C L I F F 0 R D LlMlTCDLIABILITYPARTNLRSHll C H A N C E EXECUTIONzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBACOPY DATED31MARCH2000 THE GOVERNMENT OF THE REPUBLIC OFZAMBIA and L MOPANI COPPER MINES PLC MUFULIRAMINE,SMELTER AND REFINERYAND NKANAMINES, CONCENTRATOR AND COBALTPLANT DEVELOPMENT AGREEMENT L- CONTENTS Clause Page 1. DefinitionsAnd Interpretations ................................................................... 5 .......................................................................... 2. Obligations To Develop 15 ................................ 3. RightsToExportAnd ImportAndzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAAm'Length Dealings 16 4. ........................................................................................ 18 Procurement 5. Local Business Development .................................................................... 18 6. TrainingAndHuman Resources Management................................................ 19 7. Insurance........................................................................................... 22 8. ..................................................... 22 Suspension Or Curtailment Of Production 9. Social Assets And Municipal Infrastructure Services ........................................ 25 L 10. RecordsAnd Operating Reports ................................................................ 28 11. Foreign Exchange................................................................................. 31 12. Environmental Issues............................................................................. 34 13. Communications................................................................................... 41 14. General ObligationTo Pay Tax ................................................................. 43 15. Vat Refimds ........................................................................................ 43 16. Taxation Stability.................................................................................. 43 17. Assignment......................................................................................... 46 Extensions To Time 47 18. ............................................................................... 19. Temnation........................................................................................ 48 20. Amicable Settlement Of Disputes............................................................... 51 L 21. Sole Expert......................................................................................... 52 22. Arbitration.......................................................................................... 57 23. Performance To Continue 58 ........................................................................ 24. Waiver Of Sovereign Immunity ................................................................. 58 25. Law Applicable.................................................................................... 59 26. Force Majeure ..................................................................................... 59 27. Variation............................................................................................ 60 28. Consultation........................................................................................ 62 29. Notices.............................................................................................. 63 30. Waiver.............................................................................................. 64 31. Severability......................................................................................... 64 G2181/00030 32. FurtherActs........................................................................................ 64 33. couIlterparts....................................................................................... 64 34. Representations And Warranties ................................................................ 65zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Schedule 1 APPROVED F'ROGRAMME OFMININGAND METALTREATMENT OPERATIONS67 ..................................... Schedule2zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBALOCAL BUSINESS DEVELOPMENTPROGRAMME 68 Schedule3 Comc-rAREAS. LARGE SCALEMINING LICENCEAmMININGAREAS...A9 ........................................................................ Schedule4 SOCuu.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBASERVICES 73 Schedule5 ENVIRONMENTALPLAN................................................................. 75 Schedule6 TRAINING& HUMANRE~~~cE~I~L~AGEMENTPROGRA"E 76 ................. .................................................................... Schedule7 INSURANCEPOLICIES 77 Schedule8 TAX SCHEDULE........................................................................... 78 Schedule9 TRANSFERRING SoclA~ASSETS....................................................... 83 d G2181lOOO30 THIS AGREEMENT is made on 31March2000 BETWEEN: (A) THE GOVERNMENT OF THE REPUBLIC OF ZAMBIA, acting through the Ministry of Mines and Minerals Development whose office is at the Ministry of Mines and Minerals Development, PO Box 31969, Haile Selassie Avenue, Lusaka, Zambia and the Ministry of Finance and Economic Development whose office is at the Ministry of Finance and Economic Development, PO Box 50062, Ridgeway 15101, Chimanga Road, Lusaka, Zambia; and (B) MOPANI COPPER MINES PLC, a company incorporated in Zambia (registered number 44139), whose registered office is at Insurance House, Kitwe, Zambia (the "Company",whichzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAterm shall include any permitted assigns or successors of the rights and obligationsof the Company). WHEREAS: L Proposals have been submitted for the acquisition and subsequent rehabilitation, development and operation of the mine, concentrator, smelter and refinery, and associated facilities at the ZCCM operating division known as Mufulira and the me, concentrator and cobalt plant at the ZCCM operating division known as Nkana, all situated in the Copperbelt Province of Zambia (the "Facilities")the location of which is more specifically identified by reference to the plan annexed hereto as Schedule 3, Part I. GRZ has approved these proposals, which are hereafter referred to as the "Approved ProgrammeofMiningandMetal Treatment Operations . The rehabilitation, development and operation of the Facilities will be of major economic significance to the people of Zambia. GRZ wishes to ensure that the continued development and exploitation of the commercial deposits of copper and cobalt ore at the Facilities' mines, together with the development and operation of the smelter, refinery, concentrators and cobalt plant will secure the maximum benefit for, and adequately contribute to the advancement and the social and economic welfare of, the people of Zambia, including the people in the vicinity of the Contract Area in a manner consistent with their needs and the protection of the environment and, at the same me,secure an appropriate return on investment for the Company commensurate with the risks involved to the Company. GRZ and the Company have agreed on a number of matters which are set out in this Agreement and wish the matters agreed upon to be an enduring arrangementof national interest. GRZhas granted to the Minister of Mines and Minerals Development and the Minister of Finance statutory authority under Section 9 of the Act to enter into this Agreement on behalf of GRZ,and GRZand the Company agree to be bound by all the terms and -3- G2181/00030 conditions relating thereto. The Minister has consulted with the Minister of Finance as required by Section9 of the Act, as amended, and has soughtzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAand received the advice of the Mining Advisory Committee in accordance with Section 88 of the Act and is acting m accordance with such advice. (7) GRZ, the Company and ZCCM have entered into a Sale and Purchase Agreement dated 18February2000which requires on its Completion(astherein defmed) the entry into of this Agreement. -4- G21811030 PARTA GENERAL 1. DEFINITIONS AND INTERPRETATIONS 1.1 In this Agreement and the Schedules hereof, unless tie context otherwise requires: "Act"means the Mines and Minerals Act (Chapter 213 of tie Laws of Zambia) as from time to time amended and in effect and includes any regulations made thereunder; "Affiliate,AffitedParty,or Af'filiated Parties"means: (a> any company in which the Company or a Shareholder(as tie case may be) holds forty per cent. (40%)or more of the ordinary voting shares or which holds forty per cent. (40%)or more of the Company's or a Shareholder's (as the case mybe) ordinary shares; (b) any person which, directly or indirectly, is controlled by or Controls, or is under Common Control with the Company or a Shareholder (as the case may be); or (4 any person or group of persons being directors or executive officers of, or in the employment of anyperson referred to in (a) or (b) above,zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA and "Control"means: 03 tie power (whether directly or indirectly) and whether by the ownership of share capital, the possession of voting power, contract or otherwiseto appoint and/or remove all or such of the board of directorsor other governingbody of aperson as are able to cast a majority of the votes capable of being cast by the members of that board as body, or otherwise to control or have power to control the policies and affairs of that person; and/or L W the holding and/or tie ownership of the beneficial interests mand/or the ability to exercise the voting rights applicable to shares or other securities in any person which confer in aggregate on the holders whether directly or by means of holding such interests in one or more other persons (either directly or indirectly) more than forty per cent. (40%) of the voting rights exercisable at general meetings of that person, and "Controlledby" shallzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAbe construed accordingly and "Common Control"means the circumstances where two (2) or more persons are controlledby the same person or its Affiliates; "Agreement"means this agreement as varied from time to time maccordance with the termshereof; -5- G218V00030 "Approved Programme of Mining and MetaJ Treatment Operations" means the proposals for rehabilitating, developing and operating the Facilities whichare set out in Schedule 1(as varied from time to time in accordance with Clause 27); "Arms'LengthzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBATerms"means a transaction (which, provided that all such agreements are properly disclosed, mybe documented by more than one (1) agreement between the same pmes)where: W the partiesin negotiating tie transaction have sought to promote their own best interests in accordance with fair and honest business methods; (b) tie consideration expressed in the agreement(s) for the transaction entered into is tie only consideration fortie transaction; and (c) the price and other terms of the transaction: (i) are similar to the average market prices and terms and conditions offered d by third parties for a transaction of a similar size and nature; or (ii) have not been affected by, nor determined as a consequence of, any other agreement or any direct or indirect relationship (other than the relationship created by the transaction agreemen@)) between the selling party or shareholders of the selling party, or a company in which the selling party is a shareholder, and buying party or shareholders of the buying party, or a company in which the buying party is a shareholder; "Assets"shall have the meaning assigned to it m the Sale and Purchase Agreement; "BusinessDay" means a day on which commercial banks are generally open for business in London, Lusaka, New York City and Zurich; "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 I of February, the twenty eighth (28th) or twenty ninth (29th) day as the case mayzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAbe; "Carlisa"means Carlisa Investments Corp, a company mcorporated m the British Virgin Islands (registered 110.211422) whose registered office is at R.G. Hodge Plaza, Upper Man Street,Wickham Cay 1, Road Town, Tortola, British Virgin Iskmds; "CentralBank" means the Bank of Zambia or any successor; "ColleetiveAgreement"means the agreement between the Seller and the MUZ dated 17 August 1999 (effective from 1July 1999) as amended from time to time which, for the avoidance of doubt, includes the Standard Code Book 1996, tie Disciplimy Code Book, the 1981 Joint Evaluation Agreement, the 1997 Redundancy Agreement and Administrative Rules Governing Payment for Service Held in Trust dated 15 September 1997; -6- G2181mmo "CompaniesAct" means the Companies Act, Chapter 388 of the Laws of Zambia as fromtime to meamended and in effect; "Completion"has the meaning assigned to it in the Sale and Purchase Agreement; "Completion Date" has the meaning assigned to it m the Sale and Purchase Agreement; "Contingent Commitment" means an invesment of three hundred and forty three million US dollars (US$343,000,000)to be expended in the manner, proportions and amounts specified in, but subject to satisfaction of the conditions to titexpenditure as detailedm, the Approved Programme of Mining and Metal Treatment Operations; "ContractArea(s)"means those land area(s) covered by the Leases, as are described mSchedule3Part I; "Control of Goods Regulations"means the Control of Goods (Import Declaration L Fee) Regulations, 1997 (S.I. No. 20 of 1997) as issued pursuant to an amendment (S.1 No. 7 of 1997) to the Control of Goods Act (Chapter 690 of the Laws of Zambia) as fromtimeto tieamended and in effect; Topperbelt" means Copperbelt Province m Zambia comprising the main copper mining area in Zambia; "CoststoResume Operations"means: (a) one point two (1.2) times the costs (including the cost of new capital expenditures) requiredto resume Normal Operations; plus (b) one point two (1.2) times the sum of the Company's estimate of (i) royalties; (ii) Operating Costs; L (iii) new capital expenditure to the extent not included m Operating Costs; and (iv) all other incidental costs, necessary to continue Normal Operations for a further period of twelve (12) months; "Director"means the person for the time being entitled to exercise the powers of the Director of Mines under the Act; "Dispute"means any dispute, disagreement, controversy, claim or difference of whatsoever nature arising under, out of, mconnection with or relating (m any manner whatsoever) to this Agreement including (without limitation) any dispute or difference: -7- G218UOOWO concerning the initial or continuing existence of this Agreement or any provision thereof; as to whether this Agreement or any provision thereof is invalid, illegal or unenforceable (whether initially or otherwise); as to the interpretation, performance or breach of this Agreement (including whether any default notices served under Clause 19 is valid or whether the defaultor failure alleged m any such Default Notice haszyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAoccurred); concerning the legal capacity of any of the Parties, or the signatorieson 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; as to whether any compensation is payable under any provision of this Agreementand asto the quantum of such compensation; or dzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA any dispute or claim which is ancillary or connected, in each case in any manner whatsoewer, to the foregoing; "DistributableProfii" means after tax profits and accumulated reserves of the Company, available for distribution as dividends in accordance with Section 84 of the Companies Act, as shown in the financial statements of the Company; "EducationServices"means the education services as set outmSchedule4, Part I; ""Employees''has the meaning assigned to it in the Sale and Purchase Agreement; OEnablingLegislatiodt means the Mines and Minerals (Amendment) Act (Cap No. 2 of 2ooo); "EnvironmentalComfortLetter"means tie letter from the Environmental Councilof Zambia supplied to the Buyer at Completion mthe form set out in Schedule 17 tothe Sale and Purchase Agreement; 4 "Environmental Laws" means: the Mining (Mineral Resource Exmctions) Regulations SI No. 119 1994; the Environmental Protection and Pollution Control Act (Act No 12 of WO),and regulations enacted thereunder; Sections 75to82of the Act, tie Mmes and Minerals Environmental Regulations 1997 SI No. 29 1997, and the Mines and Minerals (Amendment) Act (Cap No. 2 of 2000) save for the provisions contained in each of such laws and regulations which relate to mine safety andor the safety of persons rather than to the protection of tie environment, as each may from hetohebeamended and meffect; "Environmental Liabilities Agreement" means the agreement of even date between the Company, ZCCM and GRZproviding for the indemnification of the Company by GRZmrespectof certain environmental liabilities and as amended m accordance with Claw12 herein; ~.0ndonammrn7 -8- G218"030zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA "Environmental Licences"means all licences issued by the Environmental Council of Zambia under the Environmental Laws or regulations depursuant to such Environmental Laws which relate to the Assets and the operations carried out at the Operations immediately prior to Completion; "Environmental Plan"means until such time as agreement is reached pursuant to Clause 12.1 on the fmlform of the Environmental Plan, the framework programme for environmental protection and compliance as set out in Schedule 5 and, after agreement on the final form of the plan pursuant to Clause 12.1, shall man the Environmental Plan as so agreed and which shall be deemed a modification of the existing environmental plan and therefore exempt from any acceptance fees or costs imposed on acceptance of new environmental plans pursuant to the Environmental Laws as mended m accordance with Clause 12; "Environmental ProtectionFund" means the fund set up for environmental protection by Section 82 of the Act and the Mines and Mine Products (Environmental) L Regulations 1997 SINo. 29 1997; "ExcisezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBADuty on Power"means the excise duty on power levied from time to time under the Customs and Excise Act, Chapter 322 of the LAWS of Zambia as amended and currently set at ten (10) per cent.; "Facilities"has the meaning ascribed to it in Recital (1); "Force Majeure"has the meaning given to the term in Clause 26.2; "GoodMining Pmctices"means internationally accepted miniig, metallurgical and metal treatment practices; "GRZ"means the Government of the Republic of Zambia and includes any authorised agent of the Government oftie Republic of Zambia; %vestment Commitment" means an investment of one hundred and fifty-nine million USdollars(US$159,000,000) (oras tiePartieshereto myotherwise agree pursuantm this Agreement) to be expended on the Facilities through net increases in the Company's working capital or investment in capital items or, if less, such mount as is required to achieve: (a) ore production at the Mufulira mine of not less than two million four hundred (2,400,000) metric tonnes in 2003 and on a sustainable basis thousandzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA thereafter;and (b) copper metal production from the Mufulira mine of not less than fifty six thousand (56,000) metric tonnes m2003 and on a sustainable basis thereafter; and -9- G2181/00030 (c) ore production at the Nkana mines of not less than four million two hundred and fifty thousand (4,250,000)metric tomes m 2003 and on a sustainable basis thereafter; (d) copper metal production from the Nkana mines of not less than seventy four thousand (74,000)metric tonnes m 2003 and on a sustamable basis thereafter; and (e) cobalt metal production from the Nkana mines of not less than two thousand two hundredzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA(2,200) metric tonnes m 2003 and on a sustainable basis thereafter; "Kwacha"or "K"means the lawful currency of Zambia; "Large Scale Mining Licence (Mufdira)'lmeans the large scale miniig licence number thirty-two (32) granted as at the date hereof under PartzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAIII of the Act, to the Company by the Ministry in the form set out m Schedule3 Part 11 for a term of twenty d five (25)years; "Large!3de Mining Licence (Nkana)"means the large scale mining licence number thirty-seven (37) granted as at the date hereof under Part III of the Act, to the CompanybytheMinistrym the form set outm Schedule3PmII for a term of twenty five (25) years; "LargeScaleMining Licences"means the Large Scale Mining Licence (Mufulira) and the Large Scale Mining Licence (Nkana); "Leases" means the leases, details of which are set out in Schedule 2 of the Sale and Purchase Agreement and "Lease"means any one of these leases; "LIBOR"means,in relation to any amount on which interest for a given period is to accrue: (a) the percentage rate per annumequal to 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 amLondon time on the date which is two (2) Business Days precediig tie fmal Business Day of each calendar month that momes are outstanding or, if payment is not made on the final Business Day of a Calendar Month, two (2) Business Days preceding the Business Day on which payment is made or, if such page or such service shall ceasetobe available, such other page or such other service for the purpose of displaying an average British Bankers Association Interest SettlementRate for one (1) month deposits in US dollars as the parties, after consultation with eachother, shall select; or @) 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 - 10- G2181klCKM displayed, the arithmetic mean (rounded upwards to four decimal places) of the rates at which the principal London offices of each of four major banks in the London Interbank Market as selected by the Parties was offering to prime banks in the London Interbank Market one (1) month deposits m US dollarsat or about 11.OOam London time on such date; "Local Business Development Programme" means the programme for local business development which is described m Clause5and which is set out in Schedule 2; "MaterialAdverse Effect"means a material adverse effect on the condition (financial or otherwise) of the Company which has or may have a material adverse effect on thezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Company's present or future ability to operate the Assets and the Facilities pursuant to the Scheduled Programmes; "MedicalServices"means the medical services as set out in Schedule 4, Part 11; "Metal Treatment Products"means all smelter and refinery products of the Mufulira smelter and refinery and Nkana cobalt plant; "Metal Treatment By-Products"means sulphuric acid; WineProducts"means the ores or concentrates or other Minerals produced from the Mining Area; Winerals"means all minerals excluding petroleum and other hydrocarbons, as the same mybelocated m the MiniigArea; Winister"means the person for the time being entitled to exercise the powers of the Minister of Mines and Minerals Development under the Act; "Mining"has the meaning given to the term m the Act; "MiningArea" means the areas covered by the Large Scale Mining Licences, the c same bemg set out in Schedule 3 Part III; "Ministry" means the Ministry of Mines and Minerals Development or other successor ministry from time to time; "Non-Transferring Employees" means Employees who do not transfer to the employment of the Company immediately prior to or at Completion; "Normal Operations" means the operation of the Facilities in accordance with the Scheduled Programmes; "Notices"means any notice, consent, demand, approval or other communication required or permitted to be given under Clause 28; "Operating Costs" for any period means the costs incurred by the Company during Normal Operations excluding (a) depreciation and other non-cash costs and (b) capital costs other than replacement capital costs and (c) financing charges; - 11- G2181/ooO30 "Operations"has the meaning assigned to it in the Sale and Purchase Agreement; "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 tozyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Clause 17, and "Party"means any one of them; "Quarter"means: (a) January, February, and March; (b) April, May and June; (c) July, August and September; or (a October, November and December; "Redundancy Terms" means those terms relating to entitlement to certain payments and other rights m the event of loss of employment due to redundancy whichzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAare applicable to theTransfemg Employees as setout in the Collective Agreement; "RegisteredDepemhWmeans the spouse, children, step-children or legally adopted children of Transferring Employees or SmelterCo Employees who, m the case of children are 21 years old or less at the date of this Agreement and are further registered as of the date of this Agreement mthe records of ZCCM as bemg entitled to use some or all of the Social Assets and thereafter those that shall be registered m accordance with Clause 9.1; "Sale and Purchase Agreement"means the agreement dated 18 February 2000 and made between ZCCM, the Company and GRZ vesting the Assets (as such term is defined therein) m the Company m considerationof the payment of cash and the issue of shares to ZCCM; "ScheduledProgrammes"means the Approved Programme of Mining and Metal Treatment Operations, the Environmental Plan, the Training and Human Resources Management Programme and theLocalBusiness Development Programme; "Shareholder"means a registered holder of ordinary shares h the Company whose rights are set out in the Company's Articles of Association (as defined m the Sale and Purchase Agreement); "Shareholders' Agreement" means tie agreement of even date herewith amongst certain Shareholders m the Company being initially Carlisa, the Company and ZCCM governing the relationship between themas Shareholdersmthe Company; "SocialAssets"means the Educational Services and the Medical Services; "Sole Expert" means a person appointed in accordance with the provisions of Clause21; - 12- G218MXO30 "SmelterCoSocial Assets Access Agreement" means the agreement of even date herewith between the Buyer and SmelterCo for the provision of educational and medical services to SmelterCo; "SociiAssets Access Agreements"'means the following agreements: (a) between the Seller and CEC dated 21 November 1997;and (b) between the Seller and WC(Africa) Mining PLCzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAdated 29 June 1998, in each case for the provisionof education, medical and recreational services; "Social Assets Access Novation Agreements" means the agreements of even date herewith novating the Social Assets Access Agreements;zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA %peculative 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 L reasonably predictable incomesorcosts; "Stability Period"means the period commencing as of the date of this Agreement and ending on the fifteenth (15"') anniversary of the date of this Agreement; "Taxes"means any present and future taxes, duties, imposts and levies imposed by statute or howsoever otherwise arising, whether by state or provincial authorities or local or municipal authorities whatsoever and whenever imposed and without prejudice to the generality of that expression includes: income tax, corporation tax, capital gam tax, inheritance tax, stamp duty, stamp duty reserve tax, rates, value added tax, custom and other import duties and national insurance contributions, any payment whatsoever which the Company may be or become bound to make to any person as a result of any enactment relating to taxation and any other taxes, duties or levies supplementing or replacing any of the above and all costs, charges, interest, fines, penalties and expenses incidental, or relating thereto and "Taxation"shall have a L corresponding meaning; "Training andHuman Resources Management Programme" means the programme which is set out m Schedule6; "TransferringJihployees" shall have the meaning ascribed to it m the Sale and Purchase Agreement; "TransferringSocialAssets"means those Social Assets listed in Schedule 9; "Unspent Portion of tie Budgeted Commitment" means m respect of any part or parts of the Facilities where productionis to be suspendedor curtailedan amount equal to the capital allocated in the Approved Programme of Mining and Metal Treatment Operations for expenditure on such Facilities but which remains unspent as of the date of suspension or curtailment; Lmdon-26579SUO7 - 13- G2181/00030 WS$'l, "US dollars" or "UnitedStates dollars" means the lawful currency of the United States of America; TAT"means value added tax payable under the Value Added Tax Act, Chapter 331 of the Laws of Zambia as fromtime to time amended and in effect; "Zambia"meansthe Republic of Zambia; and "ZCCM"means Zambia Consolidated Copper Mines Limited. 