-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NJUN6ofuCCKr63FJyyXlaCzWMK5nOWGjQQgZdiTJsRWIguRgPN7MfxWXsmt3B71H lQb1KKzPz+Qc6Kr1G15A2Q== 0000950148-97-000829.txt : 19990909 0000950148-97-000829.hdr.sgml : 19990909 ACCESSION NUMBER: 0000950148-97-000829 CONFORMED SUBMISSION TYPE: 10-12G PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 19970403 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEVADA MANHATTAN MINING INC CENTRAL INDEX KEY: 0000848821 STANDARD INDUSTRIAL CLASSIFICATION: 1040 IRS NUMBER: 880219765 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-12G SEC ACT: SEC FILE NUMBER: 000-25117 FILM NUMBER: 97574327 BUSINESS ADDRESS: STREET 1: 5038 N PARKWAY STREET 2: STE 100 CITY: CALABASAS STATE: CA ZIP: 91302 BUSINESS PHONE: 8185914400 MAIL ADDRESS: STREET 1: 5038 N PARKWAY STREET 2: STE 100 CITY: CALABASAS STATE: CA ZIP: 91302 FORMER COMPANY: FORMER CONFORMED NAME: TERRA NATURAL RESOURCES CORP DATE OF NAME CHANGE: 19980828 FORMER COMPANY: FORMER CONFORMED NAME: NEVADA MANHATTAN MINING INC DATE OF NAME CHANGE: 19961126 10-12B 1 FORM 10-12B 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10 GENERAL FORM FOR REGISTRATION OF SECURITIES PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934 NEVADA MANHATTAN MINING INCORPORATED - - ----------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) NEVADA 88-0219765 --------------------------------- -------------------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 5038 NORTH PARKWAY CALABASAS, SUITE 100 CALABASAS, CALIFORNIA 91302 - - ---------------------------------------- ----------- (Address of Principal Executive Offices) (Zip Code) (818) 591-4400 - - ----------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) Securities to be registered pursuant to Section 12(b) of the Act: Common Stock ------------------------------------------------------------------ (Title of Class) Preferred Stock ------------------------------------------------------------------ (Title of Class) Securities to be registered pursuant to Section 12(g) of the Act: None 2 CROSS-REFERENCE SHEET BETWEEN REGISTRATION STATEMENT AND ITEMS OF FORM 10
FORM 10 ITEM NUMBER AND CAPTION CAPTION IN INFORMATION STATEMENT - - -------------------------------- -------------------------------- 1. Business.............................. Business; The Company's Business and Properties, Risk Factors and Special Material Considerations; Management's Discussion of and Analysis of Financial Conditions and Results of Operations 2. Financial Information................. Selected Financial Data; Management's Discussion and Analysis of Financial Condition and Results of Operations; Financial Statements 3. Properties............................ The Company's Business and Properties; Risk Factors and Special Material Considerations 4. Security Ownership of Certain Beneficial Owners and Management.... Security Ownership of Certain Beneficial Owners and Management 5. Directors and Executive Officers...... Management 6. Executive Compensation................ Executive Compensation 7. Certain Relationships and Related Transactions............ The Company's Business and Properties 8. Legal Proceedings..................... Legal Proceedings 9. Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters......... Market Price of and Dividends on Company Equity; Management; Executive Compensation 10. Recent Sales of Unregistered Securities.......................... Risk Factors and Special Material Consideration 11. Description of Registrant's Securities to be Registered......... Description of Securities Being Registered 12. Indemnification of Directors and Officers........................ Management 13. Financial Statements and Supplementary Data.................. Financial Statements and Supplementary Data 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure................ Not Applicable 15. Financial Statements and Exhibits..... Financial Statements and Exhibits
3 TABLE OF CONTENTS Page ---- The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . 1 The Company's Business and Properties . . . . . . . . . . . . . . . 1 Risk Factors and Special Material Considerations . . . . . . . . . 9 Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . 17 Security Ownership of Certain Beneficial Owners and Management. . . 18 Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Executive Compensation . . . . . . . . . . . . . . . . . . . . . . 24 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 26 Market Price of and Dividends on Company's Equity . . . . . . . . . 27 Description of Securities Being Registered . . . . . . . . . . . . 28 Financial Statements and Supplementary Data . . . . . . . . . . . . 31 4 1. THE COMPANY Nevada Manhattan Mining Incorporated (the "Company") was formed on June 10, 1985, in the state of Nevada under the name of Epic Enterprises, Ltd. On September 11, 1987, the Company amended its Articles of Incorporation changing its name to Nevada Manhattan Mining Incorporated. The Company's articles currently authorize the issuance of 49,750,000 shares of Common Stock with a par value of one cent ($.01) per share and 250,000 shares of Series A Preferred Stock with a par value of $1.00 per share (the "Preferred Stock") convertible into Common Stock on the terms and conditions described elsewhere in this Registration Statement. There were 12,208,412 shares of the Company's Common Stock and 228,919 shares of the Preferred Stock issued and outstanding as of February 28, 1997. The average price per share paid for the Common Stock issued directly by the Company has been approximately $2.00 per share. Holders of the Preferred Stock have paid $10.00 per share with an effective purchase price for the Common Stock (after giving effect to the conversion thereof on a one-for-ten basis) of $1.00 per share. The Company was formed primarily to develop the Nevada Property, other gold mining properties which it had previously owned, and certain gold mining properties which it has recently acquired. Pursuant to prior action of both the Company's directors and its shareholders, certain gold mining properties have been abandoned. The Company has recently acquired the rights to seven (7) gold mining concessions and three (3) coal mining concessions in Indonesia, as well as three (3) timber properties in Brazil. It is the Company's present intention over the next twelve (12) months to increase production at the Nevada Property pursuant to the Nevada Business Plan (as herein defined); increase the production of sawed lumber and other wood products at its facilities located on one or more of its Brazilian timber properties; conduct further mining, surveying, mapping and exploration activities on certain of its gold and coal mining concessions located in Indonesia (including the Sopang and Silobat Properties); and seek prospective joint venture partners capable of jointly developing its coal concessions in Indonesia. The Company has budgeted $1,500,000 for further development of the Nevada Property, approximately $1,500,000 for current exploration activities in Indonesia, and projects that revenues generated from operations in Brazil will be sufficient to pay all operating costs in Brazil. The funds necessary for the activities currently contemplated on the Nevada Property and a substantial portion of activities on the Indonesian gold and coal mining concessions noted above are projected to come from one or more of the following sources: a private placement to a qualified institutional buyer (within the meaning of Rule 144A) or accredited investor; a direct public offering made pursuant to a registration statement filed under the Securities Act of 1933, as amended; or from cash flow generated from the Brazilian operations. The Company has its principal executive offices at 5038 North Parkway Calabasas, Suite 100, Calabasas, California 91302. Its telephone number is (818) 591-4400 and its facsimile number is (818) 591-4411. The Company has recently formed two subsidiaries to conduct its overseas operations: Kalimantan Resources, Ltd., and Equatorial Resources, Ltd. Both of these subsidiaries are corporations organized under the laws of the British Virgin Islands. Kalimantan Resources is wholly owned by the Company while Equatorial Resources is owned 80% by the Company and 20% by Ignatius Z. Theodorou. Management of the Company presently consists of a five-member board of directors (two of which are neither executive officers nor employees) and employs two (2) full-time executive officers as well as seven (7) full-time employees at its principal offices. The Company's subsidiary, Equatorial Resources, Ltd., also employs 62 persons with respect to current operations on the Brazilian timber concessions. In 1989, the Company formed a Shareholder Advisory Committee (the "Advisory Committee") comprised of up to 12 outside shareholders. The purpose of the Advisory Committee is to participate in directors' meetings and compensation meetings, as well as planning meetings related to all aspects of corporate development. Members are selected annually from a group of shareholders who respond to Company inquiries regarding interest in participating on the Advisory Committee. Membership is rotated annually. One of the primary purposes of this Committee is to provide independent, shareholder participation in critical decisions relating to overall corporate strategy. The Company has contracted with Harrison Western Mining and Construction, Lakeland, Colorado, to supply labor, service, materials and equipment for Nevada property operations. The Company has also entered into agreements with: Gold King Mines Corporation to provide mining consulting services with respect to the Nevada Property; Behre Dolbear & Company, Inc., to provide oversight and third-party validation services relative to the exploration and development activities on the Indonesian Concessions; Eco-Rating International, Inc., to provide an economic and environmental evaluation of the Company's Brazilian Timber Properties; and Thyssen Sudamerica N.V. to market and sell all timber harvested and milled by the Company with respect to the Brazilian Timber Concession. 2. SELECTED FINANCIAL DATA The following table sets forth certain historical financial data for the Company for fiscal years 1992 through 1996 and the nine-month periods ended February 28, 1997 and 1996. The historical financial data for the three years ended May 31, 1996 (audited), and the nine months ended February 28, 1997 and 1996 (unaudited), were derived from the financial statements of the Company included elsewhere herein. The summary historical combined financial data for the years ended May 28, 1992 and 1993 have not been audited and were derived from the accounting records of the Company. In the opinion of management, the historical financial data of the Company as of and for the years ended May 31, 1992 and 1993, and as of and for the nine months ended February 29, 1997 and 1996, include all adjusting entries (consisting only of normal recurring adjustments) necessary to present fairly the information set forth therein. The historical financial data are not necessarily indicative of the results of operations for any future period. Furthermore, the results of operations for the nine months ended February 28, 1997 and 1996 should not be regarded as indicative of the results that may be expected for the full year.
Years Ended May 31, ------------------------------------------------------------------------------------------- 1996 1995 1994 1993 1992 ----------- ----------- ----------- ----------- ----------- (unaudited) Expenses: Costs and expenses of development stage activities $ 1,198,506 $ 611,073 $ 480,473 $ 503,061 $ 389,933 ----------- ---------- ---------- ---------- ---------- Net loss (1,198,506) (611,073) (480,473) (664,244) (389,933) Cumulative preferred dividends (10,600) -- -- -- -- ----------- ---------- ---------- ---------- ---------- Net loss attributable to common shareholders $(1,209,106) $ (611,073) $ (480,473) $ (664,244) $ (389,933) =========== ========== ========== ========== ========== Net loss per common share $ (0.16) $ (0.12) $ (0.15) $ (.23) $ (.18) =========== ========== ========== ========== ========== Weighted average shares outstanding 7,428,081 5,021,801 3,146,727 2,885,062 2,183,616 =========== ========== ========== ========== ========== Balance Sheet Data: Total assets $ 4,199,803 $3,711,865 $3,651,286 $3,324,098 $5,574,429 Long-term debt 115,723 105,919 143,209 131,947 2,375,000 Stockholders' equity 3,633,553 3,081,334 1,800,234 1,305,238 1,870,180
Nine Months Ended February 28, 1997 1996 ------------ ----------- (unaudited) Expenses: Costs and expenses of development stage activities $ 1,319,759 $ 468,453 ------------ ---------- Net loss (1,319,759) (468,453) Cumulative preferred dividends (136,063) -- ----------- ---------- Net loss attributable to common shareholders $(1,455,822) $(468,453) =========== ========== Net loss per common share $ (0.14) $ (0.07) =========== =========== Weighted average shares outstanding 10,405,727 6,414,837 =========== =========== Balance Sheet Data: Total assets $10,729,816 $3,824,408 Long-term debt 100,266 58,412 Stockholders' equity 9,862,768 3,214,081
3. THE COMPANY'S BUSINESS AND PROPERTIES The Company's business is the exploration and mining of precious metals and coal in Nevada and Indonesia and the harvesting of timber and other wood products in Brazil. To this end the Company has recently acquired the right to conduct exploration activities on three (3) coal properties in Indonesia and the right to develop and/or own three (3) timber properties located in the state of Para, Brazil. The Company holds various rights in and to the following properties: (i) twenty-eight (28) patented and sixty-five (65) unpatented claims aggregating approximately 1,800 acres (the "Nevada Property") which are located near the town of Manhattan, Nevada (approximately 45 miles northeast of Tonopah, Nevada); (ii) seven (7) gold concessions aggregating 39,400 hectares (98,500 acres) which are located in both the gold belt area of Kalimantan, Indonesia, and on the island of Sumatra (see "Indonesian Gold Concessions"); (iii) three (3) coal properties located in Kalimantan, Indonesia, comprising 290,000 hectares (725,000 acres) (the "Indonesian Coal Concessions"); and (iv) three (3) timber properties aggregating 693,000 hectares which are located in the state of Para, Brazil (the "Brazilian Timber Properties"). A more thorough description of the properties is contained within portions of this Section of the Registration Statement entitled "The Nevada Property," "The Indonesian Concessions" and "The Brazilian Timber Properties." 1 5 The Nevada Property The Nevada Property consists of twenty-eight (28) patented and sixty-five (65) unpatented claims aggregating approximately 1,800 acres. The Company originally acquired its rights to the Nevada Property pursuant to a mining agreement dated April 4, 1987 (the "Nevada Property Agreement") with Anthony C. Selig and related entities (the "Selig Entities"). On December 9, 1987, the Selig Entities and the Company entered into an amendment to the Nevada Property Agreement reducing both the area of interest and the purchase price of the Nevada Property from Two Million One Hundred Thousand Dollars ($2,100,000) to Six Hundred Thousand Dollars ($600,000) and modifying, amongst other things, the schedule of semiannual payments due from the Company to the Selig Entities in consideration of the purchase of the Nevada Property. On March 2, 1989, the Company entered into an agreement entitled "Manhattan Mining Property Agreement" with Argus Resources, Inc., a Nevada corporation, and Argus Mines, Inc., a Nevada corporation (the "Argus Companies"); and the Selig Entities (the "Nevada Property Agreement"). This agreement was entered into after a dispute had arisen between Argus Resources, Inc., and the Selig Entities under the lease/purchase 2 6 agreement which had been previously entered into between such parties and which originally formed the basis upon which the Company derived its rights to the Property. This agreement also modified certain terms and conditions contained within the Nevada Property Agreement. Under the terms of the Nevada Property Agreement, as amended, the Company was required to pay, and did pay, to the other parties the sum of Twenty-Five Thousand Dollars ($25,000) upon execution of the agreement. The Company also agreed to pay the Argus Companies the additional sum of One Hundred Sixty-Five Thousand Dollars ($165,000) in monthly installments of Seven Thousand Five Hundred Dollars ($7,500) commencing on April 15, 1989, and continuing thereafter until the entire sum was paid in full. The Nevada Property Agreement, as amended, further required the Company to issue 1,000,000 (pre-reverse split) shares of Common Stock as additional consideration to Argus Resources, Inc. In fact, the Company paid the Argus Companies, Inc., and the Selig Entities all amounts due under the Nevada Property Agreement, as amended, and issued 100,000 (post-reverse split) shares of Common Stock to Argus Resources, Inc. Pursuant to the terms and conditions of the Nevada Property Agreement, as amended, the Argus Companies executed a Corporation Quitclaim Deed conveying a forty percent (40%) undivided interest in the Nevada Property to the Company on March 9, 1989. Concurrently therewith, the Company delivered a Deed of Trust and Assignment of Rents (the "Deed of Trust") to the Selig Entities to further secure the obligations under the Nevada Property Agreement. Both the Corporation Quitclaim Deed and the Deed of Trust were duly recorded in the office of the county records by and for Nye County, Nevada. In June 1993, the Company entered into a Joint Venture Agreement with Marlowe Harvey/Maran Holdings, Inc. ("Marlowe Harvey"); Argus Resources, Inc.; and the Selig Entities respecting the Nevada Property. Under the terms of the Joint Venture Agreement, Marlowe Harvey was entitled to a fifty-one percent (51%) interest in the Nevada Property in consideration of Marlowe Harvey assuming certain obligations, including the purchase of the Deed of Trust from the Selig Entities. The remaining forty-nine percent (49%) interest in the Nevada Property was to be held equally by Argus Resources, Inc., and the Company in consideration of their payment of their pro rata share of all amounts due under the promissory note (the "Nevada Note") secured by the Deed of Trust created by the Nevada Property Agreement, as amended. The failure of either Argus Resources, Inc., or the Company to pay any amounts due under the note during the first year of the joint venture was to be deemed a default requiring the defaulting party to quitclaim its interest in the Nevada Property to the remaining parties. The Argus Companies, Marlowe Harvey and the Company were also responsible for their pro rata share of all property development expenses. At the time, Marlowe Harvey was the operator of the Nevada Property and responsible for all operations relating to maintaining the Nevada Property in accordance with the Mining Agreement. On October 20, 1995, the Company and Mr. Harvey "as an individual and for Maran Holdings and Argus Resources" executed an agreement (the "Amended Joint Venture Agreement") which purports to amend the June 1993 Joint Venture Agreement. The Amended Joint Venture Agreement obligates Marlowe Harvey to convey to the Company within ten (10) days of the date of execution of such Agreement fifty-two percent (52%) of the outstanding and issued stock in Argus Resources, Inc.("Argus"), in exchange for the payment of One Hundred Forty-Seven Thousand Dollars ($147,000) to be paid in the future from a percentage of Argus' share of the net proceeds realized from the sale of gold production on the Nevada Property. In addition, Marlowe Harvey agreed to convey a one percent (1%) interest in the Nevada Property to the "management" of the Company (Messrs. Michaels and Kramer) in exchange for a "production payment" of Forty-Seven Thousand Dollars ($47,000) likewise to be paid from future production attributable to Argus Resources, Inc. It was, and is, the intention of the Company's officers to convey their rights under the Amended Joint Venture Agreement to the Company in exchange for the Company's assumption of such officers' obligations under such Agreement. Both the obligations of the Company and its officers under the Amended Joint Venture Agreement were to be secured by the pledge of Common Stock (in the case of the Company, 1,235,429 shares) with "piggyback" registration rights to be granted to Marlowe Harvey in two (2) years in the event $147,000 is not paid from production by that time. If only a portion of the production payment is made by October 20, 1997, the obligation to seek registration was to be ratably reduced. The Company was further required to issue 1,186,981 3 7 shares of its Common Stock to Maran Holdings, Inc., an affiliate of Argus, at the time at which it was obligated to issue to Argus the shares to be used as security for the production payment. The Amended Joint Venture Agreement also required both the Company and its joint venture partners to each make one-half of the property tax payments and the payments due to the Selig Entities under the Nevada Property Agreement. Both of these payments are due in January of each year. In January 1996, the Company notified Marlowe Harvey that it had been "ready, willing, and able" to convey the Common Stock pursuant to the terms of the Amended Joint Venture Agreement. In addition, the Company made all of the required property tax payments relating to the Nevada Property and the payments due to the Selig Entities in reliance upon the terms of the Amended Joint Venture Agreement. Marlowe Harvey has failed to reimburse the Company for its one-half share of the property tax payments and the payments due to the Selig Entities which were advanced on its behalf by the Company and has failed to make the conveyances required by the terms and conditions of the Amended Joint Venture Agreement. As a result, the Company instituted an action in Nye County, Nevada, on November 4, 1996, seeking specific performance and damages against Marlowe Harvey; Maran Holdings Inc.; Calais Resources Inc.; and Argus Resources, Inc. This action is described in further detail under the Section of this Registration Statement entitled "LEGAL PROCEEDINGS." Regardless of the outcome of this action, the Company will continue to operate this property and believes it will continue to own the interest in the Nevada Property which it acquired by virtue of the previous agreements it entered into which relate to the Nevada Property. In March 1997, the Company entered into a Sale and Purchase Agreement with the Selig Entities. Under the terms of this latest agreement, the Selig Entities agreed to sell to the Company one hundred percent (100%) of their interests in the Nevada Note, the Deed of Trust, and the Nevada Property for the sum of Three Hundred Seventy Five Thousand Dollars ($375,000) payable as follows: One Hundred Thousand Dollars ($100,000) in March 1997 and the balance plus all accrued and unpaid interest (calculated at the rate of 5.25%) on or before February 6, 1999. The Company in fact paid the first installment of One Hundred Thousand Dollars ($100,000) in March 1997. The agreement also acknowledges that the Company is the only person or entity legally entitled to conduct mineral operations on the Nevada Property. The Company is also required to pay all U.S. Bureau of Land Management annual maintenance fees associated with the claims comprising the Nevada Property. The Nevada Property is located in an historic mining district which has experienced mining operations from 1866 to the present with the major activity in the late 1860s, between 1906 and 1921 and from 1960 to the present. Placer and lode mining took place principally in the Reliance Mine, the White Caps Mine, the Union Amalgamated Mine, the Manhattan Consolidated Mine, the Earle Mine, the Big Four Mine and the April Fool Mine. The United States Geological Survey reports historic production through 1959 of 260,000 ounces of lode gold and 206,000 ounces of placer gold mined in the Manhattan Mining District. Since 1959, the more significant gold production has occurred from the Echo Bay and Nevada Gold Fields mines which border the Nevada Property. Such mines have yielded production in excess of 500,000 ounces of gold. The Nevada Property lies in several shallow gullies in a general area which is located between 7,500 to 7,800 feet in elevation. Mineralization of the Nevada Property appears to be structurally controlled by a series of parallel east-northeast trending faults dipping from 50 to 75 degrees southwest and with some cross or perpendicular faults. The Nevada Property consists of two distinct areas which require different mining and production techniques. Gold mineralization in the vicinity of "Litigation Hill" is near the surface and much less expensive to mine. The lower grade ore can be "leached" while higher grades of ore must be milled. Gold mineralization located in the White Caps Mine has revealed two delineated ore bodies below the 600-foot level and a deeper exploration target requiring substantially higher costs for extraction as compared to "Litigation Hill." "Dewatering" the mine and driving a decline to the 800-foot level could become quite costly. Additionally, gold ore obtained from the White Caps Mine may be required to be processed using autoclave technology or other proven methods in order to comply with environmental regulations due to the ore's high content of antimony, mercury, arsenic and sulphur; nevertheless, the Company believes that the deep ore bodies located within the White Caps Mine may have sufficient potential to justify the large development program. Both the "Litigation Hill" and White Caps Mine areas of the Property will be discussed below. The Nevada Property is adjacent to three (3) existing gold mines. Immediately adjacent to the west of the Nevada Property is the Manhattan Mine formerly owned by Echo Bay Minerals Company now a part of the Smokey Valley Combined Operation. This mine has produced approximately 500,000 ounces of gold over the last 10 to 15 years. Operations at this mine have been suspended. Immediately to the south of the Nevada Property is the Keystone Mine which was developed by Nevada Gold Fields Company. Proven reserves were reported at 100,000 tons of gold ore averaging .21 ounces per ton. Probable reserves were reported at an additional 100,000 tons. 4 8 Approximately 14 miles to the north of the Property are the Smokey Valley Combined Operation mining activities known as the Round Mountain Mine. This mine is currently the largest producer of gold ore in the district with production estimated at more than 350,000 ounces of gold per year and 7,000,000 ounces in reserve and is one of the largest heap leach operations in the world. The White Caps Mine was historically one of the more prolific gold mines in the state of Nevada and is located in the Manhattan Mining District. Production of gold began in 1911 and remained in production until 1935 when the vein was lost and the lower levels of the mine encountered water. A total of 120,000 ounces of gold were produced during that period. The mine was closed in 1942 by executive order relating to all "mining activities non-essential to the [World War II] effort." The mine was found to be flooded from its deepest point at the 1,300-foot level to the 450-foot level. Beginning in 1957, a $400,000 program was put in place to "dewater", renovate and reactivate the mine. Pumping of water began that year and by 1958, the water level was down to the 800-foot level. At that time some exploration resumed at the upper levels of the mine. At the 300-foot level, antimony-mercury ore grading 60 percent and 8 percent, respectively, was discovered. An expensive antimony deposit (also containing gold and mercury values) was located near the 500-foot level and plans were made to begin mining activities after the renovation of the mine was completed. While continuing to explore for gold mineralization on the lower levels of the mine, the owners leased out the right to mine antimony-gold-mercury ore above the 600-foot levels in 1962 and production thereafter began. A diamond drilling program in 1962 relocated the gold ore vein which had been lost in 1935 when it faulted out at the 600-foot level. Drilling of the formation began at the head of the winze (i.e. incline shaft) and continued down to the 1,200-foot level. Eight regularly-spaced holes of approximately 100 feet in length were drilled. These holes revealed a gold mineralized area 65 feet wide with values ranging as high as 7.7 ounces per ton and averages over .8 ounces per ton. This mineralization is found in the foot wall of the old winze. The next phase of the 1962 drilling program consisted of diamond drilling a "hole" starting at the 1,200-foot level. Six holes of approximately 100 feet in length each were drilled and revealed gold values averaging over 3 ounces per ton with a high of 6 ounces per ton. This drilling program blocked out a proven ore reserve of over 14,000 ounces of gold according to a 1964 report published by the California Mining Journal. The program also indicated that an ore body containing several hundred thousand ounces of gold is present in the relocated vein which runs from the 600-foot level down to the 800-foot level and from the 1,200-foot level down to at least the 1,300-foot level. Before production could begin, a fire was accidentally started by a pumping subcontractor at the 300-foot level. The ore bins, shaft and head frame were destroyed and the mine was closed in 1964. The low price of gold (then $35 per ounce), high costs to rebuild the damaged mine and the lack of funds caused the White Caps Mine to close in 1964 and has remained closed since that time. The Company's plans include reentering this mine and resuming gold exploration and production. By contrast, "Litigation Hill" was the site of both Earle and Consolidated Mines, all early producers of high-grade ore until the veins ran out. Recent geomagnetic activity and a drilling program have located several small commercial-sized deposits of medium-grade gold ore which can be either milled or heap leached. The Company has conducted a geophysics and geochemical survey of "Litigation Hill." A Schlumberger resistivity survey indicated gold mineralization down to a depth of 1,000 feet (the limit of the instrument's sensitivity). Bulk sampling of the ore dumps remaining at these mines indicated that an overall average grade of the dumps was .206 ounces of gold per ton. Over 1,500 tons of ore were proven with another 500 tons considered to be probable reserves. The 1987 exploration of underground workings on "Litigation Hill" showed that the Earle Mine had experienced massive cave-ins. Two samples were taken from channel cuts. These samples indicated values of .120 ounces of gold per ton. The Bath Mine was accessible through a stope which leads directly to the main 5 9 haulage decline. Channel cut samples were taken on pillars left in previously-worked stopes. Values varied from .64 to 1.288 ounces of gold per ton. The Company initiated a rotary drilling program in 1988. Holes drilled pursuant to the program varied in depth from 200 feet to 525 feet. Gold values located in the carbonates at a depth of 70 feet indicate that open pit mining is suitable for the lower grade ores which are present. The Company commenced an exploration program during the years 1989 and 1990. This program consisted of two parts: conducting a magnetic survey of the property and drilling 25 reverse circulation drill-angle holes varying in depth from 50 to 150 feet. The magnetic survey identified the areas around "Litigation Hill" and the White Caps Mine as strong targets for further exploration. The drilling program located several areas of gold mineralization and a small ore body of about 5,500 tons containing gold values of .18 ounces per ton. In September 1993, the joint venture partners began a decline (i.e. tunnel) in order to intercept a drill hole which had been drilled by Freeport Mining Company in 1983. The drill hole revealed that from 465 feet to 505 feet below the surface, an average gold grade of .886 ounces of gold per ton over 40 feet existed. The decline was completed during the Spring of 1994 and drill stations were prepared. Exploration and drilling activities commenced and are ongoing as of the date of this Registration Statement. The decline is approximately nine feet by nine feet and runs at an approximate twelve-degree grade. At the 500-foot level, a turnaround or transfer bay has been added to enable the operators of the mine to successfully remove ore in a cost-effective method. The 1993 drilling program also included the mapping and sampling of the old workings of the Consolidated Mine (which was closed in 1939) as well as the drilling and sampling of the decline itself in the immediate potential ore zones contained within the decline. In July 1995, the Company engaged the services of William R. Wilson, a minerals industry consultant, to prepare a plan to develop the Nevada Property (the "Nevada Business Plan"). According to the Nevada Business Plan, two alternative plans for exploration and development of the Property exist. The first plan would extend the existing decline in the White Caps Mine to the 565-foot level, rehabilitate and mine old workings in the Consolidated Manhattan Mine, drift and mine a new area near the drill hole which was intercepted by the decline formed during the 1993 program, rehabilitate the White Caps Shaft, and mine the 565-foot level, 670-foot level, 800-foot level, 910-foot level, 1,120-foot level, 1,200-foot level and 1,300-foot level of the White Caps Mine. According to the Nevada Business Plan, the major advantage to this alternative would be that access to the lower levels of the White Caps Mine would be considerably improved. It is anticipated that the lower levels may yield higher grade ore as compared to the yields anticipated at current levels of the mine. A cash analysis pertaining to the first alternative projected capital costs during the first year of operations to be $1,463,290, operating costs of $1,719,699 and production of 7,960 ounces of gold resulting in revenues of $3,088,430. As a result, the cash analysis prepared for the first alternative projected a positive cash flow of $92,804 after taking into account depreciation, depletion and amortization. The second alternative identified in the Nevada Business Plan would extend the decline in the White Caps Mine to the 565-foot level, rehabilitate and mine old workings in the Consolidated Manhattan Mine, drift and mine a new area near the drill hole which was intercepted by the decline formed during the 1993 program, mine the 565-foot level only in the White Caps Mine and conduct underground sampling in the White Caps Mine in the 670-foot through 1,300-foot levels. The Nevada Business Plan identifies the major advantage to this alternative to be significantly reduced capital costs combined with the opportunity to sample underground the White Caps Mine without rehabilitating the White Caps shaft. The disadvantages of this alternative are that mining access to the lower portions of the White Caps Mine may not be completed and it is still not known whether access can be obtained to each of the levels below the 560-foot level. A cash analysis pertaining to the second alternative projected capital costs during the first year of operations to be $605,840, operating costs of $1,046,063 and production of 4,568 ounces of gold resulting in 6 10 revenues of $1,772,539. As a result, the cash analysis prepared for this second alternative projected a positive cash flow of $425,326 after taking into account depreciation, depletion and amortization. The Nevada Business Plan concludes by recommending the second alternative as the preferable alternative for the Company to follow. In June 1996, the Company initiated the second alternative by contracting with Harrison Western Mining and Construction Company, Lakeland, Colorado, to execute this plan. In July 1995, the Company notified Marlowe Harvey and related companies, then the operator of the Nevada Property, that Marlowe Harvey was not in compliance with contractual operations under the Nevada Property Agreement as well as several applicable mining laws and regulations. At that time the Company assumed the position of operator and continues to act in this capacity. The Company has begun to establish near-surface gold deposits. Initial exploration of this nature has revealed two near-surface targets showing commercial grades and quantities. These are now being developed for processing and the Company has established an ongoing exploration plan of this nature due to this success. All permits for this operation have been issued and the Company is in compliance with all state, federal and environmental regulations to the best of its knowledge and belief. The Company's operations in Nevada initially will be heavily dependent upon the mill constructed approximately one mile from the Nevada Property which is currently owned and operated by New Concept Mining, Inc. ("New Concept"). The Company presently intends to use the New Concept mill for milling the ore produced from the Nevada Property and selling gold bullion dore bars or concentrate for sale to third-party buyers. Under the terms of an agreement entered into with the Company, New Concept has agreed to provide the Company with the capacity to initially process between 1,000-1,200 tons of ore per month. New Concept has also agreed to increase processing capacity once the Company's development program expands. The Company has also been engaged in preliminary discussions with New Concept to purchase up to one half of the mill. These discussions have not yet resulted in a binding agreement between the Company and New Concept. The Company has also budgeted the sum of One Hundred Thousand Dollars ($100,000) to be spent in the foreseeable future for compliance with applicable environmental laws. However, the Company can provide no assurance that the amount so budgeted for environmental compliance will be consistent with the amounts actually spent for compliance or that the actual amount of such compliance may not be substantially greater than that which has been projected to be spent by the Company pursuant to the budget. Over the past three (3) years, the Company has expended approximately One Million Five Hundred Thousand Dollars ($1,500,000) on development expenses on or relating to the Nevada Property. These expenses relate primarily to developing the most effective means by which to extract the ore and transport it to the New Concept mill approximately one mile from the Nevada Property. The Indonesian Concessions General. In August 1996, the Company entered into an agreement to acquire a fifty-one percent (51%) interest in a gold exploration property comprising 10,000 hectares (25,000 acres) located in East Kalimantan, Indonesia (the "Kalimantan Property"). More recently, the Company has entered into two (2) additional agreements to acquire an additional six (6) gold mining concessions aggregating over 23,400 hectares (58,500 acres) and three (3) coal mining concessions comprising 290,000 hectares (725,000 acres). In January 1997, the Company and Maxwells Energy and Metals Technology Ltd., a Bahamian Company ("Maxwells"), agreed to substitute the original 10,000 hectare property (i.e. the Kalimantan Property) for a 16,000 hectare (40,000 acre) tract (the "Sopang Property") located elsewhere on the island of Kalimantan. Ownership of the Indonesian Concessions will be acquired through the Company's new wholly-owned subsidiary formed under the laws of the British Virgin Islands known as Kalimantan Resources, Ltd. ("Kalimantan Resources"). Mineralization of the Indonesian islands known as Kalimantan (the Indonesian section of Borneo) and Sumatra occurred as a result of rifting of the earth's crust at the ocean floor. There are approximately fifteen known mineralized "arcs" comprising all of Indonesia. Six (6) of these arcs contain the majority of the gold and copper deposits currently discovered in Indonesia. The Central Kalimantan Arc is the area which has evidenced the majority of recent attention of mineral exploration efforts although significant work is also being undertaken in other areas. Located within the Central Kalimantan Arc is the Kelian Mine which has been operating since 1992 and produces approximately 450,000 ounces of gold per annum from ore grading approximately 1.8 grams per tonne of gold. Over seventy (70) tonnes of gold has been produced to date. Based upon current estimated reserves, the mine is scheduled to operate until 2003. Further south is the Mt. Muro Mine. Production for 1996 at this mine was 187,000 ounces of gold. At present, it is impossible to predict whether the Indonesian Concessions possesses any recoverable reserves of gold ore or whether the yields noted in the above-described mines will be indicative of the yields to be established on the Indonesian Concessions. Three (3) agreements cover the various concessions which the Company and Kalimantan Resources have acquired: (i) the Principles of Agreement by and between the Company and Maxwells, as amended; (ii) the Acquisition Agreement dated January 26,1997 by and between Kalimantan Resources and Singkamas Agung Ltd.; and (iii) the Acquisition Agreement dated February 18, 1997, by and between Kalimantan Resources and Kaliman Jaya Ltd. The Sopang Property. The Company acquired its interest in the Sopang Property pursuant to a document entitled "Principles of Agreement" dated August 19, 1996 ("POA"). The parties to the POA are Maxwells and the Company. The Company and Maxwells originally agreed to conduct exploration activities on a 10,000 hectare tract, but pursuant to an addendum to the POA, substituted the 16,000 hectare Sopang Property. In exchange for a fifty-one percent (51%) interest in the concession relating to the Sopang Property, the Company agreed to convey to Maxwells Four Hundred Thousand (400,000) shares of its Common Stock. In addition, the Company must issue an additional Four Million (4,000,000) shares of its Common Stock to Maxwells should an investment banker confirm by independent appraisal that the Sopang Property is valued to be at least Twelve Million Dollars ($12,000,000 U.S.) and/or such investment banker provides financing to the Company based upon an evaluation of at least Twelve Million Dollars ($12,000,000 U.S.) or upon the appreciation of the Common Stock in an aggregate amount exceeding Twelve Million Dollars ($12,000,000) within ninety (90) days of an announcement by the Company of its acquisition of the Indonesian Property. The POA further required the Company to issue One Million shares (1,000,000) of Common Stock regardless of whether the Company receives financing or the above-referenced appraisals are performed if the Company's Common Stock traded consecutively for a period of at least thirty (30) days. The Company recently received a letter from Maxwells acknowledging that other than the issuance of 10,800 shares, no additional shares of Common Stock will be required to be issued until the independent appraisal mentioned above has been performed. A provision of the POA allows Maxwells to obtain a "nondilutive" percentage ownership in the Common Stock to be issued under the POA should the Sopang Property produce at least 2,000,000 ounces of gold. As of the date of this Registration Statement, Three Hundred Eighty Nine Thousand Two Hundred (389,200) of the Four Hundred Thousand (400,000) shares required to be issued to Maxwells have in fact been issued (200,000 shares of which are currently held in the name of Singkamas Agung, Ltd. but which will be reissued in the name of Maxwells). While the Company was entitled to defer exploration activities for six (6) months, exploration activities have commenced and are ongoing on the Sopang Property. 7 11 Under the POA, the Company is responsible for one hundred percent (100%) of all exploration and operating expenses relating to the Sopang Property. Maxwells also enjoys antidilution rights with respect to the Common Stock to be issued under the POA provided exploration activities result in a valuation evidencing a yield of at least two million (2,000,000) ounces of gold. Maxwells has agreed to provide a voting trust in favor of existing management. Maxwells is not, however, required to vote its shares with existing management in connection with the registration of Common Stock issued or to be issued to Maxwells. Maxwells' consent is also required in the case of any issuance of the Company's capital stock exceeding Two Hundred Fifty Thousand Dollars ($250,000). The Company has undertaken efforts to confirm the chain of title which it believes to exist with respect to the Sopang Property. Silobat Property. On January 26, 1997, the Company's wholly-owned subsidiary, Kalimantan Resources, entered into an Acquisition Agreement with Singkamas Agung Ltd., a Bahamian corporation ("Singkamas"), relating to one (1) gold mining concession and three (3) coal mining concessions located in Kalimantan, Indonesia (the "Acquisition Agreement"). Singkamas is an affiliate of Maxwells and is owned and controlled by the same persons who own and control Maxwells. The gold mining concession subject to the Acquisition Agreement relates to a 62-hectare (155-acre) tract located in West Kalimantan and is known as the "Silobat Property." Currently, PT Kajiwahida Mandiri, an Indonesian limited liability company ("PT Kajiwahida"), holds a Kuasa Pertambangan Eksploitasi license ("KPE") and a Kuasa Pertambangan Pengangkutan and Penjualan license ("KPPE") issued by the Indonesian Directorate General of General Mining and the Ministry of Mines and Energy on October 7, 1996. On December 21, 1996, PT Kajiwahida entered into a Mining Authorization Transfer Agreement with PT Duta Sena Rahayu, an Indonesian limited liability company ("PT Duta"), whereby PT Kajiwahida agreed to transfer its KPE and KPPE licenses to PT Duta in exchange for $5,000,000 payable as follows: $100,000 at the time of execution of the Acquisition Agreement; four consecutive installment payments of $100,000 each on the fourth days of February, March, April and May 1997; and a final payment of $4,500,000 at such time as official test results from exploration activities demonstrate the existence of at least 2,000,000 ounces of gold reserves. Should exploration activities reveal gold reserves of less than 2,000,000 ounces, the final payment is to be adjusted in relation to the amount of gold reserves so established. In addition, PT Kajiwahida is obligated to seek the appropriate governmental authority to expand its licenses to include a 2,000-hectare tract contiguous to the 62-hectare tract currently comprising the Silobat Property. On December 21, 1996, the shareholders of PT Duta and Kalimantan Resources entered into a Cooperation Agreement whereby in exchange for assuming the financial responsibilities under the Transfer Agreement, the shareholders of PT Duta agreed to hold the shares of such limited liability company for the benefit of Kalimantan Resources. On the same date, Kalimantan Resources entered into a Participation Agreement with Singkamas whereby Kalimantan Resources agreed to grant to Singkamas a net profits interest derived from the exploitation of the Silobat Property. The Acquisition Agreement with Singkamas requires Kalimantan to secure the issuance by the Company of Four Million (4,000,000) shares of Common Stock as follows: Two Hundred Thousand (200,000) upon execution of the Acquisition Agreement and the balance to be issued upon verification by an independent evaluation that the value of the Silobat Property and the three (3) Indonesian Coal Concessions equal or exceed Forty Million Dollars ($40,000,000). In the case of the initial issuance of shares and twenty-five percent (25%) of the balance of the shares of Common Stock to be issued, Singkamas is entitled to "piggyback" registration rights. The Company has issued Four Hundred Thousand (400,000) shares of its Common Stock to Singkamas as of the date of this Registration Statement. Of this amount, Two Hundred Thousand (200,000) shares are to be reissued to Maxwells. To date, no funds have been transferred by Kalimantan to PT Kajiwahida or any other party. However, Kalimantan Resources has been given authority to conduct trenching and pitting and has conducted preliminary mapping, sampling and trench hole pitting under the supervision of Behre Dolbear & Co. for the purpose of evaluating the Silobat Property. Results of these tests have not yet been made public pending verification. The Company (through its association with Singkamas) is currently in negotiations with PT Kajiwahida to amend the terms of the Acquisition Agreement to reflect the accord reached by the parties to enable Kalimantan to conduct further exploration activities on the Silobat Property and to forego any payments due under the Acquisition Agreement until such time as all governmental approvals associated with annexing the 2,000-hectare tract have been secured. The Silobat Property forms part of what was known as the Chinese district of Western Borneo and has been the location of substantial exploitation by the Chinese since the 1880s. In the 1960s, a Dutch company was granted a concession to conduct mining operations on the Silobat Property, but such property was abandoned shortly thereafter because of political unrest, sabotage and lack of funding. The property is located 1 degree 1 minute north longitude and 109 degrees 12 minutes east latitude in the subdistrict of Sambas, Kalimantan Barat. The topography of the property is characterized by swampy lowlands with isoldated hilly outcrops covered mainly with revegetation and local rubber plantations. The geology is characterized by green-black mudstone, fine silt stone, quartz-feldspar porphyry and quartz diorite rock types. In 1977, 21 rock chip and 7 stream sediment samples were submitted for analysis to the Superintendent Laboratories in Jakarta. Only small traces of gold were detected in all rock samples submitted while stream sediment samples yielded values of .5 to 1.05 ppm in four of the seven samples. In 1982, R.A. Watters conducted an evaluation of the Silobat Property. A synthesis of the work performed on previous investigations was attempted. Geological traverses were carried out and samples of rock types were taken. A portion of the rock type samples was dollied in a pot and washed to a concentrate representing approximately one kilogram of original material. The concentrates were then submitted to Rio Tinto Laboratories in Jakarta for analysis. Six (6) large samples were taken sluiced with existing equipment. The concentrate obtained was cleaned with gravity traps and the gold separated and weighed on a balance. Four (4) heavy mineral concentrates were collected from small creeks located on the most southwestern hill on the property. Visible gold occurred in all samples of alluvial material. The rock and stream concentrates were not measurable but gold was detected in four of the stream concentrates. The R.A. Watters report suggests that it might be possible to extract up to one gram of gold per cubic meter and that the previous evaluation estimating 0.33 grams per tonne for hard rock mining activities was "remarkably realistic." Munung (Monroe) Property. The Company's wholly-owned subsidiary, Kalimantan Resources, entered into an Acquisition Agreement for Gold and Coal Concessions February 18, 1997, with Kalimas Jaya Ltd., a Bahamian corporation ("Kalimas"), relating to five (5) gold mining concessions and one (1) coal mining concession (the "Kalimas Acquisition Agreement"). Kalimas is also an affiliate of Maxwells and is owned and controlled by the same persons who own and control Maxwells. Kalimas acquired its rights to the concession relating to the Monroe Property pursuant to a Development Agreement dated February 14, 1997, by and between PT Muara Mayang Coal Utama ("PT Muara") and Kalimas. Under the Development Agreement, Kalimas obtained the right to acquire an 80% interest in a Kuasa Pertambangan Penyelidikan ("KP") issued to PT Muara for the sum of $1,000,000 payable as follows: $150,000 upon execution of the Development Agreement and verification by Kalimas that PT Muara possesses marketable title to the concession without encumbrances and $850,000 upon commencement of production and generation of net profits. The Monroe Property comprises 6,096 hectares and is located in Central Kalimantan, Indonesia. It is located in the same general area of the Kelian gold mining concession which has produced over 450,000 per annum ounces of gold since 1992. The existing KP issued on the Monroe Property allows PT Muara to conduct a general survey and perform exploration activities for gold and other precious metals. The Development Agreement requires PT Muara to use its "expert abilities and efforts" to obtain additional licenses for the exploitation, production and refining, and transportation and sale of all minerals obtained from the Monroe Property. The Kalimas Acquisition Agreement requires Kalimas to convey a 51% interest in all current and future licenses which it acquires with respect to the Monroe Property. To date, no sums have been paid by Kalimas or Kalimantan Resources to PT Muara nor has any exploration work been performed on the Monroe Property. Kalimantan Resources currently intends to complete title work prior to engaging in any exploration activities. Telen (Tomak) Property. The second gold concession in which Kalimantan Resources received rights under the Kalimas Acquisition Agreement is known as the Telen or Tomak Property. This property comprises 687 hectares and is located in East Kalimantan, Indonesia. Kalimas acquired its rights to the property pursuant to a Development Agreement dated February 14, 1997, which it entered into with PT Walea Bahimas, an Indonesian limited liability company. PT Walea Bahimas currently holds a KP for general survey and exploration on the property. Kalimas is required to pay a purchase price of $1,000,000 to acquire an 80% interest in the current KP. The Development Agreement contains provisions similar to those contained within the Development Agreement relating to the Monroe Property with respect to payment terms. Moreover, PT Walea Bahimas will only be entitled to receive the final $850,000 payment upon commencement of commercial production and obtaining licenses for exploration and exploitation, production and refining, and transportation and sale. Kalimas is obligated to commence exploration in or before April 1997 or at such other time as agreed upon by the parties. In addition to being required to dig test pits as part of the exploration program, Kalimas has agreed to: conduct shallow drilling to a depth of approximately 60 meters during the first 90-day period, conduct deep drilling to a depth of at least 200 meters during the second 90-day period, and securing a commitment of at least $300,000 during the first three (3) years of exploration activities. The Kalimas Acquisition Agreement requires Kalimas to convey a 51% interest in all current and future licenses which it acquires with respect to the Tomak Property. In addition, Kalimas and the Company have agreed that Kalimas will be entitled to receive a number of shares of Common Stock the amount of which is to be determined no later than July 1997. The Kalimas Acquisition Agreement further provides that the value of the Common Stock is to be determined at $10 per share, which was the approximate value as of January 26, 1997. To date, no sums have been paid by Kalimas or Kalimantan Resources to PT Walea Balimas nor has any exploration work been performed on the Tomak Property. Kalimantan Resources currently intends to complete title work prior to engaging in any exploration activities. Long Beleh (La Bella) Property. The La Bella Property represents the third gold concession in which Kalimantan Resources acquired rights pursuant to the Kalimas Acquisition Agreement. This property currently comprises 4,637 hectares and is located in East Kalimantan, Indonesia. Kalimas acquired its rights in and to a KP for general survey and exploration pursuant to a Development Agreement dated February 14, 1997, with PT Muara Koman Mas ("PT Muara Koman"). The terms and conditions for the acquisition of an eighty percent (80%) interest in the current license and all future licenses held or to be held by PT Muara Koman are identical to the terms and conditions described above and relating to the Tomak Property. The obligations of Kalimas under the Kalimas Acquisition Agreement are identical to the obligations which it possesses with respect to the Tomak Property. 8 12 To date, no sums have been paid by either Kalimas or Kalimantan Resources to PT Muara Koman nor has any exploration been performed on the La Bella Property. Kalimantan Resources currently intends to complete title work prior to engaging in any exploration activities. Sengingi Property. The Sengingi Property is the fourth gold concession in which Kalimantan Resources acquired rights pursuant to the Kalimas Acquisition Agreement. Unlike the previous gold concessions mentioned in this Section of the Registration Statement, the Sengingi Property is a 4,000-hectare (10,000-acre) tract which is located on the island of Sumatra in the province of Riau, Indonesia. Kalimas acquired the right to obtain an eighty percent (80%) interest in a KP for exploration and a KPE for exploitation with respect to 3,000 hectares of this property from PT Aksara Mina Artha ("PT Aksara") pursuant to a Development Agreement dated February 14, 1997. Under the terms of its agreement with PT Aksara, Kalimas is obligated to pay PT Aksara $1,000,000 to be paid from production derived from the property. In all other material respects, the terms and conditions of the Development Agreement between Kalimas and PT Aksara and the terms and conditions of the Kalimas Acquisition Agreement between Kalimas and Kalimantan Resources are identical to the terms and conditions described above with respect to the other gold concessions subject to the Kalimas Acquisition Agreement. Kuantan Property. The last gold concession subject to the Kalimas Acquisition Agreement is known as the Kuantan Property. The Kuantan Property is also located in Riau Province, Sumatra, Indonesia, and comprises 8,000 hectares. Kalimas derives its rights pursuant to a Development Agreement dated February 14, 1997, between it and PT Aksara Tama Pramita ("PT Aksara Tama"). PT Aksara Tama currently holds a KP for general survey and exploration. The general terms and conditions upon which Kalimas is to acquire an eighty percent (80%) interest in all current and future licenses on the Kuantan Property are similar to the terms and conditions upon which all other licenses subject to the Kalimas Acquisition Agreement have been acquired. The purchase price which Kalimas will be required to pay for the Kuantan Property is $1,000,000 payable as follows: $250,000 upon execution of the Development Agreement and verification by Kalimas that PT Aksara Tama possesses marketable title to the concession without encumbrances, and $750,000 to be paid upon commencement of production and generation of net profits. Indonesian Coal Concessions. As previously mentioned, Kalimantan Resources and Singkamas entered into an Acquisition Agreement on January 26, 1997. In addition to acquiring rights to the Silobat Property, Kalimantan Resources obtained rights to three coal mining concessions aggregating over 286,000 hectares. Singkamas acquired its rights to these three coal mining concessions pursuant to Development agreements entered into with the PT Andhika Group of Companies, three Indonesian limited liability brother-sister companies (collectively referred to as "PT Andhika"). Under the terms of these Development Agreements, Singkamas received the right to acquire seventy-seven and one-half percent (77.5%) interest in the three contracts of work ("COWs") currently held by PT Andhika. Under the terms of the Acquisition Agreement between Singkamas and Kalimantan Resources, Singkamas has agreed to assign a fifty-one percent (51%) in and to the COWs (as well as a fifty-one percent [51%] interest in the Silobat Property) in consideration of the issuance of 4,000,000 shares of the Company's Common Stock described elsewhere in this Registration Statement in greater detail. In March 1997, Kalimantan Resources, engaged an Indonesian exploration crew to travel to the properties and to perform preliminary evaluations of possible coal reserves in place on the three (3) coal concessions located in Indonesia where the Company and Kalimantan Resources have entered into contracts to acquire certain exploration and exploitation rights. Behre Dolbear & Co. will review the results of these activities and present recommendations based upon such review. The Company has been contacted by several large coal mining companies for the purpose of entering into proposed joint ventures to conduct further exploration and subsequent development of such properties. At present, no joint venture agreements have been entered into by the Company. The Company has entered into an agreement with Behre Dolbear & Company, Inc. ("Behre Dolbear"), an internationally recognized mining consulting firm which was established in 1988. Behre Dolbear will be responsible for providing independent technical advisory third-party validation services to the Company as more particularly outlined in the agreement. A more thorough description of this agreement is described in the Section of the Registration Statement entitled "MANAGEMENT." The Brazilian Timber Properties The Company has acquired various rights to 693,000 hectares of timber properties located in the state of Para, Brazil. In evaluating these properties, the Company has considered only the Jonasa Concessions (comprising 276,000 hectares) in developing its economic forecasts. The property areas contain a variety of timber species of which initially only seventeen (17) of the most commercial of the one hundred twenty-five (125) available species have been selected and factored into the Company's economic forecasts. The other species will be harvested at the appropriate time. Of the four existing saw mills located on the Jonasa Concessions, two are currently operational, while two mills are currently being placed into production. Immediate expansion plans call for the construction of up to eight additional mills. The purpose of several small mills as opposed to one large facility, is to accommodate different varieties of timber and minimize downtime in the event of mechanical failure or schedule maintenance of any of the mills. All appropriate infrastructure including power, housing, roads and auxiliary equipment as well as trained labor and strong management are in place and are believed to be adequate to accommodate the phased increase in mill capacity. All shipping and associated transportation services will be provided by the Jonasa Group, one of the largest private shipping companies in the Amazon Basin. Their expertise and political position are anticipated to provide invaluable support to the operation, and as a participant in the joint venture, allow for operating efficiencies that greatly enhance profitability. The joint venture also holds the lands in fee title and the existing operations have virtually no debt. Equatorial Resources has standing orders for all of its initial start-up production at 200 cubic meters per day capacity. Additional orders for up to 1,000 cubic meters per day have been submitted to Equatorial Resources and appear to demonstrate the viability of the immediate expansion noted above. Five Hundred Thousand Dollars ($500,000) has been or will be provided by the Company for initial start-up. The Company will also provide $1,500,000 for the additional expansion noted above. The United Nations Food and Agricultural Organization (F.A.O.), Simons Corporation (Canada) and Reid, Collins & Associates, Ltd. (Canada), highly respected forestry experts, have evaluated 24,000 hectares of the total holdings and have posited that each hectare will yield approximately 200 cubic meters of raw timber. If these evaluations are accurate with respect to the entire Concession, the total potential asset value of all 276,000 hectares would be approximately 55.2 million cubic meters of raw, hard wood timber. The Jonasa Concessions. On November 11, 1996, the Company, through Equatorial Resources Ltd. ("Equatorial Resources"), entered into a letter agreement with Madeira Intex, S.A., International Exports, a company formed under the laws of the Greek Democratic Republic ("Madeira"), whereby Madeira agreed to assign its rights in and to a Joint Venture Agreement which Madeira had entered into on June 29, 1984, with Companhia Agropecuaria do Rio Jabuti ("Jonasa"). The Joint Venture Agreement required Jonasa to assign to Madeira the exclusive rights to extract and market all lumber licensed by the appropriate Brazilian authorities for export. In turn, Madeira was required to provide the financing for the management of cutting, preserving, protecting, inspecting and shipping of the lumber species permitted and located on the timber property owned by Jonasa. All such activities are required to be conducted in accordance with the Association Technique International des Bois Tropicaux. The original term of the agreement was for the period needed to extract 13,000,000 cubic meters from an area of 100,000 hectares. At such time as this quantity was extracted from the property, Madeira was required to provide the expertise and financing necessary to reclaim the areas harvested under the Joint Venture Agreement. Among the other obligations required to be performed by Madeira were the obligations to provide all labor associated with the transportation and harvesting of the timber; purchase all lumber cut up to 13,000,000 cubic meters; issue a letter of credit allowing Jonasa to present sight drafts representing the purchase price of the lumber to be harvested from the property and stevedoring costs for the shipment of such lumber; comply with the rules and regulations of the Association Technique International des Bois Tropicaux; and supervise all shipping activities. The Joint Venture Agreement required Madeira to purchase a minimum of 60,000 cubic meters per year. The purchase price of the lumber to be sold by Jonasa and purchased by Madeira was as follows: for all "merchantable quality" lumber, $90 per cubic meter; for "fair/average" quality, $80 per cubic meter; and for "second quality", $67 per cubic meter. The above purchase prices were to be revised annually commencing in 1986 based upon a formula involving the average price increase or decrease of the usual international price variations for same or similar tropical lumber from West Africa, Central America and the Far East. Through various addenda, the rights and responsibilities of Madeira have been modified so as to allow the original joint venture to remain in effect and to allow Madeira to assign its rights and delegate its responsibilities to Equatorial Resources. On July 12, 1984, Madeira entered into an agreement with Thyssen Sudamerica N. V., a Netherlands Antilles company. Under the terms of this agreement, Madeira agreed to sell through Thyssen all wood logs, sawed lumber and byproducts purchased and sold exclusively to the Far East, including Japan, South Korea, Taiwan, Singapore and the Philippines. Similarly, Thyssen agreed to exclusively purchase all such products for shipment to such regions of the Far East. The price which the parties agreed to sell such products was to be determined on a quarterly basis. Additional provisions of the contract identified the standards to be met by Madeira as to quality, species types, quantity and measurements. The Company has received confirmation that Thyssen is ready, willing and able to abide by the terms of the contract. In July, 1985, United Amazon Resources Limited, a company owned and controlled by Madeira ("U.A.R."), and Jonasa entered into a Managing and Marketing Agreement which effectively gives U.A.R. control over management and supervision of operations conducted on the Jonasa Concessions. Among other things, U.A.R. has been granted the authority to manage all of Jonasa's timber operations, including the Jonasa Concessions. The Company has also agreed to issue two million (2,000,000) shares of its Common Stock to Ignatius Z. Theodorou, the principal shareholder and executive officer of Madeira pursuant to a tax-free stock for assets transaction. To date, the Company has neither completed its agreement with Mr. Theodorou to effect such transaction nor issued said shares to him. The Company has recently commenced timber operations on the Jonasa Concessions and has recently obtained a preliminary evaluation of a sample of the Jonasa Concessions, suggesting a possible yield of 200 cubic meters of hardwood timber per hectare. The Company through its subsidiary, Equatorial Resources, Ltd., has begun to harvest and cut only a few of the species of trees located on the Jonasa Concessions, and commenced milling operations at three of the mills located in the vicinity of the concessions. At present, production at the mill has aggregated approximately 670 cubic meters since late December 1996. In mid-March 1997, daily production was increased to 80 cubic meters. The Company has received approximately $200,000 for the sawed lumber produced to date. All of this revenue has been reinvested in improvements to the mills and infrastructure on the property. The Company's subsidiary, Equatorial Resources, Ltd., currently employs 62 persons to operate the mills and conduct the activities contemplated under the agreements pertaining to these concessions. Potential markets for the lumber include the Far East, Brazil, Europe and the United States. The Company now projects daily production of sawed timber to increase to 140 cubic meters by April 1997. Salim Concession. On February 28, 1997, Equatorial Resources accepted a sales proposal from Joao Salim, et al., to purchase the rights to cut and harvest up to 300,000 hectares of land located near Portel, Brazil. The property on which these rights are located is adjacent to one of the properties relating to the Jonasa Concessions. Under the terms of this proposal, the owner has agreed to license to Equatorial Resources the right to cut up to 500,000 cubic meters of timber on the property and to pay to the owners approximately $7.50 per cubic meter. In addition, Equatorial Resources has been granted the right to purchase the 300,000 hectares for $3,500,000 on terms and conditions to be agreed upon by the parties. The proposed purchase price for the acquisition of this license calls for Equatorial Resources to pay seven and one-half Reals (approximately $7.50) per cubic meter of logs of any and all species cut pursuant to the concession upon payment of approximately One Million Dollars ($1,000,000). Once this amount is paid, Salim, et al., have agreed to issue the concession to all 300,000 hectares. Equatorial Resources will also be responsible for all extraction and transportation expenses. The parties have further agreed to employ counsel to reach a definitive agreement on or before March 30, 1997. To date, Equatorial Resources is further evaluating the viability of commercial production on the Salim Concession and continuing its title investigation. Bernardes Concessions. On March 2, 1997, Equatorial Resources received and accepted a proposal to participate in a joint venture pertaining to a timber property aggregating 117,000 hectares. Under the terms of the proposal, Equatorial Resources has been granted the right to cut timber and to pay the sum of $5.00 per cubic meter upon payment of approximately $50,000 as an advance towards the purchase of the timber. Equatorial Resources has conditionally accepted this proposal subject to the execution of definitive agreements and completion of all title work necessary to confirm the merchantability of these concessions. 