(1) THE GOVERNMENT OF THE REPUBLIC OF ZAMFJIA and (2) CHAMBISHI METALS PLC CHAMBISIil COBALT AND ACID PLANTS ANDNKANA SLAG DUMP!3 DEVELOPMENT AGREEMENT Clifford Chance 200 Aldersgate Street London EClA 4JJ Telephone: 0171 600 1000 Facsimile: 01716005555 Reference: MWUVCH coNTEm PART A GENERAL 1. &finitions and Interpretations .................................. 3 PARTB OPEIWI"IONALANDEMPLOYMENTISsuEs 2. Ccm.u&,nenttoOperate ...................................... 10 . 3. RjghtstoExportandImportandArms'LengthDealings ................ 10 4. Procurement .............................................. 11 5. Local Business Development .................................... 12 6. Trainingand Human Resources Management ........................ 13 7. Insurance ................................................ 15 8. Suspension of Normal Operations ................................ 15 9. Social Assets .............................................. 17 10. Records and OperatingReports ................................. 20 PART C UNDERTAKINGSNECESSAFZYFOR OPERATIONS 11. Foreign Exchange .......................................... 22 12. Environmental Issues ........................................ 24 PART D TAXATION 13 . General Obligation toPayTax .................................. 29 14. VATRefuds ............................................. 29 15. Taxation Stability .......................................... 29 PART E FORMALCLAUSES . .............................................. 32 16 Assignment . Extensionsto’hne .......................................... 34 17 18. Termination .............................................. 34 19. Arbitration and Sole Expert ................................... 37 20. Law Applicable ............................................ 39 21. Force Majeure ............................................ 3‘zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 1 22. Variation ................................................ 40 23 Notices. ................................................. 41 24 Waiver . ................................................. 42 25. Severability ............................................... 42 26 Further. Acts .............................................. 43 27. Counterparts ............................................. 43 28 Representations and Warranties. ................................. 43 SCHEDULE1 ................................................. 4’ FRAMEWORK APPROVED PROGRAMME OFOPERATIONS d SCHEDULE2 ................................................. 47 LOCALBUSINESS DEVELOPMENT PROGRAMME SCHEDULE3 ................................................. 48 PART I MAP OF THE FACILITIES PART 11 MAP OF THE MININGAREA PART 111 POSITIONOFZCCM SLAG DUMP NUMBER 67 SLAG SCHEDULE4 ................................................. 51 PART I MEDICALSERVICES PART I1 EDUCATIONSERVICES PART 111 RECREATIONALSERVICES SCHEDULE5 ................................................. 70 FRAMEWORKENVIRONMENTALPLAN SCHEDULE6 ................................................. 72 TRAININGANDHUMANRESOURCES MANAGEMENTPROGRAMME SCHEDULE7 ................................................. 73 REQUIRED INSURANCES SCHEDULE8 ................................................. 74 TAXSCHEDULE THISAGREEMENT is made on 1 &quevJ\ 1998 BETWEEN: (1) THE GOVERNMENT OFTHEREPUBLICOF ZAMBIA, acting through the Minister of Mines and Minerals Development and the Minister of Finance and Economic Development ("GRZ"); and (2) CHAMBISHI METALS PLC, a company mcorporated in Zambia (registered no. 41151). whose registered officeisatdoKPMG Peat Marwick, Kambendekela House, Dedan Kimathi Road, Lusaka, Republic of Zambia ("the Company")and who shall include any pemned assignsor successorsof the rights and obligationsof the Company. WHEREAS: Proposals have beem submitted on behalf of the Company by Avmin for the acquisitionand W subsequent rehabilitation, development and operation of the cobalt, mast, leach, electrowin and acid production plants located at Chambishi in the Copperbelt Province of Zambia and the Nkana Slag dumps numbers 48and 67 and certain smelter and waste disposal sites (the "Facilities")the location of which is more specifically identified by reference to the area above the red line in the plan annexed hereto as Schedule 3 Part I. GRZ has approved these proposals, which are hereafier referred to as the "Approved Programmeof 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 rehabilitation, development and continued operation of the Facilities will secure the maximum benefit for, and adequately contributeto the advancement and the social and economic welfareof, the people of Zambia, including the people in the vicinity of the Facilities in a manner consistent with their needs and the protection of the v environment and secure an appropriate return on investment commensurate with the risks involved to the Company and its legitimate commercial expectations. 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 arrangement of national interest. GRZhas granted to the Minister of Mines and Minerals Development and the Minister of Finance and Economic Development statutory authority under Section 9of the Act to enter into this Agreement on behalf of GRZ, and GRZ and the Company agree to be bound by all the terms and conditions relating thereto. The Minister has sought and received the advice of the Mining Advisory Committee in accordance with Section88of the Act and is acting in accordance with such advice. H UCCMGCOllWNSACN'JDRSOIS83I - 1 - (7) GRZ, tie Company, ZCCM and Avmhave entered into the Sale and Purchase Agreement dated / ( .$@+&v$& ,1998which requires on its Completion (as therein defined) the entry into of this Agreement. - 2 - PARTA GENERAL Definitionsand Interpretations 1. 1.1 hthisAgreement, unless the conmt otherwise requires: llActltmeans the Zambian Mines and Minerals Act, Chapter 213 of the Laws of Zambia as fromtime to time amended and m effect; "Afiiiiate,Affiliatedkrty, or AfLUiated Parties" means: (i) any company m which the Company or a Shareholder(asthe case may be) holds fifty per cent. (50%)or more of the ordinaryvoting shares or which holds fifty per cent. (50%)or morezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAof the Company's or a Shareholder's (as the case may be) ordinary shares; (ii) any person which, directly or indirectly, is Controlled by or Controls, or is under Common Control with the Company or a Shareholder(asthe case may be); or (iii) any person or group of persons being directors or executive officers of, or in the employmentof any person rekrred to in (i) or (ii) above, and "Control"means: (i) the pcnver (whether directly or indirectly) and whether by the ownership of share capital. the possession of voting power, contract or otherwise to appoint and/or remove all or such of the board of directorsor other governing body of a person 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 affairsof that person; and/or (ii) tie holding andlor the ownership of tie beneficial interests in and/or the ability to exercise the voting rights applicable to shares or other securitiesin any person which confer in aggregate on the holders whether directly or by means of holding such interests in one or more other persons (eitherdirectly or indirectly)more than fifty per cent. (50%)of the voting rights exercisable at general meetings of that person, by" shall be construed accordingly and "CommonControl" means the and "Controlled circurnstances where two (2) or more persons are Controlled by the same person or its Affiliates; means this agreement as varied from time to time in accordance with the terms "Agreement" hereof; "ApprovedProgramme of Operations"means until such time as agreement is reached pursuant to Clause 2.1 on the final form of the Approved Programme of Operations the HUCCM\GCO\TRANSACT\NDRY)lS6.31 - 3 - framework proposals for rehabilitating, developing and operating the Facilitiessubmitted on behalf of the Company by Avmin which have been approved by the Ministry and which is set out in Schedule 1and, afieragreement on the final form of such programme pursuant to Clause 2.1, shall mean the Approved Programme of Operationsso agreed. "AndLengthTerms" means a transaction where: (a) the parties m negotiating the transaction have sought to promote their own best interests in accordancewith tirand honest business methods; (b) the consideration expressed in the agreement for the transactionentered into is the only consideration for the transaction;and (c) the price and otherterms of the transaction have not been affected by, nor determined as a consequenceof,zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAany other agnxment or any direct or indirect relationship(other than the relationshipcreated by the transaction agreement between the sellingpm or shareholdersof the selling party, or a company in which the selling party is shareholder, and buying party or shareholders of the buying party, or a company in which the buying pany is a shareholder). "Assets"shall have the meaning ascribed to it in the Sale and Purchase Agreement; "Avmin" means Avmn Limited, a company incorporated in the Republic of South Africa (registeredno. 05/04469/06)whose registered office is at 56 Main Street,Johannesburg2001, SouthAfrica; "BATNJZEC" means the best available technology not entailing excessive cost as that term is normally interpreted in accordance with best environmental practice; "BusinessDay" means a day on which commercial banks are generally open for business in each of the Republic of Zambia, the Republic of Ireland and the Republic of South Africa; "Central Bank" means the Bank of Zambia; d "Cobalt Concentrate Tolling Agreement" means the agreement entered into between the Company and ZCCM for the treatment of cobalt concentrate at the Facilities; "Collective Agreement" means the agreement between ZCCM and the Mineworkers Union of Zambia dated 14 August 1997 (effective from 9 April 1997) as amended from time to time which, for the avoidance of doubt, includes the Standard Code Book 1996,the Disciplinary Code Book, the 1981 Joint Job Evaluation Agreement, the 1997 Redundancy Agreement and Administrative Rules Governing Payment forServiceHeld in Trust dated 15 September 1997; "Companies Act" means the Zambian Companies Act, Chapter 388 of the h of Zambia as from time to time amended and in effect; "Completion" has the meaning ascribed to it in the Sale and Purchase Agreement; H UCCM\GCO~TRANSACT\NDRfOlU1.31 -4- "Contingent Commitment" means fiftymillion United States dollars(US$50,000.000)to be expended mthe manner and amounts specified m the Approved Programme of Operationsin the event that the contingencies attaching thereto are fulfilled; means Copperbelt Province h Zambia comprising the main copper mining *tCopperbelt" areas in Zambia; "Cost to Resume Operations" means 1.2 (one and two-tenths) times the costs (which includesthecost of new capital expenditures)xequirexl to resume Normal Operations plus 1.2 (oneand two-tenths)tmsthe Company estimate of: (a) royalties; (b) operating costs; and (c) all other incidental costs, necessarytocontinue Normal Operations fora furtherperiod of twelve (12)months; "DistributableProfits" means alter tax profits and accumulated kserves of the Company, available for distributionas dividends m accordance with Section 84 of the Companies Act, as shmin the financial statements of the Company; "Education!Services" means the education servicesset out in Schedule 4, Part 11; "Effective Date" means the date on which this Agreement was executed by the hrties, and in the event that it was executed by different Parties on different dates means the date on which it was executed by the Party who was the last Party to execute the same; "EnvironmentalLaws"means the Mining (Mineral Resource Extractions)Regulations,1994 (SI 11911994); the Environmental Protection and Pollution Control Act, Chapter 204 of the Laws of Zambia and regulations enacted thereunder; and Sections 75 to 82 of the Act, L Chapter 213 of the Laws of Zambia and the Mines and Mine Products (Environmental) Regulations SI No. 29 1997, save for the prtwisions contained in each of such laws and regulations which relate to mine safty and/or the safety of persons rather than to the protection of the environment, as each may from time to time be amended and in effect; "Erwimnmental Plan" means until such time as agreement is reached pursuant to Clause 12.1 on the final form of the Environmental Plan, the framework programme for environmental protection and complianceas set out in Schedule5 and, after agreement on the final form of the plan pursuantto Clause 12.1,shallmean the Environmental Plan soagreed; "EnvironmentalhtectionFund" means the fund set up for environmental protection by Section 82 of the Act and the Mines and Mme Products (Environmental) Regulations, 1997 (SI29/1997); H 'ZCCM\GCOllRAKSACT\NDRSOIS8.31 -5- Txcise Duty on Rwer" means tie excise duty on power levied under the Custom and Excise Act, Chapter 322 of the Lawsof Zambia as amended and currentlyset at ten per cent. (10%); "Facilities"has the meaning ascribed toit in Recital (1); "Force Majeure" has the meaninggiven tothe term m Clause 21.2; "GRZ" means the Government of tieRepublicof Zambia and includesany authorisedagent of the Government of the Republic of Zambia; "Investment Commitment" means seventy million United States dollars (USS70.000,OOO) to be .expended h the manner and amounts specified in the Approved Programme of Operations; "Kwacha" or "K" means the lawful currency of Zambia; W 'UrgeScaleMiningLicences"means Large Scale Mining Licences numbers 30and 31 held by the Company pursuant to the Act; "Leases" means tie leases set out in Schedule4 to tie Sale and Purchase Agreement. "LIBOR" means the London Interbank Offered Rate for US dollars for one month advances which appears on the Telerate Page 3750 as of 11.00am,London time, on the date which is two (2) Business Days preceding the final Business Day of each month monies are outstanding or, if payment is not made on the final Business Day of a month, two (2) BusinessDays preceding the Business Day on which payment is made; "L.mal Business Development Programme" means the programme for local business development which is described and set out in Schedule2; "Major Change" has the meaning given to it in Clause 22.3; d "Management Agreement" shall have the meaning ascribed to it in the Sale and Purchase Agreement; "MedicalServices"means the medical servicesas set out in Schedule 4. RUTI; "Mine Products"means the ores, concentrates or minerals produced from the Facilities; "Mining Area" means the area covered by the Large Scale Mining Licences, more specifically delineated in red on the maps in Schedule 3 Parts I and I1 together with the additionalarea comprising the Nkana Slag Dump Extension Area (asdefined in the Sale and Purchase Agreement) marked in green thereon; Wlinister" means the Minister of Mines and Minerals Development under the Act; H W3XKXO\TRANSAfnNDRfOlY1.31 - 6 - "Ministry" means the Minisrry of Mines and Minerals Development or other SUCcessor ministryfrom time to time; lMtiapdInfrastructurdServices" means the municipal infrastructural servicesasset out mSchedule4, Rut IV; "NodOperations"meansthe operationof the Facilitiesin accordancewith the Scheduled programmcs; l~Notices"means any notice, consent,demand, approval or othercommunication requiredor permitted to be given under Clause 23; Y?u-ties" meansthe persons who are fixthe time being original partiesto this Agreement or parties added or substituted pursuant to Clause 16,and "hrty"means any one of them; llPlantProducW means the finished metal, sulphuricacid and other end-products produced W by the Facilities; "Quarter"; means: (a) January, February, and March; or (b) April, May and June; or (c) July, August and September; or (d) October,November and December. "RecreatiodServices" mans the facilities as the same are listed in Schedule4, Part 111; "Redu.dancyTerms" mans those terms relating to entitlement to certain payments and other rights m the event of loss of employment due to redundancy which are applicable to the TranskrringEmployccsas set out m the Collective Agreement; "Registered Dependants" means the dependants of employees who, at the date of this U Agreement, are registered in the records of ZCCM as being entitled to use some or all of the Social Services; "Sale and Purchase Agreement" means the agreement between the Company, Avmn Limited, ZCCM and GRZ for the vesting of the Assets (assuch term is defined therein) in the Company in consideration of the payment of cash and the issueof sharesto ZCCM; "Scheduled Programmes" means the Approved Programmeof Operations, the Environmental Plan, the Training and Human Resources Management Programme and the Local Business Development Programme; "Shareholder" meansaholderof ordinary shares in the Companyor the holderof the Special Share(asdelinedin the Sale and hrcl~aseAgrement); H GY3X\CCO\TRANSKlWDRY)lS8.31 - 7 - "Shareholders' Agreement" means the agreement of even date herewith amongst certain Shareholdersin the Company, including ZCCM, governing the relationshipbetween them as Shareholdersin the Company; %ual Services"means the Medical Services, Education Services, Recreational Servicesand the Municipal