1.2 hthis Agreement, unless the context otherwise requires, a referenceto: a statutory provision includes a reference to the statutory provision as modified or re-enacted or both from time to time before or after the date of this Agreement and any subordinate legislation made under the statutory provision before or after the date of this Agreement; a person includes a reference to that person's successors and permitted assigns; a Clause, paragraph or Schedule is a reference to a Clause or paragraphof or Schedule to this Agreement; a document is a reference to that document as from time to time supplemented or varied; any document or agreement shall include such document or agreement as amended novated, replaced or supplemented from time to time; and a person include a partnership, firm or corporation and any reference to GRZ includes any instrumentalityof GRZ or mypolitical subdivisionthereof, words importing the singular include the plural and vice versa; words importing any gender include the other gender; the headings do not affect the interpretation or construction; and the recitals form part of this Agreement. L.mdon-2657952m - 14- G2181KlOO3O PARTB OPERATIONALANDzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAEMPLOYMENT I!BUES OBLIGATIONSTODEVELOP 2.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 2.1 The Company shall, following the Completion Date and, subject to the terms of the Act, regulations made thereunder, the Large Scale Mmmg Licences and this Agreement and, m the case of the Contingent Commitment only, satisfaction of the conditions attaching thereto detailed m the Approved Programme of Mining and Metal Treatment Operations, implement the Approved Programme of Mining and Metal Treatment Operations in accordance with the timetable contained therein and Good Mmmg Practices provided that the Company shall not be obliged to expend more than the Investment Commitment and the Contingent Commitment(if applicable). 2.2 Without prejudice to the obligation contained in Clause 2.1 and subject at all times to the provisionsof Clause 8 and Clause 27, the Company shall: L (a) expend the Investment Commitment; and m if and to the extent that the conditions specified m the Approved Programme of Mining and Metal Treatment Operations relating to the Contingent Commitmentare satisfied, expend that portion of the Contingent Commitment mrelationto which the conditions are so satisfied substantially in the manner, on the terms and m the mounts set out in the Approved Programme of Mining and Metal Treatment Operations. The Investment Commitment shall be deemed to have been satisfied through an investment of less than one hundred and fifty me million US dollars (US$l59,000,000) notwithstanding the failure by the Company to meet the targets of ore, copper metal and cobalt metal production contained in the definition thereof if the failure to meet such targets could not reasonably be considered to have a substantive v affect on the Company's ability to achieve these targets on a sustainable basis in tie immediately s~cceedingtwelve (12) Calendar Month period and without significant further capital expenditure. 2.3 The Company's obligation to expend the Investment Commitment or the Contingent Commitment (as the case may be) in accordance with Clause 2.2 will be suspended where an event of Force Majeure has been declared to the extent that such event of Force Majeure impedes the activity upon which monies would otherwise be expended and for so long as such event of Force Majeure is continuing. 2.4 Subject m all cases to the provisions of this Agreement, GRZ hereby acknowledges its agreement to the Scheduled Programmes and the compliance of tie Scheduled Programmes with Sections 24(3) and 25(1)of the Act. 2.5 If at any tieprior to the satisfaction of the Investment Commitment or, subject as provided m Clause 2.2(b), the Contingent Commitment, the Company suspends or L.ond0*2/557952/07 - 15- G2181/00030 curtails production atany part or partsof the Facilitiesin accordancewith Clause 8 and has met its associated obligations under Clause 8, the Investment Commitment or the Contingent Commitment,asthe case may be, shall be deemedto be reduced by: (a) mthe case of a suspension of production, the Unspent Potion of the Budgeted Commitmentm respect of such part or parts of the Facilities; or (b) m the case of a curtailment of production, by the Unspent Potion of the Budgeted Commitment at which the curtailment is proposed, multiplied by the quotient of (i) the proposed curtailment of production; and (ii) the production budgeted for the relevant Facilities which are the subject of the proposed curtailment, PROVIDEDHOWEVERTHAT, if the Company resumes operationszyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAin whole or in part at the relevant part or parts of the Facilities previously so suspended or curtailed, the Investment Commitment or Contingent Commitment, as the case may be, shall be increased by the Unspent Potion of the Budgeted Commitment in respect thereof taking account of the extent of the resumption. ThezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAperiod over which the renewed portion of tie Investment Commitment must be expendedwill be extended on a day for day basis equal to the period of suspension or curtailment PROVIDED FURTHER THAT the provisions of this Clause 2.5 shall not cause the Investment Commitment to exceed one hundred and fifty memillion Umted States dollars (US!§159,000,000)or the Contingent Commitment to exceed three hundred and forty three million Umted States dollars (US$343,000,000) or prohibit the Company from expending at the Facilitiessumsexceeding the Investment Commitmentor the Contingent Commitment. 2.6 GRZ confkns that it considers tie proposed mining, smelting and refinery practices described m the Approved Programme of Mining and Metal Treatment Operations not to constitute "was?@ miningpractices" for the purposes of Section 81 of the Act and neither GRZ nor the Director of Mining Safety shall allege that mining practices used by tie Company are wasteful so long as the Company is conducting mining m accordance with mining practices set out m the Approved Programme of Mining and Metal Treatment Operations or any GRZ approved variation or modification thereto. Nothing m this Clause 2.6shall prevent or restrict or otherwise limit GRZ from taking all actions within the law to protect public health and safety provided that any dispute or disagreement between the Company and GRZ as to the action taken or proposed to be taken under such laws shall be regarded as a Dispute. 3. RIGHTSTOEXFORTANDIMPORTANDARMS' LENGTHDEALINGS 3.1 Subject to Clause 4 and the payment of applicable Taxes not otherwise exempted or deferred pursuant to this Agreement, the Companymay import and where it sodesires, re-export without further reference to GRZ, materials, equipment and services to be used directlyor indirectly m Normal Operations provided that GRZ has not notified the - 16- G2181/00030 Companythat the import andor re-export (as applicable) of such materials, equipment and services would give rise to the matters specified in Clause 3.2(b). The Company mymarket and export without further reference to GRZ (and GRZ will 3.2 cause to be issued tie requisite export authorisation documentsin respect thereof at the date of such export)all Mine Products, Metal Treatment Products and Metal Treatment By-Products and shall have sole control and management of the sale of such Mine Products, Metal Treatment Products and Metal Treatment By-Products including the forward selling of such Mine Products, Metal Treatment Products and Metal Treatment By-Products and shall assume all risks therefor, provided tit: (a) the Company sells the Mine Products, Metal Treatment Products and Metal TreatmentBy - Products on Arms' LengthTerms; (b) GRZ has not notified the Company that the export of the Mine Products, Metal Treatment Productsor Metal Treatment By-Products would: L (i) breach an obligation of GRZ arising under international law (including mandatory sanctions imposedby the United Nations); or (ii) result in dealing or contracting with nationals of a state with which GRZ is in a state of war; (c) manufacturers of processed and sem-processed goods involving copper contentwith processing facilities located in Zambia which are willing and able to purchase, and pay for, copper cathodeor other Metal Treatment Prodwts at currently prevailing international market prices payable in US dollars to the Company's account within or outside Zambia at its option and within the time limits laid down by the Company's forward selling plan of copper cathodes or other Metal Treatment Products shall be afforded a preference over manufacturers whose processing facilities are not so located PROVIDED THAT: L (i) this obligation shall only apply to an amount of copper which does not exceed 10 per cent. of the Company's annual copper production from time to time; (ii) the application of this preference shall not result in the Company breaching its delivery obligations with respect to any of the sales contracts which are transferred to the Company pursuant to the Sale and Purchase Agreement; and (iii) the application of this preference shall not operate so as to cause the Company to incur any greater cost or otherwise suffer any prejudice; and (d) no order has been made by the Minister pursuant to Section 69 of the Act which remains m force. - 17- G2181lOOO30 4. PROCUREMENT 4.1 TheCompany shall, on a regular basis, identify and invite by advertisement in the local press registration of businesses in Zambia (particularly those in the Copperbelt and with emphasis on businesses directly or indirectly majority owned by Zambian citizens) which are capable of supplying materials, equipment and services to the Company and satisfy the criteria of Clause 4.2. 4.2 The supply of materials, equipment and services may be tendered for and procured internationally and without restriction, Provided, however, that where materials, equipment and services required for the implementation of the Scheduled F%gramrnes or otherwise are manufactured or substantially assembled (or in the case of services, are procurable) within Zambia from a business or businesses registered pursuant to Clause4.1 as having proven ability and reputation in performing work similar m size and M~URas that required by the Company or as being of established, recognised and reputable suppliers of material antior equipment, such business(es) shall have the opportunity to tender andif a tender submission from any such business: 4 (a) meets the specifications of the invitation to tender; (b) meets quality standards; (c) is competitive in cost with international sources; and (d) meetstiedelivery requirements of the Facilities, then the Company shall not discriminate actively against such business(es) in its award of such tender. In the event of active discrimination, notwithstanding the rights of GRZunder this Agreement, the validity of the award shall not be affected. 4.3 h assessing the tenders from local contractors and suppliers, the Company will 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, customs clearance costs, customs duties (where appropriate having regard to Schedule 8), and demurrage charges. 5. LOCALzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBABUSXNES DEVELOPMENT 5.1 TheCompany shall: (a) comply with the Local Business Development Programme so as to encouragezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA and assist the establishment of businesses within Zambia (particularly m the Copperbelt and with a particular emphasis on businesses directly or indirectly majority owned by Zambian citizens) to supply materials, equipment and services to the Company, provided that the Company shall not be obliged to grant or lend money to any person or to enter into any contract with any person or entity; - 18- G2181/00030 (b) conductan annual review of progress being made on the implementation of the Local Business Development Programme and make such variations to it as required by changing circumstances; and (c) identify an employee experienced in setting up and managing small business enterprises: (i) assist Zambian citizens who wish to or have set up businesses to offer services to the Company and the Facilities; (ii) to have primary responsibility for the implementation of the h1 Business Development Programme and variations thereof; and (iii) to liaise with the appropriate officials from GRZ. 6.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBATRAINING AND HUMANRESOURCESMANAGEMENT L 6.1zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAThe Company shall comply in all material respects with the Training and Human Resources Management Programme applicable from time to time. 6.2 Subject to the provisions of this Clause 6 and the Company being in compliance at all times with all applicable labour or other relevant legislationm force from time to time, the Company may with the consent of GRZ (which consent shall not be unreasonably withheld), amend or alter the Training and HumResources Management Programme, with aview to securing the maximum training of and benefits to Company employees. 6.3 Subject to the provisionsof this Clause 6, if the Company is unable to comply with the Training and Human Resources Management Programmeas a resultof (a) circumstancesor events beyond its control; or (b) a directionof the Director of Mine Safety under the Act (or regulations made thereunder), ‘W then such non-compliance shall not constitute a default under this Clause 6 nor a material default for purposes of Section 19 and the Company may give notice of alternative or revised plans to the part of the Training and Human Resources Management Programme affected. 6.4 Should the Company give notice pursuant to Clause 6.3, GRZ shall within thirty (30) days either: (a) approve those alternative or revised plans; or (b) meet with the Company to discuss and agree upon the alternative or revised plans. 6.5 If the discussions under Clause 6.4 do not lead to GRZ’s approval of alternative or revised plans following a notice given under Clause 6.3 and the Company considers London-2/557952/07 - 19- G2181lOOO30 GRZ's decision to be unreasonable, the Company myelect to refer the reasonableness of GRZ'sdecision to a Sole Expertm accordance with Clause21. 6.6 If the Sole Expert determines that GRZ's decision is not unreasonable, he shall identify to the Company the changes to the Training and Human Resources Management Programme aswill be necessary to bring such programme mto compliance with GRZ's requirements in this regard. However, if the Sole Expert determines that GRZ's decision is unreasonable, he shall declare his determination to both Parties and the proposed amendment or alternation to the Training and Human Resources Management Programme shallbedeemed approved. 6.7 The Company shall not, save as provided below, be restricted m 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 discipliningof personnel withm Zambia shall be carried out m compliance with (i) the laws and regulations of Zambia which are, from time to time, of general application, d (ii) the Collective Agreement and (iii) the terms of individual employment contracts frommetotime. 6.8 The Trainingand Human Resources Management Programme identifies a target level of employees necessary to conduct Normal Operations from time to time. The Company will, however, be entitled to modify such target level m accordance with its requirements with sixtyzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA (60)days prior notification to GRZ 6.9 The Company will, m its recruitment, selection, promotion and assignment of personnel, not discriminate actively against comparably qualified and experienced Zambian citizens. 6.10 The Company acknowledges GRZ's policy to attract qualified Zambian citizens working overseas back to employment within the Zambian mining and metallurgical industry. h order to facilitate the fulfilment of this policy, the Company will tieall reasonable efforts in its recruitment and employment of employees m professional, managerial, engineering and scientific grades to bring to the attention of such qualified Zambians positions of employment available within the Company. 6.11 The Company will honour and perform the terms and conditions of the contracts of employment ofthe Transferring Employees savethat such contractsmybe varied with the Transferring Employees' consent, such variation to be made and obtained m compliance in all respects with Zambian law and regulations and the terms of the Collective Agreement. 6.12 The company will recognise, for cokctive bargaining purposes, the trade union currently representing the Transfermg Employees and the Collective Agreement covemg the Transferring Employees m force at the date hereof PROVIDED THAT the Transferring Employees shallbe free to form or belong to any other trade union or no tradeunion at their choice. -m- G21mm30 6.13 The Company will adopt the Redundancy Terms currently applicable to Transferring Employees. The Company will, as of the Completion Date, calculate the redundancy payments due to all Transferring Employees for those years previously worked for ZCCM(“ZCCMzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBARedundancy”)in accordance with the Redundancy Terms applicable immediately prior to the Completion Date in respect of the Transferring Employees and provide such Transferring Employees with the option to retain their existing service contracts or enter into new service contracts with the Company on terms to be agreed with the employees of the Company or their representatives. For those Transferring Employees who elect to enter into new service contracts, tie Company will note tie ZCCM redundancy amounts on each Transferring Employee’s service record and thereafter shall apply any agreed new Redundancy Terms which shall include an obligation to pay the redundancy payments calculated as at the Completion Date as aforesaid m addition to any amounts to be paid under any new Redundancy Terms by reference to service from the Completion Date. L 6.14 Notwithstanding the provisions of this Clause 6, the Company (and its contractorsor sub-contrac$ors) may bring into and retain in Zambia such non-Zambian citizens as, in the reasonable judgment of the Company’s management, are required for the efficient and successful operation of the Facilities and, at the Company’s request (which shall be accompanied by the requisite information concerning the education, experience and other qualifications of the personnel concerned as may be required by regulations of Zambia of general application in Zambia from time to time) GRZ shall cause all necessary permits (including entry and exit permts, work permits, visas and such other pemtsor pemssions as may be requested) to be issued to such persons and their entitled dependants without undue delay and without hampering the continuous and efficient performance of the Company’s obligations under this Agreement Provided that GRZ shall be under no such obligation to issue the permits aforesaid to any non- Zambian citizen who is disqualified from entry by reason of previous criminal convictions, health regulations and like restrictions set out in immigration regulations L of general application in Zambia from meto time. 6.15 Any such non-Zambian citizens (and dependants) as are referredto in Clause 6.14 shall be entitled (on his or their arrival or permanent departure from Zambia) and, in the case of (c), at any time during his or their residency h Zambia to: (a) import within six (6) months from the date of arrival free of duty and tax, for personal use, household and personal effects; @) export,without let or hindranceor the imposition of duty or tax on export, all personal effects originally imported or acquired during residency m Zambia; and W freely remit all income earned within Zambia during such residency. - 21- G218U00030 7.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAIrauRANcE 7.1 The Company shall insurezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAand keep insured with a reputable insurance company the Assets and those aspects of the Facilities that are normally and commercially insurable (and where such insurance is customarily obtained m the mining mdwtrym accordance with good international mining practice and reasonably obtainable for the Assets and Facilities). Such policies shall be m accordance with good mkmanagement practice having regard to the nature, age and condition of the Assets and relevant aspects of the Facilities and having regard to terms of insurance set out m Schedule 9 to the Sale and Purchase Agreement. Subject to the foregoing, the terms and conditions of the insurance taken by the Company shall otherwise be left to the sole discretion of the Board of the Company. The Company shall advise GRZ of the policy or policies in place and shall forward copies to GRZ. 7.2 GRZagreesthat the imurances specified mSchedule7are those which, as at the date hereof, would otherwise be required by: (a) the statutory instrument referred to Section lOl(1) of the Act; amUor (b) the Director pursuant mSectionlOl(3)of the Act. 7.3 The Company shall, unless the insurance policies or myof its loan agreements state otherwiseor GRZ otherwise agrees, use any mountpaid to it pursuant to any damage or destruction provisionsm any contractof insurance to reinstate such elements of the Facilities (except for Mine Products) in respect of which such mount was pad, provided that the Company shall not berequired to repair or restore any portion of the Facilities where such failure to repair or restore would not have a Material Adverse Effect provided that such amount is invested at the Operations. In the event GRZ notifies the Company that it disagrees that the failure to repair or restore would not have such a Material Adverse Effect, the matter shall be referred for determination toa Sole Expert m accordance with Clause 21. 8. SUSPJDJSIONORCURTAILMENTOFPRODUCTION 8.1 The parties acknowledge. that the Company's right to suspend and curtail (heremafter referred to as "suspend")Normal Operations is governed by Section 28 of the Act and that, m the event of any such suspension or curtailment, the Minister may exercise powers under SectionB(3)of the Act. 8.2 GRZ hereby agrees that: (a) the Minister's approval shall be deemed given in accordance with Section 28(3)(a)of the Act upon compliance by the Company with this Clause;and (b) in such event, any direction capable of bemg given pursuant to Section 28(3)(b)of the Act will only be given either: (i) mcompliancewith this Clause; or London-265795m - 22 - G2181/00030 (ii) if the Company has not complied with any provision of this Clause and has not remedied such non-compliance within thirty (30) days of being given notice of such non-compliance by GRZ. 8.3 The Company may elect by giving written notice to GRZ to suspend Normal Operations if in its reasonable opinion the Company forecasts in the following six (6) month period operating losses, shortages of supplies and materials, interruption of transportation, smelting, power, labour and other services essential to Normal Operations, or other economic or practical reasons or other events or circumstances which are, or may become, a Force Majeure event making it prudent to suspend production. As soon as possible after giving notice under this Clause, the Company shall submit a report giving the reasons why, in its opinion, it is necessary to suspend Normal Operations. 8.4 Where pursuant to Clause 8.3or otherwise in accordance with Section 28 of the Act, the Company has elected to suspend Normal Operations, it shall maintain, subject to fair wear and tear, the Facilities so as to prevent significant deterioration until Normal Operationsareresumed. 8.5 No later than twelve (12) months from the date on which the Company suspended Normal Operations pursuant to Clause 8.3or otherwise in accordance with Section 28 of the Act and thereafter at no longer than twelve (12) month intervals until Normal Operationsare resumed, tieCompany shall submit a further report toGRZ: (a) showingitsprojectionof the Costs to Resume Operations and of revenue from Normal Operations (if resumed) for the same period; and @> giving reasons why in its opinion it considers it prudent not to resume Normal Operationsin such period. 