8.1 13 4. RISK FACTORS AND SPECIAL MATERIAL CONSIDERATIONS THIS SECTION OF THE REGISTRATION STATEMENT SETS FORTH THE RISKS AND SPECIAL CONSIDERATIONS WHICH THE COMPANY BELIEVES MAY EXIST CONCERNING AN INVESTMENT IN THE COMPANY. PERSONS READING THIS REGISTRATION STATEMENT SHOULD RECOGNIZE THAT FACTORS OTHER THAN THOSE SET FORTH BELOW MAY ULTIMATELY AFFECT THE COMPANY IN A MANNER AND TO A DEGREE WHICH CANNOT BE FORESEEN AT THIS TIME. ALL PERSONS ARE URGED TO CONSULT WITH THEIR ADVISORS PRIOR TO MAKING AN INVESTMENT IN THE COMPANY IN RELIANCE UPON THIS REGISTRATION STATEMENT SO THAT THEY UNDERSTAND FULLY THE NATURE OF THE UNDERTAKING AND THE RISKS WHICH MAY BE INVOLVED PRIOR TO INVESTING. ALL PERSONS ARE URGED TO REVIEW WITH THEIR COUNSEL, ACCOUNTANTS AND PROFESSIONAL ADVISORS THE FINANCIAL STATEMENTS ATTACHED TO THIS REGISTRATION STATEMENT. ANY DOCUMENTS DESCRIBED IN THIS REGISTRATION STATEMENT WHICH HAVE NOT BEEN ATTACHED AS EXHIBITS MAY BE OBTAINED UPON REQUEST FROM THE COMPANY. THIS REGISTRATION STATEMENT ALSO CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION THAT ARE BASED UPON MANAGEMENT'S BELIEFS AS WELL AS ON ASSUMPTIONS MADE BY AND UPON INFORMATION CURRENTLY AVAILABLE TO MANAGEMENT. WHEN USED IN THIS REGISTRATION STATEMENT, THE WORDS "EXPECT," "ANTICIPATE," "INTEND," "PLAN," "BELIEVE," "SEEK" AND "ESTIMATE" OR SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. HOWEVER, THIS INFORMATION STATEMENT ALSO CONTAINS OTHER FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS, INCLUDING, BUT NOT LIMITED TO, THE FOLLOWING RISK FACTORS, WHICH COULD CAUSE THE COMPANY'S FUTURE RESULTS AND STOCK VALUES TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD-LOOKING STATEMENTS MADE BY OR ON BEHALF OF THE COMPANY. MANY OF SUCH FACTORS ARE BEYOND THE COMPANY'S ABILITY TO CONTROL OR PREDICT. READERS ARE CAUTIONED NOT TO PUT UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS. THE COMPANY DISCLAIMS ANY INTENT OR OBLIGATION TO UPDATE PUBLICLY ANY AND ALL FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. Financial Condition of Company Although the Company was formed in 1985 to engage in precious metal mining activities, its net worth is limited. The Company is and still should be considered in its development stage, having a net worth of $9,862,768 as of February 28, 1997. Moreover, the Company's net worth and the value of both its Common Stock and Preferred Stock will ultimately be dependent upon the overall success of mining operations conducted on the Nevada Property and the Indonesian Concessions and upon timber operations currently being conducted and to be conducted on the Brazilian Timber Properties. Under the terms of the Nevada Property Agreement, the sum of Three Hundred Eighty-Four Thousand Eight Hundred Dollars ($384,800) was to be due and owing under the Nevada Note and Deed of Trust on January 20, 1999. This amount has been awarded pursuant to the agreement entered into on February 6, 1997 with the Selig Entities as described in more detail in the Section of this Registration Statement entitled "THE COMPANY'S BUSINESS & PROPERTIES." Until such time as all obligations due under the February 6, 1997 agreement with the Selig Entities are paid in full and the Deed of Trust reconveyed to the Company, one of the primary assets of the Company, namely the Nevada Property, will be subject to the terms and conditions of such instruments. Any default under such agreement or the Deed of Trust which remains uncured would subject the Company to the possible loss of the Nevada Property. In addition, the Company, through its subsidiaries, has undertaken to expend considerable amounts for exploration activities on certain of the Indonesian Concessions and considerable amounts on timber-related activities with respect to certain of the Brazilian Timber Properties. The failure to generate the significant cash flow from its current operations may result in the Company's inability to adequately develop its holdings thereby jeopardizing the Company's ability to continue to hold such assets. Dependence Upon Management The business of the Company is and will be greatly dependent upon the active participation of Christopher D. Michaels and Jeffery S. Kramer. The Company also anticipates that it will be dependent upon the active participation of other key personnel and/or consultants in the future. The Company presently has employment agreements with both Mr. Michaels and Mr. Kramer and has entered into agreements with key consultants; nevertheless, the loss of the services of Mr. Michaels, Mr. Kramer and/or other key personnel (including such consultants) regardless of reason could adversely affect the Company and the Company's business. The Company does not maintain any life insurance policies enabling it to receive benefits in the case of either Mr. Michaels' or Mr. Kramer's death. To the extent that the services of Mr. Michaels or Mr. Kramer would be unavailable to the Company for any reason, the Company might be required to employ other executive personnel to manage and operate the Company. There is no assurance that the Company under such circumstances would be able to employ qualified persons on terms suitable to the Company to assure the fulfillment of the objectives stated in this Registration Statement. Lack of Diversification The Company has, in the past, maintained other mining properties for exploration and development. These properties were located in Bolivia, South America and Vancouver, British Columbia. Through its board 9 14 of directors and shareholders, the Company previously elected to abandon such other properties. The Company's primary assets presently consist of the Nevada Property, the Indonesian Concessions and the Brazilian Timber Properties. No assurance can be given that once the Company completes its present exploration and development of the Company's properties in Nevada and increases or conducts its timber operations in Brazil as described in further detail in this Registration Statement, it will be able to establish and produce significant revenues from such operations or become profitable. In addition, there can be no assurance that exploration activities currently being conducted on the Indonesian Concessions will result in the establishment of commercial quantities of mineralization. As a result, persons reading this Registration Statement should be aware that investment in the Common Stock represents an additional risk because the Company's activities are presently confined to the exploration, development and gold production of only one mining property, preliminary exploration activities on certain of the Indonesian Concessions and the continued conduct of timber operations on one of the Brazilian Timber Properties. Risks Associated With the Company's Operations There are a number of risks inherent in the mining of precious metals and timber operations which may have a dramatic impact on the value of the Company and the liquidity of the Common Stock. These risks include, but are not limited to, the ability to obtain permits, licenses and other governmental approvals; equipment availability; implementation of proper mining and milling techniques; title problems; compliance with environmental laws, rules, and regulations; accuracy of reserve forecasts; and dramatic fluctuations in the price of precious metals and timber/lumber prices. Because of these and other risk factors associated with natural resource operations, the Company can give no assurance that its shareholders will be able to realize either a return on investment or a return of capital. Title to the Nevada Property Mineral interests in the United States are frequently owned by federal and state governments and private parties. When a prospective mineral property is owned by a private party or by a state, some type of property acquisition agreement is necessary in order for a company to explore or develop such property. Generally, these agreements take the form of purchase agreements, as in the case of the mining agreement and property agreement discussed below, or long-term mineral leases. All such purchase agreements and leases are generally subject to termination in the event of a default. In addition to the acquisition of mineral rights by state or private parties, the Company also may acquire rights to explore for and produce minerals on federally-owned lands. This acquisition is accomplished through the location of unpatented mining claims upon unappropriated federal land pursuant to procedures established by the General Mining Law of 1872, the Federal Land Policy and Management Act of 1976 and various state laws (or the acquisition of previously-located mining claims from a private party). The location of a valid mining claim on federal lands requires the discovery of a valuable mineral deposit, the erection of appropriate monuments, the posting of a location notice at the point of discovery, the marking of the boundaries of the claim in accordance with federal law and the laws of the state in which it is located and the filing of a notice or certificate of location and a map with the Bureau of Land Management and the real property recording official of the county in which the claim is located. Failure to follow the required procedures will render the mining claim void. If the statutes and regulations for the location of a mining claim are complied with, the locator obtains a valid possessory right to develop and produce minerals from the claim. This right can be freely transferred and is protected against appropriation by the government without just compensation. The interests represented by unpatented mining claims possess certain unique vulnerabilities not associated with other types of property interests. For example, in order to maintain each unpatented mining claim, the claimant must pay a claim maintenance fee or, if qualified to do so under the small miner exemption, annually perform not less than $100-worth of work or improvements on or for the benefit of the claim and must file with state and federal authorities appropriate documentation. Failure to pay the claim maintenance fee or perform assessment work will render the claim subject to being declared void or subject to relocation by third parties. Failure to make the required filings will make the property deemed to be abandoned. In addition, under applicable regulations and court decisions, in order for an unpatented mining 10 15 claim to be valid, the claimant must be able to prove that the mineral deposit on which the claim is based can be mined at a profit both at the time the claim is located and at all times thereafter. Thus, it is conceivable that, during times of declining metal prices, claims which were valid when located could be invalidated by the federal government. No generally applicable title opinions or title insurance has been obtained with respect to the Nevada Property with the attendant risk that some titles may be defective. In fact, the agreements which relate to the current ownership of the parties (i.e. the 1993 Joint Venture Agreement and the Amended Joint Venture Agreement) contain incomplete and inadequate descriptions of the mining claims. However, on the basis of periodic status reports and reviews by the Company's employees of the relevant land records, the Company has concluded that it has satisfactory title to the Nevada Property subject to exceptions which the Company does not believe materially impair the ability to continue to mine and process the ore and to obtain the economic benefits thereof. The Company first acquired its rights in and to the Nevada Property pursuant to a mining agreement dated April 4, 1987 (the "Nevada Property Agreement"), with Anthony C. Selig & Associates, Dixie Exploration Corporation and Anthony C. Selig (the "Selig Entities"). The Selig Entities acquired their rights pursuant to a lease and option to purchase agreement which it had entered into on November 15, 1982 with Argus Resources, Inc. ("Argus"), pursuant to which the Selig Entities leased all of Argus' patented and unpatented mining claims comprising the Nevada Property. Under the terms of the Nevada Property Agreement, the Company was required to pay the Selig Entities the purchase price for the Nevada Property (ultimately determined to be $600,000). Additionally, the Company was required to and did issue 1,300,000 shares of Common Stock to Argus. The installment obligations owed to the Selig Entities were secured by a deed of trust on the Nevada Property (the "Deed of Trust"). The stock issued to Argus was subject to a one-for-ten reverse stock split approved by the Company's shareholders and effected in 1995. In 1992, the Company entered into an agreement with Argus, whereby Argus was to control sixty percent (60%) of the Nevada Property and was to act as operator in consideration of Argus' assumption of all remaining payments due to the Selig Entities under the Nevada Property Agreement. Argus and the Company subsequently entered into a joint venture agreement with Marlowe Harvey/Maran Holdings, Inc. ("Marlowe Harvey"), whereby in consideration of Marlowe Harvey assuming all of the then remaining obligations owed to the Selig Entities, Marlowe Harvey would acquire a fifty-one percent (51%) interest in the joint venture, Argus would earn a twenty-four and one-half percent (24.5%) interest in the joint venture, and the Company would earn a twenty-four and one-half percent (24.5%) interest in the joint venture. In turn, the Nevada Property was to be conveyed to the joint venture. The Company has executed agreements with interested parties which may result in the Company increasing its interest in the joint venture from twenty-four and one-half percent (24.5%) to a minimum fifty percent (50%) interest in the joint venture. The rights and responsibilities of both the Company and Marlowe Harvey/Maran Holdings, Inc., are currently the subject of a lawsuit filed by the Company on November 4, 1996, in Nye County, Nevada. This lawsuit, described in the section of this Registration Statement entitled "LEGAL PROCEEDINGS", will not affect the Company's right to its interest in the Nevada Property acquired pursuant to the various agreements previously entered into by the Company. As a result of the issues raised by the lawsuit, however, the Company may be required to hold or pay a portion of the revenues generated from mining operations for the benefit of Argus and Marlowe Harvey. In March 1997, the Company entered into a Sale and Purchase Agreement with the Selig Entities. Under the terms of this latest agreement, the Selig Entities agreed to sell to the Company one hundred percent (100%) of their interests in the Nevada Note, the Deed of Trust, and the Nevada Property for the sum of Three Hundred Seventy Five Thousand Dollars ($375,000) payable as follows: One Hundred Thousand Dollars ($100,000) in March 1997 and the balance plus all accrued and unpaid interest (calculated at the rate of 5.25%) on or before February 6, 1999. The Company in fact paid the first installment of One Hundred Thousand Dollars ($100,000) in March 1997. The agreement also acknowledges that the Company is the only person or entity legally entitled to conduct mineral operations on the Nevada Property. The Company is also required to pay all U.S. Bureau of Land Management annual maintenance fees associated with the claims comprising the Nevada Property. Title to the Indonesian Concessions Mineral interests in Indonesia are controlled exclusively by the federal government through the Ministry of Mines and Energy. Title to a mineral property in Indonesia is subject to obtaining various forms of licenses for the extraction of commercial quantities of minerals after obtaining property rights from the fee owner. Title is confirmed by the issuance of a government seal affixed to specific property location maps. Under Indonesian law, a foreign mining company may not own a mining concession. Instead, it may obtain a "Contract of Work," known as a "COW" which allows the foreign concern the right to conduct certain mining activities including general surveying, mapping and limited exploration. The COW is intended to provide assurances to the foreign concern that if commercial mineralization is established, the government of Indonesia will issue guarantees as to title, fix taxation rates, permit exports of profit and other conditions defining the rights of the foreign concern to profit from the enterprise. While awaiting COW approval, a foreign company may obtain a "SIPP" which allows the company to conduct preliminary exploration work on a property pending approval of a COW application. In lieu of obtaining a COW, a foreign company may elect to enter into a joint venture with an Indonesian limited liability company known as a "PT". Under this approach, the PT would hold the various licenses issued by the Ministry of Mines and Energy for the benefit of the joint venture. Another alternative is to enter into a transfer agreement with a PT company which holds the mining concession. Under this arrangement, the PT company would agree to transfer its licenses to the foreign company at such time as the foreign company received approval from Indonesian Investment Coordinating Board (the "BKPM") to form and thereafter forms a "PP20" or "PMA" joint venture company. The first step in establishing a PP20 or PMA company is to obtain the approval of the President of Indonesia to form the company. No approval can be obtained if the BKPM has identified a particular industry or line of business as closed to foreign investment, and has identified such line on its "Negative List." If such line of business is open to foreign investment, an application to the BKPM is submitted for approval. If approved, the PMA or PP20 company may hold the mining concession directly. Because direct foreign ownership of mining concessions is difficult, if not prohibited by Indonesian law, the Company and its subsidiary, Kalimantan Resources, must rely upon its contractual rights under the various agreements into which they and/or their predecessors have entered. These contracts are described in greater detail elsewhere in this Registration Statement. Should a dispute arise as to the interpretation or enforcement of such agreements, resort to the Indonesian judicial system will likely be required. It should be noted that since members of the judicial branch are employed by the executive branch of the government, a fair opportunity to assert a foreign company's rights under such agreement may be limited. The Company has not currently completed its title investigations with respect to any of the Indonesian Concessions. However, prior to the time at which any payments will be made to the current holders of the licenses, the Company will have satisfied itself that either it, Kalimantan Resources, or the parties with whom it has contracted (and/or their predecessors in interest) will have good and merchantable title to the particular licenses purported to be owned by such third parties. Ownership of licenses to explore for and/or exploit natural resources in foreign countries is also subject to political risks. The United States has important economic, commercial and security interests in Indonesia because of its growing economy and markets and its strategic location in relation to key international straits. The U.S. and Indonesia maintain cordial and cooperative relations, although the two countries are not bound by formal security treaties. Indonesia is a republic based upon its 1945 constitution providing for a limited separation of executive, legislative and judicial power. The president, elected to a five-year term, is the overwhelmingly dominant government and political figure. The president appoints the cabinet, currently composed of four coordinating ministers (in the fields of political and security affairs, economic and financial affairs, people's welfare and industrial and trade affairs), thirteen state ministers, twenty-four ministers and three high officials with the status of state ministers. Moreover, judges are employees of the executive branch. Unlike Western democratic systems, the legislative branch meets only once during its five-year term, to formulate the overall principles and aims of the government and to elect the president and vice president. Representative bodies at all levels in Indonesia eschew voting, preferring to arrive at decisions through "consultation and consensus." The party system currently in place in Indonesia reflects the Soeharto Government's determination to shift the political focus from Indonesia's deep ethnic, religious and ideological differences which contributed to the collapse of an earlier Parliamentary democracy in that country. Soeharto's preferred strategy is an authoritarian program-based development-oriented politics. The military, especially the army, has provided key advisors to Soeharto and has wielded great influence on policy. Under a dual function concept, military officers serve in the civilian bureaucracy at all government levels, although there has been a recent tendency to somewhat reduce the military's direct involvement in civilian bureaucracies. Because of the presence of a strong executive branch, some foreign companies have been forced to accede to government demands to revise licenses to include the participation of Indonesian-owned companies, larger foreign companies and, in some instances, the Indonesian government. The inability of a foreign company to effectively enforce its rights in licenses issued by the Indonesian government represents a risk unique to doing business in a developing country as compared to the United States. 11 16 The Company has entered into a contract with Behre Dolbear & Co., Inc., an international mining consulting firm established in 1911 to act as independent engineer and to oversee the exploration and development of and to provide third-party validation services relating to the Indonesian Concessions including assisting the Company in various matters relating to title and governmental regulation. Title to Brazilian Timber Properties The Company has acquired its rights to the Brazilian Timber Properties pursuant to agreements entered into by and between the Company's subsidiary, Equatorial Resources, Ltd. ("Equatorial Resources"), and Madeira Intex, S.A., International Exports ("Madeira"), with respect to the two timber concessions referred to in this Registration Statement as the "Jonasa Concessions"; Joao Salim, et al., with respect to the timber concession referred to in this Registration Statement as the "Salim Concession"; and Dario Jose Balieiro Bernardes with respect to three timber concessions referred to in this Registration Statement as the "Bernardes Concessions." The Company has performed preliminary title work on the Jonasa Concessions by examining the property files of Companhia Agropecuaria do Rio Jabuti, a company formed under the laws of the Federative Republic of Brazil ("Jonasa"), and has confirmed that Jonasa purchased its rights to the timber directly from the state government of Para in 1961. While Equatorial Resources has commenced timber production from the Jonasa Concessions pursuant to the terms of the Madeira Joint Venture, there can be no assurance that title problems and other claims hostile to the chain of title on which the Company has relied will not arise in the future. As of the date of this Registration Statement, title work has not been completed on either the Salim Concession or the Bernardes Concessions. Before any sums are expended by the Company on timber operations on these concessions, the Company intends to employ legal counsel to advise it of the status of title to these concessions. In addition to the title problems and environmental problems commonly associated with the development of timber properties in the United States, foreign ownership of timber rights in foreign countries subjects a U.S.-based company to the additional risk of political instability. Brazil is a federative republic with broad powers granted to its federal government. The country is divided into twenty-seven (27) states and a federal district. It is a country rich in resources and natural advantages, but has lagged behind its potential according to U.S. State Department publications. The State Department further reports that the United States is Brazil's most important commercial partner and largest investor. Bilateral agreements between the two countries include a treaty of peace and friendship, an extradition treaty, a joint participation agreement on communication satellites and scientific cooperation, civil aviation, and maritime agreements. Brazil's current federal government is headed by President Fernando Henrique Cardoso who received 54% of the popular vote in 1994. President Cardoso's stated agendas for Brazil include constitutional amendments for solidifying economic stabilization and other measures designed to establish long-term stability and growth and to improve Brazil's socioeconomic imbalances. Governmental Regulation Mining operations on the Nevada Property are and will be subject to substantial federal, state and local regulation concerning mine safety and environmental protection. Some of the laws and regulations which will pertain to mining operations include maintenance of air and water quality standards; the protection of threatened, endangered and other species of wildlife and vegetation; the preservation of certain cultural resources and the reclamation of exploration, mining and processing sites. These laws are continually changing and, as a general matter, are becoming more restrictive. The location of the Nevada Property is found in an area which strongly encourages mining operation. However, the Company's inability to comply with such federal, state or local ordinances and regulations on an ongoing basis may cause significant delays in the permitting process or in the operations anticipated to be conducted on the Nevada Property. In addition, delays in such compliance could result in unexpected and substantial capital expenditures. Although no such problems or delays are anticipated, no assurances can be given that the Company will be able to comply with all applicable law and regulations and maintain all necessary permits, licenses and approvals or, in the alternative, that compliance and/or permitting will be obtained without substantial delays and/or expenses. With regard to the Nevada Department of Conservation and Natural Resources, Division of Environmental Protection ("NDEP"), the Company has received authorization to proceed with its currently planned mining operations on the Nevada Property pursuant to the applicable statutes and regulations relating to a small mining operation. In the event, however, the Company's operations exceed the designated limits for a limited mining operation, a full reclamation plan will need to be prepared, submitted and approved by NDEP. The Company is currently preparing such a reclamation plan. While the Company believes that it will be able to obtain such approval, there is no guarantee that the required approval will in fact be obtained by the Company. A change in the nature or magnitude of the Company's presently anticipated operations on the Nevada Property may trigger the need to obtain additional NDEP and other federal, state or local governmental approvals, licenses or permits. For example, water processing discharge needs may trigger the requirement that the Company obtain a water pollution control permit. The Company is currently preparing for submission of an application for a water pollution control permit. Other significant permits, required by a change in operations on the Nevada Property, might include an NDEP permit, air quality permit, waste management permit, archeological clearance and wildlife permit. There is no guaranty that the Company will be able to 12 17 obtain any or all of the required federal, state or local permits that might be required to expand its operations on the Nevada Property. Even if the Company does not change its currently planned operations on the Nevada Property, the Company is nevertheless vulnerable to the various federal, state and local laws and regulations governing regulations and protection of the environment, occupational health, labor standards and other matters. The reason for this is that these laws are continually changing, and as a general matter, are becoming more restrictive. To comply with these federal, state and local laws, the Company may in the future be required to make capital and operating expenditures on environmental projects both with respect to maintaining currently planned operations and the initiation of new operations. Such projects may include, for example, air and water pollution control equipment; treatment, storage and disposal facilities for solid and hazardous waste; remedial actions required for the containment of tailings pond seepage; continuous testing programs; data collection and analysis land reclamation (specifically including existing mine and processing waste on the Nevada Property); landscaping and construction projects. There is no guaranty that the Company will technically or financially be able to comply with any or all of these potential requirements. Environmental Regulation and Liability The Company's proposed mineral operations on the Nevada Property will be subject to environmental regulation by federal, state and local authorities. Under applicable federal and state law, the Company may become jointly and severally liable with all prior property owners for the treatment, cleanup, remediation and/or removal of substances discovered at the Property which are deemed by federal and/or state law to be toxic or hazardous ("Hazardous Substances"). Liability may be imposed among other things for the improper release, discharge, storage, use, disposal or transportation of Hazardous Substances only in the areas which the Company disturbs. Applicable law imposes strict joint and several liability on, among others, "owners" and "operators" of properties contaminated with Hazardous Substances. Such liability may result in any and all "owners", "operators" and "transporters" of contaminated property being required to bear the entire cost of remediation. The Company may utilize substances which have been deemed by applicable law to be Hazardous Substances. The potential liability of the Company under such laws will be derived from the Company's classification as both an "owner" and "operator" of a contaminated property. While the Company intends to employ all reasonably practicable safeguards to prevent any liability under applicable laws relating to Hazardous Substances, mineral exploration by its very nature will subject the Company to substantial risk that remediation may be required. If the cleanup or remediation of hazardous substances is required on the Nevada Property, substantial delays could occur in the permitting process and/or in the further extraction of gold and other precious minerals on the Nevada Property. Much like environmental laws found in the United States, both the federal state governments in Brazil have adopted laws and standards relating to the harvesting and reclamation of forests. While the Company and its subsidiary, Equatorial Resources, has not yet fully familiarized itself with all of these laws and standards, Equatorial Resources has entered into an agreement with Eco-Rating International, Incorporated ("Eco-Rating"), Zurich, Switzerland, to better assist the Company and Equatorial Resources in understanding and complying with such laws and standards. Under the terms of its agreement with the Company, Eco-Rating has agreed to establish an "eco-efficiency model" designed to enable Equatorial Resources to establish environmental management guidelines for the conduct of activities on the Jonasa Concessions and ultimately the remainder of the Brazilian Timber Properties consistent with all applicable environmental laws and standards. 13 18 Relationship With Other Offerings From the period March 1, 1994, through February 28, 1997, the Company has offered and sold 8,342,619 shares of its Common Stock and 228,919 shares of Preferred Stock. These sales were made to its existing shareholders. The Company has relied upon applicable exemptions from the registration requirements of the federal securities laws and upon compatible exemptions from securities registration under applicable state ("blue sky") laws. In the event that it is determined that the Company sold and issued these securities without complying with either the federal securities laws or blue sky laws, the purchasers of these securities may have the right to rescind the sale of these securities and to recover the purchase price paid to the Company plus interest accrued on such purchase price. The Company does not currently have funds with which it could repay the purchase price and accrued interest from any prior sale of securities. Moreover, it is doubtful that the Company could continue operations if a significant number of existing shareholders were to seek to rescind their purchases of securities. The financial statements of the Company do not reflect a contingent liability for any such rescission rights. 14 19 Fluctuation of Gold Prices Since its deregulation in August 1971, the market price for gold has been highly speculative and volatile. Since 1980, gold has fluctuated from a high of approximately $850 per ounce in January 1980 to a low of approximately $285 per ounce in 1985. Currently gold is trading at approximately $350 per ounce. Instability in gold prices will affect the profitability of the Company's future operations. Similarly coal and timber prices fluctuate. Natural resources have traditionally evidenced valuable swings in pricing, thereby affecting overall the relative profitability of engaging in these lines of business. For example, timber prices increased fifty-two percent (52%) in 1996 while coal prices have remained relatively stable for the past several years. 15 20 Selected Financial Data The financial information accompanying this Registration Statement reflects the current financial condition of the Company. It should be noted that the Company has not reported a profit from operations since its inception to the present. Management projects that the further exploration and development of the Properties will result in profitable operations although, for the reasons stated elsewhere in this Registration Statement, no guaranty to that effect can be made. Use of Forward-Looking Statements This Registration Statement contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are found in the Section of the Registration Statement entitled "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION" and elsewhere. Prospective Investors are cautioned that the assumptions upon which such statements are based cannot be guarantied by the Company to occur in the future or that the overall success of the Company might be materially adversely affected should such bases (or some of them) not occur. Additional Risk Factors Persons relying upon this Registration Statement should review the Company's audited financial statements included with this Registration Statement and the remainder of this Registration Statement in its entirety. Other sections of this Registration Statement identify other potential risks and special material considerations which should be analyzed. Persons reading this Registration Statement are also cautioned that, as with any security, there may be other risks and special material considerations which are not foreseeable at this time which may also materially adversely affect an investment in the Company's securities. 16 21 5. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Introduction The Company is a development-stage company, with corporate offices in Calabasas, California, and with interest(s) in certain mining properties located in the (1) Manhattan Mining District, Nye County, Nevada, (the "Nevada Property"); (2) in the Indonesian Gold Belt, Kalimantan, Indonesia (the "Indonesian Gold Concessions"); (3) in the Kutai District of East Kalimantan, Indonesia (the "Indonesian Coal Concessions"); (4) on the island of Sumatra, Indonesia; and (5) in the state of Para, Brazil (the "Brazilian Timber Properties"). Comparison of Results of Operations-Nine Months Ended February 28, 1997 Compared to Nine Months Ended February 29, 1996 Net loss for the first three fiscal quarters of 1996-97 was $1,319,759 as compared to $468,453 for the same period ended February 29, 1996. The principal increases in expenses during the nine months ended February 28, 1997 were attributed to expenses in Brazil (approximately $124,000), office salaries (approximately $50,000), travel (approximately $125,000), stock for services to employees ($240,000), minority interest expense ($49,500) and a general increase in other expenses attributable to the Company's increased development activities from the previous year. During the period from July 1996 to February 28, 1997, the Company invested $4,000,000 in Common Stock towards the purchase of certain contractual rights to the seven (7) gold mining concessions comprising the Indonesian Gold Concessions; $123,147 towards certain exploration activities relating to the Silobat Property (one of the Indonesian Gold Concessions): and $1,055,000 ($700,000 in Common Stock) towards the acquisition of and improvements to the infrastructure relating to the Brazilian Timber Properties; and $1,565,313 ($250,000 in Common Stock) in development activities on the Nevada Property. Year Ended May 31, 1996 Compared to Year Ended May 31, 1995 During the year ended May 31, 1996, the Company reported an operating loss of $1,198,506 as compared to an operating loss of $611,073 for the year ended May 31, 1995. The difference between these two periods was principally due to the issuance of stock to officers for services rendered of $485,000. There was an increase of $233,981 in cash and cash equivalents for the year ended May 31, 1996 as compared to a decrease in cash and cash equivalents of $78,613 for the previous fiscal year. The improvement in the availability of cash and cash equivalents to the Company was the result of the sale of $1,255,325 in stock offered and sold through private placements. By contrast, the Company sold $726,013 in stock through private placements for the year ended May 31, 1995. Year Ended May 31, 1995 Compared to Year Ended May 31, 1994 The Company incurred a net loss of $611,073 in fiscal 1995 compared to a net loss of $480,473 during fiscal 1994. The principal reason for the increased loss was due to an increase in salaries of approximately $150,000. The Company used $616,013 cash in developmental activities in 1995 compared to $749,057 in 1994. Investment in property and equipment was similar each year: $146,496 in 1995 compared to $116,777 in 1994. Proceeds from issuance of stock amounted to $726,013 in 1995 compared to $975,469 in 1994. Liquidity and Capital Resources The Company's working capital position as of February 28, 1997 was a deficit of approximately $553,000. Almost since inception, the Company has experienced pressure on its working capital position due to operating losses, and the need to continually invest in exploration activities on the Nevada Property and, more recently, the Silobat Property, the remainder of the Indonesian Concessions, and the Brazilian Concessions. To raise funds in the past, the Company has relied upon private placements of its equity securities. Over the past three years, the Company has raised approximately $4,340,000 pursuant to three such private placements. The Brazilian operations represent an immediate opportunity for the Company to generate significant cash flows for the first time. The Company believes that with the anticipated increase in daily production at its Brazilian operations to 140 cubic meters per day in April 1997, much of its continued operations in Brazil, Indonesia, and on the Nevada Property will be funded by the cash flow generated on the Jonasa Concessions. The Company is also currently seeking to raise between $3,000,000 and $4,000,000 through the private placement of Common Stock and/or convertible debt instruments with one or more "qualified institutional buyers" should its immediate need for significant amounts of capital for its overseas acquisitions and operations in both Indonesia and Brazil not be met solely from its activities in Brazil. 17 22 6. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following tables set forth certain information as of February 28, 1997, regarding the record and beneficial ownership of the Common Stock and Preferred Stock with respect to: (i) any individual or group of affiliated individuals or persons owning, of record or beneficially, five percent (5%) or more of the outstanding shares of the Common Stock or the Preferred Stock; (ii) the amount of shares of Common Stock or Preferred Stock owned by each executive officer and director of the Company; and (iii) the number of shares of Common Stock and/or Preferred Stock owned, of record or beneficially, by the directors of the Company as a group. Except as otherwise indicated, the Company believes that the beneficial owners listed below, based upon information provided by such owners, have sole voting and investment power with respect to such shares. Principal Shareholders
NAME AND ADDRESS AMOUNT AND NATURE TITLE OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNER PERCENT OF CLASS(1) - - -------------- ------------------------------- ------------------- ------------------- Common Christopher D. Michaels 1,294,510(2) 10.91% 876 Ballina Court Newbury Park, California 91320 Common Jeffrey S. Kramer 1,180,000(3) 9.40% 6053 Paseo Canyon Drive Malibu, California 90265 Common Joseph C. Rude' III, M.D. 1,274,150(4) 10.15% 3065 River N. Pkwy. Atlanta, Georgia 30328 Common David Weissberg, M.D. 1,199,900 9.55% 29 Blair Drive Huntington, New York 11743 Common All Officers and 3,992,160(5) 31.79% Directors as a Group (6 persons)
- - --------------- (1) In addition to the 12,208,412 shares of Common Stock outstanding as of February 28, 1997, the percentages noted in this column assume the issuance of 340,000 shares of Common Stock pursuant to various options primarily to existing management which may be issued in whole or in part within 60 days of this Registration Statement and the issuance of an additional 10,800 shares of Common Stock required to be issued to Maxwells Energy & Metals Technology Ltd. pursuant to the August 26, 1996 Principles of Agreement. (2) Includes options to purchase up to 100,000 shares of Common Stock which may be exercised in whole or in part within 60 days of the date of this Registration Statement. (3) Includes options to purchase up to 70,000 shares of Common Stock which may be exercised in whole or in part within 60 days of the date of this Registration Statement. 18 23 (4) Includes shares owned by Carolyn Rude and Quantum Radiology (an affiliate of Dr. Rude) as well options to purchase up to 10,000 shares of Common Stock which may be exercised in whole or in part within 60 days of the date of this Registration Statement. (5) Includes options to purchase up to 230,000 shares of Common Stock by all Directors or Officers as a group which may be exercised in whole or in part within 60 days of the date of this Registration Statement. In addition, it should be noted that Ignatius Z. Theodorou, the President and a director of the Company's eighty percent (80%)-controlled subsidiary, Equatorial Resources, Ltd., will be entitled to receive Two Million (2,000,000) shares of the Company's Common Stock at such time as the Company and he complete the preparation of a tax-free stock for assets agreement consistent with the November 11, 1996 letter agreement pertaining to the Jonasa Concessions. 19 24 7. MANAGEMENT Executive Officers and Directors The Company's Bylaws authorize the creation of the offices of President, Treasurer (Chief Financial Officer), one or more Vice Presidents, Secretary and one or more Assistant Secretaries and Assistant Treasurers as the Board of Directors deems proper. The Bylaws also provide for not less than three directors and not more than seven directors who shall hold office until the following annual meeting of the shareholders. The Bylaws further provide that the number of directors may be increased by the affirmative vote of the Board of Directors or a majority in interest of the shareholders at an annual or special meeting. The executive officers and directors of the Company and/or its subsidiaries are as follows:
NAME AGE POSITION - - ------------------------ ---- ----------------------------------------------- Christopher D. Michaels 53 President and Chairman of the Board Jeffrey S. Kramer 42 Senior Vice President, Chief Financial Officer and Director Stanley J. Mohr 61 Vice President of Shareholder Relations and Director Edna Pollock 60 Director Joseph Rude III, M.D. 52 Director William Michaels 79 Vice President of Client Relations Ignatius Z. Theodorou 55 President and Director of Equatorial Resources, Ltd.
CHRISTOPHER D. MICHAELS cofounded the Company in June 1986. Since then he has served as President, Chief Executive Officer and Chairman of the Board of the Company and is entitled to retain his positions with the Company until the next annual meeting of the Company's shareholders. Mr. Michaels is also a director, vice president and chairman of the Board of Equatorial Resources, Ltd. and the chairman and a director of Kalimantan Resources, Ltd., subsidiaries of the Company. Mr. Michaels received a bachelor of arts degree from Alfred University located in New York. After graduation, he accepted a post with the United States government overseas in the Peace Corps. Since 1980, Mr. Michaels has acted in sales and management positions in corporations whose primary business consists of mining and minerals. Mr. Michaels has extensive background and experience in international relations and has spent considerable time at the Company's Bolivian mine site (closed in 1992) as well as on the Nevada Property. Mr. Michaels is a party and is subject to the permanent injunction more particularly described in the Section of the Registration Statement entitled "LEGAL PROCEEDINGS." Mr. Michaels has also been and is subject to a cease and desist order issued by the Pennsylvania Securities Commission issued February 27, 1989, prohibiting the Company, Mr. Michaels and other executive officers from violating Section 201 of the Pennsylvania Securities Act of 1972 relating to the sale of unregistered "penny stocks." JEFFREY S. KRAMER, Senior Vice President, Chief Financial Officer, Secretary-Treasurer and Director, has held these positions since 1989 and is entitled to retain these positions with the Company until the next annual meeting of the Company's shareholders. Mr. Kramer is also a director, vice president and the secretary-treasurer of Equatorial Resources, Ltd. and a director and the secretary-treasurer of Kalimantan Resources, Ltd. He has held management positions with Continental Cafes. As Chief Financial Officer, Mr. Kramer's responsibilities include business affairs, contract administration, public relations and broker and shareholder relations. Mr. Kramer was also responsible for management oversight of the Nevada Property operations since 1995 and was management's liason in negotiating the Company's settlement with the Securities & Exchange Commission more particularly described in the Section g this Registration Statement entitled "LEGAL PROCEEDINGS." Mr. Kramer is a party and is subject to the regulatory proceedings described in the Section of the Registration Statement entitled "LEGAL PROCEEDINGS" and the action taken by the Pennsylvania Securities Commission detailed above with respect to Mr. Michaels. STANLEY J. MOHR, has been Vice President Client Relations with Nevada Manhattan since 1986. Mr. Mohr became a Director of the Company in 1992 and is entitled to retain his current positions with the Company until the next annual meeting of the Company's shareholders. He is also a director of Kalimantan Resources, Ltd. Mr. Mohr has been employed as a marketing executive with several mining and mineral related companies and has gained extensive experience in many phases of operations in the mining industry. Mr. Mohr held a real estate license issued by the state of Nevada from 1976 to 1984. Mr. Mohr was a party and is subject to the regulatory proceedings more particularly described in the Section of the Registration Statement entitled "LEGAL PROCEEDINGS." 20 25 EDNA POLLOCK was elected to the Board of Directors on April 3, 1995 and is entitled to retain her position as director until the next annual meeting of the Company's shareholders. Ms. Pollock is a court reporter in North Carolina and has been a shareholder of record since 1989. She has been an active member of the Shareholders' Advisory Committee for several years representing shareholders at Director's meetings. Ms. Pollock is a graduate of Columbia University, New York, New York, having received her bachelor of arts degree in Journalism. She spent twenty-eight years as a freelance reporter for both the federal and state courts in North Carolina and acted in her official capacity as a court reporter at numerous depositions, arbitrations, hearings and conventions. DR. JOE RUDE' III was elected to the Board of Directors on April 3, 1995, and is entitled to retain his position as a director until the next annual meeting of the Company's shareholders. Dr. Rude' is a radiologist and has been practicing his medical specialty since 1977 in Georgia. Dr. Rude' has been a shareholder of record since 1989 and has been an active member of the Shareholders' Advisory Committee for several years representing shareholders at Director's meetings. Since 1995, Dr. Rude' has been a diagnostic radiologist at Quantum Radiology, Atlanta, Georgia. From 1977 to 1995, he was associated with Cobb Radiology Associates, Austell, Georgia, which merged with Quantum Radiology in 1995. Dr. Rude' is a graduate of the University of Texas, Austin, Texas, where he received his bachelor of arts degree in 1966. In 1970, he was awarded a medical degree from the University of Texas Southwestern Medical School, Dallas, Texas. Dr. Rude' is board certified in radiology and served in the United States Air Force as a flight medical officer from 1971 to 1973. WILLIAM MICHAELS, Vice President of Client Relations, has served in such capacity or in other capacities since the Company's inception. Mr. Michaels is the father of Christopher D. Michaels, the Company's President and Chairman of the Board. Mr. Michaels is a party and is subject to the regulatory proceedings more particularly described in the Section of the Registration Statement entitled "LEGAL MATTERS, AUDITORS AND PENDING LEGAL PROCEEDINGS." IGNATIUS Z. THEODOROU, President and Director of Equatorial Resources, Ltd. has served in such capacities since the formation of the Company's Brazilian-based subsidiary. Mr. Theodorou is the remaining shareholder of Equatorial Resources, owing twenty percent (20%) of such company. Mr. Theodorou was born in Greece but has spent a substantial portion of the last thirty-seven (37) years in the United States. Mr. Theodorou holds dual citizenship (Greek and U.S.) and is currently managing the Company's operations at the Jonasa Concessions. His employment experience has included consulting arrangements with Dames & Moore Consulting Company, employment as Managing Director of the Liberian-owned shipping company Crest Lines Inc., and founder and chief executive officers of the timber companies known as Madira Intex, S.A. International Imports and United Amazonian Resources, Limited. Significant Employees and Consultants The Company has entered into employment agreements dated January 1, 1995, with Christopher D. Michaels and Jeffery S. Kramer relating to their respective positions as executive officers and directors of the Company. Under the terms and conditions of these employment agreements, both Mr. Michaels and Mr. Kramer are required to devote substantially all of their business time and effort during normal business hours to the Company through December 31, 1997. As compensation for the services rendered and to be rendered to the Company, Mr. Michaels is entitled to receive annual salaries equal to One Hundred Forty-Eight Thousand Seven Hundred Twenty-Seven Dollars ($148,727) per annum and Mr. Kramer is entitled to a salary of One Hundred Thirty-Seven Thousand Two Hundred Twelve Dollars ($137,212) per annum. Both the salaries of Mr. Michaels and Mr. Kramer are to be reviewed on each anniversary date of the Agreement by the board of directors for the purposes of either increasing or decreasing such base salary. The Board, however, may not reduce the base salary of either Mr. Michaels or Mr. Kramer by more than twenty percent (20%) of the base salary for the immediately preceding year. In addition, both Mr. Michaels and Mr. Kramer have each received 900,000 shares of the Company's Common Stock as part of their compensation under the terms of their employment agreements. In addition to the base salaries and stock options, both Mr. Michaels and Mr. Kramer are entitled to receive reimbursement on a monthly basis for all reasonable expenses incurred in connection with the performance of their duties under the employment agreement. Mr. Michaels and Mr. Kramer are also entitled to certain fringe benefits (including but not limited to paid vacation and participation in medical insurance plans and employee benefit plans) which now are or may thereafter become available to all executive officers of the Company and such other benefits (if any) as may be authorized from time to time by the board of directors of the Company. The employment agreements also authorize these officers to receive a "merit bonus" ranging between twenty-five percent (25%) and seventy-five percent (75%) of such officer's base salary in the event the Company experiences operating cash flow for a fiscal year equal to not less than One Million Dollars ($1,000,000). Specifically, if the Company's operating cash flow for any fiscal year ranges between One Million Dollars ($1,000,000) and Two Million Dollars ($2,000,000), both Mr. Michaels and 21 26 Mr. Kramer will be entitled to a "merit bonus" equal to twenty-five percent(25%) of their base salary; if the operating cash flow is between Two Million Dollars ($2,000,000) and Three Million Dollars ($3,000,000) for any fiscal year, the "merit bonus" will be equal to fifty percent (50%) of such officer's base pay; and if the Company's operating cash flow is over Three Million Dollars ($3,000,000) or more during any fiscal year, during the term of the Agreement, such officer's "merit bonus" will be equal to seventy-five percent (75%) of such officer's base salary. In the event of termination of the employment agreement by the Company for cause or by such officer without cause, the "merit bonus" is not required to be paid. In the event of termination for any other reason, the "merit bonus" will be pro rated for the fiscal year in which termination occurs. The employment agreements with Messrs. Michaels and Kramer contain a covenant prohibiting such officer from engaging directly or indirectly as a principal partner or director or officer of any business competitive with the Company. However, such officer may hold up to a five percent (5%) equity interest in any entity engaged in a business competitive with the Company without violating such covenant. The agreements contain provisions for termination in the event of such officer's permanent disability, death, or for cause. In addition, the agreements provide for severance compensation equal to such officer's highest monthly base salary times thirty-six. Both Mr. Michaels and Mr. Kramer also possess an option to acquire up to twenty-five percent (25%) of the number of then outstanding shares of the Company's capital stock at a price of five cents per share in the event of an occurrence of a "Change in Control." For the purposes of such employment agreements, the term "Change in Control" shall be deemed to have occurred if the Company sells substantially all of its assets to a single purchaser or to a group of associated purchasers in a single transaction or series of related transactions; shares of the Company's outstanding capital stock constituting more than twenty percent (20%) of the voting power of the Company's outstanding capital stock are sold, exchanged, or otherwise disposed of in one transaction or in a series of related transactions; or the Company is a party to a merger or consolidation in which the Company is not the surviving entity or the Company's shareholders receive shares of capital stock of the new or continuing corporation constituting less than 80 percent of the voting power of the new or continuing corporation. The Company has engaged the services of Arthur J. Mendenhall to act as project geologist for the Nevada Property. His duties include acting as the on-site representative of the Company and to provide geological exploration and mining grade control of the Nevada Property on a daily basis. Mr. Mendenhall is an experienced mining geologist. He received his bachelor of science degree in 1971 and his master of science degree in geology from Utah State University, Logan, Utah. Mr. Mendenhall's work experience includes roles supervising and monitoring the work of senior geologists in the coring and sampling of ore, working as senior geologist in the sampling and mapping of tertiary volcanic rock formations in gold exploration projects, collecting cuttings and core samples for geochemical analyses, drafting drill hole cross sections and supervised drilling operations for bentonite and iron ore. Mr. Mendenhall has completed the Occupational & Safety Hazard Agency ("OSHA") forty-hour hazardous waste site training course and OSHA'S refresher course and has attended other geological seminars and courses relevant to mining. Mr. Mendenhall is a registered geologist in the Commonwealth of Pennsylvania and a member of the Geological Society of America. The Company's subsidiary, Equatorial Resources, Limited, will be heavily dependent upon its President, Ignatius Z. Theodorou, for the operations conducted on the Jonasa Concessions. This dependence will be particularly acute because Mr. Theodorou's company, Madeira Intex, S.A., International Exports, is the predecessor-in-interest to Equatorial Resources with respect to the agreements under which Equatorial Resources will be operating and managing the Jonasa Concessions. Neither the Company nor Equatorial Resources has an existing employment agreement with Mr. Theodorou. However, the Company believes that Mr. Theodorou's interest in the Company and Equatorial Resources will allow him to devote substantially all of his time and efforts to the Company's operations in Brazil. Limitations on Director and Officer Liability The Company's Bylaws do not contain a provision entitling any director or executive officer to indemnification against liability under the Securities Act of 1933 (the "'33 Act"). Sections 78.751 et seq. of the Nevada Revised Statutes allow a company to indemnify its officers, directors, employees and agents from any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative or investigative, except under certain circumstances. Indemnification may only occur if a determination has been made that the officer, director, employee or agent acted in good faith and in a manner which such person believed to be in the best interests of the Company. A determination may be made by the shareholders; by a majority of the directors who were not parties to the action, suit, or proceeding confirmed by opinion of independent legal counsel; or by opinion of independent legal counsel in the event a quorum of directors who were not a party to such action, suit or proceeding does not exist. Provided the terms and conditions of these provisions under Nevada law are met, officers, directors, employees and agents of the Company may be indemnified against any cost, loss or expense arising out of any liability under the '33 Act. Insofar as indemnification for liabilities arising under the '33 Act may be permitted to directors, officers and controlling persons of the Company, the Company has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy and is, therefore, unenforceable. Agreement with Gold King Mines Corporation On April 1, 1995, the Company entered into an Agreement with Gold King Mines Corporation ("Gold King"), Denver, Colorado. Under the terms of this Agreement, Gold King has agreed to provide the services of William R. Wilson on a consulting basis at the rate of $400 per day. The initial term of the consulting agreement was through December 31, 1995, and extended for one-year periods upon mutual agreement between Gold King and the Company. Gold King and the Company have extended this consulting agreement for two years. Mr. Wilson has provided various services to the Company including the preparation of the Company's business plans and executive reports. Mr. Wilson possesses a professional degree in metallurgical engineering from the Colorado School of Mines, Golden, Colorado, and has been awarded a Master's in Business Administration from the University of Southern California, Los Angeles, California. In his more than thirty years of experience, Mr. Wilson has, for 22 27 the past fifteen years, served in various seniority executive capacities with engineering, construction and consulting firms, many of such capacities as president or the chief executive officer of mining companies operating in the United States and internationally. Mr. Wilson is the past chairman of the Colorado Mining Association. Gold King is a subsidiary of Sheridan Reserve Corporation, a publicly-traded resource company based in Toronto, Canada. Mr. Wilson's primary responsibility to the Company has been and will be to act as project manager for the Nevada Property and to act as the Company's representative to Harrison Western Mining & Construction Company, the mining contractor for the Nevada Property. Mr. Wilson will also provide technical and managerial consulting to the Company on the Indonesian Concessions. Agreement with Behre Dolbear & Company The Company entered into a Consulting Services Agreement (the "Consulting Agreement") with Behre Dolbear & Company ("Behre Dolbear"), an internationally recognized mining consulting firm established in 1911. Under the terms of the Consulting Agreement, Behre Dolbear will be responsible for providing independent technical advisory third-party validation services relating to the Indonesian Concessions. Such services initially require Behre Dolbear to advise and validate the exploration program contemplated by the Company and would include related technical input for other aspects of project development. The term of the Consulting Agreement is for six months or upon satisfactory completion of the consulting services contemplated prior to such expiration date. The Company has agreed to pay Behre Dolbear the hourly rate of $137.50 up to a maximum of $1,100 per diem for the services contemplated under the Consulting Agreement and has committed to utilize Behre Dolbear a minimum of two days per month. Unused days will accrue under the Consulting Agreement but will be forfeited if not prior to the expiration of the term of the agreement. The Company must also reimburse Behre Dolbear for any travel; reasonable and necessary lodging expenses (including meals); telegram, cable, telex charges; a 2.5% "flat" labor charge in lieu of actual telephone charges; printing, copying, reproduction and fax charges; postage, courier, express and freight charges; use of personal automobiles; royalties on computer software; professional liability insurance (assessed on a 1.5% flat fee basis); clerical fees at the rate of $35 per hour; and other costs and expenses incurred by Behre Dolbear and/or its personnel in performing the services contemplated by the Consulting Agreement. Agreement with Eco-Rating International In order to better assure compliance with applicable Brazilian environmental laws and regulations, the Company has entered into an agreement with Eco-Rating International, Zurich, Switzerland ("Eco-Rating"). Under the terms of the agreement, Eco-Rating has agreed to develop an "eco-efficiency model" designed to establish environmental management guidelines for the Company's operations in Brazil. It is the objective of the Company to establish a reputation as a leader in the timber industry in environmentally-related issues and to develop its properties in a manner best designed to properly reclaim any areas harvested pursuant to its concessions. Shareholders' Advisory Committee In 1989, the Company formed a Shareholder Advisory Committee (the "Advisory Committee") comprised of up to 12 outside shareholders. The purpose of the Advisory Committee is to participate in directors' meetings and compensation meetings, as well as planning meetings related to all aspects of corporate development. Members are selected annually from a group of shareholders who respond to Company inquiries regarding interest in participating on the Advisory Committee. Membership is rotated annually. One of the primary purposes of this Committee is to provide independent, shareholder participation in critical decisions relating to overall corporate strategy. 23 28 8. EXECUTIVE COMPENSATION The table set forth below identifies the compensation paid to the Company's executive officers for the last three completed fiscal years (i.e. fiscal years ending May 31, 1994; May 31, 1995; and May 31, 1996): SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION ----------------------------------------------------- AWARDS PAYOUTS ANNUAL COMPENSATION ------------------------- ----------------------- ------------------------------------------------ RESTRICTED SECURITIES ALL NAME AND OTHER STOCK UNDERLYING LTIP OTHER PRINCIPAL ANNUAL AWARD(S) OPTIONAL/ PAYOUTS COMPENSATION POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) ($) SARS(#) ($) ($) -------- ---- --------- -------- ------------------ ---------- ---------- -------- ------------ Christopher Michaels, President and Chairman of the Board........... 1996 $100,449 -- $6,316.00 $225,000(2) 10,000(3) -- -- 1995 $148,727 -- $5,712.00 -- 10,000 -- -- 1994 $137,222 -- $5,712.00 -- 10,000 -- -- Jeffrey Kramer, Senior Vice President and 1996 $117,791 -- $7,658.00 $225,000(4) 10,000(5) -- -- Director............... 1995 $137,212 -- $6,564.00 -- 10,000 -- -- 1994 $135,117 -- $6,564.00 -- 10,000 -- --
