (50%) of the voting rights of the other company.
    
	
 
    	
 
    	
 
    
	
“Agreement”
    	
 
    	
means   this Copper Concentrate Sales Agreement and includes the Schedules hereto, in   each case as amended, modified or supplemented from time to time.
    
	
 
    	
 
    	
 
    
	
“Allowed Laytime”
    	
 
    	
has   the meaning set forth in Section 4.5(a).
    
	
 
    	
 
    	
 
    
	
“Alternate Port”
    	
 
    	
has   the meaning set forth in Section 4.3(b).
    

 

 

	
“Annual Production”
    	
 
    	
means   the quantity of Concentrate produced from the Production Facility during the   Initial Period and during each Contract Year.
    
	
 
    	
 
    	
 
    
	
“Annual Quantity”
    	
 
    	
has   the meaning set forth in Section 3.1.
    
	
 
    	
 
    	
 
    
	
“Annual Schedule”
    	
 
    	
has   the meaning set forth in Section 4.1.
    
	
 
    	
 
    	
 
    
	
“Benchmark Reference Terms”
    	
 
    	
has   the meaning set forth in Section 7.8(a).
    
	
 
    	
 
    	
 
    
	
“Business Day”
    	
 
    	
means   any day other than Saturday, Sunday or a day that is a bank or public holiday   in Denver, Colorado, U.S.A., Seoul, Republic of Korea or Vancouver, British   Columbia, Canada.
    
	
 
    	
 
    	
 
    
	
“Buyer’s Receiving Agent”
    	
 
    	
means   the receiving agent at the Discharge Port appointed by the Buyer after notice   thereof has been given to the Seller.
    
	
 
    	
 
    	
 
    
	
“CIF Free Out” or “CIF FO”
    	
 
    	
means   CIF as defined in the most recent edition of INCOTERMS (2010) as published by   the International Chamber of Commerce (Paris, France) and Free Out or FO as   defined in the US DOT Maritime Administration Glossary of Shipping Terms   (May 2008).
    
	
 
    	
 
    	
 
    
	
“Concentrate”
    	
 
    	
means   flotation copper concentrates produced at and originating from the Production   Facility.
    
	
 
    	
 
    	
 
    
	
“Contract of Affreightment” or “Charter Party”
    	
 
    	
means   the contract of charter or affreightment to be entered into from time to time   between Seller and owner of the vessel chartered or hired for the shipment of   any Parcel pursuant to this Agreement.
    
	
 
    	
 
    	
 
    
	
“Contract Year”
    	
 
    	
means   a period of twelve calendar months commencing on January 1 of each year   and ending on December 31 of that year, beginning on January 1   immediately following the Start-up Date.
    
	
 
    	
 
    	
 
    
	
“Copper Payment”
    	
 
    	
means,   with respect to any particular Parcel, the product of the Payable Copper and   the Payable Copper Price applicable to such Parcel as determined pursuant to   Section 7.2.
    
	
 
    	
 
    	
 
    
	
“Copper Treatment and Refining Charges”
    	
 
    	
means   the treatment charge for each Parcel and refining charges for Payable Copper   contained therein, comprising part of the Market Related Terms.
    

 

2

 

	
“Date of Arrival”
    	
 
    	
means   with reference to:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(a)     the date on which such vessel   tenders Notice of Readiness as provided for in Section 4.6
    
	
 
    	
 
    	
 
    
	
“Deductions”
    	
 
    	
has   the meaning set forth in Section 7.7.
    
	
 
    	
 
    	
 
    
	
“Demurrage”
    	
 
    	
means   the money payable to the owner of a vessel, by Seller pursuant to the terms   of a Contract of Affreightment or Charter Party for delay in discharge of a   Parcel after the Laytime has expired and for which the owner of the vessel is   not responsible.
    
	
 
    	
 
    	
 
    
	
“Despatch”
    	
 
    	
means   the money payable by the owner of a vessel to the Seller pursuant to the   terms of a Contract of Affreightment or Charter Party if such vessel   completes discharge of a Parcel before the Laytime has expired.
    
	
 
    	
 
    	
 
    
	
“Discharge Port”
    	
 
    	
has   the meaning set forth in Section 4.2.
    
	
 
    	
 
    	
 
    
	
“ETA”
    	
 
    	
has the   meaning set forth in Section 4.12.
    
	
 
    	
 
    	
 
    
	
“Event of Force Majeure”
    	
 
    	
has   the meaning set forth in Section 11.1(a).
    
	
 
    	
 
    	
 
    
	
“Final Invoice”
    	
 
    	
has   the meaning set forth in Section 8.4.
    
	
 
    	
 
    	
 
    
	
“Final Offer”
    	
 
    	
has   the meaning set forth in Section 7.8(g).
    
	
 
    	
 
    	
 
    
	
“Final Payment”
    	
 
    	
has   the meaning set forth in Section 8.2(b).
    
	
 
    	
 
    	
 
    
	
“Finance Parties”
    	
 
    	
means   RGLD Gold AG, a corporation incorporated under the laws of Switzerland and   Royal Gold, Inc., a corporation incorporated under the laws of Delaware   and any Affiliate of either of them.
    
	
 
    	
 
    	
 
    
	
“First Contract Year”
    	
 
    	
means   the period commencing on January 1 in the year following the year in   which the Start-up Date occurs and ending on the immediately following 31   December.
    
	
 
    	
 
    	
 
    
	
“Gold Payment”
    	
 
    	
means,   with respect to any particular Parcel, the product of the Payable Gold and   the Payable Gold Price applicable to such Parcel as determined pursuant to   Section 7.3.
    

 

3

 

	
“Initial Period”
    	
 
    	
means   the period between the Start-up Date and the First Contract Year.
    
	
 
    	
 
    	
 
    
	
“Insolvency Event”
    	
 
    	
means,   in respect of any Party, any of the following events:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(a)     it is unable or admits inability to   pay its debts as they fall due, suspends making payments on any of its debts   or, by reason of actual or anticipated financial difficulties, commences   negotiations with one or more of its creditors with a view to rescheduling   any of its indebtedness;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(b)     the realizable value of its assets   is less than its liabilities;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(c)     a moratorium is declared in respect   of any of its indebtedness; or
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(d)     any expropriation, compulsory   acquisition, seizure, attachment, sequestration, distress or execution   affects all or any material part of its assets.
    
	
 
    	
 
    	
 
    
	
“Interim Price”
    	
 
    	
has   the meaning set forth in Section 7.5(c).
    
	
 
    	
 
    	
 
    
	
“Laytime”
    	
 
    	
means   the time allotted pursuant to the terms of a Contract of Affreightment or   Charter Party for discharge of a Parcel at the Discharge Port.
    
	
 
    	
 
    	
 
    
	
“LBMA”
    	
 
    	
means   the London Bullion Market Association and its successor organisation.
    
	
 
    	
 
    	
 
    
	
“LIBOR”
    	
 
    	
means   the rate per annum for deposits offered in Dollars for a period of one month   to prime banks in London interbank market as published by the British Bankers   Association in their website (www.bba.org.uk) for the applicable date.
    
	
 
    	
 
    	
 
    
	
“Local Holidays”
    	
 
    	
means   the national or customary local holidays customarily not worked by Buyer’s   Receiving Agent or the office personnel at the relevant Discharge Port and at   the Receiving Works and which holidays are notified by Buyer to Seller 30   Business Days before the beginning of the Initial Period and each Contract   Year.
    
	
 
    	
 
    	
 
    
	
“LME”
    	
 
    	
means   the London Metal Exchange, a company incorporated under the laws of England   and Wales.
    
	
 
    	
 
    	
 
    
	
“LME Grade A Settlement”
    	
 
    	
means   the cash settlement price for Grade A Copper Cathodes as published in US   Dollars in the Metal Bulletin.
    
	
 
    	
 
    	
 
    
	
“Lot”
    	
 
    	
has   the meaning set forth in Section 9.3
    
	
 
    	
 
    	
 
    
	
“Market Related Terms”
    	
 
    	
means   the Copper Treatment and Refining Charges and, if applicable, Price   Participation, which shall apply for the Initial Period and each 
    

 

4

 

	
 
    	
 
    	
Contract   Year to each Parcel delivered hereunder during such respective period as   determined in accordance with Section 7.8.
    
	
 
    	
 
    	
 
    
	
“Metal Bulletin”
    	
 
    	
means   the publication known as the “Metal Bulletin” and currently published twice a   week in London, England, by the Metal Bulletin Journals Ltd. (a subsidiary of   Metal Bulletin plc).
    
	
 
    	
 
    	
 
    
	
“Month of Arrival”
    	
 
    	
means,   with respect to each Parcel, the calendar month in which the Date of Arrival   of the vessel carrying such Parcel occurs.
    
	
 
    	
 
    	
 
    
	
“Month of Shipment”
    	
 
    	
means,   with respect to each Parcel, the calendar month of the date of the bill of   lading relating to such Parcel.
    
	
 
    	
 
    	
 
    
	
“Mt. Milligan Project”
    	
 
    	
has   the meaning set forth in Recital A.
    
	
 
    	
 
    	
 
    
	
“Notice of Readiness” or “NOR”
    	
 
    	
has   the meaning set forth in Section 4.6(a).
    
	
 
    	
 
    	
 
    
	
“Offered Terms”
    	
 
    	
has   the meaning set forth in Section 12.1.
    
	
 
    	
 
    	
 
    
	
“Office Hours”
    	
 
    	
means:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(a)     on Monday through Friday, from 09:00 to 18:00; and
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(b)     on Saturday, from 09:00 to 13:00;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
provided,   however, Office Hours shall not include Sundays, national   holidays in the Republic of Korea or Local Holidays.
    
	
 
    	
 
    	
 
    
	
“Parcel”
    	
 
    	
means   the quantity of Concentrate shipped to the Buyer to the Discharge Port in a   single vessel.
    
	
 
    	
 
    	
 
    
	
“Parties”
    	
 
    	
means,   collectively, the Buyer and Seller and “Party” means   either one of them.
    
	
 
    	
 
    	
 
    
	
“Payable Copper”
    	
 
    	
has   the meaning set forth in Section 7.2.
    
	
 
    	
 
    	
 
    
	
“Payable Copper Price”
    	
 
    	
means   the price payable for Payable Copper set forth in Section 7.2.
    
	
 
    	
 
    	
 
    
	
“Payable Gold”
    	
 
    	
has   the meaning set forth in Section 7.3.
    
	
 
    	
 
    	
 
    
	
“Payable Gold Price”
    	
 
    	
has   the meaning set forth in Section 7.3.
    
	
 
    	
 
    	
 
    
	
“Payable Metals”
    	
 
    	
means   collectively the Payable Copper, the Payable Gold and the Payable Silver.
    

 

5

 

	
“Payable Silver”
    	
 
    	
has   the meaning set forth in Section 7.4.
    
	
 
    	
 
    	
 
    
	
“Payable Silver Price”
    	
 
    	
has   the meaning set forth in Section 7.4.
    
	
 
    	
 
    	
 
    
	
“person”
    	
 
    	
means   any person, firm, company, corporation, society, trust, government, state or   agency of a state or any association or partnership (whether or not having   separate legal personality) of two or more of the above.
    
	
 
    	
 
    	
 
    
	
“Port of Loading”
    	
 
    	
means   the port selected by Seller for the loading of Concentrate on vessels for   shipment to Buyer.
    
	
 
    	
 
    	
 
    
	
“Precious Metal Refining Charges”
    	
 
    	
has   the meaning set forth in Section 7.9.
    
	
 
    	
 
    	
 
    
	
“Price Participation”
    	
 
    	
means   a variable amount, if any, to be credited to Buyer as an additional Deduction   based on variations in the Payable Copper Price, if, as and when reflected in   Benchmark Reference Terms from time to time.
    
	
 
    	
 
    	
 
    
	
“Production Facility”
    	
 
    	
means   the mine, mill concentrator and related facilities and infrastructure   (including transportation facilities) located at the Mt. Milligan Project.
    
	
 
    	
 
    	
 
    
	
“Provisional Invoice”
    	
 
    	
has   the meaning set forth in Section 8.3.
    
	
 
    	
 
    	
 
    
	
“Provisional Payment”
    	
 
    	
has   the meaning set forth in Section 8.2(a).
    
	
 
    	
 
    	
 
    
	
“Quotational Period”
    	
 
    	
has   the meaning set forth in Section 7.6.
    
	
 
    	
 
    	
 
    
	
“Receiving Works”
    	
 
    	
means   Buyer’s smelter in Ulsan, Republic of Korea.
    
	
 
    	
 
    	
 
    
	
“Referees”
    	
 
    	
has   the meaning set forth in Section 12.1.
    
	
 
    	
 
    	
 
    
	
“Rules”
    	
 
    	
has   the meaning set forth in Section 14.11(a).
    
	
 
    	
 
    	
 
    
	
“Seller’s Provisional Weight, Moisture and Assay Certificate”
    	
 
    	
has   the meaning set forth in Section 8.3.
    
	
 
    	
 
    	
 
    
	
“Shipping Documents”
    	
 
    	
has   the meaning set forth in Section 8.2(a).
    

 

6

 

	
“Silver Payment”
    	
 
    	
means,   with respect to any particular Parcel, the product of the Payable Silver and   the Payable Silver Price applicable to such Parcel as determined pursuant to   Section 7.4.
    
	
 
    	
 
    	
 
    
	
“Splitting Limits”
    	
 
    	
has   the meaning set forth in Section 10.2(c).
    
	
 
    	
 
    	
 
    
	
“Start-up Date”
    	
 
    	
means   the date when production of Concentrate at the Production Facility commences   on a commercial level as determined by Seller and notified by Seller to   Buyer.
    
	
 
    	
 
    	
 
    
	
“Submission Period”
    	
 
    	
has   the meaning set forth in Section 12.3.
    
	
 
    	
 
    	
 
    
	
“Term”
    	
 
    	
has   the meaning set forth in Section 2.3(a).
    
	
 
    	
 
    	
 
    
	
“Total Compensation”
    	
 
    	
has   the meaning set forth in Section 7.1.
    
	
 
    	
 
    	
 
    
	
“Umpire”
    	
 
    	
means,   for the Initial Period or any particular Contract Year, two of the umpires   listed in Schedule B determined in accordance with Section 10.3.
    
	
 
    	
 
    	
 
    
	
“Weather Working Day”
    	
 
    	
means   a Working Day of 24 hours during which it is possible to discharge the   Parcels at the Receiving Port without interference due to weather.
    
	
 
    	
 
    	
 
    
	
“Working Day”
    	
 
    	
means   any day at the Discharge Port excluding Saturdays PM, Sundays, national holidays in the Republic of Korea and Local   Holidays, unless used.
    

 

1.2                                                                                 Weights and Measures

 

For purpose of this Agreement, references to the following weights and measures shall have the following meanings:

 

	
“DMT”
    	
 
    	
means   a dry metric ton without any moisture content.
    
	
 
    	
 
    	
 
    
	
“ounce” or “oz”
    	
 
    	
means   a troy ounce of 31.1035 grams.
    
	
 
    	
 
    	
 
    
	
“pound”
    	
 
    	
means   sixteen ounces avoirdupois.
    
	
 
    	
 
    	
 
    
	
“ppm”
    	
 
    	
means   parts per million.
    
	
 
    	
 
    	
 
    
	
“Metric Ton” or “MT”
    	
 
    	
means   a mass equal to 1,000 kilograms or 2,204.62 pounds avoirdupois.
    
	
 
    	
 
    	
 
    
	
“unit “
    	
 
    	
means   a one hundredth part (1% or 22.0462 pounds) of a dmt.
    
	
 
    	
 
    	
 
    
	
“WMT “
    	
 
    	
means   a wet metric ton including moisture content.
    

 

7

 

1.3                                                                                 Headings

 

The division of this Agreement into Articles and Sections and the insertion of a table of contents and headings are for convenience of reference only and do not affect the construction or interpretation of this Agreement.  The terms “hereof”, “hereunder” and similar expressions refer to this Agreement and not to any particular Article, Section or other portion hereof.  Unless something in the subject matter or context is inconsistent therewith, references herein to Articles, Sections and Schedules are to Articles and Sections of and Schedules to this Agreement.

 

1.4                                                                                 Extended Meanings

 

In this Agreement words importing the singular number only include the plural and vice versa, words importing any gender include all genders and words importing persons include individuals, partnerships, associations, trusts, unincorporated organizations and corporations.  The term “including” means “including without limiting the generality of the foregoing”.

 

1.5                                                                                 Statutory References

 

In this Agreement, unless something in the subject matter or context is inconsistent therewith or unless otherwise herein provided, a reference to any statute is to that statute as now enacted or as the same may from time to time be amended, re-enacted or replaced and includes any regulations made thereunder.

 

1.6                                                                                 Currency

 

All references to currency herein, including references to “$”, “US$” or “dollars” are to the lawful money of the United States of America.

 

1.7                                                                                 Schedules

 

The following are the Schedules to, and form part of, this Agreement:

 

Schedule A           -   Concentrate Specifications

 

Schedule B            -   Umpires

 

ARTICLE 2.          CONCENTRATE SOURCE AND QUALITY

 

2.1                                                                                 Chemical and Physical Characteristics

 

(a)                                  The Concentrate will be produced from the Production Facility which is currently under development by Seller.

 

(b)                                 Seller anticipates (but does not warrant) that the Concentrate sold to Buyer shall exhibit approximately the specifications in Schedule “A”.  Buyer acknowledges that the source of the Concentrate is a new mine and plant, as a result of which the composition of the Concentrate may vary from the anticipated specifications set out in Schedule “A”. Seller shall notify Buyer from time to time of any additional information of which Seller becomes aware 

 

8

 

concerning any material changes in the expected specifications of the Concentrate from the anticipated specifications set out in Schedule “A”.

 

(c)                                  The moisture content of each Parcel shall be below the maximum limit set forth by the International Maritime Organization’s International Maritime Solid Bulk Cargoes Code or other governing publication superseding the aforementioned code and in force at the time of shipment

 

(d)                                 If Seller becomes aware that the specifications of any Parcel, or any portion thereof, deviate materially from the anticipated specifications set out in Schedule “A”, Seller or Buyer shall promptly notify the other party of the deviation and if such deviation results in a negative financial or technical impact on Buyer the Parties will promptly attempt to negotiate a mutually acceptable adjustment to reasonably compensate Buyer for such impact in accordance with customary international practice

 

2.2                                                                                 Commencement of Purchases

 

Seller’s obligation to deliver and sell Concentrate to Buyer and Buyer’s obligation to receive, purchase and pay for Concentrate from Seller under this Agreement are subject to the occurrence of, and shall commence on, the Start-up Date.  Accordingly:

 

(i)                                   Seller shall periodically notify Buyer with brief and summary details of the progress of development of the Production Facility and the then estimated Start-up Date;

 

(ii)                                commencing three (3) months prior to the then estimated Start-up Date, Seller shall notify Buyer of Seller’s then best estimate of the expected Start-up Date once every month; and

 

(iii)                             Seller shall notify Buyer promptly of the occurrence of the Start-up Date.

 

2.3                                                                                Term and Termination

 

(a)                                  This Agreement shall commence on the date first indicated above and unless terminated earlier in accordance with the terms hereof, shall terminate at the end of the 3rd Contract Year (the “Term”).  Not later than one year prior to such termination, the Parties shall meet to discuss and endeavour to agree upon the terms of a further contract to cover the purchase and sale of Concentrate beyond such termination, provided that any failure by the Parties to agree on the terms of any new contract shall not give rise to any liability or affect the termination of this Agreement as aforesaid.

 

(b)                                 Either Party may terminate this Agreement:

 

(i)                                   immediately by notice to the other Party following the occurrence of any Insolvency Event relating to the other Party; or

 

(ii)                                following any material breach of any material provision of this Agreement by the other Party if such breach has occurred and is continuing for a 

 

9

 

period of 60 Business Days after notification of such breach to the other Party.

 

ARTICLE 3.          QUANTITY

 

3.1                                                                                 Annual Quantity

 

The annual quantity of Concentrate which Seller shall deliver and sell to Buyer, and Buyer shall receive and purchase from Seller (the “Annual Quantity”), shall be 30% of Annual Production in each of the Initial Period and the first Contract Year and approximately 50,000 DMT for each of the second and third Contract Years, with the exact quantity for the second and third Contract Years to be agreed by the Parties no later than October 1 of the first Contract Year.

 

3.2                                                                                 Adjustments

 

(a)                                  If, despite Seller’s reasonable efforts, the Annual Quantity for the Initial Period or any Contract Year is not shipped by the end of such period (provided such deficiency is more than 500 DMT), then Seller shall ship such deficiency to Buyer as part of the first and to the extent necessary, subsequent Parcels shipped during the succeeding period (or, in the case of the last Contract Year, as soon as is commercially practicable in the year following the last Contract Year).  Such deficiency when so shipped shall be regarded as part of the Annual Quantity for the preceding period and all payment and other terms and conditions applicable to shipments made during the preceding period shall apply thereto. If the shortfall is 500 DMT or less, then Seller shall be considered to be in compliance with Annual Quantity and the shortfall shall be considered cancelled with no obligation on Seller to ship any deficiency in the succeeding period.

 

(b)                                 If, despite the Seller’s reasonable efforts, the total quantity of Concentrate delivered in the Initial Period or any Contract Year is in excess of the Annual Quantity for that period, then such excess quantity (provided such excess is more than 500 DMT) shall be deemed to have been shipped as part of the Annual Quantity of the succeeding period and all terms and conditions applicable to the shipments made during the succeeding period shall apply thereto and the Annual Quantity actually to be shipped in such succeeding Contract Year shall be reduced to the extent of such excess.

 

10

 

ARTICLE 4.          SHIPMENT, DELIVERY AND DISCHARGE CONDITIONS

 

4.1                                                                                 Annual Schedule

 

Seller and Buyer shall agree on the shipping schedule (the “Annual Schedule”) for each Contract Year not later than November 30th prior to each Contract Year. Shipments scheduled under the Annual Schedule will be evenly spaced throughout the Contract Year. For the Initial Period, the Annual Schedule shall be mutually agreed not later than 60 days prior to the estimated Start-up Date.  Unless otherwise agreed between the Parties in accordance this Agreement and subject to the terms of this Agreement, Seller shall deliver the Concentrate in Parcel sizes of 11,000 WMT (+/-5% for shipping tolerance only).

 

4.2                                                                                 Delivery

 

Except as set forth in the remaining provisions of this Article 4, Seller shall deliver each Parcel CIF Free Out Onsan, Republic of Korea (“Discharge Port”).

