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The ratio of the Company’s debt to equity must not at any time exceed [ __/__ ].
For the purposes of this Section:

(a) “Debt” shall mean the aggregate, on a consolidated basis, of all outstanding obligations (whether present or future, or actual or contingent, including reclamation obligations from the operation of the mine itself) for the payment or repayment of moneys which have been borrowed or raised (including money raised by acceptances or leasing) incurred by the Company or any subsidiaries; and
(b) “Equity” shall mean the sum of the issued paid up ordinary shares of the Company (including any share premium account) plus (or minus) the Company’s retained earnings (or accumulated deficit).

Example 1
At no time during the Term of this Agreement shall Company have Project Debt that exceeds 70% of the sum of the total Capital it has invested in the Project.
“Project Debt” shall mean any indebtedness of Company excluding (i) Operating Debt and (ii) any amounts advanced by Company to THE STATE pursuant to an agreement that is subject to Section 9.2(b).

Example 2
Debt-Equity Ratio
The ratio of loan capital to paid-up equity capital must be at all times not more than [9:1]. All loan capital shall be procured by Parent Company on behalf of Mining Company on such terms and conditions as approved by the Central Bank, which approval shall not be unreasonably withheld, and in accordance with Applicable Law relating to the borrowing of foreign exchange by companies resident in [Country]. The definition of loan capital must be specified in the Feasibility Study and set out in the approved Financing Plan.

Example 3
Adequate Capital.

a. The Concessionaire and the Operating Company, on a consolidated basis, must at all times maintain a ratio of Indebtedness to Net Worth that is equal to or lower than 3:1. Prior to satisfaction of each of the Phase I Capacity Test and the Phase II Capacity Test, the Concessionaire may make no Restricted Payment.
b. After satisfaction of each of the Phase I Capacity Test and the Phase II Capacity Test, the Concessionaire may not make any Restricted Payment unless after giving effect thereto, the ratio of Indebtedness to Net Worth of the Concessionaire and the Operating Company, on a consolidated basis, does not exceed 3:1. For purposes of this Section 20.5, the amount of any Restricted Payment made in property is be the greater of (x) the fair market value of such property (as determined in good faith by the board of directors of the Concessionaire and of the Operating Company) and (y) the net book value thereof on the books of the Concessionaire and of the Operating Company, in each case determined as of the date on which such payment is made.

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

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