F n F F LlBRuotl, x ffir , fOWER HltL fnfr[T0\$Nj b. El MINING LEASE AGREEMENT E DATED [ ] 2010 I BETWEEN I THE REPUBLIC OF SIERRA LEONE AND E KOIDU HOLDINGS S.A. r' E' RELATING TO THE MINING AND COMMERCIAL EXPLOITATION OF E THE KOIDU KIMBERLITES IN A PROJECT TO BE KNOWN AS $ ..THE KOIDU KIMBERLITE PROJECT'' tr H H, u $.,', $. s st- r, : ..i.' lr & R, $ !; Tfu .Clause 1 DEFINITIONS...... l*,*.'-r5:i-;":::::"':q:i:x|!rr:i;i:';iiii'' r' 11 t 'r:-' I Clause 2 DURATT.N oF Mffic rease; pnoeif i'annic AGR#MENi.I Clause 3 RENEWAL OF MINING LEASE . ..-. Clause 4 I Clause 5 Clause 6 Clause 7 I Clause 8 Clause 9 'Clause l0 I Clause 11 Clause 12 Clause 13 I Clause 14 Clause i5 Clause 16 I Clause l7 Clause l8 ' Clause l9 I Clause 20 Clause 21 I Clause 22 Clause 23 Clause 24 I Clause 25 Clause26' Cla:us;e2V Clause 28 Clause 29 Clause 30 Schedule i THE MINING LEASE AREA Schedule 2 pRo cRAMMto-F pnop os il; MTNTNG opBnaiioN;'. I Schedule 3 MIN] IRALS INCLUDED WITHIN THE MINING :.., : : :. :. .'...'.'.:..'.?', Schedule 4 HANL. I-IN G, S ORTIN G, VALUATI ON, iNASE.,.................. 3 3 MARKLTING OF DIAMONDS.......... EXPORT_;I\6""""""""" Schedule 5 EMPLOYM-ENT AND TRAINING J3 Schedule 6 yn{E cr.oiuneaxo nidil#AiroN..::....:.....::.... ::....:..,.;...:........;: Schedule 7 pRoFrr sHnRrNC .............::..:...::........... I ............37 I t, I] N l, I MINISTRY OF MINERAL RESOURCES KOIDU HOLDINGS S.A. MINING LEASE NL|N4BER ML 6/95 Tuts MrNwc Lpasp ..Agreement,) 'trus day of {MoNTIll' 2010 AGREEMENT {this made u"t*u*Jn"" Govunrm"n, ifsr"..u I,9one IDATE] Lessor"'), represented oy afrraji^^A]nha S""ill-il;;r (hereinafter caped .,the Resources (hereinafte. iirJl.nainirter,,;, oi th;;;" Kanu, Minister of, Miner.al (hereinafter cailed "uil"d gart, and Koidu Hordi'gs s.A. the "L".t","-'1vhi9n ;rp;;;;;^.srgil incrude iis assigns i.ir""'li,l!'l;,iu"l*ounr incorporatecl in the B;;i'r;";;in r-.runa, ,iJ dul and - -eone and whose p'incipal office It li ,"ei.t"red to otherpaft,--- er""to;;;,1il;t;"*;n;; agr:eenient WHEREAS, on 22 Jury lgg5, the Lessoi entered into a mining wirh Branctr Energy ii.it*a'i:g."r"ir;l (the ::rili lease Agreement') . i'vitir respect-to'irr.,land a'i;.p;;;.re'ts iaining Lease Kirnberlite project." which ru"o i-rr"r:i1 ;;";;,-i""r"rr, knowr as the ,,I{oidu hereto (hereinafter described in schedure cotife'ed referred to as rrre ,,Mil,;;-*;;ar9i,1 purrrrrt * I upo'the Lessor by the Mines a'd Mirierar, a"i r994-(ivhi; ,rr. powers an{ supeiseded bv trre Mines ona rurrryr1, ;:;;d;jl'una, har'irrn repealed larv' tJie Lessor demisecl tnd ;t;;i'unio,-Branch subject to rhen_appricabre Schedule 2 r'vith the rights t" irt.y t; ttre rilhts to the miner.urs rlf.ir*d to i' and conditiorrs rrrercin-contained exploration una^frioag operations upon the terms 22nd of Jtrly 1995 (the irr,.',,vii,r,,g i;;;)'roi u p.riod of 25 years fi.om rrrc Projccr "co'tttn"frn.,rt out" 1, ail as'delcribed in trre Koidu Mirrirrg Lease Agr""m.,,r fno,in"u,;orj'A"i l!ii,'r"o the Kirnberiite ;'i ff : said Mining Lease has ffi :.'"111ffr;;H..,:.:;:ii?[f*f "' J ] I ;, "i Miil;-##Lo, i' the Branch a,d wHeRnes, by a transfer of Mining Lease dalgd 20 thc Lessee witir the writt"n approvar of the Minister 20.03 between attd 'ctober rcgislei'ed at uage 6l in volume-i of the g""t l#,ring of Minerul R".our"., the Registrar'-Generir, rrr""towri,'iirrr.1i, *c "f L""r., kept i' trre office of i'ights' privileges' duli<;' ' ortrlguiionr,-titi, ,rr"i"uy ir*";i". to rlie Luur*. a' of irs from I october 2,0a3 uua i"t.."'rt ;;.," the said Nfinirg Lease the,rrnfi;;;;ithe terrrr thereol as \THEREAS. trre Lessee a'd Lessor entered into a profit ;;.;;;:: ;,i';""" sharing fril;ilU,::,#FT',zroo,.'nur'i;";;, rv 1, zoos-iin" ,.p.or,t 'wunneas rre Lessee and tle Lessor have p*"uunt to agreed to vary the terms of the 1;".3",H1111?"*f,:","#;;"11',:: crause 24-or trre rqes ili"i"g Lease !