MrastructuralServices; "SoleExpert'! meansaperson appointed (i) pursuant to Clauses5.4,6.4.7.2,8.8,9.8, 12.4, 12.8, 15.4, 16h(b)(ii),16.8,22.20~).22.5 and 22.6 of this Agreement or (ii) by agreement between the Parties to resolve any differenceof view or disagreement between them and. in tie event the hrties in dispute fail to agree on the person to be so appointed, a person appointed onm applicationby eitherParty by the President for the time being of the London Courtof InternationalArbitration. For the purposesof this Agreement, the SoleExpert shall not be. or have been an employee of GRZ or the Company orzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAany Shareholderor any of their respective Affiliates or any authorityor corporationof GRZ; "Speculative Currencylhmaction"means a transaction involving the purchaseor sale b# Zambian currency, the pmryobject of which is the making of a profit on the exchange of currency but does not include the taking out of forward cover against reasonably predictable incomes or costs; "Taxes"shall includeall taxes, royalties, duties, levies and imposts of any kind; "lhiningandHuman Resources Management Programme" mansthe programme which is set out in Schedule 6; "TransfemngEmployees" shall have the meaning ascribed to it in the Sale and Purchase Agreement; T.JS$", "US dollars" or "UnitedStates dollars" means the lawful currency of tie United Statesof America; "VAT" means value added tax payable under the Value Added Tax Act, Chapter 331 of the- Laws of Zambia as from time to time amended and in effect; "Zambia" means the Republic of Zambia; "ZCCM" means Zambia Consolidated Copper Mines Limited; 1.2 In this Agreement, unless the context otherwise requires: (a) monetary references are rekrences to United States dollars unless otherwise specifically expressed; (b) the headings do not affect the interpretation or construction; H VCCM\GCO\TRANSAt3lNDJLWIS8.31 - 8 - (c) references to an Act includes the amendments to that Act for the time being in force any Act passed m substitution therefor and any regulations for the time and also tozyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA being in force thereunder; (d) words importing the singular include the plural and vice versa; (e) words importing any gender include the othergender; (f) rehmcesto a person includea partnership, firm or corporationand any refixence to GRZ includesmyimtmnentalityof GWoranypoliticalsubdivision thereof;and (g) the recitals form part of this Agreement. -9- PART B OPERATIONALzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAAND EMPLOYMENTISSUES 2. CommitmenttoOperate 2.1 TheCompanyshall, bllcwing tie Completionof the Saleand Purchase Agreement: (a) negotiate in good faithwith GRZ (which undertakes to negotiate in good faith with the Company) with a view to agreeing within six (6) months (or such longer period as the hrties myagree) of the Effective Date the detailed terms and conditionsof the Approved Programme of Operations; (b) subject to the terms of this Agreement, the Large Scale Mining Licences and laws and regulations of general application in Zambia from time to time, implement the Approved Programme of Operations in accordance with the timetable containt= therein and good international mining and metal treatment standardsand practices-d 2.2 Whhoutprejudicetothe obligation contained in Clause 2.1, the Company shall (and Avmn shallprocure that the Company shall): (a) expend the Investment Commitment substantially in the manner, on the terms and in the amounts set out in the Scheduled Programmes; and (b) in the event that the contingencies in the Approved Programme of Operations are fulfilled, expend the Contingent Commitment substantially in the manner, on the terms and in the amounts set out in the Scheduled Programmes. 2.3 Subject in all cases to the provisions of this Agreement, GFZ hereby acknowledges its agreement to the Scheduled Programmes. 2.4 GRZconfirmsthat it considers the proposed mining and metal treatment practices describe-' in the Approved Programme of Operationsnot to constitute "wa.m$d miningpmctkes" b the purposesof Section 81 of the Act. This confirmation is without prejudice to the rights of the Director of Mining Safety (actingon behalf of GRZ) to determine that miningpractices not specifically rekrred to in the Approved Programme of Operations constitute wasteful mining practices for the purposes of Section81 of the Act. Nothing in this Clause 2.4 shall prevent or restrictor otherwise limit GRZ from taking all actionswithin its power to protect public health and safety. 3. Rights to Export and Import and Arms' LmgthDealiigs 3.1 The Company mymarket and export without further rekrence m GRZ the Plant Products and shall have solecontrol and management of tie sale of such Plant Products, including tie forward selling of such Plant Products, and shall assume all risks therehr, provided that: (a) the Company sells its products on Arms' Length Terms; H GF34GCOllRANSACRNDRlS8.31 - 10- (b) GRZhas not notified the Company that the export of the Phnt Products would: (i) breach an obligation of GRZ arising under international law (including mandatory sanctions imposed by the United Nations); or (ii) result in dealing or contractingwith nationalsof a state with which GRZ is in a state of declared or undeclared war. Subject to Clause 4 and the payment of applicable duties and taxes not otherwiseexempted 3.2 or dekrred pursuant to this Agreement, the Company myimport and where it so desires. re-export without further refkcnce to GRZ, materials, equipment and servicesto be used in implementing the Scheduled Pro~rammesprovided titGRZ has not notified the Company that the import and/or re-export (as applicable) of such materials, equipment and services would give rise to the matms specified in Clause 3.l(b)(i)or (ii). 4. Procurement 4.1 The Company shall, on a periodic basis, identify and invite registration of businesses in Zambia (particularlyin the Copperbelt and with particularemphasis on businesses directly or indirectly majority owned by Zambiancitizens)which are capableof supplying materials, equipmentand servicesto the Company. 4.2 Where materials, equipment and services required for the implementation of the Scheduled Programmes are manufactured or substantially assembled (or in the case of services, are procurable) within Zambia from a business or businesses registered pursuant to Clause 4.1, such business(es) shall have the opportunity totender and if a tender submission fromzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAany such business: (i) meets the specifications of the invitation to tender; (ii) is competitive in price with international sources; and (iii) meets the quality standards and delivery requirements of the Company; then the Company shall not discriminate against such business(es) in its award of such tender. 4.3 In assessing the tenders from local contractors and suppliers, the Company will considerthe extra costs it would incur if it was to grant the contract to a foreign supplieror contractor. These extra costs shall include, but are not necessarily restricted to, wharfage costs, shipping costs, stevedoringcosts, customs clearance costs, customs duties,and demurrage charges. 4.4 A Committee shall be formed, comprised of one member from each of the Ministry, the local gwemment, the Company and a representative of the Ministry of Commerce, Trade & Industry, which shall monitor the supply and procurement of goods and services to the Facilities. 4.5 The Committee shall operate during the term of this Agreement and the Company shall furnishit with reports every six (6) months comprising tie following information: H L333WCO\TRANSXTWDRSlIS&3I - 11- (i) a list of successful tenderers which shall include the item supplied, residence of tenderers and the reasons for awarding the tender; and (ii) a list of unsuccessful locally based tenderers which shall include reasons for not awardingthe tender. 5. LocalBusiness Development 5.1 TheCompanyshall: Local Business Development hgramme so as to encourage andzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA (a) comply with the assist the establishment of businesses within Zambia (particularlym the Copperbelt and with a particularemphasis on businessesdirectlyor indirectly majorityowned 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 provide technical or other supportto them; 1 (b) conductm annualreview of progressbeing made on the implementation of the Local Business Development Programme and make such variations to it as required by changing circumstances; and (c) designatea responsible person experienced in setting up and managing small business enterprises: (i) to assist Zambian citizens who wish to or have set up businesses to offer servicesto the Company and the Facilities; (ii) to assist in the implementation of the Local Business Development Programme and variations thereof; (iii) to liaisewith the appropriate officials from GRZ; and (iv) to compileand maintain the register referred to in Clause4.1. e 5.2 The Company may, with the consent of GRZ (which consent shall not be unreasonably withheld), mend or alter the Local Business Development Programme, with a view to securingthe maximum benefit to the establishment of Zambian businesses from the Facilities. If the Company is unable to comply with some or all of the Local Business Development Programme as a result of circumtances or events beyond its control then such non- compliance shall not constitute a default under this Clause 5 and the Company may give notice of alternativeor revised plans for the Local Business Development Programme. 5.3 Should the Company give notice pursuant to Clause 5.2, GRZ shall within thirty days (30) either: (a) approve those alternative or revised plans; or (b) meet with the Company 'todiscussand agree upon the alternative or revised plans. H \ZCCM\GCO\TRANSACnNDRSOI~.31 - 12- to GRZsapproval of alternativeor revised 5.4 If the discussionsunder Clause 5.3 do not leadzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA plans and the Company considersGRZ’sdecisionto be unreasonable, the Companymyelect to rekthereasonablenessof GRZ’s decisionto a Sole Expert in accordancewith Clause 19. 5.5 If the SoleExpertdetermines thatGRZ’sdecision isnot unreasonable,he shallidentify to the Company such changes to the Local Business Development Programme as will be necessary to bring such programme mmcompliance with GRZ’s requirements in this regard and the Company shall elect whether to amend the programme accordingly or to retain the original programme. However, if the Sole Expert determines that GRZ’s decision is unreasonable, he shall declare his determination to both Rrties and the proposed amendment or alteration to the Local Business Development Programme shall be deemed approved. 6. lhiningandHuman ResourcesManagement 6.1 TheCompany will comply with the Training and Human Resources Management Programme applicable from time to time. 6.2 The Company may, with the consent of GRZ (which consent shall not be unreasonably withheld),mend or alter the Training and HumResources Management Programme, with a view to securing the maximum training of and benefits to Zambian citizens from tie Facilities. If the Company is unable to comply with the Training and Human Resources Management Programme due to circ~mstancesbeyond its control, then such noncompliance shall not constitute a default under this Clause 6 and the Company may give notice of ahnative or revised plans to the part of the Training and Human Resources Management Programme affected. 6.3 Should the Company give notice pursuant to Clause 6.2, 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. 6.4 If the discussions under Clause 6.3 do not lead to GRZ’s approval of alternative or revised plansand the Company considers GRZ’s decision to be unreasonable, the Companymay elect to refer the reasonableness of GRZ’s decision to a Sole Expertin accordancewith Clause 19. 6.5 If the Sole Expert detemnesthat GRZ’sdecision is not unreasonable,he shall identifyto the Company the changes to the Training and HumResources Management Programas will be necessary to.bring such programme mm compliance with GIWs requirements in this regard and the Company shall elect whether to amend the programme accordingly or to retain the original programme. However, if the Sole Expert detemnes that GRZ’s decision is unreasonable,he shall declare his determinationtoboth htiesand the proposed amendment or alteration to the Training and HumResources Management Programme shall be deemed approved. H GWX\CCO\’TRANSACTWDRSOIS8.3I - 13- 6.6 The Company shall not, save as provided below; be restricted in its employment, selection, assignmentor dischargeof personnel Provided, however, that tie employment and the terms and conditionsof such empluyment and tie discharge or disciplining of personnel within Zambia shallbe carried out in compliance with(i)tie laws and regulationsof Zambia which are, from time to time, of general application, (ii) tie Collective Agreement and (iii) the terms of individual employment contractsfrom time to time. 6.7 The Companywill, m its recn&nent, selection,promotion and assignment of personnelnot discriminateagainst comparablytrained, qualified and experienced Zambian citizens. 6.8 The Company acknowledges GRZ’s policy to attract qualified Zambian citizens working overseas back to emplayment within tieZambianmining and metallurgical industry. In order to facilitate the fulfilment of this policy, the Company will tieall reasonable efforts in its recruitment and employment of employees in professional. managerial, engineering and scientificgradesto bring to tie attentionof such qualified Zambians, positionsof employment available within the Company (including, but not limited to the advertising of positions internationalpress and trade journals likely to have circulation amongst suitably qualifieb/ potential employees). 6.9 The Company will honour and perhnn the terms and conditions of the contracts of employment of the Transferring Employees save that such contractsmybe varied pruvided that any variance shallbemade in compliancewith all aspectsof Zambianlaw and regulations and tie terms of the relevant Collective Agreement. 6.10 The Company will recognise, for collective bargaining purposes, the trade union currently representingtie Transferring Employees. 6.11 The Company adopts the Redundancy Terms currentlyapplicable to Transferring Employees (and agrees that years previously worked for ZCCM shall form part of the accrued service of such Transfemng Employees when calculating any subsequent redundancy payment to which they may become entitledupon being terminated by the Company) and agrees that no amendment or variation will be proposed or made to the Redundancy Terms which vmul adversely affect the TransfkringEmployees(or any of them) if such Redundancy Terms wer’ to be implemented without the Transferring Employees’ consent. 6.12 Notwithstanding the provisions of this Clause 6, the Company (and its contractorsor sub- contractors) 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 tie Company’s request (which shall be accompanied by such 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 pemts, work pemts,visas and such otherpemtsorpermissions as may be requested)to be issued to such persons and their dependants without undue delay and without hampering the continuous and efficient operation of the Facilities. Provided that GRZ shall be under no such obligation to issue the permits aforesaid to any nowZambian citizen who is disqualified from entry by reason of previous criminal convictions, health - 14 - regulations and like restrictionsset out in immigration regulations of general applicationin Zambia from time to time. 6.13 A committee shall be formed, comprising of one member from each of the Ministry, the Company, Ministry of Labour and the local government, which shall have no powers to bind the Company but shall monitor the implementation of the Training and Human Resources ManagementProgramme. 6.14 Such committee shall.operate during the term of this Agreement and the Company shall furnishit with reports every six (6)months outliningtieprogress of the Training and Human Resources Management Programme, problem encountered,positionsfilled and the number of local people empluyed. 7. Insurance 7.1 The Company shall insure and keep insured with a reputablemurance company the Assets W under new policies from Completion. Such policies shall be in accordance with godrisk management practice having regard tothe nature, age and condition of the Assets and having regard to terms of insurance set out in Schedule6 to the Sale and Purchase Agreement. The Companyshalladvise GRZ of the policy or policies and shall forward copies to GRZ. 7.2 The Companyshall,unless the policies of the insurance or any of its loan agreements state otherwiseor GRZ otherwise agrees, use any mount paid to it where such mount is greater than or equal tofive hundred thousand US dollars (USSSO0,OOO)pursuantto any damage or destructionprovisionsmzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAany contract of insurance to reinstate such elements of the Facilities (except for Plant Products) mrespect of which such mount was paid, provided that the Company shall not be required to repair or restoreany portion of the Facilities that, prior to the damage or destruction,had been obsolete or were of no material value to the actual or potential operations of the Company or where the Company, following a review of the facts with GRZ, has notified GRZ that in their judgement the cost of doing so is not justified by the incremental economic benefit which the Company will derive therefrom. In the event that GRZ notifies the Company that it disagrees with such judgement, the matter shall be referred for detemnation to a Sole Expert in accordance with Clause 19. 