8.6 If a report submitted pursuant toClause 8.5shows: (a) the Company's projection of revenues from Normal Operations for the L succeeding twelve (12) month period is greater than its projection of the Costs to Resume Operations for the said twelve month period; and (b) that there are no other relevant and extraordinary commercial considerations including without limitation tie after tax return to the Shareholders that would otherwisemake it economically unreasonable and uncommercial to do so, then the Minister mydirectthe Company to take promptly such measures necessary to ensure that Normal Operations are resumed within a reasonable time period. 8.7 Where Normal Operations have been suspended for a continuous period of not less than three (3) years, the Minister may direct the Company to resume Normal Operations if he is of the reasonable opinion that: -zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA23 - G2181lOOO30 (a) the Costs to Resume Operations are less than revenue from Normal Operations for the same period (the Minister will provide the Company with a copy of GFCZ's projectionsof costs and revenues supporting such opinion); and (b) there are no other relevant and extraordinary commercial considerations including, without limitation, the after tax return to tie Shareholders that would otherwisemake it economically unreasonable and uncommercial to do so. If the Company disagrees with the Minister's direction pursuant to either of 8.8 ClauseszyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA8.6 and 8.7 it may elect either to submit the matter to a Sole Expert for his opinion m accordance with Clause 21 or to submit the matter for arbitration m accordance with Clause 22 provided that any determination by the Sole Expert or award by an arbitral tribunal shallbe final. 8.9 Where a matter has been referred to the Sole Expert or to arbitration pursuant to Clause 8.8, the Sole Expert or the arbitral tribunal (as applicable) shall determine whether: (a) the Costs to Resume Operations are less than revenue from Normal Operations for the period of tie suspension of Normal Operations; and (b) there are any other relevant and extraordinary commercial considerations including, without limitation, the after tax return to the Shareholders that would make it economically unreasonable and uncommercial to resume Normal Operations. The opinion of the Sole Expert or arbitral tribunal (as applicable) shall be bmdmg on the Parties so that in the event that the Sole Expert or arbitral tribunal (as applicable) determines that it would be economically unreasonable and uncommercial to resume NodOperations, the direction givenby tie Minister pursuant to Clauses 8.6and 8.7 shall be deemed to have been withdrawn. In reaching its opinion, the Sole Expert or arbitral tribunal, as tie case may be, shall have regard to the Company's cost of capital W as at the date of referral pursuant to Clause 8.8when considering whether the after tax justify tie resumption of Normal Operations. return to the Shareholders is sufficient to 8.10 Where pursuant to Clause 8.7 the Minister has directed the Company to resume Normal Operations and that direction has not been or is not deemed to have been withdrawn, the Company, if it does not promptly tiesuch measures to ensure that Normal Operations are resumed within a reasonable time period, shall be deemed for the purposes of this Agreement to have abandoned all tie land subject to the Large Scale Mining Licence pursuant to Section 49 of the Act PROVIDED HOWEVER that where the matter has been referred to a Sole Expert or arbitral tribunal pursuant to Clause 8.8, the time period shall mfrom the date the Sole Expert or arbitral tribunal (as amlicable) eave his (its) determination. - 24 - G2181/ooo30 8.11 Nothing herein contained shall prejudice the Company's rights to suspend Normal Operations under Section 28 of the Act for any other reason and the exercise by the Ministerof his powers under the said section save as specifically described herein. 9. SOCIALzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAASSETSzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAAND MUNICIPAL INFRASTRUCTURESERVICES 9.1 The Parties acknowledge titthe Company has, as at the date hereof, (a) assumed ownership and operational control of, and responsibility for the Transferring Social Assets and (b) entered into the SmelterCo Social Assets Access Agreement and become party to tie Social Assets Access Agreements through execution of the Social Assets Access Novation Agreements so as to ensure the provision of the Transferring Social Assets to the employees of SmelterCo, their Registered Dependants and qualified Third Party users (which shall include persons entitled to access the same pursuant to the terms of the Social Assets Access Agreements). The Company agrees to review the registration practice for determining eligibility of dependants to qualify as Registered Dependants in place as of the date of this Agreement and to maintain the same for L TransferringEmployees, their Registered Dependants and persons entitled to access to the same pursuant to the terms of the SmelterCo Social Assets Access Agreement and the Social Assets Access Agreements PROVIDED THAT the Company shall be entitled to alter any registration practiceif it is reasonably of the view that any existing practice from time to time has teen subject to abuse. Nothing m this section will oblige the Company to offer the same registration practice to new employees of the Company, their dependants, new employees of SmelterCo, their dependantsand new Third Party users. 9.2 EducationalServices Subjectto Clause 9.9, the Company shall: ensure that the Educational Services are accessible to all employees of the Company, those persons entitled to access the same pursuant to the SmelterCo SocialAssetsAccess Agreement and the Social Assets Access Agreements and Registered Dependants of such employees or persons (including for the avoidance of doubt, such of those persons to whom access to the Educational Services is grantedby virtue of relevant redundancy or retirement provisions); make available to those persons described in Clause 9.2(a), the Educational Services at the time of this Agreement coming into effect, at the level and standard thus applying and thereafter at a level appropriate to the number of persons entitled thereto, namely tie number of the Company's employees and tieRegistered Dependantsof such employees from time to time; ensurethat the Educational Services are provided to such persons described m Clause 9.2(a) at least to the same standard (as to range and quality of service) as that currently available at the date of this Agreement; and - 25 - G2181KKO30 (d) ensure that the charges for the provision of the Educational Services to those persons described in Clause 9.2(a) are m accordance with the terms and conditionsof employment of such employees asapply from meto time. 9.3 Medical Services Subjectto Clause9.9, the Company shall: (a) emre that the Medical !3ervices are accessible to all employees of the Company, those persons entitled to access tie same pursuant to the SmelterCo Social Assets Access Agreement and the Social Assets Access Agreements and the Registered Dependants of such employees or persons (including for the avoidance of doubt, such of those persons to whom access to tie Medical Services is grantedby virtueof relevant redundancy or retirement provisions); m make available tie Medical Services at the following levels: (i) at the date of this Agreement, at the level prevailing at the date hereof which is specified m Schedule4, Part 11; and (ii) thereafter, at a level appropriate to the number of persons entitled thereto from time to time, namely the sum of tie number of the Company's employees and the Registered Dependants of such employees (including persons to whom access to tie Medical Servicesis granted by virtue of redundancy or retirement provisions); taking into account improvements m effkiency andor technology which result in the same standards of services capable of being provided by fewer people; (c) ensure that the Medical Services are provided to such persons described m Clause 9.3(a) at least to the same standard (as to range and quality of service) as that currently availableas at the date of this Agreement; and (4 ensure that charges for the provision of Medical Services to such persons described mClause 9.3(a) are in accordance with the terms and conditions of employment of such employees as apply from time to time. 9.4 MunicipalIrtfrastrucmreServices GRZ will procure the permanent provision of the following municipal infiastructure servicesm the areas m which the Company will operate: @) sewerage services; (c) solid waste; (4 domestic electricity supply; - 26 -zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA G21W00030 (e) street lighting; (0 storm water drainage; (€9 roads; (h) pest control services (including, but not limited to, grass cutting and mosquito ~pying) ; 0) markets; and (i) cemeteries, (together the "MunicipalzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Infrastructure Sewices"). GRZ will procure that the Municipal Infrastructure Services will be provided by the local councils, and m the case of domestic electricity supply - ZESCO Limited, except that for an mterim period of approximately five years water, sewerage services and solid waste services will be provided by a wholly owned subsidiary of ZCCM under a GRZ funded program PROVIDED THAT the provision of such water, sewerage services and solid waste services during this interim period does not fall below the level of service otherwise available to the Company from ZCCM.. The Company will not be required to provide or pay for the Municipal Infrastructure Servicesin respect of its employees. The Company will co-operate with the local councils, the ZCCM subsidiary and ZESCO Limited in ensuring that any transitional arrangements to be agreed with the Companyandput m place for recovering costs of the Municipal Infrastructure Services from the Company's employees are effective subject to obtaining all necessary agreements of employees or their representatives. For these purposes, "effective" does not constitute a guarantee by the Company that the recovery of the costs of the Municipal Infrastructure Services will be actually achieved from each of the Company's employees. L 9.5 The Company shall be free to effect tie maintenance of the TransferringSocial Assets, pursuant to Clauses9.2 and 9.3 at the Company's sole option either: (a) itself;or (b) through outsourcmg or other third party provision, such outsourcmg or third party provision being effected by persons of suitable competence or professional standing. 9.6 GRZagreesthat, subject to the Company giving notice mwriting, it will accept non- compliance with Clauses 9.2and 9.3 (as the case may be) and that no action will be taken under this Agreement if simultaneously with the giving of such notice: (a) the Company submits proposals to GRZ for an increase m general levels of remuneration or other employment benefits to employees of the Company; and - 27 - G2181KOO30 (b) the Company also provides GRZwith reasonable evidence that such proposals are agreed with tieemployees of the Company or their representatives. 9.8 Pending confmtionfrom GRZ that such proposals for increases in general levels of remunerations or other benefits are acceptable to it, the Company will comply in all respects with Clauses 9.2 and 9.3 and GRZ agrees that it will respond to the Company's proposal within60 days of receipt of the same fromtieCompany Provided that, m tie event GRZ does not respond by such 60 day period, acceptance will be deemedgranted. If the Parties disagree about: (a) tie level of Social Assets to be maintained or the availability of the Social Assets pursuant to Clauses 9.2(a) and 9.2(b) and Clauses 9.3(a) and 9.3(b) (as the case mybe); (b) the standard of, or charges made for, the provision of the Social AssetszyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA pursuant to Clauses 9.2(c) and 9.2(d) and Clauses 9.3(c) and 9.3(d) (as the casemay be); d (c) the competence of persons or companies providing outsourcing or third party provision pursuant to Clause9S(b);or (d) the sufficiency of the evidence that such proposals made by the Company to the employees of the Company or their representatives have been agreed. either Party myelect to submit the matter m issue to a Sole Expert for determination maccordance with the provisions of Clause 21. 9.9 The Company will not be required to make Social Assets available to persons who are not (a) employees of the Company; (b) Registered Dependants of employees of the Company;zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA (c) persons to whom access to the Social Assets is assured by virtue of relevant 4 redundancyor retirement provisions applying to the Company (save for those employees who but for having been dismissed for cause would have been assured accessby relevant redundancy provisions);and (d) persons to whom access to the Social Assets is assured pursuant to tie Social Assets Access Agreements or the SmelterCo Social Assets Access Agreement. 10.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBARECORDS ANTI OFERATINGFLEFORTS 10.1 The Company shall, pursuant to Section 104 of the Act, keep GFIZ, through the Ministry, advised concerning the Company's operations through submission of progress reports, beginning with the first Quarter following the Completion Date as to tieprogressand results of the Company's mining operations under this Agreement. -28- G2181XMlO30 10.2 Pursuant to Sections 2(d) and (e) of the Fourth Schedule to the Act, the Company shall provide quarterly reports to the Ministry of: quantitiesof ore mined and average head grades; quantitiesof waste mined; concentrates treated on behalf of third parties and the Metal Treatment Products returnedto the owner; quantities of copper and cobalt concentrates produced from the Company's mines and quantities of contained copper and cobalt sold for the Company's own account; quantities of the Company's concentrates toll treated by facilities m Zambia not owned by the Company and quantities of smelter products returned by each to the Company; Operating Costs; progress in implementing the Scheduled Programmes, the extent of any continuing non-compliance by the Company with Environmental laws and progress made m remedying this in accordance with the Environmental Plan; and any other relevant matters as to the progress and results of the Company's metallurgical operations but excluding any internal Company information relating to innovations in mining and mining related activities which, if disclosed prior to proper protection (patent or trademark) being obtained, would damage the Company commercially. 10.3 The Company shall file with the Ministry a summary of any geological and metallurgical investigations and such other material data that mybe obtained from any prospecting activities and a sample representative of each principal type of mineralisation encountered in such investigations. 10.4 The Company shall provide quarterly reports relating to any prospecting, appraisal and development activities to the Ministry which shall include such information as to the progress of operations in the Mining Area as the Ministry may from time to time reasonably require but excluding any internal Company information relating to innovations m mining and mining related activities which, if disclosed prior to proper protection (patent or trademark) being obtained, would damage the Company commercially. 10.5 All information furnished to GRZ shall be m English and, in the event that such information is a translation from the original, shall be a certified true translation. All financial data shall be recorded in US dollars or Kwacha. - 29 - G2181/OOOXl 10.6 The Company shall maintain all original records and reports relating to its activities and operations under this Agreement including all documents relating to financial and commercial transactionswith independent parties and Affiliates m its principal officein Zambia for a period of three (3) years. These records and reports shall be opened to inspectionby GRZ through m authorised representative during normal working hours upon GRZ giving not less thanone (1) week advance notice of its intention to inspect. Such reports and records shall be maintained in the English language and all financial data shall be recorded m US dollars or Kwacha. 10.7 All records, reports, plans, maps, charts, accounts, and information which the Company is or may be from time to time required to supply under the provisions of this Agreement shall be supplied at the expense of the Company. 10.8 GRZ and the Ministry hereby acknowledge that all information supplied to them pursuant to Clause 10 above is confidential information and hereby agree to treat as secret and confidential and not at any time for any reason to disclose or pemtto be disclosed to any person or otherwise make use of or pemtto be made use of any such d information where the information was received during the period of this Agreement pursuant to this Clause and upon termination of this Agreement for whatever reason GRZ and the Ministry will deliver up to the Company all working papers, computer disks and tapes or other material and copies provided to or prepared by the Company pursuant to this Agreementand still retainedby it. 10.9 For tie avoidance of doubt and subject to the Act:zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA (a) all documents, reports, records or information made available to GRZ and thezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Ministry will remain the property of the Company; and (b) nothing herem contained shall preclude GRZ from using any such information as has been supplied for the purposes of the preparation of governmental statistics and data or from publishing thesame in statistical format. - 30 - G21811WO30 PARTC UNDERTAKINGS NECESSARY FOR OPERATIONS 11. FOREIGNEXCHANGE 11.1 The Parties acknowledge that under legislation and practice currently in force in Zambia, the Company is free to: (a) remit foreign currency out of Zambia; (b) maintain foreign currency accounts outside of and within Zambia; and (c) remit foreign currency accruing to or earned by it outside Zambia into Zambia. 11.2 hthe event foreign exchange controls were to be re-introduced in Zambia within the L Stability Period, the Company shall notwithstanding such reintroduction (and without requiring further approvals fromGRZ or any entity thereof) have the right to: (a) retain foreign currency both outside Zambia and within Zambia, in accounts established for that purpose and to have paid to it and maintain in such accounts the following: proceeds of the sale of Mine Prod~cts,Metal Treatment Products and Metal Treatment By-Products including proceeds received from third parties resident in Zambia for foreign exchange purposes and toll treatment and refining revenues; payments made by insurers or re-insurers not resident in Zambia under contractsof insurance in the Company's favour; proceeds of any disposal of capital assets received from persons not resident mZambia for foreign exchange purposes; L the amount of any funds received pursuant to any loan fmceprovided bypersons not resident in Zambia for foreign exchange purposes; any share capital received m foreign currency from persons not resident in Zambia for foreign exchange purposes; any other foreign currency earned or accrued in the ordinary course of business from persons not resident in Zambia for foreign exchange purposes; and (b) use freely the foreign currency accounts maintained by the Company to: (i) service payments of principal and interest, service charges and other fees and expenses in respect of any loans arranged with institutions including Shareholders and their Affiliates who are not resident in - 31- G2181/00030 Zambia for foreign exchange purposes to implement the Scheduled Programmes or otherwise finance or refinance the Facilities; (ii) make payments due to (aa)suppliersnot resident in Zambia for foreign exchange purposes for the supply of goods and services to the Company (including capital goods and services of foreign employees and consultants) where goods and services are required to implement the Scheduled Programmes or conduct Normal Operations and (bb) suppliers resident in Zambia for foreign exchange purposes with respect to tie treatmentireftig of ores and concentrates and to the supply of electricity to the Facilities; (iii) finance the payment to Shareholders and their Afflliates who are not resident in Zambia for foreign exchange purposes of (A) dividends provided that such payments are made out ofzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Distributable Profits(asdefmed in the Companies Act); and d m management and marketing fees payable under management serviceszyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA and marketing agreements, respectively entered into with its Shareholdersor their Affiliates who are not resident in Zambia for foreign exchange purposes; (h) pay expatriate employees whose contracts of employment specify that they be paid (in whole or in part) in a currency other than Kwacha; and (V) effect such other payments m foreign currency to persons not resident m Zambia for foreign exchange purposes as may be necessary or desirable mthe ordinary course of the Company's business. 11.3 The Company shall submit to the Central Bank: (a) within fifteen (15) days of the end of each calendar month: d (i) a statement of the foreign currency accounts repatriated to Zambia within the previous month from accounts maintained overseas by the COmp~Y; (ii) a statement of tie balance of the Company's foreign currency accounts at the end of the previous month; and (iii) a forecast of the foreign currency which the Company intends to repatriatedumgthe ensuing calendar month, and (b) within five (5) months of the end of each year, audited financial statements showing themount of Distributable Profits (ifany). 11.4 hthe absence of foreign exchange controls in Zambia, the Company shall have the same rights to buy and sell currencies from authorised dealers or other commercial London-2/557952fO7 - 32 - G2181/00030 concerns in Zambia and enter into swaps and hedging agreements (which agreements will include, without limitation, arrangements for taking out forward cover against local or other currency fluctuations or other fluctuations in incomes or costs or other expenses incurred as part of the management operations but shall not include Speculative Currency Transactions). In the event foreign exchange controls were to be reimposed (and without prejudice to the Company's rights under Clause 11.2) such controls shall not be applied to the Company ina manner less favourable to it than the manner m which they are generally applied to other large commercial concerns m Zambia. The Company shall be entitled to buy and sell foreign exchange m accordance with such controls at rates of exchange no less favourable than those available to other commercial buyers and sellersof the currency concerned. 11.5 The Company shall remit to Zambia and convert into Kwacha for credit to a bank account in the name of the Company in an orderly fashion sufficient of its foreign currency earnings to pay such commitments as the Company myhave incurred m Kwacha (including, without limitation, obligations to pay dividends to local L shareholders payable m local currency, taxes, royalties and custom duties) which cannot be met by its Kwacha balances from time to time. The Company shall use its reasonable endeavours to notify the Central Bank of transfers of a substantial amount which are not m accordance with the normalpatternof transfers. 11.6 The Company shall 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 section shall not prohibit or prevent normal risk management operations discussed msection 11.4 above. If the Company is in breach of this Clause 11 it shall pay to GIU as liquidated damages an amount equal to the amount of any net after tax profit or gain which the Company makes on the Speculative Currency Transaction and any cost incurred by GRZ m establishing that the transaction was a Speculative Currency Transaction. 11.7 Where any right or assurance given to the Company under this Clause 11requires the L Central Bank: W to approve any act, matter or thiig; or @) to grant authority under applicable law and regulations for its exercise or performance, and the Company has supplied any necessary information to the Central Bank and otherwise met the conditions of this Clause 11, GRZ shall, upon request from the Company, ensure by policy directions to the Central Bank or otherwise that such approval is given or such authority is granted as soon as reasonably practicable. 11.8 The Company shall ensure that any borrowings it myincur denominated m Kwacha will not exceed the Kwacha equivalent fromtime to time of twenty million US dollars (US$2O,OOO,OOO) or such greater amount as may be agreed from time to time between the Company and the Central Bank. Lotion-2/557952/07 - 33 - G218MMO30 11.9 The Company shall not actively discriminate against the Central Bank in selling foreign exchange for Kwacha. 12. ENVIRONMENTALISSUES 12.1 The Company will: within twelve (12) months (or such longer period as the Parties myagree) finalise a baseline environmental study of the Contract Areas with a view, inferalia,to definingpreexistingconditions to which the provisions of Clause 12.19will apply; negotiatem good faith with GRZ (which undertakes to negotiate mgood faith with the Company) with a view to agreeing within six (6) months of finalisation of the baseline environmental study referred to in (a).above (or such longer period as the Parties may agree) the detailed terms and conditions of the Environmental Plan. I (subject to the provisions of and save to the extent provided otherwise m this Clause 12)comply with (i) environmental and safety laws and regulations enacted or promulgatedzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA within Zambia from time to time which are of genera4 application , for the avoidance of doubt, making such contribution as is (mcludmg required under Section 82 of the Act to the Environmental Protection Fund). For the purposes of Section82 of the Act, the Facilities shall be deemed to be either a category one (1) mine or a two (2) mine (or such other category of mefor Environmental Protection Fund contribution purposesas the Parties may agree from time to time) at the discretion of the Director;and (ii) the Environmental Plan. 12.2 The Company shall comply with and implement the Environmental Plan in accordance I with the timetable contained therein and Good Mining Practices and, without prejudice to the timetable, tie Company shall achieve the objectives specified m the Environmental Plan no later than the last date specified therein for achievement. 