 

4.3                                                                                Discharge Port

 

(a)                                  Buyer shall be responsible for all arrangements and expenses (including, without limitation, stevedoring expenses) at the Discharge Port for discharging from the vessel to shore of each Parcel “free out”, as such discharging term is commonly referred to in the bulk shipping industry.

 

(b)                                 If the discharge of a Parcel at the Discharge Port becomes impractical through no fault of Seller or the vessel such vessel shall proceed to an alternate safe port (an “Alternate Port”) as notified by Buyer where it can safely unload the Parcel. Promptly upon the receipt of such notice from Buyer, Seller shall direct the vessel to comply with such notice, provided that the master of the vessel judges such Alternate Port to be safe. If the vessel proceeds to the Alternate Port, any additional freight and other delivery costs incurred by Seller will be paid by Buyer.

 

(c)                                  Buyer shall be responsible for any damages to the vessel caused by stevedores at the Discharge Port;

 

4.4                                                                                 Discharging Berth

 

Buyer shall nominate and guarantee one good and safe berth at the Discharge Port where vessels described in Section 0 carrying Parcels may arrive, discharge and depart always afloat.

 

4.5                                                                                 Discharging Rate; Efficient Performance

 

(a)                                  At the Discharge Port the Laytime to be allowed (“Allowed Laytime”) for the discharge of a Parcel shall be determined on the basis of:

 

(i)                                     a discharging rate as set out in Section 4.5(b); and

 

(ii)                                  the bill of lading weight of such Parcel in WMT.

 

11

 

provided that if it is not possible to discharge a Parcel because of interference due to weather or would not have been possible if work had been in progress, there shall be excluded from the Allowed Laytime the period during which the weather interfered or would have interfered with the work.

 

(b)                                 Buyer shall discharge each vessel at the average rate of *[Redacted]* per Weather Working Day. If the vessel is already on Demurrage, all time counts. In order to achieve an efficient performance in the Discharge Port, Seller shall furnish Buyer with all necessary details from the Charter Party or Contract of Affreightment.

 

4.6                                                                                 Notice of Readiness

 

(a)                                  After arrival of the vessel at the Discharge Port written Notice of Readiness (the “Notice of Readiness” or “NOR”) is to be given by the master of vessel to Buyer or Buyer’s Receiving Agent, whether in berth or not, during Office Hours that the vessel is in all respects ready to discharge the Parcel, is in free pratique and is customs cleared and has all hatches uncovered and beams, if any, removed provided same is permitted by port authorities. Time lost in waiting for the berth, if any, shall count as Laytime.

 

(b)                                 If the discharging berth is not available upon vessel’s arrival at the Discharge Port and due to such unavailability the vessel cannot enter the Discharge Port, the master of the vessel will be entitled to tender NOR during Office Hours to Buyer or Buyer’s Receiving Agent upon anchoring at the customary waiting place designated by the authority for Discharge Port. Any time lost in waiting for the berth at the Discharge Port shall count as Laytime.

 

4.7                                                                                 Laytime

 

(a)                                  Time for discharging to count from 1300 hours the same Working Day if NOR is given before noon or 0900 hours on the next Working Day if NOR is given after noon during Office Hours, whether the vessel is in berth or not, unless sooner commenced then actual time used in discharging to count. Time from 1200 hours Saturday until 0900 hours on Monday and/or between 1800 hours on the last Working Day preceding a holiday until 0900 hours the next Working Day shall not count as Laytime unless used, if used actual time to count.

 

(b)                                 Once the vessel is on Demurrage, she shall remain on Demurrage until completion of discharging.  However, if there is any delay due to vessel’s inability to discharge during the Demurrage period, then to the extent such delay is attributable to the fault of the vessel, such time lost shall not count as Demurrage time.

 

(c)                                  Shifting time from anchorage to the berth shall not count as Laytime, unless vessel is already on Demurrage.  Similarly time lost in moving on or off a berth or from one berth to another shall not count as Laytime unless movement from one berth to another berth is requested by Buyer. Time used for initial, intermediate (if any) and final draft survey shall not count as Laytime.

 

12

 

(d)                                 Vessel shall open and close hatches and remove and replace beams at the vessel’s risk and expense, provided same is permitted by port authorities, in which case the time used for such purpose shall not count as Laytime.

 

(e)                                  If a Parcel is carried on the same vessel together with other cargo to be unloaded at the Discharge Port belonging to other shipper(s) (such other cargo and the Parcel, each referred to in this Section 4.7(e) only as a ‘shipment’). If the discharge of the first shipment is completed during Office Hours Laytime for the discharge of the second shipment shall commence two hours after completion of discharge of the first shipment unless discharging of the second shipment is sooner commenced. If the discharge of the first shipment is completed after Office Hours, Laytime for the second shipment shall commence at 0800 hours on the next Working Day, unless sooner commenced, in which case actual time used shall count as Laytime used. Any waiting time for berth at the Discharge Port shall be prorated between each shipper based on the quantity of each shipment the vessel is carrying for that specific Discharge Port.

 

(f)                                    Any time lost in discharging of a Parcel on account of repairing the carrying vessel’s gears/equipment or due to the fault of the vessel owner, vessel master or their agents shall not count as Laytime or time on Demurrage.

 

4.8                                                                                 Demurrage and Despatch

 

(a)                                  The applicable Demurrage/Despatch rates shall be as per Seller’s Charter Party or Contract of Affreightment and Seller shall provide an extract of such Charter Party or Contract of Affreightment with the vessel owner to Buyer referencing applicable Demurrage/Despatch rates for the purpose of calculating the Demurrage/Despatch amount. Such Demurrage/Despatch rates shall be in line with the market standard rates applied by similar vessels carrying copper concentrates on similar voyages.

 

(b)                                 If a Parcel is not discharged from the vessel within the Allowed Laytime, Demurrage shall be payable by Buyer to Seller calculated per running day of 24 hours (fractions pro rata).

 

(c)                                  Notwithstanding Section 4.8(a), Seller shall pay Buyer Despatch for Laytime saved at the Discharge Port in relation to the shipment of any Parcel, calculated per running day of 24 hours (fractions pro rata) at half of the Demurrage rate.

 

(d)                                 The Despatch/Demurrage amounts relating to a Parcel shall be paid by issuing a separate invoice.

 

Vessel Characteristics

 

(e)                                  For delivering Concentrate to the Discharge Port hereunder, vessels chartered by Seller shall be single deck bulk carriers, shall be classed 100-A1 at Lloyds Register of Shipping or its replacement, shall be no more than 20 years old, shall not have shaft tunnels in the hold, and shall have clear holds and hatchways suitable for normal grab discharge.  No cargo shall be loaded in 

 

13

 

deep tanks, in tweendecks, in bridge space, or any place not easily accessible to grabs.

 

(f)                                    If the gears of the vessel are not working in accordance with the specifications provided by the vessel’s owner, Seller shall ask Korean shipping agent to appoint a competent independent surveyor to assess the additional costs incurred in completing the discharge. After receiving such independent surveyor’s certificate about additional expenses incurred, such amount claimed by Korean shipping agent will be settled by Seller.

 

(g)                                 In no event shall any other cargo (including copper concentrates) be stowed in the same hold as any Parcel or fraction thereof.

 

(h)                                 The vessel shall conform to International Safety Management Code (ISM Code) standards. Seller shall not charter a vessel from any shipping company if Seller reasonably believes that, because of its financial condition, there is reasonable doubt about the ability of such company to carry out the normal execution of its shipping obligations.

 

4.9                                                                                 Overtime

 

Subject to the other provisions in this Section 4.9, any overtime with respect to discharge of a Parcel at the Discharge Port shall be for the account of the Party ordering the same. Officers of the vessel and crew’s overtime shall always be for Seller’s account. If overtime is ordered by Discharge Port authorities or their representatives, Seller shall pay all overtime expenses incurred as a result thereof.  If local labour regulations at Discharge Port prevent the vessel’s crew from opening/closing hatches and removing/replacing beams, such duties will be performed by agents for Buyer at its own cost and the time so used shall not count as Laytime.

 

4.10                                                                           Miscellaneous

 

(a)                                  Seller shall hold Buyer free and harmless from all port charges, harbour dues, fairway dues, pilotage, crew’s expense, light dues and all other charges and dues calculated on vessel and customarily paid by vessel or shipowner at the Discharge Port, except those incurred due to the negligence or wilful misconduct of Buyer. Buyer shall hold Seller free and harmless from all charges and dues calculated on Parcels and customarily paid by buyers at the Discharge Port.

 

(b)                                 Seller will ensure that, without cost to Buyer, each vessel provides all necessary onboard lights for night discharging; and

 

(c)                                  Upon the completion of discharge, Buyer shall arrange for vessel ́s holds from which the Parcel was discharged to be cleaned to a degree which is normally grain clean.

 

4.11                                                                           Shipping Information and Nomination of Vessel

 

At the time a vessel is nominated by Seller for shipment of a particular Parcel hereunder Seller shall notify Buyer of the following:

 

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(a)                                  the name of the vessel;

 

(b)                                 the expected dates of arrival and departure of such vessel at and from Port of Loading;

 

(c)                                  the expected tonnage of the Parcel to be loaded in the vessel;

 

(d)                                 the dimensions, draft, gear capacity, number of hooks and other details of the vessel;

 

(e)                                  estimated port rotation of the vessel;

 

(f)                                    estimated Date of Arrival; and

 

(g)                                 Despatch and Demurrage rates.

 

Seller shall obtain acceptance of the nomination of the vessel from Buyer in writing prior to finalising and booking the vessel. Buyer’s acceptance/rejection of the vessel shall be given within one Business Day from the date of notice of nomination and Buyer shall act reasonably in granting or refusing such an acceptance. Once the vessel acceptance is given, any change in the details of accepted vessel shall again be given to Buyer for acceptance. Vessel substitution shall not be done without the prior acceptance of Buyer. Such acceptance shall not be unreasonably withheld.

 

4.12                                                                           Shipping Notices

 

Not later than three Working Days after departure of each vessel from the Port of Loading, Seller shall notify Buyer of the tonnage of Concentrate loaded as per bill of lading, the indicative assays, the stowage plan, port rotation and the estimated date of arrival at the Discharge Port. Seller shall instruct the master of the vessel to give Buyer notice of the estimated time of arrival (“ETA”) at the Discharge Port 10 days, 5 days, 72 hours, 48 hours and 24 hours prior to the ETA.

 

4.13                                                                           Letter of Indemnity

 

If 1/3 original bill of lading has not been received by Buyer within 5 Business Days prior to the ETA of the vessel at the Discharge Port, Buyer shall provide to Seller a letter of indemnity signed by Buyer in the ship owner’s P&I club format upon Seller’s request, for delivery of the Parcel against non-presentation of the original bills of lading. Seller will in turn issue a back to back Letter of Indemnity in the same format to the ship owner. Any delay by Seller, master of the vessel, or vessel’s agents in performing the requirements of this Section 4.13 shall not count as Laytime or time on Demurrage.

 

4.14                                                                           Transhipment to Receiving Works

 

All Concentrate delivered to Buyer under this Agreement shall be smelted at the Receiving Works.  Buyer will arrange for, and assumes and will pay for all costs, risks, expenses and liabilities with respect to, the handling, storage, weighing, and sampling of each Parcel following its discharge from the vessel at the Discharge Port and with respect to the transhipment thereof from the Discharge Port to the Receiving Works.

 

15

 

ARTICLE 5.          TITLE AND RISK OF LOSS

 

5.1                                                                                 Seller’s Warranties on Title

 

Seller has good and marketable title to the Concentrate, free and clear of all liens and encumbrances other than any lien or encumbrance on such Concentrate for the benefit of the Finance Parties.  Upon transfer of title to a particular Parcel to Buyer in accordance with Section 5.2, Buyer shall receive good and marketable title to such Parcel, free and clear of all liens and encumbrances.

 

5.2                                                                                 Title and Risk of Loss

 

Risk of loss of, or damage to, a Parcel passes from Seller to Buyer as that Parcel passes over the vessel’s rail at the Port of Loading.  Title to a Parcel shall pass from Seller to Buyer upon Seller’s receipt of the Provisional Payment for such Parcel.

 

ARTICLE 6.          INSURANCE

 

Seller shall obtain and pay for insurance for each Parcel to be effective from the time such Parcel passes the ship’s rail at the Port of Loading until completion of discharge at the Port of Discharge.  Such insurance shall cover 110% of the Provisional Invoice amount, subject to adjustment to 110% of Final Invoice amount and shall insure against all risks (as that term is generally understood in the industry), including wars, S.R.&C.C. (strikes, riot, civil commotion clause), spontaneous combustion, fire, and malicious damage, including Institute Cargo Clauses (A), Institute War Clauses (Cargo), Institute Strike Clauses (Cargo) to the extent commercially available. In case of valid claims, the Seller and Buyer shall extend co-operation to each other for settlement of such claims.

 

ARTICLE 7.          PRICE

 

7.1                                                                                 Compensation for Concentrate

 

The total compensation payable by Buyer to Seller for each Parcel (“Total Compensation”) shall equal:

 

(a)                                  the sum of the Copper Payment, Gold Payment and Silver Payment; less

 

(b)                                 the Deductions

 

relating to such Parcel.

 

7.2                                                                                 Payable Copper and Payable Copper Price

 

(a)                                  The “Payable Copper” in each DMT of Concentrate shipped hereunder shall be:

 

	
Copper Content
    	
 
    	
Payable Copper
    
	
*[Redacted]*
    	
 
    	
*[Redacted]*
    
	
*[Redacted]*
    	
 
    	
*[Redacted]*
    

 

16

 

(b)                                 If the copper concentrate of a Parcel is *[Redacted]* the Parties will negotiate an appropriate adjustment to the Payable Copper to fairly reflect any negative financial or technical impact on Buyer attributable to the lower copper content.

 

(c)                                  The Payable Copper shall be priced at the average (calculated to two decimal points) of the daily official LME Grade A Settlement quotations for copper quoted in Dollars, as published in the Metal Bulletin during the applicable Quotational Period but corrected to the official quotations in the event of printing errors (the “Payable Copper Price”).

 

7.3                                                                                 Payable Gold and Payable Gold Price

 

(a)                                  If the gold content of a Parcel is less than *[Redacted]* gram per DMT (“g/DMT”), there will be no Payable Gold with respect to such Parcel.  If the gold content of a Parcel is *[Redacted]* g/DMT or more, then the Payable Gold with respect to such Parcel shall be that percentage of the gold content of each Parcel determined as follows (“Payable  Gold”):

 

	
Gold Content
    	
 
    	
 
    	
 
    	
Payable Gold
    
	
*[Redacted]* g/DMT or more but less than *[Redacted]* g/DMT
    	
 
    	
—
    	
 
    	
*[Redacted]*%
    
	
*[Redacted]* g/DMT or more but less than *[Redacted]* g/DMT
    	
 
    	
—
    	
 
    	
*[Redacted]*%
    
	
*[Redacted]* g/DMT or more but less than *[Redacted]* g/DMT
    	
 
    	
—
    	
 
    	
*[Redacted]*%
    
	
*[Redacted]* g/DMT or more but less than *[Redacted]* g/DMT
    	
 
    	
—
    	
 
    	
*[Redacted]*%
    
	
*[Redacted]* g/DMT or more but less than *[Redacted]* g/DMT
    	
 
    	
—
    	
 
    	
*[Redacted]*%
    
	
*[Redacted]* g/DMT or more but less than *[Redacted]* g/DMT
    	
 
    	
—
    	
 
    	
*[Redacted]*%
    
	
*[Redacted]* g/DMT or more but less than *[Redacted]* g/DMT
    	
 
    	
—
    	
 
    	
*[Redacted]*%
    
	
*[Redacted]* g/DMT or more
    	
 
    	
—
    	
 
    	
*[Redacted]*%
    

 

(b)                                 Payable Gold shall be priced at the average of the daily LBMA “Initial” and “Final” fixing prices for gold quoted in Dollars, as published in Metal Bulletin during the applicable Quotational Period, but corrected to the official quotations in the event of printing errors (the “Payable Gold Price”).

 

7.4                                                                                 Payable Silver Payment and Payable Silver Price

 

If the silver content of a Parcel is less than *[Redacted]* g/DMT there will be no Silver Payment with respect to such Parcel.  If the silver content of a Parcel is *[Redacted]* g/DMT or more, 

 

17

 

Buyer shall pay for *[Redacted]*% of the contained silver in each such Parcel (“Payable Silver”) at a price equal to the average of the daily London Spot fine silver spot quotations for silver quoted in Dollars, as reported by the LMBA and published in Metal Bulletin during the applicable Quotational Period, but corrected to the official quotations in the event of printing errors (the “Payable Silver Price”).

 

7.5                                                                                 Alternate Pricing

 

(a)                                  Reference Price No Longer Published or Representative

 

If:

 

(i)                                   Metal Bulletin ceases to be published, or ceases to publish any quotation referred to in this Section for determining the prices for copper, gold and/or silver;

 

(ii)                                the LME has ceased to quote a price for copper or the LBMA has ceased to quote a fixing price for gold and/or silver, as the case may be; or

 

(iii)                             the quotations are no longer representative of the value then being obtained by non-integrated mines for copper, gold and silver contained in copper concentrates,

 

then upon written notice by Seller or Buyer to the other, Seller and Buyer shall promptly consult with each other with a view toward determining a new reference price consistent with the previous method for determining the Payable Copper Price, Payable Silver Price and Payable Gold Price, as the case may be, with respect to the Concentrate to be sold hereunder.  If within 60 days after the date of any notice for consultation pursuant to Section 7.5(a), Seller and Buyer shall not have agreed on an alternate basis for determining the reference price of copper, gold and/or silver, as the case may be, either Seller or Buyer shall have the right to refer the matter to the Referee for resolution in accordance with Article 12.

 

(b)                                 Quotation Currency

 

The prices of copper, gold and/or silver, if quoted in any currency other than Dollars by Metal Bulletin, shall be converted into Dollars using the average daily rate published by the Federal Reserve Board of the United States over the applicable Quotational Period for the purchase of Dollars using the currency quoted in Metal Bulletin. The average price for any such Quotational Period shall be calculated by totalling the Dollar equivalents of the daily prices and dividing such total by the number of pricing days in such period.

 

(c)                                  Interim Invoicing

 

If either Party notifies the other pursuant to Section 7.5(a), Seller shall then have the right by written notice to Buyer to invoice provisionally at the applicable price(s) applied to the last previous Parcel sold hereunder prior to such written notice (the “Interim Price”) and Buyer shall thereafter pay on the basis of the Interim Price until:

 

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(i)                                     Seller and Buyer shall agree on a reference price for the metal(s) concerned; or

 

(ii)                                  the Referee has finally determined the reference price(s) as provided in Section 7.5(a),

 

whichever event shall first occur.

 

Once agreement is reached or determination is made by the Referee any Parcels which were invoiced provisionally based on the Interim Price shall be promptly re-invoiced based on the new pricing basis for the metal(s) concerned.

 

7.6                                                                                 Quotational Periods

 

The quotational period with respect to Payable Metals in any Parcel shall be (i) for copper, *[Redacted]* and (ii) for gold and silver, *[Redacted]* (each, a “Quotational Period”).

 

7.7                                                                                 Deductions

 

The deductions (the “Deductions”) applicable to each Parcel shall be equal to the sum of the following:

 

(a)                                  Copper Treatment and Refining Charges;

 

(b)                                 Precious Metal Refining Charges

 

(c)                                  penalties, if any are mutually agreed by the Parties; and

 

(d)                                 Price Participation (if applicable as part of the Benchmark Reference Terms).

 

7.8                                                                                 Market Related Terms

 

(a)                                  With the exception of the Initial Period, Seller and Buyer shall negotiate in good faith and agree on the Market Related Terms for each Contract Year by December 31 of the immediately preceding Contract Year, or later if Benchmark Reference Terms for that Contract Year are unknown by that date.  For the Initial Period, Seller and Buyer shall negotiate in good faith and agree on the Market Related Terms no later than 90 calendar days prior to the Start-up Date based on Benchmark Reference Terms for the year in which the Start-up Date occurs. The Market Related Terms for the Initial Period and for each Contract Year (as agreed by Seller and Buyer or determined by the Referee(s) in accordance with this Section 7.8 and Article 12) shall be  Copper Treatment Charge, Copper Refining Charges and Copper price participation if applicable in line with the applicable terms annually negotiated and generally acknowledged as benchmark terms (including, to the extent relevant, price participation) (“Benchmark Reference Terms”) for the calendar year in which the Initial Period occurs, in the case of the Initial Period, and otherwise for the calendar year of the applicable Contract Year, *[Redacted]* or such other source as may be agreed by Buyer and Seller. For such purpose, consideration shall not be given to contracts between buyers and sellers of copper concentrates in which one party is a majority owner of or is able to 

 

19

 

exercise control over the other, or to terms or special elements contained in contracts that are the product of the debt or equity financing arrangements for the particular mine or smelter involved.

 

(b)                                 Market Related Terms for the Initial Period and for a Contract Year shall be applicable to the entire Annual Quantity to be delivered in that Initial Period or Contract Year. The Market Related Terms for the Initial Period and for a Contract Year agreed to in accordance herewith shall be promptly recorded in an addendum to this Agreement and such addendum shall thereupon form part of this Agreement and be binding upon Buyer and Seller.

 

(c)                                  Should the Benchmark Reference Terms for a relevant period not be quoted by the sources referred to in Section 7.9(b) or should the Benchmark Reference Terms for a relevant period be quoted differently by any of such sources, then Buyer and Seller shall in good faith exchange information from other relevant sources to determine the Benchmark Reference Terms to be referenced for that period. If the Parties fail to agree within 30 days of Buyer or Seller commencing such exchange, then the determination of the Benchmark Reference Terms (but only for the relevant period) shall be submitted to the Referee(s) for resolution pursuant to Article 12.

 

(d)                                 If Seller and Buyer have not agreed the Market Related Terms by:

 

(i)                                   in the case of the Initial Period, the Start-up Date; or

 

(ii)                                in the case of any Contract Year, by April 30 of such Contract Year, then the determination of the Benchmark Reference Terms (but only for the relevant period) shall be submitted to the Referee(s) for resolution pursuant to Article 12.

 

(e)                                  If Buyer and Seller have not reached an agreement on Market Related Terms for the Initial Period, then a provisional Copper Treatment and Refining Charge (and, if applicable, Price Participation as per the Benchmark Reference Terms) as determined by Seller will be used for invoicing and payment purposes on an interim basis until such time as the Market Related Terms have been agreed between Buyer and Seller or determined by the Referee(s).