8. Suspensionof Normal Operations 8.1 The Parties acknowledge that the Company's right to suspend and curtail (hereinafterreferred to as "suspend")Normal Operations is governed by Section 28 of the Act and that, in the event of any such suspensionor curtailment, the Minister may exercise powers under Section 28(3) of the Act. 8.2 GRZ hereby agrees that: (a) the Minister's approval shall bedeemed given in accordance with Section28(3)(a)of the Act upon complianceby the Company with this Clause; and (b) in such event, any direction capable of being given pursuant to Section 28(3)(b)of the Act will only be given either: H.VCCMU;CO\TRANSACIWDRY)IP.31 - 15- (i) mcompliance with this Clause; or (ii) if the Company has not complied with any provision of this Clauses and has not remedied such noncompliance within thirty (30) days of being given notice of such non-complianceby GRZ The Company may elect to suspend Normal Operations if in its reasonable opinion the 8.3 Company forecasts m the fdlowing six (6) month period operating losses, shortages of suppliesand materials, intemption of transportation,smelting,power, labour and/or other servicesutilised m NodOperations,or fix any other operational, economic or practical reason considersit prudent mdoso. As soon aspossibleafter receiving notice under Clause 8.2(b)(ii),the Company shall submit a report to GRZ giving reasons why, in its opinion, it is necessary to suspend Normal Operations. 8.4 Where pursuant to Clause 8.3 or otherwise m accordance with Section28 of the Act, the Company has electedtosuspend NormalOperationsitshallmaintain,subjecttotirwearand tear, the Facilities so as to prevent significant deterioration until Normal Operations aree resumed. 8.5 No later than twzlve (12) months from the date on which the Company suspended Nod Operationspursuant to Clause 8.3or otherwisem accordance with Section28 of the Act and thereafter at no longer than twelve(12)month intervals until Normal Operationsare resumed, the Company shall submit a further report to GRZ: (i) showing its projection of the Cost to Resume Operationsand of revenue fromNormal Operations(if resumed) for the sameperiod; and (ii) giving reasons why m its opinion it considers it prudent not to resume Normal Operationsin such period. 8.6 If a report submitted pursuant to Clause 8.5 shows that: (a) the Company’s projection of revenues from Normal Operationsfor the succeeding .- twelve (12) month period exceeds projection of the Cost to Resume Operationsfor the said twelve (12)month period; and (b) that there are no otherrelevant commercialconsiderationsincluding without limitation the after tax value of return to the Shareholders that would make it economically unreasonableand uncommercial to do so, then the Minister mydirect the Company to promptly take such measureszyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAnecessary to ensure that Normal Operations are resumed within a reasonable time period. 8.7 Where Normal Operationshave been suspended fora continuousperiod of not lessthan three (3) years, the Minister mydirect the Company toresume Normal Operationsif he is of the reasonable opinion that: - 16- (a) the Cost to Resume Operations is less than revenue from Normal Operationsfor the same period (the Minister will provide the Company with a copy of GRZ’s projectionsof costs and revenues supporting such opinion);and (b) there are no other relevant and extxaordmrycommercial considerationsthat would rnake it economically unreasonable and uncommercial todo so. 8.8 If the Company disagrees with the Minister’s direction pursuant toClauses 8.6 and 8.7 it my submitthe matter toa SoleExpert for his demnimtion in accordance with Clause 19. 8.9 Wherea matter has been refimxlto the SoleExpert pursuantzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAto Clause 8.8, the Sole Expert shall detemne whether it is economically reasonable and commercial to resume Normal Operations. The opinion of the Sole Expert shall be binding on the Parties so that in the event that the Sole Expert determines that it would be economically unreasonable and uncommercial to resume Normal Operations then the direction given by the Minister pursuant to Clauses 8.6 and 8.7 shall be deemed to have been withdrawn. W 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 mLe such measures to ensure titNormal Operationsare resumed within a reasonabletime period,shallbe deemed fixthepurposesof this Agreement to have abandoned all the land subject to the Large Scale Mining Licences pursuant to Section 49 of the Act Prcwided hcmwer, that where the issue has been rekrred to a Sole Expert pursuant to Clause 8.8, the time period shall run from the date the Sole Expert gave his determination. 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 Minister of his powers under said section save as specifically described herein. 9. Social Assets W 9.1 The Company agrees tocontinue to employ the same registration practice for determining the eligibility of dependants to qualify as Registered Dependants as is set forth in the ZCCM Standard Codebook of 1996. 9.2 Medical Services The Company shall: (a) enter into serviceagreements with one or more third party providers of the Medical Servicesin the vicinity (meaningwithin the area commonly knownas the Copperbelt of Zambia) of the Facilities to: (i) make the Medical Services available to all employees of the Company and the Registered Dependants of such employees (including for the avoidance of doubtallpersons towhom accessto the Medical Servicesisgrantedby virtue of relevant redundancy or retirement provisions); H GXCM\CXOWRANSMDRSllS8.31 - 17- (ii) make the Medical Servicesavailable at a level appropriate to the number of persons entitled thereto from time to time, namely the number of the Company employees and their Registered Dependants (including persons to whom access to the Medical Servicesis granted by vime of redundancy or retirement provisions);and (iii) ensure, tothe extent possiblem terms of such agreements, that tie Medical Servicesare provided to such persons described in Clause9.2(a) (i) and (ii) abmeat least to the same standard (asto range and quality of service)as that currentlyavailableas at the date of this Agreement; and (b) ensurethat the costs fixthe provision of Medical Servicesto such persons described in Clause 9.2(a) above are no greater in real terms than those levied by ZCCM for such servicesimmediatelyprior to Completion; Provided that, m respect of 9.2(a) and (b) above, the obligations of the Company sha' surviveonly for such period as such Medical Servicesare reasonably available in the viciniw of the Facilities. For the avoidance of doubt,the obligations of the Company hereunderare to procure the provision of Medical Services from a provider of such services by means of the execution and enfimement of agreements on Arms' Length Terms between them and do not require the Company to become a primary service provider itself by, inw diu, the constructionand operation of hospitals, clinics (other than clinics required to be provided pursuant to statutory regulations) etc. or to assist the serviceprovider if the service provider itself becomes incapable of providing the Medical Services. 9.3 EducationzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAServices TheCompany undertakesto: (a) provide as a condition of service an education allowance of K9,OOO per child per school term or such mount as mybe agreed under the terms of the Collective Agreement from time to time payable up to a maximum of six (6) children pe employee. In order to receive this allowance, an employee will be required to" provide proof of registrationof such child at a school; (b) sponsor all children of the employees of the Company who are currently enjoying subsidised schooling at ZCCM schools in Kitwe, Kalulushi and the Mpelembe Secondary School in Kitwe (whether or not the same continue to be owned by ZCCM)(the "EducationServices")and whose access to the Education Services is currentlyfunded by the Seller, such sponsorship to continueuntil they eithercomplete the school curriculumat the school they are currently attendingor leave such school; and (c) use its best endeavours after Completion to establisha sponsorshipscheme in respect of the children of all of its employees to subsidiseaccess to the Education Services (provided the Educational Servicesare available),by not less than one (1) child per year at each standard level or not more than fourteen (14) children in aggregate at all standardlevels. ' - 18- Provided that, m respect of 9.3(a), (b) and (c) above, the obligations of the Company shall survive only for such period as such Education Services are reasonably available in the vicinity of the Facilities. For the avoidance of doubt, the obligations of the Company hereunderare toprocure the provisionof EducationServicesfrom ZCCM and do not require the company to become a primary serviceprovider itself by, imer alia, the constructionand operationof schoolsetc. 9.4 Recreational!services The Company shall provide funding for the continued provision of the Recreational Services or any other servicesof a similarnature which the Company myin its solediscretionwish to support at the level that such funding was extended by ZCCM immediately prior to the Completion provided that such funding in aggregate shall not exceed nw hundred thousand United States dollars (US3200,OOO)per annum. 9.5 Municipal hfrastructuralServices TheCompanyshall: (a) prwide the Housing Allmceto those employees who are entitledto the same (as such entitlement is set out in the employees’ conditions of service in place immediatelyprior to Completion); and (b) offer employees the facility of the payment of municipal rates and taxes through the payroll services. 9.6 in the event that the Company detemnes that it will become unable to comply with the provisionsof Clauses9.2, 9.3, 9.4or 9.5, for any reason whatsoever, it shall forthwith give notice to GRZ of this fact. GRZ agrees that it will accept such non-compliance with Clauses 9.2, 9.3, 9.4 or 9.5, (as the case may be) and that no action will be taken under this Agreement if, simultaneously with the giving of such notice, (i) the Company submits proposals to GRZ fix an increase in general levels of remuneration or other employment benefits to employeesof the Company in order to compensate such persons for the withdrawal of rights to use or for the Company’s employees or Registered Dependants to use the Social Services, and (ii) if the Company also provides GRZ with reasonable evidence that such proposals are (in the case of (i) above) agreed with any trades union@) then representing employeesof the Company. 9.7 Pending confirmation from 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, 9.3, 9.4 and 9.5 and GRZ agrees that it will respond to the Company’s proposal within sixty (60) days of receipt of the same from the Company. H UCCM\Ga)\TIUNSACT\NDRY)IUI.)I - 19- 9.8 If the Parties disagree about: (a) the level of SocialServicesto bemaintained and the availability of the SocialServices pursuant to Clauses 9.2(a) and 9.2(b)andor Clauses 9.3(b) and 9.3(c); (b) tiestandardof or charges made for the pmisionof the Medical Services,Education Servicesand/orMunicipalhfias~rucmralServices pursuantto Clauses9.2(a), 9.2(b). 9.3 (a), 9.3(b) and 9.3(c); (c) the acceptability of proposals made by the Company pursuant to Clause 9.7, either Fbny may elect to submit tie matters in issue to a Sole Expert for determinationin accordance with tieprcwisions of Clause 19. 9.9 TheCompany will not be required to make Social Servicesavailable to personswho are not employees of tie Company or immediate families of such emplcyees (including for thf avoidanceof doubt all persons towhom access to the Social Servicesare granted by vimW of relevant redundancy or retirementpmvisions). 10. Records and OperatingReports 10.1 The Company shall, for a period of fifieen (15) years from tie Effective Date, provide quarterly reports to the Ministry on: (a) quantitiesof tolled Plant Products returned to owner; (b) quantitiesof Plant Products produced and sold for its account; (c) prices obtained on salesof own Plant Products; (d) progress in implementing the Scheduled Programmes, the extent of any continuing non-compliance by the Company with Environmental Lawsand progress made ir remedying this in accordance with the Environmental Plan; and d (e) any other relevant matters as to the progress and results of the Company’s metallurgical operations. 10.2 All information furnished to GRZ shall be in English and, in the event that such information is a translationfrom the original,shallbe a certifiedtrue translation. All financialdata shall be recorded in US dollars. 10.3 The Company shall maintain all original records and reports relating to its activities and operationsunder this Agreement including all documents relating tofinancial and commercial transactionswith independentpartiesand Affiliates m its principal office in Zambia. These records and reports shall be opened to inspection by GRZ through an authorised representative during normal working hours. Such reports and records shall be maintained in the English language. - 20 - 10.4 All information acquired by GRZ mpursuance of this Clause 10 shall be retained in strictest codidence and shall not be disclosed to any third party other than to an officer oremployee of GRZ whose function requires him to have such information or save for the purpose of enforcing the provisions of this Agreement or as required by applicable Zambian law or regulation. 10.5 All records, reports, plans, maps, charts, accounts, and information which the Company is or may be from time to time reasonably required to supply under the provisions of this Agreement shall be suppliedat the expense of the Company. - 21- PART C UNDERTAKINGSNECESSARY FOR OPEFtATIONS 11. ForeignExchange 11.1 TheParties ackmwledge that under legislation and practice currently in forcein 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 accruingto or earned by it outside Zambia into Zambia. 11.2 hthe event foreign exchange controls were to be re-introduced in Zambia within fifteen (lw years of the Effective Date, the Company shall notwithstanding such reintroduction have the right to: (a) retain both foreign currency outside Zambia and within Zambia, in foreign currency accounts established for that purpose and to have paid to and maintain in such accounts the following: (i) proceeds of the sale of its Plant Products, including proceeds received from third parties resident in Zambia for foreign exchange purposes; (ii) tolls received pursuant to third party cobalt concentrate contracts including tolls received from third parties resident in Zambia for foreign exchange purposes; (iii) payments made by insurers not resident in Zambia under contracts cE insurance in the Company’s favour; 2 (h) proceeds of any disposal of capital assets received from persons not resident in Zambia for foreign exchange purposes; (v) the amount of any funds received pursuant to any loan finance provided by persons not resident in Zambia for foreign exchange purposes; (vi) any share capital received in foreign currency from persons not resident in Zambia for foreign exchange purposes; and (vii) any other foreign currency earned or accrued in the ordinary course of business from persons not resident in Zambia for foreign exchange purposes. (b) use freely the foreign currency accounts maintained by the CompanyzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAto: H UCCM\GCO\lRANSACT\NDRSOlS8.3I - 22 - (i) servicepayments of principal and interest, servicechargesand other fees and expenses in respect ofzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAany loans arranged with nonZambian institutionsto implement the Scheduled Programmes, finance or refinance the Facilitiesor otherwise; (ii) make pqrments due to (aa)suppliers not resident m Zambia for foreign exchange purposes for the supply of goods and services to the Company inside and outside Zambia (including capital goods and services of foreign empluyees and consultants) where goods and services are required to implement the Scheduled Programmes or conduct Normal Operationsand (bb)suppliers residentin Zambia for foreign exchange purposeswith.respect to the supply of electricitytothe Facilities; (iii) finance the payment of dividends to shareholders who are not resident in Zambiaforforeign exchange purposes Provided that such payments are made out of Dismbutable Profits(as defined in the Companies Act); (iv) pay expatriate employees whose contracts of employment specify that they be paid (in whole or in pm)in a currency otherthan Kwacha; and (v) effect such other payments in foreign currency to persons not resident in Zambia for foreign exchange purposes as mybe necessary or desirable in the 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 Quarter- (i) a statement of the foreign currency accounts maintained overseas by the Company showing movements on the accounts during the Quarter with Quaner-endbalances; (ii) a statement of the foreign currency accounts maintained at banks within Zambia by the Company showing movements on the accounts during the Quarter with Quarter-end balances; (iii) a statement of the foreign exchange converted into Kwacha and the total amountof Kwacha converted into foreign exchange during the Quarter; and (iv) a forecast of the foreign currency which it expects to receive and retain in a foreign currency account overseas or within Zambia and that which it expects to convert into Kwacha during the ensuing Quarter;and (b) within five (5) months of the end of each year, audited financial statements shcwing the mountof DistributableProfits. 