EXECUTIONCOPY DATED31MARCH2000 THEGOVERN" OFTHEREPUBLIC OF ZAMBIAzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA AND KONKOLA COPPER MINESPLC DEVELOPMENT AGREEMJ3NT CLIFFORDCHANCE CONTENTS Clause pase PARTzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAA ..................................................................................................... 3 1. Definitions And Interpretations .................................................................... 3 PARTB................................................................................................... 16 2. Right to Manage and Obligations to Develop ................................................. 16 3. Rights To Export And Import ................................................................... 21 4. Supply and Procurement.......................................................................... 21 5. Local Business Development .................................................................... 22 6. Employment and Training Plan.,................................................................ 23 7. Insurance............................................................................................ 24 8. Suspensionor Curtailment of Production...................................................... 25 9. Social Assets and municipal infrastructure Services .......................................... 27 10 Records and Operating Reports ................................................................. 28 PARTC................................................................................................... 31 11. Foreign Exchange ................................................................................. 31 . ............................................................................. 33 12 Environmental Issues PARTD................................................................................................... 43 13 General Stability and Operational Undertakings. by GRZ ................................... 43 14 General Obligation to Pay. Tax .................................................................. 46 . .................................................................................. 15 Taxation Stability 46 . ............. 48 16 Compensation for Breach of Stability or compulsory acquisitionProvisions PARTE................................................................................................... 50 17. Assignment......................................................................................... 50 18. Extensions to Time ................................................................................ 53 19. Termination......................................................................................... 53 20. ................................................................ Amicable Settlement of Disputes 58 21. Sole Expert ......................................................................................... 58 22. Arbitration.......................................................................................... 63 23. Performance to Continue ......................................................................... 65 24. Waiverof Sovereign Immunity.................................................................. 65 25. Law Applicable .................................................................................... 65 26. Force Majeure. Economic Force Majeure and Material Adverse Change ................ 65 G2181/CKQ30 27. Variation............................................................................................ 67 ~~~ 28. Additional Consultation ............. <=-.-. .......................................................... 68 29. Notices .............................................................................................. 69 30. Waiver .............................................................................................. 70 ~~ ~ 31. Severability......................................................................................... 71 ~~ 32. Further Acts................................................................................... .. 71 33. Counterparts........................................................................................ 71 ~~ ................................................... 34. Absence of Representations and W-arranties 71 35. Compensation and payment ......................... _........................................... 71 36. Entire agreement ................................................................................... 72 ~~ 37. Indexation........................................................................................... 72 SCHEDULE1 Approved Programme of Mining andMetalTreatment Operations ;;-.~. 74 .. .. ............................... SCHEDULEzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA2 Local Business Development Programme .... :.T 75 ~~~ SCHED-ULE3.............................................................................................. 76 PARTICONTRACTAREAS.......................................................................... 76 PART11 FORM OFTHE LARGE SCALE MINING LICENCE-:............................... 77 ~ ~ PARTIIIMININGAREAS............................................................................ 79 SCHEDULE4............................................................................................ 80 PART I THE KCM ENVIRONMENTAL PLAN IS INCQEWORATED HERE BY ~~~ . ~ ~ ...................................................................................... P~FERENCE 80 PART 11 THE ZCCM ENVIRONMENTAL PLAN IS INCORPORATED HERE BY REFERENCE...................................................................................... 80 81 SCHEDULE5 Employment and Training Plan ....................... ..........................zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA ............................................................... 82 d SCHEDULE6 Required Insurances ~ ~~ ....................................................................... 8. SCHEDULE7 TaxSc~~ule SCHEDULE8 Working Schedule: .._................ ....................... ~ ...................... 87 SCHEDULE9 TheResettlement Action Plan is Incorporatedhereby Reference.......... 89 G2181/CNM30 THIS AGREEMENTismade on 31March2000 BETWEEN: (1) THE GOVERNRIENT OF THE REPUBLIC OFzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAZAMBIA,zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAacting through the Minister of Mines and Minerals Development and the Minister of Finance ("GRZ"); and (2) KONKOLA COPPER MINES PLC, a company incorporated in the Republic of Zambia (registeredno. 43628), whose registered office is at 74 Independence Avenue, Lusaka, Republic of Zambia (whichshall include any permitted assigns or successors of the rightsand obligationsof Konkola Copper Mines Plc) ('IKCMtt). wHEREA!3 Proposals have been submitted on behalf of KMby the KCM Consortium for the development and operation of the major mine and treatment plants and facilities of Konkola Division including the Konkola Deep MimgProject, the Nchanga Division (including the Chmgola Refractory Ores), the Nampundwe Mine and associated assets (including agreed social assets) of ZCCM m the Copperbelt and Lusaka Provinces of Zambia (the "Facilities"),the location of which is more specifically identified by reference to the plans annexed hereto as Exhibits to Schedule 3, Part 1. The SmelterCo Option and Pre-Emption Agreement dated 31 March 2000 provides that, if KM exercises its right thereunder to acquire the assets of SmelterCo and to novate this Agreement to cover such Assets, the provisions of this Agreement and the Schedules will apply to such assets and such assets shall be deemed to be part of the Facilities except for the purposes of the Investment Commitment. GRZhas approved these proposals, which are hereafter referred to as the "Approved Programme of Mining and Metal Treatment Operations" and are annexed hereto as Schedule 1. The development and operation of tie Facilities shall be ' of major economic significanceto the people of Zambia. GRZ wishes to ensure that the continued development and exploitation of the commercial deposits of copper ore at the Facilities together with the development of KDMP shall secure the maximum benefit for, and adequately contribute to the advancementand the social and economicwelfare of, the people of Zambia, including the people m the vicinity of the Contract Areas in a manner consistent with their needs and the protection of the environment and secure an appropriate return on investment for the Shareholders commensurate with the risks involved to KM. GRZ and KCM have agreed on a number of matters which are set out in this Agreement and wish tiematters agreedupon to be an enduring arrangement of national interest. GRZhasgrantedto tieMinisterof Mines and Minerals Development and the Minister of Finance statutory authority under Section nine of the Act to enter into this Lo~lon-U512730/12 - 1 - G21811000M Agreement on behalf of GRZ and GRZ and KCM each agrees to be bound by all the terms and conditions relating thereto. The Minister has consulted with the Minister responsible for finance and economic development as required by Section 9 of the Act, as mended, and has sought and received the advice of the Mining Advisory Committee in accordance with Section 88 of the Act and is acting in accordance with such advice. (7) GRZ, ZCCM and KCM have entered into a Sale and Purchase Agreement dated 15December 1999which requires on its Completion(asdefmed therein) the entry into of this Agreement. (8) GRZ, ZCCM and KCM have entered into an Environmental Liabilities Agreement ofzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA even date herewith which provides, infer alia, for responsibility for preparationzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAand implementationof m environmental plan to be assumed by ZCCM m respect of assets not acquired by KCM pursuant to tie provisions of the Sale and Purchase Agreement referred to in (7) above and for the provision by GRZ of certainmdemnities m respect 4 of liabilities under Environmental Laws and laws relating to mine safety. -2- G218MKW30 PARTA GENERAL 1. DEFINITIONSzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAAND INTERPRETATIONS l.1zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAIn this Agreement, unless the context otherwise requires: "Act"means the Mines and Minerals Act, 1995 (No. 31of 1995)asfrom time to time amended and in effect, and includes my regulations made thereunder, but subject, in all cases, to the provisions of Clause 13.l(b) of this Agreement; "Affiliate, AffiliatedParty, or AffitedParties"means: (a) mycompany in which KCMor a Shareholder(asthe case mybe) holds fifty per cent. (50%) or more of tieordinary voting shares or which holds fifty per cent. (50%) or more of KCM's or a Shareholder's (as the case mybe) ordinary shares; L (b) any person which, directly or indirectly, is controlled by or Controls, or is under Common Control with, KCM or a Shareholder (asthe case mybe); or (c) any person or group of persons king directors or executive officers of, or m the employmentof, any person referred to m (i)or (ii) above, and "Control"means: ((3 the power (whether directly or indirectly) and whether by the ownership of share capital, the possession of voting power, contract or otherwise to appoint and/or remove all or such of the bardof directors or other governing body of a person as are able to cast a majority of the votes capable of bemg castby the membersof that board or body; and/or (e) the holding and/or the ownership of the beneficial interests m and/or the ability to exercise the voting rights applicable to shares or other securities m any person which confer in aggregate on the holders, whether directly or by means of holding such interests mone or more other persons (either directly or indirectly), more than fifty per cent. (50%) of the voting rights exercisable at general meetings of that person, and "Controlledby" shall be construed accordingly and "Common Control"means the circumstances where two (2) or more persons are controlled by the same person or its Affiliates; "Agreement"means thisagreementas varied from time to time m accordance with the terms hereof; "Approved Programme of Mining and Metal Treatment Operations" means tie proposals for rehabilitating, developing and operating the Facilities which are set out m Schedule 1 (asvaried from time to time in accordance withClause 27); -3- G2181KKO30 ''Assets"has the meaningzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAgiven to it in the Sale and Purchase Agreement; "Business"means the business to be carried on by KCM, namely that of (a) exploration, appraisal and mining of ore and waste; (b)the treatment of ore to produce products and (c) sale of products, m each case whether within or outside Zambia, and such other activities, including related transport and trading of metals, incidental adorconducive to the foregoing which may be approved by the Directors from time to time; "Busmess Day" means any day (other than a Saturday or a Sunday) on which commercial banks are generally open for business in London, New York, Johannesburg and Lusaka; "Calendar Month"means a month commencing on the first (1st) day of such month and ending on the thirtieth (30th) or thirty first (31st) day of such month or, in the case of February, the twenty eighth (28th)or twenty ninth (29th)day as the case may be; W "Call Option Deed"means the call option deed of even date herewith made between ZCCM, GFU and KCM and which provides that, m certain circumstances, ZCCM may require the transfer to it of the assets of the Konkola Division and the assets comprising the KDMP; "CEC"means the Copperbelt Energy Corporation PLC (asmore particularly described in the Sale and Purchase Agreement); "Central Bank"means the Bank of Zambia or any successor thereto; "Collective Agreement(s)"means the Standard Conditions of Employment and Service as agreed with the Mineworkers Union of Zambia and which idare in force at tiedate hereof, as these may be re-negotiated by KCM prior to Completion and which shall become effective as at Completion, asamended from time to time; "Companies Act"means the Zambian Companies Act, 1994 (Act No. 26 of 1994) as from time to time amended and in effect but subject, in all cases, to the provisions of Clause 13.l(a) of this Agreement; "Completion"hasthe meaning given to it in the Sale and Purchase Agreement; "Confidential Information" means any reports, records or other information or documents supplied to or made available for inspection by GRZ under Clause 10 (whether in writing, in disk or electronic form, orally or pursuant to discussions and m any form or medium in which any such information may be recorded or kept); "ContractAreas"zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAmeans those land areas describedmSchedule 3 Part I; "Controlof Goods Regulations"means the Control of Goods (Import Declaration Fee) Regulations, 1997 (S.I. No. 20 of 1997), issued pursuant to an amendment (S.I. No. 7 of 1997) to the Control of Goods Act (Chapter 690 of the Laws of Zambia), as -4- G2181KNM30 from time to time amended and meffect but subject, in all cases, to the provisions of Clause 16.1 of this Agreement; "Copperbelt"means Copperbelt Province in Zambia comprising the main copper mining area mZambia; "CopperzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAFloor Price" means one thousand seven hundred United States dollars (US$1,700) per tonne adjusted annually on the first and each succeeding anniversary of the Effective Date (an "AdjustmentDate")by the change m the Producer Price Index for Finished Goods not seasonally. adjusted, as it appears in the periodical Monthly Labor Review as published by the US Department of Labor, Bureau of Labour Statistics (the "Index")or, if such index is not published, such other index that replaces it on the basis set out below: CFPn = (CFPn- 1)X PPIn PPIn-1 L Where: CFPn isthe adjusted Copper Floor Price CFPn-l isthe previousCopper Floor Price PPIn isthe Index for the month three (3)months prior to the Adjustment Date PPIn-l isthe Index for the month fifteen (15) months prior to the Adjustment Date "Copper Reference Price" means the spot price per tonne of Grade A Copper of the London Metal Exchange as published in Platt's Metal Week averaged over a period of twelve (12)Calendar Months as certified by the auditors of KCM from time to time or upon the request of GRZ (as the case mybe). In the event that Platt'S Metal Week fails to publish quotations for Grade A Copper as aforesaid for any week, the Parties shall agree an alternative source to establish the price of Grade A Copper within five (5) Business days of notification by KCM to GRZ of the failure to publish such quotations as aforesaid, failing which the Parties may refer the matter for determination in accordancewith Clause 21; "Dispute"means my dispute, disagreement, controversy, claim or difference of whatsoever nature arising under, out of, m connectionwith or relating (in any manner whatsoever) to this Agreement including (without limitation) mydispute or difference (i) concerning the initial or continuing existence of this Agreement or any provision thereof, (ii) as to whether this Agreement or any provision thereof is invalid, illegal or unenforceable (whether initially or otherwise), (iii) as to the interpretation, performance or breach of thisAgreement (including whether any default notices served under Clause 19is valid or whether the default or failure alleged in any such Default Notice has occurred), (iv) concerning the legal capacity of my of the Parties, or the signatories on their respective behalves to this Agreement, to enter into and validly bind the Parties to the terms of this Agreement or any provisions (or any part of any provision) thereof including, m particular (but without limitation), the provisions of Lod0~2/512730/12 -5- G21811000M Parts C and D, (v) as to whether any compensation is payable under any provision of this Agreement and as to the quantum of such compensation, or (vi) any dispute or claim which is ancillary or connected, in each case in any manner whatsoever, to the foregoing; "DistributableProfits"means accumulated after tax profits and reserves of KCM, available for distribution as dividends in accordance with Section eighfyfour of the Companies Act, as shown in the financial statementsof KCM; "Divisions"means the Konkola Division, the Nchanga Division (which shall be deemed to include the Chingola Refactory Ores) and the Nampundwe Mine and "Division"shall mean any one of them; "EconomicForce Majeure"means a situation where tie Copper Reference price has fallen and remains Mow tie Copper Floor Price and an "Economic Force Majeure Event"shall mean the giving of notice of the occurrence of Economic Force Majeure pursuant to Clause 26.3 (a); 4 "EffectiveDate"means the date of Completion; "Employmentand Training Plan"means until such time as agreement is reached on thezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAftiform of such plan pursuant to Schedule 6, the programme forming Schedule 6 heretoasapprovedby the Minister for the purposes of Section 25(l)(e)of the Act (and appended to the Large Scale Mining Licences pursuant to Section 25(4) of the Act) and thereafter means such plan as mybe approved by the Minister and which replaces Schedule6; "EnablingLegislation"means tiefollowing legislation: 1. the Mines and Minerals (Amendment) Act 2000; 2. the Companies (Amendment) Act 2000; 3. the National Pension Scheme (Amendment) Act 2000; 4. the Pension Scheme Regulation (Amendment) Act 2000; and 5. the Income Tax Amendment Act 2000. ""EnablingStatutoryInstruments""means the following statutory instruments: 1. tie Minesand Minerals (Environmental) (Exemption) Order; 2. the Pension Scheme Regulation (Investment) (Exemption) Order; and 3. the National Pension Scheme (Exemption) Order. 4. Companies (Fees) (Exemption) Order; 5. Companies (ResidentDirectors)Order; 6. Customs and Excise (Excise Duty) Suspension Regulations; 7. Mines and Minerals (Royalty) (Remission) Order; and 8. the Customs and Excise (Konkola Copper Mines Plc) (Remissions) Regulation 2ooo. - 6- G2181/CKN30zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA and such other statutory instruments as mybenecessary to give effect to- Schedule 7 of the Development Agreement. L -zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA7 - G218UOWO "Environment"means any ecological system and the living organism which live in it (including m and his property) and the following media: air (including air within buildings and the air within other natural or man made structures whether above or below ground); water (including water under or within land or in drains, culverts, sewers or other manmade structures and inland waters) and land (including land under water); "EnvironmentalLaws" means: the Act, tie Mining (Mineral Resource Extractions) Regulations, 1994 (SI 119/1994); the Environmental Protection and Pollution Control Act (Act No.12 of 1990) and regulations enacted thereunder; and the Mines and Minerals (Environmental) Regulations 1997 (SI No.29 1997) and my other law or regulations m force from time to time mZambia (including tie common law) which have as a purpose or effect the protection of and/or prevention of harm to the Environment or to human health and/or the provision of remedies for harm or damage to the Environment or to human health save for the provisions contained in each of such laws and regulations which relate to mine safety ador the safety of persons rather than to the Environment but subject, in all cases, to the provisions of Clause 12.3 and 13.l(d) of thisAgreement; "Environmental Condition" means any or any combination of the following, in each case to the extent they arise from, are connected with or affect the Assets or Normal Operations: (a) pollution of the Environment andlor harm to human health resulting from pollution or harm to the Environment including noise, emissions, the conditions of buildings, other man made structures or tie work place, and discharges or releases of my substances into tie Environment; (b) contaminated land; and (c) pollution of waters; "Environmental Liabilities Agreement" means the agreement of even date herewith between KCM, ZCCM and GRZ providing for, inferdiu,the adoption of a ZCCM Environmental Plan and the indemnification of KCM by GRZ in respect of certain environmentaland mine safety liabilities; "EnvironmentalPlans"means each of the KCM Environmental Plan and the ZCCM Environmental Plan; "Environmental ProtectionFund"means the fund established by section eighty WO of tieAct as the same applies to KCMpursuant to the Enabling Statutory Instruments; "Extension of Time Event" means an event certified as such byzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAKCM and arising from: Gd any action by GRZ or action taken on its behalf otherzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAthan in accordance with this Agreement; or (b) any action taken by a person not party to this Agreement (other than m Affiliate of a party) or any event or circumstance where such action, event or circumstance is beyond the reasonable controlof KCM, -8- G2181/W330 which in either casehas the effect of delaying the implementation by KCMof any of its obligations underthis Agreement; "Extension Notice"means the notice served by KCM on GRZ pursuant to Clauses 2.4(c) and 27.4, notifyingzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAGRZ that it has ken unable to satisfy the condition contained in Clause 2.4(b)(i) or that any of the events in Clauses 2.4(b)(ii) OR (iii) have occurred and are continuing and wishes, therefore, to delay the implementation of the KDMP; "Facilities"has the meaning given in Recital (1); "ForceMajeure" has the meaning given to the term mClause 26.2 and "Force Majeure Event" shall mean the giving notice of the occurrence of Force Majeure pursuant to Clause26.l(b); "GoodMining Practices" means acceptable mining and metal treatment practices conducted in Southern Africa (which shall include the right to meand process material twenty four (24) hours a day, three hundred and sixty five (365) days a year (includingpublic holidays), if required); "GRZ"shall include all of its agencies and inmumentalities; "IFC"means the International Finance Corporation, m international institution established by Articles of Agreement among its member countries, whose principal office is at 2121 Pennsylvania Avenue, Washington DC, 20433, United States of America; "Investment Commitment"means, an investment of two hundred and eight million United States dollars (US$208,000,000) (adjusted in accordance with Clause 37.2 and (if applicable) m accordance with Clause 2.3) and as further adjusted in accordance with Clause37.2 to be expended m relationto the Facilitiesand which is capitalisedm the accounts of KCM; and "KCMAssets"has the meaning given in Clause 16.2; "KCM Consortium"means Zambia Copper Investments Limitedand IFC; "KCM EnvironmentalPlan"means, until such tieas agreement is reached on the KCMFinal Environmental Plan pursuant to Clause 12.1, the framework programme for environmental clean-up and protection, as approved by the Minister for the purposesof Section 25(l)(d) and 76(2) of the Act (and incorporated by reference m the Large Scale Mining Licences pursuant to Section 25(4) of the Act), and incorporated by reference in Schedule4 Part I hereto, and thereafter means such programme as my be approved by GRZ asthe KCMFinal EnvironmentalPlan (as amended by the Pmes from time to time) and which replaces tie previous version of tie plan set out m Schedule4, Part I pursuant to Clause 12.1; "KCMFinal Environmental Plan"means the plan approved by GRZ m accordance with Clause 12.1; - 9 - G2181/00030 "KCMzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBALosses" has the meaning given mClause 16.1; "KCMPower Purchase Agreement" shall have the meaning given to it m the Sale and Purchase Agreement; "KDMP"means the Konkola Deep Mmmg Project; "KDMP Development Date" means the date on which KCM notifies GRZ, m accordancewith Clauses2S(a)and (b), that it has obtained the Third Party Finance; "KDMP Investment Commitment" means an investmentof five hundred and twenty three million United States dollars (US$523,000,000) to be expendedby or on behalf of KCM hconnection with the KDMP at any time before or after the KDMP Development Date or, if lower, the amount required to be invested in order to achieve production at Konkola Division of at least five million seven hundred thousand (5,700,000) tonnes of ore per annum on what may reasonably be expected to be a sustainablebasis, in each case subject to adjustment maccordance with Clause 2.8 and Clause37.2and capitalisedmthe accounts of KCM; "KonkolazyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBALarge Scale Mining Licence" means the Large Scale Mining Licence Number 34 the formof which is setout m Schedule3, Part 11; "Konkola Contract Area" means the land area described m Part A of Part I of Schedule3; "KonkolaDivision"means the Konkoladivisionof ZCCM, situated at Chililabombwe, CopperbeltProvince, Zambia; "KonkolaMining Area"means the area covered by the Konkola Large Scale Mining Licence; "Kwacha"meansthe lawful currencyof Zambia; "Large!kale MmmgLicences"means the Konkola Large Scale Mining Licence, the Nchanga Large Scale Mining Licence, and the Nmpundwe Large Scale Mining Licenceeach of which is held by KCM pursuant to the Act, the form of which is set out m Schedule3 Part 11; "Leases"means the leases details of which are set out m Schedule 2 ofzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAthe Sale and PurchaseAgreement; and %ease" meansany oneof these leases; "LIBOR"means, in relation to any mount on which interest for a given period is to accrue: (a) the percentage rateper annwnequalto the offered quotation which appears on the page of the Telerate Screen which displays an average British Bankers Association Interest Settlement Rate for US dollars (being currently "3750") for one month deposits at or about 11.00 m on the date which is two (2) Business Days preceding the fmal Business Day of each calendar month that - 10- G2181KtW3O moniesare outstanding or, if payment is not made on the final Business Day of a Calendar Month, twozyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA(2) Business Days preceding the Business Day on which payment is made or, if such page or such service shall cease to be available,such other page or such other service for the purpose of displaying an average British Bankers Association Interest Settlement Rate for one (1) month deposits m US dollars as the parties, after consultation with each other, shall select; or (b) if no quotation for US dollars for one month deposits is displayed and the parties have not selected an alternative service on which a quotation is displayed, the arithmetic mean (rounded upwards to four decimal places) of the rates (asnotified to KCM) at which the principal London offices of each of four major banks in the London Interbank Market as selected by tie parties was offering to prime banks in the London Interbank Market one (1) month deposits m US dollarsat or about 11.OOamon such date; "LocdBusiness Development Programme"" means until such time as agreement is reached on the final form of such plan pursuant to Schedule2 the programme for local business development forming Schedule 2 hereto and thereafter means such plan as mybeapprovedby the Minister and replaces Schedule2; "Material Adverse