12.3 Save as provided in Clause 12.4 below, GRZ hereby confirms that for the Stability Period it will not tieany action (and will procure no action is taken by any of its ministries, departments or agencies over which it has operational control acting on its behalf)under, or m enforcing,any applicable Environmental Laws with the mtent of: (a) securing the Company's earlier compliance with Environmental Laws other than that envisaged by the timetable and conditions set out m the Environmental Plan; - 34 - G2181100030 requiring the Company to clean up andor remove any stock of pollutants andor remedy any other condition which was pre-existing as at the date of this Agreement (other than m respect of areas of land or bodies of water identifiedby the Company pursuant to Clause 12.19(b)(ii)); imposing fines or penalties upon the Company payable under Environmental Laws (or enacting new fines and penalties thereunder) which are payable m respect of the Company's non-compliance with such Environmental Laws and where the Environmental Plan provides for the remedy of the same m accordance with a specified timetable and the Company is m material compliance with that timetable; imposing fines or penalties m respect of the Company's breach of Environmental Lawsm the case of pedtycharges in respect of the emission of sulphur dioxide arising from the ongoing operation of the Mufulira smelter provided that the Company remams mcompliance with the measures, and m L material compliance with the timetables for implementing those measures set out in the Environmental Plan to reduce such omissions and, as appropriate, for the constructionof a new acid plant as set out in the Environmental Plan; or effecting any changes thereto or enacting new legislation and regulation or repealing existing legislation or regulation which would prevent the Company complying with the Environmental Plan and the timetables contained therein without making provision for the Company to be exempted therefrom or materially alter or affect the scope, enforcement or application of Environmental Laws regarding the establishment, maintenance or operation of the Environmental Protection Fund. hthe event that GRZ considersm its reasonable opinion that the Company is in material non-complmcewith the Environmental Plan, it shall notify the L Company of such fact in writing, specifying the facts and circumstances it considers give rise to such non-compliance and the actions it considers necessary to remedy the same. Subject to Clauses 12.4(b) and 12.5, the Company shall have three (3) months from the receipt of such notice within which to remedy the alleged material non-compliance. hthe event that: (i) such alleged material non-compliance is not remedied within the three (3) months notice period; or (ii) the Company is not, within the three (3) months period substantially in tie process of remedying the non-complianceand such non-compliance is not remedied mfull within a further three (3) months, - 35 - G218MKKBO GRZ shall cease to be bound by the provisions of Clause 12.3 but only mrespect of such breach and matters arising out of such breach (and in respect of no other matters) and the Parties acknowledge that GRZ (or its ministries departments or such agencies acting on its behalf) shall be free to tiesuch action as is permitted under applicable Environmental Laws in respect of such breach. 12.5 If the Company contests the non-compliance asserted by GRZ it shall serve a counter- notice specifying its reasons for disagreeing with GRZ within thirty (30) Business Days ofreceiving GRZ'snotice under Clause 12.4(a). Thereafter any dispute regardmg: (a) whether or not GRZ is entitled toserveanotice under Clause 12.4(a); or (b) whether or not the actions GRZ consider necessary to remedy such non- compliance specified in such notice are necessary and reasonable; or (c) whether the material non-compliance has been remedied within the specified period or whether the Company is not substantially m the process of dzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA remedying such non-compliance within theinitialthree (3) month period, may be referred by the Company to a Sole Expert m accordance with Clause 21, for tit: determination provided (d) notwithstanding the provisions of Clause 21, the determination by the Sole Expert shall be within thirty (30) days of the counter-notice served by the Company; and (e) GRZ shall continue to be bound by the provisions of Clause 12.3 pending the determinationof the Sole Expert. 12.6 The Company shall be entitled to mend the Environmental Plan from time to time: (a) if in its view at any time the conduct of Normal Operations in accordance with the Environmental Plan for whatever reason poses a material danger to public health and safety; d (b) if in its view the qactof Normal Operations would be likely to result in significant environmental damage which was not anticipated m the relevant Environmental Plan; (c) so as to reflect changes in operations and other circumstances considered to be appropriateby the Company, provided titfollowing suchamendmemt: (i) the Environmental Plan is m accordance with accepted environmental standards as applicable toGood Mining Practice; and (ii) such amendment will not result in GRZ's liability under the Environmental Liabilities Agreement or the Enabling Legislation being materially increased or any liability thereunder being mcurredor arising - 36 - G2181KKKMl on a date earlier than would otherwise have been the case but for the making of such amendment. (d) if, at any hefollowing the expiry of a period of three (3) years following the date of this Agreement, the continued operation of the smelter at Nkana by Konkola Copper Mines PLC (or any successor in title thereto) renders the operation of the Mufulira smelter and refinery in accordance with the then applicable Environmental Plan uneconomic and mendment(s) thereto is (are) required to enableitscontinued economic operation. Prior to any formal proposal being made by the Company, it shall allow a period of four (4) Calendar Months for informal discussions of any proposed amendments to an Environmental Plan. Any formal proposal from the Company to mend the Environmental Plan shall be delivered in writing to the Minister. This shall include a written statement of the L reasons why the Company considers the proposed variation to be necessary, setting out to the extent it is reasonably practicable to do so: c-4 its reason for concluding there is a risk to public health or safety or of significant environmental damage not anticipated in the Environmental Plan; @) its reasons for concluding the amendments proposed under Clause 12.6(c) are in accordance with Good Mining Practice and would not materially increase GRZ's liabilities under the Environmental Liabilities Agreement or the Enabling Legislation; or (c) why the continued operation of the smelter at Nkana by Konkola Copper Mines PLC (or any successor m title thereto) renders the operation of the Mufhlira smelter and refinery in accordance with the Environmental Plan uneconomic and the consequent amendments to the Environmental Plan necessary to ensure the continued economic operation of the Mufulira smelter L andrefinery. 12.7 hthe event that the Company proposes a variation of the Environmental Plan under the circumstances set forth mClause 12.6, GRZ undertakes to consider the proposed variation m good faith and to accept the proposal unless it believes that the proposal falls outside the scope pemtted under Clause 12.6 and unless, by notice of objection in writing served on the company within two (2) calendar Months of receipt of the proposal made pursuant to Clause 12.6, GRZ informs the Company 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: (a) its reasons for concluding there is no risk to public health and safety or of significant environmental damage not anticipated intie Environmental Plan; - 37 - G21WOOO30 (b) m relation to arnendments proposed under 12.q~)its reasons for concluding that the amendment would not meet Goad Mining Practice andor its analysis of the increase m liabilities under the Environmental Liabilities Agreement or the Enabling Legislation; or (c) m relation to amendments proposed under Clause 12.6(d), its reasons for concluding either: (i) that the continued operation of the Nkana smelter and refinery as aforesaid has not rendered the continued operation of the Mufulira's smelter and refinery m accordance of the Environmental Plan uneconomic; or (ii) the amendments sought to the Environmental Plan are unnecessary m order to render the continued operation of the Mufulira smelter andzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA refinery economic. d 12.8 Following receipt of a notice of objection under Clause 12.7, the Company shall, within two (2) Calendar Months and having considered the notice of objections mgood faith, inform the Minister by notice m writing whether or not the Company's proposal for variation of the Environmental Plan is or is not withdrawn. hthe event that the Company's proposal for variation is not withdrawn it will be deedto have been agreed unless the Minister elects, within a further period of two (2) Calendar Months from receipt of notification from the Company that its proposal is not withdrawn, to submit the question of whether the Company's proposal for variation is unnecessary as unreasonable for determinationby a Sole Expertmaccordancewith Clause21. 12.9 The Minister on behalf of GRZmypropose an amendment to the Environmental Plan at any time the conduct of Normal Operations m accordance with the Environmental Plan for whatever reason poses a material danger to public health and safety or myresult m significant damageto the ecology of the area d which was not contemplated m the original Environmental Plan and is or my become mversible or only become reversible or only be reversed after the lapse of fifteen (15)years; the environn-mtal impact of Normal Operations shall prove substantially more adverse than anticipatedm the Environmental Plan; or tested and established technology or procedures, or improvements thereofzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA shall have become available and economically viable subsequent to the date of this Agreement and which, if applied to the operation of the Facilities, (but excluding those areas of land or bodies of water identified in Clause 12.19 below), could materially mitigate the environmental impact of Normal Operations. - 38- G218103030 12.10 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. 12.11 Any formal proposal from the Minister to amend the Environmental Plan shall be delivered m writing to the Company. 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 practicable to do so: (a) the danger to public health and safety or the environmental damage which may result from Normal Operations if the Environmental Plan is not amended and the risk and materiality of such damage or, as the case may be, the technology, procedures or improvements which could materially mitigate the environmental impact of Normal Operations; b (b) the actions it considers necessary to remedy the same; (c) the time scale within which it considers the actions should be completed;and (a the cost of such actions. 12.12 h the event that the Minister proposes a variationto the Environmental Plan on behalf of GRZunder the circumstancesset forth m Clause 12.10, the Company undertakes to consider the proposed variation in good faith and, unless by notice of objection in writing served on the Minister within two (2) Calendar Months of receipt of the proposal made pursuant toClause 12.10 it informs the Minister that it considers the proposed variation to be unreasonableit shall be deemed to have agreed the same. A notice of objection shall include a written statement of the reasons why the Company considers the proposed variation to be unnecessary or unreasonable setting out to the extent it is reasonably practicable to do so: (a) its estimate of the costs to implement such change; (b) its analysis of the variation in the environmental impact that would be effected by such change; and (c) its appraisalof the economic and other effects of the change proposed by GRZ and, in particular, whether the proposed variation would conform to Good Mining Practice. 12.13 Following receipt of a notice of objection under Clause 12.12, the Minister shall, within two (2)Calendar Months and having considered the notice of objection in good faith, inform the Company by notice m writing whether or not tie Minister's proposal for variation of the Environmental Plan is or is not withdrawn. In the event that the Minister's proposal for variation is not withdrawn it will be deemed to have been agreed unless the Company elects, within a further period of two (2) Calendar Months from receipt of notification from the Minister that his proposal is not withdrawn, to - 39 - G2181/00030 submit the question of whether GRZ's proposal for variation is unnecessary or unreasonable for determination by a Sole Expert in accordance with Clause 21. 12.14 Should a Party refer the proposed change to expert determination, the determination pursuant to Clause 12.8 or Clause 12.13, will be binding on the parties with the effect that: (a) if the Sole Expert determines that the proposal for variation is not unnecessary or unreasonable the proposal for variation will be defmed to have been agreed; or (b) if the Sole Expert determines titthe proposal for variation is unnecessary or unreasonable the proposal willbe deemed to have been withdrawn; Provided that the Sole Expert myin his sole discretion suggest alternative proposals or time schedules or mitigation of cost proposals to the parties who will consider the same m good faith prior to tie determination being rendered by the Sole Expert. The d period during which such proposals suggested by the Sole Expert shall be considered by the Parties shallbe specified by him but shall not exceed six (6)Calendar Months. 12.15 Where a variation to tie Environmental Plan has been agreed by tie Company and GRZ or is determined pursuant to Clause 21, that Environmental Plan shall be amended accordingly.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 12.16 Nothing m this Clause 12 shall be deemed or construed to: (a) limit the right of GRZ to tiesuch other actions within its power, such as those rights given to the Director under Section 81 of the Act, to protect the public health and safety (provided titany dispute or disagreement between the Company and GRZ as to the action taken or proposed to be taken under such laws shall be regarded as a Dispute);or (b) renderthe Company liable for penalties or fines imposed, or third party clam d whenever they are made, in respect of activities undertaken by ZCCM prior to the date hereof. 12.17 Notwithstanding the provisions of this Clause 12, the Company shall, at the invitation of the Minister responsible for the environment, participate either individually or on an industry-wide basis, m discussions relating to the impact and effectiveness of the Environmental Laws or on any prospective changes thereto. 12.18 Pending an amendment of an Environmental Plan pursuant to this Clause 12, the existing Environmental Plan shall continue to apply. 12.19 During such period as is referred to m Clause 12.l(b), the Parties shall: (a) identify any areas of land or bodies of water which are polluted or containzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA pollutant stocks which were preexisting as at Completion and which the Company does not require for future Operations (notwithstanding that such L.OdOIl-2M7952U7 -40- G2181lOOO30 areas of land or bodies of water may have kenused by the Company during such period referred to m Clause 12.l(b)); (b) identify whether areas of land or bodies of water referred to in (a) above: (i) can be detached from the Leases without affecting the conduct of Normal Operations and surrendered toGRZ; or (ii) cannot be so detached from the Leases (within the period of twelve (12) months from tie end of the period referred to in Clause 12.l(b) (the "ShortTerm Use Period"))without affecting the conduct of Normal Operations. 12.20 Any such land as is referred to in Clause 12.19(b)(i) shall forthwithupon adoption of the Environmental Plan pursuant to Clause 12.l(b) be surrenderedby tie Company to GRZ who shall accept such surrender. Any such surrender shall be free of L encumbrances. 12.21 h the event that areas of land or bodies of water are identified pursuant to Clause 12.19(b)(ii),the Parties shall procure the amendment of the Environmental Liabilities Agreement (and until such amendment is made the Environmental Liabilities Agreement shall be deemed amended in its operation) to reflect the following provisions: (a) the indemnity contained m clause 2 of the Environmental Liabilities Agreement shall be amended to cover all costs and expenses the Company incurs by reason of a requirement by GRZ or the Company issued at any time after the expiry of the Stability Period to clean-up and/or remove any stock of pollutants contained within tie boundaries of such land or bodies of water or remedy any other condition in respect thereto which was preexistingas at the dateof this Agreement; and (b) such indemnity shall not apply if such stock of pollutants as is referred to in L (a) above is augmented, used m, or depleted after the Short Term Use Period as a result of the conduct of Normal Operations at any time after tie date of this Agreement. 12.22 The Parties will procure all necessary amendments to the Large Scale Mining Licences, the Leases and this Agreement to reflect any detachment of land as is referred to in Clause 12.19(b)(i). 13. COIilMUNICATIONS 13.1 GRZ will provide any reasonably required assistance and facilitation to the Company in respect of any application for licenses and other approvals necessary for the installation, maintenance and operation of a modem telecommunications system PROVIDED THAT GRZ will not be required to afford any such assistance or - 41 - G218MMO30 facilitation if it would result m the breach of any legislation or regulation relating to telecommunicationsin Zambia or any regulatory or contractual duty binding on it. - 42 - G2181ltMO30 PARTD TAXATION 14. GENERALOBLIGATIONTOPAYTAX 14.1 The provisions of Schedule 8 correctly reflec :t, in respect of the matters therein specifically described, the current tax regime applicable to the Company in the conduct of its activities under this Agreement. Whilst Schedule 8 is not intended to override applicable legislation, in the event of any ambiguity between applicable legislation and SchedulezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA8, GRZandthe Company agreethatthe provisions of Schedule 8shall apply. 14.2 Subject to Clauses 14.1, 16 and Schedule 8, the Company shall pay tax, royalties and duties from time to time in accordance with applicable legislation. L 15. VATREF'UNDS 15.1 GRZ shall ensure that VAT collected on goods and services procured by the Company is refunded to tie Company within thirty (30) days from the date of submission of an acceptable monthly VAT return for the Company. 16. TAXATIONSTABILITY 16.1 GRZ undertakes that it will not for the Stability Period: (a) increase corporate mcome tax or withholding tax rates applicable to the Company(or change the basis of calculation which would result in a decrease of deductions or decrease allowances available to the Company in computing its liability to such Taxes) from those prevailing at the date hereof (and as set out in detail in Schedule8attached hereto); (b) otherwise mend the VAT and corporate Tax regimes applicable to tie L Company and any management or marketing company to the Company from those prevailing as at the date hereof (and as set out in detail m Schedule 8 attached hereto); or W impose new Taxes or fiscal imposts (including new import or export duties or other new duties or new royalties on Normal Operations) on the conduct of Normal Operations or sale or export of products therefrom or increase withholding taxes applicable to the Company, its Shareholders or their Affiliates or lenders to it on the remittance by the Company of principal, interest or dividends above the rate prevailing as at the date hereof (as set out in detail in Schedule8attached hereto), provided that m the case of Clause 16.l(b) and Clause 16.l(c) amendments may be made which taken together do not have a material adverse effect (compared with what the position would have been but for the amendments) on the Company's Distributable - 43 - G21WOOO30 Profits or the dividends received by its Shareholders or their Affiliates or the amounts received by lenders to it (the issue of whether or not such effect is materially adverse to be detemed by a Sole Expert m accordance with Clause 21 m the event of disagreement between the Parties). GRZfurther undertakes that for the Stability Period ,it will not: (a) alter the right of any non-Zambian citizens (and dependants) (on his or their mvalorpermanent departure from Zambia) and, m the case of (iii) below, during thezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAperiod of his or their residency m Zambia to: (i) import within six (6) months from the date of arrival free of duty and tax, for personal use, household and personal effects; (ii) export, without let or hindrance or the imposition of duty or tax on export, all personal effects originally imported or acquired during residency m Zambia; and d (iii) freely remit all income earned mZambia during such residency; m increase: (i) the rate of royalty referred to m Schedule 8 from the levels set out therein; (ii) import duty rates applicable to the Company soas to result in the import duty rate to which the Company is subject on the import of machinery and equipment (including specialised motor vehicles) or other itemof a capital nature required for the Approved Programme of Mining and Metal Treatment Operations, Normal Operations or the constructionof a new acid plant and any other proposed capital expenditure as set out in the Environmental Plan or m the Scheduled Programmes and which is, at the date of this Agreement, exempt from customs and excise duties d under Section 97(1) of the Act, above a level of zero per cent. (0%);or (iii) import duty rates applicable to the Company so as to result in thezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA weighted average import duty rate to which the Company is subject on the import of other goods and materials required for the Approved Programme of Mining and Metal Treatment Operations or Normal Operations or the operation of a new acid plant as set out m the Environmental Plan or in the Scheduled Programmes and which do not fall under Clause 16.l(e)(ii),above a level of fifteen per cent. (15%). 16.2 For the purposes of Clause 16.l(e)(ii)and (m) the Facilities shall be deemed to be a "mine"and the operations conducted m connection therewith to be "mining"for the purposesof Section 97 of the Act. -44- G2181/OOO30 16.3 GRZ shall ensure that no law, statute, regulation or enactment shall be passed or made which would discriminate against the Company m respect of any such matters as are referred to in Clause 16.1 or otherwise in its conduct of Normal Operations or any other circumstances under this Agreement when compared to other mining companies orjoint ventures conducting similar operationson a scale equivalent to those conducted by the Company mZambia provided that GRZ will be at liberty to pass or make any such law, structure, regulation or enactment to enable the performance or amendment of a development agreement entered into by it and another mining company or joint venture prior to the expiry of such period. 16.4 GRZ covenants to reimburse the Company (or, at its option, make offsetting changesin any law, statute, regulation or enactment applicable to the Company) to ensure the Company is fully, fairly and timely compensated for any costs incurred by it by reason of a failure by GRZ to comply with the provisions of Clauses 14, 16.1 and Clause 16.3. The Company acknowledges that this willbe its sole remedy for such failure to comply with Clauses 14, 16.1 and 16.3. L 16.5 Inthe event there is a disputeas to whether or not the Company has suffered any costs for the purposes of Clause 16.4 the dispute shall be referred to a Sole Expert m accordance with Clause 21. 16.6 GRZ hereby exempts the Company for a period of fifken (15) years from the date hereof from liability to pay the Excise Duty on Power applicable to the Company's purchases of electricity m relation to the operation of the Facilities during such period. For the avoidance of doubt, the Company shall not incur any liability in relation to non-payment of tie Excise Duty on Power pursuant to this Clause 16.6. 16.7 GRZ confirms that the Company shall not pay any property transfer taxes associated with the acquisition of the Assets under the Sale and Purchase Agreement and the transfer of the Facilities to the Company. L -45- G2181/OCKl30 PARTE FORMALCLAUSES 17. ASSIGNMENT 17.1 The Company my,with the consent of the Minister in accordance with Sectionflfi- four (one) of the Act, assign the whole or part only of its rights and obligations under this Agreement and its interest in the Large Scale Mining Licences and GFUcovenants that the consent of the Minister to such an assignment will not be withheld m tie circurnstances set out in Clauses 17.5 and 17.7. No assignment of an interest in a Large Scale Mining Licence may be made without the assignment to such person of a comparable mterest in this Agreement and vice versa. 17.2 If the Company assigns its entire interest m the Large Scale Mining Licences and its rights and obligations under this Agreemnt m accordance with Clause 17.1,then upon the assignee becoming party to this Agreement, the Company shall be discharged from any further liability m respect of any obligation which accrues after the date of that assignment without prejudice to pre-existing rights accrued to GRZ against tie Company. 17.3 Where an assignment tieseffect pursuant to Clause 17.1, the Company shall enter into an agreement with the assignee wherein the assignee agrees with the Company and undertakesto GRZ that it will: (a) becomeaPartytothe Agreement; and (b) assume, observe and comply withzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAall obligations of the Company under this Agreement, theAct and any regulations made thereunder. 