ENERGY LAW ASSOCIATION OF NEW ZEALAND MODEL JOINT VENTURE AGREEMENTS

1. ENERGY LAW ASSOCIATION OF NEW ZEALAND MODEL JOINT VENTURE AGREEMENTS  John Grace Grace Legal Pty Ltd Melbourne, Australia

2. Model Form documents/clauses and how to use them Look at the AMPLA Model JV Agreements as examples. Especially Mining Joint Venture Agreement Most sophisticated AMPLA agreement Also refer to other Models such as AIPN & RMMLF Model documents Refer my Wellington Seminar Notes of 19 March 2008 on "JVA Defaults, Enforcements, and Security Issues"

3. Mining Joint Venture Agreement + Alternative & Optional Clauses Framework Minerals Royalty Deed + Alt. & Opt. Clauses Exploration Joint Venture Agreement (Minerals) - Three Party Exploration JV Agreement (Minerals) - Two Party Farm-in Exploration JV Agreement (Minerals) - Alt. & Opt. Clauses Farm-in Agreements (Minerals) Farm-out Agreement (Minerals) (Single Party) & (Multi-party) Farm-in and Farmout Agreements (Minerals) - Optional Clauses Deed of Assignment and Assumption (Single Party) & (Multi-party) Mining Services Contract Version 2 Cross Charge + Deed of Covenant All available on www.ampla.org

4. For a discussion of the development of, and principles underlying, the AMPLA Model Joint Venture Agreements JG Grace, �The Ampla Model Mining Joint Venture Agreement�, [2009] AMPLA Yearbook 366 � 396 JG Grace, �The Ampla Model [Exploration] Joint Venture Agreements and associated documents�, [2007] AMPLA Yearbook 365-384.

5. Paper won ELANZ Prize for applicability to NZ All AMPLA Models provide that the proper law of the agreement and jurisdiction is that of the �Nominated State�: see Schedule 1 Nominated State Can be an Australian State or Territory Can be a Nation State, like New Zealand

6. Australian Constitution, Section 6 defines a "State" as being "such of the colonies of New South Wales, New Zealand, Queensland, Tasmania, Victoria, Western Australia, and South Australia, including the northern territory of South Australia, as for the time being are parts of the Commonwealth, and such colonies or territories as may be admitted into or established by the Commonwealth as States; and each of such parts of the Commonwealth shall be called a State." NZ is listed second after NSW and before Queensland and Victoria. New Zealand participated in the Constitutional Conventions during the 1890's when the Australian Constitution was negotiated and framed, but later decided not to join. Western Australian did not join originally but came in later by local referendum.

7. Alternately, New Zealand could become an Australian State by being admitted by the Commonwealth Parliament�under s. 121�of the Australian Constitution No Referendum is needed to approve the admission

8. AMPLA Models contain all terms normal found in a basic JV agreement Major variables + optional clauses in Schedules JVA commences as soon as Pre-conditions satisfied Schedules for Exploration/Mining JVAs include Basic particulars Tenement List Accounting procedure (for Mining JVA only)

9. Not a rigid precedent to be adopted without amendment Generic agreement including all normal provisions Applicable to mining for any minerals Can also be applied to exploring for / producing oil & gas Comprehensive guide and checklist for all normal matters Consistent & fair balance between parties on contentious issues In striking a balance between the parties: preference is given to the result which keeps the Joint Venture together and facilitates achievement of its objectives, rather than promoting the interests of any particular party

10. No cross-referencing, for ease of amendment All variables in schedules, where possible Modular construction Plain English Neutral formatting Flexibility and ease of substitution for easy amendment

12. Parties Definitions and interpretation Pre-conditions Joint Venture objectives and relationships Joint Venture Property Management Committee Manager/Operator Functions, powers and duties of Manager Programmes, Budgets and Called Sums/Cash Calls

13. Accounts, reports, audit and access Assignment Default Enforcement Term, suspension and termination of Joint Venture Confidentiality Dispute Resolution Expert Determination Force Majeure

14. Goods and Services Tax Notices Ancillary provisions Schedule 1 � Basic Particulars Schedule 2 � List of Tenements as at the Commencement Date Schedule 3 � Accounting Procedure Schedule 4 � Cross Charge Schedule 5 - Permitted Chargee�s Deed of Covenant

15. Bankable Feasibility Study means a study of the technical, commercial and economic feasibility of Development, Mining, Treatment, Rehabilitation and Mine Closure in the Mining Area and producing Products, which includes exploration, geological, engineering, environmental and other relevant data and capital and operating cost estimates and (if appropriate) marketing studies in sufficient detail to enable options for optimum Development, Mining, Treatment, Rehabilitation and Mine Closure to be identified in reasonable detail, which study is of a standard suitable to be submitted to a financial institution as the basis for lending of funds for the development and operation of the Mining activites contemplated in the study and is capable of supporting a Decision to Mine: the Bankable Feasibility Study upon which the Joint Venturers decided to develop the Mine was made is annexed to this agreement and initialled for the purposes of identification.