11.4 In the absence of foreign exchange controls in Zambia, the Company shall have the same rights to buy and sell currencies from authorised dealers as other mining companies or such HVCCMGC~lRANSACllNDRSOlS&31 - 23 - ventures conducting similar operations on a scale similar to those conducted by the Company in Zambia. hthe event 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 in a manner less favourable to it than the manner in which they are generally applied. the Company shall be entitled to buy and sell foreign exchange in accordance with such controls at rates of exchange no less favourable than those available to other commercial buyers and sellers of the currency concerned. 11S The Company shall remit to Zambia and convert into Kwacha for credit to a bank account in its name in an orderly hshion sufhient of its foreign currency earnings to pay such commitments as the Company may have incurred m Kwacha (including, without limitation, obligations to pay dividends to local shareholders payable in local currency, taxes, royalties and customs duties) which cannot be met by its Kwacha balances from time to time. 11.6 The Company shall not engage hor use any provisions of this Clause 11 or any authority or approval given by the Cenaal Bank to engage in Speculative Currency Transactions. I the Company is m breach of this Clause it shall pay toGRZ as liquidated damages anamouni-’ equal to the mount of any net after tax profit or gain which the Company makes on the Speculative Currency Transaction pluszyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA any cost reasonably incurred by GRZ in 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 Central Bank: (a) to approve any act, matter or thing; or (b) to grant authority under applicable law and regulations for its exercise or performance, and tie 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. J 11.8 The Company will ensure that any borrowings it myincur denominated in Kwacha will not exceed the Kwacha equivalent from time to time of ten million US dollars (US$10,000,000). 11.9 The Company will ensure that the Central Bank will not suffer discrimination by the Company in access to foreign exchange sold by the Company for Kwacha. 12. Environmental Issues 12.1 The Company will: (a) negotiate in good faith with GRZ (which undertakes to negotiate in good faith with the Company) with a view to agreeing within eighteen (18) months (or such longer period as the hrties may agree) of the Effective Date the detailed terms and conditions of the Envimunental Plan; and H \ZCCM\CCO\TRANSACnNDRY)IU1.31 - 24 - (b) subject to the pruvisions of and save to the extent provided otherwise in this Clause 12comply with: (i) environmental and safety laws and regulations enacted or promulgated within Zambia from timetotime which areof general application (including, for the avoidance of doubt,making such contribution as is required under Section 82 of the Act for the Environmental Protection Fund); For the purposes of Section 82 of the Act, the Facilities shall be deemed to be a Category2 Mme (or suchothercategoryof mine for envimnmental fund contribution purposesas the htiesmyagree from time to time); and . (ii) the Environmental Plan. 12.2 Subjectto complianceby the Company with the Environmental Plan and save as provided in Claw12.5 below, GRZ hereby confirms that for a period of fifteen (15) years from the Effective Date, it will not tieany action (and will procure no action is taken by any of its ministries, departmentsor agenciesmerwhich ithas operational control actingon its behalf) any applicable Environmental Lawswith the intent of under or enforcing,zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA securingthe Compny*searliercompliance with Environmental Laws other than that envisagedby the timetable and conditions set out in the Environmental Plan; requiring the Company to clean-up or remove any stock of pollution which was pre- existing at the Effective Date; imposing fines or penalties upon the Company payable under Environmental Laws (or enactingnew fines and penalties thereunder) which are payable in respect of the Company's noncompliance with such Environmental Laws and where the Environmental Plan pruvides for the remedy of the same in accordance with a specified timetable and the Company is in compliance with that timetable; or L imposing fines or penalties m respect of the Company's breach of Environmental Laws in excess of those applying on the Effective Date, adjusted (where denominated in Kwacha) to tieaccount of Zambian inflation since that date. GRZ hereby codirms that the Company and Avmn arr not responsible for nor will be held liable for harm, damage, claims and losses of any kind whatsoever incurd or sufferedm the past or in the future arising out of or in relation to or in connection with activitiesundertakenby ZCCM prior to the Effective Date. Without limiting the generality of the foregoing, GRZ: (i) perpetually indemnifies the Company and Avmin against any and all liabilities, damages, losses, cost, claim and demands suffered or incurred arising out of or in relation to or in connection with activities conducted by ZCCMpriorto the Effectk Date; H GXXX\GCO\fRANSAClWD~IS8.3I -25- (ii) indemnifies tie Company for the period envisaged by the timetable and conditionsset out in the Environmental Plan (which, for the purposes of this Clause 12.3(b)(ii)is limited to the detailed fi~lform Environmental Plan agreed pursuant to Clause 12.1 and shall not, for the avoidance of doubt, includethe framewrk Envimnmental Plan therein rekrred to and originally scheduledheretobut which will, when such final form is agreed, be effective from the date hereof but only to the extent that the Company has not exacerbated the extent of non-complianceover and above that existix at the date hereof) againstzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA any and all liabilities,damages, losses, cost, claim and demands suffered or hcumdrelating to the Facilitiesas they existat the date hereof (together “EmironmentalClaims”), which matters givingrise to such Environmental Claim would, but for the provisions Clause 12.2 hereof, leave the Company open to action by GRZ ministries, departments and agencies to enforce applicable Environmental Laws. For the avoidance of doubt, such indemnityto endure only while the Company isoperating in full compliance with the terms of the Environmental Plan; and W (iii) undertakestitit will not take any action (which will include a proposal to amend tie Environmemal Plan other than as permitted pursuant to Clause 12.5) and will procure no action is taken by any of its said ministries, departmentsor agencies with the intent of making or rendering the Company liable fbr any environmental liabilitiesof ZCCM to third parties (whether disclosedor undisclosedand including without limitation those arisingout of stocksof pollutants createdin the conduct of ZCCM’s operationsprior to the Effective Date) to the extent that they either aroseprior to, or arose after but relate to activitiescarried on by or on behalf of ZCCM prior to, the Effective Date. The liabilitiesspecified in Clause 12.3(b)(i)and (iii) will remain the responsibilityof ZCCM as a matter of current Zambian law. In order to provide certainty to the Company, GRZ hereby confirms that should common law applicableto Zambia be interpreted differently, it will take such action open to it (including, but not limited to, the passing of appropriatc legislationor regulation) to ensure that the legal position-setout above is maintained. d 12.4 (a) In the event GRZconsidersin its reasonable opinion that tie Company is in material non-compliancewith the Environmental Plan. GRZ shall have the right to serve a written notice on the Company identifying the alleged material non-compliance and subject to Clause 12.4(b),the Company shall have three (3) months from tie receipt of such notice within which to remedy the alleged material non-compliance. (b) In the event that such alleged material non-compliance is not remedied within the three (3) months notice period, either €?mymay rekr the matter to a Sole Expert, for determination,in accordancewith Clause 19. Following such referral, the Sole Expert shall determine whether or not the alleged material non-compliance has occurred and if the Sole Expert determines that the alleged material non-compliance has occurred, the Sole Expert shall detemnethe remedy for such non-compliance and the timescale within which such remedy must be carriedout. H lZCCM\GCO\TRANSACT\NDRSOIS8.31 - 26 - 12.5 TheCompany shall be entitledto amend the Environmcntal Plan fromtime to rime, provided that follcwing such amendment the Environmental Plan (as the case mybe) conforms to specifications and practices established by Zambian standards for the management of the environmentas it is affected by ore treatment processes so as to reflect changes in operations and other circumstances considered to be appropriate by the Company and shall deliver a copy of such amended plan or obligations(asthe case mybe), to the Minister in substitution for tie Environmental Plan (as tie case mybe), so amended. If however, GRZ considers that any such amendment would constiturea Major Change (asdefined in Clause 22.3 herein) the provisions of Clause22 shall apply. 12.6 The Minister on behalf of GRZ may propose an amendment to the Environmental Plan if (a) atzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAany time the conduct of Normal Operations in accordance with the Environmental Plan fix whatewer reason poses a material danger topublic health and safety or may result m significant damage to the ecology of the area which was not contemplated in the original Envircmnental Plan and isor may become irreversibleor only become W reversible or only be reversed after the lapse of fifteen (15)years; (b) the environmental impact of Normal Operations shall prove substantially more adverse than anticipated inthe Environmental Plan; or (c) tested and established technology or procedures,or imprcwements thereof has become available and economic (subject to the principle of BATNEEC) subsequent to the Effective Date and, if applied to the operation of the Facilities, could materially mitigate the environment impact of Normal Operations. A notice proposing an amendment to the Environmental Plan shall include, together with the proposed amendment, a detailed written statement of the reasons why the Minister considers the proposed amendment to be necessary. 12.7 hthe event of a variation of the Environmental Plan proposed by the Minister on behalf of GRZ under the circumstances set forth in Clause 12.5,the Company undertakes toconsider W the proposed variation in good faithand, unlessby notice of objection served on the Minister within sixty (60) days of receipt of the proposal made pursuant to Clause 12.5, it informstie Minister that itconsiders the proposed variationto be unreasonab~eitshallbe deemed to have agreed the same. A noticeof objection shall include a written statement of the reasons why the Company consider the proposed variation to be unreasonable settingout: (a) its estimate of the direct 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 effectsof the change proposed by GRZ. 12.8 Follwing receipt of a notice of objection under Clause 12.7,the Minister shall within sixty (60) days of receipt thereof inform the Company by notice in writing whether or not the Minister’s proposal for variation of the Environmental Plan is or is not withdrawn. h the H.ClCCM\CICO\TRANSACTWDRSO1S.31 - 27 - went that the Minister’s proposal for variation is not withdrawn, the question of whether GRZ’s proposal for variation is unreasonable shall be submitted for the opinion of a Sole Expert in accordance with Clause 19 who shall in his determination of reasonableness considerthe principleof BATNEEC. The opinion of the Sole Expert will be binding on the hnieswith the effect that: (a) if the Sole Expert determines that GRZ’s proposal fixvariation is not unreasonable, the proposal fixvariation will be deemed m have been agnxd; or (b) if the SoleExpert detemesthat GRZ’s proposal fbr variation is unreasonable, the proposal will be deemed to hme been withdrawn, Provided that the SoleExpert may in his solediscretion suggest alternativeproposalsor timezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA schedulesor mitigationof cost proposals to the Parties who will consider the same in good faithprior to the determination being rendered by the Sole Expert. The period during which such proposals shall be consideredby the Parties shall not exceed thirty (30) days or WC’ longer period as the SoleExpert may designate. 4 12.9 Where a variation to the Environmental Plan proposed by the Minister has been agreed by the Company or is deemed to have bem agreed by them pursumt to this Clause 12, the Environmental Plan shall be amended accordingly. 12.10 Nothing in this Clause 12shallbe deemed or construed to: (a) limit the right of GRZto tiesuch other actions within its power to protect the public health and safety; or (b) render the Company liable fixpenalties or fine imposed, or third party claim made, in respect of activities undertaken by ZCCM prior tothe Effective Date. 12.11 The Company shall, at the invitation of the Minister responsible fix the environment. participate either individually or on an industry-wide basis, in discussions relating to ti impact and effectiveness of the Environmental Laws or on any prospective changes thereto. - HUCCM\GCO\TRAKSACT\NDRI01~.31 - 28 - PARTD TAXATION 13. General Obligation to Pay Tax 13.1 The provisionsof Schedule8 correctly reflect, m respect of the matters therein specifically described, the current tax regime applicabletothe Company in the conduct of its activities under this Agreement. Whilst Schedule 8isnot intended tooverride applicable legislation, in the event of any ambiguity between applicable legislation and Schedule 8, GRZ and the Companyagree that the provisionsof Schedule8 shall apply, it being the intent of the Parties that Schedule 8 clarifyzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAany ambiguitiesm the legislation and tax regime applicable to the Company or its operations. 13.2 Subject to Clause 15 the Company shall pay tax, rcyalties and duties f’romtime to time in W accordance with applicable legislation. 14. VAT Refunds 14.1 GRZ shall ensure that VAT.collected on goods and services procured by the Company is refunded to the Company as soon as practicable from the date of submission of the Company’s monthly VAT return. 15. Taxation Stability 15.1 GRZundertakes that it willnot for a period of fifteen (15)years commencing on the Effective Date: (a) increasecorporateincome tax or withholdingtax rates applicable to the Company (or decrease allcwances availableto the Company in computing its liability to such taxes) from those prevailing at the date hereof; or (b) otherwiseamend the VAT and corporatetax regimes applicable tothe Company from those prevailing as at the date hereof; or (c) imposenew taxes or fiscal imposts on the conduct of Normal Operations, (d) alter the right of any nonZambian citizens (and entitled dependants) (on his or their arrival or permanent departurefrom Zambia) to; (i) import within six (6)months from the date of amval free of dutyand 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 in Zambia; and H\ZCCM\GCO\lRANSACT\NDRSOlP.31 - 29 - (iii) freedy remit all income earned in Zambia during such residency, so as to have, in each case, a material adverse effect (the issue of whether or nor such effect is materially adverse to be detemned by a SoleExpert in accordance with Clause 19 in tie event of disagreement benveen the kartits) on tie Company's Distributable Profits or tie dividendsreceived by its shareholders. GRZfurtherundertakes that for the same period of fifteen (15) years, it will not: (e) increase (0 the rate of Royalty rekrdto inSchedule8 from the level prevailing at tie date hereof; or (ii) import duty rates applicable to the Company so as to result m the weighted average import duty rate to which the Company is subjecton the iIIIpOK r goods and materials required for the Approved Programme of OperationszyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 6r, NodOperationsand which would, at the date hereof, be exempt from custom and excise duties under Section 97(1) of the Act, above a level of zero per cent. (0%);or (iii) import duty rates applicable to tie Company so as to result in tie wtighted average import duty rate to which the Company is subject on tie import of goods and materials required for the Approved Programme of Operationsor other Normal Operations and which do not fill under Clause 15.l(d)(ii) above a level of fifteen per cent. (15%);or (iii) the Excise Duty on Power applicableto tie Company's electricitypurchases above the rate prevailing at tie date hereof, For the purposesof Clause 15.l(e)(ii)and (iii)the Facilities will be deemed to be a "mine" and the operations conducted in connection therewith to be "mining" for tk purposesof Section 97 of tie Act. d (f) impose other royalties or duties on Normal Operations, so as to have a material adverse effect on the Company's Distributable Profits or the dividends received by its shareholders. 