17.4 If tie Company assigns part only of its interest m the Large Scale Mining Licences and the rights and obligations attaching thereto under this Agreement, then the Company shall be discharged from any further liability which accrues after the date of that 4 assignment in respect of any obligation which accrues after such date as it relatesto tie interest so assigned without prejudice to pre-existing rights accrued to GRZ against the company. 17.5 Notwithstanding the foregoing provisions of this Clause 17, the Company may charge by way of fmd adorfloating charge the Large Scale Mining Licences together with this Agreement to secure the repayment of principal, and payment of interest and other fees, costs and expenses relating to all loans made to the Company to finance or refinance the Scheduled Programmes or otherwise for purposes of the Operations and GRZcovenants that the consent of the Minister to such mortgages and charges shall be given provided that such mortgages and charges are notified to the Minister upon their grant (and, m any event, within sixtyzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA(60)days thereof). Subject to Clause 17.6,any mortgagee or chargee under a mortgage or charge given by the Company pursuant to this Clause may exercise all rights of sale and other rights included in such imrument - 46 - G2181100030 of mortgageor charge provided it shall fist give to GRZ fourteen (14) days notice of its intention to exercise any rights of sale and five (5)days notice in all other cases. 17.6 The rights of any mortgagee or chargee under a mortgage or charge given by the Company pursuant to Clause 17.5 shall be subject to and limited by the rights of the Company under this Agreement and to the rights of GRZ to terminate this Agreement under Clause 19. The rights of such mortgagee, chargee or lender to sell an interest in such Large Scale Miniig Licence and this Agreement while so charged shall not be exercisable unless the mterest in such Large Scale Mining Licence and this Agreement is sold together with all or sufficient of the assets and undertakings of the Company as are sufficient (or would be sufficient m conjunction with such additional assets as the buyer may contribute) to enable the buyer to undertake Normal Operations to a purchaser approved by GRZ (which approval GRZ covenants not unreasonably to withhold). 17.7 Where the Minister'sconsent is necessary to effect: (a) an assignment under Section 54(1) of the Act or a change of control under Section 55( 1) of the Act; or @) an assignment pursuant to Clause 17.1, GRZwill procure that the Minister will not withhold his consent where, in 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 the Company, the acquiring party has demonstrated that it is of appropriate financial standing having regard, inter alia, to the obligations it will assume under the Sale and Purchase Agreement and the Shareholders' Agreement. 17.8 In the event that the Company considers that a proposed assignee has demonstrated such financial capacity or technical ability or the acquiring party has demonstrated such financial standing, each as is referred to in Clause 17.7, it may refer the issue to a Sole Expert for its opinion m accordancewithClause 21. If the SoleExpert determinesthat the proposed assignee or the acquiring party has demonstrated the requisite levels of financial capacity and technical ability or financial standing (or as the case mybe) the consents referred to m Clause 17.7(a) or Clause 17.7(b) (as the case mybe) shall be deemed given and, if not, tie Minister'sdetemnation shall stand. 18. EXTENSIONSTOTIME 18.1 Notwithstanding any provision of this Agreement the Parties, by agreement between the persons responsible for giving Notices under Clause 29, may from time to time extend anyzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAperiod referred to m this Agreement, or substitute for any date referred to mthis Agreement such later date, as they think fit. 18.2 If the Company is prevented or hindered by any circumtances or event of a kind set out m Clause26 or by a reference to a Sole Expert or by an arbitration under Clause 21 or Clause 22 from undertaking all or any of its obligations or exercising any right LOIXIO~-~/SS?XZO~ - 47 - G2181KXlO3O granted hereunder, the period of time allowed for the performance of that obligation or exercise of that rightzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAand all periods of time thereafter allowed for the performance of obligations or exercise of rights which are dependent upon the fist mentioned obligationor right, shall be extendedby a period equalto the period dumg which such prevention or hindrance continues or dumg the period from the time when the question, dispute or difference arose until the time of its determination by the Sole Expert or settlementby agreement or arbitration, asthe case mybe. 18.3 Where my period is, or is deemed to be, extended or any later date substituted for an earlier date under this Clause 18, that extended or substituted period or date shall be deedto constitute the period or date referred to m this Agreement (notwithstanding that at the theof such extension or substitution such periodmay have expired or such date myhavepassed). 19. TERMINATION dzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 19.1 The Company myterminate this Agreement at any time after the fifteenth anniversary of the date hereof by giving twelve (12) months written notice to GRZ. Such notice may bedeliveredat any time after the fourteenth anniversary of the date hereof. 19.2 GRZmyterminatethis Agreement by writtennotice to the Company if: (a) the Large Scale Mining Licences have expired by affluxion of time (which subject to the remainder of this Clause 19 cannot occur prior to twenty five (25) years fromthe date of this Agreement) and have not been renewed; or (b) the land the subject of the Large Scale Mining Licences (or either of them) is abandoned or for the purposes of this Agreement is deemed to have been abandoned by the Company under Section 49 of the Act. 19.3 hthe event that any Party: (a) is in material default in the performance of its obligations set forth in this Agreement; or 4 (b) fails to treat as binding and comply with any award made by a Sole Expert or manarbitrationpursuant to Clause 22, (30) days of receiving azyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA and has not remedied such default or failure within thirty notice fiom another Party to do so, the other Party mygive notice of such default or failure (hereinafter called a "DefaultNotice")to the defaulting Party which shall specify the default or failure alleged. If the Company receives a Default Notice, GRZ shall at the same time give acopy of the Default Notice to each lender to the Company, where the name and addressof that lender has previously been notified to GRZ, and to each mortgagee or chargee of any of tie Company's assets under any mortgage or charge notified to the Minister m accordance with Clause 17.5. If the Company disputes the subject matter of the Default Notice, it myrefer tie issue to arbitration pursuant to Clause 22. - 48 - G2181/COXO 19.4 For the purposes of Clause 19.3(a) the words "material default" shall mean a default which is material m nature and effect. 19.5 If within a period of three hundred and sixty (360) days following a Default Notice (or such longer period as may be fmed by a tribunal where the subject matter of the Default Notice is submitted to arbitration under Clause 22) either: (a) the default or failure specified m the Default Notice has not been remedied (or active steps have not been commenced and continued to remedy the default or failureif it is not capable of speedy remedy); or (b) compensation is not paid in respect thereof (in the case of a default or failure not capable of remedy but where payment of compensation would be adequate recompense to GRZ), then, subject to Clause 19.6,the non defaulting party may by notice (hereinafter m this Clause 19 called a "Termination Notice")to the defaulting party (which shall be copied to each lender, mortgagee or chargee who was given a copy of the Default Notice) bring about the termination of this Agreement on a date which is not less than thirty (30) days thereafter (heremafter inthis Clause called the "TerminationDate"). GRZ shall ensure that the Minister does not make a decision to suspend or cancel the Large Scale Mining Licences and that no other action is taken by or on behalf of GRZ without the approval of the Company to terminate the Large Scale Mining Licences or myof the Leases prior to the Termination Date, 19.6 A party shall not serve a Termination Notice while arbitration between GRZ and the Company under Clause 19.7 is in progress and any Termination Notice already served will be suspended immediately upon the commencement of such arbitration for the duration of any such arbitration. If the arbitrator finds hfavour of the Company, or within the period fmed by the arbitrator the default or failure is substantially remedied or the compensation is paid, a party shall not serve a Termination Notice and any Termination Notice already served shall be deemed withdrawn. U 19.7 If the Company or GRZcontest: (a) the grounds for the issue of the Default Notice; (b) the materiality of the default; (c) whether the default or failure has been remedied; or (d) the adequacy of any compensation to be paid pursuant to Clause 19S(b), the matter shall be submitted for arbitration pursuant to Clause 22. If the arbitrator finds(mthe case of Clause 19.7(a)) that adequate grounds exist for issue of the Default Notice, he shall fix a period for compliance with Clause 19S(a) or 19S(b) and tie amount of compensation payable (if applicable). If the arbitrator finds (m the case of Clause 19.7(c)) that the default or failure has not been remedied, he shall fix a period - 49 - G2181/00030 during which the defaulting party must remedy the default or failure. If tie arbitrator finds (in the case of Clause 19.7(d)) in favour of the non-defaulting party, he shall fix the mountof compensation payable and the period for its payment. 19.8 If this Agreement isterminatedby GRZ pursuant to Clauses 19.2 or 19.5: the Company will 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 in respect of any indemnity given and without prejudice to the rights of the Company to remove and recover any of the Facilities for the purposes of Clause 19.8(d); each Party shallforthwith pay to the other Party all monies that mybe owing to the other Party hereunder which, for the avoidance of doubt, shall not include any unexpended mounts of the Investment Commitment or the Contingent Commitment; GRZ shall have the option to purchase the assets comprising the MufUra mine, the Nkana mine or the Mufulira smelter and refinery (and any associated assets of any of them) at a price equivalent to the lesser of the then residual value of such assets after tax depreciationor the fair market value of such assets, each having regard to any encumbrances over all or any portion of the Facilities and with vacant possession. The fair market value is to be determined by agreement between GRZ and the Company but failing such agreementby a Sole Expert in accordancewith Clause21. Such option to be exercisable by notice to the Company within thii (30) days following termination of this Agreement. If requested to do so by GRZ, the Company shall also assign to GRZ such contracts to which it is a party as GRZ determines and deliver all applicable records of the Facilities held by the Company to GRZ but GRZ shall be bound to tiethe contracts that relate to the Transferring Social Assets; the Company shall have the right, within the one (1) year period following the d thirty (30) day notice period referred to in Clause 19.8(c) if GRZzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAhas not exercised its option thereunder: (i) to assign or otherwise dispose of all or any portion of the assets comprising the Mufdira tie,the Nkana mine or tie Mufdira smelter and refinery (and any associated assets of any of them) not acquired by GRZ under Clause 19.8(c) to any 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 from the Mining Area; and Lmdon-265795207 - 50- G2181lOOO30 (e) the Company shall leave the Facilities and Mining Area in a safe and stable condition to the reasonable satisfaction of tie Directorof Mine Safety having regard to natural conditions in the area and applying generally accepted standards of Good Mining Practice, provided that the Company shall not be required to alter the physical condition of the Facilities or the Mining Area beyond the requirements of the Environmental Plan applicable from time to time or as otherwise provided under Clause 12. 19.9 If following the expiry of the one (1) year period referred to m Clause 19.8(d), the assets comprising the Mufulira mine, the Nkana mine or the Mufulira smelter and refinery (and any associated assets of any of them) have not been sold or removed in their entirety and such assets as remain are not posing any danger to the environment or to public health andor safety, GRZ's option under Clause 19.8(c) shall be renewed and the Company's right under Clause 19.8(d) shall beextended for a further period of one (1) year or, if less, until any of the remaining assets pose a danger to the environment or to public health andor safety, at which time all such assets which L remain on the Mmmg Area shall become the property of GRZ without any cost to GRZ or any liability for GRZ to pay compensation therefor. 19.10 Clauses 12, 19.8, 19.9, 19.11, 20, 21, 22, 24, 25, 26 and 29 shall continue in force notwithstanding the termination of the rest of this Agreement and termination hereunder shall not otherwise m any way affect a party's accrued rights and obligations 19.11 at the date of termination. m the event of the termination of this Agreement,zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAGRZ For the avoidance of doubt, undertakes not to enforce applicable legislation retrospectively against the Company to the extent that it is inconsistent with the provisions of Clauses 12.3, 12.21, 14 and 16 and Schedule 8. 20. AMICABLESE'ITLEMENTOFDISPUTES 20.1 A Dispute shall be deemed to arise when one Party serves on the otherzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAPartya notice L ("Noticeof Dispute") stating tie nature of tie Dispute, provided that no Notice of Dispute mybe served unless the Party wishing to do so has fmt taken my steps or invoked my 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 take such step or invoke such procedure. 20.2 Following serviceof 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 any longer period agreed between the Parties, shall have elapsed following service ofa Notice of Dispute. - 51 - G218MMO30 21. SOLEEXPERT 21.1 Where soprovided by Clauses 6.5, 7.3, 8.8, 9.8, 12.5, 12.8, 12.13, 16.1, 16.5, 17.8, 19.8(c), 27.2(b) and 27.4(d) of this Agreement any Dispute shall be referred to a Sole Expert for determinationin accordance with the provisions of this Clause 21. 21.2 The Party wishing the 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 detailsof 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 Sole Expert,eitherParty may then submit a request in writing ("Request for Proposal")to the ICC International Centre for Expertise (the WCCentre")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 any relevant indications concerning the choice of 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 Parties agree to accept the expert proposed by the KC Centre as the Sole Expert selectedunder this Clause 21. 21.4 Upona Sole Expert being selexxecl under tie foregoing provisions of this Clause 21, the Parties or either of them shall forthwith notify tie Sole Expert of his selection and request him to confirm within five (5) Business Days after such notification whether or not he is willing and able to (and does mfact) accept appointment as Sole Expert and to confirm that tie requirements of Clauses 21.8(b), (c) and (d) arezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAall 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 m 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 abie to agree upon the selection of another tile Expert) either Party may submit a Request for Proposal in the manner provided in Clause 21.3 d to the ICC Centre which shall be requested tomake a proposal or (as the case may be) 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 ofzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA appointment of the Sole Expert are agreed with him as soon aspossible. If the Parties and the Sole Expert cannot withii five (5) Business Days of the giving of tie Confirmation agreeon the amount of remuneration tobe 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 (as the case may be) a further Request for Proposal in the manner provided in Clause 21.3 to the ICC Centre which shall be requested to make a proposal or (as the case may be) a further proposal and the process shall be repeated until a Sole - 52 - G2181/ooO30 Expert is selected who accepts appointment and whose terms of contract of appointmentareagreed. 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 meetingthe following criteria: (a) The Sole Expert shall be a person reasonably qualified by education, experience and trainingto determine the Dispute to be referred to him. (b) Neither the Sole Expert nor (if he is an individual) my 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, office holder or an employee of or directly or indirectly retained asa consultantor an adviser to either Party or an Affiliateof either Party. L (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 1~tti0~1of nor a permanent resident in Zambia, Canadaor Switzerland. 21.9 If, in respect of any particular 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 shallbe referred to arbitration in accordancewith Clause 22. 21.10 ThezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAterms of appointment of tie Sole Expert shall contain cmfirmationfrom the Sole Expert as to the matters required by Clause 21.8, shall require the Sole Expert to comply with the obligations set out m Clauses 21.11 and 21.12, and shall contain at least the following provisions regarding the procedure to be followed in the proceedings before the Sole Expert (the "ExpertFmceedings"): L (a) 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 myzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAmatters requiring clarification (whether arising out of his contract of appointment or otherwise) and give directionsas to the procedural rules to be applicable in the Expert Proceedings which desshall comply with the terms of this Clause 21.10. Such directions may thereafter be given from time to time by the Sole Expert as he shall consider necessary. The Parties agree to comply with such directions made by the Sole Expert, and with any request the Sole Expert may make in accordance with this Agreement or with such directions. (b) The Parties shall be entitled to supply data, information and documentation and to make submissions (written and/or oral as the Sole Expert mydirect) to the Sole Expert up to fifteen (15) Business Days after his appointment (and the Sole Expert shall ignore all data, information, documentation and submissions - 53- G218"ON supplied and made after such fifteen (15) Business Days unless the same are furnished m response to a specific request from him or are made m response, in accordance with Clause 21.1O(e), to data, information, documentation or submissions by the other Party). (c) The Sole Expert shall be entitled to obtain such independent professional andor technical advice as he myreasonably require and to obtain any secretarial assistance as is reasonably necessary. (d) The Sole Expert shall be entitled to request fiom 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, provided that neither Party shall be obliged to provide the Sole Expert with any document or information which he would m an action m the High Court be entitled to refuse to disclose on grounds of legal professional privilege. 'd (e) Copies of all data, information, documentation and submissions supplied or made by any party to the Sole Expert shall be provided simultaneously to the other Party, and any data, information or submissions supplied or madeorally by onezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAPartyzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAto the Sole Expert shall be supplied or made m tie presence of the other Party. The other Party shall, notwithstanding the limitations in Clause X.lO(b),have the right for tie 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 tieplace unless both Parties are given a reasonablezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA opportunityto attend any such meeting. (g) If, without showing sufficient cause, a Party fails to comply with any rule, request, direction or metable deadline applicable to the Expert Proceedings, or in any other way fails to comply with a requirement relating to the Expert Proceedings, the Sole Expert shall nevertheless be obliged to proceed and to issue his determination in accordance with Clause 21.100) and (k), and m so doing may: (i) continue the Expert Proceedings in the absence of that Party or of the document, informationor submission; (ii) draw such inferences from that failure to comply or produce as my, m the opinion of the Sole Expert, bejustified;and (iii) make his determination on the basis of the information before him attaching such weight as he thinks fit to any evidence submitted to him -54- G218VOOWJ outside any period he may have requested or directed or as required by the rules applicable in 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 any country as may appear to the Sole Expert to 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 rkasons required by Clause 21. lqk)below) m respect of which both Parties shall be entitled to make representations to the Sole Expert for the period of five (5) L Business Days after receipt of the said draft. The Sole Expert shall issue his determination of the Dispute in writing within ten (10) Business Days after expiry of the period under Clause 21.10Q) and shall give full written reasons for that determination. 21.11 The Sole Expert shall act impartially m carrying out his duties and shall do so in accordance with any relevant terms of this Agreement and shall make his determination in accordance with the applicable law in relation to this Agreement. 21.l2 All data, information or documentation disclosed or delivered to the Sole Expert in connection with his appointment as Sole Expert shall be treated as confidential and the Sole Expert shall not disclose to any person or company any such data, informationor documentation. All such data, information and documentation shall remain the property of the Party disclosing or delivering the same and shall (together with all copies thereof)be returned to that Party on completion of the Sole Expert's work or his L discharge from office under Clause 21.14. Provided that thezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBASole Expert may disclose any data, information or documentation to employees of the Sole Expert or his firm or companyor Affiliates (if any) of the Sole Expert or his or its professional advisers if 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 Zl.lO(d) above, the Parties shall not be entitled to, or to apply for, discovery of documents m the Expert Proceedings. 21.14 If the Sole Expert: (4 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 - 55 - G21W00030 (b) shall not have issued his determination within the time limit set out in Clause 21.1O(k) then, at the request of either Party, a replacement Sole Expert shall be appointed m accordance with the provisions of Clauses 21.3 to 21.6 and on such appointment being made (asdefmed m Clause 21.7) the appointment of the Sole Expert shall cease unless prior to tie date of appointment of the replacement Sole Expert 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 shall be withdrawn. 21.15 The Sole Expert shall act as an expert and not as an arbitratorand 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 determination of the Sole Expert shall be final and binding upon tie Parties save in the event of fraud or manifest error. 21.17 (a) Whilst the Expert Proceedings are m progress: (i) each Party shall bear tie costs of providing all data, information, documentation and submissions supplied or made by it and tie costs of 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 outm his contract of appointment. (b) The costs referred to m (a) above and the costs and expenses of the Sole ExpertzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAand any independent advisers to the Sole Expert retained in connection with a determination hereunder and any costs of his appointment if he is proposed by 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 d the said costs are to be borne within five (5) Business Days of the issue of his determination of the Dispute under Clause 2l.lqk). h reaching that determination the Sole Expert shall be guided by the principle that the umuccessful Party should pay the costs of the successful Party, and shall tie 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 titamount shall accrue and be payable at the rate of LIBORplus five per cent. (5%)per annum (to be compounded on the firstday of each calendar month of non-payment). - 56 - G2181lOOO30 22. ARBITRATION 22.1 Subject to the provisions of Clauses 20 and 21, GRZ and the Company hereby consent to submit to the hter~~i~~lCentre for Settlement of Investment Disputes ("ICSID") any Dispute for settlement by arbitration pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the "Convention"). Save where the contrary appears, terms used m this Clause 22 shall bear the same meaning as they do in the Convention. 22.2 The Partieshereby agree that the Company, because of foreign control, shallbe treated asanationalof a state otherthan Zambia for the purposes of the Convention. 22.3 The Parties agree that the transaction to which this Agreement relates is an investment. 