16. Decision to Mine means a decision made by the Management Committee to proceed to Development and Mining of a Deposit located within the Tenements. Tenement means a mining tenement listed in Schedule 2 and includes any lease, licence, claim or permit issued or to be issued under the Mining Act to the Joint Venturers for the purposes of the Joint Venture which confers or may confer a right to prospect, explore for or mine any mineral in the Mining Area, or which may facilitate the enjoyment of such right, and includes any application for, and any extension, renewal, conversion or substitution of, any of those tenements.

17. Good Australian Mining Practice means recognised mining methods, procedures and practices, together with the exercise of that degree of skill, diligence, prudence and foresight that reasonably would be expected from an experienced and competent contractor in Australia under conditions comparable to those applicable to the relevant activity in the light of known facts, or facts which should reasonably have been known at the time, and consistent with applicable Laws and Authorisations and having regard to the need for: suitable and experienced personnel and adequate materials; ongoing monitoring and testing of plant and equipment performance, safe operating procedures and appropriate maintenance procedures; the observance of relevant Australian and international standards; and in the case of design, engineering and construction, internationally accepted design, engineering and construction practices that reasonably would be expected from recognised designers, engineers and constructors of comparable plant, equipment and facilities in Australia.

18. Transfer Price means a fair market price for a Joint Venture Interest as at the date of a Deemed Sale Offer on terms and conditions to be negotiated and agreed in good faith by the Joint Venturers or, in default of agreement, as determined by an Expert appointed under this agreement, less all amounts due by the transferring Joint Venturer to the Manager or the other Joint Venturers under this agreement, including interest, and the amount of all liability of the transferring Joint Venturer to meet existing Rehabilitation Obligations and Mine Closure Obligations as determined by the Manager as at the date of payment.

19. Called Sum means the Percentage Share of funds required to be paid by a Joint Venturer in accordance with this agreement to finance Joint Venture Expenditure. Percentage Share means the percentage Joint Venture Interest which a Joint Venturer has in the Joint Venture in accordance with this agreement. Joint Venture Interest means ��..the following rights, liabilities and obligations of a Joint Venturer : (a) the obligation � to contribute its Percentage Share of all Joint Venture Expenditure; ����.

20. Breach Default Event is the happening of an Insolvency Event in relation to a Joint Venturer or a Joint Venturer committing a material breach of any of its material obligations under this agreement (other than an Unpaid Monies Default Event), including where an Encumbrance (other than an Encumbrance approved by the Joint Venturers under this agreement) is created over or attached to the Joint Venture Interest of a Joint Venturer. Unpaid Monies are monies due for payment under this agreement, and include monetary compensation and damages payable by a Defaulting Joint Venturer which is agreed, awarded or determined following an unremedied Breach Default Event for so long as it is unpaid, and interest and costs payable or reimbursable in accordance with this agreement

21. Rights, obligations and liabilities of Joint Venturers rights, duties, obligations and liabilities of JVers are several proportional to Percentage Shares and are neither joint nor joint and several. Each JVer is severally liable, in proportion to its Percentage Share, for all obligations and liabilities incurred in Joint Venture Activities. Nothing in agreement constitutes a partnership or agency or representative of any other Joint Venturer, except for the Manager when acting as manager, and not, if applicable, as a Joint Venturer.

22. to perform every obligation according to Law to perform any contract relating to the Joint Venture not to jeopardised continued enjoyment of the Tenements by any Joint Venturer to act co-operatively, honestly and reasonably in all its dealings with each other and the Manager provided that, no JVer is under any fiduciary duty not to engage in any activity over the Mining Area except as under the JV agreement, but each JVer can compete outside the Mining Area subject to confidentiality use Information outside Mining Area, provided not prejudicial to JV Activities

23. All Joint Venture Property owned by JVers severally as tenants in common in the proportions to Perc. Shares Manager to deliver JVers Percentage Share of Products to the JVer at Delivery Point Each JVer has right &obligation to take in kind and separately sell its Perc. Share of Products on delivery Nothing in JVA provides for any joint selling of Products by JVers or processing of minerals JVers waive right to partition Joint Venture Property Agreement subject to rule against perpetuities Manager/Jvers must rehabilitate JV Property on closure

24. Manager & Management Committee Nominated JV party the Manager Not liable except for fraud or Gross Negligence or Wilful Misconduct Wide powers, including delegation � with full indemnity Meetings by phone/video, on 15 days notice Nominated Passmark / Quorum, with limited need for unanimity Annual Approved Programme and Budget + emergencies + up to 10% overrun Monthly Called Sums [Cash Calls]

25. Constraint on entering into agreements with Related Body for goods or services, except on arms length terms Unanimous approval required for contracts over limit Before 1 May each year, Manager must provide JVers with Proposed Programme and Budget On approval P & B becomes Approved P & B Approved P & B gives Manager authority to proceed If not approved, then must keep Tenements in good standing & discharge existing obligations, subj, to funds Before 10th of month Manager must submit billing statement of JV Expenditure & each JVers Called Sum

