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8.0 Financing

8.1 Security Interest

(a) The Company shall have the right, with the prior consent of the State, which consent shall not be unreasonably withheld or delayed, to mortgage, pledge, lien, charge, assign, hypothecate or otherwise encumber all or part of its interest under this Agreement for the purpose of raising, from one or more third parties, financing for Mining Operations and other obligations under this Agreement. As a condition to receiving consent, the mortgagee must agree upon foreclosure to operate the Project and infrastructure in accordance with the requirements of this Agreement, and transfer the mortgaged property only to a transferee that commits to operate in accordance with the requirements of this Agreement.

(b) The State agrees that in the event of default by the Company that any such person holding such mortgage, charge or other encumbrance shall be entitled either to conduct operations on the same terms and conditions as the Company under this Agreement or, with the prior consent of the State, which consent shall not be unreasonably withheld or delayed, to exercise any power of sale granted by any such mortgage, charge or other encumbrance so long as any purchaser at such sale commits to fulfil the obligations of the Company under this Agreement.

(c) Any restrictions on transfers of rights under this Agreement or mining license shall also apply to transferees under mortgage foreclosure.

Example 1
Project Finance and Encumbrances.
Company may pledge, grant, transfer, assign, charge or otherwise encumber, partially or totally, all of its rights under this Agreement and related assets as described in Section 10.2(a) in favor of one or more financing institutions or credit sources, domestic or foreign, acting as lender to Company or agents or trustees appointed for such lender (collectively, the “Lender”), to obtain the financing necessary to develop, operate or expand the Project and exploit the Mine, subject to the limitations and requirements set forth in Section 6.3(c) and Section 6.3(d). All such pledges, grants, transfers, assignments, charges or other encumbrances (collectively, “Project Encumbrances”) shall be recorded in the Public Registry. In addition, the documents evidencing the Project Encumbrances shall provide that the rights of Company under this Agreement may only be transferred (other than the grant to the Lender of the Project Encumbrances) to a Person that i) possesses the technical and managerial expertise, and financial capacity in order to assume Company’s obligations under this Agreement; or ii) is a Lender (a “Qualified Successor”).

[…]

Any Project Encumbrances placed on the Environmental Reserve Fund shall be subject to the requirement that such funds shall only be used for the purposes and in the manner specified in this Agreement. Notwithstanding anything herein to the contrary, no Project Encumbrance shall

(i) extend to or encumber (A) funds due to the STATE and the CENTRAL BANK under this Agreement, including without limitation the NSR Tax, the income tax and the NPI Tax, or (B) the moneys necessary to fund in a timely manner all payments (if any) required to be made to the Environmental Reserve Fund and the Governmental Remediation Fund, or
(ii) limit or otherwise impede (A) the right of the STATE to receive payment of all funds due it in a timely manner or (B) the obligation that the amounts in the Environmental Reserve Fund or the Governmental Remediation Fund be used solely for the purposes set forth in this Agreement and in a timely manner.

[…]

In the event there shall occur a default by Company hereunder that entitles the Government Parties to terminate this Agreement, the Government Parties shall give the Lender Notice of such default, in the manner specified in Section 17.12(a) at the address(es) for Lender specified pursuant to Section 10.2(b). If Company fails to cure any such default within the time specified herein, the Government Parties shall notify the Lender of such failure in the manner specified above. The Government Parties and Company agree that the Lender shall have the right, but not the obligation, to cure any Company default within a period of sixty (60) Days after the later to occur of: (i) expiration of the period during which Company may cure such default; or (ii) actual receipt by the Lender of the notice of Company’s failure to cure the default.

Example 2
Notwithstanding the foregoing provisions of this Clause 16, and subject to Clause 0, Company may charge by way of fixed or floating charge the Large Scale Mining Licenses together with this Agreement to secure the repayment of principal, and payment of interest and other fees, costs and expenses relating to all loans made to Company to finance or refinance the Scheduled Programmes and any hedging arrangements relating thereto or other mining projects within Country and Government covenants and will procure that the consent of the Minister pursuant to Section [x] of the Act to such mortgages and charges shall be given provided that:

16.1.1 such mortgages and charges:

(a) are notified to the Minister upon their grant (and, in any event, within thirty (30) days thereof); and
(b) impose on the mortgagee or chargee the obligation to comply with Clause 0 on exercising any rights of sale and other rights as contemplated in that Clause; and

16.1.2 the proposed mortgagee or chargee, as the case may be, is not an Affected Party.