/j w I I 'l Now TggnEFoRE wITNESSETH As FoLLowS: I CLAUSE I _ DEFINITIONS I I . i The expressio's set out berow shail have the foilowing meanings: "Affiliate" means directly or indirectly controlli'g, by or under com*on contror ""y ry1t"jt controlled I "control" rvitl ine Lessee. F";;; purposes of thii .definitio', (including the terms ,,controlliirg,,, .."ontroli"O;;,, and .,under with') ilreans possessio', ciirect ot incii"J,,'"i;h;;;;Jio at""t common control of the management and poricies p,"_ir* o. or cause the direction voting securities, by contract or "r " "o^miruny, whetrrer though ownership of otherwrse; the "Aqreement" means trris.Amended Mining^Lease Agreement, schedules ilerJto, rvhich ro.. u,r^lnlegral pun oitC-Agreeme't, including this ,Agreeme't include ..f".un"", to ,u"f,I"fraui"r; - "^' and refeiences to of "change of control" m€ans fhe consummation of any transaction trattsactions (including, rvithout iirnitation,.";t;;i;;"rr"rg". or or series result oJ'r'vhich is that the shareholders that consoridarior), rrre of the voring equity of the L"rr;; t;i;re "oir""iir"ry-tien"{i"iuliy own more tha' 50% to (i) be the be'eficiar owners or such tru,rroriion or r"ri* of transactions cease Lessee or (ii) have trre -o* than 50yo of trre ar po*,*.io-jt;;;;r;;;* urv n"ir,.*,;ir-:;-ri:";:|]ff",H:rJJil: policies of the Lessee; urtsuLlull or tne nanagsmer of this o*r..rn.ntqolnlncllcelnettt Date" means 22 July 1995, as set out in tlie first iecifal .,Incorne Tax Act,, lneans the Income superseded i}om time to tirne). Tax Act 2000 (as amended or ,E,:vironmental protection Agency Act,, Protection Agency A:r -1-00g 1"r unt.na"a or rui".r"o"a means the Envirorunenial no* time to time). "Lessor" rlreans the Governrne't of the Repubric of sierra Leone. "Lessce" rneans i' 'idu Hordings s.a., u,-,0 ,r"r, ;"ra*lo succ€ssoIS. "rr,*", *o "Mine Dc"'eltll'rlnellt" lnealts the programme for the development scale production in the Mir;ing a";;" A,"u u, set forth in Fart and full 3 0f schedule 2 hereto. "Mining La''v" means th,: Mines and iwineials Act 2009 (as supemeded from titne to tirne) i',-l i, save where hersin otlrerwise amended or expiessioirs defi'ed therein si'a, irave ihc same provided, the meanings i" ini. eg,=rrilnf'-"' "Mining Lease 1\, -;r" m rails the area d.escribed in schedule I hereto. "Mining Lease" meani Mining Lease No. ML 6/95 granted under 1995 Mining Lease Agreement, as amendea Ui tfri, agr""_.nr, the .,Mining Operations,, m€ans exploration, mineial separation, pro""rring and sorting, ;rrj;;;;;;;;ce development, mining and the Mining Lease Area aud ln the Lessee's sortitu of any ki'd carried out in ofrice, in accordanbe with rh. t;i? om"e, as defined below, or its I,Til:ilL:3."tto ,u,opri,rg una n i* a",l*ropn'",rt' I them. "Parties" means the parLies to this Agreetnent and ,,pafty,, meals any of "profit" means the ner profit generated by the Lessee in respect Koid'I'"i'rberlite Project (bei'g ttr* n"t resui flom operating and trading of the anv taxation expense ii accordaic. *il;";;;;;H ffiun"iut Reporting activity after as detel'mitred by the board of directors of the t-"rr"" io u* uvaltable siandards) a'd shareh':lders from the I{oidu Kimberlite Project urt , iuHng into for distribution to uc"ouniilru'iotto.rr.rg - 1' I tax considerations of the Shareholders and the L.essee in reiation Koidu Kimberlite Project (including uny-*r"rr"d ro the 1'2 losses relating grereto); tlrc cash flow and *orkl]]g capital requirerne'ts of the Lessec in the Koidu Kirnberlite pr.ojecti and respect of * 1'3 all investments that the board of directors of the Lessee believes required for the rong-term gro*rh are "rtrr" kolaiiK'il;il;;;;.", "shareholdefs" means the horders of the voting equity of the tirne to ti're. . Lessee, fiorn "Sofiing oft'ice" lneans the place, wherever sii.uated in Lessee or-its ug"nt ot-rontractor creans, sorrs, sjer.r.a Leone, },lnrff,r$l: stor.es and packages its "1995 Mining Lease Agr-ement,, means the rgg5 