Economic Effect"means a material adverse effect on the financial condition of KMwhich has or may have a material adverse effect on the KCM present or future ability to operate the Business as now conducted or to be conducted pursuant to tieApproved Programme of Mining and Metal Treatment Operations; "Material Adverse Change Event" means an event having a material adverse effect on the condition (financialor otherwise)of KMand which is so declaredpursuant to Clause26.3; "MineProducts"means the ores or concentrates or other minerals produced from tie Mining Areas and all smelter and refinery products (produced in Zambia) derived therefrom; "Minister"means the person for tie time being entitled to exercise tie powers of tie Minister of Mines and Minerals Development under the Act; "Ministry"means the Ministry of Mines and Minerals Development or other successor Ministry from time to time; "'Mining"has the meaning given to it in tie Act and, for the purpose of this Agreement, includes all smelting and treatment operations associated with and beneficial thereto; "MiningAreas" means the geographic areas covered by tie Large Scale Mining Licences; and a reference to the "relevant Mining Area" shall mean the geographic area coveredby the Konkola, Nampundwe or Nchanga Large Scale Mining Licence, as the case may be; - 11- G2181KKM30 "Nampundwe Large Scale Mining Licence" means the Large Scale Mining Licence No. 32, the form of which is set out mSchedule3, Part 11; "NampundwePower Purchase Agreement" shall have the meaning given to it in the Sale and Purchase Agreement; "Nchanga Large Scale Mining Licence"means the Large Scale Mining Licence No.33, the form of which is set out in Schedule 3 Part II; "Normal Operations"means the operations of KCM carried on in accordancewith the Approved Programme of Mining and Metal Treatment Operations, as amended from time to time; "Notices"means any notice, consent, demand, approval or other communication permitted to be given under Clause 29; required orzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA "OECD"means the Organisation of Economic Co-operation and Development; "Parties"means the persons who are from time to time parties to this Agreement, including the original parties hereto and parties added or substituted pursuant to Clause 17;and "Party"means any of them; "Quarter'means, as the context requires: (4 January,February, and March; or (b) April, May and June; or (c) July, August and September; or (a October, November and December; "Reasonable Commercial Terms"means limited recoursefmmgwith: (a) aweighted average minimum life from signing of the loans to final repayment, J of twelve (12)years, where the weights are the amounts of each loan facility; (b) an average rate of interest, weighted both by the size of each loan facility and by the expected periods during which different rates may apply under each facility, of no more than LIBOR plus 3.25%; (c) any guarantees required terminating on completion of the constructionof the KDMP and passing of customary completion tests; and (d) terms available for a transaction of a similar nature with a similar class of sponsor to that party or parties providing the pre-completion guarantees for the KDMP fmcing. "Registered Dependants"mans(i) the dependants of TransferringEmployees who, at the date of this Agreement, are registered in tie records of ZCCM and (ii) those tit - 12- G2181/ooO30 shall be registered in accordance with Clause 9.1 in the records of KCM as being entitled to use some or all of the Social Assets; "Related Agreement" means the Sale and Purchase Agreement and any agreement entered into pursuant thereto, and includes the Articles of Association of KCM; "Resettlement Action Plan" means the report of that name, and incorporated by reference in Schedule 9 hereto and thereafter means any such report as the Parties my approve to replace the previous version set out in SchedulezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 9; "Royalty"means the mineral royalty payable under the Act; "Sale and Purchase Agreement" means the Agreement dated 15 December 1999and made between ZCCM, KCM and GRZ vesting the Assets (as such term is defined therein) m KCM in consideration of inter alia the payment of cash and the issue of shares to ZCCM; "Scheduled Programmes" means the Approved Programme of Mining and Metal Treatment Operations, the KCMEnvironmental Plan, the Employment and Training Plan and the Local Business Development Programme; "Shareholder"means a registered holder of ordinary shares in KCM or the holder of the SpecialShare whose rights are set out mKCM'sArticles of Association; "Shareholders' Agreement" means the agreement of even date herewith amongst certain Shareholders in KCM, including ZCCM, governing the relationship between them as Shareholdersm KCM; "SoleExpert"means a person appointed in accordance with the provisions of Clause 21; "Speculative Currency Transaction" means a transaction involving the purchase or sale of Zambian currency, the primary object of which is the making of a profit on the exchange of currency, but does not include the taking out of forward cover against reasonably predictable incomes or costs or other normal risk management operations; "Stability Period"meansthe period commencing on the EffectiveDate and, subject to 18.4, ending on the twentieth (20th)anniversary of the Effective Date; "Taxes" means any present or future taxation, statutory, governmental, state, provincial, local governmental or municipal impositions, duties, contributions and levies of any nature and whatever called, by whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or assessed and all interest and penalties attributableto such taxes; and "Taxation"shall have a corresponding meaning; "ThirdPartyFinance"has the memggiventotitterm in clause 2.4; "Transferring Employees"means those employees previously employed by ZCCM whose employment has been transferred (with their consent), on the terms and Lmdon-2/512730112 - 13- G2181100030 conditions set out in the Sale and Purchase Agreement to KCM, with effect from Completion; "UmpentPotion of the Budgeted Commitment" means in respect of any part or pmofthe Facilities where production is to be suspended or curtailed an mountequal to the product of (i) capital allocated in the Approved Programme of Mimgand Metal Treatment Operations (as of the Effective Date) for expenditure on such facilities withiithree (3) years following the Effective Date but which remains unspent as of the date of suspension or curtailment and (ii)the quotient of $208,000,000and total capital projected (as of the Effective Date) to be spent at the Facilities within three (3) years following the Effective Date maccordance with the Approved Programme of Mining and Metal Treatment Operations; 'W$","USdollars"or "United States dollars"means the lawful currency of the United Statesof America; U VAT"means value addedzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAtax payable under the Value Added Tax Act, 1995 (No. 4 of 1995)as from time to time amended and in effect; "Zambia"means the Republicof Zambia; "ZCI"has the meaning given to it in the Sale and Purchase Agreement; "ZCCM EnvironmentalPlan"means, until such time as agreement is reached on the ZCCMFinal Environmental Plan pursuant to the Environmental Liabilities Agreement, the framework programme for environmental clean up and protection as approved by the Minister for the purposes of Section 25(l)(d) and Section 76 of tie Act (and incorporatedby reference in the Large Scale Mining Licences pursuant to Section 25(4) of the Act) and incorporatedby reference in Schedule 4 Part 2 hereto, and thereafter means such programme as may be approved by GRZ as the ZCCM Final Environmental Plan (as amended from time to time by the Parties) and replaces the previous Schedule4 Part 2 pursuant to Clause 12.2; d "ZCCMFinalEnvironmentalPlan"means the plan approved by GRZ in accordance with the Environmental Liabilities Agreement; and "ZCCM"means Zambia Consolidated Copper Mines Limited; In this Agreement, unless the context otherwise requires: 1.2 (a) monetary references are references tozyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAUnited States dollars unless otherwise specificallyexpressed; m the headings do not affect the interpretationor construction; (c) subject to the provisions of Clauses 12.3 and 13.l(d) of this Agreement, references to an Act include the amendments to that Act for the time being m force and also any Act passed msubstitutiontherefor and any regulations for the time being m forcethereunder, exceptwhere specificallyexcluded; hmdon-2/512730/12 - 14- G2181KUl30 (azyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAwords importing the singular include tieplural and vice versa; (e) words importing any gender include the other gender; (Q references to a person include a partnership,zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAfirm or corporation and any ministry, department, agency, instrumentality or agent of GRZ or my political subdivisionthereof; and c31 the recitals and Schedules form part of this Agreement; and 01) references to "reasonable" and "unreasonable"and related concepts shall be accorded their natural meaning and shall not be construed narrowly by referenceto concepts of procedural or administrative law. - 15- G2181/OCKGO PARTBzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA OPERATIONALANDEMPLOYMENTISSUES 2. RIGHTTOMANAGEANDOBLIGATIONSTO DEVELOPzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 2.1 (a) Except as specifically provided mthis Agreement, and subject to the Act (as excluded and modified by this Agreement), KCM will have the unfettered right to manage the development and continued operation of the Facilities. (b) KCM shall, following the issue of the Large Scale Mining Licences and, subject to the terms of the Act, regulations made thereder, the Large Scale Mining Licences and this Agreement, implement the Approved Programme of Mining and Metal Treatment Operations m accordance with the timetable contained therein and Good Mining Practices. (c) Without prejudice to the obligations contained m Clause 2.l(b), but subject to Clauses2.2 to 2.4, KCMshall: J (i) expend the Investment Commitment within three (3)years following tie EffectiveDate: and (ii) expend the KDMP Investment Commitment; 2.2 KCM'sobligation to expend tie Investment Commitment m accordance with Clause 2.l(c)(i) shall be suspended where a Force Majeure Event has been declared and for so long as such Force Majeure Event iscontinuing. 2.3 If at any time prior to the satisfaction m full of the Investment Commitment KCM suspends or curtails production at any part or parts of the Facilities m accordance with Clause 8 and has met its associated obligations under Clause 27, the Investment Commentshall be deemed to be reduced by, m the case of a suspension, the Unspent Portion of tie Budgeted Commitment in respect of such part or parts of the Facilities or, m the case of a curtailment, by a percentage of the Unspent Potion of the Budgeted Commitment in respect of such part or parts of the Facilities where the J percentage is equal to the percentage represented by tieproportion which the proposed curtailment of production bears to the production budgeted for at the relevant part or parts of the Facilities had such curtailment not occurred; Provided however that, if KCM resumes operations m whole or m part at the relevant part or parts of the Facilities, the Investment Commitment shall be increased by the Unspent Portion of the Budgeted Commitment m respect thereof talung account of the extent of tie resumption. The period over which the renewed portion of the Investment Commitment must be expended will be extended on a day for day basis equal to the period of suspension or curtailment; provided further that the provisions of this Clause 2.3 shall not cause tie Investment Commitment to exceed two hundred and eight million United States dollars (U.S.$208,OOO,OOO) or prohibit KCM fiom expending at tie Facilities sum exceeding the Investment Commitment or the KDIWInvestment Commitment. A working example of the operation of 2.3 is attachedas Schedule 8. - 16- G218MNXBO 2.4 (a) KCM shall use its best endeavours to raise third party fmance for.KDMP on Reasonable Commercial Terms in the amounts specified in Clause 2.4(b)(i) (the “Third PartyzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAFinance”) within eighteen (18) months following Completion or, if not possible within that period, as soon as possible thereafter provided that, for the avoidance of doubt, such best endeavours shall not oblige KCM to issue (or, its shareholders to transfer) myequity m KCM to such financiers if insisted upon as a condition of provision of such Third Party Finance; (b) KCM’s obligation to implement the KDMP and expend the KDMP Investment Commitmentmaccordance with Clause 2.l(c)(ii)shall be suspended: (i) if, and for so long as, Third Party Finance on Reasonable Commercial Termsis not available: (A) for three hundred and thirteen million United States dollars (US$313,000,000), representing sixty percent (60%) of the KDMP Investment Commitment; and (B) m the event third party lenders to KDMP require tie refinancing of preexisting KCM third party loans which remoutstanding for a further one hundred and twenty million United States dollars (US$124,800,000) representing sixty per cent. (60%)of the Investment Commitment; Provided however that the figure m(B) above shall be reduced by m mountequal to the aggregate of any repayments of principal made by KCM (and not subsequently redrawn) m respect of such preexisting third party loans and my prior distributions made to the Shareholders; (U) if, but only for so long as, KCM is unable to meet, or obtain a waiver of, conditions precedent to drawdown of third party finance required to finance the KDMP Investment Commitmentas a result of circurnstances beyond the control of KCM or any of the members of the KCM Consortium; provided that nothing herein shall oblige any member of the KCM Consortium providing third party finance to waive any condition precedent to drawdown; (iii) where a Force Majeure Event, Economic Force Majeure Event or a Material Adverse Change Event has been declared and for so long as the underlying Force Majeure, Economic Force Majeure or Material Adverse Change is continuing; provided that KCM undertakes not to declarean Economic Force Majeure Event within 18months following Completion; (c) If - 17- G2181/00030 (i) despite having used its best endeavours, KCM is unable to obtain the Third Party Finance within eighteen (18) months following Completion or any of the events contained in Clause 2.4(b)(ii) or (iii) have occurred and are continuing; and (ii) KCM wishes to defer commencement of KDMP until it is able to satisfy such condition or until the eventhas ceased(as the case mybe), KCM shall notify GRZ m accordance with Clause 27.4 and, if the inability to satisfy such condition continues or any of the aforementioned events persists, and further deferments are required, similar notices shall be delivered at six (6) monthly intervals. For the avoidance of doubt, KCM's obligation to notify GRZ of such a deferral shall not be construed such that KCM would be required to obtain GRZ's consent (or that GRZ would be required to publicly support such a deferral)for such a deferral. 2.5 KCM shall, within one (1) month of obtaining the Third Party Finance, and provided that none of the events contained in Clauses 2.4(b)(ii) or (iii) have occurred and are still continuing: W notify GRZ thereof; and @) advise GRZ as to whether or not it intends to proceed or continue with thezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA development and construction phase of KDMP in accordance with Clause 2.7 below. 2.6 Inthe event that: (a) KCM notifies GRZ in accordance with Clause 2S(a) that it has obtained the Third Party Finance, but advises GRZ in accordancewith Claw2S(b) that it does not mtend to proceed or continue with the development and construction phase of KDMPin accordance with Clause 2.7 below (other than by reason of any of the events described in Clauses 2.4(b)(ii) or (iii) having occurred and being still continuing); or @) KCM notifies GRZ in accordance with Clause 27.4 that it has been unable to obtain the Third Party Finance but such financing is m fact available on Reasonable Commercial Terms (and, in the event of a dispute, the availability has been confmdfollowing a determinationby a Sole Expert pursuant to Clause21hereof). GRZ shall have the right to exerciseClauses2.1, 2.2 and 2.3 of the Call Option Deed. 2.7 Subject always to its continuing right to suspend pursuantto Clause 2.4@)(ii)and (iii) and to Clause 2.8 below, KCM shall commence or continue with the development and construction phase of KDMP, as specified m and provided for by the Approved Programme of Mining and Metal Treatment Operations, no later than the date falling upon the expiry of six (6) calendar months from the KDMP Development Date and, Lcmdon-2512730/12 - 18- G2181/ooO30 except as specifically provided m this Agreement, and subject to the Act (asexcluded or modified by this Agreement), KCM: (a> shall not require my further approval or consent from GRZ to commence development of the KDMP; (b) shall have an unfettered right to manage the development and continued operations of the KDMP; and (c) shall be the sole implementor of the KDMP, and GRZshallcooperate with KCMto facilitate the implementationof the KDMP.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 2.8 In the event that: (4 the Third Party Finance has not been obtained (or, m the event such Third Party Finance has been obtained, and any of the events set out in Clauses LzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 2.4(b)(ii) or (iii) has occurred and are continuing on the fourth (4th) anniversaryof the Effective Date); @l the KCMBoard has determined to adopt an alternative mining plan to access and develop those mineral deposits originally intended to be developed as the KDMP;and (c) KCMhasexpended one hundred and twenty five million United States dollars (US$l2S,OOO,OOO) m planning, preparing and implementing such alternative mining plan, then: (iii) the KDMP Investment Commitment shall be reduced to two hundred and fifty million United States dollars (U.S.$250,000,000) or, if lower, the amount required to achieve production at Konkola Division of at least two million four hundred thousand (2,400,000) tomes per-annum on what may reasonably be expected to be a sustainable basis; and W notwithstanding that the conditions to development of KDMP may subsequently be satisfied, GRZ shall not be entitled to require KCM to develop KDMP m the mercontemplated by the KDMP Investment Commitment without taking account of the extent of myreduction pursuant to this Clause 2.8. 2.9 KCM shall within twenty four (24) months of the Effective Date, commence an evaluation of the Chingola Refactory Ores m accordance with the Approved Programme of Mining and Metal Treatment Operations as at the date of signature hereof. 2.10 Subject m all cases to the provisions of this Agreement, GRZ hereby acknowledges the compliance of the Scheduled Programmes with all the relevant requirements of the Act (including without limitation Section 24(3) of the Act) and the Large Scale Mining Lmdon-2/512730/12 - 19- G2181KXW30 Licences and further acknowledges, without limitation, that compliance with tie Scheduled Programmes will be deemed to constitute compliance with Section 27 of tie Act. 2.11 GRZconfirmsthat it considers(or shall consider) the proposed mining, smelting and refinery practices described in the original Approved Programme of Mining and Metal Treatment Operations or as varied from time to time by the Board of KCM m accordancewith Clause 27: (4 to comply with Section 25(l)(b), (c) and (f)of the Act in as much as: (i) tie area of land over which the licence is sought is not mexcess of the area reasonably required to carry out the Approved Programme of Mining and Metal Treatment Operations; (ii) the proposed practices shall be considered to ensure the efficient and beneficial use of the mineral resources of the relevant Mining Area; and (5) KCM shall be considered not to be in breach of any of tie provisions of the Act; and @) not to constitute "wasteful mining practices" for the purpose of Section 81 of the Act and GRZ (either on its own behalf or through the Minister or tie Directorof Mines or tieDirectorof Mine Safety) shall not allege that KMis using wasteful mining practices if KMis conducting mining in accordance with the mining practices specified in the Approved Programme of Mining and Metal Treatment Operations; Provided that, in the case of any variation to which Clause 27 applies, tie Approved Programme of Mining and Metal Treatment Operations complies m all material respects with Good Mining Practices. Any Dispute as to what constitutes a Good Mining Practice will be referred for determinationby a Sole Expertin accordance with d Clause 21. 2.12 Subject to the terms of this Agreement, this Agreement shall remain m force for azyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA mmmumperiod equal to the term of the Large Scale Mining Licences; provided that, where KCM is, at the expiryof the minimumperiod, compliant in all material respects with all material terms of the Large Scale Mining Licences, tie term of this Agreement shall be extended (and tie period of the Large Scale Mining Licences shall be deemed to be renewed) for such further period not exceeding twenty-five (25) years as KCM may reasonably require in order to complete the Approved Programme of Mining and Metal Treatment Operations being undertaken pursuant to the Large Scale Mining Licences. For tie avoidance of doubt, but subject to 18.4, tie Stability Period shall terminate on the twentieth (20th) anniversary of the Effective Date notwithstanding that this Agreementmay remain m forceafter such date. - 20 - G2181m30 3. RIGHTS TO EXPORT ANDIMPORTzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 3.1 Subject to Clause 4 and the payment of applicable duties and taxes not otherwise exempted or deferred pursuant to this Agreement, KCMmay import without further reference to GRZ, materials, equipment and services to be used in implementing the Scheduled Programmes, provided that the import of such materials, equipment and services would not give rise to a breach or result of the kind specified in Clause 3.2(a)(i) or (ii) and GRZhas notified KMaccordingly. 3.2 KM(includingforthis purpose each member of the KCM Consortium in its separate capacity where it ties Mine Products from KCM) may market and export withoutzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA further reference to GRZ all Mine Products and shall have sole control and management of sale of such Mine Products, including the forward selling of all Mine Productsand shall assume all risks therefor, exceptto the extent that: (a) the exportof the Mine Products to a particular country would: (i) breach an obligation of GRZ arising under international law (including mandatory sanctions imposed by the United Nations); or (ii) result mdealing or contracting with nationals of a state with which GRZ is in a state of declared or undeclared war; and GRZhas notified KCMof such facts accordingly;or @> nationals or residents of Zambia willing and able to purchase copper in US dollars payable offshore or in Zambia (such payment to be at the direction of KM)at the market rate are discriminated against mcomparisonwith foreign nationals or overseas residents in so doing; provided that this Clause 3.2@) shall not operate so as to require KCM, in my way, to prefer ~ti~nal~or residents of Zambia, incur any greater cost, receive or make payment m any currency or country (other than a currency and country specified by KCM) accepta different standard of work or otherwise suffer any prejudice; or (c) no order has been made by the Minister on KCMpursuant to Section 69 of the Act and remains in force. 4. SUPPLYANDPROCUREMENT 4.1 KCMshall, on a regular basis, and in any event no less than annually, identify and invite by advertisement in the local press registration of businesses in Zambia which are capable of supplying materials, equipment and services to KCM and satisfy the criteria set forth in Clause4.3. 4.2 The supply of materials, equipment and services may be tendered for and procured internationally without restriction, provided that; where such materials, equipment and services are procurable within Zambia from businesses registered pursuant to Clause 4.1, such businesses shall have the opportunity to tender and, if a tender submission - 21- G2181100030 from such business meets the specifications of the invitation to tender, such businesses shall not be discriminated against in comparison with international suppliers. 4.3 When calling for tenders from contractors and suppliers, KCM shall invite tenders from Zambian contractors and suppliers where, to the best of KCM'sknowledge (all businesses registered pursuant to Clause 4.1 shall be deemed to be within the knowledge of KCM provided that; KCM shall only be required to send the invitation to tender to the address of the contractor or supplier (as the case mybe) on the register at that time):- (a) the contractorshave proven ability and reputation in (i) performing work of a similar nature and size to that required by KCM, and (ii) completing such work within the specified time period; and (b) the suppliersare established, recognised and reputable suppliers of materials and/or equipment and have previously marketed or distributed such materials and/or equipment (as applicable). 4.4 Nothing contained in Clauses 4.1 to 4.3 shall operate so as to require KCM, in any way, to prefer nationals or residents of Zambia, incur my greater cost, receive or make payments many currency or country (other than a currency or country specified by KCM), accept a different standardof work or otherwisesuffer any prejudice. 4.5 In assessing the tenders from local contractorsand suppliers, KCM shall consider the extra costs it would incur if it were to grant the contract to a foreign supplier or contractor. These extra costs shall include, but are not necessarily restricted to, wharfage costs, shipping costs, stevedoring costs, custom clearance costs, customs duties, and demurragecharges. 4.6 Subject only to the provisions of Clauses 4.1 to 4.5, KCM shall be free to make such arrangements with suppliers or contractorsas it wishes. 5. LOCALBU!SlNESS DEVELOPMENT 5.1 KCMshall: 00 comply substantially with the Local Business Development Programme with a view to encouraging and assisting the establishment of businesses withii Zambia (particularly in the Copperbelt and with a particular emphasis on businesses directly or indirectly majority owned by Zambian citizens) to supply materials, equipment and servicesto KCM; (b> conduct an annual review of progress being made on tie implementation of the Local Business Development Programme and make such variations to it as KCMconsidersto be reasonablyrequiredby changing circumstances;and (c> identify a member of staff experienced in setting up and managing small business enterprises: -zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA22 - G2181KKKXO (i) to assist Zambian citizens who wish to or have set up businesses to offer services to KCM and the Facilities; (ii) to assist m the implementation of the Local Business Development Programme and variations thereof; (iii) to liaise with the appropriate officials from GRZ; and (iv) to compile and maintain the register referred to in Clause4.l;and (a inform GRZ annually on the implementation and results of the Local Business Development Plan. 5.2 Nothing m Clause 5.1 shall oblige KCM to grant or lend any mcmY to, Orto ~~ntxtct with, any person or organisations. 6. EMPLOYMENTANDTRAININGPLAN 7%- 4 KCM shall comply with the Employment and Training Plan. 6.1 6.2 Subject to KCM complying at all times with any and all applicable labour or such other relevant legislation of general application as mybe in force from time to time, it may amendor alter the Employment and Training Plan, with a view to providing employees of KCM with improved opportunities to develop their potential to contribute to the operationsof KCM. For the avoidance of doubt, any such amended plan, provided it complies with all relevant legislation, shall be deemed to have been approved by the Minister for the purposes of Section25 l(e) and Section 25(4)of the Act. 6.3 If KCM is unable to comply with some aspects of the Employment and Training Plan as a result of:zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA (4 circumstancesor events beyond its control; or @> a direction of the Director of Mine Safety under the Act (or regulations made thereunder), then such non-compliance shall not constitute a defaultunder this Clause 6 nor a breach of the conditions of tie Large Scale Mining Licences and KCM may give notice of alternativeor revised plans to that part of the Employmentand TrainingPlan affected. 