15.2 Upon expiry of the period specified in Clause 15.1, GRZ shall ensure that no law, statute. regulation or enactment shall be passed or made which would discriminate against the Company in respectof any such matters as are referred to in Clause 15.1 or otherwisein its conduct of Normal Operations or any other circumstances under this Agreement when compared to other mining companies or joint vemmconducting similar operationson a scale equivalent to those conducted by the Company in Zambia provided that GRZ will be at liberty to pass or make any such law, structuxe, regulation or enactment to enable the performanceoramendmentof a development agreement entered intoby itand anothermining company or joint venture prior to the expiry of such period. - 30- 15.3 GRZ covenants to reimburse tie Company as soon as is practicable (or, at its option, make offsetting changesin any law, statute, regulation or enactment applicable to the Company) to ensure tie Company is fully and fairly compensated for any losses, costs or other adverse effectson its Distributable Profits incumd by it by reason of a failure by GRZ to comply with the prwisions of Clauses 15.1 and 15.2 provided that (if GRZ opts to make such legidative changes) GRZ shall reimburse the Company for any loss, costs or effectsincumd along with interest at a rate of one (1) month LIBOR whilst offsetting changes in any law, stafute, regulation or enactmentzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAare king enacted. The Company acknmvledges that this will be its sole remedy for such tihmtocomply with Clauses 15.1 and 15.2. 15.4 hthe event there is a dispute as towhether or not the Company has suffered mylosses,costs or other adverse effect on its Distributable Profits the matter shall be referred to a Sole Expert in accordance with Clause 19. u- H G3ThWCO\TRANSKlWDRSOIS8.31 - 31- PARTE FORMALCLAUSES 16. Assignment 16.1 The Company my,with the consent of the Minister, assign the whole or part only of its rights and obligations under this Agreement and its interest in the Large Scale Mining Licences and GRZ covenants that the consent of the Minister to such an assignment will not be withheld in the circumstances set out m Clauses 16.4and 16.7. 16.2 If the Company assigns its entire interest in the Large Scale Mining Licences and its rights and obligations underthisAgreementmaccordancewith Clause 16.1,then upon the assignee becomingpartyto this Agreement, tieCompanyshallbe discharged fromany furtherliability in respect of any obligation whichaccruesafter the date of that assignment without prejudicf to pre-e-xistingrightsaccrued to GRZ against the Company. U 16.3 Where an assignment tieseffect pursuant to Clause 16.1,the Company shallenter into an agreement with the assignee wherein the assignee agrees with the Company and undertakes to GRZ that it will: (i) become a party to this Agreement; and (ii) assume, observe and comply with all obligations of the Company under the Act, regulationsmade thereunderand this Agreement. 16.4 If the Company assigns part only of its interestsin the Large Scale Mining Licences and the rights and obligations attaching thereto under this Agreement, the Company shall be discharged fromany further liabilityin respect of any obligation which accrues afterthe date of that assignment as they relate to the interest soassigned. 16.5 Notwithstanding the foregoing provisions of this Clause 16, the Company may: d (a) charge by way of fixed or floating charge the whole or any part of its undertaking and assets including the Leases, the Facilities, the Mine Products and uncalled capital (and premium) 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; and (b) mortgage and chargeany specified asset (whether real or personalproperty)to secure the purchase price thereof where such amount has been borrowed to finance the purchaseof that asset and this asset is to be used as part of Normal 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, in any event, within sixty (60) days thereof). Subject to Clause 16.6, any mortgagee or chargee under a mortgage or charge given by the Company pursuant to this Clause may - 32 - exercise all rights of sale and other rights included in such instrument of mortgage or charge pmided it shall first give to GRZ at thirty (30)days notice of its intention to exercise any rights of sale and five (5)days notice in all other cases. 16.6 The rights ofzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAany mortgagee or chargee under a mortgage or charge given by the Company pursuant toClause 16.5 shall be subject to and limited by the rights of the Company under this Agreement and the rights of GRZ totemnatethis Agreement under Clause 18.3. The rights of such chargee or lender to sell the assets of the Company so charged shall not be exercisable: (a) unless all or each of those assets and undertakings of the Company which arecharged by the mortgage or charge are sold (or with such exceptions as GRZ may agree) to a purchaser appmed by GRZ (which approval GRZ cavenants not to unreasonably withhold); or (b) if GRZ has within the thirty (30)day period of notice under Clause 16.5 given notice L of the mortgagee, chargee, or lender that it will purchase some or all the assets which the mortgagee, chargee or lender wishes to sell at a price which is equivalent to: (i) the highest price which a bomjidepurchaser who is at Arms’ Length Terms from the Company, its shareholders and the mortgagee, chargee or lender has offered to pay for the assets and undertakings; or (ii) if there is no such offer, at a total price equal to the fair market value of the same as a going concern to be detemnedby agreement between the kmies but failing such agreement tobe determined by a Sole Expert in accordance with Clause 19, and settles the purchase by making full payment of the price at the principal address of the mortgagee, chargee, or lender and in the currency denominated in the loan between the mortgagee, chargee or lender and the Company within ninety (90) days after notification to GRZ of such place for payment and designated currency or otherwise on terms agreed with the mortgagee, charge or lender. 16.7 Where the Minister’s consent is necessary to effect an assignment pursuant to Clause 16.1, GRZ will procure that the Minister will not withhold his consent where, in the case of an assignment, the proposed assignee has demonstratedits financial capacity and technical ability tomeet 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 diu,to the obligations it will assume under the Shareholders’ Agreement. 16.8 h the event that the Company considers that the Minister has acted unreasonably in considering that a proposed assignee or the acquiring party has not demonstrated such financial capacity or technical ability as is rekmd toin Clause 16.7, it myrekr the issue to a Sole Expert for its opinion. If the Sole Expert detemnesthat the Minister: - 33 - (a) has behaved reasonably in determining that the proposed assignee or the acquiring party has not demonstrated the requisite levels of financial or technical ability, the Minister's determination shall stand; or (b) hasbehaved unreasonably in so determining, tie Minister's determination shall be set aside and the consent rekmd to in Clause 16.7 shall be deemed given. 17. Extensionsto"'he 17.1 NotwithstandingzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAany provision of this Agreement, the Parties by agreement between the persons responsible for giving Notices under Clause 23, may from time to time extend any period rekrred to in this Agreement, or substitute fixany date referred to in this Agreement such later date, as they think fit. 17.2 If the Company is prevented or hindered by any circumstances or event of a kind set out in Clause 21 or by a refkrcnce to a Sole Expert or by an arbitration under Clause 19 fror undertaking all or any of its obligations hereunder or exercising any right granted, the periti of time alluwed for the performance of that obligation or exercise of that right and all periods of time thereafter allowed for the performance of obligations or exercise of rights which are dependent upon the first mentioned obligation or right, shall be atended by a period equal to the period during which such prevention or hindrance continues or during the period from the time when the question, diqmm or difference arose until the time of its detemnation by the Sole Expert or settlement by agreement or arbitration, as the case may be. 17.3 Wheremyperiod is, or is deemed tobe, extended or any later date substituted for mearlier date under this Clause 17, that extended or substituted period or date shall be deemed to constitute the period or date referred to in this Agreement (notwithstanding that at the time of such extension or substitution such period may have expired or such date may have passed). 18. Termination 18.1 The Company may terminate this Agreement at any time after the fifteenth anniversary of the -' Effective Date by giving twelve (12) months notice to GRZ. 18.2 GRZmay temnate this Agreement by notice to the Company if (a) all of the Large Scale Mining Licences have expired by afhxion of time and have not been renewed; or (b) the land the subject of tie Large Scale Mining Licences is abandoned or for the purposes of this Agreement isdeemed tohave been abandoned by the Company under Section 49 of the Act. 18.3 In tie event that either Party: (a) is in material default in the performance of its obligations set forth in this Agreement; or H UCC.H\(;CO\TRANSACTWDRI01~.3I - 34 - (b) fails to mat as binding and comply with any award made by a Sole Expert or in m arbitration pursuant to Clause 19, and has not remedied such default or failure within thiny (30) days of a notice by the other Fktyto do so, the otherzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBARuty may give notice of such default or failure (hereinafter in this Clause called a "DefaultNotice") to the defaulting €?my which shall specify the default or failure alleged. If the Company receives a default notice it shallat the same time give a copy of the Default Notice toeach lender to the Company, where the name and address of that lender has previously been notified toGRZ, and toeach mortgagee or chargee of my of the Company's assets under any mortgage or charge notified to the Minister in accordance with Clause 18.5. If the defaulting htydisputes the subject matter of the Default Notice it my rekr the issue toarbitration pursuant to Clause 19. 18.4 For the purposes of Clause 18.3(a), "mareriaZdqkuZt" shall mean a default which ismaterial in nature and effect including, without limitation, a failure by a Rmy to comply in all material respects with all material terms and conditions and provisions of this Agreement which fall to be performed by it. 18.5 If within a period of three hundred and sixty (360)days fiAlmving a Default Notice (or such longer period as may be fixed by a tribunal where the subject matkr of the Default Notice is submitted toarbitration under Clause 19) either: (a) the default or failure specified in the Default Notice has not been remedied (or active steps have not been commendand continued to remedy the default or failure if 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 18.7, GRZ may by notice (hereinafter in this Clause 18 called a "Termination Notice") to the Company (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 (hereinafter in this Clause called the "Termination Date"). GRZ shall ensure that the Minister does not make a decision to suspend or cancel any of the Large Scale Mining Licences and that no action is taken by or on behalf of GRZ without the approval of the Company to terminate such Large Scale Mining Licences or any of the Leases prior to the Temnation Date. Provided that GRZ shall not serve a Termination Notice while arbitration between GRZ and the Company under this Subclause 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 in favour of the Company, or within the period fixed by the arbitrator the default or failure is substantially remedied or the compensation is paid, GRZ shall not serve a Termination Notice and any Termination Notice already served shall be deemed withdrawn. H GY3X\GCO\TRANSM3WDRWIS8.31 - 35 - 18.6 If the Company or GRZ contest: (a) the groundsfor the issue of the Dehult Notice; or (b) the materiality of the default; or (c) whether the default or failurehas been remedied; or (d) the adequacy of any compensation paid pursuant to Clause lWb), the matter shall be submitted for arbitrationpursuant to Clause 19. If the arbitratorfinds (in the case of Clause 18.6(a)that adequate grounds exist for issueof the Default Notice, he shall fix a period during which the Company must comply with Clause 18S(a)or 18.5(b)and the mountof compensation payable (if applicable). If the arbitratorfinds (in the case of Clause 18.6(c)in favour of GRZ,he shall fix a period during which the Company must remedy the default or hilure. If the arbitratorfmds (m the case of Clause 18.6(d)m howof GRZ, hr shall fix the mount of compensation payable and the period for its payment. ti 18.7 If this Agreement is terminated by GRZ pursuant to Clauses 18.2 or 18.3: (a) the Company will surrendertoGRZ the Large ScaleMming Licences and the Leases but withoutprejudiceto tie liabilityof myof tie Parties in respect of any antecedent breach or default under this Agreement or in respect of any indemnity given; (b) each Party shall forthwith pay to the other Party all monies that may be owing to the other Party hereunder; (c) GRZshallhave the option to request that the Company abandon the Facilities within a reasonable timetable specified by GRZ and the option to purchase(subjectm any encumbrances thereon) all of the Facilities at a price equimlent to the fair market value of such assets, which fair market value is to be determined by agreement between GRZ and the Company but failing such agreement by a Sole Expert in accordance with Clause 19. Such option to be exercisableby notice to the Company .- within thirty (30) days following temnation 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 records of the Facilities held by the Company to GRZ; (d) the Company shall have the right, within the one (1)year period following the thirty (30)day notice period referred to in Clause 18.7(c): (i) to assign or otherwisedisposeof all or any portionof the remaining Facilities 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 irreparabledamage to major assets which are not removed from the Contract Area; and HVCM\CICO\TRANSACT\NDRY)lU1.31 - 36 - (e) the Company shall leave the Facilities and Mining Area in a safe and stable condition to the reasonable satisfaction of the Director of Mine Safcty having regard tonanml conditions in the area and applying generally accepted standards of good mining and metallurgical industry practice, provided that the Company shall not be required to alter the physical condition of the Facilities and Mining Area beyond the requirements of the Emironmental Plan applicable from time to time. 18.8 Upon the expiry of the one (1) year period rdimedto in Clause 18.7(d), all Facilities which remain on tie Contract Area shall become the property of GRZ without any cost to GRZ or any liability fixGRZ to pay compensation thcrefor. 18.9 Clauses 12, 18.7, 18.8, 19.20 and 21 shall continue in force notwithstanding the temnation of the rest of this Agreement. 19. Arbitrationand SoleExpert v 19.1 Subject to Clause 19.7below any dispute. disagreement, contmversy or claim arising out of or relating to this Agreement. including the interpretation or performance of provisions of this Agreement or the breach, termination or validity thereof (a "Dispute")shall be referred to and finally resolved by arbitration in accordance with the rules of the London Court of International Arbimtion (the "Rules")subject tosuch modifications as the Parties may agree in writing. Unless otherwise agreed in writing, the appointing authority shall be the London Coun of International Arbitration. The tribunal shall consist of a sole arbitrator (the "Tribunal")and the place of arbitration shall be London and the language of the arbitration shall be English. 