22.4 Any arbitral tribunal (the "Tribunal")constituted pursuant to this Agreement shall consist of three arbitrators. Each Party shall appoint (1) one arbitrator within fourteen (14) days of the registration of the request for arbitration. The third arbitrator, who L 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 the request of either Party. None of the arbitrators mybe acitizen or a national of, or a permanent resident m, Zambia or Canada or Switzerland. Without prejudice to its other powers, the Tribunal shall have the power to fm a longer period than the period 360 days referred to m Clause 19.5 m any case m which the question whether a Default Notice is valid or whether the default or failure alleged m 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 m accordance with the Arbitration Rules of ICSID meffect 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 any 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 LzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Rules or the Arbitration Rules of ICSID mybesentby the Secretary General in the manner providedmClause29. 22.6 Any arbitration proceedings commenced pursuant to this Agreement shall be held in London which shall be the seat of the arbitration proceedings. In relation to any arbitration proceedings commenced under or m connectionwith this Agreement, GRZ irrevocably submits to the jurisdictionof the United Kingdom and waives, to the extent pemttedbyapplicable law, any objection to such arbitration whether on the ground of venue or on the ground that the arbitration has been commenced m an inconvenient forum. 22.7 The language of any arbitration proceedings shall be English. 22.8 Anyaward in arbitration proceedings held pursuant to the Convention shall be binding on the parties and judgement thereon may be entered m any court having jurisdiction L.omion-2m795uo7 - 57 - G2181/00030 for the purpose. Subject to Clause 24, GIU irrevocably and generally consents in respect of the enforcement of any arbitral award or determination of a Sole Expert against it m any proceedings in any jurisdiction to 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 any property whatsoever (irrespective of its use or intended use) of any decision, award, order or judgment which may be made or given in such proceedings and the granting of any injunctionor order for specific performance or for recoveryof land or other property). The Parties waive any right to appeal to any court of law or other judicial authority m 22.9 connection with any arbitration proceedings conducted pursuant to this Agreement. 22.10 The costs incurred by the Parties in connection with any arbitration procedure (to includebothParties' legal and other professional costs and other expenses, the fees and expenses of the Tribunal, and the charges for the use of the facilities of ICSID) shall be borne: (a) equally by the Parties where the Dispute has been referred jointly by them; or otherwise, (b) in accordance with Article 61(2) of the Convention. 22.11 The amount (if any) which is required by a determination or award of the Tribunal under this Clause22 to be paid by one Party to the other Party shall be paid within ten (10) Business Days of tie issue of the determination or award and, if not paid within that time, interest on that amount shall accrue and be payable at the rate of LIBOR plus five per cent. per annum(tobe compounded on the first day of each Calendar Month of non-payment). 22.12 this clause shall not preclude any Party from applying for mtem The provisions ofzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA relief on an urgent or any other basis to a court of competent jurisdiction. 23. PERF'ORMANCETOCONTlNUJ3 23.1zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAhas already been repudiated or terminated, tie Parties shall Unless the Agreement continue to observe and perform all the obligations contained in, 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 in 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 Expertor by arbitrationor by agreement of the Parties as the case may be. 24. WAIVEROFSOVEREIGNIMMUNITY 24.1 GIUirrevocably agrees that should any proceedings in relation to, arising out of or in connection with this Agreement be taken in any jurisdictionagainst it or its assets, no immunity (to the extent that it may at any time exist, whether on the grounds of sovereigntyor otherwise) from those proceedings shall be claimedby it or on its behalf Lmion-U557952l@7 - 58 - G2181lOOO30 or with respect to its assets, and GRZ hereby irrevocably waives any such immunity which it or any of its assetsnow has or myacquirem the future in any jurisdiction. The waiver of immtities referred to in Clause 24.1 constitutes only a limited and 24.2 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, (U)used by a diplomatic or consular mission of GRZ (exceptas may be necessary to effect service of process), or (iii) propertyof a military character and under the control ofa military authority or defence agency. 25. LAWAPPLICABLE This Agreement shall be governed by and interpreted in accordance with the laws of 25.1zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Zambia as in force at the date of execution of the Agreement, supplemented by the rules of international law where necessary to give effect to this Agreement. LzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 26. FORCE"EURJ3 26.1 Any failure on the part of a Party hereto to comply with any of the terms, conditions and provisionsof this Agreement (except any obligation of a Party tomake payment of money to the other Party) shall not be grounds for termination or give the other Party hereto my claim for damages insofar as such arises from Force Majeure, if the first- mentioned Party: (a) has taken all reasonable precautions, due care and reasonable alternative measures with the objective of avoiding such failure and of carrying out its obligations under this Agreement; and (b) has given notice to the other Party of the occurrence of Force Majeure on becoming aware of such an event. The fmt-mentioned Party shall tieall reasonable measures to overcome the Force Majeure and to fulfil the terms and conditions of this Agreement with the minimumof delay (provided that no Party has an obligation to settle a labour dispute or to test the constitutionalityof any legislation or law) and shall give notice to the other Party on the restorationof normal conditions. 26.2 For the purposes of this Agreement, Force Majeure shall include war, insurrection, civil disturbances, blockades, not, embargoes, strikes, lock-outs and other labour- conflicts, land disputes, epidemics, volcanic eruptions, earthquakes, cyclones, floods, explosions, fires, lightning, governmental restrictions, change m applicable law, unavailability of materials or equipment, failure by GRZ or any of its applicable ministries, departments or agencies to grant or issue to the Company (as consultantioperator)or contractors or subcontractors appointed by the Company (as consultantioperator) the necessary consents and pemssions to enable them to operate in Zambia or to import equipment into Zambia or to grant or issue the necessary permits for nonZambianemployees of the Company to enter into Zambia and tieup Lmdon-2/557952/07 - 59- G2181KXJO30 employment m a timely fashion and any other event which the Party claiming Force Majeure could not reasonably be expected to prevent or control and which prevents a Party from complying with any of the terms, conditions or provisions of thii Agreement (provided that GRZ shall not be entitled to give notice of the occurrence of Force Majeure nor be excused from performance hereunder as a result of any of its actions or inaction or any of the actions or inactions of its applicable ministries, departmentsor agencies). In the event of any circumstances or event of a kind set out m this Clause 26 the period of time allowed for the performance of those obligations or exercise of those rights are delayed by such event of Force Majeure and the periods of time thereafter whichzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA allowed for the performance of obligations or exercise of rights which are dependant upon tie fistmentioned obligations or tights, shall be extended by a period equal to the period during which such event of Force Majeure continues. Any Force Majeure event arisingas a result of the failure by GRZ to perform its obligations as detailed m 26.2 shall not preclude the right of the Company to enforce its rights arising ClausezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA fromabreach of GRZ'sobligations under this Agreement. Where any period is, or is deemed to be, extended or any later date substituted for an earlier date under this Clause 26, that extended or substituted period or date shall be deemed to constitute the period or day referred to in this Agreement (notwithstanding timeof such extension or substitution such period myhave expired or such that at thezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA date myhave passed). VARIATION The Parties may from time to time by agreement m writing add to, substitute for, cancel or vary all or any of the provisions of this Agreement, the Approved Programme of Mining and Metal Treatment Operations, the Large Scale Mtig Licences or any other programme (including any of the Scheduled Programmes), proposal or plan approved for the purpose of facilitating the objectives of this Agreement. (a) Except as otherwise provided in Clause 27.4,where the Company proposes to modify or vary the Approved Programme of Mining and Metal Treatment Operations (for the avoidance of doubt, not including the Environmental Plan) (hereinafter called a "Modifiitionff),the Company shall provide written notice of such Modification to GRZ. Such Modification shall be deemedtobe approved by GRZ and the Approved Programme of Mining and Metal Treatment Operationsshall be amended to the extent necessary to reflect such Modification unless GRZ within ninety (90)busmess days of the notice being given to it notifies the Company that GRZ considers the Modification to be a Major Change. If the Company accepts that the Modification is a Major Change the provisions of Clause27.4shall apply. (It) If the Company does not agree that the Modification is a Major Change then it myeither refer tothe Sole Expert m accordance with Clause 21 or submit for London-US5795UO7 -60- G2181KKmO arbitration in accordance with Clause 22 the question whether thezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Modification is a Major Change. If the Sole Expert or the arbitral tribunal determines that the Modification is a Major Change then it is deemed that notice has been given pursuant to Clause 27.2(a) as of the date of the Sole Expert's or arbitral tribunal's decision and the provisions of Clause 27.4 apply, unless the Company has implementedor commenced implementation of the Major Change. If such implementation has occurred or cammudthen the Sole Expert or the arbitral tribunal's shall also determine: (i) what action the Company must tie;or (ii) what compensation the Company must pay and to whom such compensation shallbe paid. 27.3 For the purpose of this Clause 27, a proposed Major Change to the Approved Programme of Mining and Metal Treatment Operationsmans: L (a) any Modification by which the Company shall not remain in substantial compliance with the Approved Programme of Mmmg and Metal Treatment Operations; or (It) any proposed material change involving the elimination or material diminution mthe capacity or availability of the Facilities or in the Approved Programme of Mining and Metal Treatment Operations if a consequence of such proposed material change would be to reduce materially or delay materially receipt of GRZ'szyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAtax revenues or royalties derived from the Facilities' operations or in a material respect adversely impact or increase the adverse impact of the Company's mining activities on the environment; or (c) any material change in capital expenditure on itemnot previously included m the Investment Commitment. L 27.4 No Major Change shall tieeffect unless it has been approved or is deemed to have been approved by GRZ and where the Company intends to make a Major Change the following provisions shall apply: (a) within thirty (30) days of GRZ giving notice tothe Company under Clause 27.2(a) the Company shall, by notice to GRZ of the proposed Major Change, give full details includingan economic analysis of the proposed Major Change entitled "Proposed Major Change to the Approved Programme of Mining and Metal Treatment Operations"; (b) if GRZ does not notify the Company that it objects to the Major Change within thirty (30) days of the notice, GRZ shall be deemed to have approved the Major Change; (c) where GRZ requires additional time to evaluate the Major Change, it shall withm the thirty (30) days stipulated in Clause 27.4(b), extend the period by - 61- G2181/00030 an additi~dthirty (30) days and if within that thirty (30) day period GRZ does not notify the Company of any objections it shall be deemed to have approved the Major Change; (d) where GRZ objects to the Major Change and the Company considers the objectionto be unreasonable, the Company myelect to refer the question of the reasonableness of GRZ's objection, at its option, tothe Sole Expert under Clause 21 or the arbitral tribunal under Clause 22. h assessing the reasonableness or otherwise of GRZ's objections the Sole Expert or the arbitral tribunal shall have regard to the impact which withholding approval to the change would have on the economic viability of the project or on other relevant and extraordinary commercial considerations, as well as the impact on GRZ revenues, as described m Clause27.3; and (e) if the Sole Expert or the arbitral tribunal determines that GRZ's objection is unreasonable, GRZ shall be deemed to have approved the Major Change. 27.5 Where GRZ approves or is deemed to have approved a Modification, the Approved Programmeof Mining and Metal Treatment Operations shall be varied or mended to the extent necessaryto reflect tie Modification. 27.6 For the purposes of this Agreement, a reduction m the number of employees of thezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Company notified (where applicable) toGRZ m accordance with Clause 6.8shall not, mand of itself, constitutea Major Change. 2.8. CONSULTATION 2.8.1 (a) The Company shall nominate a representative, of appropriate qualifications and who meets the approval of the Minister. to a committee compmmgof one member from each of the Ministry, the Company and the local government and chairedby a representativeofthe Ministry of Labour, which shall have no powers to bind the Company but shall monitor the implementation of the Training and Human Resources Management Programme. 4 (b) This committee shall operate during the term of this Agreement and the Company shall furnish it with reports every six (6) months outlining the progress of the Training and Human Resources Management Programme, problem encountered, positions filled and the number of Zambian citizens employed. (c) The Company shall only be liable for the costs associated with its representativem respectof the committee formed pursuant toClause B.1.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 28.2 (a) The Company shall nominate a representative, of appropriate qualifications and who meets the approval of the Minister, to a committee, comprising of one member from each of the Ministry, the local government and the Company and chaired by a representativeof the Ministry of Commerce, Trade - 62 - G2181100030 C!% Industry, which shall monitor the supply and procurement of goods and services to the Facilities. (b) The committee shall operate during the term of this Agreement and the Company shall furnish it with reports every six (6) months comprising the following information: (i) a list of successful tenderers which shall include the item supplied, residence of tenderers and the reasons for awarding the tender; andzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA (ii) a list of unsuccessful locally based tenderers which shall include reasons for not awarding the tender. (c) The Company shall only be liable for the costs associated with its representative in respect of the committee formed pursuant to this Clause 28.2. L 29. NOTICES 29.1 (a) Any notice, consent, demand, approval or other communication (a "Notice") required or permitted tobe given shall be mwriting and: (i) in the case of a Notice given by GRZ, such Notice shall be signed on behalf of GRZ by either the Minister or Permanent Secretary to the Ministry as their respective responsibilities require; or (ii) mthe case of a Notice to be givenby the Company, such Notice shall be signed by a director orby the Secretaryof the Company. (b) Each such Notice shall, as elected by thezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAParty giving such notice, be personally delivered or transmitted by telex or facsimile to the other Party as follows: A Notice to GRZ L If by facsimile: If by hand: Permanent Secretary Permanent Secretary Ministry of Mines and Minerals Ministry of Mines and Minerals Development Development +260 1251M/252916 POBox 31969 Haile Selassie Avenue Luaka Zambia ANotice to the Company If by facsimile: If by hand: The Secretary The Secretary Mopani Copper Mines Plc Mopani Copper Mines Plc - 63 - G2181~00030 +2602229177 Insurance House Kitwe Zambia 29.2 Except as otherwise specified herein, all Notices shall be deemed to have been duly given on tieearlier of: (a) tie date of receipt if delivered per~~dly;and (b) tie date of transmission with confirmed answerback if transmitted by facsimile, PROVIDED THAT m the event that a Notice is delivered on a day which is not a Business Day mthe jurisdiction in which it is delivered, the Notice shall be deemed to be delivered on the next following Business Daym that jurisdiction. Either Party mychange its address by Notice to the other Party in accordance with the provisionsof this Clause 29. All Notices and all documents or instruments delivered in connection with this transaction shallbe m the English language. 29.3 Where tie Company is required to submit any plans, proposals or other material forzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA the approval of GRZ, the date of submission shall be deemed to be the date on which GRZreceived the said plans, proposals or other materials. 30. WAJVER 30.1 The failure of any Party to enforce at any time any of the provisions of this Agreement shall m no way be construed to be a waiver of the provision or any part thereof or the right of any Party thereafter to enforce each and everyzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA part of the provision in respect of any subsequent default or breach. 31. sEvEIbuHLm 31.1 The provisions of this Agreement shall be separate and severable each from the other to the extent that if any potion or any one provision or portion is deemed to be d inoperative then the remainder of this Agreement shall remain bmdmg upon and enforceable by the Parties hereto. Nothiig herein shall preclude one Party from requesting tie other Party to renegotiate any provision herein. 32. FURTHERACTS 32.1 The Parties shall execute such documents and do and perform such acts that lie within their power and are necessary to give fulleffect to this Agreement. 33. COUNTEFWARTS 33.1 This Agreement mybe executed m any number of counterparts, each of which whenzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA executed shall be deemed to be an original, and such counterparts shall together constitute one Agreement. -64- G2181AWWO 34. REPRESENTATIONSANDWARRANTIES 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 inducing the other Party to enter into this Agreement, and any representations, inducements or warranties that may have been so given are hereby denied and negated. L L - 65 - G2181/OCKOO IN WITNESS WHEREOF the Parties have caused this Agreement to be executed by their duly authorised representatives on the day and year first before written. SIGNEDforandonbehalfof ~ &,~ GOVERNMJlNTOFTHEREP OFZAMBIA SIGNED for and on behalf of 1 MOPANI COPPER MINESPLC ) d - 66 -zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA G2181/ooo30 SCHEDULE1 APPROVEDPROGRAMMEOFMININGzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAAND METAL TREATMENTOPERATIONS - 67 - G2181/00030 Schedule1 Approved Progmnmeof MinimandMetal Treatment Operations The Company has developed a Business Plan based on its intention to purchase ZCCM’s Nkana Mine, Concentrator and Cobalt Plant as well as the Mufulira Division as going concerns. The plan’s mainfocus revolves around the rehabilitation and improvement of the assets andin so doing ensuring the long term survival and prosperity of both operations. These goals will be supported by a planned programme of capital expenditure as envisaged under the Investment Commitment. A more detailed discussion of the Company’s plans in each area follows. A breakdownof the Investment Commitmentisincludedmthe annexure.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Mufulira U Reserve Development Current reserves down to the1340 level, based on information provided by ZCCM, mountto 28.8ti0tomes grading3.02%copper m-situ. Below this level there is an indicated resourceof around 18miotomes grading3.21% copper in-situ. Several studies on the economic feasibility of exploiting the resource at the 1340 to 1540level have been completed. The Business Plan provides for the completion of a detailed feasibility studyon thisresourcewithinthe first three yearsofoperations. MiningOperations The current business plan envisagesan mcrease more throughput from the current level of 2.lmo tpa to m estimated 2.4mio tpa by 2003. This will be achieved by completing the implementationof the up-&p open stopmg mining method andby investing capitalin the operationasper the Investment Commitment. c The bulk of the spending will initially be applied to rehabilitating the underground mining fleet and other mining equipment and also inincreasing stocks of critical sparesto the levels requiredto sustain the operation.h years two and three capital will be invested in replacing obsolete equipment and m developing the W shaft. This should result in an increase in throughput and a signiiicantreduction in the operating costsof the mine. Provided that the feasibility study results are positive and it makes economic sense to do so, a decision will be taken on the development of the 1340 to 1540 level. Prelmunary estimates of the development capital required are approximately Us$11.5mooverathreeyear period. Concentrator Operations Asis the case withthe Mining Operation the focusof our efforts m the fistyear of operationswillbe toreverse the deteriorationof the asset andbuild upthe necessary sparesand consumablestoimprovethe operation of the concentrator. h yearszyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAtwo andthreethe focuswillshift to mcreasmgitscapacity and improving efficiencies. Smelter Operations Expenditure will be directed during the initial years of the Business Plan on improving the effiaencies of the Operation as well as addressing the major environmental concerns. To this end funds have been allocated for the repair and improvement of the converters, electrostatic precipitators and electric furnace transformers as well as for the repair and, where needed, the replacement of key itemsof equipment. Further reductions m the titoperating costs of the smelter will be achieved by d focussmgefforts on ensuring thatsuffiaentconcentrate feedissecured to enable the smelter to operate at the highest capacity level possible. These concentrates will mainly be secured under toll arrangements with KCM, RAMC and the soon to be reopened Chambishi operations. AcidPlant Following the completion of a feasibility study and depending on whether KCM exercise its option on the Nkana Smelter and Refinery complex, the Company will take a decision on the construction of an acid plant at the Mufulira Smelter. Prehmmaryestimatesset the cost of constructinganacid plant capable of handling the Smelter’s emissions at approximatelyUS60mio. Refinery Operations Oureffortsmthe Refinery willbe foamedon the refurbishment of the tankhouse and the modemsationof the anallary infrastructure. Particular attention will be paidto therectifier transformers and the rehabilitation and conversionof Tankhouse d 2toperiodic current reversal. The Company intends to refurbish Tankhouse4 and the Stripper section four years after the completion date. These projects will, however, onlybeundertakenshouldit make economic sense to do so. The cost of these projects have been estimated at aroundUS14.6do. Engineeringpther The Jhgineering Departmentsuppliesa fullrange of servicesto the Division. After completion the Company will review its needs and rationalise the Engineering Department m hewith its needs. Excess capacity will be leased off to private enterprises and where practical to retrenched employees. As m other areas the Engineering Department is critically short of spares and consumables.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAOur initial efforts willbe focussed on addressingthisneed. Sigrufxant amountsof money have been provided for the funding of the various service departments as well asthe social assets that will be purchased as part of the Operation. A further provision has been made to fulfill the Company's obligations under tie proposed retrenchment plan which is to implemented as part of the rationalisation of the Operation. ProductionTargets The Business Plan targets production levels of 2.4 mio tomes of ore and 56,000 tomesof copper metalper mumby 2003. L Reserve Development Current in-situ reserves are shown asbeing 78 mio tomes at a grade of 2.26% Cu. The Company will continue with an ore reserve delineation programme mainly comprising undergrounddrilling.One of the mainpurposesof thisprogrammewill be to firm up estimates regarding the Synclonorium resource. The cost of this drillingprogrammewillformpartof the Investment Commitment. The Company willalso undertake studiesinto the feasibility of exploiting various surface oxide resourcesand m oxide dump. This will have both positive economic and environmental consequences. MiningOperations Mining Operationswill continueto focus on the Mindola, Mmdola North, Central and South Ore Bodies. Durmg the fist two years the bulk of the funds made available will be spent m rehabilitating the underground equipment and infrastructure as well in mcreasmg spares to a level that is sufficient to sustm b operationsattheplannedlevels. Current mining methods will be reviewed mdue coursewith a view to improving effiaenaesand reducing dilution. Expatiatepersonnelwillbe introducedmcertain key positions.Their mainpurposeswillbe to trmthe local workforce and to ensure that international best practiceisfollowedmconducting the operation Following the successful completion of the drilling programme and a positive feasibility study the board will evaluate the economc viability of developing the Synclinorium Ore Body. Should tie decision be taken to proceed with the developmentof this area a furtherinvestment of approximatelyUS240mio willbe required. Pending the outcome of furthertechnical studiesit is foreseen that there could be a need for the construction of cooling facilities for the Mmdola Shaft. Should this prove necessary the capital requirements have been estimated at around US27.6 ti0. Concentrator Operations The initial focusin this areawould be to reverse the deteriorationof the asset and to increase the levels of spares and consurnables to levels that will support the production plan. Notwithstanding the fact that current recoveries are satisfactory, the planned increase in throughput will necessitate the investment of capital to ensure that the plant operates atasatisfactory level in future. Should the decision be taken to develop the Synclonorium Ore Body the ament milling capaaty would prove insufficient. A capital investment of approximately US$10 mio would berequiredto expand capacity to a level sufficient to cope with the expanded throughput.