- - --------------- (1) The Company incurs the annual cost of health insurance for Messrs. Michaels and Kramer and their respective dependents. (2) The Company granted Messrs. Michaels and Kramer the option to purchase 900,000 shares of Common Stock each at an average price of $1.50 per share. These options were exercised during the year ended May 31, 1996, at which time the Company's board of directors agreed to issue these shares for services rendered. The Company has valued these restricted securities to be worth twenty-five cents ($.25) per share. (3) The Company has granted stock options to all members of its board of directors in the amount of 10,000 shares per full year of service as an active member of the board. These options may be exercised at $1.00 per share of Common Stock. Options may not be exercised after the expiration of 10 years from the date of the grant and are nontransferable other than by inheritance. As of the date of this Registration Statement, the Company has granted options aggregating 100,000 shares to Mr. Michaels and 70,000 shares to Mr. Kramer. (4) See Footnote 2. (5) See Footnote 3. Options and Stock Appreciation Rights The table set forth below provides certain information concerning individual grants of stock options and stock appreciation rights (whether granted in connection with stock options or as "freestanding" rights made from inception to date and during the last fiscal year of the Company ending May 31, 1996) to each of the named executive officers noted below: OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF STOCK PRICE APPRECIATION FOR OPTION TERM -------------------------------------------------------------------------------------------------------------- NUMBER OF % OF TOTAL SECURITIES OPTIONS/ UNDERLYING SARs OPTIONS/ GRANTED TO EXERCISE SARS EMPLOYEES OR BASE EXPIRATION NAME GRANTED(#) IN FISCAL YEAR PRICE($/SH) DATE 5%($) 10%($) (a) (b) (c) (d) (e) (f) (g) ---- ---------- -------------- ----------- ----------- ----------- --------- Christopher D. Michaels.. 100,000 10% $1.00 May 31, '06 $16,289 $25,937 Jeffrey S. Kramer........ 70,000 14% $1.00 May 31, '06 $16,289 $25,937 Stanley Mohr............. 40,000 25% $1.00 May 31, '06 $16,289 $25,937 Edna Pollock............. 10,000 100% $1.00 May 31, '06 $16,289 $25,937 Joe Rude' III............ 10,000 100% $1.00 May 31, '06 $16,289 $25,937
24 29 - - --------------- (1) The Company has granted stock options to all members of its board of directors pursuant to Stock Option Agreements executed at various times. Under the terms of these agreements, each director has been granted options to purchase 10,000 shares of Common Stock per full year of service. The exercise price for such options is $1.00 per share. The years in which stock options were initially granted to each respective board member are as follows: Christopher Michaels, 1986; Jeffrey Kramer, 1989; Stanley Mohr, 1993; Edna Pollock, 1996; and Joe Rude' III, 1996. In 1996, the Stock Option Agreements relating to Messrs. Michaels, Kramer and Mohr were extended so that they may be exercised through May 31, 2006. The remaining may not be exercised after the expiration of ten (10) years from the date of grant and are nontransferable other than by inheritance. (2) See Footnote 1. (3) See Footnote 1. 30 LEGAL PROCEEDINGS In May 1989, the Company received notice that the Securities and Exchange Commission (the "Commission") had commenced an informal investigation into the Company's compliance with the registration and disclosure requirements of the Securities Act of 1933 (the "'33 Act") and the Securities Exchange Act of 1934 (the "'34 Act"). Thereafter the Commission commenced an extensive review of the Company's books and records relating to the, Company's business and mining operations, its capital raising activities, its financial condition and history. Through all stages of the investigation, the Company cooperated with the Commission. The Commission and the Company agreed to terminate the Commission's investigation by the entry of a consent judgment against the Company and certain of the Company's past and present key employees. These key employees include Christopher D. Michaels, Jeffrey Kramer and Stanley Mohr. The term and conditions of the consent judgment can be summarized as follows: 1. The Company neither admitted nor denied any of the allegations alleged by the Commission; 2. The Company and its officers, agents, servants, employees and others receiving actual notice of the consent judgment are permanently restrained and enjoined from selling securities in interstate commerce unless and until a registration statement is in effect or the security or transaction is exempt from the registration provisions of the '33 Act and/or '34 Act; 3. The Company and its officers, agents, servants, employees, and others receiving actual notice of the consent judgment are permanently restrained from engaging in any transaction, practice or course of conduct, employing any course of conduct, or obtaining any money or property by means of an untrue statement of a material fact, or any omission to state a material fact, necessary to make the statements made in light of the circumstances under which they were made not misleading. On April 7, 1994, the Company and the Commission entered into a stipulation regarding the resolution of all outstanding issues which then existed, which stipulation was entered as an order by the United States District Court for the Central District of California. Such stipulation contained an acknowledgement that the Company and its executive officers had received no ill-gotten gains as a result of prior activities by the Company in offering and selling its securities, and that the consent judgment resolved once and for all, all issues raised by the Commission as a result of the Company's prior activities. The Company was not required to pay any fines or required to disgorge any monies previously received by it in connection with its securities. As plaintiff, the Company filed on November 4, 1996 a complaint (the "Action") in Nye County, Nevada against Marlowe Harvey, Maran Holdings Inc., Calais Resources Inc., and Argus Resources, Inc. (the "Harvey Entities"). The complaint in the Action alleges, amongst other things, that the Harvey Entities breached their obligations under various agreements (including the October 20, 1995 amendment to the Joint Venture Agreement discussed in further detail in the Section of this Registration Statement entitled "THE COMPANY'S BUSINESS AND PROPERTIES -- The Nevada Property"). The Action seeks to require the Harvey Entities to specifically perform their obligations to convey a 1% interest in the joint venture Nevada Property to the officers of the Company (namely Messrs. Michaels and Kramer) and a 52% interest in the outstanding and issued stock in Argus Resources, Inc. The Action also seeks damages of approximately $4,000,000 resulting from the actions or inactions of the defendants. It is unknown at the present time whether the Harvey Entities have the ability to transfer the required 52% interest in Argus Resources, Inc., as required under the Amended Joint Venture Agreement, whether the Harvey Entities have substantive defenses which would prevent the Company from obtaining specific performance, or whether the remaining shareholders of Argus Resources, Inc., have approved and/or ratified the Amended Joint Venture Agreement at any time. If the Company is successful in obtaining specific performance of the agreements alleged in the Action, it will effectively continue to own or control an undivided 50% interest in the Nevada Property. To date the complaint has been served on all defendants. In January 1997, the parties held an initial joint case management conference. The parties have voluntarily exchanged documents pursuant to local court rules. The Company currently intends to commence formal discovery within the next several days. The Company anticipates that the Harvey Entities will vigorously defend the Action. 26 31 10. MARKET PRICE OF AND DIVIDENDS ON COMPANY'S EQUITY The authorized capital stock of the Company consists of 50,000,000 shares of which 49,750,000 shares are Common Stock with a par value of one cent ($.01) per share and 250,000 shares of Series A Preferred Stock with a par value of $1.00 per share and convertible into Common Stock on the terms and conditions hereinbelow described. As of February 28, 1997, there were 12,208,412 shares of the Company's Common Stock issued and outstanding and 228,919 shares of the Preferred Stock issued and outstanding. The average price paid per share for the Common Stock to date has been approximately $2.00 per share while the price per share paid for the Preferred Stock has been $10.00 per share, with an effective conversion price (determined on the basis of one-for-ten conversion rights accorded the Preferred Stock shareholders) to be $1.00 per share. The following description of the capital stock of the Company and certain provisions of the Company's Amended Articles of Incorporation and Certificate of Determination of Preferences of Series A Preferred Stock is a summary and is qualified in its entirety by the provisions of those documents which have been filed as exhibits to the Company's Registration Statement of which this Registration Statement is a part. The Company received approval for trading of its Common Stock on the Electronic Bulletin Board (NASDAQ) in March 1996 and has been trading under the symbol "NVMH". From the period from December 1995 until March 1996, the Company published "bid" and "ask" prices on the "pink sheets". The low and high prices for the Common Stock since commencement of quotations are as follows:
HIGH DATE LOW DATE - - ------ ---------------------------- ------ ---------------------------- $14.125 March 3, 1997 $1.25 December 1995
Since the commencement of trading on the Electronic Bulletin Board, the average monthly volume of trading of the Company's Common Stock has been approximately 200,000 shares. Prospective Investors should be aware that the volume of trading on the Electronic Bulletin Board traditionally has been limited and there can be no assurance that the Electronic Bulletin Board will provide an effective market for a shareholder to sell his or her Common Stock of the Company. The Company has applied for listing with the American Stock Exchange ("AMEX") by requesting a preliminary listing eligibility opinion. It is anticipated that the Company will be admitted to list its Common Stock prior to or as of the Effective Date of this Registration Statement. 27 32 11. DESCRIPTION OF SECURITIES BEING REGISTERED Common Stock The issued and outstanding shares of Common Stock are validly issued, fully paid and nonassessable. Subject to the rights of holders of Preferred Stock, the holders of outstanding shares of the Common Stock are entitled to receive dividends out of assets legally available therefor at such time and at such amounts as the Board of Directors may, from time to time, determine. See "Dividend Policy." The shares of Common Stock are neither redeemable nor convertible and the holders thereof have no preemptive or subscription rights to purchase any securities of the Company. Upon liquidation, dissolution or winding up of the Company, the holders of the Common Stock are entitled to receive, pro rata, the assets of the Company which are legally available for distribution after payment of all debts and other liabilities and subject to the rights of any holders of the Preferred Stock then outstanding. Before declaring any dividends, the Board of Directors may set apart out of any funds of the Company available for dividends such sum or sums as they may, from time to time, deem in their discretion to be proper working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the directors shall deem conducive to the interests of the Company. Each outstanding share of the Common Stock is entitled to one vote on all matters submitted to a vote of stockholders if there is no cumulative voting in the election of directors. Preferred Stock The Company's Amended Articles of Incorporation and its Certificate of Determination of Preferences of Series A Preferred Stock authorized the Company to issue up to 250,000 shares of the Preferred Stock. The holders of the Preferred Stock are entitled to receive dividends at the rate of eight percent per annum of the original issue price per share out of any funds legally viable therefor payable on each January 1, April 1, July 1 and October 1 after the issuance of the Preferred Stock. Dividends on the Preferred Stock are cumulative so that if the full dividends in respect of any preference dividend are not paid, the deficiency will be fully paid or declared and set apart for such shares (without interest) before any dividend or other distribution is paid on or declared or set apart for any other class or series of the Common Stock or preferred shares of the Company. The Company enjoys the right to pay any dividend on the Preferred Stock in cash or through the issuance of additional shares of Preferred Stock or Common Stock having an issue price equal to the amount of the dividend or through a combination of cash and stock. In the event of any liquidation, dissolution or winding up of the Company, either voluntarily or involuntarily, the holders of the Preferred Stock will be entitled to receive prior and in preference to any distribution of any of the assets or surplus funds of the Company to the holders of the Common Stock or any other class of preferred shares of the Company an amount equal to $10 per share plus a further amount equal to any dividends declared but unpaid on such shares. In the event of any consolidation or merger of the Company, or a sale of all or substantially all of the assets of the Company or a series of related instructions in which more than fifty percent of the voting power of the Company is disposed of, holders of the Preferred Stock will not be entitled to treat such event as a liquidation, dissolution or winding up of the Company. Holders of the Preferred Stock enjoy the right to convert each share of Preferred 28 33 Stock into ten (10) shares of the fully-paid and nonassessable shares of the Common Stock through December 31, 1997. Additionally, the Company is required to convert the Preferred Stock into ten (10) shares of Common Stock on or before the earlier of December 31, 1997 or the date on which a registration statement filed with the Securities & Exchange Commission by the Company and designed to raise at least Five Million Dollars ($5,000,000) becomes effective. Dividend Policy The Company has established a policy of not paying dividends on the Common Stock and anticipates that this policy shall remain in effect until further notice. To date, the Company has not paid any dividends in cash or in stock on the Preferred Stock. Management of the Company is currently planning and arranging for payment of all cumulative dividends on the Preferred Stock through the issuance of shares of Common Stock or through the payment of cash after giving effect to the conversion of Preferred Stock to Common Stock on a ten-for-one basis. 29 34 Transfer Agent and Registrar The transfer agent and registrar for the Common Stock and the Preferred Stock is US Stock Transfer Corporation, Glendale, California. 30 35 12. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The following pages contain the financial statements of the Company for the fiscal years ending May 31, 1994, 1995, and 1996 and for the periods ending February 28, 1996 and 1997. 31 36 NEVADA MANHATTAN MINING INCORPORATED INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page ---- Independent Auditors' Report............................................. F-2 Consolidated Balance Sheet at February 28, 1997 (Unaudited) and May 31, 1996 and 1995.......................................... F-3 Consolidated Statements of Operations for the Nine Months Ended February 28, 1997 and 1996 (Unaudited) and the Years Ended May 31, 1996, 1995 and 1994.................... F-4 - 5 Consolidated Statements of Changes in Stockholders' Equity for the Nine Months Ended February 28, 1997 and 1996 (Unaudited) and the Years Ended May 31, 1996, 1995 and 1994.................... F-6 - 7 Consolidated Statements of Cash Flows for the Nine Months Ended February 28, 1997 and 1996 (Unaudited) and the Years Ended May 31, 1996, 1995 and 1994.................... F-8 - 9 Notes to Consolidated Financial Statements.............................. F-10
F-1 37 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders Nevada Manhattan Mining Incorporated (A Development Stage Company) We have audited the accompanying consolidated balance sheets of Nevada Manhattan Mining Incorporated (a development stage company) as of May 31, 1996 and 1995, and the related consolidated statements of operations, changes in stockholders' equity and cash flows for each of the years in the three-year period ended May 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nevada Manhattan Mining Incorporated as of May 31, 1996 and 1995, and the results of its operations and its cash flows for each of the years in the three-year period ended May 31, 1996, in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered losses from its development stage activities and has a net working capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Jackson & Rhodes P.C. /s/ Jackson & Rhodes P.C. Dallas, Texas March 21, 1997 F-2 38 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED BALANCE SHEETS ASSETS
February 28, May 31, ------------- --------------------------- 1997 1996 1995 ------------- ----------- ----------- (unaudited) Current assets: Cash $ 135,534 $ 233,981 $ -- Accounts receivable -- -- 1,846 Prepaid expenses 164,500 -- 2,545 ----------- ---------- ---------- Total current assets 300,034 233,981 4,391 ----------- ---------- ---------- Property and equipment (Note 2): Domestic mining properties and equipment 5,510,369 3,961,047 3,696,295 Indonesian mining property (Note 7) 4,123,147 -- -- Brazilian timber concession (Note 7) 700,000 -- -- Furniture and fixtures 162,833 63,842 64,046 Less accumulated depreciation (66,567) (59,067) (52,867) ----------- ---------- ---------- 10,429,782 3,965,822 3,707,474 ----------- ---------- ---------- $10,729,816 $4,199,803 $3,711,865 =========== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 86,761 $ 88,226 $ 124,983 Accrued liabilities 306,175 181,162 283,169 Notes payable to stockholders 256,196 136,751 93,182 Current portion of long-term debt (Note 3) 68,150 44,388 23,278 ----------- ---------- ---------- Total current liabilities 717,282 450,527 524,612 Long-term debt (Note 3) 100,266 115,723 105,919 ----------- ---------- ---------- Total liabilities 817,548 566,250 630,531 ----------- ---------- ---------- Minority interest in subsidiary 49,500 -- -- ----------- ---------- ---------- Commitments and contingencies (Note 4) -- -- -- Stockholders' equity (Note 5): Common stock to be issued, 210,800 shares (Notes 5 and 7) 108 -- 495,000 Preferred stock to be issued, $1 par value, 250,000 shares authorized -- -- 737,327 Stock subscriptions receivable -- -- (50,500) Preferred stock, $1 par, 250,000 shares authorized, 228,919 and 132,510 shares issued 228,919 132,510 -- Common stock, $.01 par; 49,750,000 shares authorized; 12,208,412, 8,353,881 and 4,658,481 shares issued each period 122,084 83,539 46,585 Additional paid-in capital 22,629,435 15,079,460 12,305,772 Deficit accumulated during the development state (13,117,778) (11,661,956) (10,452,850) ----------- ----------- ----------- Total stockholders' equity 9,862,768 3,633,553 3,081,334 ----------- ----------- ----------- $10,729,816 $ 4,199,803 $ 3,711,865 =========== =========== ===========
See accompanying notes to consolidated financial statements. F-3 39 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED FEBRUARY 28, YEARS ENDED MAY 31, --------------------------- ------------------------------------------- 1997 1996 1996 1995 1994 ----------- ---------- ----------- ---------- ---------- (unaudited) Expenses: Costs and expenses of development stage activities $ 1,319,759 $ 468,453 $ 1,198,506 $ 611,073 $ 480,473 ----------- ---------- ----------- ---------- ---------- Net loss (1,319,759) (468,453) (1,198,506) (611,073) (480,473) Cumulative preferred dividends (136,063) -- (10,600) -- -- ----------- ---------- ----------- ---------- ---------- Net loss attributable to common shareholders $(1,455,822) $ (468,453) $(1,209,106) $ (611,073) $ (480,473) =========== ========== =========== ========== ========== Net loss per common share $ (0.14) $ (0.07) $ (0.16) $ (0.12) $ (0.15) =========== ========== =========== ========== ========== Weighted average shares outstanding 10,405,727 6,414,837 7,428,081 5,021,801 3,146,727 =========== ========== =========== ========== ==========
See accompanying notes to consolidated financial statements. F-4 40 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENT OF OPERATIONS FOR THE PERIOD FROM INCEPTION (JUNE 10, 1985) TO FEBRUARY 28, 1997 (UNAUDITED)
Expenses: Costs and expenses of development stage activities $ 12,809,932 Loss on disposition of mining properties 161,183 ------------ 12,971,115 ------------ Net loss (12,971,115) Cumulative preferred dividends (146,663) ------------ Net loss attributable to common shareholders $(13,117,778) ============
See accompanying notes to consolidated financial statements. F-5 41 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STATE COMPANY) CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Stock Preferred Stock Stock Subscriptions -------------------------- to be Issued Receivable Shares Amount -------------- ------------- ------------ ------------ Stock issued from inception (June 10, 1985) to May 31, 1993 (unaudited): For cash $ -- $ -- $ -- For services For property Shares borrowed from officers (Note 8) Losses from inception to May 31, 1993 (unaudited) ---------- ---------- ----------- ------------ Balance, May 31, 1993 -- -- -- -- Stock issued for cash -- -- -- -- Net loss -- -- -- -- ---------- ---------- ----------- ------------ Balance, May 31, 1994 -- -- -- -- Shares to be issued to officers (Note 5) 495,000 -- Shares issued for cash (Note 5) 131,500 (50,000) -- -- Shares issued in settlement of claims (Note 5) -- -- -- -- Shares issued as conversion of debt (Note 5) 605,827 -- Net loss -- -- ----------- ----------- ----------- ------------ Balance, May 31, 1995 1,232,327 (50,000) -- -- Deficit Accumulated Common Stock Additional During the -------------------------- Paid-in Developmental Shares Amount Capital Stage Total ---------- ----------- ----------- ------------- ----------- Stock issued from inception (June 10, 1985) to May 31, 1993 (unaudited): For cash 2,450,460 $ 24,505 $11,019,902 $ -- $11,044,407 For services 219,016 2,190 113,545 115,735 For property 140,000 1,400 1,400 Shares borrowed from officers (Note 8) (495,000) (495,000) Losses from inception to May 31, 1993 (unaudited) (9,361,304) (9,361,304) ---------- ----------- ----------- ------------- ---------- Balance, May 31, 1993 2,809,476 28,095 10,638,447 (9,361,304) 1,305,238 Stock issued for cash 1,155,225 11,552 963,917 -- 975,469 Net loss -- -- -- (480,473) (480,473) ---------- ----------- ----------- ------------- ---------- Balance, May 31, 1994 3,964,701 39,647 11,602,364 (9,841,777) 1,800,234 Shares to be issued to officers (Note 5) -- -- -- -- 495,000 Shares issued for cash (Note 5) 647,213 6,472 638,541 -- 726,013 Shares issued in settlement of claims (Note 5) 32,500 325 32,175 -- 32,500 Shares issued as conversion of debt (Note 5) 14,067 141 32,692 -- 638,660 Net loss -- -- -- (611,073) (611,073) ---------- ----------- ----------- ------------- ---------- Balance, May 31, 1995 4,658,481 46,585 12,305,772 (10,452,850) 3,081,334
(Continued) See accompanying notes to consolidated financial statements. F-6 42 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STATE COMPANY) CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Stock Preferred Stock Common Stock Stock Subscriptions ----------------- ---------------------- to be Issued Receivable Shares Amount Shares Amount ------------ ------------- -------- ------ -------- --------- Balance, May 31, 1995 $ 1,232,327 $ (50,500) -- $ -- 4,658,481 $ 46,585 Issuance of stock previously purchased (1,232,327) -- 13,150 13,150 554,400 5,544 Cash received from stock subscriptions -- 50,500 -- -- -- -- Shares issued for cash -- -- 119,360 119,360 1,001,000 10,010 Shares issued for services (Note 5) -- -- -- -- 1,940,000 19,400 Shares issued in connection with shareholder loan -- -- -- -- 200,000 2,000 Preferred dividend -- -- -- -- -- -- Net Loss -- -- -- -- -- -- ----------- ----------- -------- ------- --------- --------- Balance, May 31, 1996 -- -- 132,510 132,510 8,353,881 83,539 Shares issued for property (Note 7) 108 -- -- -- 789,200 7,892 Shares issued for cash -- -- 226,926 226,926 989,762 9,897 Shares issued for services -- -- -- -- 120,000 1,200 Shares issued for conversion of debt -- -- -- -- 650,400 6,504 Conversion of preferred -- -- (130,517) (130,517) 1,305,169 13,052 Preferred dividend -- -- -- -- -- -- Net Loss -- -- -- -- -- -- ----------- ----------- --------- -------- ---------- -------- Balance, February 28, 1997 (unaudited) $ 108 $ -- 228,919 $228,919 12,208,412 $122,084 =========== =========== ========= ======== ========== ========
Deficit Accumulated Additional During the Paid-in Development Capital Stage Total ------------ ------------ ----------- Balance, May 31, 1995 $12,305,772 $(10,452,850) $ 3,081,334 Issuance of stock previously purchased 1,213,633 -- -- Cash received from stock subscriptions -- -- 50,500 Shares issued for cash 1,075,455 -- 1,204,825 Shares issued for services (Note 5) 465,600 -- 485,000 Shares issued in connection with shareholder loan 19,000 -- 21,000 Preferred dividend -- (10,600) (10,600) Net Loss -- (1,198,506) (1,198,506) ----------- ------------ ------------- Balance, May 31, 1996 15,079,460 (11,661,956) 3,633,553 Shares issued for property (Note 7) 4,942,000 -- 4,950,000 Shares issued for cash 2,122,714 -- 2,359,537 Shares issued for services 238,800 -- 240,000 Shares issued for conversion of debt 128,996 -- 135,500 Conversion of preferred 117,465 -- -- Preferred dividend -- (136,063) (136,063) Net Loss -- (1,319,759) (1,319,759) ------------ ------------- ------------ Balance, February 28, 1997 (unaudited) $22,629,435 $(13,117,778) $ 9,862,768 ============ ============= =============
See accompanying notes to consolidated financial Statements F-7 43 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended February 28, Years Ended May 31, --------------------------- --------------------------------------- 1997 1996 1996 1995 1994 ------------- ---------- ----------- ---------- ---------- (Unaudited) Cash flows from developmental activities: Net loss $ (1,319,759) $ (468,453) $(1,198,506) $ (611,073) $ (480,473) Adjustments to reconcile net loss to net cash used in developmental activities: Common stock issued for services 240,000 - 485,000 - - Loss on disposition of property - - - - - Settlement of claim with debt - - - 32,500 - Depreciation 7,500 4,650 6,200 9,150 6,708 Minority interest expense 49,500 - - - - Changes in assets and liabilities: Accounts receivable - - 1,846 (1,846) - Prepaid expenses (164,500) 2,545 2,545 - - Accounts payable and accrued liabilities (12,515) (51,773) (149,364) (44,744) (275,292) ------------ ---------- ----------- ---------- ---------- Net cash used in developmental activities (1,199,774) (513,031) (852,279) (616,013) (749,057) ------------ ---------- ----------- ---------- ---------- Cash flows from investing activities: Purchase of property and equipment (1,521,460) (109,512) (187,481) (146,496) (116,777) ------------ ---------- ----------- ---------- ---------- Cash flows from financing activities: Additions to long-term debt 14,556 - - - - Change in bank overdraft - 55,569 - - - Payments on long-term debt (6,251) (54,000) (46,153) (42,117) (31,133) Net change in notes payable to stockholders 254,945 30,000 64,569 - - Proceeds from issuance of stock and stock to be issued 2,359,537 601,200 1,255,325 726,013 975,469 ------------ ---------- ----------- ---------- ---------- Net cash provided by financing activities 2,622,787 632,769 1,273,741 683,896 944,336 ------------ ---------- ----------- ---------- ---------- Net increase (decrease) in cash and cash equivalents (98,447) 10,226 233,981 (78,613) 78,502 Cash and cash equivalents: Beginning of period 233,981 - - 78,613 111 ------------ ---------- ----------- ---------- ---------- End of period $ 135,534 $ 10,226 $ 233,981 $ - $ 78,613 ============ ========== =========== ========== ========== Supplemental cash flow information: Cash paid during the period for interest $ - $ - $ 9,647 $ 12,701 $ 12,701 ============ ========== =========== ========== ==========
Non-cash transactions: During the year ended May 31, 1995, the Company issued stock for conversion of notes payable (see Note 5). During the year ended May 31, 1996, the Company issued 200,000 shares of common stock, valued at $21,000 in connection with a loan from a shareholder. Also during the year ended May 31, 1996, the Company assumed $77,067 in debt in connection with acquiring an additional interest in the mine (Note 2). During the period ended February 28, 1997, the Company issued 589,200 shares of common stock in connection with the Indonesian mining property acquisitions, 100,000 shares for domestic mining services and 100,000 shares for a Brazilian timber concession (Note 7). See accompanying notes to consolidated financial statements. F-8 44 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD FROM INCEPTION (JUNE 10, 1985) TO FEBRUARY 28, 1997 (UNAUDITED)
Cash flows from developmental activities: Net loss $ (12,971,115) Adjustments to reconcile net loss to net cash used in developmental activities: Common stock issued for services 725,000 Loss on disposition of property 156,183 Settlement of claim with debt 97,265 Depreciation 66,567 Minority interest expense 49,500 Changes in assets and liabilities: Prepaid expenses (164,500) Accounts payable and accrued liabilities 246,273 ------------- Net cash used in developmental activities (11,794,827) ------------- Cash flows from investing activities: Purchase of property and equipment (5,625,466) ------------- Cash flows from financing activities: Additions to long-term debt 330,011 Payments on long-term debt (165,291) Net change in notes payable to stockholders 256,196 Proceeds from issuance of stock 17,134,911 and stock to be issued ------------- Net cash provided by financing activities 17,555,827 ------------- Net increase in cash and cash equivalents 135,534 Cash and cash equivalents: Beginning of period -- ------------- End of period $ 135,534 =============
See accompanying notes to consolidated financial statements. F-9 45 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 31, 1996 AND 1995 AND FEBRUARY 28, 1997 AND 1996 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Nevada Manhattan Mining Incorporated was organized under the Laws of the State of Nevada on June 10, 1985, to acquire, explore, develop, finance and sell mining rights and properties. As of May 31, 1996 the Company is in the development stage, in that planned principal operations have not commenced. The Company has to date acquired properties and begun exploration and development. Preparation of the Company's financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Basis of Presentation The Company's financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is reporting a net loss of $1,198,506 and $611,073 for the years ended May 31, 1996 and 1995 and $1,319,759 for the period ended February 28, 1997 and net cash resources were used in developmental activities for each year and for the period then ended. The following is a summary of managements' plan to raise capital and generate additional operating funds. Management has reached an agreement to have gold ore milled adjacent to its Nevada property by a third party, reducing capital requirements of the Company. The Company and its joint venture partners in the Nevada property have constructed a 1400 foot decline underground access to enhance exploration and facilitate the extraction of gold ore. The Company has negotiated an agreement with Harrison Western Mining and Construction Company to begin production in July 1996. The Company has acquired and commenced the exploration and development of its mineral holdings in Indonesia and its Brazilian timber operations. Management will attempt to raise additional capital through a private or public sale of common stock or by loans. Though the Company has been able to raise funds from private placement of its equity securities in recent years, there is no assurance of future availability of funds from these sources. F-10 46 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Statement of Cash Flows For statement of cash flow purposes, the Company considers short-term investments with original maturities of three months or less to be cash equivalents. Property and Equipment Mining properties acquisition, exploration and development costs are capitalized as incurred and will be amortized on the units-of-production method based on economically recoverable mineral reserves. The Company assesses impairment of mineral properties on an area-by-area basis which aggregates contiguous areas. Estimated site restoration and closure costs in which the Company has reclamation responsibilities are charged against operating earnings on the units-of-production method over the expected economic life of the mines. Other property and equipment are carried at cost. Depreciation of other property and equipment is provided using the straight-line method over the seven year estimated useful lives of the related assets. Maintenance and repairs are charged to operations as incurred and expenditures for major improvements are capitalized. Gains and losses from retirement or replacement of property and equipment are included in operations. Income Taxes The Company accounts for income taxes pursuant to Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109) which requires the use of the asset and liability method of computing deferred income taxes. The objective of the asset and liability method is to establish deferred tax assets and liabilities for the temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. Net Loss Per Common Share Per share amounts have been computed on the weighted average number of common shares outstanding for each period. All share and per share amounts have been restated to retroactively reflect the reverse stock split explained in Note 5. Convertible preferred shares are considered antidilutive since conversion would decrease loss per share. F-11 47 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. 2. MINING PROPERTIES AND EQUIPMENT The Company previously owned a 24.5 percent undivided interest in a mining property in the Manhattan Mining District, Nye County, Nevada. The property consists of 28 patented (fee) and 65 unpatented mine claims which include the Whitecaps Mine, Union Mine, Consolidated Mine, Earl Mine, Bath Mine and other assorted mines and claims which cover approximately 1,200 acres. Under contractual understandings reached during October 1995, which are in the final stages of confirmation, the Company has increased its interest to 50 percent and has assumed an additional $77,067 in debt (Note 3) in connection therewith. In March 1997, the Company entered into an agreement to purchase the note and deed of trust in its entirety which is secured by the property (see Note 7). Management of the Company is active in the supervision of work taking place, plus future planning of all aspects of operations. The operating permits for the Manhattan Gold Mine were issued to the Company by the State of Nevada during April 1996. The Company has negotiated an agreement with Harrison Western Mining and Construction Company for the beginning of production in July 1996. The work was begun in July 1996 and included placement of mine shops and support facilities; mining in the existing workings of the mine and extension of the existing decline from its end location of 1,200 linear feet from the surface to the White Caps Level. Underground flooding and caving of the existing decline required an alternate access way and a new decline was driven from approximately 800 feet on the existing decline. As of the end of December 1996, the new decline has been driven starting from approximately 350 feet with an additional 450 feet expected to be completed by the end of March 1997. Ore is expected to begin to be milled in May 1997. Previously, the Company had an interest in a gold producing property in Bolivia, South America and mining claims in British Columbia, Canada. The management, directors and stockholders voted to release these properties as they felt they were not economical to the Company and the future exploration and development of the Nevada, Indonesian and Brazil properties would offer the greatest return to the Company (see Note 7). F-12 48 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS 3. LONG-TERM DEBT AND NOTES PAYABLE Notes payable to stockholders accrue interest at rates from 9 percent to 12 percent, are due on demand and are guaranteed by certain Company officers. Long-term debt consisted of the following:
FEBRUARY 28, MAY 31, ------------ ----------------------- 1997 1996 1995 ---- ---- ---- (unaudited) Obligation to a stockholder as a result of a lawsuit settlement, interest imputed at 9%, payable $1,000 per month until April 2001 $ 48,426 $ 50,770 $ 52,330 Note payable to an individual at $2,000 per month, including interest at 9% 35,649 -- -- 10% note payable to an individual under terms of a joint venture agreement, payable $50,000 per year including interest 84,341 109,341 76,867 -------- -------- -------- 168,416 160,111 129,197 Current portion 68,150 44,388 23,278 -------- -------- -------- Long-term debt $100,266 $115,723 $105,919 ======== ======== ========
Maturities of long-term debt are as follows for the years ending May 31: 1997 $44,388 1998 48,925 1999 40,978 2000 10,267 2001 15,553
The Company has capitalized $26,693, $34,242, $82,906 and $74,543 of interest into the mining properties during the years ended May 31, 1996, 1995 and 1994 and for the period ended February 28, 1997, respectively. F-13 49 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS 4. COMMITMENTS AND CONTINGENCIES Lease The Company leases office space under terms of an operating lease expiring on February 28, 1997. Future minimum lease payments for the year ending May 31, 1997 are $20,394. Rent expense amounted to $20,726, $20,394, $21,922 and $18,621 for the years ended May 31, 1996, 1995 and 1994, and the period ended February 28, 1997, respectively. Securities and Exchange Commission During May 1989, the Company received notice that the Securities and Exchange Commission ("Commission") had commenced an investigation into the Company's business activities. In 1993, the Board of Directors of the Company determined that the entry of a proposed consent judgment and the termination of the investigation was in the best interest of the Company and received confirmation that the investigation had been completed. On March 19, 1994, the Company received the following "Stipulation Regarding Resolution of Outstanding Issues" from the Commission closing out the investigation and all related issues: "Whereas the disposition of funds analysis conducted pursuant to the Judgment of Permanent Injunction and Other Relief against Defendant Nevada Manhattan Mining Incorporated entered on August 3, 1993 has revealed no ill-gotten gains received by any defendant, the undersigned parties hereby stipulate that all outstanding issues in this action have been resolved, including disgorgement, and that the judgment entered against the defendants are final." While the Company believes that it was in the best interests of the Company and its stockholders to enter the consent judgment, the entry of the judgment may impose certain burdens on the Company with respect to its future activities. The more significant of such burdens are as follows: (i) The Company may not be able to utilize the exemptions from registration available under Regulation A and Rule 701 under the 1933 Act. (ii) The Company may not be able to rely on the private placement exemptions provided in various state securities laws in connection with the offer and sale of securities in a transaction which qualifies as an exempt sale of securities under the 1933 Securities Act. F-14 50 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS 4. COMMITMENTS AND CONTINGENCIES (CONTINUED) Securities and Exchange Commission (Continued) In such case, the Company would be required to qualify the transaction under the state securities laws which may not be available. This qualification would increase the cost of, and extend the time for completing, such private placement of securities. Other Contingencies In January 1995, a group of stockholders and creditors asserted a claim in regards to a January 1988 settlement agreement. The Company has not been formally served or any legal process initiated by the stockholders and creditors in asserting this claim. Management does not believe the ultimate outcome of this contingency will have a material effect on financial position or results of operations. 5. STOCKHOLDERS' EQUITY Stock Options The Company has granted stock options to all members of the Board of Directors in the amount of 10,000 shares per full year of service as an active member of the Board of Directors. The exercise price of options granted is $1.00 per share of common stock. Options may not be exercised after expiration of ten (10) years from the date of grant and are non-transferable other than by will or inheritance. These options are the only compensation received for service as Director. The following table sets forth information regarding options for the periods ended:
FEBRUARY 28, MAY 31, ------------ -------------- 1997 1996 1995 ---- ---- ---- (unaudited) Outstanding at beginning of period 240,000 190,000 160,000 Granted - 50,000 30,000 ------- -------- -------- Outstanding at end of period 240,000 240,000 190,000 ======= ======= =======
In connection with their employment contracts, the Company also granted two officers the right to purchase 900,000 common shares each at an average price of $1.50 per share. The officers exercised these options during the year ended May 31, 1996 and the Company's F-15 51 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS 5. STOCKHOLDERS' EQUITY (CONTINUED) Board of Directors then agreed to give the officers the shares for services rendered. These shares have been valued at $.25 per share ($450,000) in the accompanying financial statements. The Company has also granted its chief legal counsel an option to acquire 100,000 common shares at $4 per share. Reverse Split In February 1995, the Company's stockholders approved a one-for-ten reverse split of the Company's common stock. The stated par value per share was not changed. All share and per share amounts herein have been retroactively restated to reflect the reverse split. Stock to be Issued and Stock Subscriptions Receivable The Company sold 647,213 shares of common stock and 13,150 shares of Series A Preferred Stock in separate private placements during the year ended May 31, 1995. The preferred stock had not been formally issued as of May 31, 1995, but was issued during the year ended May 31, 1996. The Company raised $776,513 in the private placements of which $50,500 was still receivable at May 31, 1995 and has been reflected as an offsetting amount in stockholders' equity at that date. During the year ended May 31, 1995, the Company also agreed to issue 73,467 shares of common stock in exchange for conversion of $638,660 of notes payable to certain individuals. During the year ended May 31, 1995, the Company also agreed to issue 32,500 shares of common stock to certain individuals to settle certain claims made by the individuals. The $32,500 value of the shares was charged to general and administrative expense. The preferred stock has a $1 par value, a $10 liquidation preference and an 8 percent cumulative dividend payable in cash or kind. Each share is convertible to ten common shares for a period of thirty months. During 1988, two Company officers loaned 495,000 (post-reverse split) common shares to the Company as treasury stock in return for the Company's promise to return the shares when common shares became available as a result of a reverse split or an increase in authorized shares. The shares were reissued to the officers in November 1995. The Company has accounted for the shares, valued at the market price of the shares when they were loaned to F-16 52 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS 5. STOCKHOLDERS' EQUITY (CONTINUED) Stock to be Issued and Stock Subscriptions Receivable (Continued) the Company, as a long-term obligation in the financial statements until the year ended May 31, 1995, when the reverse split occurred and the shares became available for issuance. At that time, the obligation was considered as common stock to be issued and included in stockholders' equity. Warrants In connection with the private placement of common stock, in October 1994, the Company also issued warrants to purchase 50,300 shares of common stock at $1.00 per share. None of these warrants, which expire in October 1996, have been exercised as of May 31, 1996. 6. INCOME TAXES The Company has recorded no income tax benefit, nor has deferred taxes in any year due to a net operating loss carryforward amounting to approximately $10,000,000 at May 31, 1996, which will expire, if not utilized, from 2002 to 2011. 7. SUBSEQUENT EVENTS In March 1997, the Company entered into a Sale and Purchase Agreement with the Selig Entities. Under the terms of this latest agreement, the Selig Entities agreed to sell to the Company one hundred percent (100%) of their interests in the Nevada Note, the Deed of Trust, and the Nevada Property for the sum of Three Hundred Seventy Five Thousand Dollars ($375,000) payable as follows: One Hundred Thousand Dollars ($100,000) in March 1997 and the balance plus all accrued and unpaid interest (calculated at the rate of 5.25%) on or before February 6, 1999. The Company in fact paid the first installment of One Hundred Thousand Dollars ($100,000) in March 1997. The agreement also acknowledges that the Company is the only person or entity legally entitled to conduct mineral operations on the Nevada Property. The Company is also required to pay all U.S. Bureau of Land Management annual maintenance fees associated with the claims comprising the Nevada Property. Indonesia The Company has made certain acquisitions in Indonesia subsequent to May 31, 1996: On August 19, 1996, the Company entered into an agreement to acquire a 51% interest in a metals/minerals mining property in Kalimantan, Indonesia (Sopang Gold Concession). Consideration for the purchase consisted of 400,000 shares of common stock due upon the signing of the agreement (of which 10,800 are unissued as of February 28, 1997) and an additional 4,000,000 shares to be released dependent upon the value of an independent valuation of the property. The Company has valued the 400,000 shares at $1,200,000. The Sopang Gold Concession ("Sopang") consists of 16,480 hectares and is held under Indonesian title as a KP, a form of Indonesian citizen ownership with a joint venture agreement. The concession is located in southeast Kalimantan. Because of the lack of major infrastructure in the area, initial work will be limited to surface trenching and geochemical sampling. Field work at Sopang will be initiated in the first quarter of 1997 with more extensive exploration including airborne geophysical surveys and drilling to be initiated later in 1997. F-17 53 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS 7. SUBSEQUENT EVENTS (CONTINUED) Indonesia The West Kalimantan Gold Project ("West Kalimantan") is 75 kilometers south of the Sarawak region of Malaysia and contains 62 hectares with the intent to expand to at least 2,000 hectares. The Project is held under a KPPE title, a form of Indonesian citizen ownership in joint venture with the Company. Access to the property is by road and motorized canoe for initial field work and helicopter support for advanced exploration activities. Infrastructure is limited but the proximity to the west coast of Kalimantan and low relief terrain indicates no unusual development problems will be encountered. Following a survey and additional ground sampling, key core drill targets will be identified and drilling will start as early as the second quarter of 1997. Further property acquisition is an integral part of the development program at West Kalimantan. Exploration has commenced in the first quarter of 1997. The Cepa Coal Project ("Cepa") in East Kalimantan covers an area of approximately 286,000 hectares and is held in three concessions as Contracts of Work ("COW's"). Initial work on the property will include reasonable expansion of ownership to include promising additional property containing similar coal. Surface sampling, shallow drilling for coal characterization and general market surveys began in the first quarter of 1997. The Silobat and Cepa projects, collectively, were acquired in January 1997 for 400,000 common shares issued upon signing of the agreement (valued at $2,800,000) and an additional 4,000,000 shares to be released dependent upon an independent valuation of the property of $40,000,000. The Company is also contingently liable to issue 1,000,000 common shares regardless of the valuation. The Company has contractually acquired the controlling interest in five additional gold concessions in Indonesia. The Company is currently reviewing these properties to determine an applicable acquisition structure. The Company has retained the firm of Behre Dolbear & Co. to provide review and third party validation with respect to its Indonesian operations. Brazil The Company, through its 80% owned subsidiary, Equatorial Resources ("ER"), has entered into a joint venture agreement with a Brazilian company to develop and operate 276,000 hectares of virgin timberland located in the state of Para, Brazil. The Company has an option to buy an additional 420,000 hectares. Under this joint venture arrangement, ER will manage the property and will earn a fifty percent interest in all F-18 54 NEVADA MANHATTAN MINING INCORPORATED (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS 7. SUBSEQUENT EVENTS (CONTINUED) Brazil (Continued) operations, including timber harvesting and milling activities currently being conducted on the property. Of the four existing saw mills acquired by ER, two are operational in Phase I and Phase II, and the other two mills will be put into operation by the end of February 1997. Immediate expansion plans call for the construction of up to eight additional mills in Phase III. The Company is providing $500,000 for Phase I and Phase II and will provide $1,500,000 for Phase III. In addition to the cash capital requirements for the property, the Company has issued 100,000 shares (valued at $700,000) and is required to issue 2,000,000 shares of common stock to the seller in 1997 upon closing of a stock-for-assets reorganization agreement. 8. GEOGRAPHIC AND SEGMENT INFORMATION The Company's operations during the three years ended May 31, 1996 were entirely gold mining operations in the United States. Beginning in the nine months ended February 28, 1997, the Company began operating in Indonesia (gold mining and coal) and Brazil (timber). Financial data by geographic area as of and for the period ended February 28, 1997 were as follows:
(Unaudited) Operating Identifiable Loss Assets ----------- ----------- United States $(1,105,472) $ 5,659,169 Indonesia (79,955) 4,123,147 Brazil (134,332) 947,500 ----------- ----------- Total $(1,319,759) $10,729,816 =========== ===========