27. Manager & JV � Same Liability/ Indemnity regime Joint Venturer Each JV has several percentage liability for all JV Activities Each JV indemnifies each other JVs and its employees/contractors against all loss or liability, including third party claims, re JV Activities, incl. personal injury, death or property loss or damage No indemnity for consequential, economic or indirect losses, including any lost production or loss of profits Manager Manager not liable to JVs for losses sustained or liabilities incurred in connection with the Joint Venture No liability for negligence of Manager or its employees /contractors, except for fraud or Gross Negligence or Wilful Misconduct

28. Dilution, Withdrawal and Assignment Dilution is included in a schedule so it can be omitted easily, if required Withdrawal on 30 days notice, or if < 5% JV Interest Free assignment to related body corporate Extensive pre-emption for cash offer, including royalty, NSR, NPI, and Exploration Exp. 45 day pre-emption period No pre-emption for non-cash offer Automatic assignment on Change of Control or less than Minimum Interest

29. Default and Termination Differential default for Breach & Unpaid Monies 14 days for Breach default & 7 days for Unpaid Monies Breach default quantified & becomes Unpaid Monies BBSY + 2% interest payable on Unpaid Monies If unremedied, buy-out option @ fair market value If Feasibility Study not being prepared, no cash payable If Feasibility Study being prepared, market value payable, less 10% discount, less unpaid amounts Expert determination if value, etc. disputed JVA continues for life of Tenements, or by agreement

30. Rehabilitation - before

31. Rehabilitation - after

32. Rehabilitation, Mine Closure and Abandonment Expanded Rehabilitation/Mine Closure clauses Approved Rehabilitation Programme and Budget Rehabilitation/Mine Closure carried out by Manager Manager to establish a Rehabilitation Fund JVers to pay into Rehabilitation Fund No Security for Abandonment Costs � see Alternative Clauses for short and long forms

33. Expert determination Other issue resolution in Schedule for easy replacement Representative negotiation, then CEO negotiation Then mediation, then expert determination or litigation Dispute Resolution Process not to interrupt JV Activities Dispute Resolution Process not apply to matters where consent required

34. Standard confidentiality terms Force Majeure important � wide exceptions, negotiable Standard GST Notices include electronic delivery Applicable law Submission to non-exclusive jurisdiction Basic terms in Schedule 1 Tenement List in Schedule 2 Accounting procedure in Schedule 3, but only in Mining JVA - AIFRS compliant

36. Model Exploration JVA Options List of local definitions Performance guarantee and indemnity Area of Influence Area of Mutual Interest Native title More unanimous vote situations Dilution Sole risk

37. Model Exploration JVA Alternatives Extended Owner representations & warranties Full �good faith� clause 3rd party Assignment � non cash + ASX shares Alternative Boilerplate clauses Parent company performance guarantee Additional Mining JVA Optional & Alternative Clauses Alternative Bankable Feasibility Study Detailed insurance clause Withdrawal with Royalty reservation/Mine Closure Sec International Arbitration clause Extended Unanimous Vote matters

38. Structure Short form agreement - If no JVA, then Model JVA applied Farmin parameters different from 2 party Farmin JVA Definitions linked to Model 2 party Farmin JVA Owner warranties are more extensive Buy in for cash as well as future work/expenditure Acquirer must spend Earning Expenditure to get Earned Interest Acquirer must spend Minimum Expenditure regardless Acquirer may withdraw before completion Acquirer acquires interest only when earned, not upfront

39. Single Party Structure Stand alone agreement - JVA as annexed or Model JVA Essentially a Funding Agreement Definitions linked to Model 3 party JVA or existing JVA Warranties etc same as Model Farmin Agreement Buy in provisions same as Model Farmin Agreement No replacement of Manager Work done by Manager for Acquirer Continuing parties confirm assignment process observed New extended GST clause Model Deed of Assignment and Assumption attached

40. Multi Party Structure Stand alone agreement - JVA as annexed or Model JVA Full Farmout Agreement All JVs farmout all or part of their JV Interest Definitions linked to Model 3 party JVA or existing JVA Warranties/buy in etc same as Model Farmin Agreement Continuing parties confirm assignment process observed Replacement of Manager Extensive management handover provisions New extended GST clause Model Deed of Assignment and Assumption attached

41. Single Party Structure Stand alone Deed � linked to Single Party Farmout Agreement and JVA Conditions Precedents to be satisfied before effect Assignment effective as at registration Assumption of JVA obligations, Transfer and caveat Consent to assignment Confirmation of JVA JVA novated � amendments possible in Farmout Agmt Formal indemnities and releases

42. Multi Party Structure Stand alone Deed � linked to Multi Farmout Agreement and JVA Same as Single Party Deed Except No consent required to assignment No relation back of equitable interest for new JV/Manager to Commencement Date

43. Structure Stand alone Deed of Cross Charge Linked Permitted Charge�s Deed of Covenant Assumes Model Project JVA (Development and Mining) Drafting Project JVA not yet approved by AMPLA Board Each Project JVA unique to its Project If approved, Model Project JVA would have same basic structure as the Model Exploration JVAs ( Minerals) Would include Cross Charges, Permitted Chargee�s Deed of Covenant, Project IP, Sole Risk, Rehabilitation (Fund) and Abandonment, etc. provisions and a Model Accounting Procedure

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