 

(f)                                    Until such time as the Market Related Terms for a Contract Year are known and agreed upon between the Seller and Buyer or determined by a Referee(s), the Market Related Terms applicable during the most recent Contract Year for which such terms have been agreed or determined hereunder, (or in the case of the First Contract Year, the Market Related Terms for the Initial Year) shall be used for invoicing and payment purposes on an interim basis.

 

(g)                                 If any matter is to be referred to the Referee(s) in accordance with Section 7.8(e) or Section 7.8(f), prior to selection of Referee(s) pursuant to Section 12.1, Seller and Buyer shall exchange notices setting forth their final offer with respect to the Market Related Terms in question (the “Final Offer”) provided that if one Party has delivered its Final Offer to the other and the other has not 

 

20

 

delivered its Final Offer to the first Party within 10 days, then the first Party can then submit the matter to Referee(s).

 

(h)                                 Once agreement is reached or determination made by Referee(s) on the Market Related Terms for a relevant period, any shipments of Parcels forming part of the Annual Quantity for that period already invoiced on an interim basis shall be promptly re-invoiced based on the agreed or determined Market Related Terms for that period. Any payments required to be made by one party to the other pursuant to such re-invoicing shall be made within five Business Days after the date such revised invoices are issued.

 

(i)                                     Alternatively, under favourable forward copper price spreads the Parties may agree in writing to fix Deductions for specified purposes without reference to Market Related Terms.

 

7.9                                                                                 Precious Metal Refining Charges

 

The following silver and gold refining charges (the “Precious Metal Refining Charges”) shall apply to the Payable Silver and Payable Gold in each Parcel:

 

(a)                                  The silver refining charge will be fixed at US$*[Redacted]* per ounce of Payable Silver throughout the Term;

 

(b)                                 *[Redacted]*

 

7.10                                                                           *[Redacted]*

 

21

 

ARTICLE 8.          PAYMENT

 

8.1                                                                                 Manner of Payment

 

All payments by Buyer for Concentrates sold hereunder shall be made in Dollars in immediately available and freely transferable funds by means of an irrevocable Letter of Credit to the account designated by Seller. Such Letter of Credit shall be opened by first class banks acceptable to Seller and shall be negotiable in any bank. Buyer shall submit the name of the first class opening bank to Seller’s approval prior to the Letter of Credit issuance. In case the bank presented by Buyer is not acceptable to Seller, then Buyer shall immediately propose an alternative first class bank to be approved by Seller.

 

8.2                                                                                 Payment of Total Compensation

 

Total Compensation for each Parcel shall be paid by Buyer in two stages as follows:

 

(a)                                  Buyer shall make a provisional payment of 90 per cent of the Provisional Invoice value (the “Provisional Payment”) no later than the third Business Day after the Date of Arrival against the following documents (“Shipping Documents”:

 

(i)                                     Seller’s original Provisional Invoice the amount of which shall be calculated in accordance with Section 8.3;

 

(ii)                                  2/3 of original, clean on board ocean bills of lading blank endorsed marked ‘freight prepaid’ or ‘payable as per Charter Party’;

 

(iii)                               original insurance certificate drawn in accordance with Article 6;

 

(iv)                              Seller’s Provisional Weight, Moisture and Assay Certificate; and

 

(v)                                 Seller’s certificate of origin

 

The remaining of 1/3 of clean on board bill of lading shall be sent by Seller to Buyer via courier one week before vessel’s arrival at Port of Discharge.

 

(b)                                 Buyer shall make a final payment equal to the amount, if any, by which Total Compensation exceeds the amount of the Provisional Payment on or before the fifth Business Day after receipt by Buyer of Seller’s Final Invoice by facsimile or e-mail as contemplated in Section 8.4 (the “Final Payment”).

 

8.3                                                                                 Provisional Invoice

 

For purposes of the Provisional Payment relating to any Parcel, Seller shall provide to Buyer a provisional invoice reflecting the Seller’s calculation of the provisional Total Compensation based on (a) provisional weights, moisture content and assays as determined by Seller at Port of Loading for the particular Parcel as set out in Seller’s provisional weight, moisture and assay certificate (the “Seller’s Provisional Weight, Moisture and Assay Certificate”), (b) the Deductions then in effect and (c) a calculation of provisional Payable Metal Prices using the average of the Payable Copper Price, the Payable Gold Price and the Payable Silver Price for 

 

22

 

the most recent five consecutive Business Days prior to the on board bill of lading date for which published prices are available (“Provisional Invoice”).

 

8.4                                                                                 Final Invoice

 

For purposes of the Final Payment, Seller shall submit to Buyer its final invoice for each Parcel by facsimile or e-mail promptly after all final prices and dry weights and assays applicable to such Parcel shall have been determined in accordance with Article 7, Article 9, and Article 10 (the “Final Invoice”) and shall concurrently mail to Buyer the original Final Invoice.

 

8.5                                                                                 Refund of Overpayment

 

If the Total Compensation as shown on Seller’s Final Invoice is less than the amount of the Provisional Payment with respect to any Parcel, the amount of the difference shall be paid by Seller to Buyer not later than the fifth Business Day after Seller has transmitted its Final Invoice to Buyer, by electronic transfer to Buyer at such bank account as Buyer may direct.

 

8.6                                                                                 Late Payment

 

In the event that any payment under this Agreement is not made on the due date thereof, such payment shall bear interest at the rate of *[Redacted]* including the first day of such period to but excluding the last date of such period and shall be calculated on the basis of a 360-day year.

 

8.7                                                                                 Taxes, Tariffs and Duties

 

All taxes (excluding income taxes), duties, commissions and charges in Canada shall be for Seller’s account and taxes (excluding income taxes), duties, commissions and charges outside Canada shall be for Buyer’s account.

 

8.8                                                                                 Letter of Credit

 

At least three (3) weeks prior to the estimated time of arrival of the delivery vessel at the load port, the Seller shall submit to the Buyer a proforma invoice that shall state the estimated value of the shipment based on:

 

a)  expected dry metric tons to be shipped

b)  estimated metal assays of the material to be shipped

c)  the average of the daily quotations for copper, gold and silver for the calendar week prior to the date of the proforma invoice.

 

At least ten (10) days prior to the estimated time of arrival of the delivery vessel at the load port as advised by the Seller to the Buyer, the Buyer shall establish and deliver to the Seller a Letter of Credit in an amount not less than one hundred (100%) of the value of the proforma invoice submitted by the Seller.  Said Letter of Credit shall be:

 

a)  irrevocable;

b)  in a form acceptable to the Seller:

c)  issued by a first class bank in Korea, allowing confirmation and freely negotiable.  The Seller may request that the Buyer arrange confirmation by a bank acceptable to the Seller.  In such case, any confirmation costs shall be for the Seller’s account.

 

23

 

d)  The L/C shall consider a variation of +/- 10% in the amount and +/-10% in the quantity

 

The letter of credit is to remain valid until Total Compensation for that Parcel is paid as per the terms of this Agreement and Buyer undertakes to increase the letter of credit to provide for final payment if required by Seller. All bank charges relating to such letter of credit shall be for Buyer’s account, except those for negotiation and advices charged by the banks appointed by Seller. The foregoing letter of credit is intended as security for Payment of the Total Compensation for each Parcel, not as a payment mechanism, and accordingly Seller shall not draw on such Letter of Credit unless Buyer has defaulted in making any payment with respect to a Parcel hereunder.

 

8.9                                                                                 Total and Partial Loss/Damage

 

(a)                                  Extent of Loss and/or Damage

 

(i)                                     In the event of any total or partial loss and/or damage to a Parcel either Party shall forthwith report such loss and/or damage to an independent inspection agency mutually appointed by the Parties to determine the extent of loss and/or damage. In the event the Parties fail to appoint an independent inspection agency then such an independent inspection agency shall be appointed by Seller. Such an appointed independent inspection agency shall issue a certificate specifying the extent of loss and/or damage and specifying if it is a total loss and/or damage or partial loss and/or damage. The cost of issuing such a certificate is to be shared equally between Buyer and Seller.

 

(ii)                                  The total or partial loss of and/or damage to a Parcel shall be dealt by the Parties in accordance with the provisions of this Section 0.

 

(b)                                 Total Loss/Damage

 

(i)                                     In the event of total loss of/damage to a Parcel before the transfer of risk of loss to the Buyer as per Section 5.2, no payment will be required from Buyer. All monies received pursuant to the insurance policies maintained by Seller in accordance with Article 6 shall accrue to Seller in this case.

 

(ii)                                  In case of total loss of/damage to a Parcel after the transfer of risk of loss to the Buyer as per Section 5.2, Provisional Payment shall be made by Buyer in accordance with Article 8. Final settlement shall be made and final invoice paid by Buyer according to Article 8, as soon as all necessary details are available based on shipped weights, moistures and assays. All monies received in relation to such total loss of a Parcel pursuant to the insurance policies maintained in accordance with Article 6 shall accrue to Buyer in this case.

 

(c)                                  Partial Loss

 

(i)                                     In case of partial loss of a Parcel before the transfer of risk of loss to the Buyer as per Section 5.2, then the insurance claim for the partially lost 

 

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Parcel shall accrue to Seller and Buyer shall pay for the quantity actually received by it at the Receiving Works. The provisional value of the Parcel actually received shall be determined by reference to the Provisional Invoice value and prorating the total quantity of Concentrate shipped as per the Provisional Invoice to the quantity of Concentrate determined to be lost. In case any Advance Payment has been paid by Buyer and received by Seller in connection with a Parcel that is partially lost, then the amount of the Advance Payment paid in connection with the Concentrate that are lost shall be claimed in full by Buyer by raising a debit note. This amount of such Advance Payment shall be paid by the Seller to Buyer within thirty (30) Business Days of receipt by Seller of the debit note from Buyer. Final settlement shall be made and final invoice paid by Buyer to Seller according to Section 8.5, as soon as all necessary details are available based on received weights and moistures according to Article 9 and assays as per Article 10 and after taking into account the Concentrate which is lost.

 

(ii)                                  In case of partial loss of a Parcel after the transfer of risk of loss to the Buyer as per Section 5.2, then Provisional Payment shall be made by Buyer to Seller in accordance with Article 8. All monies received in relation to such partial loss of Parcel pursuant to the insurance policies maintained in accordance with Article 6 shall accrue to Buyer in this case. Final settlement shall be made and final invoice paid by Buyer to Seller according to Article 8. In the event of partial loss of Parcel the final settlement shall be made on the basis of Seller’s weights and moisture determined at Port of Loading and governing assays for the part of Parcel that arrived safely.            .

 

(d)                                 Partial Damage

 

(i)                                     In case of partial damage to a Parcel before the transfer of risk of loss to the Buyer as per Section 5.2, Buyer shall pay for the quantity of undamaged Parcel received in usable condition at the Discharge Port. The provisional value of the Parcel undamaged shall be determined by reference to the Provisional Invoice value and prorating the total quantity of Concentrate shipped as per the Provisional Invoice to the quantity of Concentrate determined to be damaged. In case any Advance Payment has been paid by Buyer and received by Seller in connection with the Parcel that was damaged, then such amount paid shall be claimed in full by Buyer by raising a debit note. This amount of such Advance Payment shall be paid by Seller to Buyer within thirty (30) Business Days of receipt by Seller of the debit note from Buyer. Final settlement shall be made and final invoice paid by Buyer to Seller according to Article 8, as soon as all necessary details are available based on weights and moistures of the undamaged Parcel at Receiving Works as per Article 9 and assays as per Article 10.

 

(ii)                                  In case of partial damage to a Parcel after the transfer of risk of loss to the Buyer as per Section 5.2, Provisional Payment shall be made by Buyer to Seller in accordance with Article 8.  All monies received in relation to such partial damage of Parcel pursuant to the insurance policies maintained in

 

25

 

accordance with Article 6 shall accrue to Buyer in this case. Final settlement shall be made and final invoice paid by Buyer to Seller according to Article 8. In the event of partial damage  to Parcel of Concentrates the final settlement shall be made on the basis of Seller’s weights and moisture determined at Port of Loading and governing assays for the part of Parcel that arrived safely

 

(e)                                  In the case of valid insurance claim made by either Party pursuant to this Section 0, the Parties shall extend co-operation to each other for settlement of such claims.

 

ARTICLE 9.          WEIGHING, SAMPLING, MOISTURE DETERMINATION

 

9.1                                                                                 General Procedure

 

(a)                                  Weighing, sampling, assaying and moisture determination for each Parcel shall be carried out by Buyer at Buyer’s expense upon delivery of the Parcel to the Discharge Port by method which is customarily employed by Buyer.

 

(b)                                 Buyer shall take all reasonable precautions to prevent handling or other losses of Concentrate between delivery and the point of weight determination.

 

(c)                                  Seller, at its own expense, shall be entitled to be represented at the discharge, weighing, sampling and determination of moisture by an independent surveyor or representative acceptable to Buyer, such acceptance not to be unreasonably withheld.  Failure of Seller’s representative to be present on any occasion after receipt of reasonable notice from Buyer shall constitute a waiver of Seller’s rights of representation on that occasion only.

 

9.2                                                                                 Determination of Dry Weight and Moisture

 

The dry weight and moisture as determined pursuant to Section 9.1 shall govern for the purpose of final settlement of the Total Compensation for each Parcel.

 

9.3                                                                                 Sampling Lot Size

 

For the purposes of sampling each Parcel shall be divided into separate lots (each a “Lot”) of approximately 500 WMT each and samples shall be taken from each such lot.

 

9.4                                                                                 Number and Handling of Samples

 

The sample taken from each Lot shall be divided into six equal parts: two for Seller, two for Buyer, and two for reserve. The reserve samples shall be sealed and retained by Seller’s appointed representative.

 

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9.5                                                                                 Composite Samples

 

If and when the Parties agree on any penalties, for the purpose of conducting any analysis for penalty elements, six sets of composite samples shall be taken from the Lots making up each Parcel, two for the Seller, two for Buyer and two for reserve. The reserve samples shall be retained by Seller’s appointed representative.

 

ARTICLE 10.       ASSAYS

 

10.1                                                                           Copper, Gold and Silver and Penalty Elements

 

The copper, gold, silver and penalty elements (if any) contained in each Parcel shall be determined in accordance with this Article.

 

10.2                                                                           Method for Determining Final Analysis

 

(a)                                  From the Lot samples taken in accordance with Article 9, assays for copper, gold and silver respectively, shall be made independently by Seller and Buyer and the results of such assays shall be exchanged simultaneously on a Lot-by-Lot basis by courier within 60 days from the date the samples are taken and sealed. If one Party fails to so exchange its assay results, the assay results of the other Party shall be deemed to be conclusive, provided that if such failure is due to valid and justifiable reason, then upon the request of such Party, the other Party shall, in good faith, consider extension of time limit for exchanging the assays.

 

(b)                                 Determination for gold and silver assays shall be made in accordance with fire assay methods corrected for slag loss and cupel absorption. Umpires, when required, shall be instructed accordingly.

 

(c)                                  The mean of the Parties’ assay results for each Payable Metal shall be final and binding upon the Parties, if the differences between them are within the following limits (“Splitting Limits”):

 

	
*[Redacted]*
    	
*[Redacted]*
    
	
*[Redacted]*
    	
*[Redacted]*
    
	
*[Redacted]*
    	
*[Redacted]*
    

 

The Splitting Limits for any agreed penalty elements shall be mutually agreed between the Parties at such time as they agree on any penalty elements.

 

(d)                                 All assays (including umpire assay) shall show copper content to 1/100th of one percent, silver content to the nearest one gram and gold content to the nearest 1/10th of a gram per DMT.

 

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10.3                                                                           Designation of Umpire

 

(a)                                  If the difference between the results of the Buyer’s and Seller’s assays described in Section 10.2 exceeds the applicable Splitting Limit, then either Seller or Buyer shall have the right, exercisable by notice to the other, to refer the matter in rotation Lot by Lot, to one of the designated Umpires.

 

(b)                                 The first two Umpires listed in Schedule “B” shall be designated for this purpose until the end of the First Contract Year and thereafter Seller and Buyer shall jointly designate two of the Umpires to act as such for each successive Contract Year.

 

(c)                                  The list of Umpires in Schedule “B” shall be regularly updated by Seller and Buyer as they may agree from time to time.

 

(d)                                 If neither Party shall so refer the matter to the Umpire within 20 days after the date of exchange of such results, the mean of such results of Seller and Buyer shall be final and binding upon the Parties.

 

10.4                                                                           Final Analysis Based on Umpire’s Assay

 

If either Party shall so refer the matter to the Umpire, then the Umpire’s assay shall be made using one of the reserve samples referred to in Section 9.5.  The Umpire shall be instructed to advise both Seller and Buyer of the results of the Umpire’s assay by e-mail and mail. If:

 

(a)                                  the Umpire’s assay falls between the assays of Seller and Buyer, then the mean of the results of the Umpire’s assay and the results of the assay of the Party whose results are nearer to that of the Umpire’s results shall be final and binding on the Parties;

 

(b)                                 the results of the Umpire’s assay shall be the mean of the results of the assays of the respective Parties, then the results of the Umpire’s assay shall govern;

 

(c)                                  the assay of the Umpire falls outside the assays of Seller and Buyer, then the middle assay of the three shall be final for settlement; and

 

(d)                                 the assay of the umpire coincides exactly with the result of either of Buyer or Seller, then the Umpire’s assay shall govern.

 

The cost of the Umpire shall be paid by the party whose results are farthest from the Umpire’s, except that, if the results of the Umpire’s assay is the mean of the results of the respective Parties, then the cost shall be shared equally by Seller and Buyer. The Umpire shall not be employed to prepare the assay of either Seller or Buyer nor shall the Umpire be chosen to represent either Buyer or Seller during supervision of the weighing and sampling procedures as set forth in Section 9.1(c).

 

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ARTICLE 11.       FORCE MAJEURE

 

11.1                                                                           Effect of Force Majeure

 

(a)                                  Failure or delay by Buyer or Seller in the performance of any obligation, term, condition or covenant contained herein (other than a failure to make payments required hereunder), shall be excused, if such failure or delay in performance was caused by an act of nature or the elements, or disturbance, fire, unavailability of power, water and other items necessary for production, delay or interruption of transportation, damage to port/harbour or loading/discharging facilities, war (whether declared or undeclared) or the consequence thereof, acts or serious threats of sabotage or terrorism, riot, civil war, blockade, insurrection, acts of public enemies, invasion, civil strife or mob violence, trade sanctions, export restrictions, revolution, embargo, any laws (or changes therein), regulations (or changes therein) or requirements (or changes therein) or acts of any federal, state or local government or any minister, ministry or other governmental body, expropriation, nationalization or other act of eminent domain, strikes and/or lock-outs, industrial disturbance or other work stoppage, breakdown or failure of equipment or machinery, damage/failure/disruption, delays or failure in obtaining materials, supplies or equipment, or any other cause, whether or not similar to those enumerated above, beyond the reasonable control of Buyer or Seller, as the case may be, which prevents or hinders their operations (collectively, “Event of Force Majeure”), provided that in no event shall prevention or settlement of any strike or labour disturbances be considered as a matter within the control of Buyer or Seller.  If an Event of Force Majeure affects the Discharge Port and Seller, in accordance with Section 4.3 delivers the affected Parcel to an Alternate Port, then no Party shall be excused from the performance of its obligations in relation to such a Parcel.

 

(b)                                 Seller shall not be obligated to deliver concentrate from other than the Production Facility and Seller shall not be obligated to rebuild or repair any damaged or destroyed property in order to fulfil this Agreement.

 

(c)                                  If Buyer is the party affected by an Event of Force Majeure, Buyer shall nevertheless be obligated to receive, purchase and pay for any Parcel which, at the time Seller received notice of the Event of Force Majeure, was in the process of being loaded, or which had been loaded, into an ocean-going vessel.

 

(d)                                 Notwithstanding any other provision hereof, no Event of Force Majeure shall have the effect of extending the term of this Agreement.

 

(e)                                  If any Event of Force Majeure continues in effect for a period of 60 consecutive days or less, any affected deliveries of Concentrate during such period shall be made up as soon as practicable following termination of the Event; provided, however, that during the Initial Period and the first Contract Year, Seller’s responsibility for deliveries of Concentrate shall not exceed 30% of Annual Production.

 

(f)                                    If any Event of Force Majeure continues in effect for a period of more than 60 days, but not more than 365 consecutive days, then the Party who has received notice of an Event of Force Majeure shall have the option to cancel delivery of any Concentrate which would have been delivered during such period.

 

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(g)                                 If any Event of Force Majeure continues in effect for a period of more than 365 days, then the Party which has received the notice of the Event of Force Majeure shall have the right to terminate this Agreement.

 

The right to cancel quantities of Concentrate or the right to terminate the Agreement as set forth above shall be made by written notice to the other Party at any time prior to receipt of a notice that the Event of Force Majeure has ceased. In the event of a termination of the Agreement all obligations, covenants and commitments of both parties hereto, except outstanding payments to be made hereunder, shall cease to exist on the date such notice is given.

 

11.2                                                                           Notice of Event of Force Majeure

 

A Party declaring an Event of Force Majeure shall give to the other Party:

 

(a)                                  immediate notice followed as soon as reasonably possible with particulars indicating the cause of such Event of Force Majeure, the date of commencement of such Event of Force Majeure, and the estimated duration (if practical) of such Event of Force Majeure;

 

(b)                                 from time to time after such declaration periodic notice of the efforts taken and progress made in remedying such Event of Force Majeure and as to the time that the declaring Party expects to resume performance of its obligations hereunder; and

 

(c)                                  immediately after such Event of Force Majeure ceases to have effect, a notice of cessation of the Event of Force Majeure.

 

11.3                                                                           Parties to Use Reasonable Efforts

 

Buyer and Seller agree to use all reasonable efforts from time to time and at all times to prevent the occurrence of any Event of Force Majeure and to remedy any Event of Force Majeure that has occurred. Notwithstanding the foregoing or any other provision of this Agreement, the settlement of any labour dispute, protest or demonstration shall be entirely at the discretion of the Party declaring an Event of Force Majeure and there shall be no obligation on that Party to test or refrain from testing the validity of any order, regulation or law relating to such labour dispute, protest or demonstration.

 

11.4                                                                           Reduction of Capacity

 

(a)                                  If an Event of Force Majeure results in a partial reduction of Seller’s capacity to produce or deliver Concentrate, then Seller shall be obligated to allocate any such reduced amount of Concentrate between Buyer and all other purchasers of Concentrate under long-term contracts in effect on the date of the Event of Force Majeure reasonably proportional to the Annual Quantity to be delivered to Buyer and commitments to such other purchasers as is commercially practical.