6.4 KCM shall not, save as provided below, be restricted in its employment, selection, assignment or discharge of personnel; provided however, that the employment and the terms and conditions of such employment and the discharge or disciplining of personnel within Zambia shall be carried out m compliance with (i) the laws and regulations of Zambia which are, from time to time, of general application, (ii) the Collective Agreement(s) and (iii) the terms of individual employment contracts from time to time. 6.5 KCM shall, in its recruitment, selection, promotion and assignment of personnel comply mall respects with nondiscriminationlaws of generalapplicationin Zambia. London-2/512730/12 - 23 - G2181/00030 KCM acknowledges GFU's policy to attract qualified Zambian citizeris working 6.6 overseas back to employment within the Zambian mining industry. h order to facilitate the fulfilment of this policy, KCM shall take all reasonable efforts in its recruitment and employment of employees in professional, managerial, engineering and scientific grades (including, but not limited to the advertising of positions in international press and trade journals likely to have circulation amongst suitably qualified potential employees) to bring to the attention of such qualified Zambians positionsof employment available within KCM. 6.7 KMshall recognise, for collective bargaining purposes, (i) the trade union that at the relevant time represents the employees of KCM and (ii) the Collective Agreements coveringthe Transferring Employees. 6.8 Notwithstanding the provisions of this Clause 6, KCM (and its contractors or sub contractors) may bring into Zambia such non-Zambian citizens as, in the reasonable judgment of KCM's management, are required to carry out operations efficiently and UzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA successfullyand, at KCM's request GRZ shall cause all necessary permits (including entry and exit permits, work permits, visas and such other permits or permissions as may be requested) to be issued to such persons and their entitled dependants promptly and without hampering the continuous and efficient performance of KCM's operations and its obligations under this Agreement (including allowing such non-Zambian citizens the right to import and export personal effects free of taxes); Provided that, GRZ shall be under no such obligation to issue the pemtsaforesaid to any non-Zambian citizen who is disqualified from entry by reason of previous crimii convictions, health regulations and like restrictions set out in immigration regulations of general application in Zambia from time to time. Without limiting the generality of tie foregoing provisions of this Clause 6.8, nothing contained in Clauses 6.1 to 6.7 shall operate so as to require KCM, in any way, to prefer nationals or residents of Zambia or accept a different standard of work from such persons, to require the Employment and Training Plan to include quotas for the employment of Zambian citizens (or other similar provisions) or for KCM to otherwise suffer any prejudice. KMshall, in 4 respect of such non-Zambian citizens referredto above,provideGRZ with the requisite information concerning the education, experience and other qualifications of the personnel concerned. Notwithstanding the foregoing,but subject to the rights of GRZ herein provided, the provision of such information shall in no way be construed as grantingGRZ the right to object to KCM employing such persons at the Facilities or to withhold the granting of all necessarypermits. 7. N3URANCE 7.1 The terms and conditions of the insurance by KCM of its assets and potential liabilities shall be at the sole discretion of the Board of KM;Provided that, KMshall ensure that it tiesout such insurance as is consistent with Good Mining Practices. 7.2 GRZ agrees that the insurance cover specified in Schedule 6 is that which, as at the date hereof, is: -24- G2181/CKKEQ (a) prescribed by the statutory instrument referred to m Section one hundredzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAand one (one)zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAof the Act; and/or (b) required by the Director of Mines pursuant to Section one hundred and one (three)of the Act, and that no Statutory Instrument and/or direction of the Director of Mines as aforesaid applicable to and binding upon KCM and inconsistent with SchedulezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA6 shall be issued or made without the prior written consent of KM(such consent not to be unreasonably withheld). 7.3 GRZshall be advised of the insurance policy or policies in place which comply with Clause7.2and Schedule 6 and KCM shall forward copies to GRZwhereupon GRZ, if appropriate, shall acknowledge that such murancesconstitute the insurance coverage prescribed by my statutory instrument issued under Section one hundredund one of the Act and/or required by or a direction of the Director of Mines pursuant to Section lOl(3) of the Act. GRZundertakes to pemt,to the extent necessary, insurers resident in Zambia to assign their rights under any re-insurance contracts to which they are party to KCMor any lender to WM. 8. SuSPENSIONOR CURTAILMENT OF PRODUCTION 8.1 Subject to the succeeding provisions of this Clause 8, the parties acknowledge that KCM'sright to suspend or curtail production is governed by Section twenty eight of the Act and that, m the event of any such suspension or curtailment, the Minister my exercisepowers under Section twenty eight (three)of the Act. 8.2 GRZhereby agrees that: (a) the Minister'sapproval shall be given (or failingwhich shall be deemed given) maccordance with Sectiontwenty eight (three)(u)of the Act upon compliance by KCMwith this Clause, so that, in circumstances of such compliance, tie Minister shall not give KCM a direction under Section rwenfy eight (three) (b) of the Act; and cb) in tie event of any suspension or curtailment, any direction capable of being givenpursuant to Section twenty eight (three)@)of the Act shall only be given either: (i) mcompliancewith this Clause; or (ii) if KCMhas not complied with any material provision of this Clause and has not remedied such non-compliance within tlurly (30) days of being given notice of such non-compliance by GRZ. 8.3 Where: (a) in the case of Nchanga Division, at any time prior to the fifteenth (15th) anniversary of the Effective Date; - 25 - G2181KKM30 (b) mthe case of the Nampundwe Mine and (unless (iii) below applies) Konkola Division, at any time prior to the twenty-fifth (25th) anniversary of the Effective Date; or (c) mthe case of Konkola Division, mcircumstances where KCM has expended the KDMP Investment Commitment (as adjusted, if applicable, m terms of Clause 2.8) at any time prior to the fiftieth (50th) anniversary of the Effective Date KMelectsto suspend or curtail production in respect of a Division or Divisions or any part or parts of one or more Division or Divisions, and it has complied with its obligations under Clause 27 and continues to comply with its obligations pursuant to Clause8.4, it shall be deemed to have complied with this Clause 8and, accordingly: (0 the provisions of Clause 8.2(a) shall apply; and (ii) tieprovisionsof Clause 8.5, 8.6, 8.7, 8.8, 8.9 and 8.10shall not apply. Where pursuant to Clause 8.3 or otherwise m accordance with Section menfyeight of 8.4 the Act, KCM has elected to suspend production, it shall maintain, subjectto fair wear and tear, the assets comprising the Division or Divisions or the relevant part or parts of such Division or Divisions m respect of which production has been suspended so as to prevent significant deterioration until operations are resumed. WhereKCMelects to suspend or curtail production m circumstanceswhere Clause 8.3 8.5zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA than eleven (11) months from the date on which KCM does not apply it shall, no laterzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA suspended or curtailed production at tie relevant Division or Divisions or the relevant part or parts of such Division or Divisions, submit to GRZ a report showing its projection of the Costs to Resume Operations and of projected Operating Costs and Revenues. In the event the Minister does not give a direction to resume operations m accordance with Clause 8.6, reports shall be submitted to GRZ by KCM at six (6) monthly mtervals m order to allow the Minister to reassess whether it is economic to J resume operations at the relevant Division or Divisions or any part or parts thereof at the date such a report is presented. KM'Sobligation to submit such reports to GRZ shall terminate: (a) on the resumption of operations; or (b) in the event KCM does not resume operations, when it sells the relevant Division or Divisions or the relevant part or parts thereof; or (c) on the occurrence of the circumstancesset out m Clauses 8.9(a) and (b). 8.6 Subject to Clause 8.3, m the event that production at a Division or Divisions or any part or parts thereof, has been suspended or curtailedfor a continuousperiod of twelve (12) months or longer and it is economic to resume operations at the relevant Division or Divisions or any part or parts thereof, the Minister may direct KCM to resume operations and KCM shall, subject to Clause 8.7 below, as soon as practicable thereafter take such measures as are necessary to resume operationsat tie level that the Division or Divisions or part or parts thereof were operating at m the year prior to the time operations were suspended or curtailed. Lmdon-2/512730/12 - 26 - G2181KXWO 8.7 Subject to Clause 8.3, if KCM disagrees that it is economic to resume operations m accordance with the Minister's direction pursuant to Clause 8.6, it may elect to submitzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA the matter for determination to a Sole Expert in accordance with Clause 21. 8.8 Where the matter has been referred to a Sole Expert pursuant to Clause 8.7, the Sole Expert shall determine, m the light of Good Mining Practices, whether it is economic to resume production or not. The opinion of the Sole Expert shall be binding on the Parties and, if the Sole Expert determines that it would be uneconomic to resume production, the direction given by the Minister pursuant to Clause 8.6 shall be deemed to have been withdrawn. 8.9 Where, pursuant to Clause 8.6, the Minister has directed KCM to resume operations and such direction has not been or is not deemed to have been withdrawn, KCM, if it does not promptly take such measures as may be required either to resume operations or to sell the relevant division or divisions or part or parts thereof within six (6) months of such direction by the Minister, shall be deemed to have abandoned its 1zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA operations or the relevant part of such operations (asthe case may be) for the purpose of Clause 8 so that: G4 if such abandonment is in respect of part only of m area covered by a Large Scale Mining Licence, such Large Scale Mining Licence shall be amended to delete such area from its application; and @) if such abandonment is in respect of all of such area covered by the Large Scale Mining Licence, the Large Scale Mining Licence is terminated; provided however that, where the Minister's direction has, pursuant to Clause 8.7, been referred to a Sole Expert, the time period shall run from the date such Sole Expert gave its opinion on the projections oroption as the case may be. 8.10 Nothing herein contained shall prejudice KCM's rights to suspend or curtail operations under SectionzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA nvemy eighi of the Act for any other reason or the consequent exercise I by the Minister of his powers under that section. 9. SOCIALASSETSANDMUNICIPALINFRASTRUCTURESERVICES 9.1 The Parties acknowledge that KCMhas reached agreement with the MU2 regarding the levels of remuneration and other employment benefits which shall be provided to the Transferring Employees of KCM and their Registered Dependants. These benefits include the provision or procurement of certain medical and educational services and access to other recreational assets. 9.2 MunicipalInfrastructuralServices GRZ will procure tie provision of the following municipal infrastructure services m the areas mwhich KCMwill operate: (a) water; - 27- G2181/00030 (b) Sewerage services; (c) Solid waste; W Domestic electricity supply; (e) Street lighting; (0 Storm water drainage; (€9 Roads; 00 Markets; and (0 Cemeteries These will be provided by the local councils, and in the case of domestic electricity supply - ZESCO Limited, except that for an mtemperiod of approximately five years I water, sewerage servicesand solid waste serviceswill be provided by a wholly owned subsidiary of ZCCM under a GRZ funded program. KCM will not be required to providethese services. KCM willzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAco-operate with tie local councils, the ZCCM subsidiary, and ZESCO Limited, mensuring titany transitional arrangements tobe agreedwith KCM and put mplacefor recovering costsof such services from KCM's employeesm effective. 10. RECORDSzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAAND OPERATING REPORTS KCMshall,pursuant to Section one hundred andfour of the Act, keep GRZ, through 10.1 the Ministry, advised concerning KCM's operations through submission of annual reports, the first report to be submitted three months after the first financial year end of KCM following tie date of this Agreement, as to the progress and results of KCM's mining and smelting operations and prospecting and appraisal activities under this Agreement (such reports to contain any information relating to tie progress of d operations in each Mining Area as the Ministry may from time to thereasonably require). 10.2 Pursuant to Sections2(d)and (e) of the Fourth Schedule to the Act, KCM shall provide quarterlyreports to tie Ministry,tie first report to be submitted on 30* June 2000 and thereafteron 30 September, 31 December, 31 March and 30 June annually broken out on a meby tiebasis: (a) quantitiesof orezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAminedand averagehead grades; 0) quantities of waste mined; (c) quantities of copper and cobalt concentrates produced and quantities of contained copper and cobalt;zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA (4 quantitiesof own Mine Productsproduced and quantitiessold; L.odon-2/512730/12 - 28 - G21W00030 (e) prices obtained on sales of own products; (Q quantities of sulphur contained in pyrite mined and quantities of pyrite concentrates produced; W operating costs; and (h) progress in implementing the Scheduled Programmes, tie extent of any continuing noncompliance by KCMwith Environmental Laws and progress made in remedying this in accordancewith the Environmental Plan. 10.3 KCM shall file with the Ministry annual reports summarising any geological and metallurgical investigations and such other material data as may be obtained from any prospecting activities. 10.4 All information furnished to GRZ pursuant to ClausezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA10.2 shall be in English and United States dollars. 10.5 KMshall maintain all original records and reports relating to its activities and operations under this Agreement at its principal office mZambia. These records (other than those which are the subject of legal professional privilege) and reports shall be open to inspection by GRZ through an authorised representative during normal working hours upon GRZ giving reasonable notice of its intention to inspect the records and reports provided that GRZ may not require more than six (6) such inspections in any twelve (12)month period (for the avoidanceof doubt any inspections required to be carried out pursuant to any law, statutory instrument or other regulation of general application (other than inspections required under Section 104 of the Act) shall be additional to and shall not be included within the six inspections permitted pursuant to this Clause). Such records and reports shall be maintained in the English language. All such records and reports shall be retained by KCM for a period of six years. - 10.6 One copy of any records, reports, plans, maps, charts, accounts, and information which KCM is or mybe from time to time reasonably required to supply under the provisions of this Agreement shall be suppliedat the expense of KCM. 10.7 Complianceby KCMin all material respects with the provisions of this Clause 10 shall be deemed to constitute compliance with the provisions of SectionzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA104 and the Fourth Schedule of the Act and no further reports, records or information shall be required to be submitted, kept, produced, retained, delivered or otherwise made available for inspection under those provisions of the Act. 10.8 GRZundertakes that it shall (and shall procure that its relevant employees and offkers shall), in relation to any Confidential Information: (a) use all Confidential Information only for the purpose for which it was supplied to GRZand not for any other purpose; - 29 - G2181/ooO30 (b) treat and safeguard as strictly private and confidential all Confidential Information; and (c) ensure proper and secure storage of all Confidential Information. 10.9 Subject to the provisions of tie Act, all documents, reports, records or information made available to GRZ will remain the property of KCM.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA d - 30- G2181KklO30 PARTCzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA UNDERTAKINGS NECESSARYFOROPERATIONS 11. FOREIGNEXCHANGE 11.1 The Parties acknowledge that, under legislation and practice currently in force in Zambia, there are no foreign exchange controls and KCMis free, among other things to: 64 remit foreign currency out of Zambia; @) maintain any monetary assets (including foreign currency accounts) outside and within Zambia; and (c> remit foreign currency accruing to or earned by it outside Zambia into Zambia. L. 11.2 In the event foreign exchange controls were to be re-introduced in Zambia within the Stability Period, KMshall have (without any further approvals from GRZorzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAany entity thereof being required) the right to: (a) retain both outside Zambia and within Zambia (at KM'Sdiscretion), in accounts established for that purpose, foreign currency, and to have paid to it and maintain msuch accounts amounts arising from all sources associated with the Business, including but not limited to the following: (0 sale proceeds; (ii) payments made by insurers or re-insurers not resident in Zambia under contracts of insurance in KCM'sfavour; (iii) profits; proceeds of any disposal of capital assets; W foreign loan proceeds; W proceeds of the issue of share capital (payable by non-residents of W Zambia); (vii) penalties and damages under contracts (payable by non-residents of Zambia); and (viii) proceeds of swaps and hedges (payable by non-residents of Zambia); (b) use freely the foreign currency accounts maintained by KCM to: (i) service payments of principal and interest, service charges and other fees and expenses in respect of any loans arranged with non-Zambian entities; - 31- G218"COO (ii) make payments due to suppliers outside Zambia for the supply of goods and services to KCM; (iii) finance the payment of dividends to shareholders, interest and principal on loans advanced to KCM by its shareholdersor payments made by or on behalf of ZCCMin repayment of amounts advanced under repayable carried interest arrangements applicable to it; and (iv) pay employees; remit profits (in currency, products or otherwise) and repatriate capital (in cash or assets) outside Zambia (which right shall be extended to the KCM Consortium individual members in respect of the proceeds of the disposal or liquidationof all or part of their investmentishares in KCM). fund its operations from whatever sources are deemed appropriate(including rights to borrow funds wherever it chooses and in whatever currency, subject to Clause 11.7) and to invest funds without restrictions; pay smelters of KCM products outside Zambia; use non-Zambian entities for tie -provisions of services to KCM (e.g. insuranceand re-insurance); and maintainan mount equal to thirty per cent. (30%)of all contributions to its pension funds, as well as any income or gam from such contributions, offshore. No restrictions shall apply to any pension funds maintained for expatriates. KCM shall not be discriminated against in comparison with other like mining and metal treatment operations mthis regard. 11.3 KCMshallsubmit to the Central Bank: (4 withii fifteen(15) days of the end of eachcalendar month - (i) a statement of the foreign currency amounts repatriated to ZambiazyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA within the previous month from accounts maintained overseas by KCM; (ii) a statementof the balance of KCM'sforeigncurrencyaccounts [To be agreed by KCM] at the end of the previous month; (iii) a forecast of the foreign currency amounts that KCM intends to repamateto Zambia during the ensuing calendar month, and @> within five (5) months of the end of each year, audited financial statements which comply with Zambian law and regulations. 11.4 In the absence of foreign exchange controls m Zambia, KMshall have the same rights to buy and sell currencies from authorised dealers and enter into swaps and hedging arrangements (which expression shall include, without limitation, arrangements for taking out forward cover againstlocal and other currencyfluctuations London-2612730/12 - 32 - G2181/00030 or other fluctuations in incomes or costs or other expenses incurred as -part of the management operations but shall not include Speculative Currency Transactions) with non-Zmbian entities as other commercial concerns in Zambia. In the event foreign exchange controls were to be reimposed m relation to the purchase. and sale of currencies (and without prejudice to KM'Srights under Clause 11.2), such controls shall not be applied to KCM ma manner less favourable to it than the manner in which they are generally applied to other large commercial concerns in Zambia. KCMshall beentitled to buy and sell foreign currency in accordance with such controls at rates of exchangeno less favourable than those available to other commercialbuyers and sellers of the currency concerned. 11.5 KCMshall remit to Zambia, and convert into Kwacha for credit to a bank account in the name of KCM, sufficientof its foreign currency earnings to pay such commitments as KCMmay have incurred in Kwacha, but only to the extent KCM does not already have Kwacha available to meet such commitments (including, without limitation, taxes, royalties and customs duties and obligations to pay dividends to local shareholders payable m local currency, if applicable). KCM shall use its reasonable endeavours to notify the CentralzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Bank of transfers of a substantial mount which are not in accordance with the normal pattern of transfers. 11.6 KCMshall not engage in or use any provisions of this Clause 11 or any authority or approval given by the Central Bank, to engage in Speculative Currency Transactions. For the avoidance of doubt, this Clause shall not prohibit or prevent normal risk management operations which shall be deemed to include the entering into of hedging agreements ordinarily utilised by mining companies m the international mining industry. 11.7 GRZ shall not intervene to prevent access by KCM to local currency markets or to prevent exchange at market rates and on a nondiscriminatory basis (and shall procure that the Central Bank will not so interfere); Provided that KCM shall ensure that any borrowings it may incur denominated m Kwacha shall not exceed five per cent (5%)of anmal sales revenues as recorded in the latest set of audited annual accounts of KCM or, in the period prior to finalisation of KCM's first audited annual accounts, fiveper cent. (5%)of ZCCM's annual sales revenues as recorded m the latest set of audited annual accountsof ZCCM published prior to Completion. 11.8 h the event KCM determines to sell foreign currency held by it, it shall not Bank if the Central Bank is willing and able to discrimmate against the CentralzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA purchase foreign exchange at market rates and on terms that are no less favourable to KCMthan terms available from other buyers. 12. ENVIROIVMENTALISSUES 12.1 KCMandGRZeach hereby agrees that: (0 subject to (ii) below, KMshall negotiate m good faith with GRZ(which undertakes to negotiate m good faith with KCM) with a view to agreeing - 33 - G2181KKKUO within two (2) years (or such longer period as KCM and GRZ shall agree) of the Effective Date the detailed terms and conditions of the KCM Final Environmental Plan; (ii) KCM shall not be required to agree the KCM Final Environmental Plan with GRZ until such time as GRZ procures that ZCCM negotiates and agreeswith GRZ and KCMzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA (ina formreasonably satisfactory to KCM) the detailed terms andconditionsand timetable of the ZCCM Final Environmental Plan; (iii) GRZ shall agree to and approve the provisions of the KCM Final Environmental Plan provided that such plan incorporates the objectives or requirements of the IFC in respect of the conduct of Normal Operations at each of the relevant Assets; (iv) KCM shall comply with and implement the KCM Environmental Plan in accordance with the timetable contained therein and Good Mining Practices I and, without prejudice to tie timetable, KCM shall achieve the objectives specified m tie KCM Final Environmental Plan no later than the last day of the Stability Period. W GRZ shall promptly take all such actions as are necessary to pemt the implementationof the KCM Environmental Plan. 12.2 Upon agreement of the KCM Final Environmental Plan, GRZ will take promptly, or procure that all necessary action is taken promptly, to approve and to pemtthe implementation of such plan. Such action shall include mending or replacing the Enabling Statutory Instruments and/or any relevant Environmental Laws andlor applicable pemts to disapply the standards previously applied to the Assets under Environmental Laws and to replace these in any Environmental Laws which are applicable to KCM with those requirements specified in the KCM Final Environmental Plan for the conduct of Normal Operationsat each of the relevant Assets for the period after KCM has fully implemented tie other requirements of the KCM Final EnvironmentalPh. 12.3 Save as provided in Clause 12.4 below, GRZ hereby confiithat it shall notzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA(and shall procure that its Ministries, and departments,and all agencies or instmnentalities acting on its behalf over which it has operational control shall not), for the Stability Period: 12.3.1 tieany action under, or m enforcing, any applicable Environmental Laws with the intent or the effectof (i) securingKCM's compliance with Environmental Laws earlier or to a greater extentzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAthan that envisaged under tie agreed timetable and conditions set out in this Agreement, the KCM Environmental Plans or tie Enabling Legislationor Enabling Statutory Instruments;or - 34 - G2181/lXKBO (ii) imposing fines, penalties or work obligations upon KCM (or undertaking works and then seeking to recover the costs thereof) under Environmental Laws (or enacting new fines penalties or works obligations thereunder) in respect of matters which fall within the Environmental Plans or m respect of which exemptions have been granted to KMpursuant to the Enabling Statutory Instruments or other Environmental Laws; or other than as contemplated by ClausezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA12.2, repeal or mend the Enabling 12.3.2 Legislation or the Enabling Statutory Instruments or otherwise effect any changes thereto; or 12.3.3 in the case of Environmental Laws, effect any changes thereto or enact new legislation covering the Environment which individually or cumulatively would: 0) prevent KCM from complying with the terms of the KCM Environmental Plans and the timetable, contamed therein without making provision for KCMto be exempted therefrom; (ii) materially alter or affect the scope, enforcement or application of Environmental Laws regarding the establishment, maintenance and operation of the Environmental Protection Fund including mparticular (but without prejudice to the generality of the foregoing) those provisionsof such legislation or regulation regarding: (a> the predominance of industry representatives on the Board administering this fimd; (b) the independent management of cash contributed by mining companies to this fund; or (iii) materially increase the cost, in red terms, of carrying out the EnvironmentalPlansor of Normal Operations; 12.3.4 apply any environmental provisions to KCM under Section seventy six and sewnzy seven of the Act to the extent that such provisions impose requirements that are more onerous than those specified in the Environmental Plans or Enabling Statutory Instruments; or take any other action which would inhibit, prevent or render it impractical or 12.3.5zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA materially more costly for KCM to comply with the relevant Environmental Plan or to undertake Normal Operations or which impose liabilities on KCM for which KCMhad not previously been liable or was not to be liable under tieterms of thisAgreement (and related agreements and legislation). - 35 - G218”l 12.4 Subject to Clause 12.7, in the event that GRZ considers KCM to be mnon-compliance with the KCM Environmental Plan and such non-compliance does not result from actions or omissionsof GRZ andorZCCM, it shall: 12.4.1 notify KCM of such fact m writing, specifying the facts and circumstances it considers give rise to such noncompliance adthe actions it considers necessary to remedy the same; 12.4.2 specify inwriting, a time period (being such period agreedbetween GRZ and KCM, failing which being not less than six (6) Calendar Months) which it considers appropriate to remedy such non-compliance and the reasons why such theperiod is appropriate. 