F-19 55 SIGNATURES Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized. Nevada Manhattan Mining Incorporated Date: April 3, 1997 By: /s/ Jeffrey S. Kramer ----------------------------------- Senior VP, CFO and Director 56 All of the above-referenced sales were made by the Company in reliance upon the exemptions from registration contained in Section 4(2) of the Securities Act of 1933 and Regulation D promulgated pursuant to such exemption. 13. EXHIBITS EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - - ------- ---------------------- 3.(i) Articles of Incorporation of Epic Enterprises, Ltd., Filed June 10, 1985+ 3.(ii) Certificate of Amendment to Articles of Incorporation of Epic Enterprises, Ltd., Filed September 11, 1987+ 3.(iii) Certificate of Amendment to Articles of Incorporation of Nevada Manhattan Mining Incorporated Filed October 26, 1987+ 3.(iv) Certificate of Amendment of Articles of Incorporation of Nevada Manhattan Mining Incorporated Filed August 31, 1995+ 3.(v) Certificate of Determination of Preferences of Series A Preferred Stock of Nevada Manhattan Mining Incorporated Filed October 25, 1995+ 3.(vi) Bylaws of Epic Enterprises, Ltd.+ 3.(vii) Memorandum and Articles of Association of Equatorial Resources, ltd. 3.(viii) Memorandum and Articles of Association of Kalimantan Resources, Ltd. 4.(i) Pages 1, 3, 4, and 5 of the Bylaws of Epic Enterprises, Ltd.+ 4.(ii) Pages 1 through 9 of Certificate of Determination of Preferences of Series A Preferred Stock of Nevada Manhattan Mining Incorporated Filed October 25, 1995+ 4.(iii) Stock Options Issued to Directors 10.(i) Mining Agreement Dated April 4, 1987+ 10.(ii) Amendment to Mining Agreement Dated December 9, 1987+ 10.(iii) Manhattan Mining Property Agreement Dated March 2, 1989+ 10.(iv) Corporation Quitclaim Deed Filed March 9, 1989+ 10.(v) Deed of Trust and Assignment of Rents Recorded March 9, 1989+ 10.(vi) Joint Venture Agreement Dated June 1993+ 10.(vii) Letter Agreement Dated August 10, 1995+ 10.(viii) Amendment to Joint Venture Agreement Dated October 20, 1995+ 10.(ix) Contract Between Nevada Manhattan Mining, Inc, and Harrison Western Construction Corp.+ 10.(x) Principles of Agreement Dated August 19, 1996+ 10.(xi) Employment Agreement Dated January 1, 1995 with Christopher D. Michaels+ 10.(xii) Employment Agreement Dated January 1, 1995 with Jeffrey Kramer+ 10.(xiii) Consulting Agreement with Gold King Mines Corporation Dated April 1, 1995+ 10.(xiv) Consulting Services Agreement Dated October 7, 1996 with Behre Dolbear & Company, Inc.+ 10.(xv) Letter Agreement Dated March 25, 1996 with David Weissberg, M.D.+ 10.(xvi) Letter Agreement Dated May 13, 1996 with David Weissberg, M.D.+ 10.(xvii) Letter Agreement Dated September 25, 1996 with Mr. John Holsten+ 10.(xviii) Financial Advisory Agreement with Rhone Finance SA dated November 26, 1996+ 10.(xix) Addendum Agreement to Principles of Agreement 10.(xx) Acquisition Agreement by and between Sinkamas Agunbg Ltd. and Kalimantan Resources, Ltd. dated January 26, 1997 10.(xxi) Acquisition Agreement for Gold and Coal Concessions by and between Kalimas Jaya Ltd. and Kalimantan Resources, Ltd. 10.(xxii) November 11, 1996 letter Agreement with Maderia Intex, S.A. International Exporte 10.(xxiii) Proposal for Sale and Purchase and Authorization for Exploration of Timber 10.(xxiv) Eco-Rating Standard Agreement dated December 17, 1996 10.(xxv) Sale and Purchase Agreement dated February 6, 1997 57 EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - - ------- ---------------------- 21 Subsidiaries of the Company 27 Financial Data Schedule+ 99(i) Business Plan Dated July 1995+ 99(ii) Business Plan Dated January 1997 - - ------------------------------------------------------------------------------- + Incorporated by reference to the Company's Registration Statement on Form SB-2 filed December 6, 1997 (Registration No. 333-17423). EX-3.(VII) 2 EXHIBIT 3.(VII) 1 I.B.C.NO. 209544 TERRITORY OF THE BRITISH VIRGIN ISLANDS THE INTERNATIONAL BUSINESS COMPANIES ORDINANCE (CAP 291) MEMORANDUM AND ARTICLES OF ASSOCIATION OF EQUATORIAL RESOURCES, LTD. INCORPORATED on the 13th day of December, 1996 DANTRUST LIMITED P.O. BOX 186 Road Town, Tortola Virgin Islands [SEAL] 2 TERRITORY OF THE BRITISH VIRGIN ISLANDS THE INTERNATIONAL BUSINESS COMPANIES ORDINANCE (Cap 291) MEMORANDUM OF ASSOCIATION OF EQUATORIAL RESOURCES, LTD. 1. The name of the Company is EQUATORIAL RESOURCES, LTD. 2. The registered office of the Company will be situate at the offices of Dantrust Limited, Road Town, Tortola, British Virgin Islands or at such place in the British Virgin Islands as the directors may from time to time determine. 3. The registered agent of the Company will be Dantrust Limited or such other person or company being a person or company entitled to act as a registered agent as the directors may from time to time determine. 4. The Objects for which the Company is established are:- (1) To buy, sell, mortgage, lease, manage, build, develop, possess and generally deal in real properties; to buy, sell, underwrite, invest in, exchange or otherwise acquire, and to hold, manage, develop, deal with and turn to account any bonds, debentures, shares (whether fully paid or not), stocks, options, commodities, futures, forward contracts, notes, or securities of all types, precious metals, gems, works of art and other articles of value. (2) To borrow or raise money by the issue of debentures, debenture stock (perpetual or terminable), bonds, mortgages, or any other securities founded or based upon all or any of the assets or property of the Company or without any such security and upon such terms as to priority or otherwise as the Company shall think fit. (3) To guarantee loans and to lend money with or without guarantee or security to any persons, firms or corporations. (4) To engage in any other business or businesses whatsoever, or in any acts or activities, which are not [SEAL] 3 prohibited under any law for the time being in force in the British Virgin Islands. (5) To do all such other things as are incidental to or the Company may think conducive to the attainment of all or any of the above objects. And it is hereby declared that the intention is that each of the objects specified in each paragraph of this clause shall, except where otherwise expressed in such paragraph, be an independent main object and be in no wise limited or restricted by reference to any inference from the terms of any other paragraph or the name of the Company. 5. The Company has no power to:- (1) carry on business with persons resident in the British Virgin Islands; (2) own an interest in real property situate in the British Virgin Islands, other than a lease of property for use as an office from which to communicate with members or where books and records of the company are prepared or maintained. (3) carry on banking or trust business, unless it is licensed under the Banks and Trust Companies Act, 1990; (4) carry on business as an insurance or re-insurance company, insurance agent or insurance broker, unless it is licensed under an enactment authorizing it to carry on that business; (5) carry on the business of company management unless it is licensed under the Company Management Act, 1990; or (6) carry on the business of providing the registered office or the registered agent for companies incorporated in the British Virgin Islands. 6. The shares in the Company shall be issued in the currency of the United States of America. 7. The authorized capital of the Company is US$50,000.00 divided into 25,000 Class A preferred voting shares with a par value of US$1.00 each and 25,000 Class B common non-voting shares with a par value of US$1.00 each. The shares of the Company are [SEAL] 4 subject to the following preferences, rights and restrictions namely: (i) The holders of the Class A preferred voting shares shall not be entitled to repayment of capital in priority to the holders of Class B shares and shall not be entitled to participate in the surplus assets of the Company after repayment of capital and shall not be entitled to the receipt of dividends. (ii) The Class B common non-voting shares shall not carry the right to attend or vote at meetings of the members of the Company or the right to receive notice thereof, or the right to appoint or remove directors of the Company. 8. The shares shall be further divided into such number of classes and series as the directors shall by resolution to amend this Memorandum of Association from time to time determine and until so divided shall comprise the classes above mentioned. 9. The directors shall by resolution have the power to issue any class or series of shares that the Company is authorized to issue in its capital, original or increased, with or subject to any designation, powers, preferences, limitations and restrictions. 10. The directors may issue shares as registered or as shares issued to bearer as they may determine by resolution of the directors. 11. Shares issued as registered shares may be exchanged for shares issued to bearer, and shares issued to bearer may be exchanged for registered shares. 12. Where shares are issued to bearer, the bearer, identified for this purpose by the number of the share certificate, shall be requested to give to the Company the name and address of an agent or attorney for service of any notice, information or written statement required to be given to members, and service upon such agent or attorney shall constitute service upon the bearer of such shares. In the absence of such name and address being given it shall be sufficient for purpose of service for the Company to publish the notice, information or written statement in one or more newspapers published or circulated in the British Virgin Islands in a newspaper in the place where the Company has its principal office. [SEAL] 5 13. The Company shall by resolution of the directors have the power to amend or modify any of the conditions contained in this Memorandum of Association. Dantrust Limited hereby subscribe to this Memorandum of Association this 13th day of December, 1996. Signed on behalf of the subscriber Dantrust Limited: by: /s/ in the presence of: /s/ Witness [SEAL] 6 TERRITORY OF THE BRITISH VIRGIN ISLANDS THE INTERNATIONAL BUSINESS COMPANIES ACT (CAP.291) CERTIFICATE OF INCORPORATION (SECTIONS 14 AND 15) No. 209544 The Registrar of Companies of the British Virgin Islands HEREBY CERTIFIES pursuant to the International Business Companies Act, Cap. 291 that all the requirements of the Act in respect of incorporation having been satisfied, EQUATORIAL RESOURCES, LTD. is incorporated in the British Virgin Islands as an International Business Company this 13th day of December, 1996. [SEAL] Given under my hand and seal at Road Town, in the Territory of the British Virgin Islands /s/ REGISTRAR OF COMPANIES 7 TERRITORY OF THE BRITISH VIRGIN ISLANDS THE INTERNATIONAL BUSINESS COMPANIES ORDINANCE (Cap 291) ARTICLES OF ASSOCIATION OF EQUATORIAL RESOURCES, LTD. PRELIMINARY 1. References in these Regulations to the Ordinance shall mean the International Business Companies Ordinance 1984. The following regulations shall constitute the Regulations of the Company. In these Regulations words and expressions defined in the Ordinance shall have the same meaning and, unless otherwise required by the context, the singular shall include the plural and vice versa, the masculine shall include the feminine and neuter and references to persons shall include corporations and all legal entities capable of having a legal existence. SHARE CERTIFICATES 2. Every person whose name is entered as a member in the share register being the holder or registered shares, and every person who subscribes for shares issued to bearer, shall without payment, be entitled to a certificate signed by two directors or two officers or by one director and one officer of the Company or under the common seal of the Company with or without the signature of any director or officer of the Company specifying the share or shares held and the par value thereof, provided that in respect of a registered share, held jointly by several persons the Company shall not be bound to issue more than one certificate, and delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all. 3. In the case of bearer shares each certificate for shares issued to bearer shall carry an identifying number, and the Company shall maintain a register of the name and address of an agent or attorney which may be given to the Company by the bearer, identified for this purpose by such identifying statement required to be given to members. 4. If a certificate is worn out or lost it may be renewed on production of the worn out certificate, or on satisfactory proof of its loss together with such indemnity as the directors may reasonably require. Any member receiving a share certificate shall indemnify and hold the Company and its officers harmless from any loss or liability which it or they may incur by reason of wrongful or fraudulent use or representation made by any person by virtue of the possession of such certificate. [SEAL] 8 SHARE CAPITAL AND VARIATION OF RIGHTS 5. Subject to the provisions of these Regulations, the unissued and treasury shares of the Company shall be at the disposal of the directors who may without limiting or affecting any rights previously conferred on the holders of any existing shares or class or series of shares, offer, allot grant options over or otherwise dispose of them to such persons at such times and upon such terms and conditions as the Company may, by resolution of directors, determine. 6. Without prejudice to any special rights previously conferred on the holders of any existing shares or class of shares, any class of shares that the Company is authorized to issue in its capital may be issued with such preferred, deferred or other special rights or such restrictions, whether in regard to dividend, voting, return of capital or otherwise as the directors by resolution may from time to time determine. 7. Subject to the provisions of the Ordinance in this regard, shares may be redeemed without the consent of the member or members concerned on such terms and in such manner as the directors before or at the time of the issue of the shares may determine. 8. The directors may redeem any such share at a premium subject to the Provisions of the Ordinance. 9. If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the Company is being wound up, be varied with the consent in writing of the holders of not less than three-fourths of the issued shares of that class and the holders of not less than three-fourths of the issued shares of any other class of shares which may be affected by such variation. 10. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith. 11. The Company shall not be bound by or be compelled in any way to recognize (even when having notice thereof) any equitable contingent, future or partial interest in any share or any interest in any fractional part of a share or (except only as by these Regulations or by law otherwise provided) any other rights thereto by the registered holder or holders. [SEAL] 9 TRANSFER OF SHARES 12. Registered shares in the Company may be transferred by a written instrument signed by the transferor and containing the name and address of the transferee or in such other manner or form and subject to such evidence as the directors shall consider appropriate. Shares issued to bearer shall be transferred by delivery of the certificate evidencing same. 13. The holder of registered shares may request that such shares be exchanged for shares issued to bearer and the directors shall cancel the certificate evidencing registered shares and the entry in the share register and instead issue a certificate evidencing shares issued to bearer with and subject to such evidence of intent as the directors may consider appropriate. 14. The holder of a certificate evidencing shares issued to bearer may request that such shares be exchanged for registered shares and the directors shall cancel the certificate evidencing shares issued to bearer and instead issue a certificate evidencing registered shares and enter the name and address of the holder thereof in the share register with and subject to such evidence of intent as the directors may consider appropriate. 15. Upon receipt of notification of any change of name and address of any agent or attorney given to the Company for the purpose of service of any notice, information or written statement required to be given to members, identified by reference to the number of the certificate to bearer, the directors shall forthwith amend the register maintained for this purpose. TRANSMISSION OF SHARES 16. The personal representatives, guardian or trustee as the case may be of a deceased, incompetent or bankrupt sole holder of a registered share shall be the only persons recognized by the Company as having any title to the share. In the case of a share registered in the names of two or more holders, the survivor or survivors, and the personal representative, guardian or trustee as the case may be of the deceased, incompetent or bankrupt, shall be the only persons recognized by the Company as having any title to the share but they shall not be entitled to exercise any rights as a member of the Company until they have proceeded as set forth in the following two Regulations. 17. Any person becoming entitled by operation of law or otherwise to a share or shares in consequence of the death, incompetence or bankruptcy of any member may be registered [SEAL] 10 as a member upon such evidence being produced as may reasonably be required by the directors. An application by any such person to be registered as a member for all purposes shall be deemed to be a transfer of shares of the deceased, incompetent or bankrupt member and the directors shall treat it as such. 18. Any person who has become entitled to a share or shares in consequence of the death, incompetence or bankruptcy of any member may, instead of being registered himself, request in writing that some person to be named by him be registered as a transferee of such share or shares and such request shall likewise be treated as if it were a transfer. ACQUISITION OF OWN SHARES 19. Subject to provisions of the Ordinance in this regard, the directors may, on behalf of the Company, purchase, redeem or otherwise acquire any of the Company's own shares for such consideration as they consider fit, and either cancel or hold such shares as treasury shares. Shares may be purchased or otherwise acquired in exchange for newly issued shares in the Company. 20. Subject to the provisions of the Ordinance in this regard, the directors may, on behalf of the Company, at any time forfeit and cancel the shares for which payment is not made pursuant to a promissory note or other written binding obligation for payment of a debt, provided that written notice specifying a date for payment to be made is served on the member who defaults in making payment pursuant to the promissory note or other binding obligation to pay a debt, naming a further date not earlier than 14 days from the date of service of the notice, on or before which the payment required by the notice is to be made, and containing a statement that in the event of non-payment at or before the time named in the notice, the shares, or any of them, in respect of which the payment is not made will be liable to forfeiture, and the requirements of the notice are not complied with. ALTERATION IN CAPITAL 21. Subject to the terms of any resolution to amend the Memorandum of Association passed by the members or directors for the purpose of increasing the authorized capital of the Company, such increased capital may be divided into shares or classes of share of such respective amounts, and with such rights or privileges (if any) as the members or directors think expedient. 22. Any capital raised by the creation of new shares shall be considered as part of the original capital, and shall be [SEAL] 11 subject to the same provisions as if it had been part of the original capital. 23. The members or directors may be resolution to amend the Memorandum of Association:- (a) consolidate and divide all or any of its share capital into shares of larger amounts than its existing shares; (b) cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its authorized share capital by the amount of the shares so cancelled; (c) sub-divide its shares or any of them into shares of smaller amounts than is fixed by the Memorandum of Association so that subject to the provisions of Regulation 9 the resolution whereby any share is sub-divided may determine that as between the holders of the different classes of shares (if any) resulting from such sub-division one or more of the classes of shares may have such preferred or other special rights over, or may have such qualified or deferred rights or be subject to any such restrictions as compared with, the other class or classes as the Company has power to attach to unissued or new shares; (d) subject to any determination required by law, reduce its authorized and issued share capital. 24. Where any difficulty arises in regard to any consolidation and division under these Regulations the members or directors may settle the same as they think expedient. MEETING OF MEMBERS 25. The directors may convene meetings of the members of the Company at such times and in such manner and places as the directors consider necessary or desirable, and they shall convene such a meeting upon the written request of members holding more than 50 percent of the votes of the outstanding voting shares in the Company. 26. Seven days' notice at the least specifying the place, the day and the hour of the meeting and the general nature of the business to be conducted shall be given in manner hereinafter mentioned to such person whose names on the date the notice is given appear as members in the share register of the Company and to the agent or attorney of record of the holders of bearer shares. [SEAL] 12 27. A meeting of the members shall be deemed to have been validly held, notwithstanding that it is held in contravention of the requirement to give notice in Regulation 26, if notice of the meeting is waived by an absolute majority in number of the members or holders of bearer shares having a right to attend and vote at the meeting. 28. The inadvertent failure of the directors to give notice of a meeting to a member or to the agent or attorney as the case may be, or the fact that a member or such agent or attorney has not received the notice, does not invalidate the meeting. PROCEEDINGS AT MEETINGS OF MEMBERS 29. No business shall be transacted at any meeting unless a quorum of members is present at the time when the meeting proceeds to business. A quorum shall consist of the holder or holders present in person or by proxy of not less than one-third of the shares of each class or series of shares entitled to vote as a class or series thereon and the same proportion of the votes of the remaining shares entitled to vote thereon. 30. If within an hour from the time appointed for the meeting a quorum is not present, the meeting shall be dissolved. 31. At every meeting the members present shall choose some one of their number to be the Chairman. If the members are unable to choose a Chairman for any reason, then the person representing the greatest number of voting shares present at the meeting shall preside as Chairman failing which the oldest individual person shall take the chair. 32. The Chairman may, with the consent of the meeting, adjourn any meeting from time to time, and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. 33. At any meeting a resolution put to the vote of the meeting shall be decided on a show of hands by simple majority unless a poll is (before or on the declaration of the result of the show of hands) demanded:- (a) by the Chairman; or (b) by any member or members present or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right vote at the meeting. [SEAL] 13 34. Unless a poll be so demanded, a declaration by the Chairman that a resolution has, on a show of hands, been carried, and an entry to that effect in the book containing the minutes of the proceedings of the Company, shall be sufficient evidence of the fact, without proof of the number or proportion of the votes recorded in favor of or against such resolution. 35. If a poll is duly demanded it shall be taken in such manner as the Chairman directs, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The demand for a poll may be withdrawn. 36. In the case of an equality of votes, whether on a show of hands, or on a poll the Chairman of the meeting at which the show of hands takes place, or at which the poll is demanded, shall be entitled to a second or casting vote. VOTES OF MEMBERS 37. At any meeting of members whether on a show of hands or on a poll every holder of a voting share present in person or by proxy shall have one vote for every voting share of which he is the holder. 38. A resolution which has been notified to all members for the time being entitled to vote and which has been approved by a majority of the votes of those members in the form of one or more documents in writing or by telex, telegram, cable or other written electronic communication shall forthwith, without the need for any notice, become effectual as a resolution of the members. 39. If a committee be appointed for any member who is of unsound mind he may vote by his committee. 40. If two or more persons are jointly entitled to a registered share or shares:- (a) each of them may be present in person or by proxy at a meeting of members and may speak as a member; (b) if only one of them is present in person or by proxy, he may vote on behalf of all of them; and (c) if two or more are present in person or by proxy, they must vote as one. 41. Votes may be given either personally or by proxy. 42. The instrument appointing a proxy shall be produced at the place appointed for the meeting before the time for holding the meeting at which the person named in such instrument [SEAL] 14 proposes to vote. 43. The instrument appointing a proxy shall be in such form as the Chairman of the meeting shall accept as properly evidencing the wishes of the member appointing the proxy. 44. The instrument appointing a proxy shall be in writing under the hand of the appointer unless the appointer is a corporation or other form of legal entity other than one or more individuals holding as joint owners in which case the instrument appointing a proxy shall be in writing under the hand of an individual duly authorized by such corporation or legal entity to execute the same. The Chairman of any meeting at which a vote is cast by proxy so authorized may call for a notarially certified copy of such authority which shall be produced within 7 days of being so requested or the vote or votes cast by such proxy shall be disregarded. In the case of a proxy being given by the holder of a share issued to bearer, it shall be sufficient for the appointer to identify himself by writing the identifying number of the certificate evidencing the shares issued to bearer. CORPORATIONS ACTING BY REPRESENTATIVES AT MEETINGS 45. Any corporation or other form of corporate legal entity which is a member of the Company may by resolution of its directors or other governing body authorize such person as it thinks fit to act as its representative at any meeting of the members or of any class of members of the Company, and the person so authorized shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were an individual member of the Company. DIRECTORS 46. Subject to any subsequent amendment to change the number of directors, the number of the directors shall be not less than one or more than seven. 47. The first director or directors shall be elected by the subscriber(s) to the Memorandum. Thereafter, the directors shall be elected by the members or directors for such term as the members or directors may determine and may be removed by the members or the directors. 48. Each director holds office until his successor takes office or until his earlier death, resignation or removal. 49. A vacancy in the board of directors may be filled by a resolution of members of a majority of the remaining directors. [SEAL] 15 50. Until directors are appointed the subscribers to the Memorandum of Association shall have the power to act as directors. 51. A director shall not require a share qualification, but nevertheless shall be entitled to attend and speak at any meeting of the members and at any separate meeting of the holders of any class of shares in the Company. 52. A director by writing under his hand deposited at the Registered Office of the Company may from time to time appoint another director or any other person to be his alternate. Every such alternate shall be entitled to be given notice of meetings of the directors and to attend and vote as a director at any such meeting at which the director appointing him is not personally present and generally at such meeting to have and exercise all the powers, rights, duties and authorities of the director appointing him. Every such alternate shall be deemed to be an officer of the Company and shall not be deemed to be an agent of the director appointing him. If undue delay or difficulty would be occasioned by giving notice to a director of a resolution of which his approval is sought in accordance with Regulation 77 his alternate (if any) shall be entitled to signify approval of the same on behalf of that director. The remuneration of an alternate shall be payable out of the remuneration payable to the director appointing him, and shall consist of such portion of the last- mentioned remuneration as shall be agreed between such alternate and the director appointing him. A director by writing under his hand deposited at the Registered Office of the Company may at any time revoke the appointment of an alternate appointed by him. If a director shall die or cease to hold the office of director, the appointment of his alternate shall thereupon cease and terminate. 53. The directors may, by resolution, fix the emoluments of directors in respect of services rendered or to be rendered in any capacity to the Company. The directors may also be paid such traveling, hotel and other expenses properly incurred by them in attending and returning from meetings of the directors, or any committee of the directors or meetings of the members, or in connection with the business of the Company as shall be approved by resolution of the directors. 54. Any director who, by request, goes or resides abroad for any purposes of the Company or who performs services which in the opinion of the Board go beyond the ordinary duties of a director, may be paid such extra remuneration (whether by way of salary, commission, participation in profits or otherwise) as shall be approved by resolution of the directors. [SEAL] 16 55. The Company may pay to a director who at the request of the Company holds any office (including a directorship) in, or renders services to any company in which the Company may be interested, such remuneration (whether by way of salary, commission, participation in profits or otherwise) in respect of such office or services as shall be approved by resolution of the directors. 56. The office of directors shall be vacated if the director: (a) is removed from office by a resolution of members or by a resolution of directors, or (b) becomes bankrupt or makes any arrangement or composition with his creditors generally, or (c) becomes of unsound mind, or of such infirm health as to be incapable of managing his affairs, or (d) resigns his office by notice in writing to the Company. 57. (a) A director may hold any other office or position of profit under the Company (except that of auditor) in conjunction with his office of director, and may act in a professional capacity to the Company on such terms as to remuneration and otherwise as the directors shall arrange. (b) A director may be or become a director or other officer of, or otherwise be interested in any company promoted by the Company, or in which the Company may be interested, as a member or otherwise, and no such director shall be accountable for any remuneration or other benefits received by him as director or officer or from his interest in such other company. The directors may also exercise the voting powers conferred by the shares in any other company held or owned by the Company in such manner in all respects as they think fit, including the exercise thereof in favor of any resolutions appointing them, or any of their number, directors or officers of such other company, or voting or providing for the payment of remuneration to the directors or officers of such other company. A director may vote in favor of the exercise of such voting rights in manner aforesaid, notwithstanding that he may be, or be about to become, a director or officer of such other company, and as such in any other manner is, or may be, interested in the exercise of such voting rights in manner aforesaid. (c) No director shall be disqualified by his office from contracting with the Company, either as vendor, [SEAL] 17 purchaser or otherwise, nor shall any such contract or arrangement entered into by or on behalf of the Company in which any director shall be in any way interested be voided, nor shall any director so contracting or being so interested by liable to account to the Company for any profit realized by any such contract or arrangement, by reason of such director holding that office or of the fiduciary relationship thereby established. The nature of a director's interest must be declared by him at the meeting of the directors at which the question of entering into the contract or arrangement is first taken into consideration, and if the director was not at the date of that meeting interested in the proposed contract or arrangement, or shall become interested in a contract or arrangement after it is made, he shall forthwith after becoming so interested advise the Company in writing of the fact and nature of his interest. A general notice to the directors by a director that he is a member of a specified firm or company, and is to be regarded as interested in any contract or transaction which may, after the date of notice, be made with such firm or company shall (if such director shall give the same at a meeting of the directors, or shall take reasonable steps to secure that the same is brought up and read at the next meeting of directors after it is given) be a sufficient declaration of interest in relation to such contract or transaction with such firm or company. A director may be counted as one of a quorum upon a motion in respect of any contract or arrangement which he shall make with the Company, or in which he is so interested as aforesaid, and may vote upon such motion. OFFICERS 58. The directors of the Company may, by a resolution of directors, appoint officers of the Company at such times as shall be considered necessary or expedient, and such officers may consist of a President, one or more Vice-Presidents, a Secretary and a Treasurer and such other officers as may from time to time be deemed desirable. The officers shall perform such duties as shall be prescribed at the time of their appointment subject to any modification in such duties as may be prescribed by the directors thereafter, but in the absence of any specific allocation of duties it shall be the responsibility of the President to manage the day to day affairs of the Company, the Vice-Presidents to act in order of seniority in the absence of the President by otherwise to perform such duties as may be delegated to them by the President, the Secretary to maintain the registers, minute books and records (other than financial records) of the Company and to ensure compliance with all procedural requirements imposed on the Company by applicable law, and the Treasurer to be responsible for the financial affairs of the Company. [SEAL] 18 59. Any person may hold more than one office and no officer need be a director or member of the Company. The officers shall remain in office until removed from office by the directors whether or not a successor is appointed. 60. Any officer who is a body corporate may appoint any person its duly authorized representative for the purpose of representing it and of transacting any of the business of the officer. POWER OF DIRECTORS 61. The business of the company shall be managed by the directors who may pay all expenses incurred preliminary to and in connection with the formation and registration of the Company, and may exercise all such powers of the Company as are not by the Ordinance or by these Regulations required to be exercised by the members subject to any delegation of such powers as may be authorized by these Regulations and to such requirements as may be prescribed by resolution of the members; but no requirement made by resolution of the members shall prevail if it be inconsistent with these Regulations nor shall such requirement invalidate any prior act of the directors which would have been valid if such requirement had not been made. 62. The Board may entrust to and confer upon any director or officer any of the powers exercisable by it upon such terms and conditions and with such restrictions as it thinks fit, and either collaterally with, or to the exclusion of, its own powers, and may from time to time revoke, withdraw, alter or vary all or any of such powers. The directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit; any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on it by the directors. 63. The directors may from time to time and at any time by power of attorney appoint any company, firm or person or body of persons, whether nominated directly or indirectly by the directors, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under these Regulations) and for such period and subject to such conditions as they may think fit, and any such powers of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the directors may think fit and may also authorize any such attorney to delegate all or any of the powers, authorities and discretions vested in him. [SEAL] 19 64. Any directors who is a body corporate may appoint any person its duly authorized representative for the purpose of representing it at Board Meetings and of transacting any of the business of the directors. 65. All cheques, promissory notes, drafts, bills of exchange and other negotiable instruments and all receipts for monies paid to the Company, shall be signed, drawn, accepted, endorsed or otherwise executed, as the case may be, in such manner as the directors shall from time to time by resolution determine. 66. The directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertakings, property and uncalled capital or any part thereof, to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the Company or of any third party. 67. The continuing directors may act notwithstanding any vacancy in their body, save that if the number of directors shall have been fixed at two or more persons and by reason of vacancies having occurred in the Board there shall be only one continuing director he shall be authorized to act alone only for the purpose of appointing another director. PROCEEDINGS OF DIRECTORS 68. The meetings of the Board of Directors and any committee thereof shall be held at such place or places as the directors shall decide. 69. The directors may elect a chairman of their meetings and determine the period for which he is to hold office, but if no such chairman is elected, or if at any meeting the chairman is not present at the time appointed for holding the same, the directors present may choose one of their number to be chairman of the meeting. 70. The directors may meet together for the dispatch of business, adjourn and otherwise regulate their meetings as they think fit. Questions arising at any meeting shall be decided by a majority of votes; in case of any equality of votes the chairman shall ;have a second or casting vote. A director may at any time summon a meeting of the directors. If the Company shall have only one director the provisions hereinafter contained for meetings of the directors shall not apply but such sole director shall have full power to represent and act for the Company in all matters and in lieu of minutes of a meeting shall record in writing and sign a note of memorandum of all matters requiring a resolution of the directors. Such note or memorandum shall constitute sufficient evidence of such resolution for all purposes. [SEAL] 20 71. A director shall be given not less than seven days notice of a meeting of the directors. 72. Notwithstanding Regulation 71 above, a meeting of directors held in contravention of that regulation shall be valid if a majority of the directors entitled to vote at the meeting have waived the notice of the meeting. 73. The inadvertent failure to give notice of a meeting to a director, or the fact that a director has not received the notice, does not invalidate the meeting. 74. A meeting of directors is duly constituted for all purposes f at the commencement of the meeting there are present in person or by alternate not less than one-third of the total number of the directors with a minimum of two. 75. If within half an hour from the time appointed for the meeting a quorum is not present the meeting shall be dissolved. 76. Any one or more members of the Board of Directors or any committee thereof may participate in a meeting of such Board or committee by means of a conference telephone or similar communication equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting. 77. A resolution approved by a majority of the directors for the time being entitled to receive notice of a meeting of the directors or of a committee of the directors and taking the form of one or more documents in writing or by telex, telegram, cable or other written electronic communication shall be as valid and effectual as if it had been passed at a meeting of the directors or of such committee duly convened and held, without the need for any notice. INDEMNITY 78. Subject to the provisions of the Ordinance and of any other statute for the time being in force every director or other officer of the Company shall be entitled to be indemnified out of the assets of the Company against all losses or liabilities which he may sustain or incur in or about the execution of the duties of his office or otherwise in relation thereto, and no director or other officer shall be liable for any loss, damage or misfortune which may happen to, or be incurred by the Company in the execution of the duties of his office, or in relation thereto. [SEAL] 21 79. The directors shall provide for the safe custody of the common seal of the Company. The common seal when affixed to any instrument, except as provided in Regulation 2 shall be witnessed by a director or any other person so authorized from time to time by the directors. The directors may provide for a facsimile of the common seal and approve the signature of any director or authorized person which may be reproduced by printing or other means on any instrument and it shall have the same force and validity as if the seal had been affixed to such instrument and the same had been signed as hereinbefore described. DIVIDENDS AND RESERVES 80. The directors may by resolution declare a dividend but no dividend shall be declared and paid except out of surplus and unless the directors determine that immediately after the payment of the dividend:- (a) the Company will be able to satisfy its liabilities as they become due in the ordinary course of its business; and (b) the realizable value of the assets of the Company will not be less than the sum of its total liabilities, other than deferred taxes, as shown in the books of account, and its capital. 81. Dividends when and if declared may be paid to one class of holder to the exclusion of the holders of other classes, or in unequal amounts to holders of the various classes of shares. 82. Dividends may be declared and paid in money, shares, or other property. 83. In computing the surplus for the purpose of resolving to declare and pay a dividend, the directors may include in their computation the net unrealized appreciation of the assets of the Company. 84. The directors may from time to time pay to the members such interim dividends as appear to the directors to be justified by the surplus of the Company. 85. Subject to the rights of holders of shares entitled to special rights as to dividends, all dividends shall be declared and paid according to the par value of the shares in issue, excluding those shares which are held by the Company as treasury shares at the date of the declaration of the dividend. [SEAL] 22 86. The director may, before recommending any dividend, set aside out of the profits of the Company such sums as they think proper as a reserve or reserves which shall, at the discretion of the directors, be applicable for meeting contingencies, or for any other purpose to which the profits of the Company may be properly applied, and pending such application may, at the like discretion, either be employed in the business of the Company or be invested in such investments as the directors may time to time think fit. 87. If several persons are registered as joint holders of any share, any of them may give an effectual receipt for any dividend or other monies payable on or in respect of the share. 88. In the case of shares issued to bearer, the directors may provide for the payment of a dividend by reference to counterfoils or warrants issued with the certificate for such shares, and the production of such dividend counterfoil or warrant shall evidence entitlement to receipt of such dividend in the same way and to the same extent as production of the certificate itself. At the time of presentation of the counterfoils or warrant, the director may issue such counterfoils or warrants as may be required to permit receipt by the holder thereof of subsequent dividends. 89. Notice of any dividend that may have been declared shall be given to such members in manner hereinafter mentioned and all dividends unclaimed for three years after having been declared may be forfeited by the directors for the benefit of the Company. 90. No dividend shall bear interest against the Company. BOOKS AND RECORDS 91. The Company shall keep such accounts and records as the directors consider necessary or desirable in order to reflect the financial position of the Company. 92. The Company shall keep minutes of all meetings of directors, members, committees of directors, committees of officers and committees of members, and copies of all resolutions consented to by directors, members, committees of directors, committees of officers and committees of members. 93. The books, records and minutes required by Regulations 91 and 92 shall be kept at the registered office of the Company or at such other place as the directors determine and shall be open to the inspection of the directors at all times. 94. The directors shall from time to time determine whether and [SEAL] 23 to what extent and at what times and places and under what conditions or regulations the books, records and minutes of the Company or any of them shall be open to the inspection of members not being directors and no member (not being a director) shall have any right of inspecting any book, record, minutes or document of the Company except as conferred by law or authorized by resolution of the directors. AUDIT 95. The directors may by resolution call for the accounts of the Company to be examined by an auditor or auditors to be appointed by them at such remuneration as may from time to time be agreed. 96. The auditor may be a member of the Company but no director or officer shall be eligible during his continuance in office. 97. Every auditor of the Company shall have a right of access at all times to the books of account and vouchers of the Company, and shall be entitled to require from the officers of the Company such information and explanations as he thinks necessary for the performance of his duties. 98. The report of the auditor shall be annexed to the accounts upon which he reports, and the auditor shall be entitled to receive notice of, and to attend, any meeting at which the Company's audited profit and loss account and balance sheet is to be presented. 99. Any notice, information or written statement required to be given to members shall be served: (a) in the case of members holding registered shares, by mail (airmail service if available) addressed to each member at the address shown in the share register; and (b) in the case of members holding shares issued to bearer:- (i) by mail (airmail service if available) addressed to the agent or attorney whose name and address has been given for service of notice by the bearer of the share (identified for this purpose by the number of the share certificate); or (ii) in the absence of an address for service being given, or if the notice, information or written statement cannot be served for any other reason, by publishing the notice, information or written statement in one or more newspapers published or circulated in the British Virgin Island and in a [SEAL] 24 newspaper in the place where the Company has its principal office. 100. All notices directed to be given to the members shall, with respect to any registered share to which persons are jointly entitled, be given to whichever of such persons is named first in the share register, and notice so given shall be sufficient notice to all the holders of such share. 101. Any notice, if served by post, shall be deemed to have been served within ten days of posting, and in proving such service it shall be sufficient to prove that the letter containing the notice was properly addressed and put into the post office. PENSION AND SUPERANNUATION FUNDS 102. The directors may establish and maintain or procure the establishment and maintenance of any non-contributory or contributory pension or superannuation funds for the benefit of, and give or procure the giving of donations, gratuities, pensions allowances or emoluments to any persons who are or were at any time in the employment or service of the Company or any company which is a subsidiary of the Company or is allied to or associated with the Company or with any such subsidiary, or who are or were at any time directors or officers of the Company or of any other company as aforesaid or who hold or held any salaried employment or office in the Company or such other Company, or any persons in whose welfare the Company or any such other company as aforesaid is or has been at any time interested, and to the wives, widows, families and dependents of any such person, and may make payments for or toward the insurance of any such persons as aforesaid, and may do any of the matters aforesaid either alone or in conjunction with any such other company as such employment or office shall be entitled to participate in and retain for his own benefit any such donation, gratuity, pension, allowance or emolument. WINDING UP 103. If the Company shall be wound up, the Liquidator may, in accordance with a resolution of members, divide amongst the members in specie or in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may for such purpose set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members. The Liquidator may vest the whole or any part of such assets in trustee upon such trusts for the benefit of the contributories as the Liquidators shall think fit, but so [SEAL] 25 that no member shall be compelled to accept any shares or other securities whereon there is any liability. ARBITRATION 104. Whenever any differences arises between the Company on the one hand and any of the members, their executors, administrators or assigns on the other hand touching the true intent and construction of the incidence or consequences of these presents or of the Ordinance touching anything done or executed omitted or suffered in pursuance of the Ordinance or touching any breach or alleged breach or otherwise relating to the premises or to these presents or to any Ordinance affecting the Company or to any of the affairs of the company such difference shall unless the parties agree to refer the same to a single arbitrator be referred to two arbitrators one to be chosen by each of the parties to the difference and the arbitrators shall before entering on the reference appoint an umpire. 105. If either party to the reference make default in appointing an arbitrator either originally or by way of substitution (in the event that an appointed arbitrator shall die, be incapable of acting or refuse to act) for ten days after the other party has given him notice to appoint the same such other party may appoint an arbitrator to act in the place of the arbitrator of the defaulting party. AMENDMENT TO ARTICLES 106. The Company may alter or modify the conditions contained in these Regulations as originally drafted or as amended from time to time by a resolution of directors. Dantrust Limited hereby subscribed to these Articles of Association this 13th day of December, 1996. - - ----------------------------------------------------------------------- Signed on behalf of Dantrust Limited by: by: /s/ in the presence of /s/ Witness [SEAL] EX-3.(VIII) 3 EXHIBIT 3.(VIII) 1 I.B.C. NO. 199241 TERRITORY OF THE BRITISH VIRGIN ISLANDS The International Business Companies Ordinance (Cap 291) MEMORANDUM AND ARTICLES OF ASSOCIATION of KALIMANTAN RESOURCES, LTD. Incorporated the 16th day of September, 1996 DANTRUST LIMITED P. O. BOX 186 ROAD TOWN, TORTOLA British Virgin Islands [SEAL] 2 TERRITORY OF THE BRITISH VIRGIN ISLANDS THE INTERNATIONAL BUSINESS COMPANIES ORDINANCE (Cap 291) MEMORANDUM OF ASSOCIATION OF KALIMANTAN RESOURCES, LTD. 1. The name of the Company is KALIMANTAN RESOURCES, LTD. 2. The registered office of the Company will be situate at the offices of Dantrust Limited, P. O. Box 186, Road Town, Tortola, British Virgin Island or at such place in the British Virgin Islands as the directors may from time to time determine. 3. The registered agent of the Company will be DANTRUST LIMITED, P.O. Box 186, Road Town, Tortola, British Virgin Islands or such other person or company being a person or company entitled to act as a registered agent as the directors may from time to time determine. 4. The Objects for which the Company is established are:- (1) To buy, sell, mortgage, lease, manage, build, develop, possess and generally deal in real properties; to buy, sell, underwrite, invest in, exchange or otherwise acquire, and to hold, manage, develop, deal with and turn to account any bonds, debentures, shares (whether fully paid or not), stocks, options, commodities, futures, forward contracts, notes, or securities of all types, precious metals, gems, works of art and other articles of value. (2) To borrow or raise money by the issue of debentures, debenture stock (perpetual or terminable), bonds, mortgages, or any other securities founded or based upon all or any of the assets or property of the Company or without any such security and upon such terms as to priority or otherwise as the Company shall think fit. (3) To guarantee loans and to lend money with or without guarantee or security to any persons, firms or corporations. (4) To engage in any other business or businesses whatsoever, or in any acts or activities, which are not prohibited under any law for the time being in force in the British Virgin Islands. (5) To do all such other things as are incidental to or the Company may think conducive to the attainment of all or any of the above objects. [SEAL] 3 And it is hereby declared that the intention is that each of the objects specified in each paragraph of this clause shall, except where otherwise expressed in such paragraph, be an independent main object and be in no wise limited or restricted by reference to any inference from the terms of any other paragraph or the name of the Company. 5. The Company has no power to:- (1) carry on business with persons resident in the British Virgin Islands; (2) own an interest in real property situate in the British Virgin Islands, other than a lease of property for use as an office from which to communicate with members or where books and records of the company are prepared or maintained. (3) carry on banking or trust business, unless it is licensed under the Banks and Trust Companies Act, 1990; (4) carry on business as an insurance or re-insurance company, insurance agent or insurance broker, unless it is licensed under an enactment authorizing it to carry on that business; (5) carry on the business of company management unless it is licensed under the Company Management Act, 1990; or (6) carry on the business of providing the registered office or the registered agent for companies incorporated in the British Virgin Islands. 6. The shares in the Company shall be issued in the currency of the United States of America. 7. The authorized capital of the Company is US$50,000.00 divided into 50,000 shares with a par value of US$1.00 each. 8. The shares shall be divided into such number of classes and series as the directors shall by resolution to amend this Memorandum of Association from time to time determine and until so divided shall comprise one class and series. 9. The directors shall by resolution have the power to issue any class or series of shares that the Company is authorized to issue in its capital, original or increased, with or subject to any designation, powers, preferences, limitations and restrictions. 10. The directors may issue shares as registered or as shares issued to bearer as they may determine by resolution of the directors. [SEAL] 4 11. Shares issued as registered shares may be exchanged for shares issued to bearer, and shares issued to bearer may be exchanged for registered shares. 12. Where shares are issued to bearer, the bearer, identified for this purpose by the number of the share certificate, shall be requested to give to the Company the name and address of an agent or attorney for service of any notice, information or written statement required to be given to members, and service upon such agent or attorney shall constitute service upon the bearer of such shares. In the absence of such name and address being given it shall be sufficient for purpose of service for the Company to publish the notice, information or written statement in one or more newspapers published or circulated in the British Virgin Islands in a newspaper in the place where the Company has its principal office. 13. The Company shall by resolution of the directors have the power to amend or modify any of the conditions contained in this Memorandum of Association. The undersigned Subscriber, is desirous of being formed into a Company in pursuance of this Memorandum of Association. Dantrust Limited hereby subscribe to this Memorandum of Association this 16th day of September, 1996. - - ----------------------------------------------------------------------- NAME, ADDRESS AND DESCRIPTION OF SUBSCRIBER - - ----------------------------------------------------------------------- S. J. Husbands Authorized signatory DANTRUST LIMITED P. O. Box 186 Road Town, Tortola /s/ British Virgin Islands S.J. Husbands - - ----------------------------------------------------------------------- Dated this 16th day of September, 1996 Witness to the above signature: /s/ Einstein Samuels P. O. Box 186 Road Town Tortola British Virgin Islands Legal Secretary [SEAL] 5 TERRITORY OF THE BRITISH VIRGIN ISLANDS THE INTERNATIONAL BUSINESS COMPANIES ORDINANCE (Cap 291) ARTICLES OF ASSOCIATION OF KALIMANTAN RESOURCES, LTD. PRELIMINARY 1. References in these Regulations to the Ordinance shall mean the International Business Companies Ordinance 1984. The following regulations shall constitute the Regulations of the Company. In these Regulations words and expressions defined in the Ordinance shall have the same meaning and, unless otherwise required by the context, the singular shall include the plural and vice versa, the masculine shall include the feminine and neuter and references to persons shall include corporations and all legal entities capable of having a legal existence. SHARE CERTIFICATES 2. Every person whose name is entered as a member in the share register being the holder or registered shares, and every person who subscribes for shares issued to bearer, shall without payment, be entitled to a certificate signed by two directors or two officers or by one director and one officer of the Company or under the common seal of the Company with or without the signature of any director or officer of the Company specifying the share or shares held and the par value thereof, provided that in respect of a registered share, held jointly by several persons the Company shall not be bound to issue more than one certificate, and delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all. 3. In the case of bearer shares each certificate for shares issued to bearer shall carry an identifying number, and the Company shall maintain a register of the name and address of an agent or attorney which may be given to the Company by the bearer, identified for this purpose by such identifying statement required to be given to members. 4. If a certificate is worn out or lost it may be renewed on production of the worn out certificate, or on satisfactory proof of its loss together with such indemnity as the directors may reasonably require. Any member receiving a share certificate shall indemnify and hold the Company and its officers harmless from any loss or liability which it or they may incur by reason of wrongful or fraudulent use or representation made by any person by virtue of the possession of such certificate. [SEAL] 6 SHARE CAPITAL AND VARIATION OF RIGHTS 5. Subject to the provisions of these Regulations, the unissued and treasury shares of the Company shall be at the disposal of the directors who may without limiting or affecting any rights previously conferred on the holders of any existing shares or class or series of shares, offer, allot grant options over or otherwise dispose of them to such persons at such times and upon such terms and conditions as the Company may, by resolution of directors, determine. 6. Without prejudice to any special rights previously conferred on the holders of any existing shares or class of shares, any class of shares that the Company is authorized to issue in its capital may be issued with such preferred, deferred or other special rights or such restrictions, whether in regard to dividend, voting, return of capital or otherwise as the directors by resolution may from time to time determine. 7. Subject to the provisions of the Ordinance in this regard, shares may be redeemed without the consent of the member or members concerned on such terms and in such manner as the directors before or at the time of the issue of the shares may determine. 8. The directors may redeem any such share at a premium subject to the Provisions of the Ordinance. 9. If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the Company is being wound up, be varied with the consent in writing of the holders of not less than three-fourths of the issued shares of that class and the holders of not less than three-fourths of the issued shares of any other class of shares which may be affected by such variation. 10. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith. 11. The Company shall not be bound by or be compelled in any way to recognize (even when having notice thereof) any equitable contingent, future or partial interest in any share or any interest in any fractional part of a share or (except only as by these Regulations or by law otherwise provided) any other rights thereto by the registered holder or holders. [SEAL] 7 TRANSFER OF SHARES 12. Registered shares in the Company may be transferred by a written instrument signed by the transferor and containing the name and address of the transferee or in such other manner or form and subject to such evidence as the directors shall consider appropriate. Shares issued to bearer shall be transferred by delivery of the certificate evidencing same. 13. The holder of registered shares may request that such shares be exchanged for shares issued to bearer and the directors shall cancel the certificate evidencing registered shares and the entry in the share register and instead issue a certificate evidencing shares issued to bearer with and subject to such evidence of intent as the directors may consider appropriate. 14. The holder of a certificate evidencing shares issued to bearer may request that such shares be exchanged for registered shares and the directors shall cancel the certificate evidencing shares issued to bearer and instead issue a certificate evidencing registered shares and enter the name and address of the holder thereof in the share register with and subject to such evidence of intent as the directors may consider appropriate. 15. Upon receipt of notification of any change of name and address of any agent or attorney given to the Company for the purpose of service of any notice, information or written statement required to be given to members, identified by reference to the number of the certificate to bearer, the directors shall forthwith amend the register maintained for this purpose. TRANSMISSION OF SHARES 16. The personal representatives, guardian or trustee as the case may be of a deceased, incompetent or bankrupt sole holder of a registered share shall be the only persons recognized by the Company as having any title to the share. In the case of a share registered in the names of two or more holders, the survivor or survivors, and the personal representative, guardian or trustee as the case may be of the deceased, incompetent or bankrupt, shall be the only persons recognized by the Company as having any title to the share but they shall not be entitled to exercise any rights as a member of the Company until they have proceeded as set forth in the following two Regulations. 17. Any person becoming entitled by operation of law or otherwise to a share or shares in consequence of the death, incompetence or bankruptcy of any member may be registered as a member upon such evidence being produced as may reasonably be required by [SEAL] 8 the directors. An application by any such person to be registered as a member for all purposes shall be deemed to be a transfer of shares of the deceased, incompetent or bankrupt member and the directors shall treat it as such. 18. Any person who has become entitled to a share or shares in consequence of the death, incompetence or bankruptcy of any member may, instead of being registered himself, request in writing that some person to be named by him be registered as a transferee of such share or shares and such request shall likewise be treated as if it were a transfer. ACQUISITION OF OWN SHARES 19. Subject to provisions of the Ordinance in this regard, the directors may, on behalf of the Company, purchase, redeem or otherwise acquire any of the Company's own shares for such consideration as they consider fit, and either cancel or hold such shares as treasury shares. Shares may be purchased or otherwise acquired in exchange for newly issued shares in the Company. 20. Subject to the provisions of the Ordinance in this regard, the directors may, on behalf of the Company, at any time forfeit and cancel the shares for which payment is not made pursuant to a promissory note or other written binding obligation for payment of a debt, provided that written notice specifying a date for payment to be made is served on the member who defaults in making payment pursuant to the promissory note or other binding obligation to pay a debt, naming a further date not earlier than 14 days from the date of service of the notice, on or before which the payment required by the notice is to be made, and containing a statement that in the event of non-payment at or before the time named in the notice, the shares, or any of them, in respect of which the payment is not made will be liable to forfeiture, and the requirements of the notice are not complied with. ALTERATION IN CAPITAL 21. Subject to the terms of any resolution to amend the Memorandum of Association passed by the members or directors for the purpose of increasing the authorized capital of the Company, such increased capital may be divided into shares or classes of share of such respective amounts, and with such rights or privileges (if any) as the members or directors think expedient. 22. Any capital raised by the creation of new shares shall be considered as part of the original capital, and shall be subject to the same provisions as if it had been part of the original capital. [SEAL] 9 23. The members or directors may be resolution to amend the Memorandum of Association:- (a) consolidate and divide all or any of its share capital into shares of larger amounts than its existing shares; (b) cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its authorized share capital by the amount of the shares so cancelled; (c) sub-divide its shares or any of them into shares of smaller amounts than is fixed by the Memorandum of Association so that subject to the provisions of Regulation 9 the resolution whereby any share is sub-divided may determine that as between the holders of the different classes of shares (if any) resulting from such sub-division one or more of the classes of shares may have such preferred or other special rights over, or may have such qualified or deferred rights or be subject to any such restrictions as compared with, the other class or classes as the Company has power to attach to unissued or new shares; (d) subject to any determination required by law, reduce its authorized and issued share capital. 24. Where any difficulty arises in regard to any consolidation and division under these Regulations the members or directors may settle the same as they think expedient. MEETING OF MEMBERS 25. The directors may convene meetings of the members of the Company at such times and in such manner and places as the directors consider necessary or desirable, and they shall convene such a meeting upon the written request of members holding more than 50 percent of the votes of the outstanding voting shares in the Company. 26. Seven days' notice at the least specifying the place, the day and the hour of the meeting and the general nature of the business to be conducted shall be given in manner hereinafter mentioned to such person whose names on the date the notice is given appear as members in the share register of the Company and to the agent or attorney of record of the holders of bearer shares. 27. A meeting of the members shall be deemed to have been validly held, notwithstanding that it is held in contravention of the requirement to give notice in Regulation 26, if notice of the meeting is waived by an absolute majority in number of the [SEAL] 10 members or holders of bearer shares having a right to attend and vote at the meeting. 28. The inadvertent failure of the directors to give notice of a meeting to a member or to the agent or attorney as the case may be, or the fact that a member or such agent or attorney has not received the notice, does not invalidate the meeting. PROCEEDINGS AT MEETINGS OF MEMBERS 29. No business shall be transacted at any meeting unless a quorum of members is present at the time when the meeting proceeds to business. A quorum shall consist of the holder or holders present in person or by proxy of not less than one-third of the shares of each class or series of shares entitled to vote as a class or series thereon and the same proportion of the votes of the remaining shares entitled to vote thereon. 30. If within an hour from the time appointed for the meeting a quorum is not present, the meeting shall be dissolved. 31. At every meeting the members present shall choose some one of their number to be the Chairman. If the members are unable to choose a Chairman for any reason, then the person representing the greatest number of voting shares present at the meeting shall preside as Chairman failing which the oldest individual person shall take the chair. 32. The Chairman may, with the consent of the meeting, adjourn any meeting from time to time, and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. 33. At any meeting a resolution put to the vote of the meeting shall be decided on a show of hands by simple majority unless a poll is (before or on the declaration of the result of the show of hands) demanded:- (a) by the Chairman; or (b) by any member or members present or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right vote at the meeting. 34. Unless a poll be so demanded, a declaration by the Chairman that a resolution has, on a show of hands, been carried, and an entry to that effect in the book containing the minutes of the proceedings of the Company, shall be sufficient evidence of the fact, without proof of the number or proportion of the votes recorded in favor of or against such resolution. [SEAL] 11 35. If a poll is duly demanded it shall be taken in such manner as the Chairman directs, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The demand for a poll may be withdrawn. 36. In the case of an equality of votes, whether on a show of hands, or on a poll the Chairman of the meeting at which the show of hands takes place, or at which the poll is demanded, shall be entitled to a second or casting vote. VOTES OF MEMBERS 37. At any meeting of members whether on a show of hands or on a poll every holder of a voting share present in person or by proxy shall have one vote for every voting share of which he is the holder. 38. A resolution which has been notified to all members for the time being entitled to vote and which has been approved by a majority of the votes of those members in the form of one or more documents in writing or by telex, telegram, cable or other written electronic communication shall forthwith, without the need for any notice, become effectual as a resolution of the members. 39. If a committee be appointed for any member who is of unsound mind he may vote by his committee. 