 

(b)                                 If an Event of Force Majeure results in a partial reduction of Buyer’s capacity to treat copper concentrates at the Receiving Works, then Buyer shall be obligated to allocate any such reduced capacity between Seller and all other 

 

30

 

Sellers of copper concentrates under long-term contracts in effect on the date of the Event of Force Majeure reasonably proportional to the Annual Quantity to be delivered to Buyer and commitments to such other sellers as is commercially practical.

 

ARTICLE 12.       REFEREES

 

12.1                                                                           Submission to Referees

 

If Buyer and Seller cannot agree on the Benchmark Reference Terms for a relevant period per Article 7.8 (a), then the matter (but only for that relevant period) shall be submitted to the referees (“Referees”) for resolution as described below. Prior to the selection of Referees, Buyer and Seller shall exchange notices setting forth their last declared offers, including all negotiable terms and any other related concessions (the “Offered Terms”), provided that if only one Party has so delivered its Offered Terms to the other Party and the other has not delivered its Offered Terms to the first Party within 30 days, the first Party can then submit the matter to Referees.  Pending agreement by Buyer and Seller or determination by Referees, the previous Benchmark Reference Terms agreed or determined hereunder shall be used for invoicing and payment during the next relevant period until such time as all such factor or factors is or are fixed by the procedures described below, at which time the affected shipments shall be promptly re-invoiced based on the newly agreed or determined Benchmark Reference Terms and any payments required to be made by one Party to the other pursuant to such re-invoicing shall be made promptly after the date of agreement or determination of the Benchmark Reference Terms.

 

12.2                                                                           Selection of Referees

 

If a matter is to be submitted to Referees pursuant to this Agreement, Buyer and Seller shall jointly appoint an independent industry expert to act as a single Referee to determine the matter.  Any person appointed as a Referee shall be a person of sound commercial background and with strong knowledge of the international copper concentrates market.  No person who has been an employee, consultant or otherwise provided services (other than as a Referee hereunder) to either Party or any of their respective affiliated organizations during the past five years preceding the reference shall be eligible to act as a Referee. If the Parties are unable to agree in writing to the appointment of a single Referee who has accepted such appointment in writing within 20 days, then each Party shall independently appoint one Referee who accepts such appointment in writing, and a third Referee shall be expeditiously appointed by agreement of the first two Referees.  If either Buyer or Seller fails to appoint its respective Referee within 20 days, there shall be only a single Referee adjudicating the process described below, which shall be the person appointed by either Party as Referee who first accepts such appointment in writing.

 

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12.3                                                                           Submission of Positions

 

Buyer and Seller shall each submit in writing in English its respective position to the Referee(s) and to the other Party within 10 days after the Referee(s) has been appointed. The Parties shall then have a further 10 days to review the other’s submission and to submit a written rebuttal in English to the Referee(s) (the “Submission Period”).

 

12.4                                                                           Proceeding and Final Determination

 

Promptly after expiry of the Submission Period, the Referee(s) shall offer such guidance to the Buyer and Seller, if any, that the Referee(s) consider(s) appropriate with a view toward progressing the negotiations between Buyer and Seller. If Buyer and Seller fail to agree within 10 days after both Parties have submitted their respective positions to the Referee(s), the Referee(s) shall, within 20 days thereafter, finally determine any such matter by selecting one of such two positions. In making the selection the Referee(s) shall reference the relevant metals industry trade publications and information sources referred to in Section 7.8(a). The Referee(s) shall share these information sources with Buyer and Seller no later than 5 days prior to making a final determination. If either Buyer or Seller fails to submit its respective position to the Referee(s) prior to the expiry of the Submission Period, the Referee(s) shall, promptly following expiry of such period, finally determine that the sole position submitted to him (them) shall prevail.  Any such determination as described herein and otherwise made in accordance with this Agreement shall be final and binding on the Parties.  Any such determination as described herein, whether of the single Referee, in case there is only one Referee, or the majority of the Referees, in case there are three Referees, and otherwise made in accordance with this Agreement, shall be final and binding on the Parties.

 

12.5                                                                           Costs

 

In the event that the Parties reach agreement in writing on a particular issue prior to the determination by a single Referee hereunder, any costs associated with the services of such Referee shall be borne equally by Buyer and Seller.  In the event that an issue is decided hereunder by a single referee, any costs associated with the services of such Referee shall be borne by the losing party.  In the event that three Referees are appointed in accordance with a matter, each of Buyer and Seller shall pay the costs associated with its appointed Referee, and the losing party shall bear the costs associated with the services of the third Referee appointed by agreement of the first two Referees.

 

ARTICLE 13.       REPRESENTATIONS AND WARRANTIES

 

13.1                                                                           Representations and Warranties of Seller

 

Seller represents and warrants to Buyer as follows:

 

Authorisation

 

Seller is a company duly organised under the laws of the Province of British Columbia, Canada, with full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  The execution, delivery and performance of this Agreement have been duly authorised by all necessary corporate action (including, but not limited to, approval by the board of directors of Seller) and this Agreement constitutes a valid and binding obligation of Seller enforceable against it in accordance with its terms subject to applicable bankruptcy, 

 

32

 

insolvency, reorganisation and other laws of general application limiting the enforcement of creditors’ rights generally and to the fact that specific performance is an equitable remedy available only in the discretion of the court.

 

No conflict

 

Neither the execution nor delivery of this Agreement nor the consummation of any or all of the transactions contemplated hereunder will:

 

(i)                                     violate any provision of the certificate of incorporation or by-laws or other organisational documents of Seller;

 

(ii)                                  violate, be in conflict with, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under any agreement or commitment to which Seller is a party; or

 

(iii)                               violate any statute or law or any judgment, decree, order, regulation or rule of any court or any governmental body applicable to Seller.

 

Required Consents

 

Seller has obtained all consents, approvals and authorisations of, and has made all necessary filings and registrations with, all governmental bodies and other third parties required in connection with the execution, delivery and performance of this Agreement by Seller and the consummation of the transactions contemplated hereunder, including without limitation, the approval of the appropriate authorities in the Province of British Columbia, Canada.

 

13.2                                                                           Representations and Warranties of Buyer

 

Buyer represents and warrants to Seller as follows:

 

Authorisation

 

Buyer is a company duly incorporated and existing under the laws of the Republic of Korea, with full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  The execution, delivery and performance of this Agreement have been duly authorised by all necessary corporate action (including, but not limited to, approval by the board of directors or similar of Buyer) and this Agreement constitutes a valid and binding obligation of Buyer enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganisation and other laws of general application limiting the enforcement of creditors rights generally and to the fact that specific performance is an equitable remedy available only in the discretion of the court.

 

No Conflict

 

Neither the execution nor delivery of this Agreement nor the consummation of any or all of the transactions contemplated hereunder will:

 

(i)                                     violate any provision of the certificate of incorporation or by-laws or other organisational documents of Buyer;

 

33

 

(ii)                                  violate, be in conflict with, or constitute a default (or an event of default which, with notice or lapse of time or both, would constitute a default) under any agreement or commitment to which Buyer is a party; or

 

(iii)                               violate any statute or law or any judgment, decree, order, regulation or rule of any court or any governmental body applicable to Buyer.

 

Required Consents

 

Buyer has obtained all consents, approvals and authorisations of, and has made all necessary filings and registrations with, all governmental bodies and other third parties required in connection with the execution, delivery and performance of this Agreement by Buyer and the consummation of the transactions contemplated hereunder.

 

13.3                                                                           Limitations

 

(a)                                  Seller makes no representations or warranties, expressed or implied, as to the merchantability, fitness for any particular purpose or any other matters with respect to any Parcel other than the express warranties set out in this Agreement.

 

(b)                                 No representation or statement made by either Party or its agents, employees, representatives or any other person on its behalf not expressly contained in this Agreement shall be binding upon the other Party as a representation or warranty or otherwise.

 

(c)                                  Except in the case of fraud, gross negligence or wilful misconduct by a Party, neither Party shall be liable to the other Party for any indirect, consequential or special damages with respect to this Agreement whether such damages arise in tort, contract or otherwise.

 

ARTICLE 14        MISCELLANEOUS

 

14.1                                                                           Non-Waiver

 

No course of performance and no delay or failure by any Party in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice its rights, powers or remedies.  No single exercise of any right or power shall preclude the further exercise thereof or the exercise of any other right or power hereunder.  No right, power or remedy conferred upon any Party by this Agreement shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise, except as expressly provided herein.  No waiver of any provision of this Agreement shall be effective unless made in writing signed by the Party against whom such waiver is sought to be enforced.

 

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14.2                                                                           Assignment

 

Subject to the consent of the other Party hereto (which consent may not be unreasonably withheld) each of Seller and Buyer shall be entitled to assign this Agreement to an Affiliate, a successor in interest in connection with an amalgamation, merger, consolidation, sale or other transaction, in which such successor acquires all or substantially all of the Production Facility, in the case of Seller, or the Receiving Works, in the case of Buyer provided that the successor acknowledges in writing to the other Party (in form and substance reasonably satisfactory to such other party) the assumption by the successor of all of the obligations of the assignor (i.e., the Buyer or Seller, as the case may be) hereunder and further provided that if the assignor continues to exist as a separate entity following such transaction, it shall remain liable for any obligations hereunder not performed by such successor. For purposes of this provision a Party shall not be considered to be acting unreasonably if it withholds its consent on the basis that the financial capability of the proposed assignee is, in the bona fide opinion of such Party, less than that of the assignor.

 

14.3                                                                           Benefit of Agreement

 

This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and assigns (subject to Section 13.2), and no other person shall have any right or obligation hereunder.

 

14.4                                                                           Amendments

 

Any amendment to this Agreement shall only be effective if in writing and executed by or on behalf of both Parties.

 

14.5                                                                           Governing law

 

This agreement shall be governed by, and construed in accordance with, the law of the State of New York, U.S.A., including Sections 5-1401 and 5-1402 of the New York General Obligations law.  The United Nations Vienna Convention on Contracts for the International Sale of Goods shall not apply to this Agreement.

 

14.6                                                                           Severability

 

If any provision of this Agreement shall be invalid, illegal or unenforceable, then the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

14.7                                                                          Confidentiality

 

(a)                                  Each Party shall use its best efforts to assure that the provisions of this Agreement and all information disclosed to it concerning the other Party and its assets and businesses and not otherwise publicly available and the determination of any matter hereunder by any Referees, Umpire or arbitrator shall be kept confidential and shall, unless otherwise required by law or the rules and regulations of any stock exchange, not be disclosed without the consent of the other party to anyone other than:

 

35

 

(i)                                     to the directors, officers, employees, accountants, consultants, counsel, agents and representatives of each Party;

 

(ii)                                  to any proposed assignee;

 

(iii)                               to any other person or entity providing substantial financing to the Seller or Buyer;

 

(iv)                              to any underwriter of securities to be issued by Buyer or the Seller, or a rating agency;

 

(v)                                 in connection with legal proceedings or required filings with government agencies, courts, stock exchanges or other regulatory agencies; and

 

(vi)                              to any Umpire, Referee or arbitrator appointed hereunder.

 

If such information is so disclosed to any such person or entity, the disclosing party agrees to use its best efforts to obtain from such person or entity a covenant for the benefit of both Parties hereto to keep such information confidential.

 

(b)                                 Notwithstanding Section 14.7(a), the Parties agree to provide to the Finance Parties access to and the opportunity to review from time to time as may reasonably be requested by the Finance Parties, and at their expense, all relevant documents, information and data in the possession of Buyer or Seller relating to Concentrate sold to Buyer hereunder, including all shipping, weight, assay, treatment, recovery, metallurgical or other information pertaining to the sale, transporting, treatment and refining of such Concentrate and the metals derived therefrom.

 

14.8                                                                           Notices

 

All notices, requests, demands or other communications required or permitted to be given by any party to another pursuant to the Agreement shall be given in writing and delivered by personal service, or facsimile, addressed as follows, subject to any notice of change of address or fax number given in accordance herewith.

 

(a)                                  in the case of Buyer:

 

Terrane Metals Corp.

 

26 West Dry Creek Circle, Suite 810

 

Littleton, CO 80120

 

U.S.A.

 

Attention: Chief Commercial Officer

 

Fax: +1 303 761 7420

 

36

 

 

(b)                                 in the case of Seller:

 

LS-Nikko Copper Inc.

 

20Fl., ASEM Tower, 159, Samseong-1dong,

 

Gangnam-gu, Seoul, 135-798,

 

Korea

 

Attention: Raw Materials Team

 

Fax : +82 2 2189 9894

 

Any notice shall be deemed to have been given and received:

 

(c)                                  if personally delivered, then on the day of personal service to the recipient Party, provided that if such date is a day other than a Business Day where the recipient Party is located, then such notice shall be deemed to have been given and received on the first Business Day where the recipient Party is located, following the date of personal service; and

 

(d)                                 if sent by e-mail or facsimile transmission and successfully transmitted prior to noon on a Business Day where the recipient Party is located, then on that Business Day, and if transmitted after noon on that day, then on the first Business Day where the recipient Party is located following the date of transmission.

 

14.9                                                                           Remedies

 

Except as otherwise expressly provided herein, no remedy herein conferred upon either Party is intended to be exclusive of any other remedy and each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise.  Notwithstanding any other provision of this Agreement, neither Party shall have any liability to the other Party with respect to any hedging nor similar losses either Party may suffer in connection with the transactions contemplated by this Agreement.

 

14.10                                                                     Execution in Counterparts

 

This Agreement may be executed in any number of counterparts and by the Parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all the counterparts shall together constitute one and the same instrument.

 

14.11                                                                     Arbitration

 

(a)                                  Any dispute, claim or failure to agree arising out of or relating to this Agreement (including the question regarding its existence, validity or termination) or any provision hereof, except those identified in Article 7 (which shall be determined by the Referees in accordance with Article 12), shall be referred to and finally settled by arbitration in accordance with the then prevailing Arbitration Rules of the International Chamber of Commerce (the “Rules”) and which Rules are deemed to be incorporated by reference into 

 

37

 

this Section 14.11. The location of arbitration shall be New York, New York.  The arbitration shall be conducted in the English Language by an arbitral tribunal consisting of three arbitrators, one to be appointed by each Party and the third to be appointed by the court of arbitration of the International Chamber of Commerce in accordance with the Rules. Any decision or award shall be final and binding on both the Buyer and the Seller. The arbitral tribunal shall state in its award the facts of the case and the reasons for its decision. The Parties shall comply in good faith with the decision.

 

(b)                                 All costs of arbitration, including without limitation, witness fees, legal fees and expenses shall always be borne by the Party incurring such costs. The costs of the arbitrators shall be borne equally by the Parties unless otherwise awarded by the decision of the arbitrators.

 

14.12                                                                     Consent to Jurisdiction

 

Subject to Section 14.11, each Party hereby irrevocably consents and agrees, for the benefit of the other Party, that any legal action, suit or proceeding against it:

 

(i)                                     with respect to enforcement of the provisions set forth in Section 14.11; and

 

(ii)                                  with respect to the enforcement, modification, vacation or correction of an award rendered in an arbitration conducted pursuant to Section 14.11,

 

may be brought in the United States District Court located in the County of New York or in the courts of the State of New York in the County of New York. Each Party waives any objection which it may have now or hereafter have to the laying of venue of any of the aforesaid actions, suits or proceedings specified in sections (i) and (ii) above brought in any court and hereby further waives and agrees not to plead or claim in any such court that any such action, suit or proceeding therein has been brought in an inconvenient forum.

 

14.13                                                                     Entire Agreement

 

This Agreement sets forth the entire understanding of the Parties with respect to the subject matter hereof and supersedes all previous arrangements, correspondences, representations, proposals, understandings and communications, whether written or oral. Neither this Agreement nor any provision hereof can be waived, changed, amended, discharged or terminated except by an instrument in writing signed by the Party against which the enforcement of any waiver, change, discharge or termination is sought.

 

38

 

IN WITNESS WHEREOF, the undersigned have executed this Contract as of the date hereinabove set forth.

 

 

	
Terrane Metals Corp.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By
    	
/s/   Kevin Loughrey
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:   Kevin Loughrey
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:   Chief Executive Officer
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By
    	
/s/   Mark Wilson
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:   Mark Wilson
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:   Chief Commercial Officer
    	
 
    
	
 
    	
 
    	
 
    
	
LS-Nikko Copper Inc.
    	
 
    
	
 
    	
 
    	
 
    
	
By
    	
/s/   Jin-Soo Baek
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:   Jin –Soo Baek
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:   VP of Raw Materials
    	
 
    

 

39

 

SCHEDULE “A”

 

ANTICIPATED CONCENTRATE SPECIFICATIONS

 

	
element
    	
 
    	
range
    
	
 
    	
 
    	
(%)
    
	
Cu
    	
 
    	
24 – 29
    
	
Fe
    	
 
    	
24 –34
    
	
S
    	
 
    	
30 – 35
    
	
Pb
    	
 
    	
0.005 – 0.15
    
	
Zn
    	
 
    	
0.01 – 0.2
    
	
Al203
    	
 
    	
0.70 – 1.75
    
	
CaO
    	
 
    	
0.50 – 1.50
    
	
MgO
    	
 
    	
0.50 – 1.50
    
	
SiO2
    	
 
    	
4 – 6
    
	
 
    	
 
    	
(grams per dmt)
    
	
Ag
    	
 
    	
40 – 120
    
	
Au
    	
 
    	
25 – 75
    
	
 
    	
 
    	
(ppm)
    
	
As
    	
 
    	
30 – 240
    
	
Ba
    	
 
    	
40 – 70
    
	
Bi
    	
 
    	
<140
    
	
Br
    	
 
    	
0 – 10
    
	
Cd
    	
 
    	
<30
    
	
Cl
    	
 
    	
90 – 240
    
	
Co
    	
 
    	
50 – 170
    
	
F
    	
 
    	
60 – 250
    
	
Hg
    	
 
    	
<10
    
	
Mn
    	
 
    	
80 – 110
    
	
Mo
    	
 
    	
100 – 2,000
    
	
Ni
    	
 
    	
50 – 175
    
	
Sb
    	
 
    	
70 – 350
    
	
Se
    	
 
    	
75 – 200
    
	
Sn
    	
 
    	
< 1
    
	
Te
    	
 
    	
0 – 3
    
	
U
    	
 
    	
< 1
    

 

 

SCHEDULE “B”

 

UMPIRES

 

A.H. Knight International Ltd.
 Eccleston Grange, Prescot Road
 St Helens
 Merseyside
 WA1O 3BQ
 United Kingdom

 

Laboratory Services International BV
 Pittsburghstraat 9
 3047 BL Rotterdam
 NetherlandsExhibit 10.2

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE REDACTED PORTIONS OF THIS EXHIBIT.  THE REDACTIONS ARE INDICATED WITH “*[Redacted]*”.  A COMPLETE VERSION OF THIS AGREEMENT AND EXHIBIT HAS BEEN FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION.

 

 

COPPER CONCENTRATES SALES AGREEMENT

 

AMONG

 

LOUIS DREYFUS COMMODITIES METALS SUISSE SA

 

AND

 

TERRANE METALS CORP.

 

AND

 

THOMPSON CREEK METALS COMPANY INC.

 

 

Dated as of June 29, 2012

 

 

TABLE OF CONTENTS

 

	
1.
    	
DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
QUANTITY AND DURATION
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
2.01
    	
Annual Quantity
    	
1
    
	
2.02
    	
Base Amounts
    	
1
    
	
2.03
    	
Quantity Options
    	
2
    
	
2.04
    	
Quantity Adjustments
    	
3
    
	
2.05
    	
Duration
    	
3
    
	
 
    	
 
    	
 
    
	
3.
    	
QUALITY
    	
3
    
	
 
    	
 
    	
 
    
	
3.01
    	
Chemical and Physical Specification
    	
3
    
	
3.02
    	
WARRANTY DISCLAIMER
    	
4
    
	
3.03
    	
LIABILITY DISCLAIMER
    	
4
    
	
 
    	
 
    	
 
    
	
4.
    	
DELIVERY
    	
4
    
	
 
    	
 
    	
 
    
	
4.01
    	
Annual Schedule
    	
4
    
	
4.02
    	
Delivery
    	
5
    
	
4.03
    	
Discharging Berth; Vessel Dimensions
    	
6
    
	
4.04
    	
Discharge Rates and Terms
    	
6
    
	
4.05
    	
Notice of Readiness
    	
7
    
	
4.06
    	
Calculation of Laytime
    	
7
    
	
4.07
    	
Demurrage and Despatch
    	
8
    
	
4.08
    	
Vessel Characteristics
    	
8
    
	
4.09
    	
Overtime
    	
8
    
	
4.10
    	
Port Charges; Discharge Procedures
    	
8
    
	
4.11
    	
Stevedore Damage
    	
9
    
	
4.12
    	
Nomination of Vessels
    	
9
    
	
4.13
    	
Notices
    	
9
    
	
4.14
    	
Alternative Port
    	
10
    
	
 
    	
 
    	
 
    
	
5.
    	
TITLE AND RISK OF LOSS
    	
10
    
	
 
    	
 
    	
 
    
	
5.01
    	
The Seller’s Warranties on Title
    	
10
    
	
5.02
    	
Title and Risk of Loss
    	
10
    
	
 
    	
 
    	
 
    
	
6.
    	
INSURANCE
    	
10
    
	
 
    	
 
    	
 
    
	
6.01
    	
Cargo Insurance
    	
10
    
	
6.02
    	
Amount of Coverage
    	
10
    
	
6.03
    	
Period of Coverage
    	
11
    
	
6.04
    	
Evidence of Insurance
    	
11
    

 

 

	
7.
    	
PRICE
    	
11
    
	
 
    	
 
    	
 
    
	
7.01
    	
Compensation for Concentrates
    	
11
    
	
7.02
    	
Copper Payment
    	
11
    
	
7.03
    	
Gold Payment
    	
11
    
	
7.04
    	
Silver Payment
    	
12
    
	
7.05
    	
*[Redacted]*
    	
12
    
	
7.06
    	
Alternate Pricing
    	
12
    
	
7.07
    	
Quotational Period
    	
13
    
	
7.08
    	
Deductions
    	
13
    
	
7.09
    	
Treatment Charge
    	
14
    
	
7.10
    	
Copper Refining Charge
    	
14
    
	
7.11
    	
Precious Metal Refining Charges
    	
15
    
	
7.12
    	
Copper Price Participation
    	
15
    
	
7.13
    	
Penalties
    	
15
    
	
 
    	
 
    	
 
    
	
8.
    	