12.5 In the event of expiry of the period specified by GRZ in Clause 12.4, (andunless KCM has referred the matter to expert determination under Clause 12.6 below) if KCM has not remedied the non-compliance notified by GRZ in the manner required by GRZ under Clause 12.4 above (or such other manner as may have been agreed mwriting between GRZ and KCM), GRZ will cease to be bound by the provisions of Clause 12.3but only m respect of such breach and matters arising out of such breach (and m respect of no other matters) and the Pmesacknowledgethat GRZ (or its Ministries, departments or such agencies acting on its behalf) shall be free to take such action under, or in enforcing, applicable Environmental Laws in relationthereto as it or they shallconsiderappropriate or necessary. 12.6 If KCM contests the noncompliance asserted by GRZ it shall serve a counter-notice specifying its reasons for disagreeing with GRZ within one month of receiving GRZ’s notice under Clause 12.4above. Thereafter any Dispute regarding: 12.6.1 whether or not GRZ is entitled to servea notice under Clause 12.4.1; or 12.6.2 whether or not the actions GRZ consider necessary to remedy, such non- compliance specified msuch notice are necessary and reasonable;or d 12.63 whether the time period specified by GRZ under Clause 12.4.2 is appropriate to remedy such non-compliance or not; or 12.6.4 whether or not the reasons specified by GRZasto the appropriateness of such time period arejustified;or 12.63 any action by GRZ arising out of any such matter may be referred by KCM to a Sole Expert in accordace with Clause 21, for determination. 12.7 KCM shall not be m breach of the KCM Environmental Plan or its obligations underzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA this Clause 12 m relation to any noncompliance, partial compliance or delay in compliance with a particular aspect or aspects of the KCM Environmental Plan to the extenttitthis is attributable to any of the following reasons: L0d0~-U512730/12 - 36 - G2181KKO30 12.7.1 any failure by GRZ or ZCCM to comply with their obligations under this Agreement, the Enabling Legislation, the Enabling Statutory Instruments, tie Environmental Liabilities Agreement, Environmental Laws, or the Environmental Plans; 12.7.2 an Environmental Condition not previously known by KM(or its shareholders (excluding ZCCM) or those of its representatives who have responsibility for preparing and agreeing the Final KCM Environmental Plan) which renders impossible or more difficult or costly or which delays the performance by KCM of any task under the KCM Final Environmental Plan or any obligation in respect of the KCMEnvironmental Plan; or 12.7.3 any material unexpected difficulty (and myassociateddelay) which could not reasonably have been foreseen, or overcome without incumg material additional costs over and above the funds specified for suchzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAtask by KM,m performing a task specified in the KCM Environmental Plan or in achieving the improvement anticipated from such tasks, PROVIDED that this Clause 12.7 shall only apply to the extent that my such non- compliance, partial compliance or delay is not attributable to either any refusal or failure on KCM’spart to spend funds which it has committed to spend under the KM Environmental Plan or the Approved Programme or the negligence of KCM or its contractorsor agents or KM’Srefusal to comply with such plan. 12.8 The Minister on behalf of GRZ may propose an amendment to the KCM Environmental Plan in the following circumstances only, if 12.8.1 at any time the conduct of Nonnal Operations in accordance with the relevant Environmental Plan for whatever reason poses a material danger to public health and safety; or 12.8.2 the impact of Normal Operations would be likely to result m significant environmental damage which was not anticipated in the relevant Environmental Plan. Prior to any formal proposal being made by the Minister, unless he reasonably considers such danger or damage to be imminent and acute, he shall allow a period of four (4) Calendar Months for informal discussions of any proposed amendments to an Environmental Plan. 12.9 Any formal proposal from the Minister to amend the KCM Environmental Plan shall be delivered in writing to KCM. This shall include a written statement of the reasons why the Minister considers the proposed variation to be necessary, setting out to the extent it is reasonably practicableto do so: 12.9.1 the danger to public health and safety or the environmental damagewhich may result from Normal Operations if tie Environmental Plan is not amended and the risk and materiality of such damage; - 37- G218MNO30 12.9.2 the actions it considers necessary to remedy the same; 12.9.3 the tmescale within which it considers the actions should be completed;and 12.9.4 the cost of such actions. 12.10 In the event that the Minister proposes a variation to the KCM Environmental Plan on behalf of GRZ under the circumstances set forth in Clause 12.8, KMundertakes to consider the proposed variation in good faith and, unless by notice of objection m writing served on the Minister within two (2) Calendar Months of receipt of the proposal made pursuant to Clause 12.9 it informs the Minister that it considers the proposed variation to be unreasonable, it shall be deemed to have agreed the same. A notice of objection shall include a written statement of the reasons why KMconsiders the proposed variation to be unnecessary or unreasonable, setting out to the extent it is reasonably practicable to do so: 12.10.1 its estimate of the directcosts to implement such change; 12.10.2 its analysis of the variation in the environmental and health and safety impact that would be effectedby such change; and 12.10.3 its appraisal of the economic and other effects of the change proposed by GRZ. 12.11 Following receipt of a notice of objection under Clause 12.10, the Minister shall, within two (2) Calendar Months and having considered the notice of objection m good faith, inform KMby notice in writing whether or not the Minister's proposal for variation of the KMEnvironmental Planis or is not withdrawn. h the event that the Minister's proposal for variation is not withdrawn it will be deemed to have been agreed unless KCM elects; within a further period of two (2) Calendar Months from receipt of notification from tie Minister that his proposal is not withdrawn, to submit the question of whether GRZ's proposal for variation is unnecessary or unreasonable for determinationby a Sole Expert in accordance with Clause21. 4 12.12 Should KCM refer the proposed change to expertdetermination,the determination will be binding on the partieswith the effect that: 12.12.1 if the Sole Expert determines that GRZ's proposal for variation is not unnecessary or unreasonable the proposal for variation will be deemed to have been agreed; or 12.12.2 if the Sole Expert determines that GRZ's proposal for variationis unnecessary or unreasonable the proposal will be deemed to have been withdrawn; Provided that tie Sole Expert may m his sole discretion suggest alternativeproposalszyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA or time schedules or mitigation of cost proposals to the parties who will consider the samein good faith prior to the determination being rendered by the Sole Expert. The period during which such proposals suggested by the Sole Expert shall be considered by tie Parties shall be specified by him but shall not exceed six (6) Calendar Months. L.Qndon-2/512730/12 - 38 - G2181KXWO 12.13 Where a variation to the KCM Environmental Plan has been agreed by KCMand GRZ or is determined pursuant to ClausezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA21, that Environmental Plan shall be mended accordingly and GRZ shall procure the amendment, if necessary, of any Enabling Statutory Instrument or Environmental Laws to reflect any such variation. 12.14 Nothing m this Clause 12 shall affect or lmtthe powers under the Act of the Director of Mine Safety designated by the Act to tiesuch emergency actions as he considers reasonably necessary and for the purposes of safeguarding the lives or health of persons engaged m KCM's operations. To the extent that KCM is required to undertake works or incur expenditure by the Director of Mine Safety in respect of any matter addressed by the KCM Environmental Plan which go beyond the requirements of the KCM Environmental Plan, KCMshall be entitled to recover the costs of the works or expenditure fromGRZ. 12.15 KCMshall be entitled to mendthe KMEnvironmental Plan from time to time: 12.15.1 if m its view at my time the conduct of Normal Operations in accordance with the relevant Environmental Plan for whatever reason poses a material danger to public health and safety; 12.15.2 if m its view the impact of Normal Operations would be likely to result m significant environmental damage which was not anticipated m the relevant Environmental Plan; 12.15.3 to make any necessary andor reasonable amendments to take account of any issues of noncompliance, partial compliance or delay which fall within the provisions of Clause 12.7above and which would otherwise render KCMnon- compliant with the KCMEnvironmental Plan; or 12.15.4 so as to reflect changes in operations and other circumstances considered to be appropriate by KCM, provided that following such amendment (and in respect of amendments underthisClause 12.15.4only): 0) the KCM Environmental Plan is in accordance with accepted environmental standards as applicable to Good Mining Practice; and (ii) such amendment will not result in GRZ's liability under the Environmental Liabilities Agreement bemg materially increased or m a liability thereunder being incurred or arising on a date earlier than would otherwise have been the case but for the making of such amendment (unless the effect of such earlier mcurrence is to make it materially likely that GRZ's potential exposure to clamunder the Environmental Liabilities Agreement will be reduced by a more than compensatorymount). Prior to any formal proposal being made by KCM, it shall allow a period of four (4) Calendar Months for informal discussions of any proposed amendments to an Environmental Plan. - 39 - G2181/CNlO30 12.16 In the event that KCM proposes a variation of the KCM Environmental Plan under the circumstances set forth in Clause 12.15, GRZ undertakes to consider the proposed variation in good faith and to accept the proposal unless it believes that the proposal falls outside the scope permitted under Claw 12.15 and unless, by notice of objection mwriting served on KCM within 2 (WO) Calendar Months of receipt of the proposal made pursuant to ClausezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA12.15, GRZ informs KCM that it considers the proposed variation to be unnecessary or unreasonable it shall be deemed to have agreed the same. A notice of objection shall include a written statement of the reasons why GRZ considers the proposed variation to be unnecessary or unreasonable setting out to the extent it is reasonably practicable to do so: 12.16.1 its reasons for concluding there is no risk to public health and safety or of significant environmental damage 12.16.2 its reasons for concluding titthe amendments proposed under Clause 12.15.3 are not necessary or reasonable; or UzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 12.16.3 inrelation to amendments proposed under 12.15.4 its reasons for concluding that the amendment would not meet Good Mining Practice andor its analysis of the increase in liabilities under the Environmental Liabilities Agreement. 12.17 The provisions of Clauses 12.12 and 12.13 shall apply in respect of changes proposed by KCMsave that references to GRZ shall be read as KMand references to KCM shall be read as GRZrespectively. 12.18 Notwithstanding the provisions of this Clause 12, KCM shall, at the invitation of tie Minister responsible for the Environment, participate either individually or on an industry-widebasis, in discussions regarding environmental standards in Zambia or my prospective changes thereto on the basis that such participation will in no way qualify any rights which KCM has hereunder (including the rights to challenge amendments proposed by GRZto the KCM Environmental Plan). d 12.19 Pending amendment of an Environmental Plan pursuant to Clauses 12.8 to 12.17, the existing Environmental Plan shall continue to apply. h proposing or considering my such proposed amendments, the Parties shall have regard to relative costs and benefits, the potential risks and impacts of any action proposed and Good Mining Practice. 12.20 For the avoidance of doubt, nothing inthis Clause 12 shall be construed to render KCMliable for penalties or finesimposed, or third party claims made, in respect of activities undertaken prior to the Effective Date by ZCCM. 12.21 GRZagrees tita Force Majeure Event which renders compliance with tieprovisions of the KCM Environmental Plan impractical shall not constitute non-compliance provided that KCM shall use all reasonable endeavours to bring such Force Majeure Event to an end. Nothiig herem contained shall prevent GRZ assuming (through the enactment of 12.22zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA legislation, issue of regulation, by contract or otherwise) my or all obligations of L0ndon-Z512730/12 - 40 - G2181/CXXXO ZCCM under the ZCCM Environmental Plan, such obligations either to be assumed by GRZjointly with ZCCM or in place of and in substitution for, ZCCM and the discharge of ZCCM from any such obligations. KCMshallprovide to GRZwithin one month following Closing a list of those matters 12.23 relating to mesafety and/or occupational health and safety at or concerning my of the Assets, which need to be improved or upgraded, repaired or subjected to other remedial measures m order for the Assets to comply with any applicable law and regulations relating to mine safety and/or occupational health and safety (whether under Environmental Laws or other laws and regulations) andlorGood Mining Practice. 12.24 KCM and GRZshall negotiate with each other in good faith with a view to agreeing withii three (3) months following Closing (or such longer period as KCM and GRZ shall agree) an interm programme of upgrades, repairs, improvements and other measures necessary and/or appropriate to address the matters identified pursuant to Clause 12.23 above with a view to agreeing within six (6) months (or such longer period as KCM and GRZshall agree) following Closing a final programme in respect thereof and the terms, conditions and timetable pursuant to which KCM shall implement them. These upgrades, repairs, improvements and other measures shall then be treated as forming part of the KMEnvironmental Plan, save that the provisions relating to the agreementof a Final KMEnvironmental Planshall not apply to them. 12.25 The timetable which KMand GRZ shall agree under Clause 12.24 above shall provide for all such upgrades, repairs, improvements and other measures shall each be commencedassoonas reasonably practicable and in any event no later than 12 months after Closing and each such upgrade, repair, improvement and other measure shall be completed as soon as reasonably practicable after commencement, having regard to the need to continue NodOperationsand to comply with KM’Sobligations under this Agreement, any applicable pemts, and any other relevant agreements. 12.26 While such upgrades, repairs, improvements and other measures are being planned and implemented, GRZ shall afford and extend to KCM andlor the Assets all such exemptions and/or safety letters in respect of mine safety and/or occupational health and safety matters (i) as were enjoyed by ZCCM in the period immediately prior to Closing and/or (ii) as may be necessary in view of the condition of the Assets and/or the programme agreed pursuant to Clause 12.24 above to pemtthe lawful operation of the Assets (and to extend the same where necessary) until such time as the planned upgrades, repairs, improvements and other measures have been completed to the satisfaction of GRZ and KCM. KCM undertakes to comply with its obligations under (i) Clauses 12.23 to 12.26 12.27zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA above, (ii) any requirements in the KCM Environmental Plan which relate to occupational health and safety and (iii) any requirements as to mine safety in tie Mining Regulations which fall outside the scopeof the exemptions and/or safety letters referred to m Clause 12.26 above and GRZundertakes m respect of any matter where KCMhas complied with its obligations under (i) to (iii) above, not to enforce any applicable law or permit requirements relating to mine safety andor occupational Lmdon-2/512730/12 - 41- G2181/00030 health and safety m respect of matters which fall within myexemption andor safety letter and to uphold and give full effect to such exemptions and/or safety letters. 12.28 GFU shall, or shall procure that ZCCM shall, provide written confirmation to KCM within 1 month of Closing that ZCCM will finance all of the actual costs that may be incurred by KCM mrelation to the implementation of the Resettlement Action Plan set out m tie form incorporated by reference m this Agreement as at the date hereof. GFUagreesthat it shall guarantee the financial obligationsof ZCCM under this Clause 12.28.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA - 42 - G218llOOO3O PARTD GENERALzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBASTABILITY AND TAXATION 13. GENERAL STABILITY AND OPERATIONAL UNDERTAKINGS BY GRZ 13.I GRZundertakes that, for the Stability Period, it shallnot: in the case of legislation or regulations governing the regulation and management of companies, effect any changes thereto or to their application which would impose a requirement that the directors of KCM comprise a higher number of Zambian residents than that presently required by Section twohundredand eight of the Companies Act, being more than 30%; mthe case of legislation or regulations governing the operation of mines or related activities but subject to Clause 12, effect any changes thereto or to their application which, individually or cumulatively, would have a Material Adverse Economic Effect on the implementation of the Approved Programme 1 of Mining and Metal Treatment Operations; and/or tie conduct of Normal Operations; mthe case of import and export regulations and procedures within Zambia, effect any changes thereto or to their application which, individually or cumulatively, would have a Material Adverse Economic Effect on the implementation of the Approved Programme of Mining and Metal Treatment Operations and/or conduct of Normal Operations; in the case of legislation or regulations governing the terms and conditions of employment within Zambia, effect any changes thereto or to their application which would prevent KCM from: (0 operating on a seven (7) days a week, twenty-four (24) hours a day, three hundred and sixty five (365)days a year basis; or (ii) negotiating with employees or relevant unions or engaging employees or terminating their contracts of employment m such a manner which would be likely to have a Material Adverse Economic Effect, individually or cumulatively, on the implementation of the Approved Programme of Mining and Metal Treatment Operations and/ortieconductof Normal Operations. m the case of legislation relating to the regulation and management, insolvency, bankruptcy, receivership, administration or winding-up of companies, effect any changes thereto or to their application which, individually or cumulatively would be likely to prejudice: 0) the validity or enforceability of the Pledge, the Charges (asdefined m the Pledge) or the rights of tie KCM Consortium under Clause 14of the Shareholders' Agreement; or -43- G21W00030 (ii) the ranking or priority of the Charges. 13.2 GRZfurtherundertakes that, for the Stability Period, it shall not by general or special legislation or by administrative measuresor decree or by any other action or inaction whatsoever (other than an act of nationalisation such as is referred to m Clause 13.7) (I'GRZAction")vary, amend, cancel or terminatethis Agreement or any otherRelated Agreement or the rights and obligations of the Parties under this Agreement or any other Related Agreement, or cause this Agreement or any other Related Agreement or the said rights and obligations to be varied, amended, cancelled or terminated, or prevent or hinder performmce of this Agreement or any other Related Agreement by any party thereto; Provided that this Agreement and any other Related Agreement and the rights and obligations of the Parties under this Agreement and any other Related Agreement may be varied, amended, cancelled or terminated as expressly provided therein. GRZ undertakes that KMand its officers, directors, employees and shareholdersshall be held free and made exempt from myGRZ Action or any change m the law of Zambia which would, but for such freedom or exemption, adversely affectKCM's rights under, or KM'Sability to comply with its obligations under, this Agreementor myother Related Agreement to which KCM is aparty. 13.3 In the event that the Parties disagree as to whether any action (including changes to any legislation, regulations or procedures specified m Clause 13.l(b), (c) or (d)) will have a Material Adverse Economic Effect, any Party may refer the disagreementto a Sole Expert for determination m accordance with Clause 21 and m determining whether such changes have a Material Adverse Economic Effect, the Sole Expert shall have regard to the individual and cumulative effect (whether adverse or beneficial) of such changes compared with the position at the Effective Date. Where the Sole Expert determines that there has been a Material Adverse Economic Effect, GRZ shall compensate KCM maccordancewith Clause 16. 13.4 GRZ shall ensurethat no law, statute, regulation or enactment shall be passed or made which would discriminate against KCM in respect of any such matters as are referred to m this Clause 13(including without limitation Clause 13.8)or Clauses 15.1or 15.2 or otherwisem its conduct of Normal Operations or any other circumstancesunder this Agreement when compared to other companies or jomt ventures conducting similar operationsin Zambia under Large Scale Mining Licences. For the avoidance of doubt, the provisions of this Clause shall apply dumgand after the Stability Period. 13.5 GRZ shall tiesuch action required to ensure all of its ministries, departments, agencies, instrumentalities, agents and any political subdivision thereof comply with the provisions of this Agreement applicable to GRZ and references to GRZ m such provisions shall be construed accordingly. 13.6 Subject to complianceby KMwith: (a) all applicable legislation and regulations, the Large Scale Mining Licences (m each case as modified m its applicationto KCM by this Agreement) and -44- G2181/"30 (b>zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAthis Agreement, GRZundertakesto issue and renew expeditiously all necessary licences and approvals required for Normal Operations and not to withdraw or change the terms of such licences and approvals or attach any onerous conditions to them on that issue or renewal (which conditionsare not reasonably justified by the operations proposed). GRZhereby covenants that it shall not acquire compulsorily the Facilities or any other 13.7 assets of KCMor any interest in or over any property comprising tie Facilities or any other assets of KCM, except for public purposes under an Act of Parliament relating to the compulsory acquisition of property which provides for payment of compensation at fair value as between an independent buyer and seller in respect thereof. 13.8 In the event that either the Energy Regulatory Board (whether by virtue of any order, resolution, notice, directive, standard, code of conduct or licence or any revocation, amendment or change of interpretation thereof or otherwise) or GRZ: (a) requires that KCM pays a higher electricity tariff under the KCM Power Purchase Agreement or the Nampundwe Power Purchase Agreement (tie '"PowerAgreements") than would otherwise have been the case under these agreements; (b) otherwise makes or requires myamendment, variation or modification thereof or supplements or otherwise changes the interpretation of, or terminates or cancels such agreements otherwisethan in accordance with their terms; or (c) otherwise adversely affects any right of KCMunder the Power Agreements (or any corresponding obligation of any other party to KCMunder the Power Agreements) or any right (or corresponding obligation) created pursuant to any agreement or arrangement contemplated by the Power Agreements, other than in accordance with the terms of the Power Agreements this Clause 13shall be deemed to be breached and GRZ will compensatezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAKCM for any increased costs or mrespect of any losses maccordance withClause 16. 13.9 Notwithstanding the provisions of this Clause 13 and the terms of Schedule 7, GRZ shall m no way be restricted from introducing legislation relating to transfer pricing to ensure that all transactions between companies and their Affiliates are conducted on arms' length terms. 13.10 Notwithstanding termination of thisAgreement by either Party, GRZshall not tieany GRZAction which would not be permitted under any of the provisions of Parts C or D (where such provisions still m force and binding on GRZ), in respect of any action or omission of KCM taken or occurring prior to termination if KMor any member of the KCM Consortium would be likely to suffer or be subject to any additional liability, loss, cost, expense or other obligation as a result of such GRZAction. - 45 - G218MMO30 14. GENERALOBLIGATIONTOPAYTAX The provisions of Schedule 7 correctly reflect, in respect of the matters therein 14.1 specifically described, the tax regime applicable to KCM m the conduct of its activities under this Agreement. Whilst Schedule 7 is not intended to override applicable legislation, m the event of any ambiguity between applicable legislation and Schedule 7, GRZ and KCM agree that the provisions of Schedule 7 shall apply, it being tie intent of the parties that Schedule 7 clarify any ambiguities mthe legislation andzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAtax regime applicable to KCM or its operations. 14.2 Subject to ClausezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 14.1 and 15, KCM shall pay tax, royalties and duties from time to time in accordance with applicable legislation. 15. TAXATIONfXABILITY 15.1 GRZundertakes that it shall not for the Stability Period: increase any rates of Taxation (including, without limitation,corporate income tax or withholding tax rates) applicable to KCM (or change the basis of calculation which would result madecrease of deductions, rebates or other allowances available to KCM in computing its liability to such Taxes or change the basis of computation of such Taxes) from those prevailing at tie Effective Date; increase the Royalty rate applicable to KCM or change the basis of computation of Royalties from those prevailing at the Effective Date (as set out m Schedule7) m a manner which would result manincrease in Royalties payableby KCM; otherwiseamend tie VAT and corporate Taxation regimes applicable to KCM from those prevailing as at the Effective Date (as set out inter alia m Schedule 7), including but not limited to, the rules regarding carry forward losses, in a manner which would result in an increase in Taxes payable by KCM; imposenew Taxesor fiscal imposts (including exportduties)on the conduct of Normal Operations; increasewithholding taxes applicable to KCM, its shareholdersor lendersto it on the remittance by KCM of principal, interest, dividends, royalties or management fees above the rate prevailing at the Effective Date (as set out m Schedule7); impose any additional Taxes or levies on KCM relating to its purchase of electricity,water or other utility services; Provided that, in the case of Clause 15(l)(c), (d) and (Q only, amendments mybe made which do not have a material adverse effect (compared with what the position would have been but for the amendment) on KCM's Distributable Profits or the dividends,interestor other amounts received by its shareholders or lendersto it. Lmdon-2512730/12 - 46 - G2181/00030 15.2 Without prejudice to the provisions of Clause 13.4, GRZ further undertakes that for the Stability Period, it shall not: (a) alter the right of non-Zambian citizens (and entitled dependants) on their arrival or permanent departure from Zambia to: (i) import within six (6)Calendar Months from the date of arrival free of duty and tax, for personal use, household and personal effects;zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA (ii) export, without hindrance or the imposition of duty or tax on export all personal effects originally imported and acquired during residency in Zambia; and @) impose new laws to remove the right of non-Zambian citizens (and entitled dependants) to freely remit all income earned within Zambia during such residency. (c) increase import duty rates applicable to KCM so as to result m the weighted average import duty rate to which KCM is subject on the import of goods and materials required for the Approved Programme of Mining and Metal Treatment Operations or Normal Operations, rising above a level of fifteen per cent. (15%); or (d) impose other royalties or duties on Normal Operations, so as to have a material adverse effect on KCM’s Distributable Profits or cashflows or the dividends or other amounts received by its shareholders. 