Subject to Clause 0, any mortgagee or chargee under a mortgage or charge given by Company (each a “Secured Party“) pursuant to Clause 0 may exercise all rights of sale and other rights included in such instrument of mortgage or charge provided that:

16.1.3 it shall first give to Government at least thirty (30) days’ notice of its intention to exercise any rights of sale and five (5) days’ notice in all other cases; and

16.1.4 the purchaser under such power of sale (if applicable): (a) is not an Affected Party; and (b) undertakes to Government to procure that neither the Large Scale Mining Licences nor this Agreement nor any interest therein are subsequently sold, secured or otherwise disposed of or transferred to or dealt with in favour of an Affected Party.
It is acknowledged and agreed that:

16.1.5 save as contemplated in Clauses 0 and 0 in respect of the Large Scale Mining Licences and this Agreement, there is no restriction on Company’s right to sell, mortgage, charge or otherwise assign or encumber the whole or part of its undertaking, including the Leases, the Facilities, the Mine Products (or the proceeds of sale), surface rights and all other rights essential to the maintenance and operation of the Facilities, together with any assets and relevant agreements to which Company is a party;

16.1.6 Company may mortgage, charge or otherwise encumber any specified asset (whether real or personal property) to secure the purchase price thereof where such amount has been borrowed to finance the purchase of that asset and this asset is to be used as part of Normal Operations or other mining projects within Country; and

16.1.7 provided such mortgages, charges and other encumbrances are notified to the Minister upon their grant (and, in any event, within thirty (30) days thereof) and provided further that the proposed mortgagee or chargee, as the case may be, is not an Affected Party, each shareholder in COMPANY from time to time may mortgage, charge, pledge, transfer in security or conditionally assign its right, title and interest in the shares (“Share Security“) in COMPANY as security for any financing raised or to be raised by COMPANY either to finance or re-finance the Scheduled Programmes and any related hedging arrangements or other mining projects in Country and GOVERNMENT confirms and agrees:

(a) that the Share Security may be granted without any further consent from GOVERNMENT, whether pursuant to Section 55(1) of the Act or otherwise; and
(b) any transferee of such shares pursuant to enforcement of the Share Security will be approved by GOVERNMENT subject only to such transferee:

(i) not being an Affected Party;
(ii) undertaking to GOVERNMENT to procure that such shares will not subsequently be sold, secured or otherwise disposed of or transferred to or dealt with in favour of an Affected Party; and
(iii) otherwise meeting the criteria set out in Clause 0.

The rights of any Secured Party pursuant to Clause 0 shall be subject to and limited by the rights of COMPANY under this Agreement and, subject to cure rights granted to COMPANY and the Secured Parties pursuant to Clause 18, to GOVERNMENT’s right to terminate those rights under Clause 18. The rights of such mortgagee or chargee to sell an interest in a Large Scale Mining Licence and this Agreement so charged shall be exercisable if the interest in such Large Scale Mining Licence and this Agreement which are charged by the mortgage or charge are sold together with all or sufficient of the assets and undertakings of COMPANY as are sufficient (or would be sufficient (a) following cessation of any period of suspension or curtailment of production as may then apply pursuant to Clause 8 and/or (b) in conjunction with such additional assets as the buyer may contribute) to enable the buyer to undertake Normal Operations (or with such exceptions as GOVERNMENT may agree, approval of which sale GOVERNMENT covenants not to unreasonably withhold and not to withhold in the circumstances set out in Clause 0 subject to the proviso therein contained).

Example 3
22.5 Right to Encumber.

a. Each of the Concessionaire and the Operating Company may mortgage, charge or otherwise encumber (collectively, “Mortgage”) all or any portion of its interest under this Agreement and under any Exploration License or Mining License issued under this Agreement to finance a portion of the cost of constructing and acquiring any Non-Country Mine, Country Mine, Additional Concession Area Mine, Contiguous Area Mine, Mining Plant, Infrastructure and other property contemplated by the Modified Bid Materials or any Approved Feasibility Study upon receipt of prior written consent thereto from the Government. Other than in the case of Permitted Liens, (a) the Mortgage must extend to all rights of the Concessionaire, or the Operating Company, as applicable, under such Exploration or Mining Licenses and to substantially all of such Non-Country Mine, Country Mine, Additional Concession Area Mine, Contiguous Area Mine, Mining Plant, Infrastructure, and other property (including intellectual property) necessary for Operations (“Pledged Assets”), and (b) the holder of such Mortgage must agree in writing with the Government to the terms of this Section 22.5 and to any transfer restrictions set forth in such Exploration and Mining Licenses. Subject to its confidentiality rights under this Agreement, the Government will provide the Concessionaire, the Operating Company and any lender with such documents as any of them shall reasonably request in connection with any transaction with respect to such Mortgage.
b. Any foreclosure or other exercise of remedies under such Mortgage must result in a transfer of the rights of the Concessionaire, or the Operating Company, as applicable, under this Agreement and the Pledged Assets to a single Person who satisfies all the requirements for an assignee set forth in the proviso contained in Section 22.4.
c. “Permitted Liens” shall mean Liens created solely for the purpose of securing Indebtedness incurred to finance or refinance the purchase price or cost (including the cost of installation, repair, or improvements) of Movable assets acquired after the Effective Date (by purchase or otherwise), including after acquired inventory, equipment, or other tangible or intangible Movable assets, provided that no such Lien shall extend to or cover any assets other than the assets so acquired and improvements thereof.

REFER TO MMDA DISCLAIMERS AND MMDA USER’S GUIDE
PRIOR TO ANY USE OF THIS DOCUMENT.

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