PAYMENT
    	
16
    
	
 
    	
 
    	
 
    
	
8.01
    	
Manner of Payment
    	
16
    
	
8.02
    	
Payment of Total Compensation
    	
16
    
	
8.03
    	
*[Redacted]*
    	
17
    
	
8.04
    	
Provisional Invoices
    	
17
    
	
8.05
    	
Final Payment
    	
17
    
	
8.06
    	
Late Payment
    	
18
    
	
8.07
    	
Price Determination in the Event of Loss
    	
18
    
	
8.08
    	
Taxes, Tariffs and Duties
    	
18
    
	
 
    	
 
    	
 
    
	
9.
    	
WEIGHING, SAMPLING, DETERMINATION OF MOISTURE
    	
19
    
	
 
    	
 
    	
 
    
	
9.01
    	
General Procedure
    	
19
    
	
9.02
    	
Determination of Dry Weight and Moisture
    	
20
    
	
9.03
    	
Sample Lots
    	
20
    
	
9.04
    	
Number and Handling of Samples
    	
20
    
	
9.05
    	
Penalty Samples
    	
20
    
	
 
    	
 
    	
 
    
	
10.
    	
ASSAYS
    	
20
    
	
 
    	
 
    	
 
    
	
10.01
    	
Copper, Gold and Silver Content
    	
20
    
	
10.02
    	
Method for Determining Final Analysis
    	
20
    
	
10.03
    	
Umpire Assays
    	
21
    
	
10.04
    	
Final Analysis based on Umpire’s Assay
    	
21
    
	
10.05
    	
Parcel Content
    	
21
    
	
10.06
    	
Penalty Assays
    	
21
    
	
10.07
    	
Royal Gold Interest
    	
21
    
	
 
    	
 
    	
 
    
	
11.
    	
FORCE MAJEURE AND TERMINATION
    	
22
    
	
 
    	
 
    	
 
    
	
11.01
    	
Force Majeure
    	
22
    
				

 

ii

 

	
11.02
    	
Termination
    	
23
    
	
 
    	
 
    	
 
    
	
12.
    	
REFEREES
    	
23
    
	
 
    	
 
    	
 
    
	
12.01
    	
Selection of Referees
    	
23
    
	
12.02
    	
Submission of Positions
    	
24
    
	
12.03
    	
Proceeding; Final Determination
    	
24
    
	
12.04
    	
The Decision
    	
24
    
	
12.05
    	
Costs
    	
24
    
	
 
    	
 
    	
 
    
	
13.
    	
MISCELLANEOUS
    	
25
    
	
 
    	
 
    	
 
    
	
13.01
    	
Guarantee
    	
25
    
	
13.02
    	
Non-Waiver
    	
25
    
	
13.03
    	
Assignment
    	
25
    
	
13.04
    	
Benefit of Agreement
    	
26
    
	
13.05
    	
Amendments
    	
26
    
	
13.06
    	
No Third-Party Beneficiaries
    	
26
    
	
13.07
    	
Governing law
    	
26
    
	
13.08
    	
Confidentiality
    	
26
    
	
13.09
    	
Notices
    	
27
    
	
13.10
    	
Remedies
    	
27
    
	
13.11
    	
Execution in Counterparts
    	
28
    
	
13.12
    	
Arbitration
    	
28
    
	
13.13
    	
Consent to Jurisdiction
    	
28
    
	
13.14
    	
Entire Agreement
    	
29
    
	
13.15
    	
Headings
    	
29
    
	
13.16
    	
Representations And Warranties
    	
29
    
	
13.17
    	
Material Adverse Change
    	
31
    
	
13.18
    	
Security Interest
    	
31
    
	
 
    	
 
    	
 
    
	
DEFINITIONS
    	
A-1
    
	
 
    	
 
    
	
CHEMICAL SPECIFICATION
    	
B-1
    
	
 
    	
 
    
	
UMPIRES
    	
1
    
				

 

iii

 

COPPER CONCENTRATES SALES AGREEMENT

 

This Agreement, dated as of June 29, 2012, is made among LOUIS DREYFUS COMMODITIES METALS SUISSE SA, a société anonyme organized under the laws of Switzerland (the “Buyer”), TERRANE METALS CORP., a corporation organized under the laws of British Columbia (the “Seller”), and THOMPSON CREEK METALS COMPANY INC., a corporation organized under the laws of British Columbia (the “Guarantor”).

 

WHEREAS the Buyer, the Seller and the Guarantor wish to enter into this contract for the sale by the Seller to the Buyer and the purchase by the Buyer from the Seller of Concentrates, and the guarantee by the Guarantor of the Seller’s obligations hereunder, in each case on the terms and conditions set forth herein;

 

NOW THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, the Buyer, the Seller and the Guarantor agree as follows:

 

1.             DEFINITIONS

 

In this Agreement, unless something in the subject matter or context is inconsistent therewith, capitalized terms shall have the meanings assigned to them in Appendix A.

 

2.             QUANTITY AND DURATION

 

2.01                                           Annual Quantity

 

(a)           Subject to the terms and conditions hereof, including Section 2.04, the quantity of Concentrates which the Seller shall deliver and sell to the Buyer, and the Buyer shall receive and purchase from the Seller, in each Contract Year shall be equal to the Base Amount for that Contract Year, determined pursuant to Section 2.02, plus, for each of the third and fourth Contract Years, the amounts in respect of which the Seller duly exercises any of its Quantity Options for that Contract Year under Section 2.03.

 

2.02                                           Base Amounts

 

(a)           In the Contract Year beginning January 1, 2013, the Base Amount shall be the Stated 2013 Base Amount, as determined by the Seller and notified to the Buyer by the Seller pursuant to Section 2.02(b) or, if the Seller notifies the Buyer of an Adjusted 2013 Base Amount pursuant to Section 2.02(b), the Adjusted 2013 Base Amount.  In the Contract Year beginning January 1, 2014, the Base Amount shall be the Stated 2014 Base Amount, as determined by the Seller and notified to the Buyer by the Seller pursuant to Section 2.02(c) or, if the Seller notifies the Buyer of an Adjusted 2014 Base Amount pursuant to Section 2.02(c), the Adjusted 2014 Base Amount.  In each of the Contract Years beginning January 1, 2015 and 2016, the Base Amount shall be 30,000 DMT of Concentrates.

 

 

(b)           One month prior to the estimated date of the commencement of Concentrates production at the Production Facility, the Seller shall deliver a written preliminary estimate of the Production Facility’s total production of Concentrates in 2013 and of the resulting expected Base Amount for 2013, which shall equal 25% of such production estimate.  Thereafter, the Seller shall deliver an updated written, non-definitive estimate of the 2013 Base Amount, in each case equal to 25% of the Seller’s then estimate of the Production Facility’s total production of Concentrates in 2013, to the Buyer each month until August 2013 (inclusive).  A definitive estimate of the Production Facility’s total production of Concentrates in 2013 and the 2013 Base Amount (the “Stated 2013 Base Amount”), which shall equal 25% of such definitive production estimate, shall be determined by the Seller and notified in writing by the Seller to the Buyer no later than September 30, 2013.  Notwithstanding the foregoing, should the Seller subsequently determine that it shall be unable to deliver the full Stated 2013 Base Amount as so determined, and the Seller and the Buyer shall negotiate in good faith and mutually agree no later than December 31, 2013, whether or not the amount of the relevant adjustment shall be added to the Base Amount for the 2014 Contract Year.

 

(c)           Prior to January 1, 2014, the Seller shall deliver a written preliminary estimate of the Production Facility’s total production of Concentrates in 2014 and of the resulting expected Base Amount for 2014, which shall equal 25% of such production estimate.  Thereafter, the Seller shall deliver an updated written, non-definitive estimate of the 2014 Base Amount, in each case equal to 25% of the Seller’s then estimate of the Production Facility’s total production of Concentrates in 2014, to the Buyer every two months until August 2014 (inclusive).  A definitive estimate of the Production Facility’s total production of Concentrates in 2014 and the 2014 Base Amount (the “Stated 2014 Base Amount”), which shall equal 25% of such definitive production estimate, shall be determined by the Seller and notified in writing by the Seller to the Buyer no later than September 30, 2014.  Notwithstanding the foregoing, should the Seller subsequently determine that it shall be unable to deliver the full Stated 2014 Base Amount as so determined, the Seller and the Buyer shall negotiate in good faith and mutually agree no later than December 31, 2014, whether or not the amount of the relevant adjustment shall be added to the Base Amount for the 2015 Contract Year.

 

2.03                                           Quantity Options

 

(a)           In each of the Contract Years beginning January 1, 2015 and 2016, the Quantity Options *[Redacted]* which may be exercised by the Seller in each of such Contract Years *[Redacted]* to sell to the Buyer up to a combined maximum of 40,000 DMT of Concentrates, in addition to the Base Amount for the relevant Contract Year.

 

(b)           The *[Redacted]* option, which may be exercised one time in respect of each Contract Year *[Redacted]* (subject to the aforementioned *[Redacted]* 40,000 DMT limit *[Redacted]* in each Contract Year).  The *[Redacted]* Option may only be exercised by the Seller delivering written notice to the Buyer, specifying the number of DMT of Concentrates *[Redacted]* no later than: (i) *[Redacted]* provided that the Treatment Charge, the Copper Refining Charge and the Copper Price Participation *[Redacted]* have been established hereunder by that date; or (ii) *[Redacted]* the Treatment Charge, the Copper Refining Charge and the Copper Price Participation *[Redacted]* have all been so established.

 

2

 

(c)           The *[Redacted]* option *[Redacted]* to sell a total of up to 40,000 DMT of Concentrates (subject to the aforementioned *[Redacted]* 40,000 DMT limit *[Redacted]* in each Contract Year) in lots of at least 10,000 DMT of Concentrates, per exercise.  The *[Redacted]* Option may only be exercised by the Seller delivering written notice to the Buyer, specifying the number of DMT of Concentrates *[Redacted]* no later than *[Redacted]* proposes to ship the Concentrates *[Redacted]*.

 

2.04                                           Quantity Adjustments

 

If a Base Amount, determined pursuant to Section 2.02(a) (whether as first formally determined or determined following any adjustment pursuant to Section 2.02(b) or Section 2.02(c)), is not a multiple of 5,000 DMT in either of the 2013 and the 2014 Contract Years, then the Seller and the Buyer shall negotiate in good faith to agree an adjustment to such Base Amount in order to facilitate round allocations among the Seller’s customers.  During such period of negotiation, performance by the Parties of their obligations hereunder with respect to Parcels of Concentrates that are not subject to determination pursuant to this Section 2.04(a) shall not be delayed.

 

2.05                                           Duration

 

(a)           This Agreement shall commence on the date hereof and, unless earlier terminated in accordance with the terms and conditions hereof (including pursuant to Section 11.01(f), Section 11.02 or Section 13.17(a)) shall terminate at the end of the Contract Year beginning on January 1, 2016.

 

(b)           Not later than July 1, 2016, the Seller and the Buyer shall meet to discuss and endeavour to agree upon the terms of a further agreement respecting the purchase and sale of Concentrates after December 31, 2016; provided that any failure by the Seller and the Buyer to agree on the terms of any new contract shall not give rise to any liability or affect the termination of this Agreement as aforesaid.

 

(c)           Notwithstanding any other provision hereof, the Seller’s obligations hereunder, other than its obligations to provide an estimate of production under Section 2.02(b) and an estimated shipping schedule under Section 4.01(b) are entirely conditional upon the commencement of the commercial production of Concentrates at the Production Facility.

 

3.             QUALITY

 

3.01                                           Chemical and Physical Specification

 

(a)           The Concentrates shall be produced from the Production Facility.  Appendix B sets out the Seller’s current estimate with respect to the chemical specifications of the Concentrates.  The Seller expects, but does not represent or warrant, that the Concentrates delivered to the Buyer shall conform to such estimate.

 

(b)           The Buyer acknowledges that the composition of the Concentrates may vary from the estimate in Appendix B.  The Seller shall advise the Buyer from time to time of any material information of which the Seller becomes aware concerning any changes in the expected 

 

3

 

characteristics of the Concentrates from the specifications in Appendix B, but such changes shall not affect the Buyer’s obligation to purchase Concentrates hereunder provided that in such a case, Buyer and Seller reach agreement pursuant to Section 3.01 (c).

 

(c)           If the Seller becomes aware that the specifications of any Parcel, or any portion thereof, deviate materially from the anticipated specifications set out in Appendix B, the Seller shall promptly notify the Buyer and, if such deviation results in a material negative impact upon the Buyer, the Seller and the Buyer shall promptly attempt to negotiate a mutually acceptable adjustment to reasonably compensate the Buyer for such impact, which may include but shall not be limited to the negotiation of a Penalty pursuant to Section 7.13.

 

3.02                                           WARRANTY DISCLAIMER

 

BUYER AGREES THAT SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED, AS TO THE MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE CONCENTRATES OR REGARDING ANY OTHER MATTERS, OTHER THAN THE EXPRESS WARRANTIES SET OUT IN THIS AGREEMENT.  NO REPRESENTATION OR STATEMENT MADE BY THE SELLER OR ITS AGENTS, EMPLOYEES, REPRESENTATIVES OR ANY OTHER PERSON ON ITS BEHALF NOT EXPRESSLY CONTAINED IN THIS AGREEMENT SHALL BE BINDING UPON SELLER AS A REPRESENTATION OR WARRANTY OR OTHERWISE.

 

3.03                                           LIABILITY DISCLAIMER

 

NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, IN NO EVENT SHALL ANY PARTY BE LIABLE TO ANOTHER FOR ANY LOSS OF ANTICIPATED PROFITS OR OTHER CONSEQUENTIAL, SPECIAL OR INDIRECT LOSS OR DAMAGE OF ANY NATURE ARISING AT ANY TIME, WHETHER ARISING UNDER CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR FOR ANY OTHER CAUSE WHATSOEVER.

 

4.             DELIVERY

 

4.01                                           Annual Schedule

 

(a)           The Concentrates shall be shipped in Parcels of 5,000 DMT (+/- 5% for shipping tolerance only) or 10,000 DMT (+/- 5% for shipping tolerance only) in each of the 2013 and 2014 Contract Years and in Parcels of at least 10,000 DMT (+/- 5% for shipping tolerance only) in each of the 2015 and 2016 Contract Years.

 

(b)           Each time that the Seller provides a notice to the Buyer pursuant to Section 2.02(b) or Section 2.02(c), the Seller shall include therewith an estimated shipping schedule for the relevant Contract Year so as to permit the Buyer to provide comments to the Seller thereupon.

 

(c)           The Parcels to be delivered in each of the 2013 and 2014 Contract Years shall be delivered according to an annual shipping schedule, which, subject to Section 4.01(d) below,

 

4

 

shall be mutually agreed upon by the Seller and the Buyer, acting in good faith, promptly following the determination of the Stated 2013 Base Amount or the Stated 2014 Base Amount, as applicable, and concurrently with the first applicable discussions under Section 2.04(a) above; provided that the schedule shall be adjusted, by agreement between the Seller and the Buyer, if there is an adjustment to the Base Amount for the applicable Contract Year.  The Parcels to be delivered in each of the 2015 and 2016 Contract Years shall be delivered according to an annual shipping schedule, which, subject to Section 4.01(d) below, shall be mutually agreed upon by the Seller and the Buyer, acting in good faith, prior to the start of the Contract Year with the intention of having shipments distributed as evenly as possible throughout the Contract Year, and such schedule shall be amended by the Seller and the Buyer, acting reasonably, upon any exercise of a Quantity Option by the Seller in respect of that Contract Year, with the intention of having shipments distributed as evenly as possible throughout the Contract Year.

 

(d)           Notwithstanding Section 4.01(b), if the Seller and the Buyer cannot agree on the annual shipping schedule (the “Annual Schedule”) for any particular Contract Year (or on any adjustment thereto necessitated by a change in a Base Amount or the exercise of a Quantity Option) then, subject as hereinafter provided, the Seller shall determine the Annual Schedule and, in so doing, shall use reasonable commercial efforts to make shipments so that Parcels shall be delivered at approximately even intervals throughout the Contract Year.  However, the Buyer acknowledges that the timing of production of the Concentrates to be sold and delivered hereunder may not permit shipments to the Buyer at approximately even intervals throughout the Contract Year.

 

4.02                                           Delivery

 

(a)           For each Parcel to be shipped to the Buyer hereunder, the Seller shall notify the Buyer of the calendar month during which the Seller expects to ship that Parcel (the “Month of Notified Shipment”) not later than 60 days prior to the first day of the Month of Notified Shipment of that Parcel.  The Buyer shall promptly advise the Seller by written notice of the Port of Discharge of each Parcel in sufficient time to allow the Seller to arrange for shipment within the Month of Notified Shipment, but no earlier than 30 days prior to the first day of the Month of Notified Shipment.

 

(b)           Each Parcel to be delivered to the Buyer hereunder shall be delivered by the Seller CIF (Incoterms, 2010) Port of Discharge “free out” (as defined in the United States Department of Transportation’s Maritime Administration Glossary of Shipping Terms, with discharge arranged and paid by the Buyer).

 

(c)           For any Parcel delivered to a Port of Discharge which is not a Main Japanese Smelter Port, the Seller shall be entitled to a credit if the cost of freight and insurance to be borne by the Seller in respect of the Parcel exceeds that which would be required to ship the same Parcel from the Port of Loading to a Main Japanese Smelter Port, and the Buyer shall be entitled to a credit if such cost is less (such credit in either case, a “Freight and Insurance Credit”); provided that the amount of such Freight and Insurance Credit shall be negotiated and mutually agreed by the Seller and the Buyer, acting reasonably and in good faith, based on the then prevailing spot rate for shipping the Parcel from the Seller’s Port of Loading to the Main Japanese Smelter Port.  If the Seller and the Buyer are unable to agree within twenty (20) days of 

 

5

 

the dispatch of the Parcel from the Port of Discharge, either may refer the matter for determination by a Referee pursuant to Article 12.  During such period of negotiation between the Parties, or referral to a Referee, shipments of Parcels (including any Parcel that is the object of disagreement under this Section 4.02(c)) shall not be delayed.

 

(d)           The effect of any Freight and Insurance Credit shall be to increase or decrease the Deductions on the relevant Parcel, as provided for in Section 7.08.

 

4.03                                           Discharging Berth; Vessel Dimensions

 

The Buyer shall nominate and guarantee at the intended Port of Discharge for each Parcel one good and safe berth where vessels may arrive, discharge and depart always afloat.  Vessels to be discharged at a particular Port of Discharge shall not exceed the maximum dimensions for that port, if any.

 

4.04                                           Discharge Rates and Terms

 

(a)           The Buyer shall procure the discharge of each Parcel shipped to it hereunder from the relevant vessel on terms and conditions, including minimum discharge rates for Main Japanese Smelter Ports, Main Korean Ports, Main Northern China Ports and Main Indian Ports, which shall, subject to Section 4.04(c), be negotiated in good faith and mutually agreed by the Seller and the Buyer in respect of each Contract Year, before the beginning of such Contract Year.  In agreeing such terms and conditions, the Seller and the Buyer shall have reference to the then prevailing customs at each port; provided that main terms shall be based on C. (Ore) 7.  During the Contract Year, if shipment is made to any Port of Discharge for which particular relevant terms and conditions have not been pre-agreed by the Seller and the Buyer, then that Port of Discharge’s prevailing custom shall apply.

 

(b)           If in the Buyer’s reasonable opinion, any shipment of Concentrates delivered hereunder is unsuitable for normal grab discharge, the Buyer shall promptly notify the Seller, detailing the nature of the problem, and the Seller and the Buyer shall promptly review how to overcome such problem to facilitate discharge.  Notwithstanding the foregoing, the Buyer shall use all reasonable efforts to discharge the Concentrates from the vessel in a timely manner and the Seller and the Buyer shall discuss the appropriate allocation of additional costs associated with such discharge.

 

(c)           If the Seller and the Buyer are unable to agree on the appropriate terms and conditions of discharge under Section 4.04(a) or the appropriate allocation of costs under Section 4.04(b), either Party may refer the matter to a Referee for determination under Article 12.  During any period of negotiation referred to in Section 4.04(a), or determination by a Referee under this Section 4.04(c), the Buyer shall not delay in the prompt discharge of any vessel or in the timely fulfilment of any other obligation hereunder.

 

(d)           The permitted laytime for each Port of Discharge shall be among the discharge terms to be agreed annually between the Parties under Section (a) or determined pursuant to Section (c), as applicable, as shall be the demurrage and despatch rates (in Dollars); provided that the Despatch rate for laytime saved shall in each case be one half of the demurrage rate.

 

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(e)           Unless otherwise expressly agreed in writing between the Seller and the Buyer, the terms and conditions of discharge to be determined under 4.04(a) or Section 4.04(c) shall be without prejudice to the general delivery and discharge terms and conditions set forth in Sections 4.05 through 4.14.

 

4.05                                           Notice of Readiness

 

The Notice of Readiness in respect of a Parcel shall be tendered in writing by the master of the relevant vessel to the Buyer’s Receiving Agent at the Port of Discharge at any time during Normal Office Hours after the relevant vessel has cleared customs, received free pratique and is in all respects ready for discharge whether in berth or not.  If Notice of Readiness is tendered on a Sunday or on a Local Holiday, it shall be treated as if it had been tendered at the commencement of the next working day.  The Seller shall appoint the vessel’s agent at the Port of Discharge.

 

4.06                                           Calculation of Laytime

 

(a)           Laytime at the Port of Discharge shall commence:

 

(i)                                     at 13:00 the same day if Notice of Readiness is tendered during Normal Office Hours before 12:00, unless discharge of cargo is commenced sooner, in which event the time actually used shall count as laytime used, and

 

(ii)                                  at 08:00 the next day that is not a Local Holiday, if Notice of Readiness is tendered during Normal Office Hours at or after 12:00, unless discharge of cargo is commenced sooner, in which event the time actually used shall count as laytime used.

 

Laytime shall terminate upon completion of unloading.  If the Buyer is able to arrange for discharge to commence before laytime starts, the vessel’s master may allow such work to be done and, if so, all time actually used shall count as laytime.

 

(b)           Time lost in waiting for a berth or, at the request of a port authority, moving on or off a berth or from one berth to another, shall count as laytime used.  However, if such request is attributable to the vessel, time lost in moving on or off a berth or from one berth to another shall not count as laytime used.

 

(c)           If the designated discharge berth is not available upon arrival at the Port of Discharge due to congestion, the vessel shall be permitted to tender Notice of Readiness in accordance with Section 4.05, and laytime shall be calculated in accordance with this Section 4.06.

 

(d)           Any time lost in discharging a Parcel due to repairs to the applicable vessel’s equipment or the fault of the vessel, its owner, its master or their agents shall not count as laytime or time on demurrage.