40. If two or more persons are jointly entitled to a registered share or shares:- (a) each of them may be present in person or by proxy at a meeting of members and may speak as a member; (b) if only one of them is present in person or by proxy, he may vote on behalf of all of them; and (c) if two or more are present in person or by proxy, they must vote as one. 41. Votes may be given either personally or by proxy. 42. The instrument appointing a proxy shall be produced at the place appointed for the meeting before the time for holding the meeting at which the person named in such instrument proposes to vote. 43. The instrument appointing a proxy shall be in such form as the Chairman of the meeting shall accept as properly evidencing the wishes of the member appointing the proxy. [SEAL] 12 44. The instrument appointing a proxy shall be in writing under the hand of the appointer unless the appointer is a corporation or other form of legal entity other than one or more individuals holding as joint owners in which case the instrument appointing a proxy shall be in writing under the hand of an individual duly authorized by such corporation or legal entity to execute the same. The Chairman of any meeting at which a vote is cast by proxy so authorized may call for a notarially certified copy of such authority which shall be produced within 7 days of being so requested or the vote or votes cast by such proxy shall be disregarded. In the case of a proxy being given by the holder of a share issued to bearer, it shall be sufficient for the appointer to identify himself by writing the identifying number of the certificate evidencing the shares issued to bearer. CORPORATIONS ACTING BY REPRESENTATIVES AT MEETINGS 45. Any corporation or other form of corporate legal entity which is a member of the Company may by resolution of its directors or other governing body authorize such person as it thinks fit to act as its representative at any meeting of the members or of any class of members of the Company, and the person so authorized shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were an individual member of the Company. DIRECTORS 46. Subject to any subsequent amendment to change the number of directors, the number of the directors shall be not less than one or more than seven. 47. The first director or directors shall be elected by the subscriber(s) to the Memorandum. Thereafter, the directors shall be elected by the members or directors for such term as the members or directors may determine and may be removed by the members or the directors. 48. Each director holds office until his successor takes office or until his earlier death, resignation or removal. 49. A vacancy in the board of directors may be filled by a resolution of members of a majority of the remaining directors. 50. Until directors are appointed the subscribers to the Memorandum of Association shall have the power to act as directors. [SEAL] 13 51. A director shall not require a share qualification, but nevertheless shall be entitled to attend and speak at any meeting of the members and at any separate meeting of the holders of any class of shares in the Company. 52. A director by writing under his hand deposited at the Registered Office of the Company may from time to time appoint another director or any other person to be his alternate. Every such alternate shall be entitled to be given notice of meetings of the directors and to attend and vote as a director at any such meeting at which the director appointing him is not personally present and generally at such meeting to have and exercise all the powers, rights, duties and authorities of the director appointing him. Every such alternate shall be deemed to be an officer of the Company and shall not be deemed to be an agent of the director appointing him. If undue delay or difficulty would be occasioned by giving notice to a director of a resolution of which his approval is sought in accordance with Regulation 77 his alternate (if any) shall be entitled to signify approval of the same on behalf of that director. The remuneration of an alternate shall be payable out of the remuneration payable to the director appointing him, and shall consist of such portion of the last-mentioned remuneration as shall be agreed between such alternate and the director appointing him. A director by writing under his hand deposited at the Registered Office of the Company may at any time revoke the appointment of an alternate appointed by him. If a director shall die or cease to hold the office of director, the appointment of his alternate shall thereupon cease and terminate. 53. The directors may, by resolution, fix the emoluments of directors in respect of services rendered or to be rendered in any capacity to the Company. The directors may also be paid such traveling, hotel and other expenses properly incurred by them in attending and returning from meetings of the directors, or any committee of the directors or meetings of the members, or in connection with the business of the Company as shall be approved by resolution of the directors. 54. Any director who, by request, goes or resides abroad for any purposes of the Company or who performs services which in the opinion of the Board go beyond the ordinary duties of a director, may be paid such extra remuneration (whether by way of salary, commission, participation in profits or otherwise) as shall be approved by resolution of the directors. 55. The Company may pay to a director who at the request of the Company holds any office (including a directorship) in, or renders services to any company in which the Company may be interested, such remuneration (whether by way of salary, commission, participation in profits or otherwise) in respect [SEAL] 14 of such office or services as shall be approved by resolution of the directors. 56. The office of directors shall be vacated if the director: (a) is removed from office by a resolution of members or by a resolution of directors, or (b) becomes bankrupt or makes any arrangement or composition with his creditors generally, or (c) becomes of unsound mind, or of such infirm health as to be incapable of managing his affairs, or (d) resigns his office by notice in writing to the Company. 57. (a) A director may hold any other office or position of profit under the Company (except that of auditor) in conjunction with his office of director, and may act in a professional capacity to the Company on such terms as to remuneration and otherwise as the directors shall arrange. (b) A director may be or become a director or other officer of, or otherwise be interested in any company promoted by the Company, or in which the Company may be interested, as a member or otherwise, and no such director shall be accountable for any remuneration or other benefits received by him as director or officer or from his interest in such other company. The directors may also exercise the voting powers conferred by the shares in any other company held or owned by the Company in such manner in all respects as they think fit, including the exercise thereof in favor of any resolutions appointing them, or any of their number, directors or officers of such other company, or voting or providing for the payment of remuneration to the directors or officers of such other company. A director may vote in favor of the exercise of such voting rights in manner aforesaid, notwithstanding that he may be, or be about to become, a director or officer of such other company, and as such in any other manner is, or may be, interested in the exercise of such voting rights in manner aforesaid. (c) No director shall be disqualified by his office from contracting with the Company, either as vendor, purchaser or otherwise, nor shall any such contract or arrangement entered into by or on behalf of the Company in which any director shall be in any way interested be voided, nor shall any director so contracting or being so interested by liable to account to the Company for any profit realized by any such contract or arrangement, by reason of such director holding that office or of the fiduciary [SEAL] 15 relationship thereby established. The nature of a director's interest must be declared by him at the meeting of the directors at which the question of entering into the contract or arrangement is first taken into consideration, and if the director was not at the date of that meeting interested in the proposed contract or arrangement, or shall become interested in a contract or arrangement after it is made, he shall forthwith after becoming so interested advise the Company in writing of the fact and nature of his interest. A general notice to the directors by a director that he is a member of a specified firm or company, and is to be regarded as interested in any contract or transaction which may, after the date of notice, be made with such firm or company shall (if such director shall give the same at a meeting of the directors, or shall take reasonable steps to secure that the same is brought up and read at the next meeting of directors after it is given) be a sufficient declaration of interest in relation to such contract or transaction with such firm or company. A director may be counted as one of a quorum upon a motion in respect of any contract or arrangement which he shall make with the Company, or in which he is so interested as aforesaid, and may vote upon such motion. OFFICERS 58. The directors of the Company may, by a resolution of directors, appoint officers of the Company at such times as shall be considered necessary or expedient, and such officers may consist of a President, one or more Vice-Presidents, a Secretary and a Treasurer and such other officers as may from time to time be deemed desirable. The officers shall perform such duties as shall be prescribed at the time of their appointment subject to any modification in such duties as may be prescribed by the directors thereafter, but in the absence of any specific allocation of duties it shall be the responsibility of the President to manage the day to day affairs of the Company, the Vice-Presidents to act in order of seniority in the absence of the President by otherwise to perform such duties as may be delegated to them by the President, the Secretary to maintain the registers, minute books and records (other than financial records) of the Company and to ensure compliance with all procedural requirements imposed on the Company by applicable law, and the Treasurer to be responsible for the financial affairs of the Company. 59. Any person may hold more than one office and no officer need be a director or member of the Company. The officers shall remain in office until removed from office by the directors whether or not a successor is appointed. [SEAL] 16 60. Any officer who is a body corporate may appoint any person its duly authorized representative for the purpose of representing it and of transacting any of the business of the officer. POWER OF DIRECTORS 61. The business of the company shall be managed by the directors who may pay all expenses incurred preliminary to and in connection with the formation and registration of the Company, and may exercise all such powers of the Company as are not by the Ordinance or by these Regulations required to be exercised by the members subject to any delegation of such powers as may be authorized by these Regulations and to such requirements as may be prescribed by resolution of the members; but no requirement made by resolution of the members shall prevail if it be inconsistent with these Regulations nor shall such requirement invalidate any prior act of the directors which would have been valid if such requirement had not been made. 62. The Board may entrust to and confer upon any director or officer any of the powers exercisable by it upon such terms and conditions and with such restrictions as it thinks fit, and either collaterally with, or to the exclusion of, its own powers, and may from time to time revoke, withdraw, alter or vary all or any of such powers. The directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit; any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on it by the directors. 63. The directors may from time to time and at any time by power of attorney appoint any company, firm or person or body of persons, whether nominated directly or indirectly by the directors, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under these Regulations) and for such period and subject to such conditions as they may think fit, and any such powers of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the directors may think fit and may also authorize any such attorney to delegate all or any of the powers, authorities and discretions vested in him. 64. Any directors who is a body corporate may appoint any person its duly authorized representative for the purpose of representing it at Board Meetings and of transacting any of the business of the directors. 65. All cheques, promissory notes, drafts, bills of exchange and other negotiable instruments and all receipts for monies paid [SEAL] 17 to the Company, shall be signed, drawn, accepted, endorsed or otherwise executed, as the case may be, in such manner as the directors shall from time to time by resolution determine. 66. The directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertakings, property and uncalled capital or any part thereof, to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the Company or of any third party. 67. The continuing directors may act notwithstanding any vacancy in their body, save that if the number of directors shall have been fixed at two or more persons and by reason of vacancies having occurred in the Board there shall be only one continuing director he shall be authorized to act alone only for the purpose of appointing another director. PROCEEDINGS OF DIRECTORS 68. The meetings of the Board of Directors and any committee thereof shall be held at such place or places as the directors shall decide. 69. The directors may elect a chairman of their meetings and determine the period for which he is to hold office, but if no such chairman is elected, or if at any meeting the chairman is not present at the time appointed for holding the same, the directors present may choose one of their number to be chairman of the meeting. 70. The directors may meet together for the dispatch of business, adjourn and otherwise regulate their meetings as they think fit. Questions arising at any meeting shall be decided by a majority of votes; in case of any equality of votes the chairman shall ;have a second or casting vote. A director may at any time summon a meeting of the directors. If the Company shall have only one director the provisions hereinafter contained for meetings of the directors shall not apply but such sole director shall have full power to represent and act for the Company in all matters and in lieu of minutes of a meeting shall record in writing and sign a note of memorandum of all matters requiring a resolution of the directors. Such note or memorandum shall constitute sufficient evidence of such resolution for all purposes. 71. A director shall be given not less than seven days notice of a meeting of the directors. 72. Notwithstanding Regulation 71 above, a meeting of directors held in contravention of that regulation shall be valid if a majority of the directors entitled to vote at the meeting have waived the notice of the meeting. [SEAL] 18 73. The inadvertent failure to give notice of a meeting to a director, or the fact that a director has not received the notice, does not invalidate the meeting. 74. A meeting of directors is duly constituted for all purposes f at the commencement of the meeting there are present in person or by alternate not less than one-third of the total number of the directors with a minimum of two. 75. If within half an hour from the time appointed for the meeting a quorum is not present the meeting shall be dissolved. 76. Any one or more members of the Board of Directors or any committee thereof may participate in a meeting of such Board or committee by means of a conference telephone or similar communication equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting. 77. A resolution approved by a majority of the directors for the time being entitled to receive notice of a meeting of the directors or of a committee of the directors and taking the form of one or more documents in writing or by telex, telegram, cable or other written electronic communication shall be as valid and effectual as if it had been passed at a meeting of the directors or of such committee duly convened and held, without the need for any notice. INDEMNITY 78. Subject to the provisions of the Ordinance and of any other statute for the time being in force every director or other officer of the Company shall be entitled to be indemnified out of the assets of the Company against all losses or liabilities which he may sustain or incur in or about the execution of the duties of his office or otherwise in relation thereto, and no director or other officer shall be liable for any loss, damage or misfortune which may happen to, or be incurred by the Company in the execution of the duties of his office, or in relation thereto. SEAL 79. The directors shall provide for the safe custody of the common seal of the Company. The common seal when affixed to any instrument, except as provided in Regulation 2 shall be witnessed by a director or any other person so authorized from time to time by the directors. The directors may provide for a facsimile of the common seal and approve the signature of any director or authorized person which may be reproduced by printing or other means on any instrument and it shall have [SEAL] 19 the same force and validity as if the seal had been affixed to such instrument and the same had been signed as hereinbefore described. DIVIDENDS AND RESERVES 80. The directors may by resolution declare a dividend but no dividend shall be declared and paid except out of surplus and unless the directors determine that immediately after the payment of the dividend:- (a) the Company will be able to satisfy its liabilities as they become due in the ordinary course of its business; and (b) the realizable value of the assets of the Company will not be less than the sum of its total liabilities, other than deferred taxes, as shown in the books of account, and its capital. 81. Dividends when and if declared may be paid to one class of holder to the exclusion of the holders of other classes, or in unequal amounts to holders of the various classes of shares. 82. Dividends may be declared and paid in money, shares, or other property. 83. In computing the surplus for the purpose of resolving to declare and pay a dividend, the directors may include in their computation the net unrealized appreciation of the assets of the Company. 84. The directors may from time to time pay to the members such interim dividends as appear to the directors to be justified by the surplus of the Company. 85. Subject to the rights of holders of shares entitled to special rights as to dividends, all dividends shall be declared and paid according to the par value of the shares in issue, excluding those shares which are held by the Company as treasury shares at the date of the declaration of the dividend. 86. The director may, before recommending any dividend, set aside out of the profits of the Company such sums as they think proper as a reserve or reserves which shall, at the discretion of the directors, be applicable for meeting contingencies, or for any other purpose to which the profits of the Company may be properly applied, and pending such application may, at the like discretion, either be employed in the business of the Company or be invested in such investments as the directors may time to time think fit. [SEAL] 20 87. If several persons are registered as joint holders of any share, any of them may give an effectual receipt for any dividend or other monies payable on or in respect of the share. 88. In the case of shares issued to bearer, the directors may provide for the payment of a dividend by reference to counterfoils or warrants issued with the certificate for such shares, and the production of such dividend counterfoil or warrant shall evidence entitlement to receipt of such dividend in the same way and to the same extent as production of the certificate itself. At the time of presentation of the counterfoils or warrant, the director may issue such counterfoils or warrants as may be required to permit receipt by the holder thereof of subsequent dividends. 89. Notice of any dividend that may have been declared shall be given to such members in manner hereinafter mentioned and all dividends unclaimed for three years after having been declared may be forfeited by the directors for the benefit of the Company. 90. No dividend shall bear interest against the Company. BOOKS AND RECORDS 91. The Company shall keep such accounts and records as the directors consider necessary or desirable in order to reflect the financial position of the Company. 92. The Company shall keep minutes of all meetings of directors, members, committees of directors, committees of officers and committees of members, and copies of all resolutions consented to by directors, members, committees of directors, committees of officers and committees of members. 93. The books, records and minutes required by Regulations 91 and 92 shall be kept at the registered office of the Company or at such other place as the directors determine and shall be open to the inspection of the directors at all times. 94. The directors shall from time to time determine whether and to what extent and at what times and places and under what conditions or regulations the books, records and minutes of the Company or any of them shall be open to the inspection of members not being directors and no member (not being a director) shall have any right of inspecting any book, record, minutes or document of the Company except as conferred by law or authorized by resolution of the directors. [SEAL] 21 AUDIT 95. The directors may by resolution call for the accounts of the Company to be examined by an auditor or auditors to be appointed by them at such remuneration as may from time to time be agreed. 96. The auditor may be a member of the Company but no director or officer shall be eligible during his continuance in office. 97. Every auditor of the Company shall have a right of access at all times to the books of account and vouchers of the Company, and shall be entitled to require from the officers of the Company such information and explanations as he thinks necessary for the performance of his duties. 98. The report of the auditor shall be annexed to the accounts upon which he reports, and the auditor shall be entitled to receive notice of, and to attend, any meeting at which the Company's audited profit and loss account and balance sheet is to be presented. 99. Any notice, information or written statement required to be given to members shall be served: (a) in the case of members holding registered shares, by mail (airmail service if available) addressed to each member at the address shown in the share register; and (b) in the case of members holding shares issued to bearer:- (i) by mail (airmail service if available) addressed to the agent or attorney whose name and address has been given for service of notice by the bearer of the share (identified for this purpose by the number of the share certificate); or (ii) in the absence of an address for service being given, or if the notice, information or written statement cannot be served for any other reason, by publishing the notice, information or written statement in one or more newspapers published or circulated in the British Virgin Island and in a newspaper in the place where the Company has its principal office. 100. All notices directed to be given to the members shall, with respect to any registered share to which persons are jointly entitled, be given to whichever of such persons is named first in the share register, and notice so given shall be sufficient notice to all the holders of such share. [SEAL] 22 101. Any notice, if served by post, shall be deemed to have been served within ten days of posting, and in proving such service it shall be sufficient to prove that the letter containing the notice was properly addressed and put into the post office. PENSION AND SUPERANNUATION FUNDS 102. The directors may establish and maintain or procure the establishment and maintenance of any non-contributory or contributory pension or superannuation funds for the benefit of, and give or procure the giving of donations, gratuities, pensions allowances or emoluments to any persons who are or were at any time in the employment or service of the Company or any company which is a subsidiary of the Company or is allied to or associated with the Company or with any such subsidiary, or who are or were at any time directors or officers of the Company or of any other company as aforesaid or who hold or held any salaried employment or office in the Company or such other Company, or any persons in whose welfare the Company or any such other company as aforesaid is or has been at any time interested, and to the wives, widows, families and dependents of any such person, and may make payments for or toward the insurance of any such persons as aforesaid, and may do any of the matters aforesaid either alone or in conjunction with any such other company as such employment or office shall be entitled to participate in and retain for his own benefit any such donation, gratuity, pension, allowance or emolument. WINDING UP 103. If the Company shall be wound up, the Liquidator may, in accordance with a resolution of members, divide amongst the members in specie or in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may for such purpose set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members. The Liquidator may vest the whole or any part of such assets in trustee upon such trusts for the benefit of the contributories as the Liquidators shall think fit, but so that no member shall be compelled to accept any shares or other securities whereon there is any liability. ARBITRATION 104. Whenever any differences arises between the Company on the one hand and any of the members, their executors, administrators or assigns on the other hand touching the true intent and construction of the incidence or consequences of these presents or of the Ordinance touching anything done or [SEAL] 23 executed omitted or suffered in pursuance of the Ordinance or touching any breach or alleged breach or otherwise relating to the premises or to these presents or to any Ordinance affecting the Company or to any of the affairs of the company such difference shall unless the parties agree to refer the same to a single arbitrator be referred to two arbitrators one to be chosen by each of the parties to the difference and the arbitrators shall before entering on the reference appoint an umpire. 105. If either party to the reference make default in appointing an arbitrator either originally or by way of substitution (in the event that an appointed arbitrator shall die, be incapable of acting or refuse to act) for ten days after the other party has given him notice to appoint the same such other party may appoint an arbitrator to act in the place of the arbitrator of the defaulting party. AMENDMENT TO ARTICLES 106. The Company may alter or modify the conditions contained in these Regulations as originally drafted or as amended from time to time by a resolution of directors. 107. The undersigned Subscriber, is desirous of being formed into a Company in pursuance of this Memorandum of Association. Dantrust Limited hereby subscribed to these Articles of Association this 16th day of September, 1996. - - ----------------------------------------------------------------------- NAME, ADDRESS AND DESCRIPTION OF SUBSCRIBER - - ----------------------------------------------------------------------- ........................... S. J. Husbands Authorized signatory Dantrust Limited P. O. Box 186 Road Town, Tortola Virgin Islands /s/ S. J. Husbands - - ----------------------------------------------------------------------- Dated this 16th day of September, 1996 Witness to the above signature: __________________________ Einstein Samuels P. O. Box 186 Road Town, Tortola Virgin Islands [SEAL] 24 TERRITORY OF THE BRITISH VIRGIN ISLANDS THE INTERNATIONAL BUSINESS COMPANIES ACT (CAPT.291) CERTIFICATE OF INCORPORATION (SECTION 14 AND 15) No. 199241 The Registrar of Companies of the British Virgin Islands HEREBY CERTIFIES pursuant to the International Business Companies, Act, Cap. 291 that all the requirements of the Act in respect of incorporation having been satisfied, KALIMANTAN RESOURCES, LTD. is incorporated in the British Virgin Islands as an International Business Company this 16th day of September, 1996. [SEAL] Given under my hand and seal at Road Town, in the Territory of the British Virgin Islands REGISTRAR OF COMPANIES EX-4.(III) 4 EXHIBIT 4.(III) 1 EXHIBIT 4(iii) STOCK OPTION AGREEMENT FOR DIRECTOR OPTION TO: EDNA POLLOCK DATE: JUNE 1, 1996 FOR: TEN THOUSAND (10,000) SHARES AT: $1.00 PER SHARE UNTIL: MAY 31, 2006 COST: $10,000 THIS STOCK OPTION AGREEMENT is made the 1st day of June, 1996, by and between Nevada Manhattan Mining, Incorporated (herein" Nevada"), a Nevada Corporation with its principal office at 5038 N. Parkway Calabasas, Suite 100, Calabasas, California 91302 and Edna Pollock, whose address is 207 Moores Landing Extn., Hampstead, NC 28443 (hereafter "Purchaser/Director"). WITNESSETH WHEREAS, Nevada is empowered by resolution of its Board of Directors to provide common stock options to each Nevada Manhattan Mining, Incorporated Director following each year of service as a Director for the Corporation; and WHEREAS, Purchaser/Director is desirous of purchasing an option to buy a quantity of the common shares of Nevada (said shares being restricted and not tradable until some future date); NOW THEREFORE, it is mutually agreed by and between the parties hereto as follows: 1. GRANT OF OPTION. The Company desires to grant Optionee a stock option on the terms and conditions of this Agreement subject to the terms and conditions set forth in this Agreement. 2. RIGHT TO PURCHASE. Nevada hereby grants to Purchaser/Director the right and option to purchase from Nevada up to Ten Thousand shares of the Company's unissued shares of its par value common stock at the price of $1.00 per share (may be made in partial payments) for each year of service by Purchaser/Director. For the purposes of this Agreement, "year of service" shall mean each year in which Purchaser/Director serves as a director of Nevada. 3. OPTION FEE. The option fee shall be (not applicable) Dollars ($0.00) payable upon signing of this Agreement. Director's stock options are issued as compensation for each year of service rendered and shall be exempt from option fees. 4. EXERCISE PERIOD. This option may be exercised at any time by the Purchaser/Director on or after the original option date and before the date of expiration. Option expires ten (10) years from date of original issuance. After expiration date this agreement is void and unexercisable. 2 5. NOTICE OF EXERCISE. Optionee shall exercise the option by delivering to the Company, either in person or by certified or registered mail, written notice of election to exercise and payment in full of the purchase price, if applicable, of this Agreement. The Optionee understands and acknowledges the stock represented by these Options may not be issued because they exceed the authorized amount of stock. Therefore, unless some affirmative action by the Board of Directors and/or shareholders to increase the authorized amount or reverse split the stock or some other action is taken part or all of these Options may be invalid. 6. RIGHTS AS SHAREHOLDER. Optionee shall have no rights as a shareholder of the Company with respect to any shares covered by the Option until the date of the issuance of a share certificate for such shares. No adjustment shall be made for dividends (ordinary or extraordinary, whether cash, securities, or other property) or distributions or other rights for which the record date is prior to the date such share certificate is issued. 7. ISSUANCE OF SHARES. Promptly after the Company's receipt of the written notice of exercise provided for in Section 5. above and Optionee's payment in full of the purchase price, the Company shall deliver, or cause to be delivered to Optionee, certificates for the whole number of shares with respect to which the Option is being exercised by Optionee. Shares shall be issued in the name of Optionee or their assignee. Optionee has the right to exercise this Option in full or in partial installments with the right to exercise the remaining portion of the option for any unissued shares prior to the expiration date of the Option. Shares to be issued in minimum blocks of 1,000 shares or if remaining shares are less than 1,000, to issue the total remaining shares. If any law or regulation of the Securities and Exchange Commission or of any federal or state governmental body having jurisdiction shall require the company or Optionee to take any action prior to issuance to Optionee of the shares of common stock of the Company specified in the written notice of election to exercise, or if any listing agreement between the company and any nation securities exchange requires such shares to be listed prior to issuance, the date for the delivery of such shares shall be adjourned until the completion of such action and/or listing. 8. TRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee, Options are transferable to a third party with written authorization as stated in Section 4 (Exercise of Option). In the event of the death of the Optionee any portion of the unexercised option may be exercisable by Optionee's personal representatives, heirs, or legatees by will or the laws of descent and distribution at any time prior to the expiration of the Option. 9. RECAPITALIZATION OR REORGANIZATION OF COMPANY. Except as otherwise provided in this Agreement, appropriate and proportionate adjustments shall be made in the number and class of shares subject to the Option and the exercise price of the Option in the event of a stock dividend (but only on common stock), stock split, reverse stock split, recapitalization, reorganization, merger, consolidation, separation, or like change in the capital structure of the Company. In the event of a liquidation of the company, or a merger, reorganization, or consolidation of the Company with any other corporation in which the Company is not the surviving corporation or the Company becomes a wholly-owned subsidiary of another corporation, the unexercised portion of the Option shall be exercisable in the same proportion, whether in shares or value whichever is greater, as prior to said change in Company structure. To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by the Board of Directors, the determination of which in that respect shall be final, binding, and conclusive. 10. SEVERABILITY. If any term, provision, covenant, or condition of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, or unenforceable for any reason, such invalidity, illegality, or unenforceability shall not affect any of the other terms, provisions, convenants, or conditions of this Agreement, each of which shall be binding and enforceable. 2 3 11. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with the laws of the State of Nevada. 12. ENTIRE AGREEMENT. This Agreement contains the entire understanding between the parties with respect to the subject matter hereof, and supersedes any and all prior written or oral agreements between the parties with respect to the subject matter hereof. There are no representations, agreements, arrangements, or understandings, either written or oral, between or among the parties with respect to the subject matter hereof which are not set forth in this Agreement . IN WITNESS WHEREOF the parties hereto have executed this Agreement the day and year first mentioned above. NEVADA MANHATTAN MINING, INCORPORATED ("Nevada") ----------------------------------- Purchaser / Director By: --------------------------------------- Christopher D. Michaels, President/CEO 3 4 STOCK OPTION AGREEMENT FOR DIRECTOR OPTION TO: JOE C. RUDE' III DATE: JUNE 1, 1997 FOR: TEN THOUSAND (10,000) SHARES AT: $1.00 PER SHARE UNTIL: MAY 31, 2006 COST: $10,000 THIS STOCK OPTION AGREEMENT is made the 1st day of June, 1997, by and between Nevada Manhattan Mining, Incorporated (herein" Nevada"), a Nevada Corporation with its principal office at 5038 N. Parkway Calabasas, Suite 100, Calabasas, California 91302 and Joe C. Rude' III, whose address is 3065 River North Parkway N.W., Atlanta, GA 30328 (hereafter "Purchaser/Director"). WITNESSETH WHEREAS, Nevada is empowered by resolution of its Board of Directors to provide common stock options to each Nevada Manhattan Mining, Incorporated Director following each year of service as a Director for the Corporation; and WHEREAS, Purchaser/Director is desirous of purchasing an option to buy a quantity of the common shares of Nevada (said shares being restricted and not tradable until some future date); NOW THEREFORE, it is mutually agreed by and between the parties hereto as follows: 1. GRANT OF OPTION. The Company desires to grant Optionee a stock option on the terms and conditions of this Agreement subject to the terms and conditions set forth in this Agreement. 2. RIGHT TO PURCHASE. Nevada hereby grants to Purchaser/Director the right and option to purchase from Nevada up to Ten Thousand shares of the Company's unissued shares of its par value common stock at the price of $1.00 per share (may be made in partial payments) for each year of service by Purchaser/Director. For the purposes of this Agreement, "year of service" shall mean each year in which Purchaser/Director serves as a director of Nevada. 3. OPTION FEE. The option fee shall be (not applicable) Dollars ($0.00) payable upon signing of this Agreement. Director's stock options are issued as compensation for each year of service rendered and shall be exempt from option fees. 4. EXERCISE PERIOD. This option may be exercised at any time by the Purchaser/Director on or after the original option date and before the date of expiration. Option expires ten (10) years from date of original issuance. After expiration date this agreement is void and unexercisable. 5 5. NOTICE OF EXERCISE. Optionee shall exercise the option by delivering to the Company, either in person or by certified or registered mail, written notice of election to exercise and payment in full of the purchase price, if applicable, of this Agreement. The Optionee understands and acknowledges the stock represented by these Options may not be issued because they exceed the authorized amount of stock. Therefore, unless some affirmative action by the Board of Directors and/or shareholders to increase the authorized amount or reverse split the stock or some other action is taken part or all of these Options may be invalid. 6. RIGHTS AS SHAREHOLDER. Optionee shall have no rights as a shareholder of the Company with respect to any shares covered by the Option until the date of the issuance of a share certificate for such shares. No adjustment shall be made for dividends (ordinary or extraordinary, whether cash, securities, or other property) or distributions or other rights for which the record date is prior to the date such share certificate is issued. 7. ISSUANCE OF SHARES. Promptly after the Company's receipt of the written notice of exercise provided for in Section 5. above and Optionee's payment in full of the purchase price, the Company shall deliver, or cause to be delivered to Optionee, certificates for the whole number of shares with respect to which the Option is being exercised by Optionee. Shares shall be issued in the name of Optionee or their assignee. Optionee has the right to exercise this Option in full or in partial installments with the right to exercise the remaining portion of the option for any unissued shares prior to the expiration date of the Option. Shares to be issued in minimum blocks of 1,000 shares or if remaining shares are less than 1,000, to issue the total remaining shares. If any law or regulation of the Securities and Exchange Commission or of any federal or state governmental body having jurisdiction shall require the company or Optionee to take any action prior to issuance to Optionee of the shares of common stock of the Company specified in the written notice of election to exercise, or if any listing agreement between the company and any nation securities exchange requires such shares to be listed prior to issuance, the date for the delivery of such shares shall be adjourned until the completion of such action and/or listing. 8. TRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee, Options are transferable to a third party with written authorization as stated in Section 4 (Exercise of Option). In the event of the death of the Optionee any portion of the unexercised option may be exercisable by Optionee's personal representatives, heirs, or legatees by will or the laws of descent and distribution at any time prior to the expiration of the Option. 9. RECAPITALIZATION OR REORGANIZATION OF COMPANY. Except as otherwise provided in this Agreement, appropriate and proportionate adjustments shall be made in the number and class of shares subject to the Option and the exercise price of the Option in the event of a stock dividend (but only on common stock), stock split, reverse stock split, recapitalization, reorganization, merger, consolidation, separation, or like change in the capital structure of the Company. In the event of a liquidation of the company, or a merger, reorganization, or consolidation of the Company with any other corporation in which the Company is not the surviving corporation or the Company becomes a wholly-owned subsidiary of another corporation, the unexercised portion of the Option shall be exercisable in the same proportion, whether in shares or value whichever is greater, as prior to said change in Company structure. To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by the Board of Directors, the determination of which in that respect shall be final, binding, and conclusive. 10. SEVERABILITY. If any term, provision, covenant, or condition of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, or unenforceable for any reason, such invalidity, illegality, or unenforceability shall not affect any of the other terms, provisions, convenants, or conditions of this Agreement, each of which shall be binding and enforceable. 2 6 11. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with the laws of the State of Nevada. 12. ENTIRE AGREEMENT. This Agreement contains the entire understanding between the parties with respect to the subject matter hereof, and supersedes any and all prior written or oral agreements between the parties with respect to the subject matter hereof. There are no representations, agreements, arrangements, or understandings, either written or oral, between or among the parties with respect to the subject matter hereof which are not set forth in this Agreement . IN WITNESS WHEREOF the parties hereto have executed this Agreement the day and year first mentioned above. NEVADA MANHATTAN MINING, INCORPORATED ("Nevada") ----------------------------------- Purchaser / Director By: --------------------------------------- Christopher D. Michaels, President/CEO 3 7 STOCK OPTION AGREEMENT FOR DIRECTOR OPTION TO: STANLEY J. MOHR DATE: JUNE 1, 1993 FOR: ONE HUNDRED THOUSAND (100,000) SHARES AT: $0.10 PER SHARE UNTIL: MAY 31, 2003 COST: $10,000 THIS STOCK OPTION AGREEMENT is made the 1st day of June, 1993, by and between Nevada Manhattan Mining, Incorporated (herein" Nevada"), a Nevada Corporation with its principal office at 5038 N. Parkway Calabasas, Suite 100, Calabasas, California 91302 and Stanley J. Mohr, whose address is 4738 Walleta Way, Las Vegas, Nevada 89119, (hereafter "Purchaser/Director"). WITNESSETH WHEREAS, Nevada is empowered by resolution of its Board of Directors to provide common stock options to each Nevada Manhattan Mining, Incorporated Director following each year of service as a Director for the Corporation; and WHEREAS, Purchaser/Director is desirous of purchasing an option to buy a quantity of the common shares of Nevada (said shares being restricted and not tradable until some future date); NOW THEREFORE, it is mutually agreed by and between the parties hereto as follows: 1. GRANT OF OPTION. The Company desires to grant Optionee a stock option on the terms and conditions of this Agreement subject to the terms and conditions set forth in this Agreement. 2. RIGHT TO PURCHASE. Nevada hereby grants to Purchaser/Director the right and option to purchase from Nevada up to One Hundred Thousand shares of the Company's unissued shares of its par value common stock at the price of $0.10 per share (may be made in partial payments) for each year of service by Purchaser/Director. For the purposes of this Agreement, "year of service" shall mean each year in which Purchaser/Director serves as a director of Nevada. 3. OPTION FEE. The option fee shall be (not applicable) Dollars ($0.00) payable upon signing of this Agreement. Director's stock options are issued as compensation for each year of service rendered and shall be exempt from option fees. 4. EXERCISE PERIOD. This option may be exercised at any time by the Purchaser/Director on or after the original option date and before the date of expiration. Option expires ten (10) years from date of original issuance. After expiration date this agreement is void and unexercisable. 8 5. NOTICE OF EXERCISE. Optionee shall exercise the option by delivering to the Company, either in person or by certified or registered mail, written notice of election to exercise and payment in full of the purchase price, if applicable, of this Agreement. The Optionee understands and acknowledges the stock represented by these Options may not be issued because they exceed the authorized amount of stock. Therefore, unless some affirmative action by the Board of Directors and/or shareholders to increase the authorized amount or reverse split the stock or some other action is taken part or all of these Options may be invalid. 6. RIGHTS AS SHAREHOLDER. Optionee shall have no rights as a shareholder of the Company with respect to any shares covered by the Option until the date of the issuance of a share certificate for such shares. No adjustment shall be made for dividends (ordinary or extraordinary, whether cash, securities, or other property) or distributions or other rights for which the record date is prior to the date such share certificate is issued. 7. ISSUANCE OF SHARES. Promptly after the Company's receipt of the written notice of exercise provided for in Section 5. above and Optionee's payment in full of the purchase price, the Company shall deliver, or cause to be delivered to Optionee, certificates for the whole number of shares with respect to which the Option is being exercised by Optionee. Shares shall be issued in the name of Optionee or their assignee. Optionee has the right to exercise this Option in full or in partial installments with the right to exercise the remaining portion of the option for any unissued shares prior to the expiration date of the Option. Shares to be issued in minimum blocks of 1,000 shares or if remaining shares are less than 1,000, to issue the total remaining shares. If any law or regulation of the Securities and Exchange Commission or of any federal or state governmental body having jurisdiction shall require the company or Optionee to take any action prior to issuance to Optionee of the shares of common stock of the Company specified in the written notice of election to exercise, or if any listing agreement between the company and any nation securities exchange requires such shares to be listed prior to issuance, the date for the delivery of such shares shall be adjourned until the completion of such action and/or listing. 8. TRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee, Options are transferable to a third party with written authorization as stated in Section 4 (Exercise of Option). In the event of the death of the Optionee any portion of the unexercised option may be exercisable by Optionee's personal representatives, heirs, or legatees by will or the laws of descent and distribution at any time prior to the expiration of the Option. 9. RECAPITALIZATION OR REORGANIZATION OF COMPANY. Except as otherwise provided in this Agreement, appropriate and proportionate adjustments shall be made in the number and class of shares subject to the Option and the exercise price of the Option in the event of a stock dividend (but only on common stock), stock split, reverse stock split, recapitalization, reorganization, merger, consolidation, separation, or like change in the capital structure of the Company. In the event of a liquidation of the company, or a merger, reorganization, or consolidation of the Company with any other corporation in which the Company is not the surviving corporation or the Company becomes a wholly-owned subsidiary of another corporation, the unexercised portion of the Option shall be exercisable in the same proportion, whether in shares or value whichever is greater, as prior to said change in Company structure. To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by the Board of Directors, the determination of which in that respect shall be final, binding, and conclusive. 10. SEVERABILITY. If any term, provision, covenant, or condition of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, or unenforceable for any reason, such invalidity, illegality, or unenforceability shall not affect any of the other terms, provisions, convenants, or conditions of this Agreement, each of which shall be binding and enforceable. 2 9 11. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with the laws of the State of Nevada. 12. ENTIRE AGREEMENT. This Agreement contains the entire understanding between the parties with respect to the subject matter hereof, and supersedes any and all prior written or oral agreements between the parties with respect to the subject matter hereof. There are no representations, agreements, arrangements, or understandings, either written or oral, between or among the parties with respect to the subject matter hereof which are not set forth in this Agreement . IN WITNESS WHEREOF the parties hereto have executed this Agreement the day and year first mentioned above. NEVADA MANHATTAN MINING, INCORPORATED ("Nevada") ----------------------------------- Purchaser / Director By: --------------------------------------- Christopher D. Michaels, President/CEO 3 10 ADDENDUM TO STOCK OPTION AGREEMENT The addendum is made this second day of December, 1996. WHEREAS Nevada Manhattan Mining, Inc. (the "Company") and Stanley J. Mohr ("Mohr") entered into a certain stock option agreement dated June 1, 1993; WHEREAS under the terms of such agreement Mohr was granted a stock option of 10,000 shares per fiscal year of service at the post-reverse split rate of $1.00 per share (after giving effect to such post-reverse split); WHEREAS under the terms of such agreement each option so granted was to expire ten (10) years from the date of the grant; WHEREAS pursuant to resolution of the Board of Directors dated May 14, 1996, the Company agreed to extend all such options through the end of the fiscal year 2006; NOW THEREFORE, in consideration of the foregoing and other good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: (1) All previous grants of stock options granted to Mohr which were set to expire within ten (10) years of the date of the grant are hereby extended to May 31, 2003; (2) In all other respects, the terms and conditions of the stock option agreement shall remain in full force and effect. IN WITNESS WHEREOF THE PARTIES HAVE CAUSED THIS ADDENDUM TO BE EXECUTED AS OF THE DATE HEREOF FIRST HEREINABOVE WRITTEN. NEVADA MANHATTAN MINING, INC. PURCHASER/DIRECTOR: - - ------------------------------------ ------------------------------------- By: Christopher D. Michaels, C.E.O. Stanley J. Mohr 11 STOCK OPTION AGREEMENT FOR DIRECTOR OPTION TO: JEFFREY S. KRAMER DATE: JUNE 1, 1989 FOR: ONE HUNDRED THOUSAND (100,000) SHARES AT: $0.10 PER SHARE UNTIL: MAY 31, 1999 COST: $10,000 THIS STOCK OPTION AGREEMENT is made the 1st day of January, 1989, by and between Nevada Manhattan Mining, Incorporated (herein" Nevada"), a Nevada Corporation with its principal office at 5038 N. Parkway Calabasas, Suite 100, Calabasas, California 91302 and Jeffrey S. Kramer, whose address is 6053 Paseo Canyon, Malibu, CA 90265 (hereafter "Purchaser/Director"). WITNESSETH WHEREAS, Nevada is empowered by resolution of its Board of Directors to provide common stock options to each Nevada Manhattan Mining, Incorporated Director following each year of service as a Director for the Corporation; and WHEREAS, Purchaser/Director is desirous of purchasing an option to buy a quantity of the common shares of Nevada (said shares being restricted and not tradable until some future date); NOW THEREFORE, it is mutually agreed by and between the parties hereto as follows: 1. GRANT OF OPTION. The Company desires to grant Optionee a stock option on the terms and conditions of this Agreement subject to the terms and conditions set forth in this Agreement. 2. RIGHT TO PURCHASE. Nevada hereby grants to Purchaser/Director the right and option to purchase from Nevada up to One Hundred thousand shares of the Company's unissued shares of its par value common stock at the price of $0.10 per share (may be made in partial payments) for each year of service by Purchaser/Director. For the purposes of this Agreement, "year of service" shall mean each year in which Purchaser/Director serves as a director of Nevada. 3. OPTION FEE. The option fee shall be (not applicable) Dollars ($0.00) payable upon signing of this Agreement. Director's stock options are issued as compensation for each year of service rendered and shall be exempt from option fees. 4. EXERCISE PERIOD. This option may be exercised at any time by the Purchaser/Director on or after the original option date and before the date of expiration. Option expires ten (10) years from date of original issuance. After expiration date this agreement is void and unexercisable. 12 5. NOTICE OF EXERCISE. Optionee shall exercise the option by delivering to the Company, either in person or by certified or registered mail, written notice of election to exercise and payment in full of the purchase price, if applicable, of this Agreement. The Optionee understands and acknowledges the stock represented by these Options may not be issued because they exceed the authorized amount of stock. Therefore, unless some affirmative action by the Board of Directors and/or shareholders to increase the authorized amount or reverse split the stock or some other action is taken part or all of these Options may be invalid. 6. RIGHTS AS SHAREHOLDER. Optionee shall have no rights as a shareholder of the Company with respect to any shares covered by the Option until the date of the issuance of a share certificate for such shares. No adjustment shall be made for dividends (ordinary or extraordinary, whether cash, securities, or other property) or distributions or other rights for which the record date is prior to the date such share certificate is issued. 7. ISSUANCE OF SHARES. Promptly after the Company's receipt of the written notice of exercise provided for in Section 5. above and Optionee's payment in full of the purchase price, the Company shall deliver, or cause to be delivered to Optionee, certificates for the whole number of shares with respect to which the Option is being exercised by Optionee. Shares shall be issued in the name of Optionee or their assignee. Optionee has the right to exercise this Option in full or in partial installments with the right to exercise the remaining portion of the option for any unissued shares prior to the expiration date of the Option. Shares to be issued in minimum blocks of 1,000 shares or if remaining shares are less than 1,000, to issue the total remaining shares. If any law or regulation of the Securities and Exchange Commission or of any federal or state governmental body having jurisdiction shall require the company or Optionee to take any action prior to issuance to Optionee of the shares of common stock of the Company specified in the written notice of election to exercise, or if any listing agreement between the company and any nation securities exchange requires such shares to be listed prior to issuance, the date for the delivery of such shares shall be adjourned until the completion of such action and/or listing. 8. TRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee, Options are transferable to a third party with written authorization as stated in Section 4 (Exercise of Option). In the event of the death of the Optionee any portion of the unexercised option may be exercisable by Optionee's personal representatives, heirs, or legatees by will or the laws of descent and distribution at any time prior to the expiration of the Option. 9. RECAPITALIZATION OR REORGANIZATION OF COMPANY. Except as otherwise provided in this Agreement, appropriate and proportionate adjustments shall be made in the number and class of shares subject to the Option and the exercise price of the Option in the event of a stock dividend (but only on common stock), stock split, reverse stock split, recapitalization, reorganization, merger, consolidation, separation, or like change in the capital structure of the Company. In the event of a liquidation of the company, or a merger, reorganization, or consolidation of the Company with any other corporation in which the Company is not the surviving corporation or the Company becomes a wholly-owned subsidiary of another corporation, the unexercised portion of the Option shall be exercisable in the same proportion, whether in shares or value whichever is greater, as prior to said change in Company structure. To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by the Board of Directors, the determination of which in that respect shall be final, binding, and conclusive. 10. SEVERABILITY. If any term, provision, covenant, or condition of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, or unenforceable for any reason, such invalidity, illegality, or unenforceability shall not affect any of the other terms, provisions, convenants, or conditions of this Agreement, each of which shall be binding and enforceable. 2 13 11. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with the laws of the State of Nevada. 12. ENTIRE AGREEMENT. This Agreement contains the entire understanding between the parties with respect to the subject matter hereof, and supersedes any and all prior written or oral agreements between the parties with respect to the subject matter hereof. There are no representations, agreements, arrangements, or understandings, either written or oral, between or among the parties with respect to the subject matter hereof which are not set forth in this Agreement . IN WITNESS WHEREOF the parties hereto have executed this Agreement the day and year first mentioned above. NEVADA MANHATTAN MINING, INCORPORATED ("Nevada") ----------------------------------- Purchaser / Director By: --------------------------------------- Christopher D. Michaels, President/CEO 3 14 ADDENDUM TO STOCK OPTION AGREEMENT The addendum is made this second day of December, 1996. WHEREAS Nevada Manhattan Mining, Inc. (the "Company") and Jeffrey S. Kramer ("Kramer") entered into a certain stock option agreement dated June 1, 1989; WHEREAS under the terms of such agreement Kramer was granted a stock option of 10,000 shares per fiscal year of service at the post-reverse split rate of $1.00 per share (after giving effect to such post-reverse split); WHEREAS under the terms of such agreement each option so granted was to expire ten (10) years from the date of the grant; whereas pursuant to resolution of the Board of Directors dated May 14, 1996, the Company agreed to extend all such options through the end of the fiscal year 2006; NOW THEREFORE, in consideration of the foregoing and other good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: (1) All previous grants of stock options granted to Kramer which were set to expire within ten (10) years of the date of the grant are hereby extended to May 31, 2006; (2) In all other respects, the terms and conditions of the stock option agreement shall remain in full force and effect. IN WITNESS WHEREOF THE PARTIES HAVE CAUSED THIS ADDENDUM TO BE EXECUTED AS OF THE DATE HEREOF FIRST HEREINABOVE WRITTEN. NEVADA MANHATTAN MINING, INC. PURCHASER/DIRECTOR: - - ------------------------------------ ------------------------------------- By: Christopher D. Michaels, C.E.O. Jeffrey S. Kramer 15 STOCK OPTION AGREEMENT FOR DIRECTOR OPTION TO: CHRISTOPHER D. MICHAELS DATE: JUNE 1, 1987 FOR: ONE HUNDRED THOUSAND (100,000) SHARES AT: $0.10 PER SHARE UNTIL: MAY 31, 1997 COST: $10,000 THIS STOCK OPTION AGREEMENT is made the 1st day of June, 1987, by and between Nevada Manhattan Mining, Incorporated (herein" Nevada"), a Nevada Corporation with its principal office at 5038 N. Parkway Calabasas, Suite 100, Calabasas, California 91302 and Christopher D. Michaels, whose address is 876 Ballina Court, Newbury Park, California 91320 (hereafter "Purchaser/Director"). WITNESSETH WHEREAS, Nevada is empowered by resolution of its Board of Directors to provide common stock options to each Nevada Manhattan Mining, Incorporated Director following each year of service as a Director for the Corporation; and WHEREAS, Purchaser/Director is desirous of purchasing an option to buy a quantity of the common shares of Nevada (said shares being restricted and not tradable until some future date); NOW THEREFORE, it is mutually agreed by and between the parties hereto as follows: 1. GRANT OF OPTION. The Company desires to grant Optionee a stock option on the terms and conditions of this Agreement subject to the terms and conditions set forth in this Agreement. 2. RIGHT TO PURCHASE. Nevada hereby grants to Purchaser/Director the right and option to purchase from Nevada up to One Hundred Thousand shares of the Company's unissued shares of its par value common stock at the price of $0.10 per share (may be made in partial payments) for each year of service by Purchaser/Director. For the purposes of this Agreement, "year of service" shall mean each year in which Purchaser/Director serves as a director of Nevada. 3. OPTION FEE. The option fee shall be (not applicable) Dollars ($0.00) payable upon signing of this Agreement. Director's stock options are issued as compensation for each year of service rendered and shall be exempt from option fees. 4. EXERCISE PERIOD. This option may be exercised at any time by the Purchaser/Director on or after the original option date and before the date of expiration. Option expires ten (10) years from date of original issuance. After expiration date this agreement is void and unexercisable. 16 5. NOTICE OF EXERCISE. Optionee shall exercise the option by delivering to the Company, either in person or by certified or registered mail, written notice of election to exercise and payment in full of the purchase price, if applicable, of this Agreement. The Optionee understands and acknowledges the stock represented by these Options may not be issued because they exceed the authorized amount of stock. Therefore, unless some affirmative action by the Board of Directors and/or shareholders to increase the authorized amount or reverse split the stock or some other action is taken part or all of these Options may be invalid. 6. RIGHTS AS SHAREHOLDER. Optionee shall have no rights as a shareholder of the Company with respect to any shares covered by the Option until the date of the issuance of a share certificate for such shares. No adjustment shall be made for dividends (ordinary or extraordinary, whether cash, securities, or other property) or distributions or other rights for which the record date is prior to the date such share certificate is issued. 7. ISSUANCE OF SHARES. Promptly after the Company's receipt of the written notice of exercise provided for in Section 5. above and Optionee's payment in full of the purchase price, the Company shall deliver, or cause to be delivered to Optionee, certificates for the whole number of shares with respect to which the Option is being exercised by Optionee. Shares shall be issued in the name of Optionee or their assignee. Optionee has the right to exercise this Option in full or in partial installments with the right to exercise the remaining portion of the option for any unissued shares prior to the expiration date of the Option. Shares to be issued in minimum blocks of 1,000 shares or if remaining shares are less than 1,000, to issue the total remaining shares. If any law or regulation of the Securities and Exchange Commission or of any federal or state governmental body having jurisdiction shall require the company or Optionee to take any action prior to issuance to Optionee of the shares of common stock of the Company specified in the written notice of election to exercise, or if any listing agreement between the company and any nation securities exchange requires such shares to be listed prior to issuance, the date for the delivery of such shares shall be adjourned until the completion of such action and/or listing. 8. TRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee, Options are transferable to a third party with written authorization as stated in Section 4 (Exercise of Option). In the event of the death of the Optionee any portion of the unexercised option may be exercisable by Optionee's personal representatives, heirs, or legatees by will or the laws of descent and distribution at any time prior to the expiration of the Option. 