15.3 GRZ undertakes that for the Stability Period it shall ensure that VAT rehates and refunds are made within 10 days of the submission by KCM of its month-end VAT return. 15.4 Without prejudice to tie provisions of Clause 13.4, GRZ shall be at liberty to pass or make any such law, structure, reguiation or enactment to enable the performance or I amendment of a development agreement entered into by it and another company or joint venture prior to the expiry of such stability period. If, after tie Effective Date, there is in any respect a generally applicable more favourable Taxation, duties or royalties regime applicable to the mining industry generally, than applies to KMat the date of this Agreement, then GRZ agrees that KCM shall be entitled to tie advantage of such changes in any law, statute, regulations or enactment, and, if necessary, GRZ will agree changes to this Agreement to confirm or apply these changes and tiesuch steps as shall be necessary including amending my applicable legislation. 15.S To the extent that GRZ delegates or authorises tie collection of my Taxes leviable on KCM to provincial, or local or other authorities or mtrumentalities, GRZ shall procure that such authorities comply with the provisions of this Clause 15. GRZ shall also procure that such authorities or instrumentalities shall not levy or impose my Taxes on KCM. - 47 - G2181”l hthe event that the Parties disagree as to what amounts to a material adverse effect 15.6 under Clause 15.1 or 15.2(d), any Party may refer the disagreement to a Sole Expert for determination m accordance with Clause 21 and, m determining whether such changes have a material adverse effect, the Sole Expert shall have regard to the individual and cumulative effect (whether adverse or beneficial) of such changes comparedwith the position at the date hereof. Where the Sole Expert determines that there has been a material adverse effect, GRZ shall compensate KCM maccordance with Clause 16. Notwithstanding the provisions of Clause 18.4, if KCM is prevented or hindered m the 15.7zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA manner describedm Clause 18.2 as a result of actions or omissions by GRZ then: W the term of the Stability Period or other time periods set out m Clause 12, the KCM Environmental Plan, KCM Final Environmental Plan and the Environmental Liabilities Agreement shall be extended by a period equal to the period during which such prevention or hmdrmce continues or dumgthe IzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA period from the mewhen the question, dispute or difference arose until the meof its determinationby the Sole Expert or settlement by agreement or arbitration;and RJ) GRZ will take such administrative, legislative or other action (including, without limitation, amendment of applicable existing legislation) as is necessary or appropriate to give effect to the relevant time period extension referredto in paragraph(a)above. 16. COMPENSATION FOR BREACH OF STABILITY OR COMPULSORY ACQUISITION PROVISIONS 16.1 GRZ covenants to make such payments (net of any Taxes, withholdmgsor deductions) to KCM (or, at its option, make such off-setting changes m my law, statute, regulation or enactment applicable to KCM) as would result m KCM being fully and fairly compensatedfor any loss or detriment suffered or expenses or costs incurred by KCM d ("KCMLosses") by reasonof (a) a breach by GFZ of any of tie provisionsof Parts C or D of this Agreement; or (b) an act or series of acts of compulsory acquisition of any of the Facilities or other assets of KCM or any interest m or over any Property comprising tie Facilitiesor any other assets of KCM, to tie extent such KCM Losses cannot, as a matter of law, be offset by reducing amounts otherwise payableby KCM to GRZ. 16.2 In tie event of a dispute arising as to whether any compensation is payable under Clause 16.1 or whether the compensation offered or payable by GRZ under Clause 16.1 represents full and fair compensation for any KCM Losses, either Party may refer the issue to a Tribunal for arbitrationunder Clause 22 and can make such arguments or L~~d0~-2/512730~12 - 48 - G2181KMXBO assertionsto the Tribunal upon such issue as it considers appropriate. Without limiting the generalityof the foregoing,the Tribunal shall consider any argumentsor assertions made by eitherParty m relation to: (a) the cumulative effectof any or all past and existing: (i) breachesby GRZ of the provisions of Parts C or D of this Agreement, as comparedwith the position that existed at Completion; (ii) breaches of any other provision of this Agreement where such breach has a material adverse effect on the value of the Facilities or other assets of KCM (the "KCMzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAAssets'"); (iii) acts of compulsory acquisition referred to m Clause 13.7; @) mydiminution (as a result of any of the matters referred to m(i), (ii) or (iii) above, in the market value (on a going concern basis, assuming a willing Y buyer and a willing seller) of: (i) the KCM Assets (taken as a whole or any one or more of them); or (ii) KCM'sinvestmentmKDMP;and (c> myother breaches or failures of either Party mrespect of their obligations under this Agreement, meachcase adjusted to take into account compensation already paid by either Party (if any) m respect of any matters referred to above, mcludmg any amounts paid mrespect of interest underany provision of this Agreement. 16.3 Where GFU elects to reduce amounts otherwise payable to KCM by way of compensation m accordancewith Clause 16.1 (either by making offsetting changes m any law, statute, regulation or enactment or by setting off amounts otherwise payable by KCM to GRZ), it will nevertheless compensate KCM for the time value of the money represented by relevant KCM Losses by payment of interest at LIBOR plus five per cent. (5%)from the date of mcurrence of such KCM Losses to the date of payment. 16.4 Where the market value or other measures of compensation cannot be readily ascertained, the compensation shall be determined m accordance with generally accepted principlesof valuation and equitableprinciples, taking into account the capital invested, depreciation, discounted future cash flows, capital already repatriated and other relevant factors. - 49 - G2181/ooO30 PARTE FOFWALCLAUSES 17. ASSIGNMENTzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 17.1 KCMmy,withthe consent of the Minister (in accordance with Sectionjififour (one) of the Act), assign its interest m a Large Scale Mining Licence and this Agreement and GRZcovenants that the consent of the Minister to such an assignment shall not be withheld in the circumstances set out in Clauses 17.3 and 17.5. No assignment of an interest in a Large Scale Mining Licence may be made without the assignment to such person of a concomitant interest m thisAgreement and vice versa. 17.2 If KCM assigns its entire interest in a Large Scale Mining Licence and its rights and obligations under this Agreement in accordance with Clause 17.1, then upon the assignee becoming party to this Agreement, KCM shall be discharged from any further liability in respect of any obligation which accrues after the date of that assignment, without prejudice to pre-existing rights accrued to GRZ against KCMand vice versa. 4 17.3 Notwithstanding the foregoing provisions of thisClause 17, and subject to Clause 17.4, KCMmychargeby way of fixed or floating charge the Large Scale Mining Licences with this Agreement to secure the repayment of principal,zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAand payment of together interest and other fees, costs and expenses relating to all loans made to KCMto finance or refinance the Scheduled Programmes and any hedging arrangements relating thereto or other mining projects within Zambia and GMcovenants and will procure that the consent of the Minister pursuant to Section 54 of the Act to such mortgages and charges shall be given; provided that such mortgages and charges are notified to the Minister upon their grant (and, in any event, within sixty (60) days thereof). Subject to Clause 17.4, my mortgagee or charge under a mortgage or charge given by KCM pursuant to this Clause (each a "Secured Party") may exercise all rights of sale and other rights included in such instrument of mortgage or charge provided it shall first give to GRZ atleast thirty (30) days notice of its intention to exercise my rights of sale and five days notice in all other cases. For the avoidance of doubt, it is recorded tit: (a) save as contemplated above m respect of licences and pemts and this Agreement, there is no restriction on KCM's right to sell, mortgage, charge or otherwise assign or encumber the whole or part of its undertaking, including the Leases, the Facilities, the Mine Products (or the proceeds of sale), surface rights and ail other rights essential to the maintenance and operation of the Facilities, together with any assets and relevant agreements to which KCM isaparty; (b) KCMmaymortgage and charge any specified asset (whether real or personal property) to secure the purchase price thereof where such amount has been borrowed to finance the purchase of that asset and this asset is to be used as part of Normal Operations or other mining projects withiiZambia. - 50- G2181/C"zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA (c) provided such mortgages and charges are notified to the Minister upon their grant (and, in any event, within sixty (60)days thereof) each member of the KCMConsortium and other shareholders in KMfrom time to time my mortgage, charge, pledge, transfer in security or conditionally assign its right, title and interest mthe shareszyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA("sharesecurity")m KCM as security for tie Third Party Finance or other financing raised or to be raised by KCM either to finance or re-finance the Scheduled Programmes and any related hedging arrangements or other mining projects in Zambia and GRZ confirm and agrees: (9 that the share security mybe granted without any further written consent from GRZ, whether pursuant to Section %(l) of the Act or otherwise; and (ii) any transferee of such shares pursuant to enforcement of the share security will be approved by GFU subject only to such transferee meeting the criteria set out mClause 17.5. 17.4 The rights of any mortgagee or chargee under a mortgage or charge given by KCM pursuant to Clause 17.3 shall be subjectto and limited by the rights of KMunder this Agreement and, subject to cure rights granted to KCM and the Secured Parties pursuant to Clause 19, to GRZ's right to terminate those rights under Clause 19. The rights of such mortgagee or chargee to sell an interest in a Large Scale Mining Licence and this Agreement so charged shall be exercisable if tie interest in such Large Scale Mining Licence and this Agreement which are charged by the mortgage or charge are sold together with all or sufficient of the assets and undertakings of KCM as are suffkient (or would be sufficient (a)following cessation of any period of suspension or curtailment of production as may then apply pursuant to Clause 8 ancVor (b) in conjunction with such additional assets as the buyer may contribute) to enable the buyer to undertake Normal Operations (or with such exceptions as GRZ may agree), (approval of which sale GRZ covenants not to unreasonably withhold and not to withhold m the circumstances setout in Clause 17.5). 17.5 Wherethe Minister's consent is necessary to effect: (a) a changeof control under Section$&zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA$ve (one) of the Act; or 0-9 anassignment pursuant to Clause 17.1, GRZshall procure that the Minister shall not withhold his consent where, m the case of an assignment, the proposed assignee has demonstrated its financial capacity and technical ability to meet its obligations hereunder or, in the case of a change of control of KCM, the acquiring party has demonstrated that it is of appropriate financial standing having regard, inter alia, to the obligations it shall assume under the Shareholders' Agreement. GRZ shall further procure that the Minister shall not withhold his consent where, m the case of a change of control of KCM, such change of - 51- G218MWN control has or shall result from a transferbetween members of the KCM Consortium or their Affiliates. 17.6 In the event that KCM considers that the Minister has acted unreasonably m considering that a proposed assignee or the acquiring party has not demonstrated suchzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA financial capacity or technical ability as is referred to in Clause 17.5, it myrefer the issue to a Sole Expert for its option in accordance with Clause 21. If the Sole Expert determines: (a) that the proposed assignee or the acquiring party has not demonstrated the requisite levels of financial capacity or technical ability, the Minister's determination shall stand; or @) has demonstrated tie requisite levels of financial capacity or technical ability, the Minister's determination shall be set aside and the consents referred to in Clause 17.5(a) or Clause 17S(b)(as the case may be) shall be deemed to be given and the change of control or assignment (as the case mybe) shall be permitted without fiuther action on the part of GRZ or the Minister. 17.7 In tie context of the financing of the KDMP, GRZ undertakes to provide such consents, opinions and certificates to or for the benefit of senior lenders to KDMP as mybecustomaryor otherwise reasonably required by such lenders, provided that the provisionof such consents, opinions and certificates is not inconsistent with legislation or this Agreement and does not involve any attendant costs, reductions m revenue or any liability on GRZ's part (whether actual or contingent). In the event that KCM gives notice to GRZ that it has charged its interest m any Large Scale Mining Licence or this Agreement in accordance with Clause 17.3, GRZ shall if so requested by the Secured Parties, executea consent and acknowledgement of assignment which shall: (a) contain GRZ' agreement to perform its obligations hereunder and thereunder for the benefit of the Secured Party if such security is enforced in accordance with the terms of this Agreement; @) contain GRZ's agreement to deliver a copy of any Default Notice served on KCM pursuant to Clause 19.3 of Secured Parties at the same time as such notice is served on KM; (c) recognise rights of Secured Parties to cure defaults as provided m Clauses 19.3, 19.6(a) and 19.10; and (a contain GRZ's agreement to grant any statutory or regulatory consents necessary in connection with the creation or enforcement of such security in accordance with the terms of this Agreement, in addition to such other provisions as may be reasonably requested by Secured Parties from heto time m connection with the financing of the KDMP and Scheduled Programmes which do not invoke any attendant costs, reductions in revenue or any liabilities on GRZ's part (whether actual or contingent). - 52- G2181/MKBO Lmdon-25l273CW12 18.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAEXTENSIONS TOTIME 18.l Notwithstanding myprovisionof this Agreement, the Parties by agreement in writing betweenthe persons responsible for giving Notices under Clause 29, myfromtimeto time extend any period referred to in this Agreement, or substitute for my date referred to m this Agreement such later date, as they think fit. 18.2 If KCM is prevented or hindered by any circumstancesor event of a kind set out in Clause26 or by an Extension of Time Event or by a reference to a Sole Expert or by an arbitration under Clauses 21 and 22 respectively from undertaking all or any of its obligations hereunder or exercising any right granted, the period of time allowed for the perforrnmce of that obligation or exercise of that right and all periods of time thereafter allowed for the performance of obligations or exercise of rights which are dependent upon the first mentioned obligation or right, shall be extended by a period equal to the period during which such prevention or hindrance continues or during tie period from the time when the question, dispute or difference arose until the time of its determinationby the Sole Expert or settlementby agreementor arbitration,as the case may be. 18.3 Where any period is, or is deemed to be, extended or any later date substituted for an earlier date under this Clause, that extended or substituted period or date shall be deemed to constitutethe period or date referred to in this Agreement (notwithstanding that at the time of such extension or substitution such period myhave expired or such date myhave passed). 18.4 Subject always to Clause 15.7,but notwithstanding the foregoing,the provisions of this Clause 18 and Clause 26 hereof shall not in myway be construed so as to, or be deemed to, extend the term of tie Stability Period or any other time periods set out in Clause 12, the KCM Environmental Plan, the KCM Final Environmental Plan or the Environmental Liabilities Agreement. - 19. TERMINATION 19.1 KCM may terminate this Agreement at any time after the twentieth anniversary of the Effective Date by giving twelve (12) Calendar Months notice to GRZ. 19.2 GRZmayterminate this Agreement by notice to KCM if (a) all of the Large Scale MmgLicences have expiredby effluxion of time and have not been renewed or deemed to have been renewed; or @) subject to Clause 8, the land the subject of the Large Scale Mining Licences is abandonedby KCM under Section49 of the Act. 19.3 hthe event that either GRZ or KCM (the "DefaultingParty"): (a) is m material default in the performance of any of its obligations set forth m this Agreement; or - 53 - G2UWCK" (b) fails to comply with any binding determination made by a Sole Expert or award made by a Tribunal pursuant to Clauses 21 and 22 respectively, and it or, in the case of KCM (if KCMis the Defaulting Party) a Secured Party, if the Secured Party elects to do so, has not remedied such default or failure within thirty (30) days of a notice by the other Party (the "Non-DefaultingParty")to do so, the Non-Defaulting Party mygive notice of such default or failure (hereinafter m this Clause called a "Default Notice") to the Defaulting Party which shall specify the default or failure alleged. In the event that KCM is the Defaulting Party, GRZ shall at the same time give a copy of the Default Notice to each lender to KCM, where the name and address of that lender has previously been notified to GRZ, and to each mortgagee or chargeeof any of KM'Sassets under any mortgage or charge notified to the Minister m accordance with Clause 17.3. 19.4 The issue of a Default Notice under Clause 19.3shall be without prejudice to: (a) any award or determination made by a Tribunal under Clause 22 or a Sole 4 Expert under Clause 21;and P4 any rights on the part of the Non-Defaulting Party to enforce such award or determination (includingby the institution of legal or otherproceedings), provided, however, that the failure to make when due the payment m respect of a monetary award myresult m additional compensation being payable under Clause 19.5. 19.5 Where the failure or defaultin respect of which the Default Notice is issued relates to a matter m respect of which compensation is payable or other payment is due under this Agreement, or otherwise results in material loss, detriment,cost, expenseor damage to the Non-Defaulting Party (the "CompensatableLosses"), the Defaulting Party must pay to the Non-Defaulting Party (inaddition to any compensation that would otherwise be payable under this Agreement m respect of the failure or default) interest calculated d at LIBOR plus five per cent. (5%)on the amount of the Compematable Losses for the period commencing on the date when the Compensatable Losses first occurred and ending on the date when the default or failure is remedied (if capable of remedy) or compensation is paid. Any mounts already paid or payable under this Agreement by the Defaulting Party during the relevant period by way of compensation (including payments m respect of interest) shall be taken into the computation of the Compensatable Losses and any interest payable thereon. 19.6 If following the expiry of a period of three hundred and sixty (360) days following the giving of a Default Notice (or such longer period as may be fixed by a Tribunal pursuant to Clause 22): (4 where the default or failure specified in the Default Notice is capable ofzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA remedy, such defaultor failurehas not been remedied by the Defaulting Party, or if KCM is the Defaulting Party, by KCM or a Secured Party if the Secured Lomjon-2512730/12 - 54 - G218MMM30 Partyelectsto do so, (oractive steps have not been commenced and continued to remedy tiedefaultor failure if it is not capable of speedy remedy); orzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA @> whether or not tie default or failure is capable of remedy, adequate compensation is not paid in respect thereof (it being agreed that such compensationshall be increased to reflect any further diminution mthe value of the KCMAssetsdue to the delay in payment togetherwith interest thereon, calculated at LIBOR plus five per cent. (5%)in the manner set out m Clause 19.5), then tie Non-Defaulting Party myby notice (hereinafter in this Clause 19 called a "TerminationNotice")to the Defaulting Party (which, mthe event that KCM is the Defaulting Party,shall also be copied to each lender, mortgagee or chargee who was givena copy of the Default Notice) not less than 30 daysprior to the Termination Date (as hereinafter defined) bring about the termination of this Agreement on a date specified in the Termination Notice which is not less than thirty (30) days after tiedate of giving of the Termination Notice (inthis Clausecalledthe "TerminationDate"). 19.7 In tieevent that KCMis the Defaulting Party, GRZshall ensure that the Minister does not make a decision to suspend or cancel any of the Large Scale Mining Licences and that no action is taken by or on behalf of GRZ without the approval of KCM to terminate such Large Scale Mining Licences or any of the Leases prior to the Termination Date. 19.8 In tieevent that either Party serves on the other Party a notice challenging tie validity of a Default Notice or challenging whether tiedefaultor failure alleged in such Default Notice has occurred, the Non-Defaulting Partyshall not serve a Termination Notice until the Dispute is settled by arbitration proceedings under ClausezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA22 or by earlier agreement between the Parties and if a Termination Notice has already been served the Determination Date shall be postponed to a date which is five (5)days after the date of settlement of such Dispute. If the Tribunal finds m favour of tie Defaulting Party, or within any period fixed by the Tribunal tie default or failure is substantially remedied and, if applicable, the compensation is paid, neither Party shall serve a Termination Notice and any Termination Notice already served shall be ineffective for all purposes and shall be deemed withdrawn. 19.9 Without prejudice to the generality of the provisions of Clause 22, if either Party contests: G4 the grounds for the issue of a Default Notice; or (b) the materiality of tiedefault; or (c) whether the default or failurehas been remedied; or (d) tieadequacyof any compensation paid or offered pursuant to Clause 19.6(b), - 55 - G2181/ooO30 the matter shall, subject to compliance with the provisions of Clause 20, be submitted for arbitrationpursuant to Clause 22. 19.10 If the Tribunalfinds (in the case of Clause 19.9(a) or (b)) that proper grounds exist for issue of the Default Notice, the Tribunalshall fix a period during which the Defaulting Party must remedy the default or failure referred to m Clause 19.6(a) and pay any compensation payable under Clause 19.6(b). The Tribunal shall also determine (if applicable) the amount of such compensation payable. If the Tribunal finds(m the case of Clause 19.9(c)) in favour of the Non-Defaulting Party and that any default or failure has not been remedied by the Defaulting Party, or m the case of KCM (if it is the Defaulting Party) by a Secured Party, if the Secured Party elects to do so, the Tribunal shall fix a period during which the Defaulting Party must remedy the default or failure and pay the compensation (if any) due m respect of such default or failure. If the Tribunal finds (m the case of Clause 19.9(d)) m favour of the Non-Defaulting Party and that any compensation paid or offered is inadequate, the Tribunal shall fix the amount of compensation payable and the date for its payment. In each case, compensation payable under this Clause shall be increased (as appropriate) in accordance with Clause 19.5. 19.11 In the event GRZ terminates this Agreement pursuant to Clause 19.2 or 19.6: W KCM shall surrender to GRZ the Large Scale Mining Licences and the Leases but without prejudice to the liability of any of the Parties in respect of any antecedent breach or default under this Agreement or m respect of any indemnity given; @) eachParty shall forthwith pay to the other Party all monies that mybeowing to the other Party hereunder; (c) GRZshall have the option: (i) to request that KCM abandon the Facilities within a reasonable timetable specified by GRZ; and (ii) to purchase (subject to any encumbrances thereon) all of the Facilities at a price equivalentto the fair market value of such assets, which fair market value is to be determined by agreement between GRZ and KCM. Such option is to be exercisable by notice to KCM given within thirty (30) days following the date of temnationof this Agreement. If requested to do so by GRZ, KCM shall also assign to GRZ such contracts to which it is a party as GRZdeterminesand deliver all recordsof the Facilities held by KCM to GRZ; (d) KCM shall have the right, within the one (1) year period following the hrty (30)day notice period referred to in Clause lg.ll(c): - 56 - G2181KXXOO (i) to assign or otherwise dispose of all or any portion of the remab@ Facilities toany person; or (ii) to remove and recover from the Mining Area and export from Zambia any of the remaining Facilities on the condition that such removal does not cause irreparable damage to major assets which are not removed fromtieContract Areas; and (e) KCM shall leave the Facilities and the relevant Mining Area ma safe and stable condition to the reasonable satisfaction of the Director of Mine Safety having regard to natural conditionsmthe area and applying generally accepted standards of good mining and metallurgical industry practice; provided that KCMshall not be required to alter the physical condition of the Facilities and Mining Area beyond the requirements of the Environmental Plan applicable frommetothe. I 19.12 In the event this Agreement is terminated by KCM pursuant to Clause 19.6: W KMshall surrender to GRZ tieLarge Scale Mining Licences and the Leases but without prejudice to tie liability of any of the Parties m respect of any antecedent breach or default under this Agreement or in respect of any indemnity given; (b) each Party shall forthwith pay to the other Party all monies that mybeowing to the other Party hereunder; (c> KMshallbe entitled to require GRZ to purchase all of tie Facilities at a price equivalent to the fair market value of such assets (the "PutOption"), which fair market value is to be determinedby agreement between GRZ and KCM. The Put Option shall be exercisable by notice to GRZ given within thirty (30) days following the date of termination of this Agreement. 19.13 h the event that GRZ terminates this Agreement pursuant to Clause 19.2 or 19.6 and upon the expiry of the one (1) year period referred to m Clause 19.1 l(d) all facilities which have not been disposed of and which remain on the ContractAreas shall become the property of GRZ without any cost to GRZ or any liability for GRZ to pay compensationtierefor. 19.14 Without prejudice to Clause 13.10, Clauses 16, 19.5, 19.10, 19.11 and 19.12, 20, 21, 22, 24, 25, 26, 29 and 35 shall continue in forcenotwithstanding tie termination of the rest of this Agreement by KCM. Termination of this Agreement shall not operate soas to dischargeor otherwise affect tie accrued rights or obligations of either party under this Agreement. - 57 - G2181MKJ30 20. AMICABLE!WlTLEMENTOFDISPUTES 20.1 A Dispute shall be deemed to arise when one Party serves on the other Party a notice ("Notice of Dispute") stating the nature of the Dispute, provided that no Notice of Dispute mybe served unless the Party wishing to do so has fust taken my steps or invoked any procedure available elsewhere in this Agreement in connection with the Dispute and the other Party has either taken such step or invoked such procedure as mybe required, or been allowed a reasonable time to tiesuch step or invoke such procedure. 20.2 Following service of a Notice of Dispute the Parties shall attempt mgood faith to settle such Dispute amicably. The provisions of Clauses 21 and 22 shall not apply to any Dispute until a period of thirty (30) Business Days, or my longer period agreed between the Parties, shall have elapsed following service of a Notice of Dispute. 21. SOLEEXPERT 21.1 Where so provided by Clauses 2.11, 12.6, 12.10, 13.3, 15.6, 17.6 and 26.5 of this I Agreement any Dispute shall be referred to a Sole Expert for determination in accordance with the provisions of this Clause 21. 