19.2 An award m proceedings under the Rules shall be binding on the Pdrties and judgement thereon mybe entered inzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAany court having jurisdiction for the purpose of enforcing the award. 19.3 GRZ hereby irrevocably waives myclaim to immunity: (a) in respect of proceedings to enforce my such award including, without limitation, immunity from service of process and from the jurisdiction of the London Court of lntemational Arbitration; and (b) in respect of execution of any such award against the property of GRZ outside Zambia. 19.4 The waiver of immunitiesreferredto herein constitutes only a limited and specific waiver for the purposes of this Agreement and under no cinxmstances shall itbe interpreted as a general waiver by GRZ or a waiver with respect to proceedings unrelated to this Agreement. GRZ has not waived such immunity in respect of property which is (i) located in Zambia; (ii) used by a diplomatic or consular mission of GRZ (except as may be necessary to effect service of process), (iii) property of a military character and under the control of a military authority or defence agency, or (iv) located in Zambia and dedicated toa public or governmental use. - 37 - 19.5 Unless otherwise agreed by the Ruties or determined by the Tribunal the cost of any arbitration procedure will be borne by the unsuccessful Ruty in accordance with the Rules. 19.6 Where a Dispute has been rekrred fixsettlement by arbitration m accordance with the Rules then either Ruty 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 relevant pmof the Dispute has been resolved by an award of the Tribunal.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 19.7 Notwithstanding the above, the hties myby mutual agreement in writing, rekr a Dispute arising out of or in connection with Clauses 6.4, 7.2,9.8, 12.4, 12.8, 15.4, 16.6(b)(ii), 16.8. 22.2and 22.4 hereof to be finally resolved by the detemnation of a Sole Expert (rather than arbitration). 19.8 Where any difference of view or disagreement is refixred by the Rmies to the Sole Expert, consideration of the difference of view or disagreement in question shall be imtiared by the Parties jointly and by each hrty mbmtting to the Sole Expert and the other Party tl- following written materials: 1 (i) a description of the difference of view or disagreement; (ii) a statement of tiesubmitting Ruty‘s position; and (iii) copies of records (if relevant) supporting the submitting Party’s position. 19.9 Within ten (10) Business Days of the date that a Party has submitted written materials to the Sole Expert and the other Party pursuant to Clause 19.8, the Party receiving such written materials shall, if it has not already done sopursuant toClause 19.9, within ten (10) Business Days of receipt of such written materials submit to the Sole Expert and the other Party the written materials set out in Clause 19.8 (i), (ii) and (iii) above. 19.10 The Sole Expert shall consider any infixmation submitted by the Parties under Clauses 19.8 and 19.9 and may in his sole discretion and subject to the timetable imposed by Clause 19.1 ’ consider any additional infixmation submitted by any Rmy at a later date. J 19.11 The Parties shall be entitled to have access to the other Party’s relevant records and to receive copies of the records submitted by the other Party to the Sole Expert. 19.12 Each Party shall designate one (1) person knowledgeable about the issue which has been referred to the Sole Expert who shall beavailable to the Sole Expert to answer questions and provide my additional information requested by the Sole Expert. Except for such person, a Party shall not be required to. but my,provide oral statements or presentations to the Sole Expert or make any particular individuals available to the Sole Expert. 19.13 Except as provided in Clause 19.15with respect to the payment of costs, the detemnation of the Sole Expert shall be without prejudice to any Party and any evidence given or statements made in the course of this process may not be used against a Party in any other proceeding. The process shall not be regarded as an arbitration and the laws relating to commercial arbitration shall not apply - 38 - 19.14 When a Sole Expert’s determination is initiated, the SoleExpert shall be requested to provide a determination within fifteen (15) Business Days after the receipt of the written materials from both hrtiespursuant to Clauses 19.8 and 19.9. For the avoidance of doubt, the fifteen (15)BusinessDay periodwill commence on receipt of the written materials from both hnies or the expiration of the response period &rred to in Clause 19.9. whichever is the earlier. 19.15 Thecostsof engaging a Sole Expert shall be borne by the unsuccessful Party. . . 19.16 The SoleExpert’s determination shallbe final and binding on the hrties save in the case of manifesterror. 19.17 Any proceedings held hereunder shall be private and confidential and shall not be open or attended by third parties. The provisions of Clause 17 of the Sale and Purchase Agreement shall apply tozyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAany information which any Party receives or acquires in any way arising out of such proceedings. 20. LawApplicable 20.1 This Agrement shall be governed by and construed in accordance with the laws of Zambia which the htiesacknwledge and agree includes, so far as they are relevant, the rules of internationallaw. 21. Force Majeure 21.1 Any failun on the part of a Party hereto to comply with any of the terms, conditionsand provisions of this Agreement (except any obligation of a Party to make payment of money to the other Party) shall not be grounds for temnation or give the other Party hereto any claim for damages insofar as such arises from Force Majeure, if the first-mentioned Party - (a) has taken all appropriate precautions, due care and reasonable alternative measures with the objective of avoiding such failure and of carrying out is obligations under this Agreement; and L (b) has given notice tothe other Party of the occurrenceof Force Majeure on becoming aware of such an event. The first-mentioned Party shall tieall reasonable measures to overcome the Force Majeure and to fulfil terms and conditionsof this Agreementwiththe minimum of delay (provided that no Party has an obligation to settle a labour dispute or to test the constitutionalityof any legislation or law) and shall given notice to the other Party on the restoration of nod conditions. 21.2 For the purposes of this Agreement, Force Majeure shall include war, insurrection, civil disturbances, blockades, riot, embargoes, strikes, lock-outs and other labour-conflicts,land disputes, epidemics, volcanic eruptions, earthquakes, cyclones, floods, explosions, fires, lightning, govemmental restictions, change in applicable law or unavailability of materials or equipment failure by GRZ to grant or issue to Avmin as consultantioperator or any H:UCCM\GCO\TRANSMTWDRSO1S8.31 - 39 - contractors or sub-conuactors appointed by Avmin as consultantioperatorthe necessary consents and pemssionstoenable them tooperate within Zambia, to import equipment into Zambia and to permit tie entry into Zambia of employees of the Company and any other event which the Ruty claiming Force Majeure could not reasonably be expected to prevent or control. 21.3 hthe event of any circumstances or went of a kind set out mthis Clause21 the period of time allowed for the performance of those obligations or exerciseof those rights which are delayed by such event of Force Majeure and the periods of time thereafter allmwd for the performanceof obligationsor exerciseof rights which aredependant uponthe first mentioned obligations or rights, shall be extended by a period equal to the period during which such event of Force Majeurecontinuesuntil the time of its settlement by agreement. 21.4 Where any period is, or is deemed to be, extendedor any later date substituted for an earlier date under this Clause 21, that extended or substituted period or date shall be deemed to constitute the period or day refimed to in this Agreement (notwithstanding that at the tin, of such extension or substitutionsuch period may have expired or such date may havhd passed). 22. Variation 22.1 The Rmies may from time to time by agreement in writing add to, substitutefor, cancel or vary all or any of tie provisionsof this Agreement, the Appmed Programme of Operations (including for. the avoidance of doubt the Investment Commitment and the Contingent Commitment),the Large Scale Mining Licences, the Leases, special easements and'all other leases, licences, rights or grants granted or any programme, proposal or plan approved for the purposes of more efficiently or satisfactorily implementing or facilitating the objectives of this Agreement. 22.2 TheCompany shall have the right to modify or vary the Approved Programme of Operations (hereinaftercalleda "Modification")if such Modification isnot a Major Change. No Major Change shall be effected unless it has been approved or is deemed to have been approved !. GRZ, provided that such approval is not to be unreasonably withheld. d 22.3 For the purpose of this Clause 22, a Major Change means, without limiting the generalityof the term: (a) any Modification by which the Company shall not remain in substantialcompliance with the Approved Programme of Operations;or (b) any material change involving the elimination or material dilutionin the capacity of the Facilities or in the Approved Programme of Operationsif a consequenceof such proposed material change would be to materially reduce or materially delay receipt of ZCCM's dividendsor royalties derived from the Facilities or in a material respect adversely impact or increase the adverse impact of the Company's activitieson the environment H \ZCCM\CCO\TRANSACnNDRfOlU1.31 - 40 - provided that a reduction m the number of employees of the company shall not, in and of itself, constitutea Major Change. 22.4 Where the Company proposes a Modification, it shall deliver notice of such Modification to GRZ, such notice to include full details includmg an economic analysis of the proposed Modification entitled "Proposed Modification to the Approved Programme of Operations". Such Modification shall be deemed tobe approved by GRZ and the Approved Programme of Operations shall be amended to the extent necessary to reflect such Modification, unless GRZ within thirty (30) days of the notice being delivered notifies the Company that it considers the Modification a Major Change and that it does not approve it. 22.5 If the Company does not agree that the Modification is a Major Change then it myrefer the question of whether the Modification isa Major Changetothe Sole Expertmaccordance with Clause 19, and if the Sole Expert determines that the Modification is not a Major Change, GRZ shall be deemed to have approved the Modification as at the date of the Sole Expert's determination. W If the Company considers the withholdingzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 22.6 of approval by GRZ to be unreasonable, it my refer the question of the reasonableness of GRZ's objectionto the Sole Expert in accordance with Clause 19and if the Sole Expert determines that GRZ's objectionisunreasonable, GRZ shall be deemed to have approved the Modification as at the date of the Sole Expert's determination. h assessing the reasonableness or otherwise of GRZ's objectionsthe Sole Expert shall have regard to the input which withholding approval to the change would have on the economic variability of the project, as well to the impact on government revenues described in Clause 22.3(b) above. 22.7 Where GRZ approves or is deemed to have approved a Modification, the Approved Programme of Operations mybe varied or amended to the extent necessary to reflect the Modification. 22.8 For the purposesof this Agreement, a reduction in the number of employees of the Company shall not, in and of itself, constitute a Major Change. 23. Notices 23.1 (a) Anynotice, consent, demand, approval or other communication (a "Notice")required or permitted to be given shall be deemed to have been given if: (i) in the case of a Notice given by GRZ, such Notice is signed on behalf of GRZ by either the Minister or Rxmanent Secretary to the Ministry as their respective responsibilities require; or (ii) in the case of a Notice to be given by the Company, such Notice is signed by a director or by the Secretary of the Company. (b) Each such Notice shall, as elected by the hrty giving such notice, be personally delivered or transmitted by telex to the other hrty as fbllcws- H UCCMLGCO\lRANSACNUDRSOIS8.3I - 41- A Noticeto GRZ If by facsimile: If by hand: Fk!rmanelltsecretary Axmanent Secretmry “stryofMinesandMinerals Mhhtryof Mines and Minerals Development Development +260 1 2512441252916 . POBox 31969 Haile SalassieAvenue Lusaka, Zambia A Notice to tieCompany If by facsimile: If by hand - The Secretary The Secretary ChambistiMetalsPLC Chambisti MetalsPLC do + 260 1 225 903 KPMGFeat Marwick Kambendekela House DedanKimathi Road Lusaka Zambia 23.2 Except as otherwisespecifiedherein, all Notices and other communications shall be deemed to have been duly given on the earlier of (i) the date of receipt if delivered personally;and (ii) the date of transmission with a confirmed receipt of transmission if transmitted by facsimile. Either Party mychange its address by Notice to the other Party in accordance with tht provisions of this Clause. All Notices and all documents or instruments delivered in .- connection with this transaction shall be in the English language. 23.3 Where the Company is required to submit any plans, proposals or other material for the approval of GRZ, tie date of submission shall be deemed to be the date on which GRZ received the said plans, proposals or other materials. 24. Waiver 24.1 The failureof any Party to enforceat any time any of the provisions of this Agreement shall in no way be construed to be a waiver of the provision or any part thereof or the right of any Party thereafterto enforce each and every pan of the provision in respect of any subsequent dehultor breach. 25. Severability - 42 - 25.1 The provisions of this Agreement shall be separate and severable each from the other to the extent that ifzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAany portion or any one provision or portion is deemed to be inoperative then the remainder of this Agreement shall remain binding upon and enfixceable by the hrties hereto. Nothing herein shall preclude one hrty from requesting the other Party to renegotiate any provision herein. 26. Further Acts 26.1 The Parties shall execute such documents and do and perform such acts that lie within their power and are necessary to give full effect to this Agreement. 27. Counterparts ThisAgreement may beexecuted in any number of counterparts, each of which executed shall be deemed to be an original, and such counterparts shall together constitute one Agreement. L 28. Representations and Fkranties 28.1 Except as expressly stated in this Agreement, no representation, inducement or warranty was, prior to the execution of this Agreement, given or made by one of the Parties hereto with the intent of including the other Party to enter into this Agreement, and any representations, inducements or warranties that may have been so given are hereby denied and negated. H \ZCCMGCO\lRANSACIWMIOD1S8.3I -43- IN WITNESSWHEREOFthisAgreement hasbeendulyexecutedby the htieson tiezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA day of l 19 SIGNEDfixandon behalfofthe ) GOVERNMENTOFTHE 1 FtEPUBLIQA3FZAMBIA THECOMMON!!