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA CobaltPlantOperations The focus of the Investment Commitmentmthe CobaltPlant during thethreeyears following completionwillbe aimed at improving recoveries and reducing operating costs. This willinclude the completion of the Zn SX programme, the refurbishment and improvement of the filtering system, the process conversion from Limeto Soda Ashandthe improvementof offgas collection. The Cobalt Plant’s production is currently constrained by the roaster capaaty. Following the completion of a successful feasibility study and the positive outcome of meconomic evaluation the Company will mvest approximatelyUS$X8mio in increasing thecapaatyof the plantto 3,500 tpa ofcobalt. Enpeeringpther Due to the split of the Nkana operation between the Company and ZCCM the current Engineering Facilities will be m excess of our needs. Weare planning to condidatethe key functionstoprovide the Minewiththe necessary services. Excess capacity will be leased off to private enterprises and where practical to retrenched employees. Asafurthermeasure tooptimisecosteffiaenaestiemanagementof theenpeemg servicesthat affect key operational areas willbe decentralised. For shared semcesa centralised approachisstill envisaged. ProductionTargets The Business Plan targets production levels of 4.25 motomesof ore, 72,000 tomes of copper metal and2,200tomesof Cobalt metal perzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAannum by 2003. Annexure: CommittedCauitdExuendihueforthe=M- andMufuliraOperations JhringtheFirstthreeYearsof Omrations NkanrOperation: MiniqzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA YearOne Year Two YearThreezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBATogl Underground Equipment 4,000,000 27~mJ 22~poo 8,900,~ Storesbuildup 2500,000 23m000 ~800~6,600,000 l+nw% 0 U7f" 3@9m 4,679,000 Geological 20,oco 10,000 10,000 40,000 WCPE 5,650,000 3,750,000 3,700,000 13,100,000 FeasibilityStudies 0 Z~r0al 0 0000,000 Concenhtox CrushingandMilling 4mJ@J 335m 50m 8o5poo concenming 1J50,000 430,000 WWJ0 3,510,000 SparesandReagents Buildup 3337m L6%W LO'%@J(J 6,051,000 WCPE L m77 77,218 6437 233,532 cobaltPlank F%mtRefurbidlment WCPE otha: StoresRepknkhment 5D0m 0 0 5,000iNO etc RekedumntzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 6,656OOO 0 0 6.656iNO Engineering Lao0,OOO L0"0 1,000,000 3mom Overheads z3mm L=5000 410,000 42mm WCPE 1JM3300 1,020,000 m2m0 292,000 subtotal Mdidh Omrrtiox hfhlillK Underground F.quipment L 130,000 1,020,000 41~NJO wing 700,COO 0 WW000 SVShaft 0 5m4000 5mm0 SP== 500,000 5cQ000 3,950,000 WCPE 1zwm 1,036,000 3,492,000 FeasibilityStudies 1.0cQ000 ~#~#OOO um000 concenhatoc CrushmgandIWmg W000 1248,000 lW,O00 concentrating 563,000 172,000 665,000 Sparesand Reagents Buildup zsnm 0 0 WCPE 319,500 330,150 m340 Smelter Preciptator Rehabilitation U%~O 0 3,140,000 6373,000 Equipment Replacement 3,510,000 2198,000 45om 6,158,000 Workshop Equipment 0 0 118,000 118,000 WCPE 3wm 0 330,000 660,000 R&- TankhouseRefurbishment L35VOO 1,215,000 UWW 4,698,000 OverheadCranes 0 0 200Po0 200,000 WCFJE 200,000 200,000 mwm QJom other: !kmsReplenishment 0 0 5mwm 5m,000 Retrendunentetc 4mr.ooo 3mpoo 3#000,000 10,000,000 2,4405,000 z3vm Gm0 5237,000 Overheads 7.483233 4mJ5o 4,165,000 15,727,OCKl WCFJEzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA LXUQO 1200m 3xt000 d 3,0!%,000 SUbtdd TotalclpitdExpendihue 74,587,627 45,996Jl8 3WlW77 =92W8= SCHEDULE2 LaxBusm~ssDEVELOPMENTPROGRAMME L 'L - 68 - G2181/CMO30 Schedule2 Local Business Development Programme 1. INTRODUCTION The Companyis very conscious of the need for the establishment of long term, viable and sustainable local businesses. Over and above the economic requirement for this,there is the need to reduce thecommunity dependency on the miningoperations. The mm thrust of the Company's involvement mlocal business developmeqtW11 be m assisting retrenched employees to have meaningfid employment after leaving the mines. Sufficient financial resources have been provided, withinthe retrenchment provision, to establish this local Business Development Programme. 2. BASISOFTHE LOCAL BUSINESS DEVELOPMENT PROGRAMME The basis of the Programmewillbe toprovide advice and assistance to retrenched employees. This advice willfocus on the following fimdamental businessissues- --.../, the husbanding of retrenchment packages mestablish thebasisof required capital the identification of suitable entrepreneurial opportunities preparation ofabusiness plan the establishment ofacompanyhsmessvehicle training m busmess techniques including marketing, bookkeeping, hiring, taxation, cash management, etc. ongoing assistancemthe adrunningof the busmess. This advice till be offered through the Administration Department. These people will be tramed by suitable qualified professionals,who will also be calleduponto interactdirectlytiththeretmchees. 3. ENCOURAGEMENTTOOTHEREMPLOYEES The company iskeenly aware of the fact that noteveryretrenched miner tillbe self-employed, or indeed anemployer. To thisend, the Companywillencourageothaemployeestoestablish theiropxationsatthe Mine sites so as to create employment opportunities. hzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAturn, the Company will provide suitable inducements for other companies to establish operations at our mine sitesasopposed to any other. 4. POTENTIAL BUSINESS OPPORTUTVITIES The Company does not wish to prescrii areas of business opportunities thatzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAex-employees may be L mterested in as these are of a limited scope. However, there are a number of areas in which the Company mybeable to actively create opportunities, these include: c) Light vehicle maintenance. The maintenance of Company vehicles is an area which would easily besub-contmcted, provided quality and cost objectives are met. It is also an areawhere there is a large client base outside the Company. If the Company was satisfied that these services could satisfactorilybe sub-contracted, then it would consider leasing out its existing premises to ex- employees d)zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA F%perty Maintenance. There are many areas relating to property maintenance that lend themselvesto subcontract by suitably qualified ex-employees. These include: pamting (internal, external and roofs), plastering and bricklaying, plumbing, electrical work, garden services, etc. Potential customers for these services include: the mine, houseowners, absentee landlords, busmesses and municipalities, as well as social and sporting clubs. c) Funeral Services. The services that may be offeredm this regard include provision of cofiimand firewood, supplyadorpitching of tents, transportation ofzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAmoumm. Again this may be an area where certain of the caqxntry shop are sub-contracted to carpentry rentiechees. These services could be offered to the public at large. d) Taxi Services. The Company could assist retrenched drivers in purchasing, running and maintaining small Combi buses. These small vehicles are possiblym range of certain retrenchees’ severance packages. This service has a relativelylow entry threshold, but critically requires astute operatingand maintenance. e) Forestryand Fanning. Within the mine licence area, there are tracts of land that are suitable for agriculture. Every effort will be made to discourage ad-hoc subsistence type of firming, while encouraging the subdivision of adequately sized plots to allow good fbmingpractice, such as rotation, to provide economic returns. Plantations of certain exotic treeswillbe advocatedmareas wluch W11 not encroach on an existing indigenous forests. Although forest plantations have a long return period, the steady planting of treesin early years could lead to substantial and steady returns lateron 4 Fish Fanning. The Company’s properties are blessed with wondafbl water resources. These d resources are already endangered Wth poor fishing practices. The initiation of proper fish breedingprograms, with controlled destodcing methods could lead to the steady croppmg of an eminently saleable product. Individual retrenchees or their companies involved in such an undertakmg would needto give adequateattentionto security. 0 Workshop Smces. The Company is keen to downsize its workshops to provide only unique serviceswhich are not readily available outside, This policy would lead to the abandonment of large parts of the existing workshops. The Company would like to sublet sections of these workshops as mini-units to a varietyof skilled ex-employees. These units could then offer their services not only to the mine but to other businessesm the cities. 5.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAFURTHER ASSISTANCE TO ENTRJ3PRENEURS. There are a number of external factors that impact negatively on the successful implementation of our LocalBusincss Development Program,these include: a) Lack of access to Capital. There is a very militant banking system mZambia. This through its extotionate lending rates prevent locals ftom borrowingfunds. Borrowingis the secret to the industrial nations rapid growth. Unfortunately high interest rates are a product of high inflation rates. TheCompanywilloffer whenever possible to improve mdividuals’ access to capital. d b) Lack of working capital. WherezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAcertain ex-employees sublease company premises from which to provide services, there may still be diflicultiesmpurchasing working capital. h cases where it is deemed prudent, the Companywillassist in the supply of work-m-progress stocks. c) Lack of Recognition. Wherever an ex-employeeortheir company isable to prowdeacompetitive service (m texms of price, quality and smce)then the Company willhave a fixed policy to support suchan enterprise. 6. The Company has designated Mr Brim Robinson of First Quantum Minerals to be the responsible person to facilitate the successofthe Local Busmess Development Plan. SCHEDULE3 CONTRACTzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAAREAS, LARGESCALEl”NG LICENCEANDzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAMINING AREAS PARTI CONTRACTAREAS Schedule2of the SaleandPurchaseAgreement shallbeincorporated here by reference - 69 - G2181/OMl30 PARTIIzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA LARGE SCALE MININGLICENCE HiFmn10396 SmckedbyHiDc4qmauDcplnma ImB14399~96 ItBXSTRATIONNo.LML.................................. REPUBLICOFZAMBIA LARGESCALE MINING LICENCE (Section25 of the Mines and MineralsAct, 1995, No. 31 of 1995) Applicant's name ................................................ Address...................................................... Prospecting Licence No. ........................................... The miniugarea shall be the area described m the Schedule and annexed hereto and bordered ........................ onthePlan. The Licence is granted for a period of twenty five (25) years commencing on the ... day of. ...................... The programme of mining and development operations shall be as shown m the Appendix hereto. Thefollowing conditions includedmProspecting Licence No. PL ......... shall continue to apply: N/A Issued at. ........... this ..............dayof..... ................... Director ENDOR!3EMENTOFREGISTRATION This large-scale mining licencehas this. ........... day of. ................. been registered m the Register of Mining Rights. ................... Director - 70 - G2181/QOO30 RENEWALSmAlmNDiwnws Date ofzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Details of Renewal or Date of Registration and Signature of Director Amendment Amendment RegistrationNo. - 71- G2181/00030 PARTIII MININGAREAS Schedule2of tieSale and Purchase Agreement shall beincorporated hembyreferencezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA - 72- G2181lOOO30 SCHEDULE4 SOCIALzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAsERvKJLs PART1 EDUCATIONAL SERVICES L L - 73- G2181KlOO3O SCHEDULE4zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA PART 11 MEDICAL SERVICES d - 74 - G2181lODO30 WAGER - H/R @002 18/02 '00 10:25zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAPAX 2802447004 .._ - - -___ c39 - .- TABLEl-HOSPITALBEDCAPACrrY PAGE l NOTE: TheZOOOi2(lOl bed capdbisforbathhighcostandlowcostwingsathWoolmWatsonHospital 18/02 '00 10:25 TX/RX NO.7028 P.002 BOOS 18/02 '00 10:25 FAX 2602447004 MhNAa-zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAWR TABLE2-CLINICBEDCAPACiW PAOE2 18/02 '00 10:25 TXjRX NO.7028 P.003 UNA= -zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAWR 18/02 ‘00 10:25zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAFM 2602447004 TABLE3-HOSPITALOCCUPANCYRATE PAGE 3 c * This isas a resultof allemployeesattending onehospital I-- P-I-1 L 18/02 ’00 10:25 TX/RX NO.7028 P.004 d 18/02 '00 10:25 TX/RX NO.7028 P.005 WAW.- @oos 18/02 '00 10:25 FM2802447004zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA TABLEzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA7 - PLANNEDLABOURDISIRIMJTIONBY . FUNCTIONFOR F.Y. 2000/2001 PAGE 5 -p- --- 3 CONSULTANTS --- ConsultantAnaesthetist l -----p -- 1 ConsultmtSurgeon l L SUBTOTAL 5 MEDICALDOCTORS -.-p 4 Substantive . - l!s= ---.--- 1 79 -- 5 5 3 - 2 --p- 3 _cc-- --- 2 --- 20 7 L --p. p- 25 -- 18/02 '00 10:25 TX/EU NO.7028 P.006 UNAGER - a007 18/02 '00 m:25 FM2602447004zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA TABLE8-HOSF4TALUTIIJSAllONBYELJGl8LEUSERS PAGE 6 -v--- NOTE 7hpra/ecied#gumbr2ocxMOOf aboveisfirbothHighandLowCostV#gs at"WpostzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA4 ptiiisettion~ 18/02 '00 10:25 TX/RX NO.7028 P.007 18/02 '00 M:25 FM2602447004 TABLE9-CURRENTHOSPITALBUILDINGSANDzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAFAClUTES(MW-H) PAGEzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA7 L .- PharmacyBulkStore p-- .- Incmemtor .- MaintenanceWorkshop P. l 1 L 18/02 '00 10:25 TX/RX NO.7028 P.008 MANAGER - WR la000 18/02 '00 10:25zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAFAX 2602447004 PAGE 8 18/02 '00 10:25 TX/RX NO.7028 P.009 l- c8 \ 0 h) 0 TABU10 0 PAN8 l- 1- 0 MEDICALCOSTSzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBABY ELEMENT N CA A) MALCOLMWATSONHOSPITAL E 97198 98/99 N 99100 WO1 a e h) b US'000 ACTUAL US'000 ACTUAL VS'000 & -l 0 (Projection) (BuWETa* 1 0 10 Locdlabour -. 408 448 496 726 557 1114 W ExpaMeLabour 112 163 118 67 36 66 CO 100 \ 0 Mawls 380 539 281 313 ru m41zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA-1- 103 0 W 74 0 10 26 18 la m E c.r 0 .Eh9C#Wy .. 20 25 28 36 65 f 52 66 t ru cl7 Surtdryexpmses 13 If6 19 16 11 7 28 22 Sundryrevenw 409 -129 -146 -157 -78 -99 -19 40 0 wortifl{ costfvojJct 9 3 0 *O 42 0 0 0 an * I 3 K401 1M61 10881 9381 741 1191 1132 U Nob: 0 NI "'The 230012001 projecklbudgetIs forboth~I@Icostend kwmhhp bawdat MalcomWakmHospkal wllhagrandtotdof 110bedsasopposed(0tie WzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA current63. 0 e H-izyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA B) CLINKS PzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA CO \ 0 W 0 0 W 0 .. N ul 1-3 X \ E * Note: z *' 'ONLY FOURCLlNlCSANDPLANTSIECLINK WILLBEMAINTAINEOWITHATOTALLABOURFORCEOF25, 0 -4 0 ru m 'd 0 W c-l a 0 F P PUPILzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAENROLMENT AT ZCCM MTJFULIRA PRIMARY SCHOOL CHILDREN OF MINES/NOB-XtNERS- PUPIL ENRtXLMENT 1999 PUPIL ZNROlXY33SIT 2000 ChildrenzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAof Miners 400 412 Children of Ncm-Miners 45 31 TOTAL 445 443 NUMBER OF TEACHERS AND SUPPORT STAFF BY PAY GISDE PAY GRADE_zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA-NUMBER OF' TE2ACBER.S NUMBER OF SUPPORT STAFF G12 2 G1 G2 - G3 2 G4 1 G5 2 G7 5 TOTAL 19 10 VACAHCIES PAY GRADE NUMBER U? TEACHJ3RS NUMBER OF SUPPORT STAFF G2 2 G7 -3 MAIN FACILITIES AT ZCCM MUFULIRA PRIMARY SCHOOL BUILDINGS AND GROUNDS NUMBER Classrooms 16 Music Room 1 Library 1 Eomecraft I Print/Ccmputer Library 1 Costume Room Store Room Administration Hall Playing Fields Car Parks 18/02 '00 10:25 TX/RX NO.7028 P.012 18/02 '00 09:34 FAX 260 2 228917 NKA!!A HOSPITAL @loo1 zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA-I- TABLE1-HOSPITALBEDCAPAClTY WUSAKlLE BEDS COTS CRIBS lNXJBATORS HRS HOSPITAL OPEN/TOTAL DAY WARD MaleMedical 30 0 0 0 30 PostNatalandNursery 17 0 16 5. 24 1 38 Isolation 22 1 1 0 24 1 24 FcmdeOPD 2 0 0 0 24 1 2 TOTAL, 247 34 26 8 1 315* Note: * Beftm 1998,zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAthe total mnnber of beds at Wusakile Hospital was 330. From 1999zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA todate~mlmherhasreducedto3159sarefllhofdoing~ywith15hotboxes. 4 18/02 '00 09:35 TX/RX NO.7022 P.001 ~ 18/02 '00 OQ:S4 FM260 2 248917 NKAIU HOSPITAL @oon Tm2-CLINICBEDzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBACAPACITY CLINIC TOWBEWIPzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA NO FARMI BEDS COTS CRIBS HRS TOTAL LOT OPEN/ NO DAY J SubC1,Farm chamboii chambdi 842 4 3 7 24 P Chaznbfi Sub Cl,Farm h!hmni* 842 3 2 24 I MindoloU Mindolo SubG21,zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAFarm 840 6 3 9 24 Mi!&li SubE68.Fam Atfhd~doMiscshi 84.0 3 2 24 5 Materniity . SubzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBATT3, Faun Natwange Natwange 842 4 2 24 6 L Phtsite SOB, Fam971 Farm 839zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA cIinics central 5 MindoloMah Farm840 wuches MindoloNorth Farm840 eadl 24 20 L 18/02 '00 09:35 TX/RX NO.7022 P.002 U(02 '00 09:QS FAX 460 2 228917zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA NKANA HOSPITAL @oom TABLE3-HOSPITALOCCUPANCYRATE 1 wusAKrLE HtmmlxL 1 1997 I 1998 I 1999 I BcdCapkity 330 330 315 stay m hospital 5&w Sdays 5wQ 48% I 50% 50% TABIX4-ROSPJTALOUT-PATIENTATTENDANCZ 1 WUSAKILE HOSPITAL 1 P397 I 1998 I 1999 I NO.OF NO.OF PATKEIWS PATIENTS NkanaDivisiencmphyccs 13844 12656 18790 NkanaDivisiondependants 36371 26439 37170 dzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 6045 Non-NkanaDiWti~usa~zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA17403 14832 TOTAL 65047 45140 73363 TABLE5-HOSPITALADkUSSIONS WUSAKILE HOSPITAL 1997 199s 1999 NO. OF NO.OF NO.OF PATtEN"S PATIENTS PMXENTS hanaDivisionemployees 2112 1574 2012 1 8559 m . 9903 NkanaDivision dewadants 1 I 2320 2872zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA hm-NkanaDivisionusers 1301 TOTAL 11972 11620 14787 4 18/02 '00 09:48 TX/RX NO.7023 P.002 la001 NKANA HOSPITALzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 18/02 '00 1O:Ol PAX 280 4 228917zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA -4 TABLJC 6-LABOURDISTMWTIONByFUNCTION CATEGORY LABOUR .AD-m0oN 28 ICONSULTANTS 1 I 1 consukantPadlologist 1 ConsultantGpaecdogisr 0 ConsultantSurgpzon 0 ConsultantPaediatrician 0 SpecialistGynaecologist 0 hfEIXCALOFETCERWDOCTORS I I Substantive 23 oveA?xashahine 0 L hltems 2 SUBTOTAL 25 NURSES 298 rPARAMEDICAL I ~~ I Phamacist&chnologist 4 Labomoly 11 Mitxoscctpist 0 Physiothempist 2 Radiomwhcr 3 Dentalsurgery -~~~ ~~~~ 1 SUBTOTAL 319 PUBLECJXEUTE 15 AlwmJARYsERvIcEs caterins 11 FirstAid 4 ~ ~~~ L Hipitic~e-aning 24 Hospital laundry 9 MedicalStm keeping IzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Ckricd 15 Morhrary - 3 Ambu' ~ ~~ l5 SUBTOTAL 82 18/02 '00 1O:Ol TX/RX NO.7025 P.001 NKANA HOSPITAL @l002 18/02 '00 1O:Ol FM260 2 228917zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA - 2 - CATEZORY I LABOUR 1 I h-uRsEsmsERMcE I 1 TOWNSEIPLP~CLINICS 37 GRANDTOTAL 492 18/02 '00 1O:Ol TX/RX NO.7025 P.002 18/02 '00 09:M FM260 2 228917 NKANA BOSPITAL c Lnw4d3L - 2 -zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA t BUKLDINGSANDFACIIJTIES wum SPECIALLSTSERVICES IntedMedicine Obstetrkd~logy Amcstbesidh~vecare PainClinidAcup~ MatcrndChildHealthCare - TraineeHostels:Old New cottages ~~~ MedicalLibrary surgical stoxe I I hcmcrator Mainte~zmceWorkshop ,AdministrafionBlock ~tSTeaRoom - L PAmiMEDIcALSERVICES Laboratory Bidl~ 1 I h4icrobiologym2tiology 1 HaematologyandBloodTransfbsion 1 1 Histology 18/02 '00 09:35 TX/RX NO.7022 P.005 NKANA EOSPITAL 18/02 '00 OS:34 FAX 260 2 228917zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA - 3 - BUILDINGSzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAAND FACILITIES WUSAKUZzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA r l I 1 i d 18/02 '00 09:35 TX/RX NO.7022 P.006 TABLE8-HOSPITALBUILDlNCSzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAAND E'Ac13LX~S BUILDINGSANDzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAFAClLlTfES wusm WARDS: Labour 1 Matemiw 1 Children'szyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA l 3 c3lsnad EkCSUtiVC AIltE2-Natd 1 Isolation 1 MaltMedicai/s~cal 1 Gynaecology/SurgidGwmd 2 OPDWrag 1 L- lpOStNatal 2 Nu==7 1 FdeMedical 1 1 Labaratmy corwhinRzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBARoonls 6 HospitalKitchen 1 1 Laundry 1 zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA-tal SWPY N~xsesHostels~dFLats L S-msound ! 'IlUNSPORT Amb& *4 OtherMotorvehicles 7 Note: *3 ofthe4ambulancesarcnon-runners 18/02 '00 09:35 TX/RX NO.7022 P.004 18/02 '00 09:48 FM 480 2 228917 NlWUHOSPITALzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Boo1 R TABLE9-LABOURDWIX.TBUTIONBYGRADE-WUSAKILXHOSPITAL (&u?nLsRY2ooo) CATEGORY WCAJA 1 EXPATRIATE TOTAL CS.14 1 1 013 2 0 2 G12 12 1 13 G11 8 . 0 8 G1 27 27 G2 94 94 G3 123 123 04 6 6 05 10 c36 10zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 29 29 G7 28 28 d TOTAL 339 2 341 18/02 '00 09:48 TX/RX NO. 7023 P.001 - Sundryexpenses Sundryrevenue IExRatesl US$= K 1257.5 12W.5 l 375 1387 1750 1946.22 18/02 '00 09:35 TX/RX NO.7022 P.007 NlL4NA HOSPITAL UUU3 18/02 '00 09:34zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAFM 280zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA2 228917zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA tJm-uA i\ TABU4-IPITPD,FXKO- ATZCCMNKANAPRtMARYSCHOOL mREN OFMTNERSNON- PUPlL PUPIL4 PUPIL Mrlwnts ENROLMENT 1997 ENROLMENT ENROLMENT 1998 1999 Childrem ofMmm 765 797 690 TABLE5-NuMaEROF"FA- ANDSIPPORTSTAFFBYPAYGBADE I PAYGRADE NUMBJSROFTEACRERS IWBEBEROFSUPPORT srm G12 3 G1 16 G2 26 G3 W 09 d 1 G5 03 G7 D1 G8 07 TOTAL 45 20 TAIBILE 6-MAINFA- AT!ZCmNXANAPRIMARY SCHOOL I BUILDINGSANDGROUNDS I PxmmER I Classrooms 36 Musicroom 01 pm 01 Ho~nocdkroom 02 Printandcostumeroom 01 Playingfields M d C=& 02 costumemom 04 computixmom 01 store rooms I1 Ablutionblocks I7 POOb Q2 Changcrooms m Netballcourts 02 18/02 '00 09:35 TX/RX NO.7022 P.003 SCHEDULE5 PARTI ENVIRONMENTAL PLAN This document is the framework Environmental Plan referred to in Clause 12.l(b)(ii) of the Agreement and sets out the Company’s environmental policies and broad outline plans. The Company shall conduct environmental studies at its Mufulira and Nkana Operations and prepare its own environmental impact statement, which shall comprise a detailed Environmental Plan which shall be submitted to GRZ within 15 months of Completion. GRZ shall, within three (3) months of its receipt thereof, approve the Environmental Plan provided that such Environmental Plan is in accordance with and meets Good Mining Practices as defined in the Agreement. In the event there is a dispute as to whether the L Environmental Plan meets Good Mining Practices the matter shall be referred for determination bya Sole Expert in accordance with Clause 21 of the Development Agreement. If the Sole Expxt determines tit(a) the Environmental Plan is m accordance with Good Mining Practices, GFU shall be deemed to have approved the Environmental Plan and GRZ shall notify the Company accordingly; or (b) the Environmental Plan does not meet Good Mining Practices, the Company shall make such amendmentsas directed by the Sole Expert m orderthat the Environmental Plan shall conform to Good Mining Practice. If eitherparty fails to abide by the Sole Expert’s determination this will constitute a “material default” for the purposes of Clause 19of the Agreement .The Environmental Plan shall bring the Operations (with the exception of Mufulira Smelter) into compliance with existing Environmental Laws within a period of three (3) years from Completion. In tie interim, the Company shall adopt ZCCM’s current environmental impact statement for the Mufulira Division,and that for the Nkana Division m so far as it refers to the Company’s Operations at that location, subject in both cases to any subsequent approved amendments or U updates which are to be approved by GRZ (acting reasonably). The two environmental impact statements were originally prepared by the consultants Steffen, Robertson and Kirsten on behalf of ZCCM in September 1996 and March 1997, and shall be deemed to be incorporated into the Environmental Plan. They have been approved by the Minister under the Act for the purpose of renewal of the Large Scale Mining Licences for the Mufulira and Nkanamining licence areas. The detailed Environmental Plan will include proposals to bring the Mufulira Smelter into compliance with Environmental Laws within a period of five (5) years of Completion in accordance with and subject to the Contingent Commitment provisions of the Development Agreement. The Company shall assume any obligations for environmental clean-up, which result from its own operations after Completion, following closure of the mine until such time as a closure certificateis granted. Londonasn6#m~ ...l... The Company undertakes to comply with its obligations regarding making payments to the Environmental Protection Fundasprovided for under applicable laws m Zambia. This framework Environmental Plan has identified the following issues: (a) The Mufblira smelter has no sulphur dioxide abatement facility and consequently about 98%of the total sulphur m feed to the smelter is emitted as sulphur dioxide gas at a rate of about 5,000 tonnes per month; @) At times there are emissions of sulphur dioxide from the Nkana Cobalt Plant roaster duetothe inability of tieNkana acidplantsto accepttiegas; (c) Effluents discharged into streams in or around both plant areas are generally compliantzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA with S.I. No. 72 of 1993, but occasional 'upsets" m the processing operations may cause elevated concentrations of suspended solids, copper and sulphatezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA (and cobalt, at Nkana) to enter the effluent drains. As part of the ongoing activities of the environmental management programme, the Company d shall: (a) Examine ways to improve water management and mineral processing procedures to reduce contaminant levels mtieeffluent discharges; @) Quantify the levels of air emissions from processing and smelting activities and propose measures to reduce sulphurdioxideemissions; (c) Implement measures to reduce sediment release and wind erosion from tie tailings dumps; (d) Assess aquatic resources dumgperiods of high flow; (e) Assess the effects of air emissions on health, vegetation and soils, particularly m the most affected townships; (f) Assess the socio-economic impact of mmmg activities and the consequencesof mine d closurem the local and regional environs. EnvironmentalPoliciesand Objectives 1. PollutionPrevention Priority will be given to technological modemsation and improved process maintenance, monitoring and control to complement conventional pollution control systemfor atmospheric emissions and effluent discharges. This approachwill, inter alia: (i) reduce the volume of watex requiring treatment by increasing recycling of process water and minimise the use of fresh water. This will improve the efficiencyof rmtals and solids removal in effluent treatmentsystem; and LOlldOD-2/572646/01 -2- ... i... (ii) minimise process upset conditions and spills to the environment. 