21.2 The Party wishing tie appointment to be made shall serve written notice to that effect on the other Party ("Noticeto Appoint") and with such Notice to Appoint shall give details of the matter which it is proposed shall be resolved by the Sole Expert. 21.3 If within ten (10) Business Days from the service of the Notice to Appoint the Parties have failed to agree upon the selection of a SoleExpert, eitherParty may then submit a request in writing ("Request for Proposal") to the ICC International Centre for Expertise (the "ICCCentre") for the proposal of a Sole Expert as quickly as possible. The Request for Proposal shall set out the names, description and addresses of the Parties, shall attach a copy of this Agreement, shall set out my relevant indications concerning thechoiceof the Sole Expert (including a reference to the provisions of this Clause 21) and shall set out a descriptive summary of the Sole Expert's brief. The J Parties agree to accept the expert proposed by the ICC Centre as the Sole Expert selected under this Clause 21. 21.4 Upon a Sole Expert being selected under the foregoing provisions of this Claw21, the Parties or either of them shall forthwith notify the Sole Expert of his selectionand request him to confirmwithin five (5) Business Days after such notification whether or not he is willing and able to (and does in fact) accept appointment as Sole Expert and to confiithat the requirements of Clauses 21.8(b), (c) and (d) are all satisfied in his case. 21.5 If the Sole Expert shall be either unwilling or unable to accept such appointment or shall not have given the confirmation in response to the request to be made under Clause 21.4 (the "Confirmation")within the said period of five (5) Business Days, then (unless the Parties are able to agree upon the selection of another Sole Expert) either Party mysubmita Request for Proposal in the manner provided mClause21.3 L~ndon-2/512730/12 - 58 - G218MCKl30 to the ICC Centre which shall be requested to make a proposal or (asthe case mybe) a further proposal and the process shall be repeated until a Sole Expert is selected who accepts appointment. 21.6 The Parties shall co-operate with each other to ensure that the terms of the contract of appointment of the Sole Expert are agreed with him as soonas possible. If the Parties and the Sole Expert cannot within five (5) Business Days of the giving of the Confirmation agree on the mount of remunerationto be paid to the Sole Expert or any other terms of his contract of appointment, then (unless the Parties are able to agree upon the selection of another Sole Expert) either Party mysubmit a Request for Proposal or (asthe case may be) a further Request for Proposal in the mnner provided 21.3 to the ICC Centre which shall be requested to make a proposal or (as in ClausezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA the case mybe) a further proposal and the process shall be repeated until a Sole Expert is selected who accepts appointment and whose terms of contract of appointmentare agreed. 21.7 The appointment of the Sole Expert shall be deemed to have been made upon his signing the contract of appointment. 21.8 The Parties shall select or (if applicable) the ICC Centre shall propose a Sole Expert meeting the following criteria: (a) The Sole Expert shall be a person reasonably qualified by education, experience and trainingto detemethe Dispute to be referredto him. @) Neither the Sole Expert nor (if he is an individual) any member of his immediate family nor (in other cases) any partner in or director of the Sole Expert shall be (or within ten (10) years before his appointment have been) a director, ofice holder or an employee of or directly or indirectly retained as a consultant or m adviser to either Party or an Affiliate of either Party. (c) The Sole Expert shall be independent of the Parties and shall have no interest or duty which conflicts or myconflictwith his function as Sole Expert. (d) The Sole Expert shall not be a citizen or a national of nor a permanent resident in Zambia or South Africa. 21.9 If, in respect of myparticular Dispute, the ICC Centre informs the Parties or either of them that is unable to propose an expert as the Sole Expert to determine that Dispute, then the said Dispute shall be referred to arbitration in accordance with Clause 22. 21.10 The terms of appointment of the Sole Expert shall contain confirmation from the Sole Expert as to the matters required by Clause 21.8, shall require the Sole Expert to comply with the obligations set out in Clauses 21.11 and 21.12, and shall contain at least tie following provisions regarding the procedure to be followed m the proceedings before the Sole Expert (the "ExpertProceedings"): - 59 - G2181100030 (4 The Sole Expert shall not later than fourteen (14) Business Days after his appointment call the Parties to a meeting at which he shall raise any matterszyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA requiring clarification (whether arising out of his contract of appointment or otherwise) and give directionsas to the procedural rules to be applicablem the Expert Proceedings which rules shall comply with the terms of this Clause 21.10. Such directions mythereafter be given from time to time by the Sole Expert as he shall consider necessary. The Parties agree to comply with such directionsmade by the Sole Expert, and with any request the Sole Expertmay make haccordance with this Agreement or with such directions. (b) The Parties shall be entitled to supply data, information and documentation and to make submissions (writtenand/ororal as the Sole Expert mydirect)to the SoleExpert up to fifteen (15) Business Days after his appointment(and the SoleExpert shall ignore all data, information, documentation and submissions supplied and made after such fifteen (15) Business Days unless the same are IzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA furnished m response to a specific request from him or are made in response, in accordance with Clause 21.10(e), to data, information, documentation or submissionsby the other Party). (c) The Sole Expert shall be entitled to obtain such independent professional andlor technical advice as he may reasonably require and to obtain any secretarial assistance as is reasonably necessary. (d) The Sole Expert shall be entitled to request from the Parties (and the Parties shall supply to the Sole Expert) all documents and other information which the Sole Expert shall reasonably consider to be related to the Dispute and necessary for resolution thereof, providedthat neither Party shall be obliged to providethe SoleExpert with any document or information which he would in an action m the High Court be entitled to refuse to disclose on grounds of legal professional privilege. (e) Copies of all data, information, documentation and submissions supplied or 4 made by any party to the Sole Expert shall be provided simultaneously to the other Party, and any data, information or submissions suppliedor made orally by one Party to the Sole Expert shall be supplied or made in the presence of the other Party. The other Party shall, notwithstanding the limitations in Clause 21.10(b), have the right for the period of ten (10) Business Days from receipt of such data, information, documentation or submissions to comment in writing on it to the Sole Expert and copies of any such comments shall be promptly supplied to the other Party. (0 No meeting between the Sole Expert and the Parties or either of them shall take place unless both Parties are given a reasonable opportunity to attend any such meeting. (g) If, without showing sufficient cause, a Party fails to comply with any rule, request, direction or timetable deadline applicable to the Expert Proceedings, kmdon-2/512730/12 -60- G218l&MO3O or in any other way fails to comply with a requirement relating to the ExpertzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Proceedings, the Sole Expert shall nevertheless be obliged to proceed and to issue his determination m accordance with Clause 21.1OQ) and (k), and in so doing may: (i) continue the Expert Proceedings in the absence of that Party or of the document, information or submission; (ii) draw such inferences from that failure to comply or produce as may, in the opinion of the Sole Expert, be justified; and (iii) make his determination on the basis of the information before him attaching such weight as he thinks fitto any evidence submitted to him outside any period he may have requested or directed or as required by the rules applicable m the Expert Proceedings. The Sole Expert shall have the power to open up, review and revise any certificate, opinion, decision, instruction, direction, valuation, requisition or notice issued, given or made under this Agreement and to determine all matters referred to him in accordance with the terms of his appointment. The Sole Expert may conduct the Expert Proceedings at one or more locations in mycountryasmyappear to the Sole Expertto be reasonable. Not more than ten (10) Business Days after expiry of the period provided under Clause 21.lqe)the Sole Expert shall furnish the Parties with a draft of his proposed determination of the Dispute (including a draft of the reasons required by Clause 2l.lO(k) below) m respect of which both Parties shall be entitled to make representations to the Sole Expert for the period of five (5) Business Days after receipt of the said draft. The Sole Expert shall issue his determinationof the Dispute mwriting within ten (10) Business Days after expiry of the period under Clause 21.100) and shallgive full written reasons for that determination. 21.11 The Sole Expert shall act impartially mcarrying out his duties and shall do so m accordance with any relevant terms of this Agreement and shall make his determination in accordance withthe applicable law in relation to thisAgreement. 21.l2 All data, information or documentation disclosed or delivered to the Sole Expert m connection with his appointment as Sole Expert shall be treated as confidential and tie Sole Expert shall not disclose to any person or company any such data, information or documentation. All such data, information and documentation shall remain the property of tie Party disclosing or delivering the same and shall (together with all copies thereof) be returned to that Party on completionof the Sole Expert's work or his discharge from office under Clause 21.14. Provided that the Sole Expert may disclose any data, information or documentation to employees of the Sole Expert or his firm or company or Afflliates (if my)of the Sole Expert or his or its professional advisers if - 61- L0d0~-2/512730/12 G2181KKKUO such employees or Affiliates or professional advisers have prior to such disclosure entered into specific undertakings to maintain the confidentiality of such information data and documentation. 21.13 Without prejudice to the Parties' obligation to comply with any request made by the Sole Expert under Clause 21.1qd) above, the Parties shall not be entitled to, or to apply for, discoveryof documentsmthe Expert Proceedings. 21.14 If the SoleExpert: (a) relinquishes, resigns or abandons his appointment or dies or becomes incapacitated before the issue of his determination on costs under Clause 21.17(b); or @) shall not have issued his determination within the time limit set out m Clause 21.10(k) then, at the request of either Party, a replacement Sole Expert shall be appointed m accordancewith the provisionsof Clauses21.3 to 21.6 and on such appointment being made (as defined m Clause 21.7) the appointment of the Sole Expert shall cease unless prior to the date of appointment of the replacement Sole Expxt the Sole Expert shall have rendered his determination thereunder in which case such determination shall be binding on the Parties and the proposed appointment of the replacement Sole Expert shallbe withdrawn. 21.15 The Sole Expert shall act as an expert and not as an arbitrator and the laws relating to arbitration shall not apply to the Sole Expert or his determination or the Expert Proceedingsor the procedure by which he reaches his determination. 21.16 Any determinationof the Sole Expert shall be fmland binding upon the Parties save in the event of fraud or manifesterror. 21.17 (a) Whilst the Expert Proceedings are in progress: (i) each Party shall bear the costs of providing all data, information, documentationand submissions supplied ormade by it and the costsof all lawyers, advisers, witnesses, employees and other Persons retained by it; and (ii) each Party shall comply with its obligations as to payment of the Sole Expert set out in his contractof appointment. @) The costs referred to in (a) above and the costs and expenses of the Sole Expertand any independentadvisersto the Sole Expert retained m connection with a determination hereunder and any costs of his appointment if he is proposedby the ICC Centre shall be borne as mybe determined by the Sole Expert. The Sole Expert shall issue his determination on the question of how the said costs are to be borne within five (5) Business Days of the issue of his Lcmdon-2/512730/12 - 62 - G21W00030 determination of the Dispute under Clause 21.1O(k). In rexhing thatzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA determination the Sole Expert shall be guided by the principle that the unsuccessfid Party should pay the costs of the successful Party, and shall take into account the relative extent of success or lack thereof by each Party. 21.18 The mount (if any)which is required by a determination of the Sole Expert under this Clause 21 (including, without limitation, any costs under Clause 21.17(b)) to be paid by one Party to the other Party shall be paid within ten (10) Business Days of the issue of the determination, and if not paid within that time, interest on titmountshall accrueand be payable at the rate of LIBOR plus 5%per annum (to be compounded on the first day of each calendar month of non-payment). 22. ARBITRATION 22.1 Subject to the provisions of Clauses 20 and 21, GRZ and KCM hereby consent to submitto the International Centre for Settlement of Investment Disputes ('WSID")any Dispute for settlement by arbitration pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (tie "Convention"). Save where the contrary appears, terms used in this Clause 22 shall bear the same meaning asthey dom the Convention. 22.2 The Parties hereby agree that KCM, because of foreign control, shall be treated as a national of a state other than tie Republic of Zambia for tie purposes of tie Convention. 22.3 The Parties agreetitthe transactionto which this Agreement relatesis an investment. 22.4 Any arbitral tribunal (tie "Tribunal")constituted pursuant to this Agreement shall consist of three arbitrators. Each Party shall appoint (1) one arbitrator withii fourteen (14)days of the registration of tie request for arbitration. The third arbitrator, who shall be President of the Tribunal, shall be appointed by agreement of the arbitrators appointed by the Parties or, failing such agreement within twenty eight (28) days of registration of the request for arbitration by the Chairman of the Administrative Council at tie request of either Party. None of the arbitrators may be a citizen or a national of, or a permanent resident in, Zambia or SouthAfrica. Without prejudice to its other powers, the Tribunal shall have tie power to fix a longer period than the period of 360 daysreferred to in Clause 19.6in any case in which the question whether a Default Notice is valid or whether the default or failure alleged in any such Default Notice has occurred has been submitted for settlement by arbitration. 22.5 Any arbitration proceeding pursuant to this Agreement shall be conducted in accordance with the Arbitration Rules of ICSID in effect on the date on which the proceeding is instituted (the "ArbitrationRules"). Such Arbitration Rules shall be subject to the express provisions of this Clause 22. In the event of my conflict the provisions of this Clause 22 shall take precedence over such Arbitration Rules. Any communicationsby the Secretary-Generalwith either Party under either the Institution - 63 - G2181/MKDO Rules or the Arbitration Rules of ICSID mybe sent by tie Secretary General in tie mannerproviddmClause29. 22.6 Any arbitration proceedings commenced pursuant to this Agreement shall be held in London which shall be the seat of the arbitration proceedings. h relation to any arbitrationproceedings commenced under or in connection with this Agreement, GRZ irrevocably submits to the jurisdictionof the United Kingdom and waives, to the extent pemtted by applicable law, any objection to such arbitrationwhether on the ground of venue or on tie ground that the arbitrationhas been commenced in minconvenient forum. 22.1 The language of any arbitration proceedings shallbe English. 22.8 Any award in arbitrationproceedings held pursuant to tie Convention shallbe binding on the parties and judgement thereon may be entered in my court having jurisdiction for the purpose. Subject to Clause 24, GRZ irrevocably and generally consents m respect of the enforcement of any arbitral award or determinationof a Sole Expert I against it in any proceedings in any jurisdictionto the giving of any relief or the issue of any process in connection with such proceedings (including, without limitation, the making, giving, enforcement or execution against or in respect of my property whatsoever (irrespectiveof its use or intended use) of any decision, award, order or judgment which mybe made or given m such proceedings and the granting of any injunctionor order for specific performance or for recovery of land or other property). 22.9 The Parties waive any right to appeal to any court of law or otherjudicial authority in connection with anyarbitrationproceedings conductedpursuantto this Agreement. 22.10 The costs incurred by the Parties in connection with my arbitration procedure (to include both Parties' legal and other professional costs andother expenses, tie fees and expensesof the Tribunal, and the chargesfor the use of tie facilitiesof ICSID) shall be borne: (a) equally by the Parties where tie Dispute has been referredjointly by them; or otherwise, @) in accordance with Article 61(2) of the Convention. 22.11 The mount (if my) which is required by a determination or award of tie Tribunal under this Clause 22 to be paid by one Party to tie other Party shallbe paid within ten (10) Business Days of the issue of the determination or award and, if not paid with that time, interest on that mount shall accrue and be payable at tie rate of LIJ3OR plus five per cent. per annum (to be compounded on the first day of each Calendar Month of non-payment). 22.12 The provisions of this clause shall not preclude any Party from applying for mterirn relief on m urgentor any other basis to a courtof cmmetent iurixiiction. YzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA -64- G218"30 23. PERFORMANCE TO CONTINUEzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 23.1 Unless tie Agreement has already been repudiated or terminated, the Parties shall continue to observe and perform all the obligations contamed m, and may exercise their rights under, this Agreement notwithstanding the reference of any Dispute to the Sole Expert or to arbitration. Neither Party shall be entitled to exercise any rights or election arising h consequence of any alleged default by the other arising out of the subject matter of the Dispute until the Dispute has been resolved by the Sole Expert or by arbitration or by agreement of the Parties as the case may be. 24, WAIVER OF SOVEREIGN IMMUNITY 24.1 GRZirrevocably agrees that should any proceedings m relation to, arising out of or in connection with this Agreement be taken in any jurisdiction against it or its assets, no immunity (to the extent that it myat any time exist, whether on the grounds of sovereignty or otherwise) from those proceedings shall be claimed by it or on its behalf or with respect to its assets, and GRZ hereby irrevocably waives my such immunity which it or any ofzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAits assetsnow has or myacquire in the future in any jurisdiction. 24.2 The waiver of munities referred to mClause 24.1 constitutes only a limited and specific waiver for the purposes of this Agreement and under no circumstances shall it be interpreted as a general waiver by GRZ or a waiver with respect to proceedings unrelated to this Agreement. GRZ has not waived such immunity in respect of property which is (i) located in Zambia, (ii) used by a diplomatic or consular mission of GRZ (exceptas mybe necessary to effect service of process), or (iii) property of a military character and under the control of a military authority or defence agency. 25. LAW APPLICABLE 25.1 This Agreement shall be governed by and construed in accordance with tie laws of Zambia as in force at the date of execution of this Agreement, supplemented by the rules of international law where necessary to give effect to the express provisions of this Agreement (mparticular, but without limitation, to giveeffect to the provisions of Clauses 11, 13, 15 and 16). 26. FORCE MAJEURJ3, ECONOMIC FORCE MAJEURE AND MATERIAL ADVERSE CFIANGE 26.1 Any failure on the part of a Party hereto to comply with any of the terms, conditions and provisions of this Agreement (except any obligation of a Party to make payment of money to the other Party) shall not be grounds for termination or give the other Party hereto any claim for damages insofar as such arises from Force Majeure, if the first- mentioned Party: (a) has taken all appropriate precautions, due care and reasonable alternative measures with the objective of avoiding such failure and of carrying out is obligations under this Agreement; and - 65 - G2181KKO30 (b) has given notice to the other Party of the occurrence of Force Majeure on becoming awareof such an event. The first-mentioned Party shall take all reasonable measures to overcome the Force Majeure and to fulfil terms and conditions of this Agreement with the minimum of delay (provided that no Party has an obligation to settle a labour dispute or to test the constitutionality of any legislation or law) and shall give notice to the other Party on the restorationof normal conditions. 26.2 For tie purposes of this Agreement, Force Majeure means act of war (whether declared or undeclared), invasion, armed conflict, act of foreign enemy, act of terrorism, martial law, military or usurped power, insurrection, revolution, civil disturbances,blockades, not, embargoes,strikes, lock-outs and other labour conflicts, sabotage, criminal damage, land disputes, epidemics, plague, volcanic eruptions, earthquakes,subsidence, heave, landslip, collapse,rock falls, storms, cyclones, floods (including flooding of underground meworks), explosions (including nuclear explosions), fires, lightning, methane and other underground gases and the explosion ‘thereof,radioactive or chemical contamination or ionising radiation unless the source or causeof the contamination, radiation or otherhazardous thing is broughtor has been brought onto or near KCM’s operations by the Party claiming Force Majeure or those employedor engaged by the Party claiming Force Majeure unless it is or was essential for the construction or operation of the Facilities, non-availability of electrical power, gas, water or other utilities other than due to the negligence or default of KCM, restrictions imposed by the government or other authorities of any country which has jurisdiction either over KCM or its operations (provided that GRZ will not be entitled to claim a Force Majeure Event as a result of restrictions imposed by Zambian governmental authorities) or destruction of, damage to or unavailability of materials, equipment or supplies and myother event which the Party claimiig Force Majeure could not reasonably be expected to prevent or control. 26.3 KCMmay, at any time, serve notice uponzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAGFtZ that either: (a) an Economic Force Majeure Event;or 0) a Material Adverse Change Event; has occurred and is continuing. The service of an Economic Force Majeure Event notice shall be accompanied by a certificate from tie auditors of KCM certifying that an Economic Force Majeure Event has occurred and is continuing. The service of a Material Adverse Change Event Notice shall be accompanied by a certificate signed by two (2) Directors of KCM summarising the reasons for service of such notice and the events or circumstances constituting suchmaterialadverse change. KCM shall procure that the delivery of a certificate(s) as referred to above, shall be repeated on a monthly basis by reference to the immediately preceding one month period until such time as the Economic Force Majeure Event andor Material Adverse - 66 - G218”30 Change Event (as the case mybe) ceases to be continuing or the KMboard have adopted an alternative mining plan for the KDMP as contemplated in Clause 2.8(b). 26.4 The occurrence of a Ekonomc Force Majeure Event andor a Material Adverse Change Event shall have the consequences (but only those consequences) set out inzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Clause 2. KCM shall tieall appropriate precautions, due care and reasonable alternative measures with the objective of avoiding the service of a notice of a Economic Force Majeure Event or a Material Adverse Change Event (as the case may be) and shall tieall reasonable measures to overcome such events (so far as it is within its reasonable control) and to fulfil the terms and conditions of this Agreement with the minmum of delay, provided however that KCM shall not have an obligation to settle a labour dispute or test the constitutionality of any legislation or law. KM shall forthwith give notice to GRZ of a Economic Force Majeure Event and/or Material Adverse Change Event ceasing to be continuing. 26.5 In tie event that: (a) a Economic Force Majeure Event occurs and the auditors of KMdeliver a certificate in respect thereof; or @> a Material Adverse Change Event occurs, and GRZdisputes the occurrence of either of the aforementioned events, GRZ shall, within thirty (30) days of receiving the notice informing it of the occurrence and continuation of the Economic Force Majeure Event or Material Adverse Change Event (as the case may be) notify KCM that it disputes the occurrence of the relevant event and, where this matter has not been resolved within a further thirty (30)days of GRZ notifying KCM of such dispute, the matter shall be referred for determination by a Sole Expert in accordance with Clause 21hereof. 27. VARIATION 27.1 The Parties may from time to time by agreement in writing add to, substitute for, cancel or vary all or any of the provisions of this Agreement, the Large Scale Mining Licences and the Environmental Plan for the purpose of more efficiently or satisfactorily implementing or facilitating the objectives of this Agreement. 27.2 Subject to the provisions of Clause 27.3, KCM may from time to time and without the need for agreement m accordance with Clause 27.1 add to, substitute for or vary all or any of the Scheduled Programmes (excluding the Environmental Plan changes to which shall only be made in accordance with Clause 27.1) or any other programme, proposal or plan approved for the purpose of more efficiently or satisfactorily implementing or facilitating the objectives of this Agreement. 27.3 Where KCM, m its sole discretion, proposes to modify or vary tie Approved Programmeof Mining and Metal Treatment Operations and as a consequence of such modification or variation any of the following occur: - 67 - G218MNO30 (a) the aggregate amount of capital expenditure to be expendedat the Facilities is either increased or reduced by at least ten per cent. (10%)of the sum set out in tie Approved Programme of Mining and Metal Treatment Operations; m) tie aggregate annual production levels of the Facilities is either increased or reduced by at least ten per cent. (10%) of those figures set out m the Approved Programme of Mmmg and Metal Treatment Operations;or (c) the aggregate number of people employed at the Facilities is either increased or reduced by at least ten per cent. (10%)of those employed at the Facilities prior to any such reduction. KCM shall provide notice of such variation or modification to GRZ together with a duly varied or modified Approved Programme of Mining and Metal Treatment Operationsand, within thirty (30) days of GRZ notifying KMthat it wishes to receive an explanation of such proposed changes, but without, in any way fettering or restricting KM'Sdiscretion to make them, the parties shall meet in order that KM may soexplain the reasons for the proposed variation or modification to the Approved Programme of Mining and Metal Treatment Operations. For the avoidance of doubt, KCM's obligations to explain the factors motivating the proposed variation or modification to the Approved Programme of Mining and Metal Treatment Operations shall m no way be construed such that KCM would be required to obtain GRZ's consent (or thatzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAGFCZ would be required to publicly support such a proposed variation or modification)prior to effecting the proposed variation or modification. 