&U, of 1 CHAMBISHIMETALSPLCwashereunto ) Director -44- scHEDuLE1 FWMEW0Fi.K APPROVED PROGRAMME OF OPERATIONS Cobalt!Slag Smelterand Hydro-MetahrgiadPlant Chambishi Metals PLC has bid to acquire the discard slag dumps from tieNkana smelter with a view to processing this material m order to produce iinished cobalt and copper. The development plan involves reclamation of material from the slag dump via ripping and loati@' onto trucks. The production rate of material from the slag dump is planned at 700,000 tpa. Thetrucks will transport the material from Nlcana to Chambishi where the material will be dumped on a stockpile to be fed into a crushing circuit to be crushed to - 10m. The crusher products will be blended with coal and fed into the newly constructed smelter of approximately45 MVA. The smelter will procure a high grade mattealloy assaying around 10%cobalt and 25%copper which will be leached in a newly constructed leach plant. The current hydro metallurgical plant will be adapted and expanded to receive and process the leach solution coming from the new mane leach section. The production from the new facility will total 4,200 tpa of cobalt and 7,700 tpa of copper. The copper circuit will be modified toproduce A grade cathode while the cobalt tankhouse will be expanded to produce 6,600 tpa of cobalt including the production from toll treatment. Normal operations The development of the process flow sheets, detailed descriptions of what constitutes normal operations in terms of costs and production levels will be finalised and made available when the detailed design study has been completed. The programme of operations will be submitted for approval within a period of six (6) months (pursuant to Clause 2.1). Investment commitment The committed capital in respect of the initial capital program is as follows: L Mining and transport $ 1 million Material Handling $ 2 million Crushing $ 3 million Smelter and ancilliaries $ 30 million Discard facilities $ 2 million Leach section $ 6 million Plant Reconditioning $ 14 million Cobalt tank house expansion $ 7 million Copper tank house expansion $ 5 million Total committed capital S 70 million Timetable - 45 - The realistic timetable for bringing the smelter into production, commencing from t.k date of completion, is approximately as follows: Detailed design of smelter and hydro- metalluq$al facility additions 4 months Preparation of tender documents, submission of tenders and adjudication- 2 months Constructions of smelter and additions to hydro-metallurgical facilities 22 months Commissioning 3 months Total time from Completion 31 months The project has a life of approximately thirty (30) years. Contingentcommitment Nature of contingency If, in the sole discretion of Chambishi Metals PLC, certain technical commercial and economic criteria (including without limitation, the possible impact thereof of a possible Konkola North mine are satisfied), Chambishi Metals PLC will undenakea further capital programme, for the construction of a second smelter and a further expansion of the hydro-metallurgical plant. Theanticipated capital in respect of this programme is: Allocation of expenditure Additional Smelter $ 30 million Further plant expansion 9 20 million Total contingent capital $ 50 million Toll treatment of cobalt concentrates In addition to the slag treatment facility the Chambishi plants taken over by Avmn will be operated on a basis similar to the current mode of operation toll treating cobalt concentrates supplied by Nchanga. Nkana and Baluba. Chambishi Metals PLC will act as the coordinator of the distribution of the cobalt concentrates and pyrite between the two cobalt plants on the Copperbelt. Under the toll treatment agreements concluded as part of this transaction the plant will continue to output cobalt at a rate of approximately 2,400 tpa copper at a rate of 15,000 tpa and acid at 60,000 tpa (dependent on concentrate availability). The surplus acid of about 40,000 tpa will be available for sale to ACo. - 46 - SCHEDULE2 LOCALBWINJSSDEVELOPMENTPROGRAMME Chambishi Metals PLC believes that Zambian, and specificallyCopperbelt,industry and business will benefit from the continued operation of the Chambishi Cobalt and Acid Plants and from the constructionof the slag smelter. It believes that the company will benefit from the presence of strong local business and will facilitate its furtherdevelopment and grcnvth. horder to achieve this, Chambishi Metals PLC will initiate a plan that will provide an impems for the development of local business. The broad strategy to achieve this will be as follows: e Identificationof businessopporhmitiedmnesoutsourcing > The company will identifyareas of operation which are not part of its core business or which it does not want to carry out. These areas will be designated fix outsourcing. e Identificationof existing entrepreneursm the area > Local businessmen and entrepreneurs who will be able to provide these servicestothe tineswill be identified. Should there be no-one who can do so, the company will use its best endeavours to foster partnershipsbetween foreign businesses whocanprovide theseservicesand local businessmenwho are interested in participating in these areas. e Identificationof traininghkillsrequired. This will initially be hcused on the formal sectors of the economy through a programme of: > Wherever possible utilising local business in the capital expansion and maintenance programme. > Encouraging contractors to do likewise. L e The company will investigate mechanisms to: > Assist Zambian citizens to effectively service the company through the provisionof materials, equipmentand services. > Advise and assist the establishment of long term businessenterprises. > Maintainaregister of Zambian businesses in terms of the provision of above- mentioned services to allow for the easier identification of potential providers. Chambishi Metals PLC has designated Messrs R Duvel and M Uys of Avmn to be the responsible persons to facilitate the success of the Local Business Development Plan. At a later stage this role will be fulfilledby a company employee. H GY334GCCN7tANSCMDRXM8.3I - 47 - SCHEDULE3 PARTI L l SCHEDULE4 PART I MEDICALSERVICES 1. MEDICALSERVICES IMMEDIATELY PRIOR TOCOMPLETION The Chambishi Cobalt & Acid Plant operates under the Nkana Division of ZCCM which administers two hospitals both of which mbased m Kitwe. Prior m the take over of Chibuluma Mine by the MemzConsortium, Nkana Division was responsible fix a third hospital based at Kalulushi. The three hospitals thus made up the medical services which catered for all ZCCM employees based mKitwe, Kalulushi and Chambishi. Employees of ZCCM had a choice of three hospitals depending on where they lived. The hospitals are supplemented by clinicsbased m the townships in the three towns as well as clinics in the plant and works areas at Chambishi. CHAMB1sHl CLINICS Chambishi employees and their registered dependants residing 'at Chambishi township are served by twclinics, one is situated m the township and caters for employees' registered dependants, while the other is located in the plant and works areas and caters for mine employeesas well as ZAMDET employees. Both clinicsare run and maintained by ZCCM on a 24 hour service. They are staffed by ZCCM employees and are visited three days a week by doctors from Nkana hospital or, by arrangement, from Kalulushi hospital. Allemployees of Chambishi Cobalt & Acid Plant and their registered dependants are entitled to free medical services and to attend hospitals at Kalulushi, and in some cases, Nkana. ZCCM provides a bus service to enable dependantsto visit the sick at Kalulushi hospital and an ambulance service is available at Chambishi to ferry cases which need to be attended to by a Doctor or require hospitalisation at Kalulushi/Nkana hospitals. In line with ZCCM practice, employees have a choice to use the contributoryor the non-contributory section of the hospital at Kalulushi or Nkana. HOSPITALSERVICES Chambishi employees needing hospitalisation or specialised medical attention attend the Kalulushior Nkana hospitals. 2. STANDARDANDCOSTSTOSERVICE USERS The information set forth in the remainder of this Part I is intended to facilitate the identificationand establishment of the standard of Medical Servicesprevailing at the date of Completion. The information is not certified as true, correct or complete and nothing herein contained shall be construed as preventing either Party from accessing primary and otherdata regarding the historical provision of Medical Services by ZCCM in order to correct, clarify and/or H UCCMUia)\fRANSACT\NDRY)IS8.3I - 51- elaborate upon such information for purposes of compliance with Clauses 9.2(a)(iii) and 9.2(b) of this Agreement. 0 NKAMDIVISION MEDICAL SERVICES (also utilised by Chambishi Cobalt and Acid Plant eqW=s) 1.0 TYPESOFSERVICES The following services are provided by ZCCM hospitals to serve mine employees, their dependants and others. CLINICALSERVICES Surgery, Internal medicine, €?aediamcs,Obstetrics and Gynaecology, Orthopaedic surgery, Anaesthesia, Ophthalmology, Dental and Accident and Emergencies. U OTHt3RSPECIALISED SERVICES Intensive Care Therapy, Computer Tomographic Scanner and Ultrasound (only at Nkana Division), Radiology and Histopathology (only at Nkana Division). MATEFUALzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAAND CHILDHEALTHSERVICES Immunisation, Antenatals, hst Natal, Family Planning Nutrition Surveillance and Home Based Care for HIV/Aid patients and the terminally ill. OTHER PUBLIC HEALTH LABORATORY LOCATIONOFMEDICAL SERVICESAT NKANA DIVISION d Nkana Division - 2 hospitals Nkana and Wusakile Hospitals and 14Township and Plantsite Clinics. The clinics include the following: Mindolo2, Mindolo 1, Miseshi Maternity, Twibukishe, Nka~West. Mumana (C7). Chamboli, (J) Chamboli (P) Maternity, Natwange. Nkana East. The Plantsite Clinics (ie. SOB Clinic. Central Shaft. Refinery, Mindolo Main, and Mindolo North) are located in their respective Plant Areas. All the Clinics at Nkana Division except for Nkana West Clinic Operate for 24 hours but have limited bed capacity. - 52 - 2.0 STAFFING These include Nursing staff, Rmunedical staff, Professional staff ie. Doctors and Consultants in different fields of specialisation and interest. AtNkana Division the total number of staff running the medical servicesis 611. Appendix 1 shows the labour distributionby category. 2.1 NURSINGSTAFF These are enrolled or registered nurses. Other nurses are in specialised fields (including theatre nursing, midwifery, intensive care nursing, ophthalmology, public health etc). At Nkana Division the total number of nurses is 373 as shown in Appendix 1. 2.2 PARAMEDICALSTAFF These include the following: Laboratory Technicians, Pharmacists and Pharmacy Technicians, Radiographers, Physiotherapists, etc. At Nkana Division the total number of paramedical staff is 44, as shown m Appendix 1. 3.0 OUTPATIENT A'ITENDANCES, OCCUPANCYRATE, ADMISSIONS The statisticsof outpatient attendances, Bed Capacity and occupancy rates are as shown in Appendix 2, tables 1 and 2. Overall, the major activity in outpatient attendance is with dependentsat 70%(366,298). employees22%(117,003).non-mine7%(33,948)and interdivisionalactivitiesat2% (9315). The average bed capacity for mine hospitals is 204 ranging hm26 to 450. The average stay in the hospital is 4.8days ranging from 4 days to 8 days. The average occupancy rate is 41.9%.The highest occupancy rate is in the low cost units. Appendix 2, table 2 gives the details. On admissions the greatest activity is on dependants54% (26,456).mine employees 23% (11.229)non-mine22%(10,545).interdivisional0.8%(394). 4.0 PEOPLEEXPECTJIDTOUSEMEDICAL FACILITIESPOSTPRIVATISATION By and large, the greatest number of users of medical facilities post privatisation will be working employees and their dependants 89%(180,441),followed by Mpedembe drilling5% (9336). Ndola Lime 1.4%(2802). Ndola Copper Refinery 1%(1149).Retired 1%(1062), Techpro (Z) Limited 0.3%(549). Medical Discharge0.2%(504) etc. Appendix 3, tables 1 and 2below and Table 4 show the picture: HUCCMGCOTRANSACnNDRWIS8.31 - 53 - Appendix 1 LABOURDISlWBUTIONBY FUNCI'ION ! "EGORY 1 LOCAL 1 EXRAT TOTAL Doctors 34 7 41 Nurses 373 0 373 Fbrarmdicals 44 0 44 Administration 153 SWT Ol TOTAL H WCM\GCO\TRANSACTlNDRX)lS8.31 -54- Appendix 2 Table 1 OUT PATIEN'IS AlTENDANCJ3 by Mine Hospital for Mine Emplo~yes, dependents, interdivisional and non mine I FACILITY'TYPE IkFkHIGHNKANALow 'IVTAL MINE EMPLOYEES 382 2089 8612 13844 24927 DEPENDEm 1932 1470 19140 36371 58913 INTEFtDlVIsIONAL 101 8325 8426 NONMINE 287 1117 4107 6507 12019 'KYlXL 2601 1 4676 1 31961 1 65047 1 104285 Table 2 BED CAPACITY, OCCUPANCY €"E (Averagestaymhospital,bed occupancy rate, inpatient bYS) By different Mine Hospitals NCHANGA NKANA FACILITYTYPE HIGHCOST Low COST HIGHCOST LOW COST Bed Capacity 110 450 101 338 Average Stay in Hospital 5 6 4 5 Bed Occupancy Rau 5% 30 52 40 48 In Rtient Days 7030 45630 11800 48462 - 55 - Appendix 3 Table 1 PEOPLE EXPECTED TO USE MEDICAL FACILITIES POST PRIVATISATION at Mine Hospitals NCHANGA NKANAIWUSAKILEzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA T I zccMLIlmrED EMP DEP EMP DEP Working 8,766 20.153 10.962 55611 Retired 12 230 ..1 Medical Discharge 20 203 herDivisional 9 SUBSIDIARY MpelembeProperties Mpekmbe Drilling 331 1,655 699 1004 Prosec (2)Limited Ndoh Lime Techpm (Z) Limited Ndola Copper Refinery J ZAMDET Scaw Limited 51 278 MUZ 40 232 Other l.352 4.056 'IDTAL 10.490 25,864 I 12,185 57,125 IXGEND: Emp = Employee. Dep = Dependentof employee H VCCM\GCO\TRANSACTWDRY)I5(1.31 - 56 - Table 2 PEOPLEEXPECI'ED"QUSEMEDICALFACILI"IE3 POSTPRIVATISATION 11 CATEGORY L * Rounding error Source: Submissions from Chief Medical Officers H UCCMUXO!TRANSACT\NDRSOIS&3I - 57 - NKANAHOSPITAL-MEDICAL COSTS TO OCTOBER 1997 94/95 95/96 96/97 To date m US$000 m us000 m us$000 Budget 4376 5830 4611 6360 6923 5835 Actwd 3848 5850 4881 5209 5909 4499 H GKCMGCOiTRANSACTWDRSOIS8.3I - 58 - NKANA DIVISION MEDICAL COSTS "D OCTOBER1997 COSTBYELEMENTzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 96/97Year To date H iZXh4GCO\litANSACT\NDRSO1S8.31 - 59 - LOCALEMPLOYEESProfessionalStaff (Alphabetical Order) II NAME QUALIFICATION SPECIALISATION Chiponda Charles Dr Bsc (HB)MBBS (OSM) Assistant Chief Medical Officer (Health ServicesManagement) KabolcMwape Mbewe Or) BscMBChBMRCP-UK Consultant Paediatrician Paediatrics MaboshePatrick Mwanawina BSCMBChB MRCP - UK SeniorConsultant Physician InmnalMedicine (Physician) Mu~enga Hcntry@r) BscMBC~BMRCP-UK Consultant Physician Internal Medicine (Physician) r Muralc Chola Baldwin (Mr) MDlFRCSHigher Surgical Senior Consultant Orthopaedic Tnining in orthopaedics UK Surgeon Orthopaedics GDR . Ngome Charles Cakb (Dr) Bsc MB ChBFRCR Consultant Radiologist Radiology Bsc MB ChB. FRCS 1London, Specialist Ophthalmologist FRCS I Dublin Ophthalmology Simukonde Musyani (Dr) BSc MB ChB M Comm H Dip Group.MedicalAdviser and HSM(UK) Chief Medical Officer, PubkKommmityHealth. Health Service Management d Simwizye Tresphor Kapupula BSCMBChBFRCS - UK Consultant Surgeon General Surgery BSCMBChBFRCA XI- UK DA Consdtant Anacsthetisr - UK AIIXS~~CS~~ H \ZCCM\GCO\TRANSACT\NDR~I18.31zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA -60- EXPATRIATE EMPLOYEES NAMJi QUALIFICATION SPECIALISATION DesaiH M (Dr) BDS. DOti.RCS Orthodontic Dentistry GodRG(Prokssor) MBBS Dip Chin RthMD ConsulantPathologist Rlthology Himpathology Menon G K (Dr) MBBS DA Consulcmt Anaesthetist Anaesthesia PaulCK @r) MBBSDDMREMB Consulant Radiologist Radiology Sinha P (Mr) MBBS FRCS Consultmt Surgeon Surgery Sathya Naathan @r) BDS Dental Surgeon Dcntisuy/Acupuncturc Waloch M (Th) PdD (UnivenityMedical School Consulant ObslGynae Obstetrics wmw and Gynaecolqy HUCCMGCOVlUNSACT\NDRSOlP.3I - 61- CllAMBlSlll CLINICS(TOWNSIIIPAND PLANT SITE)ACTUAL COST AGAINST BUDGET APRIL ToOCIIIBER1997 CO!X ELEMENT BUDGET ACIWAL K'000 K'000 LOCAL LABOUR(31) 95,037 90.298 DRUGS 3.249 7,486 STATIONERY 56 108 CLEANING MATERIAL 1.809 242 FOOD STUFFS 366 169 mHERMKESTORES 53.842 0 'Ktl'AL 154,359 98,303 PART II EDUCATION SERVICES 1. EDUCATION SERVICES IMMEDIATELY PRIOR TO COMPLETION ZCCM Nkana Division runs twoprimary schools, one in Kitwe and the second school at Kalulushi which has now been taken over by the Metorex Consortium. There are no ZCCM schools at Chambishi township. Employees' children and dependents attend local (government) primary schools and a junior secondary school at Chambishi twmhip. The majority of secondary school children attend the Government Secondary School in Kalulushi. ZCCM provides a bus service to emplcyxs' children and dependents attending secondary school education (Government schools) in Kalulushi. Estimated cost of this bus service is K100million per mum. Like all ZCCM employees, the children of Chambishi Cobalt &kidPlant employees and their registered dependents are eligible to be considered for enrolment at the education facilities run by ZCCM m Kitwe, Kalulushi and the Mpelembe Secondary School mKitwe subjectto the children meeting the selection criteriacurrently in practice. 2. STANDARDANDCO!3TS7O.SERVICEUSERS The information set forth in the remainder of this €?mI1 is intended to facilitate the identification and establishment of a standard of education servicesprevailing at the date of Completion. The information is not certified as txue, correct or complete and nothing herein contained shall be construedas preventingeitherparty from accessing primary and other data regarding the historical provision of Education Services by ZCCM in order to correct, clarify and/or elaborate upon such informationforpurposesof compliancewithClause9.3(b) and (c)of this Agreement. H UCCUGCO\TRANSACTWDRSO1S8.31 - 63 - EDUCATION FACILITIES OKANAPRIMARYSCHOOL) School Enrolment = 870(920in 1998) Number of classes = 32 (34 in 1998) Number of Teachers = 42 Administrativestaff = 03 Breakdown of Staff by Grade ADhfIN TEACHING SUPPORTSIXFF lWTAL !mwF STAFF G12 G11 G1 G2 G3 G4 G5 G6 G7 G8 3 0 22 20 0 9 2 0 2 8 66 Type of syllabus followed: Basic Zambia Primary Course High Quality cost-effective education is offered. NB: 1. Willbe recruiting5Class Teachers and 1Computer Science Teacher by November 1997. 