9. RECAPITALIZATION OR REORGANIZATION OF COMPANY. Except as otherwise provided in this Agreement, appropriate and proportionate adjustments shall be made in the number and class of shares subject to the Option and the exercise price of the Option in the event of a stock dividend (but only on common stock), stock split, reverse stock split, recapitalization, reorganization, merger, consolidation, separation, or like change in the capital structure of the Company. In the event of a liquidation of the company, or a merger, reorganization, or consolidation of the Company with any other corporation in which the Company is not the surviving corporation or the Company becomes a wholly-owned subsidiary of another corporation, the unexercised portion of the Option shall be exercisable in the same proportion, whether in shares or value whichever is greater, as prior to said change in Company structure. To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by the Board of Directors, the determination of which in that respect shall be final, binding, and conclusive. 10. SEVERABILITY. If any term, provision, covenant, or condition of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, or unenforceable for any reason, such invalidity, illegality, or unenforceability shall not affect any of the other terms, provisions, convenants, or conditions of this Agreement, each of which shall be binding and enforceable. 2 17 11. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with the laws of the State of Nevada. 12. ENTIRE AGREEMENT. This Agreement contains the entire understanding between the parties with respect to the subject matter hereof, and supersedes any and all prior written or oral agreements between the parties with respect to the subject matter hereof. There are no representations, agreements, arrangements, or understandings, either written or oral, between or among the parties with respect to the subject matter hereof which are not set forth in this Agreement . IN WITNESS WHEREOF the parties hereto have executed this Agreement the day and year first mentioned above. NEVADA MANHATTAN MINING, INCORPORATED ("Nevada") ----------------------------------- Purchaser / Director By: --------------------------------------- Christopher D. Michaels, President/CEO 3 18 ADDENDUM TO STOCK OPTION AGREEMENT The addendum is made this second day of December, 1996. WHEREAS Nevada Manhattan Mining, Inc. (the "Company") and Christopher D. Michaels ("Michaels") entered into a certain stock option agreement dated June 1, 1997; WHEREAS under the terms of such agreement Michaels was granted a stock option of 10,000 shares per fiscal year of service at the post-reverse split rate of $1.00 per share (after giving effect to such post-reverse split); WHEREAS under the terms of such agreement each option so granted was to expire ten (10) years from the date of the grant; whereas pursuant to the resolution of the Board of Directors dated May 14, 1996, the Company agreed to extend all such options through the end of the fiscal year 2006; NOW THEREFORE, in consideration of the foregoing and other good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: (1) All previous grants of stock options granted to Michaels which were set to expire within ten (10) years of the date of the grant are hereby extended to May 31, 2006; (2) In all other respects, the terms and conditions of the stock option agreement shall remain in full force and effect. IN WITNESS WHEREOF THE PARTIES HAVE CAUSED THIS ADDENDUM TO BE EXECUTED AS OF THE DATE HEREOF FIRST HEREINABOVE WRITTEN. NEVADA MANHATTAN MINING, INC. PURCHASER/DIRECTOR: - - ------------------------------------ ------------------------------------- By: Jeffrey S. Kramer, C.O.O. Christopher D. Michaels EX-10.(XIX) 5 EXHIBIT 10.(XIX) 1 EXHIBIT 10(XIX) ADDENDUM AGREEMENT This Addendum Agreement (hereinafter referred to as "AA") is made and entered into on this 26th day of January, 1997 by and between: 1. MAXWELLS ENERGY & METALS TECHNOLOGY LTD. (hereinafter referred to as "MAXWELLS"), a corporation organized under the laws of the Commonwealth of the Bahamas, and having registered offices in the Bahamas and representative offices in Singapore, and is represented in this AA by its President Director, William Chan; and 2. NEVADA MANHATTAN MINING INC. (hereinafter referred to as "NEVADA"), a corporation organized under the laws of the state of Nevada, and having offices at 5038 North Parkway Calabasas, Suite 100, Calabasas, CA 91302, and is represented in this AA by its Chairman/CEO, Christopher Michaels. Whereas Maxwells and Nevada entered into a Principles of Agreement in August 1996 for the development, exploration, and exploitation of a 10,000 hectare gold concession in Kalimantan, Indonesia. Per the terms of said Agreement, the Parties agreed that Maxwells may substitute a like gold concession mutually acceptable by both Parties. Under the terms of this AA, the Parties hereby agree to substitute the 10,000 hectare concession (known as the "Abubakar Property") with a new 16,000 hectare concession in East Kalimantan (known as the "Sopang Property") and all other terms and conditions remain the same. The execution of this AA is legal and binding on all Parties, and this AA is ratified by the Board of Directors of both corporations. Executed in South Hampton, Bermuda on this 26th day of January, 1997 by: SIGNATORIES Nevada Manhattan Mining Inc. Maxwells Energy & Metals Technology Ltd. /s/ /s/ Chris Michaels William Chan Chairman & CEO President Director EX-10.(XX) 6 EXHIBIT 10.(XX) 1 EXHIBIT 10(XX) SINGKAMAS AGUNG LTD. ACQUISITION AGREEMENT Whereas this Acquisition Agreement (AA) is made and entered into on this 26th day of January 1997, by and between: 1. SINGKAMAS AGUNG LTD. (hereinafter referred to as "SINGKAMAS"), a corporation organized under the laws of the Bahamas and having representative offices in Singapore. Singkamas is represented in this transaction by William Chan (Chan); and, 2. KALIMANTAN RESOURCES LTD. (hereinafter referred to as "KALIMANTAN"), a corporation organized under the laws of the Commonwealth of the British Virgin Islands, and having registered offices in the Commonwealth of the British Virgin Islands. Kalimantan is a wholly owned subsidiary of Nevada Manhattan Mining Inc. which has a representative office at 5038 North Parkway Calabasas, Suite 100, Calabasas, CA 91302. Kalimantan is represented in the AA by Christopher Michael (CDM) and Jeffrey Kramer (JK). Singkamas and Kalimantan are hereinafter referred to the "PARTIES" to this AA. WITNESSETH I. CONTRACTUAL TRANSACTIONS Whereas Singkamas controls potential gold mining concessions as well as potential coal mining concessions (hereinafter referred to as the "CONCESSIONS") in West and East Kalimantan, Indonesia: GUNUNG SILOBAT (SINGKAWANG) CONCESSION Whereas Singkamas and Kalimantan entered into a "Participation Agreement" dated 21 December 1996 for the exploration and exploitation of the Gunung Silobat Concession, also referred to in the Participation Agreement as the Singkawang Concession, which is located in the Singkawang Region of West Kalimantan, Indonesia. As delineated in the Agreement (which is attached herewith as EXHIBIT I), Singkamas introduced, evaluated, secured, and recommended the Gunung Silobat Concession as well as other potential concessions within this Singkawang 2 gold district to Kalimantan for which consideration will be outlined and described in this Agreement. Following Singkamas' efforts to introduce, secure, and recommend the Gunung Silobat Concession and others to Kalimantan, Kalimantan through its local Indonesian nominee company which it controls (hereinafter referred to as "PT DUTA SENA RAHAYU")-acquired the rights to the government mining authorizations held by PT Kajiwahidah Mandiri (hereinafter referred to as "KAJIWAHIDAH") for the exploration and exploitation of the 62-hectare Gunung Silobat Concession and, potentially, the immediate surrounding areas by expanding the current exploitation license. At the time of the signing of the "Transfer Agreement" dated 21 December 1996 between Kajiwahidah and PT Duta, Kajiwahidah controlled several valid government licenses, one known as a Kuasa Pertamabangan Expoitasi (KPE) for the exploration and exploitation of gold metals on the Gunung Silobat Concession, and another license known as a Kuasa Pertambangan Pengangkutan Dan Penjualan for the transport and sale of gold from the Concession. Furthermore, Kajiwahidah represented that it could expand its exploitation licenses to include 62 hectares. For any new areas of land beyond those delineated above, Kajiwahidah agreed to use its best efforts to obtain additional concession, either through blocking land at the Dept. of Mines and Energy or by seeking cooperations and/or acquisitions of other KPEs. In any event, Singkamas is prepared to use its best abilities to assist Kalimantan/Duta in achieving its objectives for expanding its concession. As described in the Transfer Agreement, Kajiwahidah agreed to transfer its' 100% interest and/or it's effective control in the Gunung Silobat Concession to Duta as well as its' rights to the Government Licenses for the exploration, exploitation, transport, and sale of gold minerals on the Concession. As part of the development, exploration/exploitation, and further investigation/exploration of the Concession, the Parties have already initiated a site survey in December 1996 and sample testing (via test pits) of the Concession and surrounding areas. The survey team which traveled to the Concession consisted of members of Kalimantan's executive board, professional geologists from Indonesia, and an expert consultant from Behre Dolbear & Co. which is an internationally renown mining consulting company. Although the surveys were important, the results from the laboratories indicate that the Concession does reside within a gold mineralization zone and that its' potential value is great (See Geologists/Laboratory Reports in EXHIBIT II). Because of the outstanding potential for gold reserves in the Singkawang Region and, especially, for the surrounding land/hills contiguous with the Gunung 3 Silobat Concession, Singkamas will continue to introduce, evaluate, secure, and recommend additional concessions to Kalimantan and/or Duta. The Parties already believe that they have identified potential gold mining concessions which are contiguous with Gunung Silobat and can expand their rights to explore and exploit gold metals within this Singkawang Region from 62 hectares up to approximately 15,000 hectares and beyond. THREE (3) COAL CONCESSIONS Whereas Singkamas has completed the acquisition of three (3) potential coal mining concessions (hereinafter referred to as the "Concessions") which reside in a widely recognized coal mineralization zone in East Kalimantan. These Concessions consist of approximately 280,000 hectares (or 700,000) acres. Concession I consists of approximately 109,900 hectares; Concession II consists of approximately 104,700 hectares; and Concession III consists of approximately 71,420 hectares. Singkamas negotiated the acquisition of these 3 concessions in December 1996 and executed the written agreements on January 7, 1997 through a series of "Development Agreements" between Singkamas and the PT Andhika Group of Companies (hereinafter referred to as "ANDHIKA"). The Development Agreements and all relevant data in respect of concession information and government filings and licenses/approvals are attached herewith in EXHIBIT III. Per Andhika's official government filings with the Dept. of Mines & Energy, the 3 coal concessions are to be developed, explored and, later, exploited under the Contract of Work ("COW") scheme. Under the terms of the Development Agreements with Singkamas, it was agreed between the Parties that Andhika would be responsible for obtaining all necessary government licenses and, most importantly, the COW, for the development, exploration, and exploitation of coal from the 3 concessions; furthermore, Andhika would seek all necessary government licenses related to the transport and sale of coal produced from the Concessions. Under the terms of the Development Agreements, Singkamas would receive a 77.5% participation and interest in each of the 3 coal mining concessions and would provide certain development funding and other mining and management expertise. The specific terms of funding as well as consideration which is to be paid to Andhika is accurately described in the Development Agreements which are attached herewith in Exhibit III. The Parties agreed that Singkamas would be entitled to appoint a third party (such as Kalimantan and/or its' local Indonesian nominee company) to accept a transfer of the COWs and other relevant government licenses in respect of the 3 coal mining concessions. 4 The Parties agree that any additional information, points of agreement, and/or amendments in respect of the Gunung Silobat Concession and the 3 Coal Concessions will be attached to this Acquisition Agreement as ADDENDUMS. In the event that Andhika is unable to perform the required obligations and responsibilities with respect to government licenses and, in particular, the COWs, Kalimantan/Nevada (with the assistance of Singkamas as necessary) has a first right to step in with respect to any and all title issues, and to cure or effect as needed. This may adjust required payments for said properties at the sole expense of sellers. Whereas KALIMANTAN is a wholly-owned subsidiary company of Nevada Manhattan Mining Inc. (hereinafter referred to as "NEVADA") which currently operates gold mining concessions in the state of Nevada. Kalimantan has the desire, interest, and ability to acquire and finance the exploration, development and exploitation of the Gunung Silobat/Singkawang Concession, and the Three (3) Coal Concessions (hereinafter referred to as the "TRANSACTIONS"). Kalimantan/Nevada has already begun its' due diligence process to verify the values on the Concessions. II. CONSIDERATION FOR THE TRANSACTION Under the terms of this Acquisition Agreement for the gold and coal concessions, the Parties agree on the following for the development, exploration, and exploitation of the Concessions: Whereas Singkamas will merge 51% control and interest in each of the Concessions in to Kalimantan for the following terms, conditions, and consideration: 1. Kalimantan's parent company, Nevada, will issue common shares of Nevada's Common Stock to Singkamas on the following basis: Four Million (4,000,000) Shares of Nevada's Common Stock will be issued to Singkamas: Two Hundred Thousand (200,000) shares of which will be issued with Piggy-back registration rights upon the signing of this AA as a signing bonus; and the balance of Three Million Eight Hundred Thousand (3,800,000) shares of Common Stock to be issued upon an independent economic valuation of the Properties commensurate with industry standards to no less than USD$40,000,000 or like value. Twenty-five percent (25%) of the 3.8 million shares referenced above will have Piggy-back registration rights. 5 2. Cash payment(s) of approximately USD$6,000,000, commensurate with Singkamas' obligations per its Development Agreements with Andhika, which is to be finalized and paid at a date to be determined by the Parties, will be assumed by Kalimantan/Nevada, after the results from the gold and coal concessions are completed by Kalimantan/Nevada in the above referenced economic valuations. Any additional cash payments are to be discussed at a later date as necessary. 3. Exploration Program & Board Representation (a) Kalimantan must commence exploration on the Concessions within 6 months but not later than 12 months from the execution of this AA. (b) Singkamas will be entitled to Board representation of Nevada's Board of Directors. 4. Default Provisions (a) Kalimantan/Nevada, Christopher Michaels & Jeffrey Kramer shall be deemed "key men" to this transaction; and any change in corporate management without the express written consent of Singkamas shall be deemed a default and the gold and coal concessions shall revert back to Singkamas at no cost. (b) In the event that Kalimantan/Nevada is unable to complete the development of any of the above concessions, it is mutually agreed by the Parties that its interests shall be prorated under some mutually agreed formula. 5. Singkamas reserves the right to substitute or add other gold or coal mining concessions or like potential value with the approval of Kalimantan/Nevada. 6. Voting Trust: Singkamas will vote its shares in favor of management as long as CDM and JK are executives of Kalimantan/Nevada. 7. All exploration, operating, and budgetary costs to effectuate the Company's due diligence and development of the Concessions will be 100% undertaken by Kalimantan and/or Nevada and will be fully recoupable prior to any distribution of profits. 6 8. It is understood that this agreement and all compensation agreed hereto by both parties above holds true throughout any and all Kalimantan subsidiaries and spin-off public companies that may arise through any corporate structure reorganization. 9. Singkamas will use its best efforts and good faith to fully cooperate with Kalimantan/Nevada to succeed, especially in Indonesia. 10. Other Consideration(s) a) Kalimantan/Nevada will have a first right of refusal to acquire Singkamas' 26.5% interest in these gold and coal concessions at terms to be mutually agreed upon by the Parties. b) Kalimantan/Nevada will have a first right of refusal to acquire any additional concessions or properties which Singkamas may make available or control. The execution of this AA is legal and binding on all Parties, and this Agreement is ratified by the Board of Directors of both corporations. Executed in South Hampton, Bermuda on this 26th day of January 1997 by: SIGNATORIES Nevada Manhattan Mining, Inc. and Kalimantan Resources Ltd. Singkamas Agung Ltd. /s/ /s/ Name: Christopher Michaels Name: William Chan Title: Chairman/CEO Title: President Director /s/ /s/ Name: Jeffrey Kramer Name: Graham Mawer Title: President Title: Asst. Food & Beverage Manager 7 EXHIBIT I: PARTICIPATION AGREEMENT BETWEEN KALIMANTAN AND SINGKAMAS 8 PARTICIPATION AGREEMENT This PARTICIPATION AGREEMENT (this "Agreement") is made and entered into as of the 21st day of December 1996 by and between: KALIMANTAN RESOURCES, LTD., a corporation duly organized and validly existing under the laws of the British Virgin Islands (hereinafter referred to as "Kalimantan"); and SINGKAMAS AGUNG LTD., a limited liability company duly organized and validly existing under the laws of the Bahamas (hereinafter referred to as "Singkamas"). Kalimantan and Singakamas are also hereinafter referred to as the "Parties". WITNESSETH WHEREAS, Singkamas has evaluated, secured and recommended and introduced PT Duta Sena Rahayu to the opportunity to acquire all of the mining authorizations ("Kuasa Pertambangan" or "KP") and interest currently held by PT Kajiwahidah Mandiri in respect of an area of West Kalimantan Indonesia registered as KP DU 480/Kalbar (which mining authorizations are hereinafter referred to as the "KP's"); WHEREAS, the shareholders of PT Duta Sena Rahayu have entered into a Cooperation Agreement of even date herewith whereby, for certain agreed consideration, they have agreed to hold the shares of PT Duta Sena Rahayu for the benefit of Kalimantan; WHEREAS, in consideration of the effort devoted by Singkamas to create the opportunity for the acquisition of the KP's by PT Duta Sena Rahayu, Kalimantan has agreed to grant Singkamas a participation in the commercial benefits derived by Kalimantan in respect of the KP's as set forth more fully herein; NOW, THEREFORE, the Parties hereto do hereby agree as follows: 1. SCOPE OF PARTICIPATION Kalimantan agrees that it shall grant to Singkamas a participation in the net profits to be derived from the exploitation of the mining areas described in the KP's and/or other equity participation, in a percentage and on detailed terms and conditions to be determined later in good faith. 9 2. SINGKAMAS CONSULTATION RIGHTS Kalimantan hereby undertakes that it shall not make any transfer, either directly or indirectly, of any legal or beneficial interest it may have in the KP's and/or in PT Duta Sena Rahayu, or make any assignment for security purposes or otherwise of such interest, without the prior written consent of Singkamas which shall not be unreasonably withheld. 3. LOSS SHARING In the even that the project described herein results in a loss requiring additional capital or financial assistance from Kalimantan, Singkamas agrees to share such loss on a pro rata basis in proportion to the participation percentage agreed to pursuant to section 1 of this Agreement. 4. GOVERNING LAW This Agreement shall be governed by and interpreted in accordance with the laws of the State of California, United States of America, without reference to its rules concerning choice of law. IN WITNESS WHEREOF, the Parties hereto do hereby agree as follows: KALIMANTAN RESOURCES LTD. SINGKAMAS AGUNG LTD. By: /s/ by: /s/ Name: Name: Title: Title: 10 EXHIBIT II: GEOLOGISTS' REPORT FOR GUNUNG SILOBAT 11 PETROLOGY OBSERVATION IN THE VICINITY OF THE MOUNT SILOBAT OF GOLD PROSPECT AREA, SINGKAWANG WEST KALMANTAN ---------------------------------------- Based on the previous investigation and core drilling data, as well as the recent observation in the vicinity of Mount Silobat can be stated that the types of rock occupying this area generally consist of metasediment of shale and slate intruded by igneous rock of quartz diorite which is partly younger, and belong to the upper cretaceous and followed by hydrothermal processes effecting the host rock of quartz diorite. It * indicated by the presence of supergene and hypogene alteration distributed throughout this area. Supergene alteration is locally present at and near the surface and its intensity gradually decreases to down. It there gives way to hypogene alteration or is separated by a zone of fresh rock from active hypogene alteration at still greater depth. CHARACTERISTIC OF SUPERGENE AND HYPOGENE ALTERATIONS The supergene alteration in this area is characteristic by clayey materials and silica mixed with the hydrated iron oxides. The hydrated iron oxides possibly result from alteration of accessory magnetite. No sulphate mineral has been found among the supergene minerals produced by down-ward-percolating sulphuric acid solution. It indicated by the absence of sulphide ferro minerals, such as pyrite. The product of supergene alteration can be classified as laterite soil which is distributed and almost cover the whole area, with thickness possibly more than 6 metres. It can be predicted from the one of escarpment near the Pool. A having a height about of 6 metres. the lower part of the supergene alteration possibly occupied by supergene enrichment zone which commonly has a breccia texture with fragments of slightly fresh quartz diorite and metasediment of slate, and it cementing materials commonly consist of iron 12 rich bearing clayey materials, fine grained quartz and feldspar. The ore minerals trapped in this zone are generally secondary copper sulphides, such as; azurite and malachite with a pervasive goethite and jarosite assemblage. It indicates the possible former presence of chalcopyrite, possibly as an interstitial mineral. The underlying of supergene enrichment is commonly appeared a hypogene alteration zone consisting of argillic, phyllic, propylitic, and potassic alterations subsequently. In this area, the indication of potassic alteration has not been encountered yet. So that, the temperature of hydrothermal solution commonly does not exceed 240 degrees C (A. Steiner, 1977). A relatively small increase in temperature above 230 degrees C is thus significant factor controlling the stability of Na-Ca plagioclase and also the formation of epidote. PETROGRAPHY AND MINERAGRAPHY SUMMARY LATERITIC ZONE This zone almost occupies the whole prospect area with more than 6 metres thick. Petrographycally, the type of materials consist of iron rich bearing clayey materials with yellowish to reddish brown in colour; fine grained quartz, feldspar, magnetite, ilmenite, limonite and frequently also consist of rock fragments of strongly weathered quartz diorite, metasediment and secondary quartz of chalcedony containing reddish brown iron oxides, as well as containing predominantly fine to coarse grained gold. It can be carly after panning processes. SUPERGENE ENRICHMENT ZONE Indication of the presence possibly the supergene enrichment zone is observed from the one of sample composed of secondary quartz associated with ore materials, such as; pyrite, chalcopyrite, fine grained gold as inclusion in pyrite, illite, and malachite, as well as azurite showing greenish and bluish in colour. The second 13 both minerals belong to secondary copper sulphides (Sample. Das.1). The copper deposit enrichment probably can be expected in this zone, and grade content of gold possibly slightly decrease. ARGILLIC ZONE The argillic zone can be predicted from the sample no. DAS.5. The type of rock is quart diorite composed of plagioclase which is partly altered and replaced by clay materials, and also ferromagnesian minerals consisting of hornblends and biotite are partly altered and replaced by chlorite and isotropic Fe-Ti oxides. This alteration belong to low alteration and the intensity of alteration can be classified into partial or medium alteration due to partly altered primary constituents, The ore minerals present as pyrite. The formation temperature of above hydrothermal minerals possibly ranged between < 100 degrees C to 150 degrees C (Gregg.j.Corbett at.allergy, 1995), PHYLLIC ZONE The phyllic zone is characterized by the sample (DAS,2; DAS.6) of quartz diorite having a high intensity due to the primary constituents of plagioclase and ferromagnesian minerals (hornblende and biotite) completely altered and replaced by hydrothermal minerals, such as; interlayered illite-smectite, illite, well crystalline fine grained mica (sericite), coarse crystalline white mica, and chlorite, Fe-Ti oxides. The both later minerals are the product of altered ferromagnesian minerals. Based on the sequence of above altered minerals, possibly can be predicted that the hydrothermal solution temperature effecting this host rock has a large range temperature from 150 degrees C to maximum of 250 degrees C (Gregg.j.Corbett and Terry Leach, 1995). PROPYLITIC ZONE The evidence showing the propylitic alteration can be observed from the sample (DAS.4) composed of secondary quartz as quartz vein, micaceous clay minerals which are further enriched in 14 interlayered illite, fine grained calcite, chlorite and epidote. These minerals possibly derived from altered plagioclose and ferromagnesias minerals. The ore minerals occur in this sample is mainly pyrite, less chalcopyrite and very fine grained gold as inclusion in pyrite. The formation temperature of above hydrothermal minerals, mainly epidote is ranged from 220 degrees c -230 degrees C and commonly does not exceed 240 degrees C (A. Steiner, 1977). Thus, the porpilitic zone occurred in between or overlapping with phyllic zone having maximum temperature of about 250 degrees C, possibly close to the potassic zone which is not encountered at the surface manifestation. To ensure the sequence of alteration zone, the author proposes to be drilled at the location close to the Test.Pit no:2; in between Test.Pit 5 and 7; no.8; no.6; in between Test.Pit 10 and 11; no 18 and no.15 (7 drill holes) with average depth of about 200 metres. Thus, total depth is about 1500 metres. 15 [MAP] Profile sketch of an inferredevolution of the Quartz Diorite pluton affected by hydrothermal alteration associated with god deposit in the Silobat prospect area, Singkawany, West - Kalimantan. 16 MINERALOGICAL ANALYSIS EQUIPMENT - - - Electronic balance with sensitivity of 10-5 gram. - - - Frantz Isodynamic. - - - Heavy liquid with specific gravity of more than 3.8. - - - Small plastic bag. - - - Brush. - - - Drying oven. METHOD OF ANALYSIS - - - Each concentrate sample should be dried in drying oven, in order to get the samples free from the water content. - - - Each sample is weighed and separated into magnetic and non magnetic fractions using Frantz Isodynamic. - - - Each fraction is weighed to get the weight procentage either to the concentrate or the original sample (before panning). - - - Gold grains will be easily separated. - - - Each fraction is ready to describe under the binocular microscope, after separating using the heavy liquid. MINERALOGICAL ANALYSIS Each fraction mainly non magnetic minerals describe under the microscope by means of counting the total grains of identified minerals and multifid with their specific gravity to get the weight procentage to the concentrate and to the original sample. Thus, the weight of each fraction be easily counted. The result of mineralogical are closed. From the 19 Test.Pit consist of 12 Test.Pit with grade content of gold ranged 30.375 gr/ton to 261.400 gr/ton and 4 Test,Pit have grade range 0.288 gr/ton to 6.0990 gr/ton and 3 Test.Pit are barren or possibly trace. 17 MINERALOGICAL ANALYSIS OF PAN CONCENTRATE OF THE TEST PIT SAMPLES FROM THE SILOBAT PROSPECT AREA, SINGKAWANG, WEST KALIMANTAN PREPARED BY : KARDANA HARDJADINATA
ems Test pit Depth Weight of weight of Pan Weight identified mineral (gr) Sample concentrate No m (kg) Weight of Weight of Magnetite Ilmenite Limonite Magnetic Non Mineral Magnetic (gr) mineral 1 2 3 4 5 6 7 8 9 1. SL. 01 0.0-10 5.0 0.4948 0.6682 0.4848 0.0234 0.0354 1.0-2.0 3.0 0.3970 0.5952 0.3970 0.0208 0.0315 2.0-3.0 1.7 0.3842 0.71169 0.3842 0.0773 0.0702 3.0-3.5 1.6 0.4296 0.5490 0.4296 0.0176 0.0269 2. SL. 02 0.0-10 2.0 0.3862 0.4736 0.3862 0.0587 0.0706 1.0-2.0 1.7 0.3843 0.4482 0.3862 0.0021 0.0157 2.0-3.0 1.3 0.4109 0.7261 0.4109 0.0378 0.2614 3.0-4.0 1.5 0.3367 0.6766 0.3367 0.0622 0.3112 4.0-4.5 1.5 0.4170 1.5626 0.4170 0.1594 0.6766 3. SL. 03 0.0-10 3.0 0.4650 1.5980 0.4650 0.1998 0.5993 1.0-2.0 1.8 0.4447 3.0720 0.4447 0.8942 1.9040 2.0-3.0 1.7 0.4500 1.8891 0.4500 0.1054 1.6155 3.0-4.0 2.0 0.4492 1.3845 0.4492 0.0982 1.1680 4. SL. 04 0.0-10 1.9 2.0889 0.1888 2.0889 0.0138 0.0276 1.0-2.0 1.7 2.1095 0.2279 2.1095 0.0080 0.0239 2.0-3.0 2.2 3.5243 0.1451 3.5243 0.0136 0.0044 3.0-4.0 2.2 7.8145 0.3360 7.8145 0.0276 0.0091 4.0-4.5 1.9 2.0886 1.3845 2.0886 0.0117 0.0011 5. SL. 05 0.0-10 2.1 0.1216 1.5572 0.1216 0.4858 0.2912 1.0-2.0 2.1 0.0776 0.4591 0.0773 0.0437 0.1377 greater than 2.0 2.1 0.0096 0.1508 0.0096 0.0042 0.0016
18
Weight of ems Test pit Depth Sample Quartz Feldspar Pyrite Gold Gold Contents No m (kg) (gr/ton) 1 2 3 4 10 11 12 13 14 1. SL. 01 0.0-10 5.0 0.2359 0.0788 0.0009 0.2939 58.7800 1.0-2.0 3.0 0.2101 0.0702 - 0.2626 87.5333 2.0-3.0 1.7 0.4317 0.0938 - 0.0430 25.2941 3.0-3.5 1.6 0.0447 0.0146 - 0.4452 278.2500 2. SL. 02 0.0-10 2.0 0.1094 0.0393 - 0.1956 97.8000 1.0-2.0 1.7 0.0015 0.0013 - 0.4276 251.5294 2.0-3.0 1.3 0.0319 0.0378 - 0.3572 274.7692 3.0-4.0 1.5 0.0832 0.0625 - 0.1575 105.0000 4.0-4.5 1.5 0.1922 0.1438 - 0.3906 260.4000 3. SL. 03 0.0-10 3.0 0.3996 0.3897 - 0.0096 3.2000 1.0-2.0 1.8 0.1458 0.1277 - 0.0003 0.1667 2.0-3.0 1.7 0.0942 0.0740 - - - 3.0-4.0 2.0 0.0751 0.0432 - - - 4. SL. 04 0.0-10 1.9 0.0415 0.0208 - 0.0851 44.7895 1.0-2.0 1.7 0.0479 0.0203 - 0.1278 75.1765 2.0-3.0 2.2 0.0302 0.0061 - 0.0908 41.2727 3.0-4.0 2.2 0.0551 0.0124 - 0.2318 105.3636 4.0-4.5 1.9 0.0075 0.0018 - 0.1666 87.6842 5. SL. 05 0.0-10 2.1 0.6478 0.1231 - 0.0093 4.4286 1.0-2.0 2.1 0.0597 0.0367 - 0.1813 86.3333 greater than 2.0 2.1 0.0042 0.0016 - 0.1293 69.6500
19
1 2 3 4 5 6 7 8 9 6. SL. 06 00.-10 2.0 0.335 0.3243 0.0335 0.0221 0.0012 1.0-2.0 2.0 0.4501 0.6795 0.4501 0.0325 0.0020 2.0-3.0 2.0 0.4544 0.5972 0.4544 0.0102 0.0045 3.0-4.0 2.0 0.3715 0.3398 0.3715 0.0054 0.0023 greater than 40 2.0 0.4485 0.9440 0.4485 0.0902 0.0043 7. SL. 07 0.0-0.5 2.0 3.3081 0.4749 3.3081 0.0069 0.0194 05.5-1.5 2.0 2.3043 0.1259 2.3043 0.0214 0.0022 1.5-2.5 2.0 2.7146 0.1205 2.7146 0.0105 0.0048 greater than 2.5 2.0 3.3528 0.7626 3.3528 0.0201 0.0009 8. SL. 08 0.25-1.25 2.0 0.0343 0.7280 0.0343 0.1042 0.0114 1.25-2.25 2.0 0.0319 1.6885 0.0319 0.8430 0.0142 2.25-3.25 2.0 0.3964 1.5698 0.3964 0.4321 0.0201 greater than 3.25 2.0 0.4066 1.1799 0.4066 0.5431 0.0290 9. SL. 09 0.0-10 2.0 1.5859 0.2211 1.5859 0.1020 0.0104 1.0-2.0 2.0 2.1004 0.3300 2.1004 0.1542 0.0226 2.0-3.0 2.0 1.5434 0.2154 1.5434 0.0964 0.0482 greater than 3.0 2.0 1.4402 0.2336 1.4402 0.0102 0.0092 10. SL. 10 0.0-10 2.0 0.4643 0.9839 0.4643 0.6230 0.0502 1.0-2.0 2.0 0.0548 1.5171 0.0548 0.9843 0.0320 2.0-3.0 2.0 0.0682 1.6546 0.0682 0.9578 0.2340 greater than 30.0-10 2.0 0.9314 0.6035 0.9314 0.2983 01530 1.0-2.0 11. SL. 11 2.0-3.0 2.0 2.6405 0.2272 2.6405 0.2012 0.0052 greater than 3.0 2.0 2.6553 0.1219 2.6553 0.0942 0.0080 .0 2.0 5.8222 0.4176 5.8222 0.1832 0.0280 2.0 6.9779 0.4710 6.9779 0.1908 0.210 12. SL. 12 0.0-10 2.0 0.1344 1.1514 0.1344 0.1201 0.7832 1.0-2.0 2.0 0.1017 0.1673 0.1017 0.0533 0.0784 2.0-3.0 2.0 0.1182 0.6428 0.1182 0.2104 0.2938 greater than 3.0 2.0 0.0648 0.2095 0.0648 0.1203 0.0209 13. SL. 13 0.0-10 2.0 0.2001 0.1387 0.2001 0.1028 0.0058 1.0-2.0 2.0 0.0723 0.2834 0.0723 0.1215 0.0016 2.0-3.0 2.0 0.0832 0.1590 0.0832 0.1138 0.0311 greater than 3.0 2.0 0.0695 0.0577 0.0695 0.1010 0.0078
20
1 2 3 4 10 11 12 13 14 6. SL. 06 00.-10 2.0 0.0145 0.0023 - 0.2842 142.1000 1.0-2.0 2.0 0.0195 0.0015 - 0.640 312.000 2.0-3.0 2.0 0.0110 0.0010 - 0.5703 285.1500 3.0-4.0 2.0 0.0101 0.0010 - 0.3210 160.5000 greater than 40 2.0 0.0201 0.0049 - 0.8145 407.2500 7. SL. 07 0.0-0.5 2.0 0.4201 0.0385 - - - 05.5-1.5 2.0 0.0148 0.0030 - 0.0845 42.2500 1.5-2.5 2.0 0.0112 0.0022 - 0.0918 45.9000 greater than 2.5 2.0 0.0390 0.0008 - 0.7018 350.9000 8. SL. 08 0.25-1.25 2.0 0.5104 0.1020 - - - 1.25-2.25 2.0 0.4501 0.1870 - - 97.1000 2.25-3.25 2.0 0.8102 0.1172 - 0.0482 85.1000 greater than 3.25 2.0 0.2986 0.1047 - 0.1948 102.2500 9. SL. 09 0.0-10 2.0 0.0985 0.0102 - - - 1.0-2.0 2.0 0.1012 0.0520 - - - 2.0-3.0 2.0 0.0120 0.0106 - - 24.1000 greater than 3.0 2.0 0.146 0.0050 - - 97.4000 10. SL. 10 0.0-10 2.0 0.2904 0.0203 - - - 1.0-2.0 2.0 0.3908 0.1100 - - - 2.0-3.0 2.0 0.3601 0.1027 - - - greater than 30.0-10 2.0 0.1201 0.0321 - - - 1.0-2.0 11. SL. 11 2.0-3.0 2.0 0.0185 0.0018 0.0004 - - greater than 3.0 2.0 0.0386 0.0010 0.0001 - - .0 2.0 0.2012 0.0050 0.0002 - - 2.0 0.2501 0.0090 0.0001 - - 12. SL. 12 0.0-10 2.0 0.2173 0.0308 - - - 1.0-2.0 2.0 0.0301 0.0048 - - - 2.0-3.0 2.0 0.0986 0.0400 - - - greater than 3.0 2.0 0.0520 0.0140 - 0.0023 1.1500 13. SL. 13 0.0-10 2.0 0.0287 0.0012 0.0002 - - 1.0-2.0 2.0 0.0710 0.0093 - - - 2.0-3.0 2.0 0.0128 0.0012 0.0801 - - greater than 3.0 2.0 0.0002 - - 0.0487 24.3500
21
1 2 3 4 5 6 7 8 9 14. SL. 14 0.0-10 2.0 0.1202 0.6190 0.1202 0.2830 0.1248 1.0-2.0 2.0 0.0878 0.6274 0.0878 0.1485 0.3218 2.0-3.0 2.0 0.0745 0.9391 0.0745 0.1512 0.6152 3.0-4.0 2.0 0.0759 1.6227 0.0759 0.1920 1.1503 greater than 4.0 2.0 0.0862 0.4985 0.0862 0.1012 0.3201 15. SL. 15 0.0-10 2.0 2.0595 0.5193 2.0595 - 0.0015 1.0-2.0 2.0 2.4674 0.8257 2.4674 0.4321 0.0074 2.0-3.0 2.0 0.5547 0.2668 0.5547 0.1832 0.0129 greater than 3.0 2.0 0.2721 0.1228 0.2721 - - 16. SL. 16 0.0-10 2.0 0.2993 0.0431 0.2993 0.0102 0.0098 1.02-2.0 2.0 1.0106 0.5073 1.0106 0.0328 0.0210 2.0-3.0 2.0 1.5477 0.1004 1.5477 0.0098 0.0085 greater than 3.0 2.0 2.0107 0.0723 2.0107 0.0021 0.0012 17. SL. 17 0.0-10 2.0 2.8179 0.1205 2.8179 0.0183 0.0039 1.0-2.0 2.0 1.5055 0.1028 1.5055 0.0210 0.0019 2.0-3.0 2.0 1.9556 0.0771 1.9556 0.0098 0.0020 3.0-3.5 2.0 2.1690 0.1658 2.1690 0.0231 0.0078 greater than 3.5 2.0 1.6509 0.2003 1.6509 0.0208 0.0094 18. SL. 18 0.0-10 2.0 0.8541 0.1186 0.8541 0.0010 0.0009 1.0-2.0 2.0 1.4178 0.1489 1.4178 0.0001 0.0001 2.0-3.0 2.0 2.945 0.2398 2.8945 0.0001 0.0001 greater than 3.0 2.0 2.5780 0.0941 2.5780 0.0029 0.0042 19. SL. 19 0.0-10 2.0 0.1807 0.1923 0.1807 0.0942 0.0120 1.0-2.0 2.0 0.0704 0.1545 0.0704 0.0120 0.0098 greater than 2.0 2.0 0.1128 0.3408 0.1128 0.0142 0.0164
22
1 2 3 4 10 11 12 13 14 14. SL. 14 0.0-10 2.0 0.1305 0.0806 0.0001 - - 1.0-2.0 2.0 0.1103 0.0468 - - - 2.0-3.0 2.0 0.1521 0.206 - - - 3.0-4.0 2.0 0.2108 0.0696 - - - greater than 4.0 2.0 0.0612 0.0160 - - - 15. SL. 15 0.0-10 2.0 0.4818 0.0359 0.0001 - - 1.0-2.0 2.0 0.3546 0.0287 0.0015 0.0016 0.8000 2.0-3.0 2.0 0.0521 0.0114 - 0.0072 3.6000 greater than 3.0 2.0 0.1038 0.0088 - 0.0102 5.1000 16. SL. 16 0.0-10 2.0 0.0192 0.0038 0.0001 - - 1.02-2.0 2.0 0.0498 0.0096 - 0.3941 197.0500 2.0-3.0 2.0 0.0165 0.0017 - 0.0639 31.9500 greater than 3.0 2.0 0.0085 0.0007 - 0.0598 29.9000 17. SL. 17 0.0-10 2.0 0.0074 0.0013 0.0002 0.0894 44.7000 1.0-2.0 2.0 0.0147 0.0050 0.0001 0.0601 30.0500 2.0-3.0 2.0 0.0138 0.0013 - 0.0502 25.1000 3.0-3.5 2.0 0.0194 0.0052 - 0.1103 55.1500 greater than 3.5 2.0 0.0236 0.0064 - 0.1401 70.0500 18. SL. 18 0.0-10 2.0 0.0003 - - 0.1164 58.2000 1.0-2.0 2.0 - - - 0.1487 74.3500 2.0-3.0 2.0 - - - 0.2396 119.8000 greater than 3.0 2.0 0.0009 0.0001 - 0.0860 43.0000 19. SL. 19 0.0-10 2.0 0.0294 0.0082 - 0.0485 24.2500 1.0-2.0 2.0 0.0096 0.0016 - 0.1209 60.4500 greater than 2.0 2.0 0.0495 0.0106 - 0.2501 125.0500
AVERAGE OF GOLD CONTENT SL. O1 :112.464 SL. 10 :BARREN SL. 02 :247.375 SL. 11 :BARREN SL. 03 :0.842 SL. 12 :0.288 SL. 04 :70.857 SL. 13 :6.088 SL. 05 :53.471 SL. 14 :BARREN SL. 06 :261.400 SL. 15 :2.375 SL. 07 :109.763 SL. 16 :64.725 SL. 08 :71.113 SL. 17 :45.010 SL. 09 :30.375 SL. 18 :73.838 SL. 19 :69.917
23 [PHOTO] 1). Mikrophotograph of Sample Das. 1, composed of secondary quartz (1-5/A-E;1-6/C-I) associated with ore minerals, such as pyrite (1B/10-11/A-B); chalcopyrite (in between illite) and fine grained gold as inclusion in pyrite (1B) and secondary copper supphides of malachite (6B) and a zurite (6 C) Cross nicol 24 [PHOTO] 2). MIkrophotograph of the sample DAS. 5, which is existed possibly in the urgillic zone characterized by portly altered plagioclase and replaced by clay materials (10-13/A-I) and also hornblende and bictite are commonly alterased and replaced by chlorite and Fe-Ti- oxides (3-4/E-G). The type of rock is altered quartz diorite - Crossnicol 25 [PHOTO] 3). Mirophotograph of the sample DAS 2 consisting of altered plagioclase minerals and replaced by hydrothermal minerals such as : interlayered illite-smectite-illite and will crystalline fine grained sericite. It feromagnesias minerals are also altered and completely replaced by chlorite and Fe-Ti oxides (3-4/D-#). This rock possibly occurred in the low rank of phyllic alteration. Cross nicol. 26 [PHOTO] 4). Mikrophotograph of the sample DAS. 6 of altered quartz diorite with a high rank alteration (advanced phyllic alteration). Characterized by will developed of white mica (muscovite) (1-3/F- I) illite and chlorite as the result alteration from ferro magnesian minerals (hornblende and biotite) (11-13/C-G). Cross nicol. 27 [PHOTO] 5). Mikrophotograph of the sample DAS. 4 Consisting of hydrothermal quartz; fine grained calcite, chlorite and epidoe, as well as ore minerals, such as : pyrite, chelcopyrite and very fine grained gold. This rock possibly occurred in prophylitic zone. Cross nicol 28 [PHOTO] 6). Mikrophotograph of slate composed of fine grained illite, quartz and feldspar shoring a gold lamination. No. alteration at all. Cross nicol 29 [PHOTO] 7). Mikrophotograph of a fresh quartz diorite composed of plagioclase (An38 - An52); quartz, hornblende, biotite less K-feldspar and magnetite or ilminite - Cross nicol. 30 EXHIBIT II GEOLOGICAL REPORT OF THE PROPERTY 31 G. SILUBAT GOLD PROSPECT KALIMANTAN BARAT, INDONESIA L. WHITEHOUSE May ]977. 32 2. INTRODUCTION 2.1. Previous Work The Gunung Silubat area forms part of what was known as the Chinese district of Western Borneo (Kalimantan Barat), encompassing the sub-districts of Sambas, Bengkajang, Pamangkat, Singkawang and mempawah. Consequently it has been subjected to much exploitation by the Chinese since the 1800's. Understandly no records of production have been kept due to tax evasion. From 1935 until the beginning of World War II in 1940, a Dutch company, N.V. Silobat Mijnbouw MIJ. worked the alluvials adjacent to G. Silubat utilising hand labour, hoes and wooden troughs. During this period the amount of gold dug was 63.3 Kg. The three areas worked are now lagoons 1 - 3; 28 acres, 11-1/2 acres and 19 acres in area respectively. In 1968, P.T. Silubat obtained the concession over G. Silubat and began preparations to empty the lagoons as well as hand auger drill many of the adjacent alluvial areas to confirm gold values previously recorded by the geologist working for the previous Dutch company, E. Peters, utilising bangka drills. However, because of the communist insurgency problems in nearby Barawak, in 1969, the Laksus PagKopKamtib closed the area to everyone and during the uprising, all machinery, houses etc. along with all reports and plans were destroyed. 33 In 1971 the area was reopened but because of smashed machinery, lack of funds etc. P.T. Silubat could not continue their previous work. In 1975, Exploration Mining Concession D.U. 305 was awarded to Wahidah Trading and Mining Co. the present K.P. holders. 2.2. Location and Access G. Silubat (109 metres elevation a.s.l.) is located at Longitude 1 degree 1' N and Latitude 109 degrees 12' E in the sub-district of Sambas, Kalimantan Barat. Though only 25 miles due east of the coast, it is separated by densely timbered swampy lowlands. From Pontianak (daily flights from Jakarta), the prospect can be reached in one day and involves a 3 hour road journey (bitumenised high speed road in very good condition) via Mempawah, Singkawang and Pemangkat to Semparuk, thence a 6 hour (more or less depending on type of outboard motor and prow used) journey firstly up to the Sungai Sebangkaw (good for vessels to 50 tons) then approximately 10 kms. up to the narrow vegetation clogged S. Bakun (good for prows less than 1 ton, and subject to periods of low river levels). The G. Silubat area consists of a series of ridges and spurs stemming from G. Silubat over an area 2 km. by 1 km., covered with rubber trees and light rainforest and surrounded by swampy lowlands. Although there is a small kampong in the area, whose source of income is harvesting rubber, it cannot be relied upon for labour (too lazy) or food supplies. It seems feasible to be able to construct a bulldozer tract to G. Silubat from Buduk, 5 kms. away following low rises above the swampy plains and from there, upgrading a disused road from Sebakoawan (10 kms. away). 34 The only other feasible way to bring in heavy machinery would be to dredge the S, Bakun (10 kms. length). Note - in 1968 a 1-1/2 ton jeep was brought to G. Silubat by clearing the vegetation from the banks of this creek. it is anticipated that it would take 100 labourers one month to be able to reclear this creek to be able to repeat such a feat. 2.3. Present Survey The writer along with Moksin Lele, the project officer for Wahidah Trading and Mining Co. and three labourers arrived at the site on Sunday 24th April and spent the next 6 days doing ridge and spur traverses, geologic mapping at a scale of 1:5,000 and digging numerous pits to bedrock. A total of 21 rock chip and 7 stream sediment samples were collected and submitted for assay. Difficulties were encountered with a corrupt army official at G. Silubat and due to the labour having to return before the Election Day, the survey was hurriedly finished on Sunday 1st May. The writer arrived back in Jakarta on Monday 2nd May. 2.4. Land Tenure D.U. 305/KALBAR is held by Decree of the Directorate General of General Mining No. 1696/Sk-DJ/DDP 342/pertamb/1975 and was granted to Fa. Wahidah Trading and Mining Co. on 13/10/75, valid for 3 years and application made for Gold, Silver and its associated metals. 35 3. GEOLOGY 3.1. Rock Types 3.1.1. Siltsonte Where unaltered, this unit is seen as a green-black mudestone/fine siltstone. In one place it resembles a fine-grained basaltic futt. These rocks form the cep rocks to the acid intrusives and it is highly probable that they carry the bulk of the mineralisation in the G. Silubat area. 3.1.2. Quartz-feldspar porphyryr Small prismatic quartz crystals observed in the altered porphyritic saprolite characterise this rock type. These crystals are indicative of a high temperature - subvolcanic origin. Intrusive braccias noted on the margins of this body are also indicative. On the western margin of the prospect, where this unit is most apparent, a fern vegetation anomaly as well as white sand film on top of the soil occurs over an area 400 metres long by 150 metres wide. 3.1.3. Quartz diorite Where relatively unaltered, this rock is seen as a medium grained byer fresh quartz-hornblende diorite with disseminated magnetite and rare disseminated pyrite and traces of chalcopyrite. This unit outcrops over an area 1000 metres by 800 metres as is for the most part latered and mineralised. 36 3.2. Alteration An alteration system is developed at G. Silubat over an area in excess of 2000 metres by 1500 metres. Unaltered rocks are uncommon in the area and alteration zoning is recognised. Propylitic alteration is recognised as chloritisation of hornblend mefics and epidote disseminations in feldspar sites in dioritic rocks. This alteration is accompanied by weak disseminated and fractured controlled pyrite mineralisation. Aroillic alteration affects dominantly the siltsone cap rocks. Alteration minerals are characteristically clay and weak sericite (as alteration envelops around sulphide veins). Rocks bordering the more intense phyllic alteration zones show similarities to the Cabank Kiri (Sulawess Utara) porphyry copper deposit in that alteration minerals are clay, green sericite and specularite. This type of alteration, known as advanced aroillic alteration is difficult to distinguish in the field from or aroillic alteration as the most diagnostic minerals, including andalusits and diaspor are recognisable only in this section. Phyllic alteration is characterised by intense pervasive [ILLEGIBLE COPY] which completely modifies the original texture of the rock. A lessor quartz-sericite assemblage is also noted. In the locality, a shaft sunk on highly altered (phyllic) oxidised diorite bottomed at the water table in secondary biotite bearing rock. It is quite possible that this type of alteration (potassic) could be more widely spread but because of the surface oxidation and modification of the rocks in the phyllic zones, has not been recognised. 37 3.3. Mineralisation The G. Silubat area is characterised by strong leaching with the result that it is only in the zones of weak alteration that unoxidised sulphide mineralisation is noted. Original sulphides are recognised as hematitic disseminations (oxidation of chalcocite?), and goethitic veins commonly with sulphide boxworks, and disseminations after probable pyrite. Limonitic (50% goethite 50% hematite) fracture cotains are also indicative of former sulphides. Original total sulphide (OTS) content ranges from 5 - 7 volume percent, mostly as veins and fracture coatings, in altered siltstone cap rocks immediately adjacent to dioritic bodies, to 2 - 3 volume percent as coarse disseminations, dominantly goethitic and hematitic peppering, in altered diorite and quartz-feldspar porphyry. Race chalcocite is noted in rocks at the water table. However, pan concentrates of alluvials shedding off G. Silubat contain fine nonmagnetic black minerals which are thought to be chalcocite. pending assays will resolve this. Thin platy pyrite and gold, obviously derived from this veins are also found in pan concentrates. A previous assay result of a mixture of pyrite and gold gave an assay result of 25% copper, showing that much of this pyrite was in fact chalcopyrite. The write did not see this sample of "pyrite". 38 4. GEOCHEMISTRY 21 rock chip and 7 stream sediment samples were submitted for analyses to Superintendent Laboratories in Jakarta. Copper-in-rock values range from 11 ppm to 140 ppm with an average value of 40 ppm. Lead-in-rock values range from 15 ppm to 385 ppm with an average value of 65 ppm. Zinc-in-rock values range from 15 ppm to 106 ppm with an average value of 47 ppm. Molybdenum-in-rock values range from less than 1 ppm to a spot high of 20 ppm. Average values are less than 1 ppm. Gold was undetectable in all rock samples submitted (a lower detection limit of 0.5 ppm for the method of analyses used). Stream sediment samples gave similar copper, lead and zinc and molybdenum. Gold values of 0.5 to 1.05 ppm were obtained in four of the seven samples submitted. The values obtained are puzzling because of several reasons. Firstly the concentrate of "pyrite" that when assayed gave a figure of 25% copper shows there to be copper in the system. Secondly, abundant free gold was visible in all the stream sediment samples submitted. The gold-in-silt values obtained seem inconsistent with this fact. Thirdly the gold is shedding off the G. Silubat hills and the fact that no gold is detected in any of the 21 samples, which were representative of various rock, mineralisation and alteration types also seems inconsistent. Fourthly the copper values obtained are too low for the porphyry copper type style of mineralisation and alteration observed. 39 It is therefore proposed to have the samples reassayed by Geomin in Australia, utilising the RG.50 method for gold analyses. 4.1. GOLD - IN - ROCK CHECK ASSAYS Twenty one pulverised rock pulps were submitted to ANALABS in Australia for gold analyses utilising a fire assay method. Values range from 0.05 ppm to 0.81 ppm with an average value of 0.20 ppm. Eight of these samples which lie wholely within the dioritic intrusive give an average gold - in rock value of 0.33 ppm. Host sediments/volcanics average a value of 0.12 ppm. It was noted that agreement on duplicate samples from these lower values was not good, and that they represent an average only. 40 5. BULK COPPER - GOLD POTENTIAL Gold - in - rock values for dioritic rocks outcropping over an area some 1300 metres long, and 500 metres wide, elongated NW-SE, give an average of 0.33 ppm. These rocks interpreted as forming a leached capping over chalcopyrite mineralisation. Utilising a 4:1 copper - gold ratio (1 ppm (Au) in a leached cap represents a hypogene grade of 4% copper - this figure has been arrived at from research into porphyry copper deposit is at Ok Tedi (New Guinea), Bouganville, the Philippines and more recently, the Cabang Kiri deposit in Sulawesi, Indonesia), this gives an expected hypogene grade of 1.3% which is highly significant, considering a potential 1.6 million tons/vertical metre (1300 X 500 X 2.5) i.e. 160 million tons of probable ore to 100 metres depth. However, the feasibility of mining this deposit is open to question, for it is surrounded by swamps and river systems at 20 metres above sea level only. Utilising an average height of 25 metres above swamp level the maximum tonnage of rock ( this includes leached capping) that could be mined to swamp level is less than 30 million tons. It is therefore a mining engineers decision as to what, if any, further work be carried out here, not the geologist's. 41 6. ALLUVIAL GOLD POTENTIAL As discussed under 2.1., all previous reports, maps and drilling results are no longer in existence. Only a fragment of a plan showing some 30 bangka drill holes with depth of hole and value in pence per cubic yard (date 1962) has been salvaged. On current day values ($150 U.S./02), the average gold value for these alluvials is pf the order of U.S.$1-50 per cubic metre. Discussion with Moksin Lele, formerly with P.T. Silubat suggests that the average depth of the alluvials is 6 - 7 metres and that they are consistently gold bearing for greater than 300 metres away from the foot of the hills. A calculated volume for the numerous alluvial basins adjacent to G. Silubat gives a figure of some 5 million cubic metres, which at $1.50/cu metre is highly significant. Because of the swampy nature of these alluvials (most of them have been cleared of vegetation for former rice paddies) a suction cutting dredging method would be the appropriate means of exploitation. A program of widely spaced bangka holes (special platforms would need to be constructed to enable these machines to be used in swampy terrain) should therefore be implemented to confirm these gold values. 42 AN EVALUATION OF SILUBAT GOLD - BASE METAL DEPOSIT KALIMANTAN BARAT, INDONESIA R.A. WATTERS JANUARY, 1982 43 INTRODUCTION At the request of Mr. Steven Zagon of P.T. Pnanh Tiara, Jakarta, a visit of a week's duration was made to Gunung Silubat, Kacamatan Selakau, Kalimantan Barat, (see inset on Figure 1), for the purpose of assessing what was said to be an alluvial gold prospect. The K.P. is held by Firma Wahidah Mining and Trading Company, headed by Mochsin Lele of Singkawang. The area is 62.5 ha and lies immediately south west of Gunung Silubat. Location and Access To get to the prospect, one travels for up to three hours by bitumen road from [ILLEGIBLE COPY] Singkawang (150 Km) another hour to Simparuk (50 Km), also by bitumen road. From Simparuk, one rents a motorised prahu and travels up the River Sebangkau to [ILLEGIBLE COPY] where the smaller river Bakung is then taken, the total prahu journey taking [ILLEGIBLE COPY] Silubat, provided that the water is deep enough. If not, one also walks for 2 hours from a sawmill on the Sungai Bakung. From Silubat village the foot track to Kolam B takes about 15 minutes to traverse. The location is at coordinates 1 degree 1'N, 109 degrees 12'E. [PHOTO 1: Kolam B looking West.] Previous Work Chinese exploitation of the deposit took place from the early nineteenth century [ILLEGIBLE COPY] the Dutch from 1935 until 1940, when 63.3 Kg of gold was reportedly produced. In 19__ T. Silobat started operations but the insurgencies of that period caused a [ILLEGIBLE COPY]. 44 Mr. Laurie Whitehouse of P.T. Tropic Endeavour mapped and described the geology in 1977 took samples of rock and stream sediment. Messrs. Bennet and Gillham carried out empirical studies over traverse lines up Hills 1 to 6 (see Figure 3). Geology (See Figure 1) A. Lithology Three main rock types were encountered: 1. Quartz diorite, hornblende with fine magnetite, disseminated pyrite, occasionally fresh with traces of chalcopyrite. This rock type crops out over approximately a square kilometre and is mostly altered and showing evidence of mineralization in the form of limonite after pyrite. 2. Quartz - feldspar porphyry, manifests itself as crystals of quartz in saprolite, indicative of a high temperature subvolcanic origin. Intrusive breccia occurrences can be seen at the edges. To the west of the prospect, where this rock-type is mainly evident, a film of white sand occurs on the top of the soil over and area of approximately 400 m by 150 m i.e. 6 ha. 3. Silstone, greenish-black finegrained siltstone which crops out on the side on the track from Silubat to the Kolam B, and between Kolam B and Kolam C. This unit is [ILLEGIBLE COPY] rock of the acid intrusives and it is likely that a considerable amount of the mineralisation is contained by it. B. Structure From a study of the topography it appears likely that Kolam B is situated at the intersection of two major fault zones. This would account for the shape of the hills around that [ILLEGIBLE COPY] which suggest an ellipsoidal outline with its centre at that locus. It is perhaps significant that the angle of the two fault zones approximates two of the joint systems seen in the [ILLEGIBLE COPY] diorite. A similar mechanism to that described by Rice (1981) is envisaged, i.e. that the gold has been diffused along major structure lines, accompanied by some silicification. Alteration (See Figure 2) Alteration occurs over an area of more than 3 km2. Few unaltered rocks [ILLEGIBLE COPY] of the alteration is evident. This includes propylitic, argillic and phyllic alterations. It is also possible, as Whitehouse noted, that potassic alteration might also be widespread but because of surface oxidation and weathering in the phyllic zones, cannot be recognized. The propylitisation manifests itself as chlorization of hornblende and epiolotsation in the diorites. Pyritic mineralisation has accompanied this phase. Argillic alteration has probably affected the siltstone. Sericite and clay minerals are common. Phyllic alteration is characterised by intense sericitisation which thoroughly changes the original texture of the rock. 45 Mineralisation In such an environment it is not surprising that strong leaching has taken place and only in the relatively unaltered zones is fresh pyrite noted. Haematite, goethite and _________ common in disseminations and in fracture coatings. Original total sulphide is estimated to be in excess of 5% in altered siltstone and 2% to 3% diorite and porphyry bodies. Rare chalcocite has been seen in rocks at the water table and pan concentrates contain non-magnetic black grains which are thought to be chalcocite. 46 Work Carried Out A synthesis of the work of all previous investigations was attempted. Geological traverses were carried out to get a "feel" for the area and samples of rock types were taken. Some of these were dollied in a period of time specially manufactured in Singkawang, and washed to a concentrate representing approximately 1 kg of original material. These concentrates were submitted to Rio Tinto, Jakarta, for analysis of (Au), Ag, Cu Pepto-Bismol and Zn. Several rocks contained fresh suphides, mainly pyrite, arsenopyrite, chalcopyrite. A C-Scope metal detector was employed on some traverses and some boulders gave a detection sound, but when the iron discrimination switch was brought in, the sound disappeared. It is unlikely that lumps exist which are large enough to be detected by the machine. Six large samples, between 0.2m3 and 0.5m3, were taken and sluiced with the existing equipment. The concentrate was cleaned up using a Garrett gold pan (with gravity traps), the gold separated and weighed on a balance bought for the purpose in Singkawang. Four heavy mineral concentrates were collected from small creeks running off the most south-western hill of the prospect. These samples represented approximately 5 Kg of original sample. As for the rock concentrates, they were weighed and taken to Jakarta. Their locations as well as compilation of all sample locations, are show on the accompanying map, (Figure 1). [PHOTO II: Kolam B and work site from locations S1 and 2.] Whitehouse pointed out that the average Au in dioritic rocks over an area of 65 ha was 0.33 ppm. Utilising a 4:1 Cu/Au, i.e. 1 ppm (Au) in leached capping represents 4% Cu, quoting [ILLEGIBLE COPY] OK Tedi, Philippines and Cabang Kiri, a hypogene grade of 1.3% and 1.6 million tons per vertical metre could be expected. This author sees no reason to disagree with this contention as visibly seen below. 47 As mentioned before, a study of the physiography suggests that two faults intersect at [ILLEGIBLE COPY]. One runs from Kolam C through B and over the saddle, passing just east of BB31 and west [ILLEGIBLE COPY]. [PHOTO III: Kolam C from location S4.] Near BB31, rocks of different appearance are exposed on either side of a small [ILLEGIBLE COPY] was a reddish-brown, highly oxidised, lateritised rock which could be fault [ILLEGIBLE COPY] occurred in S2, a well-jointed acid volcanic which was very silicic. Blue-black [ILLEGIBLE COPY] occurred as a coating on quartz crystals in a fracture filling. The second suggested fault is striking north-northeast south-southwest from Silobat through Kolam B to the southern bank of Kolam A. It is probably more than a coincidence that _____ in the area are mostly at a similar angle to these two suggested faults. The overall synthesis of the area suggests that interesting possibilities exist for a sizeable porphyry copper-gold deposit. A sample (S3) of what is probably leached capping was taken from the top of the hill above BB31 South of Kolam B. A similar capping occurs on through above BB2 3 north of Kolam B. It is white, kaolinised, with reminents of Fe minerals. Negative results of some of the earlier work cannot necessarily be believed because of pilfering and because of analytical error. The good results are more likely to be correct, particularly these analysed in Bandung. Gold analysis and sample preparation are particularly tricky and work done in the seventies is often suspect. Some of the samples taken by the Department of Mines team marked SS, mixture of stream sediments and residual soils. All those results believed to be significant and shown in Figure 1. It must be noted that none of the Department of Mines results of SS samples was related back to weights of samples and of concentrates. However, experience tells that values of three figures or more in such concentrates, is usually significant. 48 Check assay were carried out for gold which had not originally been detected in the rocks and values ranged form 0.05 to 0.81 ppm with an average in diorite of 0.33 ppm. Whitehouse gave an average of 0.3 g/m3 for the alluvial potential, which is in accord with the above. DISCUSSION Sample S2 contained high base metals and this is in accord with the high ferric hydroxide content of this material. It probably represents pyritic fault gouge which would have contained chalcopyrite, galena and sphalerite originally. It is plain that silver is not totally allied to the gold content, although sample S10 seems to have a strong liaison. Base metals in the stream sediment concentrates are very low but gold even in the original 5 kg sample is largely highly anomalous. Frank Gillham and Merton Bennet took many samples on traverses in the vicinity of Kolam S, and the great majority contained some visible gold, albeit not enough to quantify to any way. Some were, however, obviously better than others, notably those designated Hills 1, 5 and 6. From the combination of all results, it is interpreted that the colluvial/proluvial possibilities are good in the two areas between the three kolams. For example, the Department of Mines found over 7 metres of 9.5 g/m3 near Koam C. The problem is how to extract it, as the ground is waterlogged throughout the two areas. Even though there were check analyses carried out, there must be some lingering doubt about the gold analyses recorded by Whitehouse, but the geology and alteration he has recorded appear essentially accurate. These are shown in Figures 2 and 3 with some minor corrections. Other areas which appear attractive are: 1. Drainage basin No. 39 2. Drainage basin No. 17 and the north side of that ridge (containing BB31) 3. Drainage basin No. 16 4. Drainage basin No. 2 5. (?) Drainage basin No. 25 (24?, since there is no result for No. 25) south of Silubat. Extensive diggings occur on the sides of the areas between kolams and it is obvious that the early exploitation concentrated on these base of slope areas. Boyle, however, points out that the eluvial areas, the gold and other heavy minerals often lag behind uphill a little. 49 Results Visible gold occurred in all samples of eluvial material, i.e. B1, B2, S4, 5, 6, and 8. The rock and stream concentrates were not measurable but gold was seen in S3, 9, 10, and 11, (stream concentrates). Concentrations were less than 0.1 ppm by visual estimation. The weights of gold and concentrations were as follows:
Sample No. Approx. m3 qm Au Concentration (g/m3) B1 0.5 0.10 0.20 B2 0.5 0.10 0.20 S4 0.2 0.005 0.025 S5 0.5 0.10 0.20 S6 0.5 0.10 0.20 S7 0.03 0.015 0.05 S12 0.4 0.04 0.10
Analytical Results (ppm in concentrate)
Sample No. Cu Pb Zn Ag Au Au original S1 ) 55 263 20300 2.3 0.8 .002 2 ) Rock 253 158 2060 17.1 4.4 .055 3 ) Chip 62 159 1200 6.2 19.5 .022 8 ) 2.7 54 19 8.3 47.1 .07 9 ) Stream 1.9 11 28 2.9 12.4 .026 10 ) Sediment 9.4 47 66 49.2 140.5 [ILLEGIBLE COPY] 11 ) 3.4 20 26 1.3 1.5 .004