27.4 Inthe event KMwishes to defercommencement of KDMPm accordancewith Clause 2.3(c) it shall, assoon as reasonably practicable, notifyGRZ of such fact by serving an Extension Noticeand, within thirty (30) days of such notification, the parties shall meet in order that KCM may explain the reasons which have given rise to KCM'swish to so defer KDMP. 27.5 If: 4 (a) the Investment Commitment is reduced in accordance with Clause 2.3; or @l tie KDMPInvestment Commitment isreduced in accordance with Clause 2.8, KMshall notify GRZ m writing promptly following its decision to make such reduction (and in any event prior to any public announcements thereof) and (in the case of (a) only) provide GRZ with additional information setting out tie mount of the Investment Commitment which is to be delayed as a result thereof. 28. ADDlTIONALCONSULTATION 28.1 G-4 KCM shall nominate a representative, who in the opinion of KMis ofzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA appropriate seniority and experience, to a committee comprising of onezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA member from each of the Ministry, KCM and the local government, which - 68- G2181/030 shall have no powers to bind KCMbut shall monitor the implementation of tie Employment and Training Plan. This committee shall operate during the term of this Agreement and KCM shall furnish it with reports every three (3) months outlining the progress of the Employment and Training Plan, problems encountered, positions filled and the number of Zambian citizensemployed. KCMshall only be liable for the costs associated with its representative in respect of the committee formed pursuant to Clause28.l(a). KCM shall nominate a representative, who in the opinion of KCM is of appropriate seniority and experience, to a committee, comprising of one member from each of the Ministry, the local government and KCM, which shall have no powers to bind KCM but shall monitor the supply and procurementof goods and servicesto the Facilities. The committee shall operate during the term of thisAgreement and KCM shall furnish it with reports every three (3) months comprising the following information: (i) a list of successful tenderers which shall include the items supplied, and the residenceof tenderers; and (ii) a list of unsuccessful locally based tenderers.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA KCMshall only be liable for the costs associated with its representative in respect of the committee formed pursuant to Clause28.2(a). 29. NOTICES i 29.1 G4 Any notice, consent, demand, approval or other communication (a "Notice") required or permitted to be given, delivered or served under this Agreement or in connection with the transaction as evidenced by tie Sale and Purchase Agreementor under the Act shall be deemed to have been given, delivered or servedif - (i) in the case of a Notice given by GRZ, such Notice is signed on behalf of GRZ by either the Minister or Permanent Secretary to the Ministry aszyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA their respective responsibilities require; or (ii) mthe caseof a Notice to be given by KCM, such Notice is signed by a director or by the Secretary of KCM. @) Each such Notice shall, as elected by the Party giving such notice, be personally deliveredor transmitted by fax to the other Party as follows- l~ndon-2/512730/12 - 69 - G2181/CKKDJ ANoticeto GRZ Ifbyfm-zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Ifbyhd- Permanent Secretary PermanentSecretary MhktryofMinesandMinerals Mhistryof MinesandMinerals Development Development Fax: 260 l 251 2441252916 POBox31969 WeSalassie Avenue Lusaka,Zambia ANoticetoKCM Ifbyfu- Ifbybd- The Secretary The Secretary Fax: 260 1 250 658 Konkola Copper Mines PLC 74 Independence Avenue LUSdCii Zambia 29.2 Exceptasotherwise specified herem, a Notice or other communication shall be deemed to have been duly given on the earlier of - (9 if delivered personally, the date at which it was left at tie address referred to m Clause 29.1 and signed for at that address by someone with apparent authorityto do so; or (ii) if transmittedby facsimile the dateof transmission totie fax number set out m Clause29.1 with confiiedanswerback. Either Party mychange its address by Notice to the other Party given m accordance with the provisions of this Clause. All Notices and all communications, documentsor instruments given, transmitted, delivered or served under this Agreement or m connection with this transaction shallbe mthe English language. 29.3 Where KCM is required to submit any plans, proposals or other material for tie approvalof GRZ, the dateof submission shallbe deemed to be tie date on which GRZ received the said plans, proposalsor other materials. 30. WAIVER 30.1 The failure of any Party to enforce at any time myof tie provisions of this Agreement shall m no way be construedto be a waiver of the provision or any part thereof or the right of any Party tiereafter to enforce each and every part of the provision m respect of any subsequent defaultor breach. - 70- G218MKXl30 31.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBASEWRABILITY 31.1 The provisions of this Agreement shall be separate and severable each from the other to the extent that if any portion or any one provision or portion is deemed to be inoperative then the remainder of this Agreement shall remain binding upon and enforceable by the Parties hereto. Nothing herein shall preclude one Party from requesting the other Party to renegotiate any provision herein. 32. FURTHER ACTS 32.1 The Parties shall execute such documents and do and perform such acts that lie within their power and are necessary to give full effect to, and to give each other the full benefit of, this Agreement and GRZundertakes, so far as possible and m accordance with the terms of this Agreement and Zambian law and regulation, to expeditiously provide all necessary approvals and assistance for the development and operation of the Facilities. 33. COUNTERPARTS 33.1 This Agreement may be executed in any number of counterparts, each of which when executed shall be deemed to be an original, and such counterparts shall together constitute one Agreement. 34. ABSENCE OF REPRESJNTATIONS ANDWARhWTJES 34.1 Except as expressly stated in this Agreement, no representation, inducement or warranty was, prior to the execution of this Agreement, given or made by one of the Parties hereto with the intent of including the other Party to enter into this Agreement, and any representations, inducements or warranties that myhave been so given are hereby denied and negated. 35. COMPENSATIONANDPAYMENT 35.1 Any compensation or other amount payable under any provision of this Agreement shall be made promptly and shall be paid in any freely convertible OECD currency, fully transferable, without withholdings or deductions for taxes, levies and other duties except where those were due. 35.2 If any amount which is required by any provision of this Agreement to be paid by one Party to the other Party is not paid on the due date, interest on that amount shall (unless already payable under Clause 21 or 22) accrue and be payable at the rate of LIBOR plus five per cent. (5%)per annum (to be compounded on the first day of each calendarmonth of non-payment). 35.3 In the event of a dispute arising as to the compensation payable by a Party pursuant to any provision of this Agreement (including, without limitation, a dispute as to the quantum of the compensation or whether the compensation is payable or not), either Party may refer the issue to a Tribunal for determination m accordance with Clause 22. - 71 - G2181100030 36.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAENTIRE AGREEMENT 36.1 This Agreement and the Environmental Liabilities Agreement together contain all the express provisions agreed on by the parties with regard to the subject matter of the agreementand the parties waive tie right to rely on myalleged expressprovision not contained in this agreement. 37. INDEXATION 37.1 The Investment Commitment and the KDMP Investment Commitment shall be subject to revaluation on the basis set out inClause 37.2 by reference to any change m the Producer Price Index for Finished Goods as it appears in the periodical Monthly Labor Review as published by the US Department of Labor, Bureau of Labor Statistics or, if such index is not published,such other index that replaces it (the "Index"'). 37.2 At the end of each month, the Investment Commitment and the KDMP Investment Commentshall be adjusted by multiplication by the quotient resulting from the followmg: quotient = the Index as at the end of the previous month divided by the Index as at three (3)monthsprior to Completion. 37.3 Any Party may request that an adjustment pursuant to Clause 37.2 is determined by a fmof chartered accountants of recognised international standing provided that the Party requesting such determination procures that such firm provides its determination within ten (10) Business Days of the date of adjustment specified m Clause 37.2. L0ml0n-U5l273Ofl2 - 72 - G2181/00030 INWITNESSWHEREOFthis Agreementhasbeen duly executed by the Parties.onthezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAthirty fmtday of March,zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA2000 SIGNEDfor andon behalf of the GOVERNMENTOFTHE FtJZPUBLIC OFZAMBIA n SIGNEDfor andon behalf of 1 KOIWOLACOPPERMINESPLC } Y -73- G218llOOD30 scHEDuLE1 APPROVED~OGRAMMEOF"INGANDzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA"I,zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBATREATMENT OPERATIONS J h1d0dBl273W12 - 74 - G2181moo30 KONKOLACOPPERMINESPLC 4 PROGRAMMEOFMININGANDMETALzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA TREATMENTOPERATIONS December1999 This document, tie Programme of Mining and Metal Treatment Operations for the assetsthat W11be ownedby Konkola Copper Mines PLC (KCM),has been produced to satisfy the requirements of Part 3 of The Mines And MineralszyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAAct, 1995 in relation to tie application for a large-scale mining licence. Section 24 (3) of Part 3 of the Act states,inter alia: a)A comprehensive statement ofthe mineral depositsin the area over which the licence is sought, including details of all known mineralsproved, estimated or IzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA inferred, orereservesand mining conditions; b) Every applicationfor a large scale mining licence shall include or be accompanied by the proposed programme of mining operations, including a forecast of capital investment, the estimated recovery rate of ore and mineral products, and the proposed treatment and disposal of ore and minerals recovered. The Progamme of Mining and Metal Treatment Operations for tie KCM assets has been based, hgeneral, on tieClass 1Feasibility Study that was undertaken by Zambia Copper Investments Limited (ZCI) in June 1999. Wherever available, the Feasibility Study programme has been updated with more recently estimated information. The Programme addresses the operations at Konkola, Nchanga and Nampundwe. 4 KCMProject Programme of Mining&Metal Treatment Operations . - ._.... ..... __... ._=.:=.-.. __?-_.. --.---i~:.z-:_-......... _.L__...-. ..._.. -_...=._....-..- ::_z;_..-=:27.. .. .- .. . :.:.:- .=i:..i.-i... .......... .- ... - ..-.. .... I..... - . - . -. -. ..... coPmwTs PREAMBLE 1. DESCRIPTIONOFTHEMININGOPERATIONS - l.1 KonkolaMim .- -. . - 1.1.1 UndermundInhstmcture 1.l.2 StoDim Methods andEfficiencies 1.1.3 Ore Production Forecast 1.1.4 Concentrator 1.1zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAS SurfaceInfkstmcture 1.2 NchangaMine 1.2.1 The Underground Mine l.2.l.l UnderwoundInfrmtructure 1.2.1.2 Stopirw Methods andEficiencies l.2.l.3 Production Forecast 1.2.2 The Opennit Mine I.2.2.I 0-permithhzmucture 1.2.2.2 LifeofMine Desim l.2.2.3 Production Forecast 1.2.3 Concentrator 1.2.4 Tailings Leach Plant 1.2.5 Surfacehfkstructure 1.2.6 Chineola Refi-actow Ore 1.2.7 Hvdrometallurgical Treatment NampundweMine 13zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 1-3.1 UndermoundMine l.3.1.l UnderwoundInfrastructwe l.3.l.2 Stopinp methods and Eficiencies l.3.l.3 ProductionForecast 1.3.2 Concentrator 1.3.3 SurfaceInfiastructure 1.4 ConsolidatedSalesForecast 2. CAPITALCOSTESTIMATE ... .... ..... .... ___ _ .... . : .. ;.-;c rl-2...... .I.:.-.--: ......... :;.:-_z:-. .:. ....... -. ............. 7;. :L.::: .zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA2 : :.-;.-.;I=-:.-=-.;. Zambia Copper Investments Limited PageNo2 Konkola 1.1 er-. -.ma In~mctuie Er0 - -. . . The existing hoisting installations at Konkola will be upgraded to comply with modem practice and the relevant legal requirements. The VS3B ventilation shafl (to be re-named No.4 Shaft) will be slyped and deepened to provide annual hoisting capacity for 6 million tom of ore and its associated waste. No.4 Shaft will be commissioned for hoisting m May 2006, fiom which date ore hoisting through No.1 and No.3 Shafis will cease. Additional pumpsW11be installed in anextensionto the 985m.Lpump chamber and anew pump chamber on thezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA138OmL will be established. At present, the main surface fans at No.1 and No.3 Shafts operate at unacceptable pressures and underground booster fans are usedtokeep the production sections ventilated. The location and relatively small capacity of these booster fans have resulted mpressurisation of the return airways with consequent high re-circulation. h turn, this has resulted in inadequate heat dissipation and the slow clearing of fiunes at blasting times. New higher duty booster fans will be installed above the production levels to extract fi-om the workings below and to force the air up the various upcast shafts in smes with tie present main surface fans. This will allow the currently installed booster fans to be removed thereby ensuring negative pressure mthe retum airways and the elimination of the majority ofthere-circulation. Provision has been made for new purchases and rebuilds of tie underground mobile fleet. KCMProject Programme of Mining&Metal Treatment Operations - __ --:;.-,: :-=__zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA-:I---=:::.Yz-7~~; -i.---i=-i;:i-l--ll.~._~-.=-~~-~.i ---?>=.---i---.-=:. __...C..-. *Ili&-="Y---?ziiz .-.=.=:. ...c .. ... ........... . ..- ----.. ._ __ __-.-. .... ... -.--....- -. - -...... - ... 1.1.2 StoDing Methods and Efficiencies The current mining operation is based mainly on sub level open stopmg methods (SLOS) using gravity ore flow within stopes where the orebody . . -. -. -- ~'-iiip~issteqind iiyscraping~ofhoken ore m flatter dipping StopeS, These methods have been practised extensively over a number of years at Konkola butzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA With variations to suit tie level of mechanisation, mode of stope drilling, orebody width etc. The post pillar cut and fill method (PPCF) has been introduced at No 3 Shaii-using waste rock backfill. SLOS With benching and longitudinal room and pillar (LW)have also been planned for use in some areas at No.1 and No.3 Shafts during the interim period before changing totally to the backfill methods for the Konkola Deep Mining Project(KDMP). Atemporary backfill plant With a capacity of about 40000m3per month will be built at the existing concentrator and commissioned mearly 2001. Following this, the bulk of the No.3 Shafl stoping will be by the post pillar cut and fill (PPCF) method. Two fidly mechanised total backfill methods have been planned for tiezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA KDI'vP. These are: l Square excavation level fill(SELF); and l Post pillar cut and fill (PPCF). TheKJ3MPstoping design is based on the following average dilution and extraction factors: SELF Dilution: 14.8% Extraction: 84.8% PPCF Dilution: 13.0% Extraction: 77.4% ......... .... . .... __ --- ........ - ............ ............................. .... .-:: ....... .=.... 7........ =..... :__ . :.. _.__:__-_::1s____ Zombia Copper investments Limited PageNo4 KCMProject ProgrammeofMining&Metal Treatment Operations ... .:; .... :.:.:-z.z =.i..L. :La .rzT=i:ii :r- .... :. __ ~.-.. :.......... -. -. .-. ...... . - ........................... - .-_.__ . : -:. :...zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA2.:. . .i:iL.:. :___ .. - __ ....................... .. Anew large capacity backfill plant will be constructed next to the new concentrator atNo.4Shaft to provide the required volumes of classified .- Tidingsfill for the stopmg operations. The temporary'backfill plant at No.1Shaft will be closed when the newbackfill plant iscommissioned. 1.lzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA.3 OreProduction Forecast The estimate of ore reserves and resources for Konkola as at May 1998is shownmtiefollowing Table. The estimate is based on a 1% copper cut- off (the same as used by ZCCM) and is for Ore Shale only. All of the reserves and the indicated resources will be extracted during the project life. Table: KonkolaOreReservesandResources CATEGORY Orebody Tons(Mt) %TCu %MCU Konkola Reserves Proved No 1Shaft 3.88 4.11 0.43 No 3 Shaft 5.68 3.18 0.24 Probable No 1 Shaft 8.79 4.33 0.48 Total Konkola Reserve 18.35 3.93 0.40 I 1 Konkola Resources d Indicated KDMP 124.0 4.26 0.32 Inferred KDMP 97.0 3.94 0.28 Total Konkola Resource 221.0 4.12 0.30 .... ...... .-.~.--___-_____.__.l_ __............. ..... ..................................... .r ....... ................... -......... ...................... ................. ._--L--__._ .............. :1 . , ..... ........ .._._..I----. U. .Zambia CopperInvestmentsLimited PageNo5 KCMProject ProgrammeofMining&Metal Treatment Operations . . ............. . . ... ....... .iii.:----=-=ST=-.--.--~.---.'=i=-i..-.~_--I.._~-- -. . ,_zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA7 .... _- - .... ... .............. -- ......... ... .................zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA It is plannedto increase the ore productioncapacity from the current level of about 2.0mtpa to 24mtpa in the short term and thereafler build-up production until it reaches thelevel of 6mtpa planned for KDMP. - .... -..... -__...... - -. The limited ore reserves remaimng above 59OmL at No.3 Shaft require stoping of reserves below that level to commencem about four years time. To achieve timely dewatering of those reserves, tie 95OmL dewatering developmentW11re-commence after vesting. The dewatering plan over the thirty year project period is based on tie extension of the existing WhI., dewatering development and the development of the 115OmLand 135OmLlevels. This hasbeen scheduled to tie in with the establishment of No. 4 Shaft The development is also timed to ensure that tierelevant stopes W11be dewateredbefore they are required for production. The No.1 Shaft areazyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA has more ore reserves than No.3 Shaft, a larger geographical extent to provide for more stoping faces and a higher grade than that of No.3 Shaft. Therefore out of the total underground ore production of 2.4mpta, 1.4mtpa will be produced from the No.1 Shafi area in the early years. No.3 Shaft's production of 1.O mpta will come fiom a limitednumber of stoping faces andbyrelativelynew methods. Ore production fiom thezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAKDMP resources commences m 2004. No.3 Shafl stops hoisting ore in2005. KDMPproduction increases rapidlyhm 2004 and reaches the rate of 6.0mtpa fiom January 2007. Ore hoisting through No.1 Shaft closesin 2006. The temporary backfillplant will remain in operation until the first module of the KDMP backfill plant comes into operation in September 2005. From September 2005, all stoping will be by backfill methods and the secondbackfillmodule of the KDMP backfillplant will be commissioned mApril2006. KMhject ProgrammeqfMining cfi Metal Treatment Operations ...-.......... .. ........ -- __-: -. -.--._r ---'^~-~----..-zi.-,:-_'-:--c,---._i;T.i;i--~- ... :.. =:.. . .- ... .... - .. - . .... .... - ... _._.- ............... - - ..-.. --. ... -. .....__ ..-. -_.. .. - -- .. -- The combined mudore productior, forecast for No.1 Shaft, No.3 Sh& and No.4ShaftzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAfiom 2000to 2028 is shown in the following Table. The Table also shows the forecastconamtitorrecoveryand the tonsofcopper ... .- .mcon.cenmteper ~~.~-. .......... ......... .. ........ ............. ...... ~:-~._..._I_._-_...-__I.__.-._ .. -_ ...... .............................. _i........zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAT.~-~-.--i;:.- i-.:~~i-L--i-~-~=. &mbw-Copper InvesbnentsLimited PageNo 7 KCM Project rogramme of Mining& Metal Treatment Operations I I Table: Konkola Production Forecast i I 2006-~~ 2007 2008 2009 1 2010 2011 m 4636 5902 6046 6037 6038 6044 5984 : IzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA !zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA L 3.44 3.54 3.57 3.60 3.69 3.66 3.73 ! 3.85 4.01 I 88.90 89.59 90.06 90.05 90.04 90.06 90.091 90.22 90.l l I 1 47.5 47.5 47.5 47.5 47.5 47.5 47.5 : 47.5 47.5 141.8 187.2 194.3 195.5 199.1 200.9 201.1j i I . ... . . . . . . ~ . . . i Zambia Copper Investments Limited PageNo8 KCMProject /rogramme ofMining&iMetal Treatment Operations l Table: Konkola Production Forecast (ctd) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 20281 Ore 6026 6076 5910 6082 6061 5978 6060 5950 5966 6020 6039 5997' Production (000 tons) I Ore Grade 4.03 4.14 4.16 4.13 4.19 4.19 4.27 4.28 4.26 4.21 3.87 1 %TCu Concentrator 90.09 90.05 90.01 90.08 90.04 90.04 90.01 89.74 89.80 89.92 90.01 I 90.19 Recovery W) L Concentrate 47.5 47.5 47.5 47.5 47.5 47.5 47.5 47.5 47.5 47.5 47.5 47.5 47.5 47.5 Grade (TCu%) Copper 219.1 226.6 221.4 226.3 228.6 225.4 228.4 228.0 229.2 230.5- 228.9 224.1 218.7 209.1 ContainedIn Cons (000 tons) . . ZambiaCopperInvestments Limited PageNo9 Aminor expansionwillbe made to the existing concentrator during2000to increase its capacityby 20%. The existing concentratorwill be shutdown following commissioningzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA of the new plant m2005. The new concentrator, which W11be positioned approximately three kilometres north- west of the existing concentrator, W11consist of two 3 million tons per annum modules that will include mill feed silos, SAGand ball mills, large cell flotation and concentrate thickening. The thickened concentrate W11 be pumped to tieexistingconcentrator site for filtering in anew filterplant. The flotation tailingsW11be classifiedmthe new backfill plant and the underflow will be used asthe backfill material for the stopmg operations. 1.1.5 Surface Infiastructure Most of the surface infhtructure requires general refiu-bishment. Some of the surface workshop facilitiesW11be re-equipped and others will have to be extended to cater for all of the KDMPrequirements.A new changehousewill be required fortieunderground workers to replace the existing changehouse that will have to be demolished to make way for amajor extension to the mainelectrical substation. The Lubengeletailingsdamwall willberaised progressivelyover the thuty years and a newspillwaywillbe constructed to replace the existing decant tower. KMProject ProgrammeofMining &Metal TreatmentOperations . -~. .... -? ..z_-in.___. '-.'L: ____-:A---...li__-_.- ....:>L. ~.=-.ii-ii=-i--i;i--i~-?irrj..~f--iiiiri~-~=i.--Y=-:.Oi.-... ... . .- - ---.I .. .. . - -- .. .. - .. ..... 1.2 NchangaMine 12.1TheUndermundMmezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA .- I.i rider . oundIn m-m-~&re ...... - -... __.. U PT h. Provision has been made m the capital estimate to upgrade certain of the winderelectricdmechticalsand for upgrades to the 1600 and 2800 pump stations. The planned re-commissioning of the No 4 Shaft upcast fan will supplement thetwin fan system at No 5 Shaft and will allow the use of the 735ftL drain drive as a return system fiom Chingola B. This will increase the total circulating quantity by 200m3/s for the remaining pmod during which the Chingola B reserves are being mined. Provision has been made for new purchases and rebuilds of tie underground mobile fleet. I.2.I.2 StoDinpMethods andEficiencies There are no planned changes to the basic design of the stoping methods. To reduce the amount of banded sandstone dilution that is encountered from the Lower Ore Body, the maximumpercentage drawtillbe reduced fiom 125%to 110%. J Chingola B production will be increased fiom the current rate of 300000tpato 480000tpa withanoverall recovery factor willbe 0.85. I .2.1.3Production Forecast The estimate of ore reserves and resources for the Nchanga Underground Mine aspublished by ZCCM is shown in the following Table. The estimate is based on the same cut-off parameters used by ZCCM. Copper Reserves 19.80 2.70 1.19 Underground Resources Indicated LOB"thinrich" 6.95 6.61 2.83 Block A 0.64 3.31 1.82 1.11zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA3.27 ChingolaB 5.43 Inferred RiverLode 1.79 3.48 1.14 Total Underground Copper Resources 10.49 5.75 2.53 Inferred UOBCobalt 23.16 2.15 0.45 Total Underground Cobalt Resources 23.16 2.15 0.45 The current forecast of metal prices excludes tieabove quoted resources fiom being regarded asviable at thisstage. However,tieresources are significantm quantumand will be tie subject of careful re-evaluation when tie forecast of metal pricesimproves. The production forecast for the Nchanga underground mine ispresented in tie following Table.To reducetieamount of Banded Sandstone in tieore stream, KCMProject Programme of Miningc% Metal Treatment Operations ... .-. % L i_>-:-z-..G-k...-, ..Z.&.i. 7:--7_;i-.-i -_-. ~..,--?.-.-._: -.-. .................. - .. -. ..... i_.--. ..... :. i1 .. .... . -. _....... ... - . - ... -.- ---- . -. . - ----....... ._-.-- ... _-I.-..-._-. .... - - . - .. - the maximumpercentagedraw has been reduced fiom 125% to 110%. All of the estimated reserves W11 be cxtracted during the remaining life of tiemine. .- - --TheTabie.&so shows-the expected c&kmtratorr&ovqandthetons ofcopper m concentrate annum. PmzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA ........... -.. .. -. .. --- ................... .. __--- .. -- ................ ..... - -?.-F---.-- . .zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA ..... -L., i.i:.::...... ....... --_:.::-.c--=.-- -&&z"&-...... ............ -- .. -.; ...... .i. =. ..L. ...... i.-i_=-...................... &&a CopperInvestments Limited PageNo13 KCM Project i Programme of Mining & Metal Treatm wrations l Table: Nchanga Underground Production Summary I OreProduction (000 tons) Grade%TCu 2.50 2.50 2.36 2.21 I 1 Grade%ASCu 1.18 1.16 1.12 1.10 TCuContained in 63.772 47.681 44.334 39.443 Ore(000tons) ASCu Contained in 30.183 22.061 20.950 19.570 Ore(tons) Overall Recovery 51.88 52.67 51.94 50.19 l (W MG Cons Grade 40.0 40.0 40.0 40.0 (TCu%) HG Cons Grade 43.0 43.0 43.0 43.0 50.0 50.0 50.0 50.0 (TCu%) Cu Contained in 43.981 50.580 49.572 43.131 33.086 25.1 13 23.026 19.794 Cons(000tons) PageNozyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA14 ZambiaCopperhvestmentsLimited ....... -. ... ..- ... 1.22.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAI oDe& r&&&&&~zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Due to the short remaining life of tie Nchanga Open Pit, only limited oftieopenpit inhstructurezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAhas been allowed for in the cost refurbishment estimates. I.2.2.2Life ofMineDesim All of the ore lying to the west of section 12 East W11be mined through the underground mine and is unavailable to tie openpit. A major back-filling U operation has taken place in this area of the Eastern Extension. Some of tie overburden removalhas beencapitalised. Explorationdrillingwill be undertaken to evaluate the viability ofany downdip extensiontotieUpper Orebody fiom tiebottom ofthe Nchanga OpenPit. The programme,which will commenceduringtiefirstyear after close,is estimated to cost $1 million and will be completed by the end of the second year. A detailedexploration programmewill be compiled whichW11be presentedas an addendumtotieProgrammeofMining andMetal Treatment Operations. 1.2.2.3ProductionForecast d The statement of ore reserves and resources for the Nchanga Openpit Mine as estimatedin April 1999 is shown in the following Table. The estimate is based on tiesamecut-off parameters for copper and cobaltas are used by ZCCM. All oftheestimated reserveswillbe extractedduringthe remaininglifeof the mne. ...-..... ..... - ...................... .-- ...... ~ .. __ ..... .................. - . . . ..................... ............ .-. ................... -. -.__.__~.7._......... &m& apperInvestmentsiinzited PageNo13 . - - - . .. __ .. . . . - ... -- __ .-zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA CATEGORY Tom %TCu %ASCu %TCo %ASCo Orebody W) NOPReserves ProvedCopper LOBRJOB 12.26 2.75 1.35 Reserve copper ProvedCobalt UOBCobalt 2.82 1.79 0.40 0.67 0.07 Reserve ~~~ NOPResources U 42.24 1.94 0.91 Measured UOB Indicated LOB 11.45 4.63 1.99 Total NOP Copper Resource 53.69 2.51 1.14 Indicated UOBCobalt 13.05 1.22 0.33 0.31 0.04 Total NOP Cobalt Resource 13.05 1.22 0.33 0.31 0.04 The current forecastofmetal prices excludes the above quoted resources from being regardedas viable at this stage. However, the resources are significant m quantum and W11be the subject ofcareful re-evaluation when the forecast of metd prices improves. The exploration programme discussed above will contributesignificantly tothis re-evaluation. The life-of-mine production forecast for tieNchanga Open Pit mine is shown in tiefollowing Table. A primary objective ofthe mining plan fortheNchanga Open Pit mine is to ensure that tieresources tabled above are not sterilised by bad mining practices. The Table also shows the expected concentrator recovery andthe tonsofcopper in concentrateperannum. Table: NchangaOpenpitProductionForecast Production Production mcons(oootom) 1.2.3 Concentrator Total copper flotation recoveries at Nchanga are expectedto improve followingtie generalrefbrbishmmt of the plantand the splittingof the openpit and underground flotation streams. The flotation recovery for the open pit copperore isforecast to improve fkom 31%to 35% and for the underground ore from53%to 55%. KMProject ProgrammeofMining c% Metal TreatmentOperations .