2. Reduction of Risks Incidences of inadvertent releases will be minimised by an improved capacity for the containment of untreated water and reduced external storage of sludges and residues. The implementation of spill prevention plans will further reduce risks. 3. ReductionofEnvironmentalImpacts Treated water discharges into the environment will be consolidated into one stream as far as possible. This will result in improved treatment efficiency and will reduce stress on the number of streams currently receiving untreated or partially treated water. 4. Conducting Progressive Rehabilitation Where appropriate, progressive rehabilitation will be exercised over the operating life of facilities when areas become inactive and plant titsredundant. General housekeeping improvements within the plant site are a part of the investment programme. This includes appropriate storage for concentrates, residues, full and empty containersfor chemicals, sludgesand so forth. 5. Achieving Production Efficiency A fundamental objective of the Company will be to achieve a high level of production and process solutions efficiency. Losses of metals through discharges of concentrateszyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA represent unacceptable economic costs and environmental effects. Optimising process and production efficiency will have a favourable environmental benefit. 6. Protectionof HumanHealth The Company commits to a modernisation programme at Mufulira and Nka~that will reduce emissions, discharges and releases into the environment and address, mter alia, the issue of W the protection of human health. Major environmentalcapital expendituresas contemplated m the Agreement will be required to bring these operations to an acceptable standard. 7. FhalEnvironmental Plan The final Environmental Plan will describe the Company’s commitment (subject to the provisions of the Agreement) to bmg the environmental performance of its Assets into compliance, over a period of time, with the Environmental Laws. The technological modemisation programme is expected to be completed within thirty six (36) months of Completion, with the exception of the Mufulira Smelter which shall be addressedasa separate issue depending upon the Company’s future operating plans. Areas of noncompliancewill be discussed and agreed to with GRZ. The time required to bmgeach process into compliance which will not exceed 5years, will be detailed m the final Environmental Plan. -3- ...l... Timetable a. In accordance with clause 12.1 of the Agreement and the second paragraph of Pm1 of this Schedule5 . -4- ...1... SCHEDULE5 PARTI1 ENVIRONMENTAL CLEAN-UPOBLIGATIONS Programmes of progressive rehabilitation will be undertaken over the remaining life of Mufulira and Nkana Mines in preparation for their eventual closure. The costs of these programmes for the areas which W11 fall under the control of the Company are estimated to be W.0 million at Mufulira and $5.3 million at Nkana. The Company undertakes that after Operations come to an end, it will clean up tie mesite and plant areaswith the objectives of: (a) Protecting public health and safety; (b) Minimisingoreliminating environmental degradation; LzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA (c) Allowingaproductiveuse of the land. The global costs of such rehabilitation are estimated at $11 million at Mufulira and $19 million at Nkana, of which in each case approximately 90% is required for demolition of buildings and clearance and resurfacing of the plant areas. At Nkana, a large proportion of this cost will be tie responsibility of the operators of the smelter, refinery and acid plants. Studies will be undertaken m the context of the Environmental Plan to define more accurately the costs ascribable to theCompany in each case. Mineclosure Mine closure will follow exhaustion of ore reserves at the Company’s Operations. The followingactivities are expected tobe required: The Company will undertake to decommission all shafts by sealing all openings to surface after salvage of underground equipment, dismantle and remove all surface structures for which there is no further use, and contour and re-vegetate disturbed surfaces. Open pits and caving areas will be protected from inadvertent access by suitable bamers or warning signs. Water levels and qualities will be monitored until results indicate that conditions have stabilised. Overburden and waste rock dumps will be re-profded by appropriate methods in cases where there is a possibility of instability, and re-vegetation will be encouraged if the dumps have no further resource potential. Tailings dams will be stabilised by vegetation of surfaces and by constructionof toe bunds, surface evaporation paddocks or engineered discharge structuresas appropriate. Plant facilities and unwanted buildings will be removed. Structures will be disassembled and all scrap steel and other waste mtemls removed. Slabs and foundations will be broken up, contaminated soils removed or treated, and contaminated areas covered with a layer of waste rock or soil. The site will be -5- ...l... contoured, natural drainage system will be reestablished, and the area will be re- vegetatedasappropriate. (d) Monitoring of pollution control measures and water flows and quality will be conducted regularly after the cessation of operations until the fmal closure certificate is granted. EnvironmentalSafeguards-Key Aspects The principal componentsof the Mining Area requiring rehabilitation, decornmissioning and closure activities have been identified in the environmental impact statements. Progressive rehabilitation of disused workings and affected areas will be undertaken prior to mine closure. Specific measures that will be taken to safeguard the environment dumg the rehabilitation stage will include: Undertaking an environmental monitoring programme to monitor the impact of operations and to characterise the mine site and receiving environment. The programme will cover air quality, surface and ground water quality and meteorology; Minimising discharge of liquid effluents to surface waters; Preparation of an erosionand sediment controlplan; Development of management plans for handling, storage and disposal of chemicals, reagents, fuels, oils, and other hazardous (reactive, inflammable, radioactive, corrosive or toxic) materials and wastes; Preparation and implementation of a reclamation plan with the objective of progressively returning the land to conditions capable of supporting productive uses. To the extent possible, reclamation activities will be mmrrent with ongoing production activities. d -6- ...l... SCHEDULE 6 TRAINING &HUMANRESOURCES MANAGEMENT PROGRAMME 1. HumanResourcesPolicy The Company believes that the success of Operations depends on the retention of a well- integrated and trained labour force. The Company will invest in the training and developing of its employees with a view to ensuring tie availability of all necessary skills for tie successful development of its business in a changing business and technological environment. 2. FormalAgreements The Company undertakes to recognise for purposes of collective bargaining and negotiation the trade union that currently represents the Transferring Employees, at present being tie Mineworkers Union of Zambia, provided that Transferring Employeesshall be free to form or belong to any other trade union of their choice. --.--, The Company will abide by the conditions of the collective agreement and redundancy agreement currently m force, as agreed with tie Mineworkers Union of Zambia. It will continueto apply the terms and conditions of employment as specified in the StandardCode Book 1996 until such time as any revised terms are agreed with the employees and their trade union. 3. ManpowerPlans The Company will continually review the size and composition of its labour force to ensure that it remains consistent with projected production levels and methods. The management team will have a primary responsibility for assessing the future manpower needs of the business and detimg organisational structures and interfaces as well as detailing accountabilitiesof each major functional area. At Completion, all existing employees of Mufulira Division, and the majority of the L employees at those Operations at Nkana Division which are to be acquired by the Company, who have been selected and have agreed to transfer, will become employees of the Company. The current relevant numbers are 4,800 at Mufulira and 5,951 at Nkana. Over the subsequent five years, the Company will progressively reduce employee numbers m line with production requirements. Initial projections suggest that the number of employees over the period of the plan may be as follows: Division Current Post End2000 End 2001 End2002 End2003 End2004 Completion Mufulira 4800 4208 3808 3628 3448 3268 3088 Nkana 5951 4479 3879 3699 3519 3339 3159 Total 10751 8687 7687 7327 6967 6607 6247 L.ondon-ZS72646lO1 -7- ... 1... 4. Expatriates/ ZambianCitizensandzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAEqual Opportunities The Company myrecruit and retain mZambia such expatiate employees as the Company judges necessary for the efficient and successful operation of its busmess. The Company envisages that there will be a net addition of 20 expatiates at senior management level and approximately40 othersto support operations at lower levels. These numbers will besubject to continual review, and it is the Company’s intention that many of tie expatriates will not be retamed for an extended period but will use their expertise to raise the skills of the Zambian workforce to the requisite level such that the requirements for expatriate labour should progressively reduce. Notwithstanding the above, the Company’s human resources department shall, in its recruitment, selection, promotion and assignment of personnel, not discriminate against comparably qualified and experienced Zambian citizens and shall focus on securing and maxhisiigtraining and development opportunities for Zambian citizens. Importance will be accorded to attracting qualified Zambian citizens working overseas to return to employment within the Zambian mining and metallurgical industry. Formal management development programmes shall be instituted to meet the development needs of the business. Promising young professionals shall be specifically targeted to ensure that they are accorded equal opportunities for recruitment, promotion, training and development 5. SW€Development The Company expects to spend approximately USO.8 million on training its workforcezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAeach year, although this figurewillbe subjectto review in tie light of total workforce numbers and specifictraining requirements. Funds will be allocated toboth local andoverseastrmg. Consideration shallbe given to the long-term manpower requirementsof the business and the need to ensure that senior and key positions are appropriatelymanned. Career Development plans will therefore be establishedfor the guidance of individual employee development and will ensure that employees receive relevant mining and experience consistent with operational 4 skill requirements. The Company shall adopt a policy of filling positions and promoting employees from within tieCompany wherever appropriate. The Company shall consider and target opportunities for overseas training to provide broad based experienceto managerial and technical staff where appropriate. These may include: (a) Formal secondment to associate companies of the joint venture partners overseas; (b) Business management courses; (c) Technicalcoursesbasedupon requirements of the Company’s operations; (d) Scholarships for undergraduate or graduate studies in exceptional cases. LU&*2Ci72646/01 -8- ...l... (e) The Company will continue to sponsor Zambian employees currently undertaking appropriate specialised courses locally and abroad. 7. Remuneration Policy The Company, consistent with its cash flows, shall review the remuneration of employees with a view to improving base salaries to attract and retain competent and experienced staff.. The Company shall progressively reduce the dependence of employees upon tie Company by grossing-up non-cash benefits into the wage structure. 8. Employee Shareholding The Company shall establish a profit sharing scheme with its managers and employees. 9. Retrenchment Mitigation Given the need for retrenched employees to be re-equipped to direct their talents and energies L/, outside of the Company, an additional expense of $12.5 millionis budgeted over the fkst five years for retraining those employees whose jobs have been made redundant. The Company shall also investigate assisting retrenched employees to find formal employment elsewhere. 10. SafetyzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAtmining and Awareness The Company attaches great importance to the safety of employees at the work place and believes that the successof safety programmes will only be guaranteedby tie involvement and participation of employees. Safety training will be given where appropriate to create greater safety awareness, develop expertise and encourage ownershipof safety concerns by the entire workforce. 11. Emergency Response Teams Prompt and proper medical attention for injured persons and prevention of injury to employees and members of the public are primary considerations. Emergency and medical services at workplaces will be evaluated to ensure titthey are appropriate to needs. First L Aid trammg will continue to be offered to employees to enable them to deal with emergency situations. 12. TraiigandzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAHuman Resources Management Plan The Company will produce, within 12months of Completion, a detailed training and human resources management plan (which will be submitted to GRZfor approval under clause 6.2 of the Agreement), encapsulating and expandingupon all of the above issues. -9- ...l... SCHEDULE7 INSURANCEzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAPOLICIES Schedule9 of tieSaleandPurchase Agreement shallbe incorporated here by reference - 77 - G2181100030 SCHEDULE8 TAXSCHEDULE The principal applicable taxes and the rates applicable to the Company m the conduct of Normal Operationsasat the date hereof areas follows: (1)zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAhwmeTar: The Company shall pay to GRZincometax m accordance with the provisions of this Agreement on its net taxable income arising from all mining, concentration, smelting and refining and other operations. The income tax rate applying as at the date of this Agreement shall be twenty five per cent. (25%). The carry forward of losses shall be permitted for a period of ten (10) years from the date at which the loss was incurred. Losses should be used on a first L in, first out basis with earlierlosses used before later losses. The Company shall be entitled to maintain books of account and to render income tax returns and returns in respect of royalties and custom and excise duties stated in United States dollars m accordance with generally accepted accounting principles. For the purposes of Part VI of tie Fifth Schedule to the Income Tax Act, the Facilities shall be deemed a "1975 new mine" allowing the deduction of one hundred per cent. (100%)of capital expenditure (as defined m the Act) m the year m which the capital expenditure was incurred provided the Facilities continue to be owned by a single legal entity. h the calculation of the Company's liability to income tax, the Company shall be entitled to deduct "price participation payments" payable pursuant to Clause 4.2(c) of the Sale andzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAPurchase Agreement. Any Price Participation Payments (as defined in the Sale and Purchase Agreement) shall be regarded as an expense of the Company and deductible in calculating the income tax payable by the Company. (2) Roy&s: (0 The Company shall pay to GRZMineral Royalty tax (the "Royalty")on the gross revenue of minerals produced mthe Mmmg Area at a rate of 0.6% provided that the Royalty otherwise payable hereunder shall be exempt from paymentm the fistfive (5) years following Completion. (ii) GRZconfirmsthatfor the Stability Period, royalty payable under the Act shall be deductible against liability for income tax. - 78 - G218UOOO30 (iii) The circumstances where the discretion available to GRZ under Section 67 of the Act to defer the payment of royalty would be exercised are: (aa) under the terms of Section 67(3) where the cash operating margin of the Company's mining operations is less than nil; and (bb) under the terms of Section 67(2) on samplesof minerals acquired for the purposes of assay, analysis or other examination. W) For the purposes of the foregoing "cash operating margin" means the amount derived by deducting operating costs (not including capital expenditure dumg or required for the developmentof the Facilities) from revenue. (3) Other Tares, ChargesandFees: (0 CustomandEicise Lhties dzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Subject to the provisionsof Clause 14 and Section 97 of the Act, the Company shall be liable to pay customs and excise duties on all items imported for the purposes of the Approved Programme of Mining and Metal Treatment Operations at such rates and on the terms and conditions as are set out m the CustomsandExcisezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAAct savethat: for the twelve (12) month period commencing from the Completion Date, the Company shall pay such customs and excise duties at rate of zero per cent. (0%) on all consumable items imported dumg that period for the purposes of the Approved Programme of Mining and Metal Treatment Operations and whichimports, but for the conditions set forth in this section, would have resulted in customs and excise duties being payable up to a value of sixteen million dollars (US%16,000,000); for the next following twelve (12) months, the Company shall pay such customs and excise duties at a rate of zero per cent. (0%)on all consumableitem imported during that period for the purposes of the Approved Programme of Miniig and Metal Treatment Operations and which imports, but for the conditions set forth in this section, would have resulted m customs and excise duties being payable up to a value of twelve million dollars (US$12,000,000); for the next following twelve (12) months, the Company shall pay such custom and excise duties at a rate of zero per cent. (0%)on all consumable items imported dumg that period for the purposes of the Approved Programme of Mining and Metal Treatment Operations and inthis section, would which imports, but for the conditions set forthzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA have resulted in custom and excise duties being payable up to a value of ten million dollars (US$10,000,000); and - 79- Lmxionam7952m G218MNMM for the next following twelve (12) months, the Company shall pay such customs and excise duties at a rate of zero per cent. (0%)on all period for the purposes of the consumable items imported during thatzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Approved Programme of Mining and Metal Treatment Operations and which imports, but for the conditions set forth in this section, would have resulted in customs and excise duties being payable up to a value of ten million dollars (US$10,000,000); and the Company will also enjoy the benefit of Section 97 of the Act namely that the Company shall be entitled to exemption from custom and excise duties, and from any other duty or impost levied under the Customs and Excise Act, in respect of all machinery and equipment (including specialised motor vehicles) or other items of a capital nature required for any of the activities carried on or to be carried on m pursuance of the right or otherwise for the purposes of its investment in miniig metal treatment operations or prospecting. GRZ and the Company agree that such machinery, equipment and other item of a capital nature imported by contractors of the Company engaged by the Company for the purposes of implementing the Approved Programme of Operations, Normal Operations, or any other proposed capital expenditure as set out m the Scheduled Programmes shall similarly enjoy the benefit of the Company's exemption from customs and excise duties under Section 97 of the Act. GRZ and the Company further agree to establish an administrative mechanism to achieve this post Completion of which an essential part shallbe the implementation of an audit trail for purposes of proving to GRZ that tie imported equipment referred to above have been used for purposes falling within Section 97 of the Act. (ii) ExciseDuty onPower: L GRZconfirmsthat this is ten per cent. (10%)of the amount paid to ZESCO by the Copperbelt Energy Corporation PLC for the purchase of electricity. For the avoidance of doubt and as provided in Clause 16.6, the Companywill not be required to pay the Excise Duty on Power applicable to the Company's purchases of electricity in relation to the operation of the Facilities for the Stability Period. (iii) Other Taxes, Chargesand Fees: For the avoidance of doubt, the Company shall be liable to pay (and these provisionswill be without prejudice to such liability) all other taxes, charges and fees payable to GRZ or to any governmental authority m Zambia as of the date of this Agreement in relation to its mining, concentration, smelting or refining and other operations carried out in Zambia, including but not limited to: - 80- G2181rQOO30 (aa) any annual fees, company fees, land rents falling due post Completion or other payments due to GRZ in accordance with applicable legislation and the provisions of this Agreement; and (bb) taxes, charges and fees for services rendered by governmental authorities on request or to public or commercial enterprises generally; save that such liability will not include any mounts owed by ZCCM and still outstandingasof the date of this Agreement. (4) ValueAdded Tax ("VAT"): Tax Act, Chapter 331 (0 In accordance with the provisions of the Value AddedzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA of the laws of Zambia 1995,Plant Products are chargeable to VAT at a rate of zeroper cent. (0%)if exported and are otherwise taxable ata standard rate. (ii) GRZconfiithat input VAT shall be credited to the Company within thirty (30) days from the date of submission of the Company's monthly VAT return in respectof each accounting period. (iii) For the purposes of this Clause, "input VAT" shallzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAmean VAT claimable m respect of allowable business purchases of goods and services supplied by a registered supplier (which, for the avoidance of doubt, shall include the treatment of Mine Products) during a prescribed accounting period for the purposes of the Facilities andor the activities contemplated m the Scheduled Programmesandorthe conduct of Normal Operations. 09 In accordance with the VAT Letter issued by the Commissioner General of the Zambia Revenue Authority, the transfer of the business of ZCCM's Mufulira Division and the Nkana mines, concentrate and cobalt plant to the Company shall not be treated as a taxable supply of goods and servicesfor the purposes of the Value Added Tax Act Chapter 331 of the laws of Zambia 1995. d (5) Relief fromWithholdingTax The rate of withholding tax applicable to the Company shall be ten per cent. (10%) save that for the Stability Period the Company shall pay withholding tax on dividends, royalties, patents, principal or interest payments to lenders or Shareholdersor their Affiliates and marketing and management fees to Shareholders or their Affiliates (in any such case who arenot resident in Zambia for withholding tax purposes) at a rate of zero per cent. (0%). GRZ confirms its intention to enter into Double Taxation Agreements with its major trading partners which should, inter alia, reduce the level of withholding tax suffered on distributions and paymentsof interestby the Company. - 81- LmdonUS57952m7 G21811WO30 (6) DeductionsforMiningExpenditureon anon-produtig andnon-contiguousmine For tie purposeof ascertainingtie Company's allowable deductions under Section five (one) (5(1)) of Part VI, Paragraph23 of the Fifth Schedule to tie Income Tax Act, tie Facilities shall at all times be regarded as a single large scale mining and metal treatment operation, provided tie Facilities continue to be owned by a single legal entity. L - 82 - G2181/00030 SCHEDULE9 TRWSFERRINGzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBASOCIAL A!SSER3 Schedule15oftieSaleandPurchaseAgreementshallbemcorporatedhereby reference - 83 - G2181/ooo30