4''''I^ Agreement as describcd in thJnrst i.ucitutiirhi;;;-.;;# Mining Lease CLAUSE 2 _ DURATILTN oF MINING LEASE; PR9FIT SHARTNG 2'l AGP.EEMENT The tem ol the-Mining Lease is hereby extended until the 22 July a'd shall continue in force urtil the ."]iry, ,uru.nJb, J, tlrrinution 2030 Ant oi*," ui;il;';*r. of the Mining L,ease *H:iffifr,t$|'*teeme*1' ';;*;i shan be in accordance ; I K, I ,Y{Y .l 2.2 This Agreement supersedes and replaces the terms of the profit Sharing Agreement, which shall have no further force and effect. CLAUSE 3 _ RENEWAL OF MINiNG LEASE 3.1 The Lessee may apply to the Minister for the renewal of the Mining Lease in respect of all, or part of, the Mining Lease Area at any time not later than one year before the expiry of thc Mining Lease. 3.2 An application under this Clause 3 shall: (a) state the period, not ey,ceeding fifteen years, for which the renewal is so*ght; (b) be accompanied by a statement giving particulars of rnining operations proposed to be carried out in the peiiod of renewal; {c) be accompanied by a staiement giving details of: (i) the latest proved, estirnated or infeneci ore res€rves; costs and revenue made in' and production for.ecasts ',1'3,0""r':;;3;31,il":;iH:ffi:e l- i (iii) any expected changes in the rnethod of mining and treatrnent; (iv) any likely sccial impact and any likely effects on thc environment and proposals for mitigation and compensation m€asures; (v) such further information. as the Minister r,,ay require; and (d) shall, if renewal of the Mining Lease is sought in respeci of only part of the Mining Lease Area, be accompaniecl by a plan ind desciiption identifiing tliat part of the Mining Lease Aiea. 3.3 Subject *o Clause 3.4, on application duly made for the renewal of the Mining Lease, the Minis'er may renew the Mining Lease with or without variation of the conditions of the Miniirg Lease, for a period not exceeding fifteen yeais. 3.4 The Minist .r shall refuse to renew the Mining Lease if,: (a) (i) the Lessee is in default of (ii) the developrnent of tho Mining Lease Area has uot proceeded with reasonable speed; liii; minerals in reasonable quantities do not remain . be produced; or (iv) he is advised by the Dir,,ector (as defined in the Mining Law) that the programme of mining operations proposed to bi earried out is not satisfactoiy; to refuse to re'ew ,rr" f?]*rrgtherVlinister has given to the Lessee notice of his intention (i) giving of the notice pafticulars of the ground for the intended refusal; and (ii) stating a date before which the Lessbe may take appropriate action or make representations in rciation to that ground; and (c) if the Lessee rras not 'lrerore that date made appropriate atnendtnents to its application, or made representations which .;t";;; n, *r"r" for the intendcd refusal. CLAUSE 4 _ REPRESENTATIONS AND V/ARRANTIES 4.1 The Lessor represents and r.varrants, as of the date hereof, that: 4'1'l Pursuattt to the lvlinirrg Law. the entire properfy and control of all minerals in, under or upon trre Mining Leasi arru r, vested in the T,essor wliich has the sole and exclusive righi to grant a minlng t"uru ,=tutirru il;;#.. claim, or"other encumbLance, except for any rights of thi.o puJiEr in "?"rr'rien, applicabie iaw in sie*a Leone, uppii""uirr. accordan"" #tii generally "r oi, irr* al[ rr-L.i rniling 4'l'2 other than the.Miniug Lease, there is no valid and subsisting lease or tniueral right (as defined in tire"Minire L"i") the Mining Lease Area: o --- ' ""r;;riffi#; locared in 4'1'3 no person (other than the Lessee) has any right or interest in respect of any minerals located over, under or upon the Mining i"u.! 4'| ;;;";;; improrcmettt:; '!i''icto and-generally agrees to indemnify the Lessee harmless and all loss or cLa:nage arising out of-or in comection *ittt against a'y any such lvarrantie,,;. any rights inconsistent with 4'2 The Lessor covettan{s that the Lessee sliali peaceably enjoy and without inierruption by the Lessor or by any other pelson or persons'clairni'j ,"d"r^irre Lessor or in trust for it, have.the riglit cluring the term orine Mining ". mine diainonds and other minelals t-eaJe,o ffir, for and entity "ight rcferred to in Schedulel, ind that no otilu,. p"ison or shall have th: to engage in any exploration or mining operation or any otlel activities on, above : ';ilrv the surface, in tire Mining rrn . a,&;;;; #ierm Mining Lease. ---o -^^" .