2. Will lose one Class Teacher on transfer to Nkwazi Primary School in Lusaka at end of this term. H iZCCMGCOlTRANSACTWDRSOlS8.31zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA -64- PART 111 RECREATIONALSERVICES RJXREATIONAL SERVICES - CHAMBISHI TOWNSHIP IMMEDIATELY PRIOR 'ID COMPLETION 1. SOCIAL CLUBS There is one Social Club runby ZCCM through a Club Committee and twoother clubs which operate autonomously. See Appendix I. All these clubs are in the Council area but use ZCCM facilities. Services provided by ZCCM are water, electricity, general maintenance of the buildings lawns and surroundings. The Company provides assistance to a number of youth programmes and youth clubs which are suitably registered under Community Services. The services provided by ZCCM include transport for outside sporting activities, meal expenses fix team members and officials, the sports kits and where necessary registration and affiliation kes with National Sports Bodies. Details are given in Appendix I,table I. FOOTBALL FIELDS There are twoplaying fields in Chambishi township; one is a football pitch and the other a rugby field. The fields and associated inffastructure buildings are maintained by ZCCM. One stadium is used by the First Division Chambishi Football club which is sponsokd by ZCCM through the Community Services. ZCCM subsidises the costs of the team's kit, travel expenses, hotel accommodation, food and transport and other costs incidental thereto. ZCCM also bears winning bonus, camp and training allowances for the players including local cup games. Details of expenses for the current year are given in Appendix 2. WOMEN CENTRES L There is one Women Centre situated in the main Chambishi Township. The centre has one ZCCM employee who is assisted by one casual worker. All equipment, teaching aids, and material are funded by ZCCM. The centre caters for an average of 60 women per year. They are trained in Basic and Advanced Home Economics, Mothercraft. Nutrition and Hygiene. Trainees are spouses of ZCCM employees and their dependents. 2. STANDARDANDCOSTSTOSERVICEUSERS The information set forth in the remander of this Part I11 is intended to facilitate the identificationand establishment of a standard of recreational services prevailing as at the date of Completion. The inhrmation is not certified as true, correct or complete and nothing herein contained shall be construed as preventing either party from accessing primary and other data as regards the historical provision of the Recreational Services by ZCCM in order to correct, clarify H GXCMXjCO\TRANSACnNDRSOlS8.31 - 65 - and/or elaborate upon such information for purposes of compliance with Clause 9.5 of this Agreement. -66- YzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA a a ka 0 Table2 1.lb CLUBSWITHOUT ZLUB IIOUSES ~~~~~ c NAMEOFCLUB LOCATION/TOWNSIIIP STATUS IIALLIFACILITYUSED I REMARKS 11 DARIS CHAMBISHI ZCCM SPONSORED TENNISCLUB CHAMBISHI ZCCM SPONSORED MINEREC. CLUB ClIAMBIS111 ZCCM SPONSORED MINEREC. CLUB I CHAMBISHI ZCCM SPONSORED MINEREC. CLUB F- CHAMBISHI ZCCM SPONSORED MINEREC. CLUB CHAMBISHI ZCCM SPONSORED GOVT SCIIOOL I BASKETBALL CHAMBlSlll ZCCM SPONSORED MINEREC. CLUB CIIAMBISIlI ZCCM SPONSORED MINEREC. CLUB CllAMBlSlll ZCCM SPONSORED CHAMBISHI ZCCM SPONSORED 11 JUDO CIIAMBISHI ZCCM SPONSORED ~ ~~ BOXING CIIAMBISHI ZCCM SPONSORED MINEREC. CLUB YOUTH SOCCER CIIAMBISHI ZCCM SPONSORED STADIUM CHAMBISHI ZCCM SPONSORED STADIUM ~ ~~ CIlAMBISHI ZCCM SPONSORED MINEREC. CLUB CHAMBISHI ZCCM SPONSORED MINEREC. CLUB Appendix 2 CHAMBISIII FOOTBALLCLUB EXPENDITURE ON LEAGUEKUP GAMES NO. OFGAMES WINNING TRAINING CAMPING MATCH TOTALS ALLOWANCES ALLOWANCES ALLOWANCES 0FFICIAJ.S K K K K K 15 (HOME) 7125000 1950000 1950000 810072 I1835072 15(AWAY) 7125000 195OtlOO 1950000 0 I1025000 5 (HOME) 2375000 650000 , 650000 630000 4305000 TOTAL 16625000 4~!wooo 4550000 1440072 27165072 NOTE 1 .. 1. Winning allowmces are paid to 16players and 3 officials ie. Coach, Assistant Coach and first aider. 2. Campingexpensesare spent on food, cleaning materials and toiletries for the team for one night. Three meals are prepared. 3. Match officials are paid to 3 Referees and 1 Match Commissioner. 4. The home games are expected to attract gate takings. However, these have not been to expectations since the team entered 1st division. An average of K250.000 iscollected per game. HWXhWCl3TRANSACT\NDRWIM31 - 69 - SCHEDULE5 FIbiMEWORKENVIRONTVlENTALPLAN This document is intended to form the framework Environmental Plan referred to in Clause 12.3(b)(ii) of the Development Agreement and sets out the Company’s environmental policies and broad outline plans. The plan is subject to changes arising from a base-line study of the operations and will be replaced by a more detailed plan in accordance with the timetable below and when agreed in accordance with Clause 12.1 of the Development Agreement. The Company will be responsible fix meeting the terms and conditions specified in the Environmental Plan and the Environmental Licences. Terms and conditions of existing operating permits and licences will be adhered to consistent with the terms of the Environmental Plan. It is envisaged that the Environmental Plan will cover the following aspects: W 1. Pollution Prevention Priority will be given to technological modemisation and improved process maintenance, monitoring and control to complement conventional pollution control system for atmospheric emissionsand el3uent discharges. This approach will: - reduce the volume of water requiring treatment by increased recycling of process water and mnimsethe use of fresh water. This will improve the efficiency of metals and solids removal in efhent treatment system; and - mnimseprocess upset conditions and spills to the environment. 2. Reduction of Risks d Incidents of inadvemnt releases will be minimised by an improved capacity for the containmentof untreated water and reduced external storage of sludges and residues. The implementation of spill prevention plans will further reduce risks. 3. Reduction of Environmental Impacts Treated water discharges into the environment will be consolidated into one stream for Operations, wherever 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 units redundant. - 70 - General housekeeping improvements within the plant site are part of the process capital investment programme. This includes appropriate storage fix concentrates, residues. full and empty barrelscontaining chemicals, sludges and so forth. 5. Achieving ProductionEfficiency A fundamental objective fixtie Company will be to achieve production efficiency. High losseszyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAof metals thmugb discharges of concentraces and process solutions present an unacceptable economc cost and environmental effects. Optimsing process and production efficiency will have a favourable environmental benefit. 6. Protectionof Human Health The Company commits to a modemisation program at Chambishi that will reduce emissions, dischargesand releases into the environment and address, inter alia, the issue of the protection of humhealth. Major environmental capital expenditures as contemplated in the Development Agreement will be required to bring these operations to an acceptable standard. 7. Phased Compliance The final Environmental Plan will describe the Company’s commentto bring the environmental performance of the Chambishi operation into compliance, over time, with the Environmental Laws. Thistechnological modemisation programme is expected to be completed within 31 months of Completion. Areas of non-compliance will be discussed and agreed to with GRZ. The time required to bring each prctcess into compliance will be detailed in the final Environmental Plan. Meeting these time schedules, within the 31 month completion period, will guarantee the maintenanceof the indemnification. 8. SmelterOperation Environmental planning for the smelter will not include any aspect of indemnification. Timetable Date Productionof the Baseline Study 12months from the date hereof Productionof the Environmental Plan 18months from tie date hereof HWZCM\CCO\fRANSAClWDRSO1S8.31 - 71- SCHEDULE6 TRAININGANDHUMANRESOURCES MANAGElilENT PROGRAMME hthe operation of the Chambishi Cobalt and Acid Plants, Chambishi Metals PLC will focus extensively on the training and development of its emplcyees. As is practice on Avmn’s other operations, the company will ensure thattechnicalexcellenceis pmof each employee’s make- up. The company’s approach will be a pragmatic bottom-up developmental approach to human resource development, with selective initiatives to accelerate the development of managers. The company will develop and empower current employees to make best use of the opportunities for advancement. Merit alone will guide the selection criteria for filling vacancies and will not be limited to academic qualification, but will include informal qualifications and work experience. The criteria will be set at appropriate levels to avoi excluding employees from mning and development. U In the interim, the company will provide on-the-job training to enhance existing skills. Ongoing safkty mning will be an important part of this process. It is planned to provide opportunities to appropriate employees todevelop and grow through rotational training at other Avmnoperations mAfrica. During the planning and construction stage of the new plant, the company will provide the employees with the new skills required to effectively manage the new technology. Also this period will be used to evaluate and effect organisational re-engineering to set in place the most effective and efficient organisational structure required by the new company. Chambishi Metals PLC believes that it is in its best interest to maintain a high level of Zambian employment and will endeavour to attract qualified and experienced Zambians. Recruitment will not be limited to the Republic of Zambia but will also concentrate on attracting Zambians back to the Copperklt from other parts of Africa and the rest of th world. J Chambishi Metals PLC has designated Mr R Duvel of Avmn to be the responsible person to take an active role in facilitating the success of the Training and Human Resource Development Plan. At a later stage, a company employee will be identified to fulfil this role. Thecompany will carry out a detailed evaluation of current employees’ in order to determine their current capacity and future potential. This evaluation will enable a detailed employee- specific trainingand development matrix to be developed. Chambishi Metals PLC will submit a detailed Training and Human Resource Development Plan within 12monthsof Completion. H UCCMKXO\lRANSACTWDRSOISB.31 - 72 - SCHEDULE7 REQUIREDINSURANCES The fbllcwing insurance policies shall be taken out with insured amounts and excesses appropriateto the Company scale of operation and the risk profile pertaining from time to time. This summarised schedule conforms to the derails of Schedule 6 of the Sale and Purchase Agreement relating to the types of insurance policies taken out by ZCCM. 1. Property Insurance 2. Motor hsurance 3. Money Insurance 4. Fidelity Guarantee 5. Legal Liability Insurance 6. Cobalt Storage Cover 7. Metal Export Insurance H VCCMGCO\TRANSACT\NDRSOIS8.3I - 73 - SCHEDULE8 TAX SCHEDULE The principal applicable taxes and the rates applicable to the Company in the conduct of Normal Operations from the date hereof are as follwx (1) Income TPY: The Company shall pay to GRZ income tax in accordance with the provisions of this Agreement and the income Tax Act, Chapter 668 of the Laws of Zambia as from time to time amended and in effect on its net 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 thirty five per cent (35%)save that if the Company were to obtain a full listing on the Lusak Stock Exchange such rate shall be thirty per cent (30%)from the year of suce listing. The carry forward of losses shall be pemtted for a period of ten (10) years from the date at which the loss was incurred. Losses should be used on a first in, first out basis with earlier losses used before later losses. TheCompany shall beentitledto maintain booksof account stated in United States dollars in accordance with generally accepted accounting principles. For the purposes of the Third Schedule to the Act, the Facilities shall be deemed a "1975 new mine" allowing the deduction of one hundred per cent. (100%) of capital expenditure (as defined in the Act) in the year in which the capital expenditure was incurred. (2) Royalties: U (i) The Company shall pay to GRZMineral Royalty tax (the "Royalty")on tie net back value of minerals produced in the Mining Area at a rate of two per cent (2%). (ii) For the purpose of the foregoing, the words "net back value" shall mean: (aa) the market value of Mine Products free-on-board at the point of export from Zambia or, in the case of consumption within Zambia, at the point of delivery within Zambia, less: (i) the cost of transport, including insurance and handling charges, from the Contract Area to the point of export or delivery; and - 74 - (ii) the cost of smelting and refining (whereapplicable)or other processing costs except such other processing costs as relate to processing normally carried out in Zambia in the Contract Am; (iii) payments made under the Cobalt Price Participation Agreement; (bb) the term "market value" means the realised price for a sale free-on- board at the point of export from Zambia or point of deliverywithin Zambia, (iii) GRZconfirms that for a period of fifteen (15)years from the Effective Date, royalty payable under the Act shall be deductible againstliabilityfor income tax. (h) The circumstances where the discxetion available to GRZ under Section67 of the Act to dekr the payment of royalty would be exercised are: (aa) under the terms of Section 67(1) where the cash operating margin of the Company mining operations is less than nil; and (bb) under the terms of Section 67(2)on samplesof minerals acquired for the purposes of assay, analysisor other examination. (v) For the purposes of the foregoing "cash operating margin" means the amount derivedby deducting operating costs (not including capital expenditure during or required for the development of the Facilities) from revenue. (3) Other Taxes, Chaqesand Fees: (i) Customsand Excise Duties Subject to the provisions of Clause 13 and Section 97 of the Act, the Company shall be liable to pay customs and excise duties on all assets imported for the purposes of the Approved Programme of Operations at such rates and on the terms and conditions as are set out in the Custom and Excise Act. The Company will also enjoy the benefit of S97 of the Act namely that the Company shall be entitledto exemption from custom and excise duties, and from any other duty or impost levied under the Customs and Excise Act, in respectof all machinery and equipment (including specialised motor vehicles) required forzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBAany of the activities carried on or to be carried on in pursuance of the right or otherwise for the purposes of his investment in mining or prospecting. GRZ and the Company agree that goods imported by contractors of the Company engaged by the Company for the purposes of implementing the Approved Programme of Operations shall enjoy the benefit of the Company's exemption from custom and excise duties under Section H.VCCMUiCOY?lWNSKllNDRY)IS8.31 - 75 - 97 of the Act, such benefit to be strictlylimited to machinery and equipment imported for the implementation of the Approved Programme of Operations. GRZ and the Company further agree to establish an administrative mechanismto achieve this post Completion. (ii) ExcisezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBADuty on Power: GRZ confirms that this will be ten per cent. (10%)of the mount paid to ZESCO by the Copperbelt Energy Corporation PLC for the purchase of elecmcity. (iii) Other Tares, Chaqesand Fees: For the avoidance of doubt, the Company shall be liable to pay (and these provisions will be without prejudice to such liability)all other taxes, charges and kes payable to GRZ or toany governmentalauthority in Zambia as c' the date of this Agreement in relation to its mining, concentration,smeltingu or refining and other operationscarried out in Zambia, including but not limited to: (aa) anymudkes, companyfees,land rents falling duepost 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. (4) Value Added Tar ("VAT"): (0 In accordancewith the provisions of the Value Added Tax Act, 1995, Plant Productsare chargeable to VAT at a rate of zero per cent. (0%). v. (ii) GRZ confirms that input VAT shall be credited to the Company within a reasonable period of time from the date of submission of the Company's monthlyVAT return in respect of each accountingperiod. (iii) For tie purposes of this Clause, "input VAT" shall mean VAT payable in respect of the supply of goods or servicessupplied by a registered supplier duringaprescribed accounting period for thepurposesof the Facilitiesand/or the activitiescontemplated in the Scheduled Programmes and/orthe conduct of Normal Operations. W) PmidedCompany submits the appropriate applications, the Company shall be deemed to be registered under the VAT Deferment Scheme from the date of Completion. - 76 - (5) Relief from WithholdingTax The rate of withholding tax applicable to the Company and to Avmn in respect of payments made under the Management Agreement shall be ten per cent. (10%). GRZconfirms 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 payments of interest by the Company. For tie purposes of Second Schedule to tie Act, tie Facilities shall be deemed a "1975new mine". (6) Deductions for Mining Expenditure onanon-producing and non-contiguous mine For the purpose of ascertaining the Company's allowable deductions under Section five (one) @(l))of the Third Schedule to tieAct, the Facilities shall at all times be regarded as a single large scale mining and metal treatment operation. H WXM\GCO\TRANSACTWDRWIS8.3I - 77 -