 

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(e)           In the event that the a Parcel is discharged following the discharging from the same vessel of other Concentrates at the same Port of Discharge, laytime shall commence two hours after completion of discharge of the other Concentrates unless sooner commenced or unless discharging of the other Concentrates is not completed during Normal Office Hours.  If discharging of the other Concentrates is completed after Normal Office Hours, laytime shall commence at 08:00 on the next Working Day unless sooner commenced.  If the vessel must wait for a discharging berth due to congestion, the laytime used while waiting for the berth shall be pro-rated between the Parcel and the other Concentrates to be discharged at the berth from that vessel according to the proportion that such Parcel bears to all Concentrates being discharged from that vessel at that berth.

 

4.07                                           Demurrage and Despatch

 

(a)           With respect to each Parcel, if the actual laytime, as determined pursuant to Section 4.06, exceeds the permitted laytime for the relevant Port of Discharge, demurrage shall be payable by the Buyer to the Seller as an adjustment to the Deductions for the Parcel; conversely, if the actual laytime, as determined pursuant to Section 4.06, is less than the permitted laytime for the relevant Port of Discharge, despatch shall be payable by the Seller to the Buyer as an adjustment to the Deductions.

 

4.08                                           Vessel Characteristics

 

Shipments shall be effected exclusively in single-deck bulk carriers which shall be suitable for mechanical grab discharge.  Concentrates shall be stowed and trimmed as per the Seller’s normal practice, provided that no Concentrates shall be loaded in areas inaccessible to the grabs (e.g. bunkers, deep tanks, tunnels, manholes or shafts).  The Concentrates shall be stowed separately from other cargoes.  Vessels shall be classed 100 A 1 at Lloyd’s or the equivalent and shall be no more than 20 years of age.

 

4.09                                           Overtime

 

Notwithstanding any other provision hereof, any stevedoring overtime payable at the Port of Discharge for discharging outside normal working hours shall be paid by the Party ordering such overtime, except that officers’ and crews’ overtime shall always be for the Seller’s account.

 

4.10                                           Port Charges; Discharge Procedures

 

(a)           The Buyer shall hold the Seller free and harmless from all port charges and dues, harbour dues, pilotage, crew expenses and light dues (if applicable) calculated with respect to the vessel carrying a Parcel and customarily paid by a vessel at the Port of Discharge.

 

(b)           Notwithstanding the foregoing, the Seller shall ensure that, without cost to the Buyer: (i) each vessel provides all necessary onboard lights for such vessel for night discharging; and (ii) hatches are opened and closed and any beams are removed and replaced at the vessel’s risk as necessary for or in connection with discharging, and time used for such purposes shall not count as laytime used, except that, if the custom of the Port of Discharge does not permit the vessel’s crew to open and close hatches and remove and replace any beams, then such activities shall be performed by shore labour for the Buyer’s account.

 

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(c)           The Buyer shall make best efforts to ensure that vessel holds are fully shovelled and swept clean upon completion of discharge and shall instruct stevedores to make best efforts to remove all material.  The Seller’s representative shall have the right to visually inspect each vessel’s hold upon completion of discharge to ascertain that all Concentrates have been shovel-cleaned from the hold.

 

4.11                                           Stevedore Damage

 

Stevedores at discharge shall be in the service of the Buyer and all stevedoring and related discharge costs shall be for the Buyer’s account.  Damage caused to a vessel by stevedores and/or lighters nominated and/or appointed by the Buyer shall be settled directly between such stevedores and the relevant vessel’s owner.  If the stevedores and the vessel’s owner are unable to settle, the Buyer shall cooperate for immediate settlement of such damage.

 

4.12                                           Nomination of Vessels

 

(a)           At least 15 days prior to the commencement of any calendar month in which a Parcel is to be shipped hereunder, the Seller shall notify the Buyer of the intended vessel’s name, the approximate quantity of Concentrates to be shipped in such Parcel and the spread of laydays, including the estimated time of such vessel’s arrival at, and the estimated time of its departure from, the Port of Loading, and the estimated date of such vessel’s arrival at the Port of Discharge.  At its option, the Seller may subsequently nominate or substitute another vessel, provided that the Seller shall use reasonable efforts to ensure that such vessel has as reasonable a spread of laydays as the initially nominated vessel.

 

(b)           Whenever the Buyer is notified of a vessel in accordance with Section 4.12(a), the Buyer shall advise approval or rejection within the same working day, if at all possible, but in no event shall Buyer’s response exceed two full working days (Saturdays, Sundays and holidays excluded).  The only valid ground for such objection shall be if such vessel does not satisfy the requirements of Section 4.08 or if such vessel’s length or draft exceed the port restrictions for the relevant Port of Discharge.

 

(c)           The Seller shall not charter any vessel to perform shipping under this Agreement from any shipping company if the Seller has a reasonable doubt about whether such company has the financial capacity to carry out its obligations under the Charter Party.

 

4.13                                           Notices

 

Immediately after the departure of each vessel carrying a Parcel from the Port of Loading, the Seller shall notify the Buyer of the tonnage of the Parcel in accordance with the bill of lading, the stowage plan, the name of the vessel and the estimated time of arrival at the Port of Discharge.  The applicable Charter Party shall contain a clause stipulating that the master of each vessel shall give the Buyer’s Receiving Agent five notices of the estimated time of arrival at the Port of Discharge ten days, five days, forty-eight hours, twenty-four hours and twelve hours prior to such expected time of arrival.

 

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4.14                                           Alternative Port

 

Notwithstanding the foregoing, if the discharge of a Parcel at the appointed Port of Discharge becomes impractical through no fault of the Seller or the vessel, such vessel shall proceed to an alternative safe port (an “Alternative Port”), as notified by the Buyer, where it can safely unload the Parcel. Promptly upon the receipt of such notice from the Buyer, the Seller shall direct the vessel to comply with such notice, provided that the master of the vessel judges such Alternative Port to be safe. If the vessel proceeds to the Alternative Port, any additional freight and other delivery costs incurred by the Seller shall be paid by the Buyer.

 

5.             TITLE AND RISK OF LOSS

 

5.01                                           The Seller’s Warranties on Title

 

The Seller shall have good and marketable title to the Concentrates to be sold hereunder, free and clear of all liens and encumbrances other than any lien or encumbrance on such Concentrates in the Seller’s inventory for the benefit of (i) RGLD Gold AG under the Amended and Restated Security Agreement Collateral dated December 14, 2011 among the Seller, the Guarantor, RGLD Gold AG and Royal Gold, Inc., as amended from time to time and (ii) the lenders under the Credit Agreement dated December 10, 2010 among the Guarantor and the lenders thereto, as amended from time to time.  Upon transfer of title to the Concentrates to the Buyer in accordance with Section 5.02, the Buyer shall receive good and marketable title to the Concentrates, free and clear of all liens and encumbrances, other than any liens or encumbrances on such Concentrates arising from the security interest retained by the Seller in accordance with Section 13.18.

 

5.02                                           Title and Risk of Loss

 

Risks of loss for any Parcel shipped to the Buyer hereunder shall pass to the Buyer as such Concentrates pass over ship’s rail at the Port of Loading.  Title to any Parcel shipped to the Buyer shall pass from the Seller to the Buyer upon the Seller’s receipt of payment in accordance with the Provisional Invoice for such Parcel.

 

6.             INSURANCE

 

6.01                                           Cargo Insurance

 

The Seller shall obtain and pay for ocean marine cargo insurance on each Parcel shipped hereunder in accordance with the terms and conditions of this Article 6.  Such insurance shall be placed with large, well-known, first class companies of good international repute and shall cover All Risks in accordance with Institute Cargo Clause (A) including revised insolvency exclusion clause, S.R.C.C., War Risk and Heating and Spontaneous Combustion Clauses.

 

6.02                                           Amount of Coverage

 

The insurance shall be effected in Dollars in the amount of 110% of the estimated Total Compensation, as set out in the Seller’s Provisional Invoice, and shall be adjusted to 110% of the

 

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Total Compensation set out in the Final Invoice.  All such insurance shall nominate the Buyer as beneficiary in respect of any loss after the time when the risk of loss passes to the Buyer.

 

6.03                                           Period of Coverage

 

The insurance shall provide coverage from the time the relevant Concentrates pass the ship’s rail at the Port of Loading, until 30 days after discharge of such vessel at the Port of Discharge or until the Concentrates have reached Buyer’s receiving smelter warehouse, whichever is earlier, as long as the Concentrates are in due course of transit.

 

6.04                                           Evidence of Insurance

 

The Seller shall provide to the Buyer the original and duplicate insurance certificates in respect of each Parcel, endorsed in blank.

 

7.             PRICE

 

7.01                                           Compensation for Concentrates

 

The total compensation payable by the Buyer to the Seller for each Parcel (“Total Compensation”) shipped hereunder shall be equal to the aggregate amount of the payments for Payable Copper, Payable Gold and Payable Silver determined in accordance with Sections 7.02 through 7.04, minus the sum of: (i) the Deductions specified in Section 7.08 and (ii) the product of the weight of any Toll Refined Gold with respect to such Parcel and the Payable Gold Price.

 

7.02                                           Copper Payment

 

The payable copper for each DMT of Concentrates in each Parcel shipped hereunder shall be *[Redacted]* (the “Payable Copper”), payable at a price equal to the average of the daily official London Metal Exchange Grade A Settlement quotations for high-grade copper quoted in Dollars, as published in Metal Bulletin during the applicable Quotational Period but corrected to the official quotations of the London Metal Exchange in the event of printing errors (the “Payable Copper Price”).

 

7.03                                           Gold Payment

 

No payment shall be made for gold in any particular Parcel if the gold content of that Parcel is one gram or less per DMT of Concentrates.  If the assayed gold content is more than one gram per DMT of Concentrates, then the payable gold for each DMT of Concentrates in such Parcel (the “Payable Gold”) shall be:

 

(i)                           *[Redacted]*

 

(ii)                        *[Redacted]*

 

(iii)                     *[Redacted]*

 

(iv)                    *[Redacted]*

 

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(v)                       *[Redacted]*

 

(vi)                    *[Redacted]*

 

(vii)                 *[Redacted]*

 

(viii)              *[Redacted]*

 

in each case payable at a price equal to the average of the London Bullion Market Association’s “initial” and “final” daily quotations for gold quoted in Dollars, as published in Metal Bulletin during the applicable Quotational Period, but corrected to the official quotations of the London Bullion Market Association in the event of printing errors (the “Payable Gold Price”).

 

7.04                                           Silver Payment

 

No payment shall be made for silver in any particular Parcel if the silver content of that Parcel is *[Redacted]* or less per DMT of Concentrates.  If the assayed silver content is more than *[Redacted]* per DMT of Concentrates, then the payable silver for each DMT of Concentrates in such Parcel (the “Payable Silver”) shall be *[Redacted]* of the assayed silver content, payable at a price equal to the average of the daily London Bullion Market Association’s fine silver spot quotations quoted in Dollars, as published in Metal Bulletin during the applicable Quotational Period, but corrected to the official quotations of the London Bullion Market Association in the event of printing errors (the “Payable Silver Price”).

 

7.05                                           *[Redacted]*

 

7.06                                           Alternate Pricing

 

(a)           In the event that (i) Metal Bulletin ceases to be published, or ceases to publish any quotation referred to in this Article 7 for determining the prices for copper, gold and/or silver, (ii) the London Metals Exchange ceases to quote a price for copper or the London Bullion Market Association ceases to quote a price for gold and/or silver, as the case may be, or (iii) any of such quotations are, in the reasonable opinion of the Seller or the Buyer, no longer internationally recognized as the basis of payments for such metals, then, upon written notice by the Seller or the Buyer to the other, the Seller and the Buyer shall promptly consult with each other with a view toward determining a new basis consistent with the previous method (under this Article 7) for determining the prices for copper, gold and/or silver, as the case may be, with respect to the Concentrates to be sold hereunder.

 

(b)           The prices of copper, gold and/or silver, if quoted in any currency other than Dollars by Metal Bulletin, shall be converted into Dollars using the average daily rate published by the Federal Reserve Board of the United States over the applicable Quotational Period for the purchase of Dollars using the currency quoted in Metal Bulletin.  The average price for any such Quotational Period shall be calculated by totalling the Dollar equivalents of the daily prices and dividing such total by the number of pricing days in such period.

 

(c)           If either the Seller or the Buyer notifies the other pursuant to Section 7.06(a) above, the Seller shall then have the right, by written notice to the Buyer, to invoice

 

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provisionally (in respect of any of the types of invoices referred to in Article 7.13(a)) at the applicable price(s) applied to the last previous shipment of Concentrates sold hereunder prior to such written notice (the “Interim Price”) and the Buyer shall thereafter pay on the basis of the Interim Price until (i) the Seller and the Buyer shall agree on a new pricing basis for the metal(s) concerned or (ii) the Referee has finally determined the price(s) as provided in Section 7.06(b) below, whichever shall first occur.  Once agreement is reached pursuant to Section 7.06(b) above or determination is made by Referee pursuant to Section 7.06(b) below, the affected quantities of Concentrates shall be promptly re-invoiced by the Seller based on the new pricing basis for the metal(s) concerned.

 

(d)           In the event that within 30 days after the date of any notice for consultation pursuant to Section 7.06(a)) above, the Seller and the Buyer shall not have agreed on an alternate basis for determining the price of the copper, gold and/or silver content of the Concentrates to be sold hereunder, as the case may be, either the Seller or the Buyer shall have the right to refer the matter to a Referee for resolution in accordance with Article 12; provided that, during the period of such determination by a Referee, the Seller and the Buyer shall not delay in the complete fulfilment of any obligation hereunder (other than the issuance of any Final Invoice).

 

7.07                                           Quotational Period

 

(a)           The Quotational Period with respect to any Parcel shall be:

 

(i)                                     With respect to copper, *[Redacted]*;

 

(ii)                                  With respect to silver, *[Redacted]*; and

 

(iii)                               With respect to gold, *[Redacted]*.

 

(b)           *[Redacted]*

 

7.08                           Deductions

 

The Deductions shall be equal to the net amount of:

 

(i)                                     the applicable Treatment Charge;

 

(ii)                                  the applicable Copper Refining Charge;

 

(iii)                               the Precious Metal Refining Charges;

 

(iv)                              the Copper Price Participation (the amount of which may increase or decrease the Deductions);

 

(v)                                 for shipments to other than a Main Japanese Smelter Port, any applicable Freight and Insurance Credit (the amount of which shall increase or decrease the Deductions);

 

(vi)                              Demurrage or despatch for the Parcel, pursuant to Section 4.07

 

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(vii)                           Any other amount owing from the Buyer to the Seller or from the Seller to the Buyer in relation to the Parcel under Article 4 and;

 

(viii)                        any applicable Penalties.

 

7.09                                           Treatment Charge

 

The treatment charge (the “Treatment Charge”) for Concentrates delivered hereunder shall be:

 

(i)                                     for the 2013 Contract Year, negotiated and agreed in good faith between the Seller and the Buyer during May and June, 2013, provided that it shall be based upon the treatment and refining charges charged *[Redacted]*;

 

(ii)                                  for the Base Quantity in each of the 2014, 2015 and 2016 Contract Years, negotiated and agreed in good faith between the Seller and the Buyer during *[Redacted]*;

 

(iii)                               *[Redacted]* in each of the 2015 and 2016 Contract years, negotiated and agreed in good faith between the Seller and the Buyer during the respective prior Contract Year *[Redacted]*; and

 

(iv)                              *[Redacted]*,

 

provided that if the Buyer and the Seller fail to reach agreement on any Treatment Charge within the applicable time period specified above, the matter may be submitted to a Referee for determination under Article 12, and provided further that any delay in determining a Treatment Charge shall not give rise to a right to adjust any Concentrates delivery schedule or excuse any delay in the complete fulfilment of any obligation hereunder (other than the issuance of any Final Invoice)..

 

7.10                                           Copper Refining Charge

 

The copper refining charge (the “Copper Refining Charge”) for Concentrates delivered hereunder shall be:

 

(i)                                     for the 2013 Contract Year, negotiated and agreed in good faith between the Seller and the Buyer during May and June, 2013, provided that it shall be *[Redacted]*;

 

(ii)                                  for the Base Quantity in each of the 2014, 2015 and 2016 Contract Years, negotiated and agreed in good faith between the Seller and the Buyer during *[Redacted]*;

 

(iii)                               *[Redacted]* in each of the 2015 and 2016 Contract years, negotiated and agreed in good faith between the Seller and the Buyer during the respective prior Contract Year *[Redacted]*; and

 

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(iv)                              *[Redacted]*,

 

provided that if the Buyer and the Seller fail to reach agreement on any Copper Refining Charge within the applicable time period specified above, the matter may be submitted to a Referee for determination for determination under Article 12, , and provided further that any delay in determining a Copper Refining Charge shall not give rise to a right to adjust any Concentrates delivery schedule or excuse any delay in the complete fulfilment of any obligation hereunder (other than the issuance of any Final Invoice).

 

7.11                                           Precious Metal Refining Charges

 

The refining charges for precious metals applicable to Concentrates delivered hereunder (the “Precious Metal Refining Charges”) shall be as follows:

 

(i)                                     $*[Redacted]* per troy ounce of Payable Silver; and

 

(ii)                                  $*[Redacted]* per troy ounce of Payable Gold,

 

and shall apply throughout the term of this Agreement.

 

7.12                           Copper Price Participation

 

The copper price participation (the “Copper Price Participation”) for Concentrates delivered hereunder shall be:

 

(i)                                     for the 2013 Contract Year, negotiated and agreed in good faith between the Seller and the Buyer during May and June, 2013, provided that it shall be based upon *[Redacted]*; and

 

(ii)                                  for each of the 2014, 2015 and 2016 Contract Years, negotiated and agreed in good faith between the Seller and the Buyer during the respective prior Contract Year, provided that it shall be based upon *[Redacted]*,

 

provided that if the Buyer and the Seller fail to reach agreement on any Copper Price Participation within the applicable time period specified above, the matter may be submitted to a Referee for determination for determination under Article 12, and provided further that any delay in determining a Copper Price Participation shall not give rise to a right to adjust any Concentrates delivery schedule or excuse any delay in the complete fulfilment of any obligation hereunder (other than the issuance of any Final Invoice).

 

7.13                                           Penalties

 

(a)           If at any time and from time to time during the term of this Agreement, based on analysis of any Concentrates hereunder and prevailing industry practice, the Buyer determines that penalties for certain elements or compounds contained in such Concentrates should be imposed, the Buyer may give notice to the Seller setting forth the particulars of the proposed penalties.  If the Seller objects to the imposition of such penalties, the Seller shall notify the

 

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Buyer of such objection within 30 days following the Buyer’s original notice of the proposed penalties.  If the Seller does not notify the Buyer of any such objection within such 30-day period the Seller shall be deemed to have agreed to the penalties proposed by the Buyer. If the Seller does so object, the Parties shall promptly following such objection meet and negotiate in good faith with a view to reaching agreement on any applicable penalties.

 

(b)           If the Parties are unable to agree on the applicable penalties within 30 days after the Seller’s notice of objection referred to in Section 7.13(a) above, either the Buyer or the Seller may refer the matter for negotiation to its respective senior commercial officers.  If an agreement has not been reached by the Parties within 30 days of the matter having been referred to the Parties’ senior commercial officers, the Buyer or the Seller may refer the matter for determination to the Referee in accordance with Article 12.  In making such determination, the Referee shall consider any penalties then prevailing in the applicable concentrate market as well as such other factors as the Referee may consider appropriate.  Irrespective of the foregoing, however, in making its decision, the Referee shall ensure that the Seller is treated no less favourably than any other seller of concentrates to the Buyer.

 

(c)           The penalties to be applied with respect to a Concentrate, if any, as consented to by the Seller or agreed to by the Parties or as determined by the Referee as contemplated above (in each case a “Penalty”) shall, unless otherwise agreed by the Parties or determined by the Referee following any reference thereto, apply to all Concentrates delivered hereunder starting with the first shipment in the month in which the Buyer gave the Seller the notice of proposed penalties under Section 7.13(a).

 

(d)           For the avoidance of doubt, each Penalty shall be imposed in respect of a Parcel only on the basis of final assay results, determined under Article 10, in respect of the relevant Parcel’s content of the element or compound with which the relevant Penalty is associated.

 

8.             PAYMENT

 

8.01                                           Manner of Payment

 

All payments by the Buyer for Concentrates sold to it hereunder shall be made in Dollars in immediately available and freely transferable funds by means of electronic transfer to such bank account as the Seller may notify to the Buyer from time to time in writing.

 

8.02                                           Payment of Total Compensation

 

The Total Compensation for each Parcel sold to the Buyer hereunder shall be paid by the Buyer as follows:

 

(i)                                     if the Seller *[Redacted]* in respect of such Parcel, the Buyer shall make a provisional payment equal to 90% of the estimated Total Compensation (the “Provisional Payment”) to be paid promptly upon shipment of the Parcel from the Port of Loading (the “Provisional Payment Date”) against the Seller’s Provisional Invoice, subject to receipt by the Buyer in respect of such Parcel of the clean on-board bill of lading; or

 

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(ii)                                  *[Redacted]*.

 

(iii)                               a final payment equal to the amount, if any, by which the Total Compensation as set out in the Final Invoice exceeds the sum of the net payments made pursuant to Section 8.02(i) or Section 8.02(ii) (the “Final Payment”), to be paid on or before the third Banking Day after receipt by the Buyer of the Final Invoice.  Additionally, interest on payments made pursuant to Section 8.02(ii) and 8.03 (b) shall be included in the Final Invoice.

 

Should the Total Compensation as set out in the Final Invoice be less than the sum of the net payments made pursuant to Section 8.02(i) or Section 8.02(ii) (the “Final Payment”), Seller shall make payment to Buyer of such difference on or before the third Banking Day after receipt by the Buyer of the Final Invoice.

 

8.03                                           *[Redacted]*

 

8.04                                           Provisional Invoices

 

(a)           In respect of each Parcel, the Seller shall, at the Production Facilities or the Port of Loading, determine the full weight and moisture content of the Parcel and conduct a provisional assay of the Parcel, and shall set out the results thereof in a provisional certificate (the “Provisional Certificate”), which shall be delivered to the Buyer together with the Provisional Invoice, and any Advance Provisional Invoice for that Parcel.