~~---__..__= _,. ..>...4-.-:- -A--’,.::-.:zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA“2:..:”.’.-- __ .-.. .. _. .. . .... -.. -. ... .... ..._.. .. .. .-5.. . ,. . .. . . . .. .- . .. - .. --__ - -- --.-. -_-_ --..-__-- - - -__ ...--- --~ .... .- ..- . _- -- - - -.-- .zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 1.2.4 TailimsLeach Plant mP) General refiubishment and upgrading of tie Nchanga Tailings Leach Plant will be - . ._- - - ---.._ -__--_ -. __ _..-. .. - undertaken.Themaximum capacity of the‘TLPhabeen estimated at 15.5 million tom of tailings per annum. Excess capacity beyond that required for the treatment of the current msmgs W11be filled with reclaimed tailings. The reclamation of tailingsW11 cease m 2007 with tie final depletion of tie old tailings dams. TLP recoveries are projected to increase fkom 68% to an estimated 74%. Production of cathodes of marketable qualityzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAis expected to increase to 90%. The production forecast for theTLP is shown in the following Table. KCMProject F wmeof Mining& Metal Treatment OperationszyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA IzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Table: Nchanga Tailings Leach PlantProduction Summary 2000 2001 2002 2003 2004 2005 r0-z 1 *O07; Total Flotation 7764 7719 7440 2424 2473 1846 1739 ' Tailings (000 tons) Recovery of 68.39 70.60 72.60 74.00 74.00 74.00 74.00 1 74.00, ASCu(%) Cu Recovered 56.107 62.600 59.386 23.1 12 19.476 14.236 13 519 12.628 (000 tons) Tailings 6360 10520 10799 13076 13027 13654 Reclamation (000 tons) l- Cu Recovered 23.964 40.861 43.145 (000 tons) TLP Finished 82.570 102.985 106.018 59.989 56.570 50.611 Cathodes (000 tons) TLP TotalCu 80.081 103,458 1 102.123 66.655 62.855 56.235 54.000 33.198 I Recovered (000tons) Zambia Copper Investments Limited \ PageNo 19 KCMProject programme ofMiningc% Metal Treatment Operations :: _:__I-:r ~-~~-a--.i-~~;.~~:~.--i.-~..~;.-i;-~':----.-- __:_-:----_~-.?-.-;;.~==.-----;-- - - - .... - ......... _-_ -........... -... - . __.... - --. ............ - -. ............. - .- ..... -....... -zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA............ - . 1.2.5 Surface Infrastructure General refbrbishment of much of thesurfaceinhtructure W11be 1.2.6 Chineola Refractom Ore A comprehensive tilling, composite sampling, laboratory and pilot plant scale testwork programme will be undertaken to evaluate tie technical and financialviability of the Chingola Refiactory Ore at an estimated cost of US4.25 million. The evaluation programme will tie mestimated twozyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAand ahalf yearsto complete and is scheduledto commenceattiestartoftiethird yeartierclose. 1.2.7 Hvdrometallurtical Treatment Ahydrometallurgical routeW11be evaluated as a possible replacement to pyrometallurgical treatment for most, if not all, of the KM concentrates. The evaluation programme, which will include bench and pilot scale testwork, is being compiled and is expected to commence as a high priority immediately after close. If the hydrometallurgical route is shown to be tie more attractivethen tie project would enter the financing and construction phase. Commissioning of a suitabletreatment facility is not expected before the end of the third year after close. It is probable that if a hydrometahrgicd route is implemented, it would to utilise the TLP facilities. 13NampundweMine 1.3.1 Undemround Mine 1.3.I.l UndermoundInfkm-ucture Provision has been made in the capital estimate to upgrade certain of the winderelectricsand mechanicals. __ . . .... ....... -_ .._. .... - .. ~ ....... -.. .- .-- ................ ;_- __ -____ Zumbia CopperInvestmmtr Limited PageNo 20 programmeofMining&iMetal Treatment Operations KCMhject - :.---:--_:-.: .. ....... -zt=;.?Ci-z:iii ::-.:-::----. .... ~=::::.--=zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA2;. .. >.i.3:3._;::--;:_.--.~~:__.=:- -.>;_..= i.:. ....... ......... - .... -..................... .............. Two ncw 3OOkWcentrifbgalzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAfans will be installed to provide the zdditional air volume required by the proposed increase more production. .... .~ .... . - .. I.3.I.2&Dim Methods andEficiencies Sub-level open stoping will continue to be practised throughout the Nampundwe mine and dilution is planned at 15% and extraction at 60%. I.3.1.3Production Forecast The statementof ore reserves and resources for tie Nampundwe Mineasestimatedby ZCCMis shown in the following Table. Table: NampundweOreReservesandResources Total Resources 11.8 15.0 The current bottom production level, tie 48OftL, has approximately eighteen months of ore reserves left for production at a relatively low grade. The reserves belowtie48Ofi.Lare close to the shaft station and have a higher grade. To achieve tie targeted concentrate requirements, tie 730% W11 be equipped with tracks, pipes and a main tip grizdey as soon as possible. ........... ....- ...................... __ ............ .- __ ............. ._I-.. .. ............. . .- - ..-. -- “>L.&.%A.-;z..zm.~-; ..L* &&a Copper Investments Limited PageNo21 KMProject programme of Mining&Metal Treatment Operations -I. . -:.~.... ::. ~~ ,-=_i-.~_-..7.-x&-.i -.... ~~~-~:~-~,~..-~~=~.~.~~-~~=.~~...~=.~~~=:~:=-:.~~--~=~.... ...-.. ........r7-...... =. ................................ ....zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA.... The quipping of the belt level and loading boxes on the 83Oft.L in %lzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAShaft is a priority and B Shafl W11 be deepened to pmwdeasecondoutlettothelowest level. ..... - ... .... __ ... - - . .__ -.. The preliminary productionforecast forNampundwe for the first fiveyears is shownmthe following Table. The programme will be finalised when the total Zambian oflhke potential is known. It is anticipated at this stage that Nampundwe will continue m operationforthethirtyyears. Table: NampundweProductionForecast 2000 2001 2002 2003 2004 OreProduction 249.852 363.519 393.070 95.929 59.828 (000tons) Grade % 10.8 10.8 10.8 12.2 14.8 Sulphur . 1.3.2Concentrator Rehabilitation and extensiontotheexisting concentratorwillbe undertakentoallow fortheexpandedunderground production. 1.3.3 SurfaceInfrastructure Limitedrefurbishmentwill beundertakenofthe surfaceinfkstructure. 1.4 Consolidated SalesForecast The following Table shows the estimated annual copper and cobaltsalesover tielife ofproject. .............................. - ................. - .. ............... :..... .... i .. _.. _- .___ _1..... i- .. Zambia Copper InvestmmtsLmited ... . . 'PigeNO 22- ~~ - 2020 2021 2022 2023 2024 2025 2026 2027 2028zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 218 220 220 221 222 221 216 211 210 &pp& Cobalt 0 0 0 0 0 0 0 0 0 NotezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAl 000tom ** tom ' d ........... .- - -................. _...... .................... - .. ....... .. .. ..... -=.: --i..:..---.i __:_-A__; i &~,~-. .... ...G. ........ . ^...-...........e ._L_;.... L._. :L.:_--.-.-----:-:.-L ._: Page Zambia Copperh~hentsLimited No23 KMProject programmeofMining & Metal Treatment Operations . . . . .. . __ -.~~ri-~;----.-_..i?ii'-.;- .. .. .--,:-~.~:,,-._7.2;-----zzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA- .-:~:- -,=& . , -.. _. . . . . ,,. . ... . . . . . . . -.._ -.._.. -.-___ - . . ... . -. . --.-. . . . . 2. CAPITALCOSTESTIMATEzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA The required capitd expenditure for tie mining assets at Konkola, Nchanga and -. .- - Nampundwehasbeenestimakdm detail.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAAll costs associated with refurbishment of the assets or an increase m production have been capitalised. These include additionalequipment and the development required tobmgtherelevant mines up to their expanded levelof output. bysite,with Konkolafurther divided The capitalrequirements have been estimated into the capital required for the current mine and that required for KDMP. The scope of worksthat will be undertaken for the current mine at Konkola andKDMP has been detailed in the fifteen volume KDMPFeasibility Study report that has alreadyzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAbeen presented to GRZ. The details of all estimated capital costs at Nchanga are described below together with the summmsed estimates of capital expenditureat each of thesites. Table: CapitalCostEstimateProject Summary BaseDateJanuary 1999 Description US$000 ~ ~~ Kodcola DeepMmgProject 522 680 Konkola Division 72124 Nchanga Division 174 655 Nampundwe Division 10729 Johannesburg, ZambiadkPartners Cost 18751 PROJl3CTTOTAL 798939 KCMProject Programme of Mining & Metal Trealment Operalions Table: Capital Cost Estimate ProjectSummary Cashflow DESCRIPTION ussm 2ooo 2001 2002 2003 2004 2005 2006 2012 :BEYOND TOTAL KonkolaDeepMiningProject 25 593 53 933 I04 145 156213 94 611 6O074 13 201 I355 3 848 1025 1023 1023 ’ 6576 S22680 Konkola Division 31 l49 2 362 961 72 I24 NchangrDivisim SO138 26 295 7746 5095 2943 469 174655 Nampundwe Division 3491 657 10 729 Johannesburg. Zambia B Partners 6751 2 525 18751 cost - PROJECTTOTAL I17 522 85 772 I I2 852 161 308 91614 60543 13201 13-55 3848 1025 1023 I023 6576 798 939 - . .zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA .- . . .. . . .. . I Page No 25 ZambiaCopperInvestmentsLimited Table: Capital CostEstimateNchanga Division BaseDaleJanua~y1999 - - .. - ... . . ... Description uswoo Sh& and Underground l5400 Open Pit 41 583 Copper Concentrator 14 563 Cobalt Concentrator 3 389 Tailings Leach Plant 54 188 9463 SurfacehfiastmcturezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA . . Indirect Costs 18462 SUBTOTAL 157048 CONTINGENCYAMOUNT 17607 PROJECTTOTAL 174655 The capital estimate for Nchanga includesthe following significant items: SHAFTSANDUNDERGROUND US%'000 US$'000 Localised Services ,671 ShaftEquipment ,208 4 Capital Development 2,800 Mining Equipment 7,083 Arterial Tmnspozt ,674 Locomotives and Rolling Stock ,411 Ore Storage and Transport ,595 Ventilation 1,548 Underground Workshops ,264 Electrical power ,246 PumpingandDewatering .900 15.400 OPENPIT Stripping of over burden 40,700 Miscellaneous 882 41.582zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA .... ..- ...................... -. ......... ....... . . ... . . ............. __ -.. -_ .... :: . ............ ~ _._L_ - ... .:-&+- hnbiaCopperInvemnentrLimited PageNo 27 COPPER CONCENTR4TORzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Civil Works 1,030 MechanicalEquipment 6,622 Piping.and Vd-ves- - . -- .. . - - ,429 Electrics 1,674 Instrumentation 1,631 Preliminmesand general 2,733 Operating spares 444 14.563 COBALTCONCENTRATOR Civil Works ,146 1,218 ~tmmralSteelzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAand Platework MechanicalEquipment ,911 PipingandValves ,025 Electrics ,040 Instrumentation ,235 Preliminariesandgeneral ,759 Operating Spares .OS 3.389 TAILINGSLEACH PLANT Electrownning Plant 13,234 Filter Plant 12,698 Thickening 10,469 Solvent Extraction 5,452 Dams 2,662 Leaching 2,048 Lime Plant 1,926 Acid Offloading 1,637 Pregnant Leach Liquor 1,384 MuntimpaPumpHouse 1,345 hnamaPumpStation ,201 ReagentPlantFilters ,l18 ReagentPlant Thickness ,037 Gl3Xd .977 54.188 SURFACEINFRASTRUCTURE ImalisedSmces 2,109 Housing 1,520 Railways 1,223 Stores, Officesand Building ,942 Workshops ,239 Electrical Power 298 Instrumentation 1,373 Road Transport 1.760 9.464 INDIF€ECTCOSTS ReimbursablesandIndirect Costs 18,462 ._ - ...- - -. - -. .._ . - . ---- .- .. - ~ ~ SubtotalzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 157,048 Contingency 17,607 TOTALESTIMATE 174,655 . .. . . _.. ~ ... .-. .... _. _. .... . .. .. .- .. .... -. . . .. . . _. . __ i...___> 2.__L_.L -:: --._.: i__ -.---.:--. _L . Zambia CopperInvestmentsLimited PageNo29 KC34Ptqject Programme ofMining&Metal Treatment Operations ......... -. .-- .- ...... .. -........ .. . - - --- ... .-2 :-.--_...- ._i?zc=...:--7.-z-.-:zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA............. ...?__.. .. ..... - .. ... - .- ........ _____ . .- .__ ....... ._....... Table: Capital Cost Estimate Nampundwe DivisionzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA BaseDateJanuary 1999 .. -- .......... Description. -- . - . usmoo ShaftsandUnderground 6662 Concentrator 1 295 SurfaceInfiastructure 1 553 SUBTOTAL 9 510 CONTINGENCY AMOUNT 1219 PROJECTTOTAL 10729 SCHEDULE2 LQCXLBUSINESSD~~~~TPROGRA”E - 75- G2181KXXl3O SCHEDULEzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA2: LOCAL,EUSINESSDEVELOPMENTPLAN Anumber of employees have been retrenched recently by ZCCM fiom the assetsthat will be owned by KCM. Further retrenchments will be necessary, both before and after transfer of ownership, to transform the operations fiom the previously over- mannedcondition toaposition where they can become more competitivemterms of internationally acceptable productivity performance.hthemedium term,certainof asthey reach the end of their economc lives.This the Nchanga operations will close will result madditional lossofjobopportunitiesat the KCM operations. hyears gone by, the direct impact of pastZCCMretrenchment programmes was not as obviousasthose affected opted,mgeneral, to return to their home districts. However, more recently, therehasbeen asignificant reversal of this trend and employees who lose theirjobs now prefer,mthe main,to remain resident on the copperbelt. The recent decision to allow ZCCM employees to purchase their mine houses will reinforce this tendency. This has resultedmthe effects of retrenchment programmes becoming more localised and with more obvious impact on the general communitymwhich the mines operate. ZCCMto calculate the terminal benefitsis Although the current formula used by relatively generousby international standards, it is commonplacemZambia that the affected individuals exhaust their cash retrenchment package withinashort period. As most of those affected have no alternative sources of cash income, they become L increasingly reliant on family support and subsistence farming. One way of lessening the effects of retrenchment is to encourage and assist the individuals concerned to establish their own commercial enterprises.KM,asa responsible employer,willput into place aprogramme to facilitate the generationof these small busmess initiatives.A fidl time facilitatorwill be appointed by KCM shortly aftertie-over whose sole task will be to nourish these alternative opportunities. The facilitator will be experiencedmsettingup and managing small busmess enterprisesand he will beprovided withan adequate budget by KCM to supportthisideal. Emphasis willbe placed on the development of businessesmwhich the ownership is held by Zambian citizens. The facilitator will liaise wththe appropriate officials and hewill assist in maintainingaregistrarofbusmessesm Zambia thatzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA are capableof suppiying materials, equipmentaadzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAservices to tie KCM operations. TheAngloAmerican Grouphashadasignificant success with similar initiatives at its operationsmSouthAfricaandKCMwilldrawon that experiencetoensurethatits programme achieves sustainable results. In accordance with Clause5 ofthe Development Agreement, KCMwill encourage and assistthe establishment of businesses, particularly on the Copperbelt,to supply materials, equipment andsemicestoKCM. Aninterim Local Business Development Programme willbeassembled within six months of Closure. A finalLocal Business Development Programmewillbe issued twelve months after Closure. d SCHEDULE3 PARTI CONlR4CTAREAS Schedule2 of the KCMSaleand Purchase Agreementis Incorporated here by Reference La~lon-251Z730~12 - 76 - G21WUOO3O PARTIT FCRM OFTHE LARGE SCALE MINING LICENCEzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Mines Form 1031% Stocked by Mines Development Department lmB1 43991% REGISTRATION No. LML .................................... REPUBLICOFZAMBIA LARGESCALEMINING LICENCE (Section25zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAof the Mines andMineralsAct, 1995, No. 31zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAof 1995) Applicant'S name ......................................................................................................... Address ...................................................................................................................... Prospecting LicenceNo. ............................................................................................... The mining area shall be the area described m the Schedule and annexedhereto and bordered ....................................................................... .on the Plan. The Licence is granted for a period of .......................................... commencing on the ........ day of .................................................. The programme of mining and development operations shall be as shown m the Appendix hereto. The following conditions included m Prospecting Licence No. PL ........................ shall continue to apply: Issued at ....................... this ......................... day of ................. ............................................ Director ENDORSEMENTOFREGISTRATION This large-scale mining licence has this ...................... day of ....................................... been registeredin the Register of Miniig Rights. ............................................ Director - 77 - G21wooo30 RENEwALsANDAMEmMENTs Date of Details of Renewal Date of Registration Signature of .4mendment or Amendment and Registration No. Director d - 78 - G2181/00030 PART111 MININGAREAS Schedule 2 of tie KCM Sale and Purchase Agreement isIncorporated here by Reference - 79 - G2181/UXOO SCHEDULE4zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA PARTI THEKCMENVIRONMENTALPLANISINCORPORATEDHEREBYREFERENCE PART11 THEZCCMENVIRONMENTALPLANISINCORPORATEDHEREBYREFERENCE - 80 - G2181/00030 SCHEDULE5zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA E&PKWMENTANDTR”NG~AN 4 - 81 G2181KNX30 SCHEDULE5: EMPLOYMENTANDDEVELOPMENTPLAN It is recognisd that appropriate training and development of the employees is central to the future successof the KCM operations. To that end, priority emphasis will be given by KCMtothe prowsion of adequate training facilities and the requisite levelof be provided for through adequate training skills. Thesefimdamental prerequisites will fimdingmthe operatingand capital cost budgets. A primary fimction that will be addressed directly after tie-over is a skills needs analysis across each of the KCMoperations. 'Ibis, mturn, will provide a basis on which the actual detailsof the training requirement can be assessed and programmed. The assessment will cover thefullrange of training needs fiom the basic requirements of the semi-skilled employees to the training of supervisorsand managers. The main focusmmanagement and leadership development would be to broaden the scope and depth of these competencies at various levels throughout the organisation. The s@fics of individual training will depend on a variety of factors such as the available potential, existing skills levelsand defined needs. It is planned thatKCM apprentice training will be centred at the Kitwe Trades School whichisincludedmtheKCMassets. AnInterim Employment and Development Plan will be assembled Wthin six months of closure. A Fmal Employment and Development Plan W11 be submitted to thezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA MinisterofMines and Minerals Development for approval Wthintwelve months after closuremaccordance with Clause6of the Development Agreement. Zambia CopperInvestments Limited PageNoI SCHEDULE6 ~UIFtEDbSURANCES SCHEDULE14OFTHEKCMSALEANDPURCHASE AGREEMENTIS INCORPORATEDHEREBYREFERENCE - a2- G21wooo3o SCHEDULE7 TAXS~HED~LE The principal applicable taxes and the rates applicable to KCM m the conduct of Normal Operationsfrom tiedatehereof are as follows: (1) IncomeTax: KCM shall pay to GRZ income tax m accordance with the provisions of this Agreement and tie IncomezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBATax Act, Chapter 323 of the Laws of Zambia as fromhetomeamended and in effect on its net taxable income arising from all mining, concentration, smelting and refining and other operations. tax rate shall be twenty five per cent. (25%). TheincomezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA L The carry forward of losses shall be permitted for a period of twenty (20) years from the date at which the loss was incurred. Losses should be used on a firstm, firstout basis with earlier losses used before later losses. KMshall be entitled to maintainbooks of account and to render income tax return and returns in respect of royalties and customs and excise duties stated m United States dollars m accordance with generally accepted accounting principles. Part VI of tie Fifth Schedule to the Income Tax Act, the For the purposes ofzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Facilities shall be deemed a "1975new mine" allowing the deduction of one hundred per cent. (100%)of capital expenditure (as defined m the Act) m the year in which the capital expenditurewas incurred. In the calculationof KCM's liability for income tax, KCM shall be entitled to deduct any copper'~price participation payments and any cobalt price W pr+ei~ipatiunPayments made pmuant to the Copper Price Participation and the Cobalt Price hrticipation Agreements respectively between KCM and ZCCM. (2) Royakties: (9 KCM shall pay to GRZ the Royalty on the gross revenue of minerals produced m the Mining Areas at a rate of nought point six per cent. (0.6%), subject to paragraph (6) below. (ii) GRZconfirmsthat for a period of twenty (20)years from the Effective Date, the Royalty payable under tie Act shall be deductible in the calculation of KM'Sliability for income tax. - 83 - G218VOMEO (iii) The circwsmceswhere the discretion avtiable ta GRZ under Section 67 of the Act to defer or exempt, as applicablethe payment of the Royalty would be exercisedare: (aa) under the terms of Section 67(3) where the cash operating margin of KCM mining operations is less than nil; and (bb) under the terms of Section 67(2) on samples of mineralszyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAaquired for the purposes of assay, analysis or other examination. (iv) For the purposes of the foregoing "cash operating margin"meanszyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAthe amount derived by deducting operating costs (not including capitalised expenditure duringor required for the development of the Facilities) from revenue. (3) OtherTaxes, ChargeszyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAand Fees:zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA (9 Customand Excise Duties (a) KCM shallenjoy the benefit of Section97 of the Act namely that KCM shall be entitled to exemption from customs and excise duties, and from any other duty or impost levied under the Customs and Excise Act, m respect of all machinery and equipment (including specialised motor vehicles) required for any of the activities carried on or to be carried on in pursuance of the right or otherwise for the purposesof its investment in Mining or prospecting. For the purposes of the application of Section 97 of the Act to KCM, machines and equipment shall include all item imported for the purposes of effecting or incurring capital expenditure and which are referred to in Section 2 (Capital Cost Estimate) of the Approved Programme of Mining and Metal Treatment Operations relating to the Facilities. GRZand KCM agreethat godsk&Td by contractors, agents and suppliers of KCM engapi by KCM for the purposes of implementing tkApproved Programme of Mining and - Metal Treatment- CC d fromc~~idexcise duties under Section 97 of the Act, such benefit .-- to be strictly limited to the implementation of the Approved Programme of Mining and Metal Treatment Operations. GRZ and KMfurther agree to establish an administrative mechanism to achieve this post Completion. (b) Subject to the provisions of Clause 13and Section 97 of the Act, KCM shall be liable to pay custom and excise duties on all materials and assets imported for the purposes of the Approved Programme of Mining and Metal Treatment Operations (other than those itemsexemptin terms of Section 97 as detailed in paragraph 3(i)(a) of this Schedule) at such rates and on the terms and conditions as are set out m the Custom and Excise Act provided that theaggregate duty payable by KCM in myone year shall not exceed a sum equivalent to fifteen per cent. (15%)of the -84- G218lfUMEW value of the materials and assets imported, subject to paragraph (6) below. (ii) ExcisezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBADuty onPower GRZ confirms that Excise Duty on power shall be levied at zero per cent. (0%). (iii) OtherTaxes,ChargesandFees: be liable to pay (and these provisionszyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA For the avoidance of doubt, KCM shall shall be without prejudice to such liability) all other taxes, charges and fees payable to GRZ or to any governmental authority in Zambia as of the date of this Agreement m relation to its mining, concentration, smelting or refining and other operations carried out m Zambia, including but not limited to: (aa) any annual fees, company fees, land rents fallmg due post Completion or other payments due to GRZ m accordance with applicable legislation andtieprovisions of this Agreement;and (bb) taxes, charges and fees for services rendered by governmental authorities on request or to public or commercial enterprises generally. (4) ValueAdded Tax ("VAT"): (0 In accordance with the provisions of the Value Added Tax Act, Chapter 331 of the laws of Zambia 1995,goods and services produced by the Facilities are taxable at a standardrate and zero rated if exported. (ii) GRZ confirms that input VAT m excess of VAT payable m respect of the supply of goods and services shall be credited to KCM within a reasonable period of time (and in any event within 10days) from the date of submission of KCM's monthly VAT return in respect of each prescribed accounting period. (iii) For the purposes of this Clause, "input VAT" shall mean VAT claimable m respect of allowable business purchases of goods and services supplied by a registered supplier duringa prescribed accounting period. (5) ReliefMmWithholdingTax KCM shall pay withholdingzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAtax on dividends, royalties and management fees to Shareholdersor Affiliates at a rate of zero per cent. (0%)and on interest payments to Shareholdersor their Affiliates, or any lender of money to KCM at a rate of zero per cent. (0%). (6) Exemptionfrom custom and exciseduties and Royalties The aggregate of the value of the customs and excise duty payable m terms of paragraph 3(i)(b) above and tie value of tie Royalty payable in terms of paragraph2(i) - 85 - G2181100030 above is exempt to the extent of sixteen million United States dollarszyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAir, tie first year following Completion and the sum of fifteen million United States dollars perzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAannum inclusiveof the four years thereafter. (7) DeductionsforzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAMining Expenditure on a non-producing and non-contrguous mine For the purpose of ascertaining KM'Sallowable deductions under Section five (one) (5(1)) of Part VI, Paragraph 23 of the Fifth Scheduie to tie Income Tax Act, tie Facilities shall at all times be regarded as a single large scale mmgand metal treatment operation. -86- G2181KOD30 SCHEDULES WORKING%HEDULE Working example of the operation of Clause 2.3 of The Development Agreement - deemed reductionof tie Investment Commitment A. Suspension Assumptions there are only two shafts m operation- shaft Y and shaft Z the Investment Commitment is US$208m and is to be spent as to US$104m on shaft Y and $lWmon shaft Z tie budgeted commitment at each shaft is US$llOm (i.e. a total budgeted commitment of US$220m) suspensionhmtailment (in thecaseof B) occurs at shaft Y and at the time of suspensionkurtailment (in the case of B) (a) US$75m has been spent at shaft Y (b) nothing has been spent at shaft Y. Calculation(a): The Investment Commitment is deemed reduced by (110- 75) XzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA208 =us$33.09m 220 Calculation(b): The Investment Commitment is deemed reduced by B. Curtailment Assumption- as above plus budgeted production at each shaft is 100 tons over tie anticipated life of each of the shafts production is to be curtailed at shaft Y to 75 tons over the anticipated life of the shaft i.e. a 25%reduction in production Calculation of deemed reduction in the Investment Commitment is - 87 - G2181/ooO30 208 X 25% = US8.27mzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA (110- 75)XzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA220 d Lo1don-2/51Z730/12 - 88 - G2181lWO30 SCHEDULE9 THE~SEXTLEMENTACTIONF”ISbJCORPORATEDZKEREBYRlm3tENCJ3 - 89 - G2181/00030