Further extraction was carried out by Meron Bennet after some of the previously washed material had had a chance to sit in water for a week, and 0.3g Au was obtained from about 1-2m3. A total of 16m3 from 0 to 0.5m depth was processed for a gain of 4.5g Au, i.e. almost 0.3g/m3 also. A further 2.5m3 of deeper material (0.5 - 1.0m depth) yielded 1g.Au, i.e. 0.4g/m3. Thus, the yields are of the order of 0.3g/m3 with a similar amount or more passing over the riffles in the clay material. It is reasonable to suppose that good equipment would extract up to a gram of gold per cubic metre, while Whitehouse figure of 0.33g per ton for hard rock in bulk begins to look remarkably realistic. Geochemistry In spite of the fact that most of the gold assays from Whitehouse cannot relied upon, the base metals are perhaps more credible, and some support for a mineral deposit can be seen with Cu, Pb and Zn in stream sediments. Gold in concentrates from soils are also consistently high but no means of quantifying these results could be found, as noted above. 50 He took 21 rock chip and 7 stream sediment samples and all of the latter contained visible free gold as did all 4 taken during this last visit. Copper in rocks was up to 140 ppm with maxima of 20 ppm MO, 385 ppm Pb and 106 ppm Zn also recorded. Up to 1 ppm Au was also found. 51 BIBLIOGRAPHY 1. Boyle, R.W., 1980, the Geochemistry of Gold and its Deposits, Canadian Geological Survey, Ottawa. 2. Kitaisky, Y, 1964, Prospecting for Minerals, Mir Publishing, Moscow. 3. Lubis M., 1980, Report by Direktorat Teknik Pertambangan (unpubl.). 4. Rice, R., 1981, Gold Exploration - past and future B.11. I.M.M. 90, p.a. 128 5. Van Bermmelen, R.W., 1970, the Geology of Indonesia, Martinus Nijhoff, the Hague, (2nd ed.). 6. Whitehouse L., 1977 Report on a visit to G. Silubat (unpubl.). 52 DEVELOPMENT AGREEMENT COAL MINING PROJECTS IN EAST KALIMANTAN [SEAL] This Development Agreement (Agreement) is made and entered into on this seventh day of January, 1997 by and between: PT. Andhika Mutiara Sejahtera, a limited liability company established and validly existing under Indonesia law, and having its address at Jl. Langsat No.59 Komp. Samarinda - Indonesia (hereinafter referred to as "Andhika"), and is represented in this Agreement by its' President Director, Mr. Adnan AS; and Singkamas Agung Ltd., a Bahamas Corporation having its' registered offices in the Bahamas and its representative offices in Singapore (hereinafter referred to as "Singkamas"), and is represented in this Agreement by its' President Director, Mr. William Chan. (Andhika and Singkamas are hereinafter referred to collectively as "The Parties"). WITNESSETH Whereas, the Government of Indonesia acting through its' Ministry of Mines and Energy and the Directorate General of General Mining (hereinafter referred to as the "DGGM") wishes to expand on its enhanced exploration for coal and other natural resources during the next Sixth Development Plan (known as Repelita VI) and beyond, and encourages the private sector to participate in such exploration, development, exploitation and production; and Whereas Singkamas is actively seeking to acquire coal mining concessions and to implement coal mining activities in East Kalimantan, Indonesia (hereinafter to as the "Project"); and Whereas Andhika has successfully reserved, or "blocked", one (1) potential cola mining property in the coal mining district of East Kalimantan. The geographical location of such property is described in Exhibit I. Andhika can successfully demonstrate that it has officially blocked this area of land at the DGGM through its' official and complete filings and payments to the DGGM for this area. These official 53 [SEAL] documents are attached in Exhibit II. Currently, Andhika controls the rights to this property and is in the process of obtaining the government approvals and/or mandates (hereinafter referred to as the "Government Licensee"), which are to be issued in the form of Contracts of Work (hereinafter referred to as a "CoWs"), for the development and exploitation of the coal mining property. Andhika also recognizes the importance of obtaining any other government licenses associated with the exploitation of coal, including the license for the refinery and production of coal as well as the transportation and sale of coal; Andhika will use its' expert abilities and efforts to obtain these additional licenses from the Government in order to facilitate the development, implementation, and success of the Project; and Whereas both Parties agree to use their best efforts to complete the sale and acquisition of the Property (hereinafter referred to as the "Transaction"), which includes the rights to the government licenses for exploration and exploitation of coal on the Property. The Parties also agree to jointly cooperate to successfully obtain any other government licenses which will be necessary; and Whereas the Coal Mining Property (hereinafter referred to as the "Property") is located in the coal mining district of East Kalimantan, Indonesia and, potentially, has substantial deposits of coal and other natural resources. The property encompasses a combined total of approximately 104,700 hectares of land. A geographical description of the Property is provided in Exhibit I which is attached to this Agreement. The Property is located in a coal mineralization zone and, through official flings and monetary payments made to the DGGM (which includes both filing and annual fees as well as seriousness bonds), Andhika has secured the rights to the Property and is in the process of obtaining the government licenses for the general survey and exploration of coal on the Property as well as the CoWs to exploit coal on the Property. These documents are shown in Exhibit II which is attached to this Agreement. DESCRIPTION OF THE PROPERTY : 104,700 HECTARES The Property consists of approximately 104,700 hectares of land. For this block of property, Andhika has properly filed, paid for, and obtained the rights to this area. Andhika is also currently in the process of obtaining the CoWs to explore and exploit coal on the property. See Exhibit II. For purposes of this Transaction, Mr. Adnan AS, as President Director of PT Andhika Mutiara Sejahtera, has been granted the complete and/or official authorization, through a General Shareholder's Meeting (subject to provision in the Articles of Association), to sell 77.5% of Andhika's interest in the Property, including the complete transfer of the government rights (when obtained) to explore and exploit for coal on the Property. The Shareholder's Minutes are referenced in Exhibit III which is attached to this Agreement. Although Andhika will actively seek to obtain the government licenses 2 54 [SEAL] for the commercial exploitation of coal (including the licenses for the refinery production, transportation, and sale of coal), Andhika recognizes that these government licenses will also be transferred to Singkamas or to some third party which is appointed by Singkamas. Andhika will use its' expert abilities and efforts for obtaining the government licenses from the DGGM. The purposes of obtaining all of the necessary licenses is to make terminal ileum feasible for Singkamas to effectively and efficiently mine the Property and to make it into a world-class profitable operation. Whereas Singkamas has the ability to provide and/or secure financing to acquire 77.5% interest in the Coal Mining Property and the related government licenses from Andhika as well as the ability to develop the Property into a world-class mining operation. Now therefore, the Parties hereto agree as follows: 1. COOPERATION In accordance with the Government approvals which have already been granted to Andhika, the parties agree as follows: 1.1 To submit additional application(s), as necessary, to the DGGM for the licenses and/or CoWs for the exploration and exploitation of coal on the Property. 1.2 To complete the acquisition of the Property. 1.3 To support, develop, and complete the mining operations. 2. EXCLUSIVITY Except as otherwise provided for in this Agreement, the Parties warrant that they shall cooperate solely and exclusively with each other in connection with this Coal Mining Project and that nontender of them shall enter into any agreement with any other firm or group of firms with respect to any matters related to this Project without the prior written consent of the other Party and to keep this information strictly confidential. Further, Andhika will grant Singkamas a first rights of refusal with respect to any coal mining property which it may control, influence the sale of, or be able to recommend to Singkamas. The parties also warrant that such exclusivity will be respected by those persons or firms which they may exercise control or with their affiliate in any manner. 3 55 [SEAL] 3. SPONSORSHIP Andhika shall activity as the main sponsor of this Project. In this regard, Andhika has obtained the complete and proper approvals (which are subject to legal verification) to transfer 77.5% interest in the Property, which includes the full and complete rights to any Government Licenses which Andhika will receive for the exploratoin and exploitation of coal on the Property. All geological and other significant information will be made available to the Parties on a continual basis. Furthermore, Andhika will obtain any other necessary and appropriate government licenses associated with the refinery and production of coal as well as the transportation and sale of coal. Similarly, these licenses will also be transferred to Singkamas or its' designee. 4 INITIAL RESPONSIBILITIES The Parties agree that their responsibilities shall be as follows: 4.1. Andhika will secure the proper approvals to sell its' rights to the Property as well as its' rights to the Government Licenses. Andhika will assist with the development of the Project in conjunction with the Parties as need. In particular, Andhika will take all steps necessary or deemed advisable by Singkamas to secure the CoW for the exploitation of coal on the Property. Andhika has reviewed preliminary geological surveys on the Property and will provide all of this information as well as all future information to the Parties on a continual basis. Andhika will give Singkamas first priority/option for any future coal mining opportunities for acquisition and/or for working together in seeking other coal mining projects. In particular, Andhika must give first priority to Singkamas to acquire any additional property which are contiguous with the current property. In those instances where these contiguous property and/or other property region are owned and/or controlled by friends, families, and/or directors of other local PT. Companies which are associated with Andhika, Andhika must give priority to Singkamas to acquire such property, if available. 4.2 Sigkamsa will be responsible to provide and/or secure financing for the Project, provide world-class technologies and management/exploration teams and, if necessary, a strategic operator(s) to develop the Property Singkamas will jointly assist the Project with Andhika. 4.3 Singkamas may appoint a qualified Indonesian party to accept the transfer of CoW and may at any time at its discretion cause or permit such party to transfer such property and licenses to any third party based on prevailing regulations and subject to Anugrah's continuing rights under the Agreement being respected by such transferee. 4 56 [SEAL] 5. TRANSFER OF LICENSES 5.1 Andhika will transfer 77.5% interest of coal minerals on the Property. Furthermore, Andhika's principals and/or affiliates will not compete with Singkamas. 5.2 Payment For: (a) Anhika agrees to sell 77.5% if its interest in the Property as well as its' full and complete rights to the Government Approvals to such qualified party as indicated by Singkamas that may be appointed for the price of US One Million Dollars (US$1,000,000). (b) All payments hereunder shall be subject to continual fulfillment by Andhika of its obligations under this Agreement. 5.3 Payment Conditions: (a) Singkamas agrees to make a down payment of US$200,000 after the signing of this Agreement. This payment, however, is subject to legal verification that the title to the Property is acceptable and without encumbrances and that the government license issued to Andhika is current and valid. Such payment will be made to Andhika once the test results from the initial investigation/exploration activity are completed and any other legal verifications, which may be required in respect of title to the Property and validity of government licenses are finalized. (c) The final payment of US$1,500,000 will be immediately paid to Andhika upon the coal mines being put into the production stage and are generating positive revenues. For this to occur, however, Andhika must first secure the complete and proper CoW. Anhika recognize that once it secures CoW for the benefit of the Parties and, moreover, the benefit of the Project, Andhika will transfer the full and complete rights of CoW to Singkamas or the entity appointed by Singkamas. 5.4 Profit Sharing The Parties hereby agree that the Profit Sharing from the net profit (total revenue minus all expenses including taxes) to the Project shall be as follows: 5 57 [SEAL] Singkamas 77.5% Andhika 22.5% 5.5 Reimbursement of Expenses Singkamas agrees to relinquish to or reimburse Andhika for the funds which Andhika expended towards the Seriousness bond which it paid to the DGGM for blocking the property. These funds amount to a total of Rp. 1,094,000,000. Receipts for these expenses are referred in Exhibit IV. Terms and Conditions for the reimbursement of these expenses are to be determined by the Parties. 5.6 Exploration Program (a) Singkamas agrees to begin the Exploration Program on the Property by February 1997 or sooner. (b) Singkamas will dig numerous test pits as part of the exploration program. (c) Shallow drilling to the depth of 50-60 meters will also be carried out over time second 90-day period. (d) Deep drilling to depth of 200 meters will also be carried out over the second 90-day period. (e) Singkamas agrees to finance the Exploration Program for the development and implementation of the Coal Mine Project. In this regard, Singkamas agrees to spend a minimum of US$100,000 in year 1; US$100,000 in Year 2; and US$100,000 in Year 3. Accounting record for these expenditures will be kept by Singkamas. 6 JURISDICTION 6.1 (a) Any dispute or controversies which may arise out of this Agreement shall be amicably settled by the Parties, but in failure thereof, such disputes or controversies shall be referred to the arbitration of the Rules of Badan Arbitrasi Nasional Indonesia (BANI). The arbitration panel shall consist of three (3) arbitrators, one (1) chosen by the complainant, one (1) chosen by the respondent and a Chairman chosen by the arbitrators named by the complainant and the respondent. (b) The parties expressly agree that (1) the arbitration tribunal shall decide the matter as expeditiously as possible, however, no time limits shall be imposed, (ii) Section 631 of the R.V. (Reglement opde Rechtsvordering) 6 58 [SEAL] shall apply, and that accordingly the arbitrators shall only reach their decision by applying strict rules of law to the facet and shall not purport to resolve any dispute exaequo et bono, (iii) the arbitration shall be conducted the English language, in Jakarta, Indonesia or such other place or places in Indonesia, as the Parties to the arbitration may agree, (vi) the Party in whose favor the arbitral award is rendered shall be entitled to recover costs and expenses of the arbitration including but not limited to the cost and expense of administration of the arbitration proceedings, and (v) the arbitral award shall be issued in Indonesia. (c) The Parties expressively agree to waive section 641 of the R.V. and any other applicable laws permitting appeal to courts of law or any other body so that accordingly there shall be no appeal to any court of law or any other body from the decision (or any interim decision) of the arbitrators and neither party shall dispute nor question such decision before any judicial authority in the Republic of Indonesia of elsewhere. (d) Pending the submission to arbitration and thereafter until the arbitration tribunal issues its decision, each Party shall, expect in the event of expiration, termination or failure by the other party to obey or comply with a specific order or decision of the arbitration tribunal, continue to perform all of its obligations under this Agreement without prejudice to a final adjustment in accordance with the said award. 6.2 This Agreement as to its' interpretation and application shall be governed by the Laws of Indonesia. 6.3 The Parties hereby expressly agree to waive the provision of Article 1266 of the Indonesian Civil Code with respect to the need for a court pronouncement to terminate this Agreement. 7. TERM OF VALIDITY 7.1 This Agreement shall be in effect as of January 7th, 1997, and shall be valid until the purposes and objectives of the Project have been fulfilled. 7.2 If for any reasons the transfer of the Property is not approved by the Government Authorities within six (6) months after the date of this Agreement, Singkamas shall have the option to terminate this Agreement with no further liability hereunder. 7 59 [SEAL] 8. OTHER MATTERS Other matters not stipulated in this Agreement shall be further discussed and decided later on through mutual discussion between the Parties on the basis of this Agreement. In Witness Whereof, the Parties agree that this Agreement is legal and binding and have caused their duly authorized representatives to execute this Agreement on the year and the first above stated. PT. ANDHIKA MUTIARA SEJAHTERA SINKAMAS AGUNG LTD. [SEAL] By /s/ By /s/ --------------------------- ------------------- Name: Adnan AS Name: William Chan Title: President Director Title: President Director Number : 20.190/1997/Leg. - - -Seen for the signing of the signatures of : - - -Mr. ADNAN ALAMSYAH SULAIMAN, Indonesian --- Citizen, private person residing in -------- Samarinda, Jalan Rawa Indah B3/No.9, Rt.52,- Rw.08, holder of Identity Card Number : ---- 03.1002/2714/00931/1995, temporarily being - in Jakarata; ------------------------------- - - -Mr. WILLIE CHAN HUA BENG, Singapore Citizen, private person, holder of Passport Number : S 1852289-F, temporarily being in Jakarta; - both are known to me, BUNTARIO TIGRIS ------ DARMAWA,NG.SH.CN. by virtue of decision----- Letter from the Minister of Justice of the - Republic of Indonesia dated on the thirteenth day of April one thousand nine hundred and - ninety five ( 13-4-1995 ) number : C-59.HT. 03.07-Th.1995, substitute of RACHMAT SANTOSO, SH. Notary in Jakarta.---------------------- Jakarta, 7th January 1997 Substitute Notary in Jakarta. [SEAL] /s/ ( BUNTARIO TIGRIS DARMAWA, NG.SH.CN. ) 8 60 LIST OF EXHIBITS EXHIBIT I DESCRIPTION OF THE PROPERTY EXHIBIT II GOVERNMENT FILINGS EXHIBIT III SHAREHOLDER'S MINUTES EXHIBIT IV RECEIPTS 61 EXHIBIT I DESCRIPTION OF THE PROPERTY 62 [MAP] 63 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] Lampiran I : Keputusan Direktur Jenderal Pertambangan Umum [SEAL] Nama Perusahaan : PT. ANDHIKA MUTIARA SEJAHTERA Lokasi - - - Propinsi : KALIMANTAN TIMUR - - - Kabupaten : KUTAI - - - Kecamatan : - - - - Kode Wilayah : APB042 Luas : 104.700 Ha
No. Titak Garis Bujur Garis Lintang . ' " . ' " LU/LS 1 117 13 0.0 1 15 0.0 LU 2 117 30 0.0 1 15 0.0 LU 3 117 30 0.0 1 10 0.0 LU 4 117 35 0.0 1 10 0.0 LU 5 117 35 0.0 1 0 0.0 LU 6 117 13 0.0 1 0 0.0 LU
Direktur Jenderal Pertambangan Umum Kuntoro Mangkusbrot 64 EXHIBIT II GOVERNMENT FILINGS 65 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] T A N D A T E R I M A Nomor: 300/SDPH/1996 A. Permohanan (aplikasi) dari : PT. Andhika Mutiara Sejahtera Tanggal : 13 Mei 1996 Alamat : Komp. Pinang Babaris Blok A/47 Samarinda Telp. (0541) - 41974 Diterima hari/tanggal/Jam : Senin/13 Mei 1996/15.30 Perihal : Permohonan Kontrak Karya Batubara di daerah Propinsi Kalimantan Timus, Kabupaten Kutai. Seluas 104.700 Ha Kode Wilayah : 96APB226 B. Lampiran - lampiran n : 1. Peta wilayah (asli) dari Unit Pelayanan Informasi dan Pencadangan Wilayah Pertambangan (UPIPWP)...............: ada 2. Tanda bukti penyetoran jaminan kesungguhan dari Bank yang ditunjuk...........................................: ada 3. Tanda terima SPT tahun terakhir.........................: ada 4. Laporan Keuangan 3 (tiga) tahun terakhir yang telah diaudit oleh Akuntan Publik : - Perusahaan Asing......................................: --- _ Perusahaan Indonesia..................................: ada 5. Kesepakatan ersama (MOU) jika pemohon diajukan lebih dari 2 pemohon..........................................: ada 6. Laporan tahunan perusahaan..............................: ada Permohanan tersebut telah dilampiri persyaratan sesuai ketentuan yang berlaku untuk diteruskan ke Direktur Batubara. Jakarta, 13 Mei 1996 Kepala Bagian Perundang- Undangan [SEAL [S] Yusmid AP, SH. NIP. 100002520 Tembusan : - - - Unit Pelayanan Informasi Pencadangan Wilayah Pertambangan (UPIPWP) 66 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] Kepada : Yth.bapak Yusmet. Dari : Riduansyah Basri. No. Facs : 021.5250895 [SEAL] APLIKASI ELECTRONIC FUNDS TRANSFER No. Ref: 182 063 051376 42648 Direktur Jenderal Pertambangan PT. Andhika Mutiara Sejahtera Umum qq dan Andhika Mutiara Jl. Rawa Indah Blok B RT 52 Sejahtera prp BDN Cahung Wiama RW 08 Samarinda Raja Jl. Gatot Subroto Kav. 54 Jkt.700.087.06025.2.01. 004143.001 BNI Cabang Senayan Jkt. BMI Cabang Samarinda Yg.dikirim Rp.1.094.000.000.- Rp. 1.094.005.000. satu milyard sembilan puluh empat juta sebalas ribu Rp. 6.000. rupiah Rp. 1.094.011.000. 67 EXHIBIT III SHAREHOLDER'S MINUTES 68 [SEAL] MINUTES OF GEN MEETING OF FOUNDERS OF PT ANDHIKA MUTIARA SEJAHTERA On this day, the fifteenth of December one thousand nine hundred ninety-six (15-12-1996), a Gen Meeting of Founders ("Meeting") of PT. ANDHIKA MUTIARA SEJAHTERA ("the Company") was held at Plaza Exim, 24th Floor, Jl. Jendral Gatot Soebroto Kav.36-38, Jakarta, 12910. The Company was established by Deed No. 11, dated 1 April 1996 made by Haji Gunawan, SH, Notary in Samarinda, such deed has not been approved yet by the Minister of Justice of the Republic of Indonesia (herein after referred to as the "Articles of Association") Present in this Meeting: 1. Sri Aslinda Sulaiman, as the holder of 280 shares of the Company. 2. Drs. Ardiansyah Sulaiman, as the holder of 280 shares of the Company. 3. Andra Fahreza Ardans, as the holder of 280 shares of the Company. That in this Meeting there were represented 840 shares, which represent all of the subscribed and issues shares in the Company so that based on Article 20 of Articles of Association of the Company, this meeting is duly convened and has the power to make valid decision with respect to all matters which are to be discussed, even though there was no written call of the Meeting. The Chairman further explained to the Meeting that the agenda of the Meeting is the transfer of the property and interest of the Company in Kontrak Karya Batu Bara KW APB042 (KKB) and any government licenses with regard to such KP to Singkamas Agung, Ltd or any other party appointed by Singkamas Agung, Ltd. In respect to the above-mentioned Agenda, the Chairman, after giving a complete explanation, subsequently proposed to the Meeting and the Meeting, after due discussion, unanimously voted to approve and therefore decides to declare the transfer of the property and interest in Kontrak Karya Batu Bara KW APO585 and any government licenses with regard to such KKB to Singkamas Agung, Ltd or any other party appointed by Singkamas Agung, Ltd was approved by founders ft Company. [SEAL] The Meeting hereby authorizes the Board of Directors of the 69 Company with the right of substitution, to appear before a Notary to state the resolutions resolved hereunder in notarial deed and to appear wherever necessary, to give information, to make, to cause to be made and signed, all necessary letters/documents, and further to perform all actions deemed proper and useful for the completion of the above-mentioned matters. Since no other matters to be discussed in this Meeting is closed by the Chairman at 16.00 West Indonesian Time. Chairman Shareholders [SEAL] [S] [S] - - -------------------- ------------------------ Sri Aslinda Sulaiman Drs. Ardiansyah Sulaiman Shareholders - - -------------------- Andra Fahreza Ardans 70 EXHIBIT IV RECEIPTS 71 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] Kepada : Yth.bapak Yusmet. Dari : Riduansyah Basri. No. Facs : 021.5250895 [SEAL] APLIKASI ELECTRONIC FUNDS TRANSFER No. Ref: 182 063 051376 42648 Direktur Jenderal Pertambangan PT. Andhika Mutiara Sejahtera Umum qq dan Andhika Mutiara Jl. Rawa Indah Blok B RT 52 Sejahtera prp BDN Cahung Wiama RW 08 Samarinda Raja Jl. Gatot Subroto Kav. 54 Jkt.700.087.06025.2.01. 004143.001 BNI Cabang Senayan Jkt. BMI Cabang Samarinda Yg.dikirim Rp.1.094.000.000.- Rp. 1.094.005.000. satu milyard sembilan puluh empat juta sebalas ribu Rp. 6.000. rupiah Rp. 1.094.011.000. 72 DEVELOPMENT AGREEMENTS COAL MINING PROJECTS IN EAST KALIMANTAN [SEAL] This Development Agreement (Agreement) is made and entered into on this seventh day of January, 1997 by and between: PT. Andhika Mutiara Etam, a limited liability company established and validly existing under Indonesia Law, and having its address at Jl. Langsat No. 59 Komp. Samarinda - Indonesia (hereinafter referred to as "Andhika"), and is represented in this Agreement by it's President Director, Mr. Adnan AS; AND Singkamas Agung, Ltd., a Bahamas Corporation having it's registered offices in the Bahamas and it's representative offices in Singapore (hereinafter referred to as "Singkamas", and is represented in this Agreement by it's President Director, Mr. William Chan. (Andhika and Singkamas are hereinafter referred to collectively as "The Parties"). WITNESSETH Whereas, the Government of Indonesia acting through it's Ministry of Mines and Energy and the Directorate General of General Mining (hereinafter referred to as the "DGGM") wishes to expand on its enhances exploration of exploitation for coal and other natural resources during the Sixth Development Plan (known as Repelita VI) and beyond, and encourages the private sector to participate in such exploration, development, exploitation and production; and Whereas Singkamas is actively seeking to acquire coal mining concessions and to implement coal mining activities in East Kalimantan, Indonesia (hereinafter referred to as the "Project"); and Whereas Andhika has successfully reserved, or "blocked", one (1) potential coal mining property in the coal mining district of East Kalimantan. The geographical location of such property is described in Exhibit I. Andhika can successfully demonstrate that it has officially blocked this area of land at the DGGM through it's official and complete filings and payments to the DGGM for this area. These official 73 [SEAL] documents are attached to Exhibit II> Currently, Andhika controls the rights to the property and is in the process of obtaining the government approvals and/or mandates (hereinafter referred to as the "Government License"), which are to be issued in the form of Contracts of Work (hereinafter referred to as a "CoWs'), for the development and exploitation of the coal mining property. Andhika also recognizes the importance of obtaining any other government licenses associated with the exploitation of coal, including the license for the refinery and production of coal as well as the transportation and sale of coal; Andhika will use it's expert abilities and efforts to obtain these additional licenses from the Government in order to facilitate the development, implementation, and success of the Project; and Whereas both Parties agree to use their best efforts to complete the sale and acquisition of the Property (hereinafter referred to as the "Transaction"), which includes the rights to the government licenses for the exploration and exploitation of coal on the Property. The Parties also agree to jointly cooperate to successfully obtain any other government licenses which will be necessary; and Whereas the Coal Mining Property (hereinafter referred to as the "Property") is located in the coal mining district of East Kalimantan, Indonesia and, potentially, has substantial deposits of coal and other natural resources. The property encompasses a combined total of approximately 71,420 hectares of land. A geographical description of the Property is provided in Exhibit I, which is attached to this Agreement. The Property is located in a coal mineralization zone and, through official filings and monetary payments made to the DGGM (which includes both filing and annual fees as well as seriousness bonds), Andhika has secured the rights to the Property and is in the process of obtaining the government licenses for the general survey and exploration of coal on the Property as well as the CoWs to exploit coal on the Property. These documents are shown in Exhibit II, which is attached to this Agreement. DESCRIPTION OF THE PROPERTY: 71,420 HECTARES The Property consists of approximately 71,420 hectares of land. For this block of property, Andhika has properly filed, paid for, and obtained the rights to this area. Andhika is also currently in the process of obtaining the CoWs to explore and exploit coal on the property. See Exhibit II. For purposes of this Transaction, Mr. Adnan AS, as President Director of PT Andhika Mutiara Etam, has been granted the complete and/or official authorization, through a General Shareholder's Meeting (subject to provision in the Articles of Association), to sell 77.5% of Andhika's interest in the Property, including the complete transfer of the government rights (when obtained) to explore and exploit for coal on the [SEAL] Property. The Shareholder's Minutes are referenced in Exhibit III, which is attached to this Agreement. Although 74 Andhika will actively seek to obtain government licenses for the commercial exploitation of coal (including the licenses for the refinery production, transportation, and sale of coal), Andhika recognizes that these government licenses will also be transferred to Singkamas or to some third party which is appointed by Singkamas. Andhika will use it's expert abilities and efforts for obtaining the government licenses from the DGGM. The purposes of obtaining all of the necessary licenses is to make it feasible for Singkamas to effectively and efficiently mine the Property and to make them into a world-class profitable operation. Whereas Singkamas has the ability to provide and/or secure financing to acquire 77.5% interest in the Coal Mining Property and the related government licenses from Andhika as well as the ability to develop the Property into a world-class mining operation. Now, therefore, the Parties hereto agree as follows: 1. COOPERATION In accordance with the Government approvals which have already been granted to Andhika, the parties agree as follows: 1.1 To submit additional application(s), as necessary, to the DGGM for the licenses and/or CoWs for the exploration and exploitation of coal on the Property. 1.2 To complete the acquisition of the Property. 1.3 To support, develop, and complete the mining operations. 2. EXCLUSIVITY Except as otherwise provided for in this Agreement, the Parties warrant that they shall cooperate solely and exclusively with each other in connection with this Coal Mining Project and that none of them shall enter into any agreement with any other firm or group of firms with respect to any matters related to the Project without the prior written consent of the other Party and to keep this information strictly confidential. Further, Andhika will grant Singkamas a first rights of refusal with respect to any coal mining property which it may control, influence the sale of, or be able to recommend to Singkamas. The Parties also warrant that such exclusivity will be respected by those persons or firms which they may exercise control or with their affiliate in any manner. [SEAL] 3. SPONSORSHIP Andhika shall act as the main sponsor of this Project. In this regard, Andhika has obtained complete and proper approvals (which are subject to legal verification) to transfer 77.5% interest in the Property, which includes the full and complete rights to any 75 Government Licenses which Andhika will receive for the exploration and exploitation of coal on the Property. All geological and other significant information will be made available to the Parties on a continual basis. Furthermore, Andhika will obtain any other necessary and appropriate government licenses associated with the refinery and production of coal as well as the transportation and sale of coal. Similarly, these licenses will also be transferred to Singkamas or it's designee. 4. INITIAL RESPONSIBILITIES: The Parties agree that their responsibilities shall be as follows: 4.1 Andhika will secure the proper approvals to sell it's rights to the Property as well as it's rights to the Government Licenses. Andhika will assist with the development of the Project in conjunction with the Parties as needed. In particular, Andhika will take all steps necessary or deemed advisable by Singkamas to secure the CoW for the exploitation of coal on the Property. Andhika has reviewed preliminary geological surveys on the Property and will provide of this information as well as all future information to the Parties on a continual basis. Andhika will give Singkamas first priority/option for any future coal mining opportunities for acquisition and/or for working together in seeking other coal mining projects. In particular, Andhika must give first priority to Singkamas to acquire any additional property which are contiguous with the current property. In those instances where these contiguous property and/or other property region are owned and/or controlled by friends, families, and/or directors of other local PT. Companies which are associated with Andhika, Andhika must give priority to Singkamas to acquire such property, if available. 4.2 Singkamas will be responsible to provide and/or secure financing for the Project, provide world-class technologies and management/exploration teams and, if necessary, a strategic operator(s) to develop the Property Singkamas will jointly assist the Project with Andhika. 4.3 Singkamas may appoint a qualified Indonesian party to accept the transfer of CoW and may at any time at its discretion [SEAL] cause or permit such party to transfer such property and licenses to any third party based on prevailing regulations and subject to Anugrah's continuing rights under the Agreement being respected by such transferee. 5. TRANSFER OF LICENSES 5.1 Andhika will transfer 77.5% interest of coal minerals on the Property. Furthermore, Andhika's principals and/or 76 affiliates will not compete with Singkamas. 5.2 Payment For: (a) Andhika agrees to sell 77.5% of its interest in the Property as well as it's full and complete rights to the Government Approvals to such qualified party as indicated by Singkamas that may be appointed for the price of US One Million Dollars (US$1,000,000). (b) All payments hereunder shall be subject to continual fulfillment by Andhika of its obligations under this Agreement. 5.3 Payment Conditions: (a) Singkamas agrees to make a down payment of US$200,000 after the signing of this Agreement. This payment, however, is subject to legal verification that the title to the Property is acceptable and without encumbrances and that the government license issued to Andhika is current and valid. Such payment to Andhika will also be made after test results form the initial investigation/exploration activity is completed and any other legal verifications, which may be required in respect of title to the Property and validity of government licenses, is finalized. 5.4 Profit Sharing: The Parties hereby agree that the Profit Sharing from the net profit (total revenue minus all expenses, including taxes) to the Project shall be as follows: Singkamas 77.5% Andhika 22.5% [SEAL] 5.5 Reimbursement of Expenses: Singkamas agrees to relinquish to or reimburse Andhika for the funds which Andhika expended toward the Seriousness Bond which it paid to the DGGM for blocking the property. These funds amount to a total of Rp. 714,211,000.-. Receipts for these expenses are referred in Exhibit IV. Terms and Conditions for the reimbursement of these expenses are to be determined by the Parties. 5.6 Exploration Program. (a) Singkamas agrees to begin the Exploration Program on the Property by February 1997 or sooner. (b) Singkamas will dig numerous test pits as part of the exploration program. (c) Shallow drilling to the depth of 50-60 meters will also be carried out over time second 90-day period. 77 (d) Deep drilling depth of 200 meters will also be carried out over the second 90-day period. (e) Singkamas agrees to finance the Exploration Program for the development and implementation of the Coal Mine Project. In this regard, Singkamas agrees to spend a minimum of US$100,000 in Year 1; US$100,000 in Year 2; and US$100,000 in Year 3. Accounting records for these expenditures will be kept by Singkamas. 6. JURISDICTION 6.1 (a) Any dispute or controversies which may arise out of this Agreement shall amicably settled by the Parties, but in failure thereof, such disputes or controversies shall be referred to the arbitration of the Rules of Badan Arbitrasi Nasional Indonesia (BANI). The arbitration panel shall consist of three (3) arbitrators, one (1) chosen by complainant, one (1) chosen by the respondent, and a Chairman chosen by the arbitrators named by the complainant and the respondent. (b) The Parties agree that (1) the arbitration tribunal shall decide the matter as expeditiously as possible. However, no time limits shall be imposed, (ii) Section 631 of the R.V. (Reglement opde Rechtsvordering). 78 [SEAL] shall apply, and that, accordingly, the arbitrators shall only reach their decision by applying strict rules of law to the facts and shall not purport to resolve any dispute exaequo et bono, (iii) the arbitration shall be conducted in the English language, in Jakarta, Indonesia, or such other place or places in Indonesia, as the Parties to the arbitration may agree, (iv) the Party in whose favor the arbitral award is rendered shall be entitled to recover costs and expenses of administration of the arbitration proceedings, and (v) the arbitral award shall be issued in Indonesia. (c) The parties expressly agree to waive Section 641 of the R.V. and any other applicable laws permitting appeal to courts of law or any other body so that, accordingly, there shall be no appeal to any court of law or any other body from the decision (or any interim decision) of the arbitrators and neither party shall dispute nor question such decision before any judicial authority in the Republic of Indonesia or elsewhere. (d) Pending the submission to arbitration and thereafter until the arbitration tribunal issues its decision, each party shall, expect in the event of expiration, termination, or failure by the other Party to obey or comply with a specific order or decision of the arbitration tribunal, continue to perform all of its obligations under this Agreement without prejudice to a final adjustment in accordance with the said award. 6.2 This Agreement as to it's interpretation and application shall be governed by the Laws of Indonesia. 6.3 The Parties hereby expressly agree to waive the provision of Article 1266 of the Indonesian Civil Code with respect to the need for a court procurement to terminate this Agreement. 7. TERMS OF LIABILITY 7.1 This Agreement shall be in effect as of January 7, 1997 and shall be valid until the purposes and objectives of the Project have been fulfilled. 7.2 If for any reasons the transfer of the Property is not approved by the Government Authorities within six (6) months after the date of this Agreement, Singkamas shall have the option to terminate this Agreement with on further liability hereunder. 79 [SEAL] 8. OTHER MATTERS Other matters not stipulated in this Agreement shall be further discussed and decided later on through mutual discussions between the Parties on the basis of this Agreement. In Witness Whereof, the Parties agree that this Agreement is legal and binding, and has caused their duly authorized representative to execute this Agreement on the year and the first above stated. PT. ANDHIKA MUTIARA ETAM SINGKAMAS AGUNG, LTD. By [S] By [S] --------------------------- ---------------------- Name: Adnan AS Name: William Chan Title: President Director Title: President Director Number : 20.191/1997/Leg. - - -Seen for the signing for the signatures of: - - -Mr. ADNAN ALAMSYAH SULAIMAN, Indonesian --- Citizen, private person, residing ---------- Samarinda, Jalan Rawa Indah B3/No. 9, Rt. 52, Rw. 08, holder of Identity Card Number: ---- 03.1002/2714/00931/1995, temporarily being - in Jakarta; -------------------------------- - - -Mr. WILLIE CHAN HUA BENG, Singapore Citizen, private person, holder of Passport Number: S 1852289-F, temporarily being Jakarta; - both are known to me, BUNTARIO TIGRIS ----- DARMANA, NG.SH.CN. by virtue of decision---- Letter from the Minister of Justice of the Republic of Indonesia, dated on the thirteenth day of April one thousand nine hundred ninety-five (13-4-1995) number: C-59.HT. 03.07-Th. 1995, substitute of RACHMAT SANTOSO, SH. Notary in Jakarta.-------------------------- Jakarta, 7 January 1997 Substitute Notary in Jakarta. [SEAL] (BUNTARIO TIGRIS DARMANA, NG.SH.CN.) 80 LIST OF EXHIBITS EXHIBIT I DESCRIPTION OF THE PROPERTY EXHIBIT II GOVERNMENT FILINGS EXHIBIT III SHAREHOLDER'S MINUTES EXHIBIT IV RECEIPTS 81 EXHIBIT I DESCRIPTION OF THE PROPERTY 82 [map] 83 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] [SEAL] Lampiran I : KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM Nomor : Tanggal : LAMPIRAN DAFTAR KOORDINAT Nama Perusahaan : PT. ANDHIKA MUTIARA ETAM Lokasi - - - Propinsi : KALIMANTAN TIMUR - - - Kabupaten : KUTAI - - - Kecamatan : - - - - Kode Wilayah : JLB007 Luas : 71.420 Ha
================================================================== No. Garis Bujur (BT) Garis Lintang Ti ----------------------------------------------------------- tik O ' " O ' " LU/LS ------------------------------------------------------------------ 1 117 21 30.0 1 15 0.0 LU 2 117 21 30.0 1 30 0.0 LU 3 117 23 0.0 1 30 0.0 LU 4 117 23 0.0 1 33 0.0 LU 5 117 24 0.0 1 33 0.0 LU 6 117 24 0.0 1 35 0.0 LU 7 117 25 0.0 1 35 0.0 LU 8 117 25 0.0 1 38 30.0 LU 9 117 30 0.0 1 38 30.0 LU 10 117 30 0.0 1 26 0.0 LU 11 117 35 0.0 1 26 0.0 LU 12 117 35 0.0 1 20 0.0 LU 13 117 30 0.0 1 20 0.0 LU 14 117 30 0.0 1 15 0.0 LU ==================================================================
Direktur Jenderal Pertambangan Umum Kuntoro Mangkusubroto 84 EXHIBIT II GOVERNMENT FILINGS 85 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] [SEAL] T A N D A T E R I M A Nomor: 402/SDPH/1996 Perusahaan : ANDHIKA MUTIARA ETAM, PT Alamat di Indonesia : Komp. Pinang Babaris Blok A/47-48 Samarinda Telp. 0541-41974 Alamat di Luar Negeri Tgl/Jam Terima Aplikasi : 09/07/1996, 10.00 Bahan Galian : Batubara Jenis Aplikasi : Kontrak Karya Batubara Kode Wilayah : 96JLB007 Propinsi : Kalimanta Timur Lokasi : Kab.Kutai Luas Wilayah : 71.420.00 Ha Lampiran Aplikasi:
- - --------------------------------------------------------------------- No. Keterangan Persyaratan - - --------------------------------------------------------------------- 1 Peta dari UPIPWP Ada - - --------------------------------------------------------------------- 2 Tanda bukti penyetoran jaminan kesungguhan Ada - - --------------------------------------------------------------------- 3 Tanda terima SPT tahun terakhir (PMDN) Ada - - --------------------------------------------------------------------- 4 Lap.keuangan perusahaan PMA dan PMDN tiga tahun Ada terakhir yang telah diaudit - - --------------------------------------------------------------------- 5 Kesepakatan bersama (MOU) jika> 1 pemohon Tidak ada - - --------------------------------------------------------------------- 6 Laporan Tahunan Perusahaan (PMA dan PMDN) Ada - - ---------------------------------------------------------------------
Jakarta, 09/07/1996 Kepala Bagian Perundang-undangan /s/ YUSMID AP, SH 100002520 [SEAL] 86 EXHIBIT III SHAREHOLDER'S MINUTES 87 [LOGO] [SEAL] MINUTES OF GENERAL MEETING OF FOUNDERS OF PT ANDHIKA MUTIARA ETAM On this day fifteenth December one thousand nine hundred ninety six (15-12-1996), a General Meeting of Founders ("Meeting") of PT. ANDIKA MUTIARA ETAM ("the Company") was held at Plaza Exim, 24th Floor, Jl.Jendral Gatot Soebroto Kav.36-38, Jakarta 12910. The Company was established by Deed No. 64 dated 19 June 1996 made by Haji Gunawan,SH,Notary in Samarinda, such deed has not been approved yet by the Minister of Justice of the Republic of Indonesia (here in after reforted to as the "Articles of Association") Present in this Meeting: 1. Adnan Alamsyah Sulaiman, as the holder of 160 shares of the Company; 2. Armansyah Sulaiman, as the holder of 80 shares of the Company; 3. Sri Aslinda Sulaiman, as the holder of 160 shares of the Company; 4. Drs. Ardiansyah Sulaiman, as the holder of 160 shares of the Company; 5. Anwar Heriansyan Sulaiman, as the holder of 160 shares of the Company; 6. Sulaiman, as the holder of 80 shares of the Company. That in this Meeting there were represented 800 shares, which represent all of the subscribed and issued shares in the Company so that based on Article 20 of Article of Association of the Company, this meeting is duly convened and has the power to make valid decision with respect to all matters which are to be discussed even though there was no written call of the Meeting. The Chairman further explained to the Meeting that the agenda of the Meeting is the transfer of the property and interest of the Company in Kontrak Karya Batu Bara KW APB042 (KKB) and any government licenses with regard to such KP to Singkamas Agung Ltd. or any other party appointed by Singkamas Agung Ltd. In respect to the above mentioned Agenda, the Chairman after giving a complete explanation, subsequently proposed to the Meeting and the Meeting after due discussion, unanimously voted to approve and therefore decides to declare the transfer of the property and interest in Kontrak Karya Batu Bara KW 96JLB007 and any government licenses with regard to such KKB to Singkamas Agung Ltd. or any other party appointed by Singkamas Agung Ltd. was approved by founders of the Company. 88 [SEAL] The meeting hereby authorizes the Board of Directors of the Company with the right of substitution, to appear before a Notary to state the resolutions resolved hereunder in notarial deed and to appear wherever necessary, to give information, to make, to cause to be made and signed, all necessary letters/documents, and further to perform all actions deemed proper and useful for the completion of the above mentioned matters. Since no other matters to be discussed in this Meeting is closed by the Chairman at 16.00 West Indonesian Time. Chairman Shareholders [SEAL] /s/ /s/ - - ----------------------- ------------------- Adnan Alamsyah Sulaiman Armansyah Sulaiman Shareholders Shareholders /s/ /s/ - - ----------------------- ------------------------ Sri Aslinda Sulaiman Drs. Ardiansyah Sulaiman Shareholders Shareholders /s/ /s/ - - ------------------------ ------------------------ Anwar Heriansyah Sulaiman Sulaiman 89 EXHIBIT IV RECEIPTS 90 [SEAL] [ILLEGIBLE COPY] 91 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] [SEAL] Jakarta, 3 Juli 1996 Nomor : 1694 /861/DJP/1996 Lampiran : Hal : Penyetoran uang Jaminan Kesungguhan Yang terhormat PT. ANDHIKA MUTIARA ETAM Komp. Pinang Babaris Blok A/47 - 48 Samarinda Kaltim Berdasarkan Keputusan Menteri Pertambangan dan Energi Nomor 135.K/201/M.PE/1996 tanggal 20 Maret 1996 dan Keputusan Direktur Jenderal Pertambangan Umum Nomor 154.K/27/DDJP/1996 tanggal 3 Mei 1996, maka dalam rangka memenuhi persyaratan pengajuan permohonan Kontrak Karya Batubara, kepada Saudara diminta menyetorkan/transfer uang sebesar Rp. 714.200.000,- (tujuh ratus empat belas juta dua ratus ribu rupiah atau AS$ pada rekening Direktur Jenderal Pertambangan Umum Nomor 700.087.06025.2.01.5 (untuk rupiah) atau Nomor 3081.411.0180.4 (untuk dollar Amerika Serikat) pada PT. Bank Dagang Negara (Persero) Cabang Jakarta Wisma Baja Jalan Jenderal Gatot Subroto Kav. 54 Jakarta 12950 dan didepositokan atas nama Direktur Jenderal Pertambangan Umum qq perusahaan Saudara. Bukti penyetoran/transfer tersebut dilampirkan pada Daftar Isian Permohonan Kontrak Karya Batubara yang Saudara Ajukan. Apabila sampai dengan tanggal 9 Juli 1996, Saudara tidak melaksanakan penyetoran/transfer dimaksud, maka wilayah yang telah dicadangkan dinyatakan bebas dan terbuka kembali untuk umum. Demikian untuk Saudara laksanakan. DIREKTUR JENDERAL PERTAMBANGAN UMUM SEKRETARIS DIREKTORAT JENDERAL PERTAMBANGAN UMUM, [SEAL] /s/ NASRI YUNUS ANIS, SH NIP. 100001656 Tembusan: 1. Kepala Bagian Perundang-undangan, Sekretariat Direktorat Jenderal Pertambangang Umum 2. Direksi PT. Bank Dagang Negara (Persero) Cabang Jakarta Wisma Baja. KD. 96 JLB007 92 DEVELOPMENT AGREEMENT COAL MINING PROJECTS IN EAST KALIMANTAN [SEAL] This Development Agreement (Agreement) is made and entered into on this seventh day of January, 1997 by and between: PT. Andhika Mutiara Lestari, a limited liability company established and validly existing under Indonesia law, and having its address at Jl. Langsat No.59 Komp, Samarinda - Indonesia (hereinafter referred to as "Andhika"), and is represented in this Agreement by its' President Direcotr, Mr. Adnan AS; and Singkamas Agung Ltd., a Bahamas Corporation having its' registered offices in the Bahamas and its representative offices in Singapore (hereinafter referred to as "Singkamas"), and is represented in this Agreement by its' President Director, Mr. William Chan. (Andhika and Singkamas are hereinafter referred to collectively as "The Parties"). WITNESSETH Whereas, the Government of Indonesia acting through its' Ministry of Mines and Energy and the Directorate General of General Mining (hereinafter referred to as the "DGGM") wishes to expand on its enhanced exploration and exploitation for coal and other natural resources during the next Sixth Development Plan (known as Repelita VI) and beyond, and encourages the private sector to participate in such explorations, development, exploitation and production; and Whereas Singkamas is actively seeking to acquire coal mining concessions and to implement coal mining activities in East Kalimantan, Indonesia (hereinafter referred to as the "Project"); and Whereas Andhika has successfully reserved, or "blocked", one (1) potential coal mining property in the coal mining district of East Kalimantan. The geographical location of such property is described in Exhibit I. Andhika can successfully demonstrate that it has officially blocked this area of land at the DGGM through its' official and complete filings and payments to the DGGM for this area. These official 93 [SEAL] documents are attached in Exhibit II. Currently, Andhika controls the rights to this property and is in the process of obtaining the government approvals and or mandates (hereinafter referred to as the "Government License"), which are to be issued in the form of Contracts of Work (hereinafter referred to as a "CoWs"), for the development and exploitation of the coal mining property. Andhika also recognizes the importance of obtaining any other government licenses associated with the exploitation of coal, including the license for the refinery and production of coal as well as the transportation and sale of coal; Andhika will use its' expert abilities and efforts to obtain these additional licenses from the Government in order to facilitate the development, implementation, and success of the Project; and Whereas both Parties agree to use their best efforts to complete the sale and acquisition of the Property (hereinafter referred to as the "Transaction"), which includes the rights to the government licenses for the exploration and exploitation of coal on the Property. The Parties also agree to jointly cooperate to successfully obtain any other government licenses which will be necessary; and Whereas the Coal Mining Property (hereinafter referred to as the "Property") is located in the coal mining district of East Kalimantan, Indonesia and, potentially, has substantial deposits of coal and other natural resources. The property encompasses a combined total of approximately 109,900 hectares of land. A geographical description of the Property is provided in Exhibit I which is attached to this Agreement. The Property is located in a coal mineralization zone and, through official filings and monetary payments made to the DGGM (which includes both filing and annual fees as well as seriousness bonds), Andhika has secured the rights to the Property and is in the process of obtaining the government licenses for the general survey and exploration of coal on the Property as well as the CoWs to exploit coal on the Property. These documents are shown in Exhibit II which is attached to this Agreement. DESCRIPTION OF THE PROPERTY: 109,900 HECTARES The Property consists of approximately 109,900 hectares of land. For this block of property, Andhika has properly filed, paid for, and obtained the rights to this area. Andhika is also currently in the process of obtaining the CoWs to explore and exploit coal on the property. See Exhibit II. For purposes of this Transaction, Mr. Adnan AS, a President Director of PT Andhika Mutiara Etam, has been granted the complete and/or official authorization, through a General Shareholder's Meeting (subject to provision in the Articles of Association), to sell 77.5% of Andhika's interest in the Property, including the complete transfer of the government rights (when obtained) to explore and exploit for coal on the Property. These Shareholder's Minutes are referenced in Exhibit III which is attached to this Agreement. Although Andhika will actively seek to obtain the government licenses for 94 [SEAL] the commercial exploitation of coal (including the licenses for the refinery production, transportation, and sale of coal), Andhika recognizes that these government licenses will also be transferred to Singkamas or to some third party which is appointed by Singkamas. Andhika will use its' expert abilities and efforts for obtaining the government licenses from the DGGM. The purposes of obtaining all of the necessary licenses is to make it feasible for Singkamas to effectively and efficiently mine the Property and to make them into a world-class profitable operation. Whereas Singkamas has the ability to provide and/or secure financing to acquire 77.5% interest in the Coal Mining Property and the related government licenses from Andhika as well as the ability to develop the Property into a world-class mining operation. Now therefore, the Parties hereto agree as follows: 1. COOPERATION In accordance with the Government approvals which has already been granted to Andhika, the parties agree as follows: 1.1. To submit additional application(s), as necessary, to the DGGM for the licenses and/or CoWs for the exploration and exploitation of coal on the Property. 1.2. To complete the acquisition of the Property. 1.3. To support, develop, and complete the mining operations. 2. EXCLUSIVITY Except as otherwise provided for in this Agreement, the Parties warrant that they shall cooperate solely and exclusively with each other in connection with this Coal Mining Project and that none of them shall enter into any agreement with any other firm or group of firms with respect to any matter related to this Project without the prior written consent of the other Party and to keep this information strictly confidential. Further, Andhika will grant Singkamas a first rights of refusal with respect to any coal mining property which it may control, influence the sale of, or be able to recommend to Singkamas. The Parties also warrant that such exclusivity will be respected by those persons or firms which they may exercise control or with their affiliate in any manner. 95 [SEAL] 3. SPONSORSHIP Andhika shall act as the main sponsor of this Project. In this regard, Andhika has the complete and proper approvals (which are subject to legal verification) to transfer 77.5% interest in the Property, which includes the full and complete rights to any Government Licenses which Andhika will receive for the exploration and exploitation of coal on the Property. All geological and other significant information will be made available to the parties on a continual basis. Furthermore, Andhika will obtain any other necessary and appropriate government licenses associated with the refinery and production of coal as well as the transportation and sale of coal. Similarly, these licenses will also be transferred to Singkamas or its' designee. 4. INITIAL RESPONSIBILITIES The Parties agree that their responsibilities shall be as follows; 4.1 Andhika will secure the proper approvals to sell its' rights to the Property as well as its' rights to the Government Licenses. Andhika will assist with the development of the Project in conjunction with the Parties as needed. In particular, Andhika will take all steps necessary or deemed advisable by Singkamas to secure the CoW for the exploitation of coal on the Property. Andhika has reviewed preliminary geological surveys on the Property and will provide all of this information as well as all future information to the Parties on a continual basis. Andhika will give Singkamas first priority/option for any future coal mining opportunities for acquisition and/or for working together in seeking other coal mining projects. In particular, Andhika must give first priority to Singkamas to acquire any additional property which are contiguous with the current property. In those instances where these contiguous property and/or other property region are owned and/or controlled by friends, families, and/or directors of other local PT. Companies which are associated with Andhika, Andhika must give priority to Singkamas to acquire such property, if available. 4.2 Singkamas will be responsible to provide and/or secure financing for the Project, provide world-class technologies and management/exploration teams and, if necessary, a strategic operator(s) to develop the Property Singkamas will jointly assist the Project with Andhika. 4.3 Singkamas may appoint a qualified Indonesian party to accept the transfer of CoW and may at any time at its discretion cause or permit such party to transfer such property and licenses to any third party based on prevailing regulations and subject to Anugrah's continuing rights under the Agreement being respected by such transferee. 96 [SEAL] 5. TRANSFER OF LICENSES 5.1 Andhika will transfer 77.5% interest of coal minerals on the Property. Furthermore, Andhika's principals and/or affiliates will not complete with Singkamas. 97 5.2 Payment For: (a) Andhika agrees to sell 77.5% if its interest in the Property as well as its' full and complete rights to the Government Approvals to such qualified party as indicated by Singkamas that may be appointed for the price of US One Million Dollars (US$1,000,000). (b) All payments hereunder shall be subject to continual fulfillment by Andhika of its obligations under this Agreement. 5.3 Payment Conditions: (a) Singkamas agrees to make a down payment of US$200,000 after the signing of this Agreement. This payment, however, is subject to legal verification that the title to the Property is acceptable and without encumbrances and that the government license issued to Andhika is current and valid. Such payment will be made to Andhika once the test results from the initial investigation/exploration activity are completed and any other legal verifications, which may be required in respect of title to the Property and validity of government licenses, is finalized. (b) The final payment of US1,500,000 will be immediately paid to Andhika upon the coal mines being put into the production stage and are generating positive revenues. For this to occur, however, Andhika must first secure the complete and proper CoW. Andhika recognize that once it secures CoW for the benefit of the Parties and, moreover, the benefit of the Project, Andhika will transfer the full and complete rights of CoW to Singkamas or the entity appointed by Singkamas. 5.4 Profit Sharing The Parties hereby agree that the Profit Sharing from the net profit (total revenue minus all expenses including taxes) to the project shall be as follows: 98 [SEAL] Singkamas 77.5% Andhika 22.5% 5.5 Reimbursement of Expenses Singkamas agrees to relinquish to or reimburse Andhika for the funds which Andhika expended towards the Seriousness Bond which it paid to the DGGM for blocking the property. These funds amount to a total of Rp. 1,198,000,000.-. Receipts for these expenses are referred in Exhibit IV. Terms and Conditions for the reimbursement of these expenses are to be determined by the Parties. 5.6 Exploration Program (a) Singkamas agrees to begin the Exploration Program on the Property by February 1997 or sooner. (b) Singkamas will dig numerous test pits as part of the exploration program. (c) Shallow drilling to the depth of 50-60 meters will also be carried out over time second 90-day period. (d) Deep drilling to depth of 200 meters will also be carried out over the second 90-day period. (e) Singkamas agrees to finance the Exploration Program for the development and implementation of the Coal Mine Project. In this regard, Singkamas agrees to spend a minimum of US$100,000 in year 1, US$100,000 in Year 2; and US$100,000 in Year 3. Accounting record for these expenditures will be kept by Singkamas. 6. JURISDICTION 6.1 (a) Any dispute or controversies which may arise out of this Agreement shall be amicably settled by the Parties, but in failure thereof, such disputes or controversies shall be referred to the arbitration of the Rules of Badan Arbitrasi Nasional Indonesia (BANI). The arbitration panel shall consist of three (3) arbitrators, one (1) chosen by the complainant, one (1) chosen by the respondent and a Chairman chosen by the arbitrators named by the complainant and the respondent. (b) The Parties expressly agree that (1) the arbitration shall decide the matter as expeditiously as possible, however, no time limits shall be 99 [SEAL] imposed, (ii) Section 631 of the R.V. (Reglement opde Rechtsvordering) shall apply, and that accordingly the arbitrators shall only reach their decision by applying strict rules of law to the facts and shall not purport to resolve any dispute exaequo et bono, (iii) the arbitration shall be conducted the English language, in Jakarta, Indonesia, or such other place or places in Indonesia, as the parties to the arbitration may agree, (vi) the Party in whose favor the arbitral award is rendered shall be entitled to recover costs and expenses of the arbitration including but not limited to the cost and expense of administration of the arbitration proceedings, and (v) the arbitral award shall be issued in Indonesia. (c) The Parties expressly agree to waive section 641 of the R.V. and any other applicable laws permitting appeal to courts of law or any other body so that accordingly there shall be no appeal to any court of law or any other body from the decision (or any interim decision) of the arbitrators and neither party shall dispute nor question such decision before any judicial authority in the Republic of Indonesia of elsewhere. (d) Pending the submission to arbitration and thereafter until the arbitration tribunal issues its decision, each Party shall, expect in the event of expiration, termination or failure by the other Party to obey or comply with a specific order or decision of the arbitration tribunal, continue to perform all of its obligations under this Agreement without prejudice to a final adjustment in accordance with the said award. 6.2 This Agreement as to its' interpretation and application shall be governed by the Laws of Indonesia. 6.3 The Parties hereby expressly agree to waive the provision of Article 1266 of the Indonesian Civil Code with respect to the need for a court pronouncement to terminate this Agreement. 7. TERM OF VALIDITY 7.1 This agreement shall be in effect as of January 7th, 1997, and shall be valid until the purposes and objectives of the Project have been fulfilled. 7.2 If for any reasons the transfer of the Property is not approved by the Government Authorities within six (6) months after the date of this Agreement, Singkamas shall have the option to terminate this Agreement with no further liability hereunder. 100 [SEAL] 8. OTHER MATTERS Other matters not stipulated in this Agreement shall be further discussed and decided later on through mutual discussion between the Parties on the basis of this Agreement. In Witness Whereof, the Parties agree that this Agreement is legal and binding and have caused their duly authorized representatives to execute this Agreement on the year and the first above stated. PT. ANDHIKA MUTIARA LESTARI SINGKAMAS AGUNG LTD. By /s/ By /s/ Name : Adnan AS Name : William Chan Title : President Director Title : President Director Number : 20.191/1997/Leg. - - -Seen for the signing of the signatures of: - - -Mr. ADNAN ALAMSYAH SULAIMAN, Indonesian--- Citizen, private person, residing in ------ Samarinda, Jalan Rawa Indah B3/No.9, Rt. 52, Rw. 08, holder of Identity Card Number: ---- 03.1002/2714/00931/1995, temporarily being- in Jakarta;-------------------------------- - - -Mr. WILLIE CHAN HUA BENG, Singapore Citizen, private person, holder of Passport Number: S 1852289-F, temporarily being in Jakarta,- both are known to me, BUNTARIO TIGRIS------ DARMAWA,NG.SH.CN. by virtue of decision---- Letter from the Minister of Justice of the- Republic of Indonesia dated on the thirteenth day of April one thousand nine hundred and- ninety five (13-4-1995) number : C-59.HT. 03.07-Th.1995, substitute of RACHMAT SANTOSO, SH. Notary in Jakarta.---------------------- Jakarta, 7th January 1997 Substitute Notary in Jakarta [SEAL] /s/ (BUNTARIO TIGRIS DARMAWA, NG.SH.CN.) 101 LIST OF EXHIBITS EXHIBIT I DESCRIPTION OF THE PROPERTY EXHIBIT II GOVERNMENT FILINGS EXHIBIT III SHAREHOLDER'S MINUTES EXHIBIT IV RECEIPTS 102 EXHIBIT I DESCRIPTION OF THE PROPERTY 103 [MAP] 104 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] [SEAL] Lampiran I : Keputusan Direktur Jenderal Pertambangan Umum Nomor : Tanggal : LAMPIRAN DAFTAR KOORDINAT Nama Perusahaan : PT. ANDHIKA MUTIARA LESTARI Lokasi Propinsi : KALIMANTAN TIMUR Kabupaten : KUTAI Kecamatan : SANGKULIRANG Kode Wilayah : AP0585 Luas : 109.900 Ha
============================================================== No. Garis Bujur (BT) Garis Lintang Ti- ------------------------------------------------------- tik o ' " o ' " LU/LS -------------------------------------------------------------- 1 117 48 0.0 1 22 0.0 LU 2 117 56 0.0 1 22 0.0 LU 3 117 56 0.0 1 24 0.0 LU 4 118 14 0.0 1 24 0.0 LU 5 118 14 0.0 1 3 0.0 LU 6 118 3 0.0 1 5 0.0 LU 7 118 3 0.0 1 17 0.0 LU 8 117 48 0.0 1 17 0.0 LU ==============================================================