- of the 4-3 The I €ss€e represents and warrants, as of tlre date heieof, that: R\ I l 4.3.1 The Lessee is a company duly organized, validly existing and in I good standing under the iarvs of the British vrirgin'Islands. The Lessee has ail the requisite po\\€r and authority to execute and delivir- thi, Agr""-ent and io perrorm its obli gations hereunder. I 4'3'2 The execution tire performance of its and delivery by the Lessee of this Agreernent and obligations hereunder have Leen duly author.iz.,d Uyl"af necessary corporate ol otirer action orrthe part of the Lessee, and nc iuither consent or authorization is required of the Lessee's board of directors or its shareholders to authorize this Agreement 4'3'3 Neither tiie execution and delivery of this Agreement nor the f-essee's compliance with tlre obligations conternplated heseby wili conflict with or result in a bteach or violation of: (i) the organizational docurnents of the Lessee, (ii) any' provision of lar'v applicable to the Lessee on the date hereof or (iii) the terms of any rnaterial agreement to which the Lessee is a parly or by r,vhich the Lessee is bo'nd, '4'3'4 The Lessee has the financial and the work prosramme technical capabilities to 3lljl,31of.Hil:* in accordance with this Agreeni*ii inrruoing I . 13 Any l*":11 of representations and warranties in this clause 4 shall be 1. deemed to be a'breach of this Agieement CLAUSE 5 _ WORK OBLIGATIONS I 5'1 The Lessee shall at all times perfomr its duties, obligations and work in the Mi'ing Lease Area with all due professional cliiig;; and i' accoridance with best and safest practice contemporaneously prcvailnig i";irr" the I *i"l,rg-il;;;;;ridwide. 5'2 Tire Lessee shall proceed^-with the development of the mile.and related plant and facilities, and the mining, milling una p.o""riirrg, of vr diamonds vr4'rv'ur and 4r miuerals i' accordance with sctredule 3 hereto. ' ^^b' relatetl CLAUSE 6 _ OBLIGATIONS AND zuGHTS OF THE LESSEE 6'j subject to tlre terms of this Agrcenrent {including but without limitation clause 16'1 hereof), the Lessee shall at all-times .o*prv with the provisions of the Mining Law and othet'relevant laws and regulations in cinnection with the carrying out of its obligations aud r'vtrrk as described.in tiis agr""i;ort, *xept to the extent that they are inconsistent witrr iire llrovisions of this Agreern"ent .'-"") 6'2 Subje':t to its rights under this Agi=-em.ent, the Mining !s Law the Lessee slrall have the following rights: vv a1d 4'u otlrcrwise,., 6.2.1 the rig'nt within or outside the Mi'i'g Lease Area to dig, clean and widen chamels ir sir€arns, rivers aM watercour-s€s as maabe n€cessary fi.om tinie to \ --^S7 o I ; T E time to permit or facilitate wateL flow to or. fi.om the Mining Lease Aiea Processing pjants and Concentrator; and the ' 6.2.2 the right witfjn the Mi'ing,kase Area, to use the any natural water course and to rctuT th" **"-iG;;h* spols water from stream or watercourse, provided that in.so _r,vith,washing to the river, ' to be discharged ot'y poi,onous doing;;;;";;r"" ,t utt ,roi-aiJ"nu.ge or permit feil trees arrd otherwise or noxious *utir,. *t ir*r.nt in the i'take water, and to clear the la.d to be rninei, ;;; '^ 5'2'3 the rights in addition to those set forth in the Mining consrruct and operate rvithin thi Mining rease ar.u.*or, lid;;;;*rr,'**". Law, to systems' electric power systems, loadirig stations,-uirJiipr, storage facilities, suppry and medical facilities and to