 

(b)           For purposes of calculating the amount of the Provisional Payment for a Parcel, the Total Compensation shall be estimated by the Seller based on: (i) the Provisional Payment Certificate; (ii) the Deductions then in effect; and (iii) the Seller’s calculation of the Payable Copper Price, Payable Gold Price and Payable Silver Price using provisional metal prices determined in accordance with Article 7 hereof but based on the daily average price thereof during the Calendar Week prior to the Calendar Week containing the date of the bill of lading for the Parcel.  The Seller shall prepare and deliver to the Buyer a provisional invoice (the “Provisional Invoice”) for each Parcel in an amount equal to the Provisional Payment relating thereto, calculated as aforesaid no less than three Business Days before the Provisional Payment Date.

 

(c)           *[Redacted]*

 

8.05                                           Final Payment

 

(a)           For purposes of the Final Payment, the Seller shall prepare its final invoice for each Parcel of Concentrates based on dry weights, assays and the final prices applicable to such Parcel determined in accordance with Articles 7, 9 and 10 hereof (the “Final Invoice”) and shall submit such Final Invoice to the Buyer by facsimile or, subject to Section 13.09(b), by facsimile or e-mail, promptly after such final data is available.  Final Payment for each Parcel of Concentrates sold hereunder, if any is required pursuant to Section 8.02(iii), shall be made by the Buyer by no later than the third Banking Day after receipt by it of the Seller’s Final Invoice.  The

 

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original of the Final Invoice shall be sent by mail to the Buyer on the same day on which the Seller submits its final invoice by facsimile or e-mail.

 

(b)           If the Total Compensation as shown on the Seller’s Final Invoice is less than the sum of the payments made by the Buyer to the Seller pursuant to Section 8.02(i) or Section 8.02(ii), the amount of the difference shall be paid by the Seller to the Buyer not later than the third Banking Day after the Seller has transmitted its Final Invoice to the Buyer, in good and collectable funds by electronic transfer to the Buyer at such account as the Buyer may direct or, at the option of the Buyer, the Buyer may deduct such amount from sums thereafter becoming due and payable to the Seller under this Agreement.

 

8.06                                           Late Payment

 

In the event that any payment under this Article 8 is not made on the due date thereof, such payment shall bear interest at the 3-month LIBO Rate in effect on such due date, plus four percent (4%) per annum, from and including such due date to but excluding the date on which such payment is received and calculated on the basis of a 360-day year.

 

8.07                                           Price Determination in the Event of Loss

 

(a)           In case of total loss or destruction of any Parcel of Concentrates any time after the risk of loss passes to the Buyer but prior to weighing, sampling and moisture determination pursuant to Section 9.01, the Final Invoice shall be based upon the full weights, which the Seller shall have determined, and provisional assays, which the Seller shall have conducted, at the Port of Loading and set out in the Provisional Certificate.

 

(b)           In the case of total loss or destruction of any Parcel of Concentrates any time after the risk of loss passes to the Buyer but prior to arrival at the Port of Discharge, the Date of Arrival of such Parcel shall be deemed to have occurred 35 days after the bill of lading date for purposes of determining Quotational Periods.

 

(c)           In case of partial loss or damage to a portion of the Concentrates in any Parcel prior to weighing, sampling and moisture determination pursuant to Section 9.01, the final invoice for the lost or damaged portion shall be based upon:

 

(i)                                     the full weight as determined at the Port of Loading; and

 

(ii)                                  the moisture content and the weighted average of the final assays for copper, gold and silver (as ascertained by assay in accordance with Article 9 and Article 10), as determined from the portion of such Parcel safely delivered to the Buyer.

 

8.08                                          Taxes, Tariffs and Duties

 

(a)           All taxes, tariffs, fees, duties or other governmental fees or charges whether existing or imposed in future, applicable to the Concentrates and/or contained metals sold hereunder or commercial documents relating thereto imposed by the country of origin, or any political sub-division thereof, shall be borne by the Seller.

 

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(b)           All taxes, tariffs, fees, duties or other governmental fees or charges whether existing or imposed in future, applicable to the Concentrates and/or contained metals sold hereunder or commercial documents relating thereto imposed or to be imposed in any country in which any Port of Discharge or any receiving smelter is located, or any political sub-division thereof, shall be borne by the Buyer.

 

9.             WEIGHING, SAMPLING, DETERMINATION OF MOISTURE

 

9.01                                           General Procedure

 

(a)           With respect to Parcels shipped to Japan, South Korea, the Philippines, North America (including Mexico), Western Europe (including Bulgaria) hereunder, the weighing, sampling and determination of moisture for each Parcel shall be carried out in accordance with internationally accepted industry standards at the Port of Discharge or at the ultimate receiving smelter in the country, whichever is customary.  The Seller and the Buyer shall mutually agree on the person to supervise at these operations, and its costs shall be shared equally.

 

(b)           For shipments to China and India, *[Redacted]*.

 

(c)           The Buyer shall take all reasonable precautions to prevent handling or other losses of Concentrates between ship’s rail and the point of weighing, sampling and moisture determination pursuant to Section 9.01(a) or Section 9.01(b).  The Seller, at its own expense, shall be entitled to be represented at the discharge, weighing, sampling and determination of moisture by an independent surveyor or representative acceptable to the Buyer, such acceptance not to be unreasonably withheld.  Failure of the Seller’s representative to be present on any occasion after receipt of reasonable notice from the Buyer shall constitute a waiver of the Seller’s rights of representation on that occasion.

 

(d)           Notwithstanding the foregoing Sections 9.01(a) and 9.01(b), *[Redacted]* for the purposes of weighing, sampling and determining moisture content of a Parcel, the weighing, sampling and moisture determination for such Parcel shall be carried out at the Port of Loading in accordance with accepted industry standards by the Seller at the Seller’s expense during the loading of the carrying vessel and such weights and samples shall govern for final settlement provided however, that *[Redacted]*.

 

(e)           In the circumstances, in which neither Section 9.01(a) nor Section 9.01(b) applies, the weighing, sampling and moisture determination for a Parcel shall be carried out in accordance with Section 9.01(d).

 

(f)            If weighing, sampling and moisture determination for a Parcel are carried out at the Port of Loading in accordance with Section 9.01(d), the Buyer shall have the right to be represented thereat, at the Buyer’s expense.  Failure of the Buyer’s representative to be present on any occasion after receipt of reasonable notice from the Seller shall constitute a waiver of the Buyer’s rights of representation on that occasion.

 

(g)           If the Seller and the Buyer fail to reach agreement regarding the equipment or standards at a Port of Discharge or a receiving smelter, or regarding the person to supervise weighing, sampling and the determination of moisture content pursuant to Section 9.01(a) or

 

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Section 9.01(b), either Party may refer the matter for a decision by a Referee under Article 12; provided that during the period of such determination by a Referee, no obligation to ship or receive Concentrates hereunder shall be delayed, and provided further that, during the period of such determination, the Seller may conduct the weighing, sampling and moisture determination at the Port of Loading for each affected Parcel, the results of which may serve as definitive measurements hereunder, depending upon the outcome of the applicable referral pursuant to Article 12.

 

9.02                                           Determination of Dry Weight and Moisture

 

The dry weight and moisture as determined pursuant to Section 9.01 shall govern for the purpose of final settlement of the Total Compensation for each Parcel.

 

9.03                                           Sample Lots

 

For purposes of sampling, each Parcel of Concentrates shall be divided into separate lots of approximately 500 WMT each, or as otherwise agreed (each a “Lot”), and samples shall be taken from each Lot.

 

9.04                                           Number and Handling of Samples

 

The sample taken from each Lot as specified in Section 9.03 shall be divided into nine equal parts, two for the Seller, two for the Buyer, two for the receiving smelter and three for reserve/umpire.  Two reserve samples shall be sealed and retained by the Seller or its appointed representative.

 

9.05                                           Penalty Samples

 

For the purpose of conducting any analysis for elements other gold, copper and silver (including to determine whether any Penalty should be assessed), nine sets of composite samples shall be taken from each Parcel, two for the Seller, two for the Buyer, two for the receiving smelter and three for reserve.  Two reserve samples shall be retained as provided in Section 9.04 above.

 

10.           ASSAYS

 

10.01                                     Copper, Gold and Silver Content

 

The copper, gold and silver content of any Parcel of Concentrates shall be determined in accordance with this Article 10.

 

10.02                                    Method for Determining Final Analysis

 

From the Lot samples taken in accordance with Sections 9.03 and 9.04, assays for each of copper, gold and silver, and penalty elements if applicable, shall be made independently by the respective assayers of the Seller and the Buyer (who shall not at that time be one of the Umpires).  The results of such assays shall be exchanged simultaneously on a Lot-by-Lot basis, or composite basis for penalty elements, by mail as soon as possible, on a date mutually agreed

 

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upon.  If one Party fails to so exchange its assay results, the assay results of the other Party shall be deemed to be conclusive.  Determination for gold and silver assays shall be made in accordance with fire assay methods corrected for slag loss and cupel absorption.  The mean of such results shall be final and binding upon the Parties hereto if such results show that the differences between the Seller’s and the Buyer’s assays are within the following limits:

 

	
 
    	
·
    	
Copper:
    	
*[Redacted]*
    
	
 
    	
·
    	
Gold:
    	
*[Redacted]*
    
	
 
    	
·
    	
Silver:
    	
*[Redacted]*
    

 

10.03                                     Umpire Assays

 

If the results of assays described in Section 10.02 show that the difference between the Seller’s and the Buyer’s assays for any of copper, gold or silver, or penalty elements if applicable, in a given Lot exceeds the applicable limit therefor specified in Section 10.02, the matter shall be referred to one of the designated Umpires.  The Umpire’s assay shall be made on the basis of one of the reserve samples referred to in Section 9.04, which shall be sent by the Seller or its appointed representative via air freight to the Umpire.  The Umpire’s gold and silver assays shall be made in accordance with fire assay methods corrected for slag loss and cupel absorption. The Umpire shall be instructed to advise both the Seller and the Buyer of the results of the Umpire’s assay by facsimile or e-mail and by mail.

 

10.04                                     Final Analysis based on Umpire’s Assay

 

If an Umpire’s assay in respect of an element falls between the applicable assays of the Seller and the Buyer, the mean of the result of the Umpire’s assay and the result of the assay of the Party whose result is nearer to the Umpire’s result shall be final and binding on the Parties hereto.  Otherwise, the middle assay of the three assays shall be taken as the agreed assay.  The cost of the Umpire assay shall be paid by the Party whose assay is further from the Umpire assay.  When the Umpire assay is the exact mean of the other two, then these charges shall be shared equally by the Seller and the Buyer.

 

10.05                                     Parcel Content

 

After all per-Lot assays have been completed pursuant to Sections 10.02 through 10.04, the copper, gold and silver content of the relevant Parcel shall be determined based upon the dry weight of the Parcel (determined pursuant to Article 9) and, with respect to each element, the weighted-average of the final assay results for that element for each Lot in the Parcel, determined pursuant to Section 10.02 and 10.04, as applicable.

 

10.06                                    Royal Gold Interest

 

Notwithstanding any other provision hereof, RGL Gold AG or its representatives shall be permitted to, at their own cost, attend any weighing or sampling of any Parcel.

 

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11.           FORCE MAJEURE AND TERMINATION

 

11.01                                     Force Majeure

 

(a)           Failure or delay by the Seller or the Guarantor in the performance of any term, condition or covenant contained herein (other than a failure to make payments required hereunder), shall be excused, if such failure or delay in performance was caused by an act of nature or the elements, disturbance, fire, unavailability of power, water or other items necessary for production, delay or interruption of transportation, war or consequence thereof, insurrection, civil strife or mob violence, export restriction, embargo or similar law, regulation or requirement of any federal, state, provincial or local government or governmental body, expropriation, nationalization or other act of eminent domain, strike, lock-out or other work stoppage, breakdown of equipment or machinery, delays or failure in obtaining materials, supplies or equipment, or any other cause, whether or not similar to those enumerated above, beyond the reasonable control of the Seller or the Guarantor, as the case may be, provided that in no event shall a lack of funds constitute a cause beyond the control of a Party and prevention or settlement of any strike or labour disturbance shall not be considered a matter within the control of a Party.  Each such cause, as aforesaid, shall constitute an Event of Force Majeure and such failure or delay shall be excused until such cause or causes shall have ceased.

 

(b)           Notwithstanding any other provision hereof, in no event shall the Seller or the Guarantor be obligated to deliver concentrates from other than the Production Facility and neither of them shall be obligated to rebuild or repair any damaged or destroyed property in order to fulfill this Agreement.

 

(c)           The Party claiming an Event of Force Majeure shall give prompt notice thereof to the other Parties indicating the nature of such Event, the date of commencement of such Event, and the estimated duration (if possible) of such Event.  The Party claiming an Event of Force Majeure shall give further notice to the other Parties (i) from time to time as to the progress in remedying such Event and as to the time that the affected Party expects to resume performance of its obligations hereunder and (ii) immediately after such Event ceases to have effect.

 

(d)           The following provisions shall apply in the alternative, depending on the duration of an Event of Force Majeure:

 

(i)                                     If any Event of Force Majeure continues in effect for a period of 60 consecutive days or less, any affected deliveries of Concentrates hereunder during such period shall be made up as soon as practicable following termination of the Event of Force Majeure.

 

(ii)                                  If any Event of Force Majeure continues in effect for a period of more than 60 days, but less than or equal to 360 consecutive days, then a Party who has received notice of the Event of Force Majeure shall have the option to cancel any of the Concentrates which would have been delivered during such period.

 

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(iii)                               If any Event of Force Majeure continues in effect for a period of more than 360 days, then each Party shall have the right to terminate this Agreement.

 

If an Event of Force Majeure is in effect at the end of the last Contract Year, and has continued for less than 360 days at that time, the term of this Agreement shall herewith be extended until such time that the Event of Force Majeure has ended, or 360 days has elapsed from the start of the Event of Force Majeure, whichever is earlier. Except as provided in the foregoing sentence, no event of Force Majeure shall have the effect of extending the term of this Agreement.

 

The right to cancel quantities of Concentrates or the right to terminate the Agreement as set forth above shall be made by written notice to the other Parties at any time during the period of the Event of Force Majeure or up to five Business Days following the termination of the period of the Event of Force Majeure.

 

(e)                                       The Seller and the Guarantor agree to use all reasonable efforts from time to time and at all times to prevent the occurrence of any Event of Force Majeure, and to cause the termination of any Event of Force Majeure that has occurred.  Notwithstanding the foregoing, the settlement of labour disputes shall be entirely in the discretion of the Party affected thereby and there shall be no obligation on the affected Party to test or refrain from testing the validity of any order, regulation or law relating to such labour disputes.

 

11.02                                     Termination

 

(a)           If the Seller, Guarantor or Buyer materially breaches any material provision hereof (and, for the avoidance of doubt, such breach is not excused by Section 11.01(a)), then if such breach is continuing and has not been reasonably cured by the end of a period of 60 days following written notice of the breach by any Party to the breaching Party, then (i) in the event of a breach by Seller and/or Guarantor, Buyer may terminate this Agreement, effective upon the delivery of written notice to the other Parties hereto, or (ii) in the event of a breach by Buyer, Seller may terminate this Agreement, effective upon the delivery of written notice to Buyer.

 

(b)           Notwithstanding the termination of this Agreement as contemplated hereunder (whether pursuant to 11.02(a) above or any other provision hereof), each Party shall remain liable for its obligations hereunder which have accrued prior to the date of termination, including all payment obligations.

 

12.           REFEREES

 

12.01                                     Selection of Referees

 

In the event that a matter is to be submitted to a Referee pursuant to this Agreement, the Seller and the Buyer shall appoint an independent industry expert to act as a single Referee to determine the matter.  Any person appointed as a Referee shall be a person of sound commercial background and with knowledge of the base metals and concentrates markets.  No person who has been an employee, consultant or otherwise provided services (other than as a Referee hereunder) to any Party hereto or any of their respective affiliates during the five years preceding the reference shall be eligible to act as a Referee.  If the Seller and the Buyer are unable to agree

 

23

 

on the appointment of the single Referee within five Business Days, then each shall appoint one independent nominator and the Referee shall be appointed by agreement of the two independent nominators.  If either the Seller or the Buyer fails to appoint its respective independent nominator within five Business Days after such initial five-Business-Day period, such nominator shall be appointed by the President of the American Arbitration Association and the costs for such appointment shall be paid by the Party failing to appoint such nominator.  If the two independent nominators fail to agree on the Referee within five Business Days after the appointment of the second nominator, such Referee shall be appointed by the President of the American Arbitration Association and the costs of such appointment shall be paid equally by the Seller and the Buyer.

 

12.02                                     Submission of Positions

 

The Seller and the Buyer shall each submit in writing in English its respective position to the Referee and to the other Party within five Business Days after the Referee has been appointed.  The Seller and the Buyer shall then have a further five Business Days to review the other’s submission and to submit a written rebuttal in English to the Referee (the “Submission Period”).

 

12.03                                     Proceeding; Final Determination

 

Promptly after expiry of the Submission Period, the Referee shall offer such guidance to the Seller and the Buyer, if any, that the Referee considers appropriate with a view toward progressing the negotiations between the Seller and the Buyer.  If the Seller and the Buyer fail to agree within 10 Business Days after both Seller and the Buyer have submitted their respective positions to the Referee, the Referee shall, within five Business Days thereafter, finally determine any such matter by selecting one of such two positions.  In making such selection, the Referee shall take account of any basis of negotiations between the Seller and the Buyer set forth in this Agreement with respect to the matter in question.  If either the Seller or the Buyer fails to submit its respective position to the Referee prior to the expiry of the Submission Period, the Referee shall promptly following expiry of such period finally determine that the sole position submitted to him shall prevail.

 

12.04                                     The Decision

 

Any decision of the Referee made in accordance with this Agreement shall be final and binding on the Parties and shall apply retroactively to the period for which the Seller and the Buyer were to have reached agreement.

 

12.05                                     Costs

 

Any costs associated with the services of a Referee shall be borne equally by the Seller and the Buyer in the event that agreement is reached by them on a particular issue.  If an issue is decided by the Referee, the Party whose position was not selected shall bear all such costs, provided that, if the Referee finds that the other Party acted unreasonably in connection with the matter the Referee may, in his discretion, order that other Party pay all or any portion of such costs.

 

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13.           MISCELLANEOUS

 

13.01                       Guarantee

 

The Guarantor unconditionally guarantees the punctual performance when due of the Seller’s obligations under this Agreement; provided that the Guarantor shall be entitled to all rights, privileges, and defences otherwise available to the Seller under the Agreement with respect to such obligations, and provided further that the Buyer shall not proceed against the Guarantor under this Section 13.01 until demand for performance has been made to the Seller and the Guarantor.  Such demand shall be deemed to have been effectively made only if and when notice in writing containing such demand addressed to each of the Seller and the Guarantor is given in accordance with Section 13.09.

 

13.02                       Non-Waiver

 

No course of performance and no delay or failure by any Party in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice its rights, powers or remedies.  No single exercise of any right or power shall preclude the further exercise thereof or the exercise of any other right or power hereunder.  No right, power or remedy conferred upon any Party by this Agreement shall be exclusive of any other right, power or remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise, except as expressly provided herein.  No waiver of any provision of this Agreement shall be effective unless made in writing and signed by the Party against whom such waiver is sought to be enforced.

 

13.03                       Assignment

 

(a)           Except as otherwise permitted in this Section 13.03, no Party may grant, assign or transfer any of its rights or obligations hereunder without the prior written consent of the other Parties, and any attempt to assign or transfer, or to effect an assignment or transfer without such consent shall render such attempted assignment or transfer void.  Any such assignment with consent shall not relieve the assignor from its obligations under this Agreement to the extent the assignee fails to perform such obligations.

 

(b)           The Buyer may assign its rights and obligations under this Agreement to a wholly-owned subsidiary of the Buyer, provided that prior to such assignment the Buyer, the Seller, the Guarantor and such subsidiary enter into an assignment agreement in form satisfactory to the Seller and the Guarantor pursuant to which (i) the Buyer and the assignee represent and warrant to the Seller and the Guarantor that the assignee is a wholly-owned subsidiary of the Buyer and that such assignment shall not give rise to any increased costs to the Seller or the Guarantor during the remaining term of this Agreement, (ii) such assignment shall automatically terminate if the assignee ceases to be a wholly-owned subsidiary of the Buyer or if the assignment at any time gives rise to any increased costs for the Seller or the Guarantor and termination of the assignment would reduce the Seller’s or the Guarantor’s costs and (iii) the Buyer agrees that notwithstanding such assignment it shall remain liable for all of its obligations under the Agreement to the extent the assignee fails to perform all or any portion of such obligations or in the event of the termination of such assignment as aforesaid.

 

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(c)           The Seller may, without the consent of the Buyer, assign any of its rights and obligations under this Agreement provided that such assignment is to (i) a successor of the Seller by consolidation, merger or operation of law, (ii) a purchaser of all or substantially all of the Seller’s assets, or (iii) a lender of the Seller as collateral.

 

13.04                       Benefit of Agreement

 

This Agreement shall inure to the benefit of and be binding upon the Parties hereto and their respective successors and assigns (subject to Section 13.03), and no other person shall have any right or obligation hereunder.  Successors and assigns of the Parties hereto shall in no respect be entitled to any right, title or interest to which the assignor is not entitled unless otherwise provided for hereunder.

 

13.05                       Amendments

 

Any amendment to this Agreement shall only be effective if in writing and executed by or on behalf of each of the Parties.

 

13.06                       No Third-Party Beneficiaries

 

Except as otherwise expressly stated herein, this Agreement shall be to the benefit of no party other than the Seller, the Buyer and the Guarantor.

 

13.07                       Governing Law

 

This Agreement shall be governed by and construed in accordance with the law of the state of New York (without regard to its laws relating to any conflict of laws).  The United Nations Vienna Convention on Contracts for the International Sale of Goods shall not apply to this Agreement.

 

13.08                       Confidentiality

 

(a)           Each Party shall use its best efforts to ensure that the provisions of this Agreement and all information disclosed to it concerning the other Parties and their respective assets and businesses and not otherwise publicly available, and the determination of any matter hereunder by any Referee, Umpire or arbitrator, shall be kept confidential and shall, unless otherwise required by law or the rules and regulations of any stock exchange, not be disclosed without the consent of the other Parties to anyone other than (a) to the directors, officers, employees, accountants, consultants, counsel and representatives of each Party, (b) to any proposed assignee, (c) to any person or entity providing substantial financing to the Seller or the Guarantor, (d) to the direct or indirect shareholders of the Seller, (e) to any underwriter of securities to be issued by the Buyer, the Guarantor or the Seller, or to a rating agency, (f) in connection with legal proceedings or required filings with government agencies, courts, stock exchanges or other regulatory agencies, or (g) to any Umpire, Referee or arbitrator appointed hereunder.  If such information is so disclosed to any such person or entity, the disclosing Party agrees to use its best efforts to obtain from such person or entity a covenant for the benefit of each of the Parties hereto to keep such information confidential.

 

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(b)           Notwithstanding the foregoing, the Seller may deliver a copy of this Agreement and of each other document prepared in connection herewith to RGL Royalty AG and its affiliates.  In addition, the Seller may notify RGL Royalty AG and its affiliates in writing when any dispute arising out of or in connection with this Agreement is commenced in respect of Concentrates and may provide RGL Royalty AG and its affiliates with timely updates of the status of any such dispute and the final decision and award of any Referee, Umpire, court or arbitration panel with respect to such dispute, as the case may be.  The Seller may also notify RGL Royalty AG and its affiliates in writing upon the occurrence of any Event of Force Majeure under this Agreement and provide RGL Royalty AG and its affiliates with timely updates of the status thereof.

 

13.09                       Notices

 

(a)           All notices, requests, directions and other communications required or permitted by any provision of this Agreement shall be in writing and in the English language and shall be sufficiently given or transmitted if delivered by hand or sent by facsimile and addressed (i) in the case of the Buyer, to Louis Dreyfus Commodities Metals Suisse SARoute de l’Aeroport 29, Case Postale 236, CH-1215, Geneva 15, Switzerland, Attn:  Global Head Copper Concentrates, Telephone: +41-22-799- 2860, Facsimile: +41-22-592-7461, (ii) in the case of the Seller, to Terrane Metals Corp., 26 West Dry Creek Circle, Littleton, CO, 80120, Attention:  Chief Commercial Officer, Facsimile: 303-761-7420, and (iii) in the case of the Guarantor, to Thompson Creek Metals Company Inc., 26 West Dry Creek Circle, Littleton, CO 80120, Attention: General Counsel, Facsimile: 303-761-7420, or at such other address as may be designated in writing by the applicable Party to the other Parties hereto, as the proper address to which such communications should be delivered to it and shall become effective on the date of receipt by each Party to which it shall be addressed.

 

(b)           The Parties may send any such communications by e-mail, provided that prior to their initial use of e-mail for that purpose, they have each informed the other in writing of their intention to use e-mail for purposes of this Agreement and advised each other of their respective e-mail addresses and have successfully exchanged test communications to their mutual satisfaction.

 

13.10                       Remedies

 

Except as otherwise expressly provided herein, no remedy herein conferred upon any Party is intended to be exclusive of any other remedy and each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise.  Notwithstanding any other provision of this Agreement, no Party shall have any liability to the other Parties with respect to any hedging or similar losses any Party may suffer in connection with the transactions contemplated by this Agreement.

 

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13.11                       Execution in Counterparts

 

This Agreement may be executed in any number of counterparts and by the Parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all the counterparts shall together constitute one and the same instrument.

 

13.12                       Arbitration

 

(a)           Any dispute, claim or failure to agree arising out of or relating to this Agreement or any provision hereof, except those specifically identified as being determined by Referee or Umpire, shall be determined by arbitration between the Parties, in accordance with the then prevailing UNCITRAL Arbitration Rules.  Except as otherwise expressly provided in this Agreement, arbitration shall be the exclusive method for resolution of the dispute, and the determination of the arbitrators shall be final and binding on the Seller, the Guarantor and the Buyer.  The Parties agree that they shall give conclusive effect to the arbitrators’ determination and award and that judgment thereon may be entered by any court having jurisdiction.  Each Party shall bear its own costs in any such arbitration, provided that, if the arbitrators find that any Party shall have acted unreasonably they may, in their discretion, award costs against such Party.

 

(b)           Under no circumstances shall any arbitration required by this Agreement be subject to consolidation for any purpose with any other arbitration involving the Seller and persons other than the Buyer and the Guarantor hereunder.

 

(c)           The number of arbitrators shall be three, each of whom shall be disinterested in the dispute or controversy and shall be impartial with respect to all Parties hereto.  The Seller and the Buyer shall each appoint one arbitrator and the third arbitrator shall be appointed in accordance with the then prevailing UNCITRAL Arbitration Rules.  If either the Seller or the Buyer fails to appoint its respective arbitrator within 10 Business Days after the matter has been referred to arbitration, or if the two arbitrators fail to agree on the third within 15 Business Days after the appointment of the second, such arbitrator shall be appointed by the American Arbitration Association from its Large Complex Arbitration Panel.

 

(d)           The place of arbitration shall be the City of New York, U.S.A.  The arbitration shall be held in camera and conducted in the English language and any documents or portions thereof presented at such arbitration in a language other than English shall be accompanied by an English translation thereof.  The arbitrators shall give effect insofar as possible to the desire of the Parties hereto that the dispute or controversy be resolved in accordance with good commercial practice.

 

13.13                       Consent to Jurisdiction

 

(a)           Each Party hereto hereby irrevocably consents and agrees, for the benefit of each other Party, that any legal action, suit or proceeding against it (i) with respect to enforcement of the provisions set forth in Section 13.12, shall be brought in any federal or state court located in the Borough of Manhattan, The City of New York (a “New York Court”) and irrevocably accepts and submits to the exclusive jurisdiction of such New York Court with respect to any such action, suit or proceeding; and (ii) with respect to the enforcement, modification, vacation or correction of an award rendered in an arbitration conducted pursuant to Section 13.12 may be

 

28

 

brought in any New York Court and hereby irrevocably accepts and submits to the non-exclusive jurisdiction of such New York Court with respect to any such action, suit or proceeding.  Each Party waives any objection which it may have now or hereafter have to the laying of venue of any of the aforesaid actions, suits or proceedings specified in sections (i) and (ii) above brought in any New York Court and hereby further waives and agrees not to plead or claim in any such New York Court that any such action, suit or proceeding therein has been brought in an inconvenient forum and waives any right it may have to trial by jury.  No Party shall be relieved from its performance under this Agreement pending any such proceeding.

 

(b)           To the extent that any Party hereto has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution, sovereign immunity or otherwise) with respect to itself or its property, it hereby irrevocably waives such immunity in respect of its obligations under this Agreement.

 

13.14                       Entire Agreement

 

This Agreement sets forth the entire understanding of the Parties with respect to the subject matter hereof.  Neither this Agreement nor any provision hereof can be waived, changed, discharged or terminated except by an instrument in writing signed by the Party against which the enforcement of any waiver, change, discharge or termination is sought.

 

13.15                       Headings

 

The headings of the respective articles, sections and clauses of this Agreement are inserted for convenience of reference only and shall not be deemed to be a part of this Agreement or considered in construing this Agreement.

 

13.16                       Representations And Warranties

 

(a)           The Seller represents and warrants to the Buyer the following:

 

(i)            The Seller is a corporation duly organized under the laws of British Columbia, with full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  The execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action (including, but not limited to, approval by the board of directors and, if necessary, stockholders) of the Seller and this Agreement constitutes a valid and binding obligation of the Seller enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization and other laws of general application limiting the enforcement of creditors rights generally and to the fact that specific performance is an equitable remedy available only in the discretion of the court.

 

(ii)           Neither the execution and delivery of this Agreement nor the consummation of any or all of the transactions contemplated hereunder shall (i) violate any provision of the certificate of incorporation or by-laws

 

29

 

or other organizational documents of the Seller, (ii) violate, be in conflict with, or constitute a default (or an event of default which, with notice or lapse of time or both, would constitute a default) under any agreement or commitment to which the Seller is a party or (iii) violate any statute or law or any judgment, decree, order, regulation or rule of any court or any governmental body applicable to the Seller.

-

(b)           The Guarantor represents and warrants to the Buyer the following:

 

(i)            The Guarantor is a corporation duly organized under the laws of British Columbia, with full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  The execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action (including, but not limited to, approval by the board of directors and, if necessary, stockholders) of the Guarantor and this Agreement constitutes a valid and binding obligation of the Guarantor enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization and other laws of general application limiting the enforcement of creditors rights generally and to the fact that specific performance is an equitable remedy available only in the discretion of the court.

 

(ii)           Neither the execution and delivery of this Agreement nor the consummation of any or all of the transactions contemplated hereunder shall (i) violate any provision of the certificate of incorporation or by-laws or other organizational documents of the Guarantor, (ii) violate, be in conflict with, or constitute a default (or an event of default which, with notice or lapse of time or both, would constitute a default) under any agreement or commitment to which the Guarantor is a party or (iii) violate any statute or law or any judgment, decree, order, regulation or rule of any court or any governmental body applicable to the Guarantor.

 

(c)           The Buyer represents and warrants to the Seller and the Guarantor the following:

 

(i)            The Buyer is a société anonyme organized under the laws of Switzerland, with full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  The execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action (including, but not limited to, approval by the board of directors and, if necessary, stockholders) of the Buyer and this Agreement constitutes a valid and binding obligation of the Buyer enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization and other laws of general application limiting the enforcement of creditors rights generally and to the fact that specific performance is an equitable remedy available only in the discretion of the court.

 

30

 

(ii)           Neither the execution and delivery of this Agreement nor the consummation of any or all of the transactions contemplated hereunder shall (i) violate any provision of the certificate of incorporation or by-laws or other organizational documents of the Buyer, (ii) violate, be in conflict with, or constitute a default (or an event of default which, with notice or lapse of time or both, would constitute a default) under any agreement or commitment to which the Buyer is a party or (iii) violate any statute or law or any judgment, decree, order, regulation or rule of any court or any governmental body applicable to the Buyer.

 

13.17                       Material Adverse Change

 

(a)           The Parties hereto agree that, if a Party (the “Notifying Party”) reasonably determines and informs another Party (the “Notified Party”) in writing (with copy to the third Party hereto) that in its reasonable opinion the Notified Party has suffered a material adverse change in its financial condition or creditworthiness when compared to its financial condition or creditworthiness as at the date of the Agreement, the Agreement shall be terminated upon the delivery of such notice.  In the event of such notification and termination, no penalties or fees shall apply to any Party as a result solely of the termination.

 

(b)           Notwithstanding the foregoing, each Party undertakes that, prior to delivering a notice of material adverse change to another Party pursuant to Section 13.17(a), it shall orally advise the other Parties of its specific concerns and ask the Party experiencing a material adverse change in its financial condition or creditworthiness to seek a cure, whether in the form of credit support or collateral, which, if proposed or implemented, it in its sole discretion may or may not accept.

 

13.18                       Security Interest

 

The Seller shall retain, and the Buyer hereby grants to the Seller, a security interest in all Concentrates delivered to the Buyer hereunder until such time as the Buyer has made the Final Payment for such Concentrates.  Such security interest (i) shall only apply to the extent that any portion of the Final Payment remains outstanding, (ii) shall not affect the Buyer’s right to blend, commingle, treat, process or resell the Concentrates and (iii) shall not apply or attach to any metal produced from such Concentrates and sold in the ordinary course of the Buyer’s business.

 

31

 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.

 

	
 
    	
LOUIS DREYFUS COMMODITIES METALS SUISSE SA
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Paul Shapiro
    
	
 
    	
 
    	
Name: Paul Shapiro 
   Title: Global Head, Copper Raw Materials
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Hal Didner
    
	
 
    	
 
    	
Name: Hal Didner
   Title: Manager
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Thomas Mackay
    
	
 
    	
 
    	
Name: Thomas Mackay 
   Title: Head of Refined Materials
    
	
 
    	
 
    	
 
    
	
 
    	
TERRANE METALS CORP.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Mark A. Wilson
    
	
 
    	
 
    	
Name: Mark A. Wilson
   Title: Chief Commercial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
THOMPSON CREEK METALS COMPANY INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Kevin Loughrey
    
	
 
    	
 
    	
Name: Kevin Loughrey
   Title: Chief Executive Officer
    

 

32

 

Appendix A

 

DEFINITIONS

 

In this Agreement, unless the context otherwise requires, the following terms shall have the meanings assigned below.  References in the Agreement to the singular include the plural and vice versa.  Unless otherwise specified, references in this Appendix A to sections and articles are to sections and articles of the Agreement:

 

“Adjusted 2013 Base Amount” shall have the meaning assigned to it in Section 2.02(b).

 

“Adjusted 2014 Base Amount” shall have the meaning assigned to it in Section 2.02(c).

 

“Advance Provisional Payment” shall have the meaning assigned to it in Section 8.02(ii).

 

“Advance Provisional Payment Date” shall have the meaning assigned to it in Section 8.02(ii).

 

*[Redacted]*

 

“Advance Provisional Invoice” shall have the meaning assigned to it in Section 8.04(c).

 

“Agreement” shall mean the Copper Concentrates Sales Agreement to which this Appendix A is attached, including this Appendix A and the other appendices thereto.

 

*[Redacted]*

 

“Alternative Port” shall have the meaning assigned to it in Section 4.14.

 

“Annual Schedule” shall have the meaning set forth in Section 4.01(d).

 

“Banking Day” shall mean any day other than a Saturday, a Sunday or a day that is a bank or public holiday in the City of London, England, the State of Colorado, United States of America or the Province of British Columbia, Canada.

 

“Base Amount” shall mean, with respect to a Contract Year, the DMT of Concentrates to be purchased and sold hereunder in that Contract Year, exclusive of the Concentrates to be purchased and sold under any Quantity Option.

 

*[Redacted]*

 

“Business Day” shall mean any day other than a Saturday, a Sunday or a day that is a bank or public holiday in the State of Colorado, United States of America, the State of New York, United States of America or the Province of British Columbia, Canada.

 

“Buyer” shall have the meaning assigned thereto in the recitals of this Agreement.

 

“Buyer’s Receiving Agent” shall mean the receiving agent at the applicable Port of Discharge appointed by the Buyer, after notice thereof has been given to the Seller.

 

A-1

 

“Calendar Week” means a week beginning on a Monday and ending on a Sunday.

 

“Charter Party” shall mean the contract of charter or affreightment to be entered into from time to time between the Seller and the owner of a vessel chartered or hired for the shipment of any Parcel pursuant to this Agreement.

 

“Concentrates” shall mean flotation copper concentrates produced at and originating from the Production Facility.

 

“Contract Year” shall mean the period of twelve consecutive calendar months commencing on January 1, 2013 or any of the subsequent periods of twelve consecutive calendar months beginning on January 1 of any year during the term of this Agreement.

 

“Copper Price Participation” shall have the meaning assigned to it in Section 7.12.

 

“Copper Raw Materials” means the monthly report having that title published by CRU International Ltd. (or any replacement thereof published by CRU International or any successor thereto).

 

“Copper Refining Charge” shall have the meaning assigned to it in Section 7.10.

 

“Date of Arrival” shall mean with reference to (a) any vessel containing no cargo other than Concentrates sold by the Seller to the Buyer under this Agreement, the date on which the master of the vessel tenders Notice of Readiness to the Buyer as provided for in Section 4.05, or (b) any vessel which is carrying cargo in addition to Concentrates sold by the Seller to the Buyer under this Agreement, the later of the date on which the master of the vessel tenders Notice of Readiness to the Buyer as provided in Section 4.05, and the date on which the discharge of the Concentrates sold by the Seller to the Buyer is actually commenced.

 

“Deductions” shall have the meaning assigned to it in Section 7.08.

 

“Dollars” or “$” shall mean the currency of the United States of America.

 

“DMT” shall mean a dry metric tonne, equal to 1,000 kilograms.

 

 “Event of Force Majeure” shall mean an event of the type described in Section 11.01(a).

 

“Final Invoice” shall have the meaning assigned to it in Section 8.05.

 

“Final Payment” shall have the meaning assigned to it in Section 8.02(iii).

 

“Freight and Insurance Credit” shall have the meaning assigned to it in Section 4.02(c).

 

“Guarantor” shall have the meaning assigned thereto in the recitals of this Agreement.

 

*[Redacted]*

 

“LIBO Rate” shall mean, for any period, the interest rate per annum for deposits in U.S. dollars for such period which appears on the Reuters LIBOR01 page (or such other page as may 

 

2

 

replace that page on that service for the purpose of displaying the British Bankers Association Settlement Rates for London interbank deposits in U.S. dollars) at or about 11:00 a.m. London time on the Business Day in London before and for value on the first day of such period, provided that:

 

(i)                                     if such period is not equal to any period shown on such page, LIBOR shall be the rate determined by interpolation from the rates for the next longer and next shorter periods shown on such page, using the number of days as the basis for the interpolation, expressed as a decimal fraction to five decimal places and rounded to the closest fifth decimal; and

 

(ii)                                  if the LIBO Rate is not published on such day, then the first day preceding such day on which the LIBO Rate is so published.

 

“Local Holidays” shall mean the national or customary local holidays and Saturdays customarily not worked by the office personnel at the Buyer’s Receiving Agent or at the Port of Discharge of which the Buyer has notified the Seller.

 

“Lot” shall have the meaning assigned to it in Section 9.03.

 

 “Metal Bulletin” shall mean the publication known as the “Metal Bulletin” and currently published twice a week in London, England, buy the Metal Bulletin Journals Ltd. (a subsidiary of Metal Bulletin plc) (or any replacement thereof published by the same publisher or any successor thereto).

 

“Month of Notified Shipment” shall have the meaning assigned to it in Section 4.02(a).

 

“New York Court” shall have the meaning ascribed thereto in Section 13.13.

 

“Normal Office Hours” shall mean (a) on Monday through Friday, from 08:00 to 16:00, and (b) on Saturday, from 08:00 to 12:00; provided, however, Normal Office Hours shall not include Local Holidays (unless such days are worked).

 

“Notice of Readiness” shall mean the notice provided when a vessel has cleared customs, obtained free pratique and is in all respects ready to discharge.

 

“Notified Party” shall have the meaning assigned to it in Section 13.17(a).

 

“Notifying Party” shall have the meaning assigned to it in Section 13.17(a).

 

“Parcel” shall mean a tonnage of Concentrates to be shipped hereunder to a particular Port of Discharge in a single voyage of a vessel.

 

“Parties” shall mean the Buyer, the Seller and the Guarantor and “Party” shall mean one of them or any of them, as the context requires.

 

“Payable Copper” shall have the meaning assigned to it in Section 7.02.

 

3

 

“Payable Copper Price” shall have the meaning assigned to it in Section 7.02.

 

“Payable Gold” shall have the meaning assigned to it in Section 7.03.

 

“Payable Gold Price” shall have the meaning assigned to it in Section 7.03.

 

“Payable Silver Price” shall have the meaning assigned to it in Section 7.04.

 

“Payable Silver” shall have the meaning assigned to it in Section 7.04.

 

“Penalty” shall have the meaning assigned to it in Section 7.13.

 

“Port of Loading” shall mean the Port of Vancouver, Canada, or such other port as the Seller may determine.

 

“Port of Discharge” shall mean, with respect to a particular Parcel, the port named by the Buyer in the notice to the Seller referred to in Section 4.02(a) as the port to which such Parcel is to be delivered.

 

“PPM” shall mean parts per million.

 

“Precious Metal Refining Charges” shall have the meaning assigned to it in Section 7.11.

 

“Production Facility” shall mean the mine, mill and related facilities located near Fort St. James, British Columbia, Canada and known together as the Mt. Milligan Mine, which are currently under development by the Seller.

 

“Provisional Certificate” shall have the meaning assigned to it in Section 8.04(a).

 

“Provisional Invoice” shall have the meaning assigned to it in Section 8.04(b).

 

“Provisional Payment” shall have the meaning assigned to it in Section 8.02(i).

 

“Provisional Payment Date” shall have the meaning assigned to it in Section 8.02(i).

 

“Quantity Options” shall mean the Seller’s options referred to in Section 2.03(a).

 

“Quotational Period” shall mean the applicable period determined in accordance with Section 7.07.

 

“Referee” shall have the meaning assigned to it in Article 12.

 

“Seller” shall have the meaning assigned thereto in the recitals of this Agreement.

 

“Seller’s Gold Account” shall have the meaning assigned thereto in Section 7.05(a).

 

“Stated 2013 Base Amount” shall have the meaning assigned to it in Section 2.02(b).

 

“Stated 2014 Base Amount” shall have the meaning assigned to it in Section 2.02(c).

 

4

 

 *[Redacted]*

 

“Total Compensation” shall have the meaning assigned to it in Section 7.01.

 

“Treatment Charge” shall have the meaning assigned to it in Section 7.09.

 

*[Redacted]* Option described in Section 2.03(b).

 

*[Redacted]*

 

“Umpire” shall mean any one of the umpires listed in Appendix C.

 

“Unit” shall mean one hundredth part of a DMT.

 

“WMT” shall mean a wet metric tonne, equal to 1,000 kilograms.

 

5

 

Appendix B

 

CHEMICAL SPECIFICATION

 

The Seller estimates and expects (but does not warrant) that the Concentrates sold to the Buyer shall exhibit approximately the following specifications:

 

	
ELEMENT
    	
 
    	
RANGE: %
    
	
 
    	
 
    	
 
    
	
Cu
    	
 
    	
24 - 29
    
	
Fe
    	
 
    	
24-34
    
	
S
    	
 
    	
30 - 35
    
	
Pb
    	
 
    	
0.005 – 0.15
    
	
Zn
    	
 
    	
0.01 – 0.2
    
	
Al203
    	
 
    	
0.70 – 1.75
    
	
CaO
    	
 
    	
0.50 – 1.50
    
	
MgO
    	
 
    	
0.50 – 1.50
    
	
SiO2
    	
 
    	
4 – 6
    
	
 
    	
 
    	
RANGE: GRAMS PER DMT
    
	
Ag
    	
 
    	
40 – 120
    
	
Au
    	
 
    	
25 – 75
    
	
 
    	
 
    	
RANGE: PPM
    
	
As
    	
 
    	
30 – 240
    
	
Bi
    	
 
    	
<140
    
	
Cd
    	
 
    	
<30
    
	
Cl
    	
 
    	
90 - 240
    
	
Co
    	
 
    	
50 – 170
    
	
F
    	
 
    	
60 - 250
    
	
Hg
    	
 
    	
<10
    
	
Mo
    	
 
    	
100 – 2,000
    
	
Ni
    	
 
    	
50 – 175
    
	
Sb
    	
 
    	
70 – 350
    
	
Se
    	
 
    	
75 – 200
    

 

B-1

 

Appendix C

 

UMPIRES

 

A.H. Knight International Ltd.
 Eccleston Grange, Prescot Road
 St Helens
 Merseyside
 WA1O 3BQ
 United Kingdom

 

Laboratory Services International BV
 Pittsburghstraat 9
 3047 BL Rotterdam
 Netherlands

 

Alex Stewart International Corporation

20 Sefton Business Park

Netherton

Liverpool, Merseyside L30 1RD

United Kingdom

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