Direktur Jenderal Pertambangan Umum Kuntoro Mangkusubroto 105 EXHIBIT II GOVERNMENT FILINGS 106 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] [LOGO] [SEAL] 10 Mei 1996 Nomor : 1976/29/M.DJP/1996 Sifat : Lampiran: Perihal : Persetujuan Prinsip Aplikasi Kontrak Karya Batubara Atas Nama PT Andhika Mutiara Lestari Yang terhormat Direksi PT Andhika Mutiara Lestari Komplek Pinang Babaris Blok A No. 47-48 Samarinda, Kalimantan Timur Menunjuk Surat permohonan Saudara tanggal 27 Maret 1996 dan memperhatikan surat Direktur Jenderal Pertambangan Umum nomor 938/29/DJP/1996 tanggal 19 April 1996 perihal permohonan persetujuan prinsip aplikasi Kontrak Karya Batubara (KKB), dengan ini kami beritahukan bahwa pada prinsipnya kami dapat menyetujui aplikasi PT Andhika Mutiara Lestari untuk mengusahakan bahan galian batubara di Kecamatan Sangkuliran, Kabupaten Kutai, Propinsi Kalimantan Timur seluas 109.900 ha, sesuai dengan pencadangan wilayah dari Unit Pelayana Informasi dan Pencadangan Wilayah Pertambangan (UPIPWP) Direktorat Jenderal Pertambangan Umum tanggal 25 Maret 1996. Selama pemrosesan permohonan KKB tersebut, Saudara dapt segera mempelajari draf KKB dan melakukan perundingan dengan Tim Perunding Batubara. Apabila dikehendaki Saudara dapat meneliti wilayah yang dimohon sebelum KKB ditandatangani. Untuk itu Saudara dapat mengajukan permohonan Surat Izin Penyelidikan Pendahuluan (SIPP) berdasarkan Keputusan Menteri Pertambangan dan Energi nomor 2202.K/201/M.PE/1994 tanggal 18 November 1994. Kami tekankan lagi bahwa kerusakan lingkungan yang diakibatkan oleh kegiatan penambang, adalah tanggung jawab penambang yang bersangkutan. Atas perhatian Saudara, kami ucapkan terima kasih. Menteri Pertambangan dan Energi [SEAL] /s/ I.B. Sudjana Tembusan: 1. Bapak Menteri Negara Penggerak Dana Investasi/Ketua BKPM 2. Sekretaris Jenderal Departemen Pertambangan dan Energi 3. Direktur Jenderal Pertambangan Umum 4. Gubernur Kepala Daerah Tingkat I Propinsi Kalimantan Timur 5. Direktur Utama PT Tambang Batubara Bukit Asam (Persero) 6. Direktur Batubara, Ditjen Pertambangan Umum 7. Direktur Teknik Pertambangan Umum, Ditjen Pertambangan Umum 8. Kepala Kanwil Dep. Pertambangan dan Energi Prop. Kalimantan Timur 107 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] [SEAL] T A N D A T E R I M A Nomor: 188/SDPH/1996 A. Permohonan (aplikasi) dari : PT. Andhika Mutiara Lestari Tanggal : 27 Maret 1996 Alamat : Komp. Pinang Babaris Blok A Nomor 47-48 Samarinda Kaltim Telp. 0541-41974 Diterima hari/tanggal/Jam : Rabu /27 Maret 1996/15.00 Perihal : Permohonan Kontrak Karya Batubara di daerah Propinsi Kalimantan Timur Kabupaten Kutai Luas 109.900 Ha Kode Wilayah : AP 0585 B. Lampiran - lampiran : 1. Peta wilayah (asli) dari Unit Pelayanan Informasi dan Pencadangan Wilayah Pertambangan (UPIPWP)..............: ada 2. Tanda Bukti penyetoran jaminan kesungguhan dari Bank yang ditunjuk..........................................: ada 3. Tanda terima SPT tahun terakhir........................: ada 4. Laporan Keuangan 3 (tiga) tahun terakhir yang telah diaudit oleh Akuntan Publik: - Perusahaan Asing.....................................: --- - Perusahaan Indonesia (Perusahaan Pendukung)..........: ada 5. Kesepakatan bersama (MOU) jika pemohon diajukan lebih dari 2 pemohon.........................................: --- 6. Laporan tahunan perusahaan.............................: ada Permohonan tersebut telah dilampiri persyaratan sesuai ketentuan yang berlaku untuk diteruskan ke Direktur Batubara. Jakarta, 27 Maret 1996 Kepala Bagian Perundang-Undangan [SEAL] /s/ Yusmid AP, SH. NIP. 100002520 Tembusan: - - - Unit Pelayanan Informasi Pencadangan Wilayah Pertambangan (UPIPWP) 108 [SEAL] [ILLEGIBLE COPY] 109 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] [SEAL] Nomor : Lampiran : Hal : Penyetoran uang Jaminan Kesungguhan Yang terhormat PT. Andhika Mutiara Lestari Komp. Pinang Babaris Blok A/47- 48 Samarinda Kaltim Berdasarkan Edaran kami No.02/E/80/DJP/1996 tanggal 16 Januari 1996 yang merupakan penyempurnaan dari Edaran No.01/E/80/DJP/1996 tanggal 8 Januari 1996, maka dalam rangka memenuhi persyaratan pengajuan permohonan Kontrak Karya Batubara*, kepada Saudara diminta menyetorkan/transfer uang sebesar Rp 1.198.000.000 (Satu millar seratus sembilan puluh delapan Juta Rupiah) atau AS $...........................................) pada rekening Direktur Jenderal Pertambangan Umum No.700.087.06025.2.01.5 (untuk rupiah) atau Nomor 3081.411.0180.4 (untuk dollar Amerika Serikat) pada PT. Bank Dagang Negara (Persero) Cabang Jakarta Wisma Baja Jalan Jenderal Gatot Subroto Kav. 54 Jakarta 12950 dan didepositokan atas nama Direktur Jenderal Pertambangan Umum qq perusahaan Saudara. Bukti penyetoran/transfer tersebut dilampirkan pada Daftar Isian Permohonan Kontrak Karya Batubara yang Saudara ajukan. Apabila sampai dengan tanggal 29 Maret 1996, Saudara tidak melaksanakan penyetoran/transfer dimaksud, maka wilayah yang telah dicadangkan dinyatakan bebas dan terbuka kembali untuk umum. Demikian untuk Saudara laksanakan. DIREKTUR JENDERAL PERTAMBANGAN UMUM SEKRETARIS DIREKTORAT JENDERAL PERTAMBANGAN UMUM, [SEAL] /s/ NASRI YUNUS ANIS, SH NIP. 100001656 Tembusan: 1. Kepala Bagian Perundang-undangan, SDJPU 2. Direksi PT. Bank Dagang Negara (Persero) Cabang Jakarta Wisma Baja. 110 EXHIBIT III SHAREHOLDER'S MINUTES 111 [LOGO] [SEAL] MINUTES OF GENERAL MEETING OF FOUNDERS OF PT ANDHIKA MUTIARA LESTARI On this day fifteenth December one thousand nine hundred ninety six (15-12-1996), a General Meeting of Founders ("Meeting") of PT. ANDIKA MUTIARA LESTARI ("the Company") was held at Plaza Exim, 24th Floor, Jl.Jendral Gatot Soebroto Kav.36-38, Jakarta 12910. The Company was established by Deed No. 47 dated 20 Oktober 1995 made by Haji Hardjo Gunawan,SH,Notary in Samarinda, such deed has not been approved yet by the Minister of Justice of the Republic of Indonesia (here in after reforted to as the "Articles of Association") Present in this Meeting: 1. Adnan Alamsyah Sulaiman, as the holder of 700 shares of the Company; 2. Sulaiman, as the holder of 700 shares of the Company; 3. Sri Aslinda Sulaiman, as the holder of 700 shares of the Company; 4. Drs. Ardiansyah Sulaiman, as the holder of 700 shares of the Company; 5. Anwar Heriansyan Sulaiman, as the holder of 525 shares of the Company; That in this Meeting there were represented 3500 shares, which represent all of the subscribed and issued shares in the Company so that based on Article 20 of Article of Association of the Company, this meeting is duly convened and has the power to make valid decision with respect to all matters which are to be discussed even though there was no written call of the Meeting. The Chairman further explained to the Meeting that the agenda of the Meeting is the transfer of the property and interest of the Company in Kontrak Karya Batu Bara KW APB042 (KKB) and any government licenses with regard to such KP to Singkamas Agung Ltd. or any other party appointed by Singkamas Agung Ltd. In respect to the above mentioned Agenda, the Chairman after giving a complete explanation, subsequently proposed to the Meeting and the Meeting after due discussion, unanimously voted to approve and therefore decides to declare the transfer of the property and interest in Kontrak Karya Batu Bara KW AP0585 and any government licenses with regard to such KKB to Singkamas Agung Ltd. or any other party appointed by Singkamas Agung Ltd. was approved by founders of the Company. 112 [LOGO] [SEAL] The meeting hereby authorizes the Board of Directors of the Company with the right of substitution, to appear before a Notary to state the resolutions resolved hereunder in notarial deed and to appear wherever necessary, to give information, to make, to cause to be made and signed, all necessary letters/documents, and further to perform all actions deemed proper and useful for the completion of the above mentioned matters. Since no other matters to be discussed in this Meeting is closed by the Chairman at 16.00 West Indonesian Time. Chairman Shareholders /s/ /s/ - - ----------------------- ------------------------ Adnan Alamsyah Sulaiman Sulaiman Shareholders Shareholders /s/ /s/ - - ----------------------- ------------------------ Sri Aslinda Sulaiman Drs. Ardiansyah Sulaiman Shareholders /s/ - - ------------------------- Anwar Heriansyah Sulaiman 113 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] [LOGO] [SEAL] Samarinda, 7 Januari 1997 Yang bertandatangan dibawah ini: N a m a : ADNAN AS Alamat : Jl. Rawa Indah B-3/No.9 Samarinda Jabatan : Pendiri PT. ANDHIKA MUTIARA LESTARI Dengan ini menyetakan bahwa, Bapak Abdullah Juffrie telah meninggal dunia. Pendiri PT. ANDHIKA MUTIARA LESTARI menyatakan sepenuhnya ahli waris dari Bapak Abdullah Jueffrie telah setuju secara penuh dilaksanakan pengalihan Kontark Karya Batu Bara, kode wilayah : AP0585 milik Pt. ANDHIKA MUTIARA LESTARI kepada Singkamas Agung Ltd. atau pihak lain yang ditunjuk oleh Singkamas Ltd. Pendiri PT. ANDHIKA MUTIARA LESTARI /s/ /s/ - - ----------------------- ------------------------ Adnan Alamsyah Sulaiman Sulaiman /s/ /s/ - - ----------------------- ------------------------ Sri Aslinda Sulaiman Drs. Ardiansyah Sulaiman /s/ - - ------------------------- Anwar Heriansyah Sulaiman 114 EXHIBIT IV RECEIPTS 115 [SEAL] [ILLEGIBLE COPY] 116 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] [SEAL] Nomor : Lampiran : Hal : Penyetoran uang Jaminan Kesungguhan Yang terhormat PT. Andhika Mutiara Lestari Komp. Pinang Babaris Blok A/47- 48 Samarinda Kaltim Berdasarkan Edaran kami No.02/E/80/DJP/1996 tanggal 16 Januari 1996 yang merupakan penyempurnaan dari Edaran No.01/E/80/DJP/1996 tanggal 8 Januari 1996, maka dalam rangka memenuhi persyaratan pengajuan permohonan Kontrak Karya Batubara*, kepada Saudara diminta menyetorkan/transfer uang sebesar Rp 1.198.000.000 (Satu millar seratus sembilan puluh delapan Juta Rupiah) atau AS $.......................... ....................................................) pada rekening Direktur Jenderal Pertambangan Umum No.700.087.06025.2.01.5 (untuk rupiah) atau Nomor 3081.411.0180.4 (untuk dollar Amerika Serikat) pada PT. Bank Dagang Negara (Persero) Cabang Jakarta Wisma Baja Jalan Jenderal Gatot Subroto Kav. 54 Jakarta 12950 dan didepositokan atas nama Direktur Jenderal Pertambangan Umum qq perusahaan Saudara. Bukti penyetoran/transfer tersebut dilampirkan pada Daftar Isian Permohonan Kontrak Karya Batubara yang Saudara ajukan. Apabila sampai dengan tanggal 29 Maret 1996, Saudara tidak melaksanakan penyetoran/transfer dimaksud, maka wilayah yang telah dicadangkan dinyatakan bebas dan terbuka kembali untuk umum. Demikian untuk Saudara laksanakan. DIREKTUR JENDERAL PERTAMBANGAN UMUM SEKRETARIS DIREKTORAT JENDERAL PERTAMBANGAN UMUM, [SEAL] /s/ NASRI YUNUS ANIS, SH NIP. 100001656 Tembusan: 1. Kepala Bagian Perundang-undangan, SDJPU 2. Direksi PT. Bank Dagang Negara (Persero) Cabang Jakarta Wisma Baja. EX-10.(XXI) 7 EXHIBIT 10.(XXI) 1 EXHIBIT 10(XXI) KALIMAS JAYA LTD. ACQUISITION AGREEMENT FOR GOLD & COAL CONCESSIONS Whereas this Acquisition Agreement (AA) is made and entered into on this 18th day of February 1997, by and between: 1. KALIMAS JAYA LTD. (hereinafter referred to as "KALIMAS"), a corporation organized under the laws of the Bahamas and having representative offices in Singapore. Kalimas is represented in this transaction by William Chan (Chan); and, 2. KALIMANTAN RESOURCES LTD. (hereinafter referred to as "KALIMANTAN"), a corporation organized under the laws of the Commonwealth of the British Virgin Islands, and having registered offices in the Commonwealth of the British Virgin Islands. Kalimantan is a wholly owned subsidiary of Nevada Manhattan Mining Inc. which has a representative office at 5038 North Parkway Calabasas, Suite 100, Calabasas, CA 91302. Kalimantan is represented in the AA by Christopher Michaels (CDM) and Jeffrey Kramer (JK). Kalimas and Kalimantan are hereinafter referred to the "PARTIES" to this AA. WITNESSETH I. CONTRACTUAL TRANSACTIONS Whereas Kalimas controls potential gold mining concessions as well as potential coal mining concessions (hereinafter referred to as the "CONCESSIONS") in Central & East Kalimantan, Indonesia as well as in Central Sumatra, Indonesia. The Concessions are described as follows: THE MUNUNG GOLD MINING CONCESSION - 6,096 Hectares - Location: Central Kalimantan - Northwest of the Kelian Gold Mine - KP for General Survey & Exploration; Issued in August 1996 1 2 THE TELEN GOLD MINING CONCESSION - 687 Hectares - Location: East Kalimantan - East of Busang Deposits - KP for General Survey & Exploration; Issued in August 1996 THE LONG BELEH GOLD MINING CONCESSION - 4,637 Hectares - Location: East Kalimantan - South of Busang Deposits - KP for General Survey & Exploration; Issued in September 1996 THE RIAU GOLD MINING CONCESSIONS(2) Sengingi Concession - 4,000 Hectares - Location: Central Sumatra in the Province of Riau - KP Exploitation Kuantan Concession - 8,000 Hectares - Location: Central Sumatra in the Province of Riau - KP Exploitation 2 3 THE BERAU COAL MINING CONCESSION - 100,000 Hectares - Location: Southeast Kalimantan - Government License: To be provided in Jakarta by PT Kresna TambangSawah The geographic descriptions & information as well as all other relevant Government Licenses in respect of the Concessions is included in Exhibit I which is attached to this Agreement. Kalimas has acquired these five (5) Concessions and has executed the written agreements through a series of "Development Agreements" between Kalimas and a group of local Indonesian companies (hereinafter referred to as the "LOCAL INDONESIAN PARTNERS") designated as follows: 1. PT Walea Bahimas 2. PT Aksara Mina Artha 3. PT Kresna Tambang Sawah 4. PT Muara Mayang Coal Utama 5. PT Muara Koman Mas As a prelude to the signing of this Agreement, Kalimas has introduced, evaluated, recommended, and secured these Concessions to Kalimantan, and for which consideration will be outlined and described later in this Agreement. Under the terms of the Development Agreements between Kalimas and the Local Indonesian Partners, it was agreed that the Local Indonesian Partners would be responsible for obtaining all necessary government licenses and, most importantly, the Exploitation Licenses and/or Contracts of Work (hereinafter referred to as "COWs"), for the development, exploration, and exploitation of gold/other metals and coal from the Concessions; furthermore, the Local Indonesian Partners would seek and obtain all other necessary government licenses, such as those associated with refinery & production as well as transport & sale of the respective natural resources. Under the terms of the Development Agreements, Kalimas has the effective control to consummate this Agreement. As described in the Development Agreements, Kalimas has the controlling interest in each of these Concessions and is to provide certain development funding and other mining and management expertise, all of which has already been negotiated. The specific terms of the cash funding as well as other 3 4 considerations which are to be paid is accurately described in the Development Agreements, all of which are attached herewith in EXHIBIT II. Additionally, it was agreed between Kalimas and the Local Indonesian Partners that Kalimas would be entitled to appoint a third party, such as Kalimantan and/or its' local Indonesian nominee company, to accept a transfer of the relevant government licenses in respect of the Concessions (simultaneously with the filings for the Exploitation Licenses and/or COWs). On the basis of this Agreement, the Parties agree that in the event that the Local Indonesian Partners are unable to perform the required obligations and responsibilities with respect to seeking and acquiring the necessary government licenses and, in particular, the Exploitation Licenses and/or COWs, Kalimantan/Nevada (with the assistance of Kalimas as necessary) has a first right to step in with respect to any and all title and/or licensing issues, and to cure or effectuate them as needed. This may adjust required payments for said properties at the sole expense of seller(s). The Parties further agree that any additional information, points of agreement, clarification and/or amendments in respect of the Concessions will be attached to this Acquisition Agreement as ADDENDUMS. Whereas KALIMANTAN is a wholly-owned subsidiary company of Nevada Manhattan Mining Inc. (hereinafter referred to as "NEVADA") which currently operates gold mining concessions in the state of Nevada. Kalimantan has the desire, interest, and ability to acquire and finance the exploration, development, and exploitation of the Concessions (hereinafter referred to as the "TRANSACTIONS"). Kalimantan/Nevada is prepared to conduct its' due diligence process to verify the values on the Concessions. II. CONSIDERATION FOR THE TRANSACTION Under the terms of this Acquisition Agreement for the gold and coal concessions, the Parties agree on the following for the development, exploration, and exploitation of the Concessions: Kalimas will merge 51% of its' control and interest in each of the Concessions into Kalimantan or its' proper designee for the following terms, conditions, and consideration: 4 5 1. Kalimantan's parent company, Nevada, will issue Common Shares of Nevada's Common Stock to Kalimas on the following basis: The number of shares of Nevada's Common Stock to be issued to Kalimas will be done on a negotiated basis and which will be determined after Kalimantan/Nevada has performed its' due diligence and verification of the Concessions within a 90 to 180 day period from the date of the signing of this Agreement. The consideration to this Agreement is based upon the current price of Nevada's stock, which is approximately $10 per share; thus, any number of shares to be issued to Kalimas will be on the basis of this current market price and will be determined once the appropriate examination and negotiations are finalized and completed. Any shares to be negotiated and issued as a signing bonus for this Agreement will be issued as free trading shares or shares with Piggy-back registration rights. Any further shares above and beyond those shares issued as "Bonus Shares" will be issued upon an independent economic valuation of the Concessions, and at which time the gross value will be negotiated by the Parties. Moreover, the economic valuation of the Concessions will be based upon prevailing industry standards. Twenty-five percent (25%) of any of the shares to be issued in consideration for the valuation of the Concessions will be free trading or have Piggy-back registration rights. 2. Cash payment(s) of approximately USD$5,000,000 to USD$6,000,000 will be assumed by Kalimantan/Nevada in accordance with the financial obligations as described in the Development Agreements, all of which are to be finalized and paid at a date to be determined by the Parties after the results from the gold and coal concessions are completed by Kalimantan/Nevada in the above referenced economic valuations. Any additional cash payments are to be discussed at a later date as necessary. 3. Exploration Program & Board Representation (a) Kalimantan must commence exploration on the Concessions within 6 months but not later than 12 months from the execution of this AA. (b) Kalimas will be entitled to Board representation on Nevada's Board of Directors. 5 6 4. Default Provisions (a) Kalimantan/Nevada, Christopher Michaels & Jeffrey Kramer shall be deemed "key men" to the management of Kalimantan/Nevada and to this transaction. If there is any change in corporate management without Mr. Michaels or Mr. Kramer and without the express written consent of Kalimas, then this Agreement shall be deemed in default and these gold and coal concessions shall revert back to Kalimas at no cost to Kalimas. (b) In the event that Kalimantan/Nevada is unable to complete the development of any of the above concessions, it is mutually agreed by the Parties that its interests shall be prorated under some mutually agreed formula. 5. Kalimas reserves the right to substitute or add other gold or coal mining concessions of like potential value with the approval of Kalimantan/Nevada. 6. Voting Trust: Kalimas will vote its shares in favor of management as long as CDM and JK are executives of Kalimantan/Nevada. 7. All exploration, operating, and budgetary costs to effectuate the Company's due diligence and development of the Concessions will be 100% undertaken by Kalimantan and/or Nevada and will be fully recoupable prior to any distribution of profits, except to the Local Indonesian Partners in this Agreement. 8. It is understood that this agreement and all compensation agreed hereto by both parties above holds true throughout any and all Kalimantan subsidiaries and spin-off public companies that may arise through any corporate structure reorganization. 9. Kalimas will use its best efforts and good faith to fully cooperate with Kalimantan/Nevada to succeed, especially in Indonesia. 6 7 The execution of this AA is legal and binding on all Parties, and this Agreement is ratified by the Board of Directors of both corporations. Kalimas has executed this Agreement in the Republic of Singapore on this 18th day of February, 1997. NMMC has executed this Agreement in the Republic of Brasil on the 24th day of February 1997. SIGNATORIES Nevada Manhattan Mining Inc. and Kalimantan Resources Ltd. Kalimas Jaya Ltd. /s/ Christopher Michaels /s/ William Chan - - ------------------------------- --------------------------------- Name: Christopher Michaels Name: William Chan Title: Chairman/CEO Title: President Director - - ------------------------------- Name: Jeffrey Kramer Title: President 7 8 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] DEPARTEMEN PERTAMBANGAN DAN ENERGI REPUBLIK INDONESIA DIREKTORAT JENDERAL PERTAMBANGAN UMUM KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM Nomor: 378. K / 2012 / DDJP / 1996 TENTANG PEMBERIAN KUASA PERTAMBANGAN PENYELIDIKAN UMUM (KW. 96JLP079) DIREKTUR JENDERAL PERTAMBANGAN UMUM Membaca : Surat permohonan PT. MUARA MAYANG COAL UTAMA tanggal 18 Juli 1996. Menimbang : bahwa permohonan yang bersangkutan tclah memenuhi syarat-syarat sebagaimana ditentukan dalam peraturan perundang-undangan yang berlaku. Mengingat : 1. Undang-undang No. 11 Tahun 1967 (LNRI Th 1967 No. 22, TLNRI No. 2831); 2. Peraturan Pemerintah No. 32 Tahun 1969 (LNRI Th 1969 No. 60, TLNRI No. 2916) sebagaimana telah diubah dengan Peraturan Pemerintah No. 79 Tahun 1992 (LNRI Th 1992 No. 130, TLNRI No. 3510); 3. Keputusan Presiden RI No. 343/M Tahun 1993 Tanggal 11 September 1993; 4. Keputusan Menteri Pertambangan dan Energi No. 2027 K/201/M.PE/1985 Tanggal 18 September 1985; 5. Keputusan Direktur Jenderal Pertambangan Umum No.03.K/201/DDJP/1996 tanggal 8 Januari 1996. Memperhatikan : Surat Direktur Teknik Pertambangan Umum Nomor : 2088/2012/DPT/1996 tanggal 13 Augustus 1996 MEMUTUSKAN Menetapkan : PERTAMA : Memberikan Kuasa Pertambangan Penyelidikan Umum untuk jangka waktu 1(satu) tahun. Kepada : PT. MUARA MAYANG COAL UTAMA Alamat : Jl. Cengkeh 21 F-C Jakarta Atas suatu wilayah tertanda KW. 96JLP079 terletak di Kabupaten Barito Utara, Propinsi Kalimantan Tengah, seluas 6.096,000 (enam ribu sembilan puluh enam) hektar. Dengan penjelasan batas wilayah dan Peta Kuasa Pertambangan sebagaimana tercantum pada lampiran I untuk mengadakan penyelidikan umum dengan memenuhi kewajiban-kewajiban tersebut dalam lampiran II Keputusan ini serta ketentuan peraturan perundang-undangan yang berlaku. KEDUA : Kuasa Pertambangan ini tidak dapat di perpanjang dan dapat dibatalkan walaupun masa berlakunya belum habis, apabila Pemegang Kuasa Pertambangan tidak memenuhi kewajiban-kewajiban yang tercantum di dalam lampiran II Keputusan ini dan ketentuan peraturan perundang-undangan yang berlaku. 9 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] - 2 - KETIGA : Pemegang Kuasa Pertambangan yang bermaksud mengadakan kerjasama dengan pihak modal asing dalam rangka Perjanjian Karya terlebih dahulu harus memperoleh izin tertulis dari Menteri Pertambangan dan Energi cq. Direktur Jenderal Pertambangan Umum. KEEMPAT : Keputusan Direktur Jenderal ini mulai berlaku pada tanggal ditetapkan. Kitetapkan di Jakarta pada tanggal 28 Agustus 1996 DIREKTUR JENDERAL PERTAMBANGAN UMUM [SEAL] /s/ KUNTORO MANGKUSUBROTO -------------------------------- Kuntoro Mangkusubroto TEMBUSAN : 1. Menteri Pertambangan dan Energi di Jakarta (dengan peta); 2. Menteri Kehutanan di Jakarta (dengan peta); 3. Menteri Negara Penggerak Dana Investasi/Ketua Badan Korrdinasi Penanaman Modal di Jakarta (tanpa peta); 4. Menteri Negara Agraria/Kepala Badan Pertanahan Nasional di Jakarta (DENGAN PETA); 5. Sekretaris Jeneral Departemen Pertambangan Dan Energi di Jakarta (dengan peta); 6. Inspektur Jenderal Departemen Partambangan dan Energi di Jakarta (dengan peta); 7. Direktur Jenderal Deologi dan Sumberdaya Mineral up. Direktur Direktorat Sumberdaya Mineral, Jl.Diponegoro No. 57 Bandung (dengan peta); 8. Direktur Jenderal Pemerintahan Umum dan Otonomi Daerah, Departemen Dalam Negeri di Jakarta (tanpa peta); 9. Direktur Jenderal Perlindungan Hutan dan Pelestarian Alam, Departemen Kehutanan Jl.H. Ir. Juanda No. 9 Bogor (dengan peta); 10. Direktur Jenderal Inventarisasi dan Tataguna Hutan, Departemen Kehutanan di Jakarta (dengan peta); 11. Kepala Biro Hukum, Sekretariat Jenderal Departemen dan Energi di Jakarta (dengan peta); 12. Kepala Biro Humum, Sekretariat Jenderal Departemen Pertambangan dan Energi di Jakarta (tanpa peta); 13. Direktur Teknik Pertambangan Umum di Jakarta (dengan peta); 14. Direktur Pembinaan Pengusahaan Pertambangan di Jakarta (dengan peta); 15. Gubernur Kepala Daerah Tingkat I Propinsi Kalimantan Tengah di Palankaraya (dengan peta); 16. Kepala Kantor Wilayah Departemen Pertambangan dan Energi di Palangkaraya (dengan peta); 17. Kepala Kantor Wilayah Departemen Kehutanan di Palankaraya (dengan peta); 18. Bupati Kepala Daerah Tingkat Ii Kabupaten Barito Utara di Muara Teweh (dengan peta); 10 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] - 3 - Lampiran I : KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM Nomor : 378.K/2012/DDJP/1996 tanggal : 28 Agustus 1996 LAMPIRAN DAFTAR KOORDINAT Nama Perusahaan : PT. MUARA MAYANG COAL UTAMA Lokasi - - - Propinsi : KALIMANTAN TENGAH - - - Kabupaten : BARITO UTARA - - - Kecamatan : - - - - Kode Wilayah : 96JLP079 Luas : 6.096 Ha - - ----------------------------------------------------------------------------- No. Garis Bujur (BT) Garis Lintang Titik -------------------------------------------------------------------- o ' " o ' " LU/LS - - ----------------------------------------------------------------------------- 1 114 50 30.00 0 17 0.00 LU 2 114 50 30.00 0 20 30.00 LU 3 114 47 0.00 0 20 30.00 LU 4 114 47 0.00 0 23 0.00 LU 5 114 52 0.00 0 23 0.00 LU 6 114 52 0.00 0 17 0.00 LU - - ----------------------------------------------------------------------------- Direktur Jenderal Pertambangan Umum /s/ Kuntoro Mangkusubroto ------------------------------------ Kuntoro Mangkusubroto 11 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] - 4 - [LOCATION MAP] PETA WILAYAH KUASA PERTAMBANGAN Diperuntukkan bagl : PT. MUARA MAYANG COAL UTAMA Tanggal Proses : 11 JULI 1996 Operator : UMAR ANTANA Kode Wilayah : 96JLP079 LOKASI KEGIATAN Propinsl : KALIMTAN TENGAH Kabupaten : BARITO UTARA Kecamatan : - Tahap : PENYELIDIKAN UMUM Luas areal : 6.096 Ha UNIT PELAYANAN INFORMASI DAN PENCADANGAN WILAYAH PERTAMBANGAN (UPIPWP) DIREKTORAT JENDERAL PERTAMBANGAN UMUM DEPARTEMEN PERTAMBANGAN DAN ENERGI PETA WILAYAH KUASA PERTAMBANGAN 12 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] - 5 - LAMPIRAN II : KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM Nomor : 378. K/2012/DDJP/1996 Tanggal : 28 Agustus 1996 KEWAJIBAN-KEWAJIBAN PEMEGANG KUASA PERTAMBANGAN PENYELIDIKAN UMUM I. Pemegang Kuasa Pertambangan ini telah memilih tempat tinggal (domisili) pada pengadilan Negeri yang berfedudukan di Ibukota Propinsi Kalimantan Tengah di Palangkaraya. II. Sebelum melakukan kegiatan, pemegang Kuasa pertambangan ini harus lebih dahulu memberitanhukan kepada Pemerintah Daerah Propinsi Kalimantan Tengah. III. Hubungan antara pemegang Kuasa Pertambangan dengan pemilik tanah dan pihak ketiga diatur menurut ketentuan-ketentuan yang berlaku. IV. Penegang Kuasa Pertambangan Penyelidikan Umum diwajibkan membayar Iuran Tetap menurut ketentuan-ketenuan yang berlaku dan harus dilunasi sebelum berakhirnya Kuasa Pertambangan. V. Jika terjadi pertindihan Wilayah Kuasa Pertambangan dengan kepentingan lahan lainnya, maka pemegang Kuasa Pertambangan sebelum melaksanakan kegiatan dalam wilayah tersebut harus lebih dahulu menyelesaikannya sesuai dengan ketentuan yang berlaku. VI. Pemegank Kuasa Pertambangan harus memberiken laporan kegiatan 3 (tiga) bulan sekali kepada Direktur Jenderal Pertambangan Umum (1 expl) dan tembusannya disampaikan kepada Direktur Teknik Pertambangan Umum (3 expl), Kepala Kantor Wilayah Departemen Pertambangan dan Energi di Palangkaraya (1 exple), Gubernur dan Bupati Kepala Daerah setempat (masing-masing 1 expl) paling lambat 10 (sepuluh) hari setelah berakhirnya triwulan. VII. Dalam tempo 15 (lima belas) hari setelah keluarnya Keputusan ini, pemegang Kuasa Pertambangan wajib menyerahkan Rencana Kerja dan Rencana Pembiayaan untuk daerah yang dimaksud dalam Keputusan ini. VIII. Pemegang Kuasa Pertambangan diwajibkan memberikan fasilitas jalan atau fasilitas lainnya kepada pemegang Kuasa Pertambangan lain apabila diperlukan sesuai dengan kesepakatan. IX. Dalam Bidang Pengawasan a. Penegang Kuasa Pertambangan harus mengindahkan/mentaati peraturan yang berlaku mengenai Pengawasan Keselamatan dan Kesehatan Kerja serta Lingkungan di bidang Pertambangan Umum. b. Pengawasan atas pelaksanaan Kuasa Pertambangan ini dilakukan oleh Pelaksana Inspeksi Tambank dan/atau petugas yang ditunjuk. c. Pemegank Kuasa Pertambangan dapat meminta kepada petugas tersebut untuk memperlihatkan surat-surat pengenal dan surat-surat tugasnya. 13 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] - 6 - X. a. Peemohonan Kuasa Pertambangan Eksplorasi sebagai peningkatan Kuasa Pertambangan Penyelidikan Umum harus diajukan 3 (tiga) bulan sebelum berakhirnya masa izin ini kepada Direktur Jenderal Pertambangan Umum. b. Atas Kelalaian tersebut pada huruf a, mengakibatkan: 1. Kuasa Pertambangan berakhir menurut hukum dan segala usaha pertambangan harus dihentikan 2. Selambat-lambatnya dalam waktu 6 (enam) bulan sejak tanggal berakhirnya Keputusan ini, pemegang Kuasa Pertambangan mengangkat keluar segala sesuatu yang menjadi milliknya kecuali benda-benda/ bangunan - bnagunan yang dipergunakan untuk kepentingan umum. DIREKTUR JENDERAL PERTAMBANGAN UMUM /s/ KUNTORO MANGKUSUBROTO ------------------------------------- Kuntoro Mangkusubroto 14 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] DEPARTEMEN PERTAMBANGAN DAN ENERGI REPUBLIK INDONESIA DIREKTORAT JENDERAL PERTAMBANGAN UMUM KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM Nomor: 379. K / 2012 / DDJP / 1996 TENTANG PEMBERIAN KUASA PERTAMBANGAN PENYELIDIKAN UMUM (KW. 96JLP071) DIREKTUR JENDERAL PARTAMBANGAN UMUM Membaca : Surat permohonan PT. WALEA BAHIMAS tanggal 18 Juli 1996. Menimbang : bahwa permohonan yang bersangkutan telah memenuhi syarat-syarat sebagaimana ditentukan dalam peraturan perundang-undangan yang berlaku. Mengingat : 1. Undang-undang No. 11 Tahun 1967 (LNRI Th 1967 No. 22, TLNRI No. 2831); 2. Peraturan Pemerintah No. 32 Tahun 1969 (LNRI Th 1969 No. 60, TLNRI No. 2916) sebagaimana telan diubah dengan Peraturan Pemerintah No. 79 Tahun 1992 (LNRI Th 1992 No. 130, TLNRI No. 3510); 3. Keputusan Presiden RI No. 343/M Tahun 1993 Tanggal 11 September 1993; 4. Keputusan Menteri Pertambangan dan Energi No. 2027 K/201/M.PE/1985 Tanggal 18 September 1985; 5. Keputusan Direktur Jenderal Pertambangan Umum No.03.K/201/DDJP/1996 tanggal 8 Januari 1996. Memperhatikan : Surat Direktur Teknik Pertambangan Umum Nomor: 2089/2012/DPT/1996 tanggal 13 Agustus 1996 MEMUTUSKAN Menetapkan : PERTAMA : Memberikan Kuasa Pertambangan Penyelidikan Umum untuk jangka waktu 1 (satu) tahun. Kepada : PT. WALEA BAHIMAS Alamat : Jl. Kayu Putih Tengah I D/3A Jakarta Timur Atas suatu wilayah tertanda KW.96JLP071 terletak di Kabupaten Kutai, Propinsi Kalimantan Timur, seluas 687,00 (enam ratus delapan puluh tujuh) hektar. Dengan penjelasan batas wilayah dan Peta Kuasa Pertambangan sebagiamana tercantum pada lampiran I untuk mengadakan penyelidikan umum dengan memenuhi kewajiban-kewajiban tersebut dalam lampiran II Keputusan ini serta ketentuan peraturan perundang-undangan yang berlaku. KEDUA : Kuasa Pertambangan ini tidak dapat di perpanjang dan dapat dibatalkan walaupun masa berlakunya belum habis, apabila Pemegang Kuasa Pertambangan tidak memenuhi kewajiban-kewajiban yang tercantum di dalam lampiran II Keputusan ini dan ketentuan peraturan perundang-undangan yang berlaku. 15 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] KETIGA : Pemegang Kuasa Pertambangan yang bermaksud mengadakan kerjasama dengan pihak modal asing dalam rangka Perjanjian Karya terlebih dahulu harus memperoleh izin tertulis dari Menteri Pertambangan dan Energi cq. Direktur Jenderal Pertambangan Umum. KEEMPAT : Keputusan Direktur Jenderal ini mulai berlaku pada tanggal ditetapkan. Ditetapkan di JAKARTA pada tanggal 28 Agustus 1996 DIREKTUR JENDERAL PERTAMBANGAN UMUM [SEAL] KUNTORO MANGUSKUBROTO TEMBUSAN: 1. Menteri Pertambangan dan energi di Jakarta (dengan peta); 2. Menteri Kehutanan di Jakarta (dengan peta).; 3. Menteri Negara Penggerak Dana Investasi/Ketua Badan Koordinasi Penanaman Modal di Jakarta (tanpa peta); 4. Menteri Negara Agaria/Kepala Badan Pertanahan Nasional di Jakarta (dengan peta); 5. Sekretaris Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta); 6. Inspektur Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta); 7. Direktur Jenderal Geologi dan Sumberdaya Mineral up. Direktur Direktorat Sumberdaya Mineral, J1. Diponegoro No. 57 Bandung (dengan peta); 8. Direktur Jenderal Pemerintahan Umum dan Otonomi Daerah, Departemen Dalam Negeri di Jakarta (tanpa peta); 9. Direktur Jenderal Perlindungan Hutan dan Pelestarian alam, Departemen Kehutanan J1. H. Ir. Juana No. 9 Bogor (dengan peta); 10. Direktur Jenderal Inventarisasi dan Tataguna Hutan, Departemen Kehutanan di Jakarta (dengan peta); 11. Kepala Biro Hukum Sekretariat Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta); 12. Kepala Biro Keuangan, Sekretariat Jenderal Departemen Pertambangan dan Energi di Jakarta (tanpa peta); 13. Direktur Teknik Pertambangan Umum di Jakarta (dengan peta); 14. Direktur Pembinaan Pengusahaan Pertambangan di Jakarta (dengan peta); 15. Gubernur Kepala Daerah Tingkat Propinsi Kalimantan Timur di Samarinda (dengan peta); 16. Kepala Kantor Wilayah Departemen Pertabangan dan Energi di Samarinda (dengan peta); 17. Kepala Kantor Wilayah Departemen Kehutanan di Samarinda (dengan peta); 18. Bupati Kepala Daerah Tingkat II Kabupaten Kutai di Tenggarong (dengan peta); 16 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] Lampiran II: Keputusan Direktur Jenderal Pertambangan Umum Nomor : 379.K/2012/DDJP/1996 Tanggal : 28 Agustus 1996 KEWAJIBAN-KEWAJIBAN PEMAGANG KUASA PERTAMBANGAN PENYELIDIKAN UMUM I. Pemegang Kuasa Pertambangan ini telah memilih tempat tinggal (domisili) pada pengadilan Negeri yang berkedudukan di Ibukota Prominsi Kalimantan Timur di Samarinda. II. Debelum melakukan kegiatan, pemegang Kuasa Pertambangan ini harus lebih dahulu memberitahukan kepada Pemerintah Daerah Propinsi Kalimantan Timur. III. Hubungan antara pemegang Kuasa Pertambangan dengan pemilik tanah dan pihak ketiga diatur menurut ketentuan-ketentuan yang berlaku. IV. Pemegang Kuasa Pertambangan Penyelidikan Umum diwajibkan membayar Iuran Tetap menurut ketentuan-ketentuan yang berlaku dan harus dilunasi sebelum berakhirnya Kuasa Pertambangan. V. Jika terjadi pertindihan Wilayah Kuasa Pertambangan dengan kepentingan lahan lainnya, maka pemegang Kuasa Pertambangan sebelum melaksanakan kegiatan dalam wilayah tersebut harus lebih dahulu menyelesaikannya sesuai dengan ketentuan yang berlaku. VI. Pemegang Kuasa Pertambangan harus memberikan laporan kegiatan 3 (tiga) bulan sekali kepada Direktur Jenderal Pertambangan Umum (1 expl) dan tembusannya disampaikan kepada Direktur Teknik Pertambangan Umum (3 expl), Kepala Kantor Wilayah Departemen Pertambangan dan Energi di Samarinda (1 expl), Gubernur dan Bupati Kepala Daerah setempat (masing-masing 1 expl) paling lambat 10 (sepuluh) hari setelah berakhirnya triwulan. VII. Dalam tempo 15 (lima belas) hari setelah keluarnya Keputusan ini, pemegang Kuasa Pertambangan wijib menyerahkan Rencana Kerja dan Rencana Pembiayaan untuk daerah yang dimaksud dalam keputusan ini. VIII. Pemegang Kuasa Pertambangan diwajibkan memberikan fasilitas jalan atau fasilitas lainnya kepada pemegang Kuasa Pertambangan lain apabila diperlukan sesuai dengan kesepakatan. IX. Dalam Bidang Pengawasan a. Pemegang Kuasa Pertambangan harus mengindahkun/mentaati peraturan yang berlaku mengenai PengawasanKeselamatan dan Kesehatan Kerja serta Lingkungan di bidang Pertambangan Umum. b. Pengawasan atas pelaksanaan Kuasa Pertambangan ini dilakukan oleh Pelaksana Inspeksi Tambang dan/atau petugas yang ditunjuk. c. Pemegang Kuasa Pertambangan dapat meminta kepada petugas tersubut untuk memperlihatkan surat-surat pengenal dan surat-surat tugasnya. 17 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] X. a. Permohonan Kuasa Pertambangan Eksplorasi sebagai peningkatan Kuasa Pertambangan Penyelidikan Umum harus diajukan 3 (tiga) bulan sebelum berakhirnya masa izin ini kepada Direktur Jenderal Pertambangan Umum. b. Atas kelalaian tersebut pada huruf a, mengakibatkan: 1. Kuasa Pertambangan berakhir menurut hukum dan segala usaha pertambangan harus dihentikan 2. Selambat-lambatnya dalam waktu 6 (enam) bulan sejak tanggal berakhirnya Keputusan ini, pemegang Kuasa Pertambangan mengangkat keluar segala sesuatu yang menjadi milliknya kecuali benda-benda/ bangunan-bangunan yang dipergunakan untuk kepentingan umum. DIREKTUR JENDERRAL PERTAMBANGAN UMUM [SEAL] KUNTORO MANGKUSUBROTO 18 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] [A MAP OF KAB. KUTAI PROP.KALIMANTAN TIMUR] 19 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] Lampiran I : KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM Nomor : 379.K/2012/DDJP/1996 Tanggal : 28 Agustus 1996 LAMPIRAN DAFTAR KOORDINAT Nama Perusahaan : PT.WALEA BAHIMAS Lokasi - - - Propinsi : KALIMANTAN TIMUR - - - Kabupaten : KATAI - - - Kecamatan : - - - - Kode Wilayah : 96JLP071 Luas : 687 Ha
======================================================================== No. Garis Bujur (BT) Garis Lintang Ti- ---------------------------------------------------------------- ti 0 ' " 0 ' " LU/LS - - ------------------------------------------------------------------------ 1 116 54 0.00 0 37 0.00 LU 2 116 54 0.00 0 36 30.00 LU 3 116 50 0.00 0 36 30.00 LU 4 116 50 0.00 0 37 0.00 LU ========================================================================
Direktur Jenderal Pertambangan Umum [SEAL] Kuntoro Mangkusubroto 20 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] DEPARTEMEN PERTAMBANGAN DAN ENERGI REPUBLIK INDONESIA DIREKTORAt JENDERAL PERTAMBANGAN UMUM KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM Nomor: 422.K / 2012 / DDJP / 1996 TENTANG PEMBERIAN KUASA PERTAMBANGAN PENYELIDIKAN UMUM (KW. 96AGP047) DIREKTUR JENDERAL PERTAMBANGAN UMUM Membaca : Surat permohonan PT. MUARA KOMAN MAS tanggal 21 Agustus 1996. Menimbang : bahwa permohonan yang bersangkutan telah memenuhi syarat-syarat sebagaimana ditentukan dalam peraturan perundang-undangan yang berlaku. Mengingat : 1. Undang-undang No. 11 Tahun 1967 (LNRI Th 1967 No. 22, TLNRI No. 2831); 2. Peraturan Pemerintah No. 32 Tahun 1969 (LNRI Th 1969 No. 60, TLNRI No. 2916) sebagaimana telah diubah dengan Peraturan Pemerintah No. 79 Tahun 1992 (LNRI Th 1992 No. 130, TLNRI No. 3510); 3. Keputusan Presiden RI No. 343/M Tahun 1993 Tanggal 11 September 1993; 4. Keputusan Menteri Pertambangan dan Energi No. 2027 K/201/M.PE/1985 Tanggal 18 September 1985; 5. Keputusan Direktur Jenderal Pertambangan Umum No.03.K/201/DDJP/1996 tanggal 8 Januari 1996. Memperhatikan : Surat Direktur Teknik Pertambangan Umum Nomor: 2215/2012/DPT/1996 tanggal 26 Agustus 1996 MEMUTUSKAN Menetapkan : PERTAMA : Memeberikan Kuasa Pertambangan Penyelidikan Umum untuk jangka watku 1 (satu) tahun. Kepada : PT. MUARA KOMAN MAS Alamat : Komplek Pertokoan Pulo Mas Blok VII/15-16 Jakarta Timur Atas suatu wilayah tertanda KW.96AGP047 terletak di Kabupaten Kutai, Propinsi Kalimantan Timur, seluas 4.637,00 (empat ribu enam ratus tiga puluh tujuh) hektar. Dengan penjelasan batas wilayah dan Peta Kuasa Pertambangan sebagaimana tercantum pada lampiran I untuk mengadakan penyelidikan umum dengan memenuhi kewajiban-kewajiban tersebut dalam lampiran II Keputusan ini serta ketentuan peraturan perundang-undangan yang berlaku. KEDUA : Kuasa Pertambang ini tidak tidak dapat di perpanjang dan dapat dibatalkan walaupun masa berlakunya belum habis, apabila Pemegang Kuasa Pertambang tidak memnuhi kewajiban-kewajiban yang tercantum di dalam lampiran II Keputusan ini dan ketentuan peraturan perundang-undangan yang berlaku. 21 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] KETIGA : Pemegang Kuasa Pertambangan yang bermaksud mengadakan kerjasama dengan pihak modal asing dalam rangka Perjanjian Karya terlebih dahulu harus memperoleh izin tertulis dari Menteri Pertambangan dan Energi cq. Direktur Jenderal Pertambangan Umum. KEEMPAT : Keputusan Direktur Jenderal ini mulai berlaku pada tanggal diterapkan. DITETAPKAN DI JAKARTA PADA TANGGAL 16 SEPTEMBER 1996 DIREKTUR JENDERAL PERTAMBANGAN UMUM [SEAL] KUNTORO MANGKUSUBROTO TEMBUSAN: 1. Menteri Pertambangan dan Energi di Jakarta (dengan peta); 2. Menteri Kehutanan di Jakarta (dengan peta).; 3. Menteri Negara Penggerak Dana Investasi/Ketua Badan Koordinasi Penanaman Modal di Jakarta (tanpa peta); 4. Menteri Negara Agraria Kepala Badan Pertanahan Nasional di Jakarta (dengan peta); 5. Sekretaris Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta); 6. Inspektur Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta); 7. Direktur Jenderal Geologi dan Sumberdaya Mineral up. Direktur Direktorat Sumberdaya Mineral, J1.Diponegoro No. 57 Bandung (dengan peta); 8. Direktur Jenderal Pemerintahan Umum dan Otonomi Daerah, Departemen Dalam Negeri di Jakarta (tanpa peta); 9. Direktur Jenderal Perlindungan Hutan dan Pelestarian Alam, Departemen Kehutanan J1. H. Ir. Juanda No. 9 Bogor (dengan peta); 10. Direktur Jenderal Inventarisasi dan Tataguna Hutan, Departemen Kehutanan di Jakarta (dengan peta); 11. Kepala Biro Hukum, Sekretariat Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta); 12. Kepalo Biro Keuangan, Sekretariat Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta); 13. Direktur Teknik Pertambangan Umum di Jakarta (dengan peta); 14. Direktur Pembinaan Pengusahaan Pertambangan di Jakarta (dengan peta); 15. Gubermur Kepala Daerah Tingkat I Propinsi Kalimantan Timur di Samarinda (dengan peta); 16. Kepala Kantor Wilayah Departemen Pertambangan dan Energi di Samarinda (dengan peta); 17. Kepala Kantor Wilayah Departemen Kehutanan di Samarinda (dengan peta); 18. Bupati Kepala Daerah Tingkat II Kabupaten Kutai di Tenggarong (dengan peta); 22 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] Lampiran I : KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM Nomor : 422.K/2012/DDJP/1996 Tanggal : 16 September 1996 LAMPIRAN DAFTAR KOORDINAT Nama Perusahaan : PT. MUARA KOMAN MAS Lokasi - - - Propinsi : KALIMANTAN TIMUR - - - Kabupaten : KUTAI - - - Kecamatan : - - - - Kode Wilayah : 96AGP047 Luas : 4.637 HA
========================================================================= No. Garis Bujur (BT) Garis Lintang Ti- ----------------------------------------------------------------- tik 0 ' " 0 ' " LU/LS - - ------------------------------------------------------------------------- 1 116 8 0.0 0 5 0.0 LU 2 116 8 0.0 0 18 30.0 LU 3 116 9 0.0 0 18 30.0 LU 4 116 9 0.0 0 5 0.0 LU =========================================================================
Direktur Jenderal Pertambangan Umum [SEAL] Kuntoro Mangkusubroto 23 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] [A MAP OF KAB. KUTAI PROP. KALIMANTAN TIMUR] 24 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] Lampiran II : Keputusan Direktur Jenderal Pertambangan Umum Nomor : 422.K/2012/DDJP/1996 Tanggal : 16 September 1996 KEWAJIBAN-KEWAJIBAN PEMEGANG KUASA PERTAMBANGAN PENYELIDIKAN UMUM I. Pemegang Kuasa Pertambangan ini telah memilih tempat tinggal (domisili) pada pengadilan Negeri yang berkududukan di Ibukota Propinsi Kalimantan Timur di Samarinda. II. Sebelum melakukan kegiatan, pemegang Kuasa Pertambangan ini harus lebih dahulu memberitahukan kepada Pemerintah Daerah Propinsi Kalimantan Timur di Samarinda. III. Hubungan antara pemegang Kuasa Pertambanga dengag pemilik tanah dan pihak ketiga diatur menurut ketentuan-ketentuan yang berlaku. IV. Pemegang Kuasu Pertambangan Penyelidikan Umum diwagibkan membayar Iuran Tetap menurut ketentuan-ketentuan yang berlaku dan harus dilunasi sebelum berakhirnya Kuasa Pertambangan. V. Jika terjadi pertindihan Wilayah Kuasa Pertambangan dengan kepentingan lahan lainnya, maka pemegang Kuasa Pertambangan sebelum melaksanakan kegiatan dalam wilayah tersebut harus lebih dahulu menyelesaikannya sesuai dengan ketentuan yang berlaku. VI. Pemegang Kuasa Pertambangan harus memberikan laporan kegiatan 3 (tiga) bulan sekali kepada Direktur Jenderal Pertambangan Umum (1 expl) dan tembusannya disampaikan kepada Direktur Teknik Pertambangan Umum (3 expl), Kepala Kantor Wilayah Departemen Pertambangan dan Energi di Samarinda (1 expl), Gubernur dan Bupati Kepala Daerah setempat (masing-masing 1 expl) paling lambat 10 (sepuluh) hari setelah berakhirnya triwulan. VII. Dalam tempo 15 (lima belas) hari setelah keluarnya Keputusan ini, pemegang Kuasa Pertambangan wajib menyerahkan Rencana Kerja dan Rencana Pembiayaan untuk daerah yang dimaksud dalam Keputusan ini. VIII. Pemegang Kuasa Pertambangan diwajibkan memberikan fasilitas jalan atua fasilitas lainnya kepada pemegang Kuasa Pertambangan lain apabila diperlukan sesuai dengan kesepakatan. IX. Dalam Bidang Pengawasan a. Pemegang Kuasa Pertambangan harus mengindahkan/mentaati peraturan yang perlaku mengenai Pengawasan Keselamatan dan Kesehatan Kerja serta Lingkungan di bidang Pertambangan Umum. b. Pengawasan atas pelaksanaan Kuasa Pertambangan ini kilakukan oleh Pelaksana Inspeksi Tambang dan/atua petugas yang ditunjuk. c. Pemegang Kuasa Pertambangan dapat meminta kepada petugas tersebut untuk memberlihatkan surat-surat pengenal dan surat-surat tugasnya. 25 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] X. a. Permohonan Kuasa Pertambangan Eksplorasi sebagai peningkatan Kuasa Pertambangan Penyelidikan Umum harus diajukan 3 (tiga) bulan sebelum berakhirnya masa izin ini kepada Direktur Jenderal Pertambangan Umum. b. Atas Kelalaian tersebut pada huruf a, mengakibatkan: 1. Kuasa Pertambangan berakhir menurut hukum dan segala usaha pertambangan harus dihentikan 2. Selambat-lambatnya dalam waktu 6 (enam) bulan sejak tanggal berakhirnya Keputusan ini, pemegang Kuasa Pertambangan mengangkat keluar segala sesuatu yang menjadi milliknya kecuali benda - benda/bangunan - bangunan yand dipergunakan untuk kepentingan umum. Direktur Jenderal Pertambangan Umum [SEAL] Kuntoro Mangkusubroto 26 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] DEPARTMEN PERTAMBANGAN DAN ENERGI REPUBLIK INDONESIA DIREKTORAT JENDERAL PERTAMBANGAN UMUM KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM NOMOR: 2193.K/2013/DDJP/1993 TENTANG PEMBERIAN PERPANJANGAN KEDUA DUASA PERTAMBANGAN EKSPLORASI (DU. 875/RIAU) DIREKTUR JENDERAL PERTAMBANGAN UMUM Membaca : Surat permohonan Ny.Yudith Djamal tanggal 30 Agustus 1993 Menimbang : bahwa dalam rangka persiapan ke arah Eksploitasi dipandang perlu memberikan perpanjangan masa berlakunya Kuasa Pertambangan Eksplorasi. Mengingat : 1. Undang-undang No. 11 Tahun 1967 (LNRI Th 1967 No. 22, TLNRI No. 2831). 2. Peraturan Pemerintah No. 32 Tahun 1969 (LNRI Th 1969 No. 60, TLNRI No. 2916) jo. Peraturan Pemerintah No. 79 Tahun 1992 (LNRI Th 1992 No. 129, TLNRI No. 3510). 3. Peraturan Pemerintah No. 27 Tahun 1980 (LNRI th 19380 No. 47 TLNRI No. 3174). 4. Keputusan Presiden R.I. No. 343/M Tahun 1993 Tanggal 11 September 1993. 5. Keputusan Menteri Pertambangan dan Energi No. 2027 K/201/M.PE/1985 tanggal 18 September 1985. 6. Keputusan Direktur Jenderal Pertambangan Umum No. 667 K/201/040000/1986 tanggal 11 Nopember 1986. 7. Keputusan Direktur Jenderal Pertambangan Umum No. 399 K/2013/DDJP/92 tanggal 6 Nopember 1992. Memberhatikan : Surat Drektur Direktorat Teknik Pertambangan Umum tanggal 26 Oktober 1993 Nomor: 2981/22/DPT/1993 MEMUTUSKAN Menetapkan : PERTAMA : Memberikan Perpanhangan Kedua Kuasa Pertambangan Eksplorasi (DU. 875/Riau) Kepada : Ny.Yudith Djamal Alamat : Jl. Kayu Putih Tengah I D/3 A, Pulomas Jakarta untuk selama 1 (satu) tahun yang berladu mulai tanggal 11 Agustus 1993 sampai dengan tanggal 11 Agustus 1994 dengang luas dan penjelasan batas serta detentuan-detentuan yang sama seperti tercantum dalam Keputusand Direktur Pertambangan Umum No. 748 K/2013/DDJP/89 tanggal 11 Agustus 1989. 27 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] KEDUA : Keputusan Direktur Jenderal ini mulai berlaku pada tanggal ditetapkan dan mempunyai daya surut sejak tanggal 11 Agustus 1993. Ditetapkan di : Jakarta Pada tanggal : 14 Desember 1993 DIREKTUR JENDERAL PERTAMBANGAN UMUM [SEAL] KUNTORO MANGKUSUBROTO TEMBUSAN: 1. Menteri Pertambangan dan Energi di Jakarta 2. Menteri Kehutanan di Jakarta. 3. Menteri Negara Agraria/Kepala Badan Pertanahan Nasional di Jakarta. 4. Sekretaris Jenderal Departemen Pertambangan dan Energi di Jakarta. 5. Inspektur Jenderal Departemen Pertambangan dan Energi di Jakarta. 6. Direktur Jenderal Geologi dan Sumberdaya Mineral up. Direktur Direktorat Sumberdaya Mineral, J1n. Diponegoro No.57 Bandung. 7. Direktur Jenderal Pemerintahan Umum dan Otonomi Daerah, Departemen Dalam Negeri di Jakarta. 8. Direktur Jenderal Perlindungan Hutan dan Pelestarian Alam, Departemen Kehutanan, J1.Ir.H.Juanda No.9, Bogor. 9. Kepala Biro Hukum, Sekretariat Janderal Departemen Pertambangan dan Energi di Jakarta. 10. Kepala Biro Keuangan, Sekretariat Jenderal Departemen Pertambangan dan Energi di Jakarta. 11. Direktur Direktorat Teknik Pertambangan Umum di Jakarta. 12. Kirektur Kirektorat Pembinaan Pengusahaan Pertambangan di Jakarta. 13. Gubernur Kepala Daerah Tingkat I Propinsi Riau. 14. Kepala Mantor Wilayah Departemen Pertambangan dan Energi di Pekanbaru. 15. Bupati Kepala Daerah Tinghat II Kabupaten Indragiri Hulu. 28 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] DEPARTMEN PERTAMBANGAN DAN ENERGI REPUBLIK INDONESIA DIREKTORAT JENDERAL PERTAMBANGAN UMUM KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM NOMOR: 2192.K/2013/DDJP/1993 TENTANG PEMBERIAN PERPANJANGAN KEDUA DUASA PERTAMBANGAN EKSPLORASI (DU. 872/RIAU) DIREKTUR JENDERAL PERTAMBANGAN UMUM Membaca : Surat permohonan Ny.Yudith Djamal tanggal 30 Agustus 1993 Menimbang : bahwa dalam rangka persiapan ke arah Eksploitasi dipandang perlu memberikan perpanjangan masa berlakunya Kuasa Pertambangan Eksplorasi. Mengingat : 1. Undang-undang No. 11 Tahun 1967 (LNRI Th 1967 No. 22, TLNRI No. 2831). 2. Peraturan Pemerintah No.32 Tahun 1969 (LNRI Th 1969 No. 60, TLNRI No. 2916) jo. Peraturan Pemerintah No. 79 Tahun 1992 (LNRI Th 1992 No. 129, TLNRI No. 3510). 3. Peraturan Pemerintah No. 27 Tahun 1980 (LNRI th 19380 No. 47 TLNRI No. 3174). 4. Keputusan Presiden R.I. No. 343/M Tahun 1993 Tanggal 11 September 1993. 5. Keputusan Menteri Pertambangan dan Energi No. 2027 K/201/M.PE/1985 tanggal 18 September 1985. 6. Keputusan Direktur Jenderal Pertambangan Umum No. 667 K/201/040000/1986 tanggal 11 Nopember 1986. 7. Keputusan Direktur Jenderal Pertambangan Umum No. 398 K/2013/DDJP/92 tanggal 6 Nopember 1992. Memberhatikan : Surat Drektur Direktorat Teknik Pertambangan Umum tanggal 26 Oktober 1993 Nomor: 2981/22/DPT/1993 MEMUTUSKAN Menetapkan : PERTAMA : Memberikan Perpanhangan Kedua Kuasa Pertambangan Eksplorasi (DU. 872/Riau) Kepada : Ny.Yudith Djamal Alamat : Jl. Kayu Putih Tengah I D/r A, Pulomas Jakarta untuk selama 1 (satu) tahun yang berladu mulai tanggal 11 Agustus 1993 sampai dengan tanggal 11 Agustus 1994 dengang luas dan penjelasan batas serta detentuan-detentuan yang sama seperti tercantum dalam Keputusand Direktur Pertambangan Umum No. 746 K/2013/DDJP/89 tanggal 11 Agustus 1989. 29 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] KEDUA : Keputusan Direktur Jenderal ini mulai berlaku pada tanggal ditetapkan dan mempunyai daya surut sejak tanggal 11 Agustus 1993. Ditetapkan di : Jakarta Pada tanggal : 14 Desember 1993 DIREKTUR JENDERAL PERTAMBANGAN UMUM [SEAL] KUNTORO MANGKUSUBROTO TEMBUSAN: 1. Menteri Pertambangan dan Energi di Jakarta 2. Menteri Kehutanan di Jakarta. 3. Menteri Negara Agraria/Kepala Badan Pertanahan Nasional di Jakarta. 4. Sekretaris Jenderal Departemen Pertambangan dan Energi di Jakarta. 5. Inspektur Jenderal Departemen Pertambangan dan Energi di Jakarta. 6. Direktur Jenderal Geologi dan Sumberdaya Mineral up. Direktur Direktorat Sumberdaya Mineral, J1n. Diponegoro No.57 Bandung. 7. Direktur Jenderal Pemerintahan Umum dan Otonomi Daerah, Departemen Dalam Negeri di Jakarta. 8. Direktur Jenderal Perlindungan Hutan dan Pelestarian Alam, Departemen Kehutanan, J1.Ir.H.Juanda No.9, Bogor. 9. Kepala Biro Hukum, Sekretariat Janderal Departemen Pertambangan dan Energi di Jakarta. 10. Kepala Biro Keuangan, Sekretariat Jenderal Departemen Pertambangan dan Energi di Jakarta. 11. Direktur Direktorat Teknik Pertambangan Umum di Jakarta. 12. Kirektur Kirektorat Pembinaan Pengusahaan Pertambangan di Jakarta. 13. Gubernur Kepala Daerah Tingkat I Propinsi Riau. 14. Kepala Mantor Wilayah Departemen Pertambangan dan Energi di Pekanbaru. 15. Bupati Kepala Daerah Tinghat II Kabupaten Indragiri Hulu. 30 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] DEPARTEMEN PERTAMBANGAN DAN ENERGI REPUPLIK INDONESIA DIREKTORAT JENDERAL PERTAMBANGAN UMUM KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM NOMOR : 320.K/2013/DDJP/1994 TENTANG PEMBERIAN KUASA PERTAMBANGAN EKSPLORASI ( DU. 998/RIAU ) DIREKTUR JENDERAL PERTAMBANGAN UMUM Membaca : Surat permohonan PT. AKSARA TAMA PRAMITA tanggal 10 Mei 1993. Menimbang : bahwa permohonan yang bersangkutan telah memenuhi syarat-syarat sepbagaimana ditentukan dalam peraturan perundang-undangan yang berlaku. Mengingat : 1. Undang-undang No. 11 Tahun 1967 (LNRI Th 1967 No. 22, TLNRI No. 2831). 2. Peraturan Pemerintah No. 32 Tahun 1969 (LNRI Th 1969 No. 60, TLNRI No. 2916) jo. Peraturan Permintah No. 79 Tahun 1992 ( LNRI Th 1992 No. 130, TLNRI No. 3510 ). 3. Peraturan Pemerintah No.27 Tahun 1980 (LNRI Th 1980 No. 47, TLNRI No. 3174). 4. Keputusan Presiden R.I. No. 343/M Tahun 1993 tanggal 11 September 1993. 5. Keputusan Menteri Pertambangan dan Enegi No. 2027 K/201/M.PE/1985 tanggal 18 September 1985. 6. Keputusan Direktur Jenderal Pertambangan Umum No. 667 K/201/040000/1986 tanggal 11 Nopember 1986. Memperhatikan : Surat Direktur Direktorat Teknik Pertambangan Umum tanggal 31 Mei 1994 Nomor : 1446/2013/DPT/1994. M E M U T U S K A N Menetapkan : PERTAMA : Memberikan Kuasa Pertambangan Eksplorasi untuk jangka waktu 3 (tiga) tahun berturut-turut : Kepada : PT. AKSARA TAMA PRAMITA Alamat : J1. cengkeh No. 21 F-G Jakarta Kota. atas suatu wilayah tertanda DU. 998/Riau terletak di : Kabupaten Indragiri Hulu, Propinsi Riau. seluas : 2.000 (dua ribu) hektar dengan penjelasan batas wilayah seperti tercantum dalam lampiran I yang ditanda tangani oleh Direktur Direktorat Teknik Pertambangan Umum dan peta wilayah Kuasa Pertambangan dalam lampiran II untuk mengadakan eksplorasi mencari bahan galian " emas dan mineral pengikutnya " dengan memenuhi kewajiban-kewajiban tersebut dalam lampiran III Keputusan ini serta ketentuan peraturan perundang-undangan yang berlaku. KEDUA : Kuasa Pertambangan ini dapat dibatalkan walaupun masa berlakunya belum habis, apabila Pemegang Kuasa Pertambangan tidak memenuhi kewajiban-kewajiban yang tercantum di dalam lampiran III Keputusan in dan ketentuan peraturan perundang- undangan yang berlaku. 31 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] KETIGA : Pemegang Kuasa Pertambangan yang bermaksud mengadakan kerja sama dengan pihak modal asing dalam rangka Perjanjian Karya terlebih dahulu harus memperoleh izin tertulis dari Menteri Pertambangan dan Energi cq. Direktur Jenderal Pertambangan Umum. KEEMPAT : Keputusan Direktur Jenderal ini mulai berlaku pada tanggal ditetapkan. Ditetapkan di : JAKARTA pada tanggal : 21 Oktober 1994 DIREKTUR JENDERAL PERTAMBANGAN UMUM [SEAL] KUNTORO MANGKUSUBROTO TEMBUSAN: 1. Menteri Pertambangan dan energi di Jakarta (dengan peta). 2. Menteri Kehutanan di Jakarta (dengan peta). 3. Menteri Negara Penggerak Dana Investasi/Ketua Badan Koordinasi Penanaman Modal di Jakarta (tanpa peta). 4. Menteri Negara Agaria/Kepala Badan Pertanahan Nasional di Jakarta (dengan peta); 5. Sekretaris Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta); 6. Inspektur Jenderal Departemen Pertambangan dan Energi di Jakarta (tanpa peta); 7. Direktur Jenderal Geologi dan Sumberdaya Mineral up. Direktur Direktorat Sumberdaya Mineral, J1. Diponegoro No. 57 Bandung (dengan peta); 8. Direktur Jenderal Pemerintahan Umum dan Otonomi Daerah, Departemen Dalam Negeri di Jakarta (tanpa peta); 9. Direktur Jenderal Perlindungan Hutan dan Pelestarian alam, Departemen Kehutanan J1.Ir.H. Juana No. 9 Bogor (dengan peta); 10. Direktur Jenderal Inventarisasi dan Tataguna Hutan, Departemen Kehutanan di Jakarta (dengan peta); 11. Kepala Biro Hukum Departemen Pertambangan dan Energi di Jakarta (dengan peta); 12. Kepala Biro Keuangan, Departemen Petambangan dan Energi di Jakarta (tanpa peta); 13. Direktur Teknik Teknik Pertambangan Umum di Jakarta (dengan peta); 14. Direktur Direktorat Pembinaan Pengusahaan Pertambangan di Jakarta (dengan peta); 15. Gubernur Kepala Daerah Tingkat I Propinsi Riau (dengan peta); 16. Kepala Kantor Wilayah Departemen Pertabangan dan Energi di Pekanbaru (dengan peta); 17. Kepala Kantor Wilayah Departemen Kehutanan di Pekanbaru (dengan peta); 18. Bupati Kepala Daerah Tingkat II Kabupaten Indragiri Hulu (dengan peta); 32 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] Lampiran I : Keputusan Direktur Jenderal Pertambangan Umum Nomor : 320.K/2013/DDJP/1994 Tanggal : 21 Oktober 1994 PENJULASAN BATAS WILAYAH KUASA PERTAMBANGAN EKSPLORASI (D.U. 998 / RIAU) Sebelah Utara dan : masing-masing garis sejajar terletak pada 3,000 meter di sebelah Selatan sebelah Utara dan 2,000 meter di sebelah Selatan titik Triangulasi 111. Sebelah Timur dan : masing-masing garis rembang terletak pada 7,000 meter sebelah Barat dan 3,000 meter di sebelah Timur titik tersebut di atas. Direktur Directorat Teknik Pertambangan Umum [SEAL] Ir. Soelendro As NIP. 100002158. 33 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] Lampiran III : Keputusan Direktur Jenderal Pertambangan Umum Nomor : 320.K/2013/DDJP/1994 Tanggal : 21 Oktober 1994 KEWAJIBAN-KEWAJIBAN PEREGANG KUASA PERTAMBANGAN EKSPLORASI I. Pemegang Kuasa Pertambangan ini telah memilih tempat tinggal (domesili) pada Pengadilan Negeri yang berkedudukan di ibu kota Propinsi Riau di Pekanbaru. II. Sebelum melakukan kegiatan, pemegang Kuasa Pertambangan ini harus lebih dahulu memberitahukan kepada Pemerintah Daerah dan Kantor Wilayah Departemen Pertambangan dan Energi di Pekanbaru. III. Hubungan antara pemegang Kuasa Pertambangan dengan pemilik tanah dan pihak ketiga, diatur menurut ketentuan-ketentuan yang berlaku. IV. Pemegang Kuasa Pertambangan Eksplorais diwajibkan membayar Iuran Tetap dan Iuran Eksplorasi menurut ketentuan yang berlaku dan harus dilunasi sebelum beraknirnya Kuasa Pertambangan. V. Jika terjadi pertindihan wilayah Kuasa Pertambangan dengan kepentingan lahan lainnya, maka pemegang Kuasa Pertambangan sebelum melaksanakan kagiatan dalam wilayah tersebut harus lebih dahulu menyelesaikannya sesuai dengan ketentuan yang berlaku. VI. a. Pemegang Kuasa Pertambangan harus memberikan laporan kegiatan 3 (tiga) bulan sekali kepada Direktur Jenderal Pertambangan Umum (1 expl.) dan tembusannya disampaikan kepada Direktur Direktorat Teknik Pertambangan Umum (3 expl.), Kepala kantor Wilayah Departemen Pertambangan dan Energi di Pekanbaru (1 expl.), Gubernur dan Bupati Kepala Daerah setempat (masing-masing 1 expl.). b. Selambat-lambatnya dalam waktu 6 (enam) bulan setelah tanggal ditetapkannya Keputusan ini, Pemegang Kuasa Pertambangan harus sudah menyampaikan laporan mengenai pematokan batas-batas wilayah Kuasa Pertambangan tersebut. VII. Dalam Bidang Pengawasan. a. Pemegang Kuasa Pertambangan harus mematuhi/mentaati peratruan yang berlaku mengenai Pengawasan Keselmatan dan Kesehatan Kerja serta Lingkungan dibidang Pertambangan umum. b. Pengawasan atas pelaksanaan Kuasa Pertambangan ini dilakukan oleh Pelaksana Inpeksi Tambang dan/atau petugas yang ditunjuk oleh Direktur Jenderal Pertambangan Umum. c. Pemegang Kuasa Pertambangan dapat/diperkenankan meminta kepada petugas tersebut untuk memperlihatkan surat-surat pengenal dan surat-surat tugasnya. VIII. a. Permohonan Perpanjangan atau permohonan Kuasa Pertambangan Eksploitasi sebegai peningkatan harus kiajukan 3 (tiga) bulan sebelum berakhirnya masa izin ini dengan desertai bukti-bukti kewajiban yang telah dipenuhi. b. Atas kelalaian tersebut pada huruf a, mengakibatkan: 1. Kuasa Pertambangan berakhir menurut hukum dan segala usaha pertambangan harus dihentikan. 2. Sealmbat-lambatnya dalam watku 6 (enam) bulan sejak tanggal berkahirnya Keputusan ini, pemegang Kuasa Pertambangan mengangkat keluar segala sesuatu yang menjadi milikanya kecuali benda-benda/ bangunan-bangunan yang dipergunakan untuk kepentingan umum. DIREKTUR JENDERAL PERTAMBANGAN UMUM [SEAL] KONTORO MANGKUSUBROTO 34 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] DEPARTEMEN PERTAMBANGAN DAN ENERGI REPUPLIK INDONESIA DIREKTORAT JENDERAL PERTAMBANGAN UMUM KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM NOMOR : 321.K/2013/DDJP/1994 TENTANG PEMBERIAN KUASA PERTAMBANGAN EKSPLORASI ( DU. 999/RIAU ) DIREKTUR JENDERAL PERTAMBANGAN UMUM Membaca : Surat permohonan PT. AKSARA TAMA PRAMITA tanggal 10 Mei 1993. Menimbang : bahwa permohonan yang bersangkutan telah memenuhi syarat-syarat sepbagaimana ditentukan dalam peraturan perundang-undangan yang berlaku. Mengingat : 1. Undang-undang No. 11 Tahun 1967 (LNRI Th 1967 No. 22, TLNRI No. 2831). 2. Peraturan Pemerintah No. 32 Tahun 1969 (LNRI Th 1969 No. 60, TLNRI No. 2916) jo. Peraturan Permintah No. 79 Tahun 1992 ( LNRI Th 1992 No. 130, TLNRI No. 3510 ). 3. Peraturan Pemerintah No.27 Tahun 1980 (LNRI Th 1980 No. 47, TLNRI No. 3174). 4. Keputusan Presiden R.I. No. 343/M Tahun 1993 tanggal 11 September 1993. 5. Keputusan Menteri Pertambangan dan Enegi No. 2027 K/201/M.PE/1985 tanggal 18 September 1985. 6. Keputusan Direktur Jenderal Pertambangan Umum No. 667 K/201/040000/1986 tanggal 11 Nopember 1986. Memperhatikan : Surat Direktur Direktorat Teknik Pertambangan Umum tanggal 31 Mei 1994 Nomor : 1446/2013/DPT/1994. M E M U T U S K A N Menetapkan : PERTAMA : Memberikan Kuasa Pertambangan Eksplorasi untuk jangka waktu 3 (tiga) tahun berturut-turut : Kepada : PT. AKSARA TAMA PRAMITA Alamat : J1. Cengkeh No. 21 F-G Jakarta Kota. atas suatu wilayah tertanda DU. 998/Riau terletak di : Kabupaten Indragiri Hulu, Propinsi Riau. seluas : 1.850 (seribu delapan ratus lima pulah) hektar dengan penjelasan batas wilayah seperti tercantum dalam lampiran I yang ditanda tangani oleh Direktur Direktorat Teknik Pertambangan Umum dan peta wilayah Kuasa Pertambangan dalam lampiran II untuk mengadakan eksplorasi mencari bahan galian " emas dan mineral pengikutnya " dengan memenuhi kewajiban-kewajiban tersebut dalam lampiran III Keputusan ini serta ketentuan peraturan perundang-undangan yang berlaku. KEDUA : Kuasa Pertambangan ini dapat dibatalkan walaupun masa berlakunya belum habis, apabila Pemegang Kuasa Pertambangan tidak memenuhi kewajiban-kewajiban yang tercantum di dalam lampiran III Keputusan in dan ketentuan peraturan perundang- undangan yang berlaku. 35 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] KETIGA : Pemegang Kuasa Pertambangan yang bermaksud mengadakan kerja sama dengang pihak modal asing dalam rangka Perjanjian Karya terlebih dahulu harus memperoleh izin tertulis dari Merteri Pertambangan dan Energi cq. Direktur Jenderal Pertambangan Umum. KEEMPAT : Keputusan Direktur Jenderal ini mulai berlaku pada tanggal ditetapkan. Ditetapkan di : JAKARTA Pada Tanggal : 21 Oktober 1994 DIREKTUR JENDERAL PERTAMBANGAN UMUM [SEAL] KUNTORO MANGKUSUBROTO TEMBUSAN : 1. Menteri Pertambangan dan Energi di Jakarta (dengan peta). 2. Menteri Kehutanan di Jakarta (dengan peta). 3. Menteri Negara Penggerak Dana Investasi/Ketua Badan Koordinasi Penanaman Modal di Jakarta (tanpa peta). 4. Menteri Negara Agraria/Kepala badan Pertanahan Nasional di Jakarta (dengan peta). 5. Sekretaris Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta). 6. Inspektur jenderal Departemen Pertambangan dan Energi di Jakarta (tanpa peta). 7. Direktur Jenderal Geologi dan Sumberdaya Mineral up. Direktur Direktorat Sumberdaya Mineral, Jl.Diponegoro No.57 Bandung (dengan peta). 8. Direktur Jenderal Pemerintahan Umum dan Otonomi Daerah, Departemen Dalam Negeri di Jakarta (tanpa peta). 9. Direktur Jenderal Perlindungan Hutan dan Pelestarian Alam, Departemen Kehutanan Jl.Ir.H.Juandan No.9 Bogor (dengan peta). 10. Direktur Jenderal Inventarisasi dan Tataguna Hutan, Departemen Kehutanan di Jakarta (dengan peta). 11. Kepala Biro Hukum, Departemen Pertambangan dan Energi di Jakarta (dengan peta). 12. Kepala Biro Keuangan, Departemen Pertambangan dan Energi di Jakarta (tanpa peta). 13. Direktur Direktorat Teknik Pertambangan Umum di Jakarta (dengan peta). 14. Direktur Direktorat Pembinaan Pengusahaan Pertambangan di Jarkata (dengen peta). 15. Gubernur Kepala Dareah Tingkat I Propinsi Riau (dengan peta). 16. Kepala Kanto Wilayah Departemen Pertambangan dan Energi di Pekanbaru (dengan peta). 17. Kepala Kantor Wilayah Departemen Kehutanan di Pekanbaru (dengan peta). 18. Bupati Keplal Daerah Tingkat II Kabupaten Indragiri Hulu (dengan peta). 36 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] Lampiran I : Keputusan Direktur Jenderal Pertambangan Umum Nomor : 321.K/2013/DDJP/1994 Tanggal : 21 Oktober 1994 PENJELASAN BATAS WILAYAH KUASA PERTAMBANGAN EKSPLORASI ( D.U. 999 / RIAU ) Sebelah Utara : garis sejajar terletak pada 2.000 meter di sebelah Selata titik Triangulasi 111. Sebelah Timur : a. garis rembang terletak pada 7.000 meter di sebelah Timur titik tersebut di atas b. garis sejajar terletak pada 3.250 meter di sebelah Selatan titik tersebut di atas. c. garis rembang terletak pada 6.000 meter di sebelah Timur titik tersebut di atas. d. garis sejajar terletak pada 4.750 meter di sebelah Selatan titik tersebut di atas. e. garis rembang terletak pada 7.000 meter di sebelah Timur titik tersebut di atas. Sebelah Selatan : garis sejajar terletak pada 7.000 meter di sebelah Selatan titik tersebut di atas. Sebelah Barat : garis rembang terletak pada 3.000 meter di sebelah Timur titik tersebut di atas. DIREKTUR DIREKTOR AT TEKNIK PERTAMBANGAN UMUM [SEAL] IR. SOELENDRO AS NIP 100002158. 37 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] [THIS IS A MAP OF LAMPLHAN II KEPUTUSAN DIRJEN PERTAMBANGAN UMUM] 38 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] Lampiran III : Keputusan Direktur Jenderal Pertambangan Umum Nomor : 321.K/2013/DDJP/1994 Tanggal : 21 Oktober 1994 KEWAJIBAN-KEWAJIBAN PEREGANG KUASA PERTAMBANGAN EKSPLORASI I. Pemegang Kuasa Pertambangan ini telah memilih tempat tinggal (domesili) pada Pengadilan Negeri yang berkedudukan di ibu kota Propinsi Riau di Pekanbaru. II. Sebelum melakukan kegiatan, pemegang Kuasa Pertambangan ini harus lebih dahulu memberitahukan kepada Pemerintah Daerah dan Kantor Wilayah Departemen Pertambangan dan Energi di Pekanbaru. III. Hubungan antara pemegang Kuasa Pertambangan dengan pemilik tanah dan pihak ketiga, diatur menurut ketentuan-ketentuan yang berlaku. IV. Pemegang Kuasa Pertambangan Eksplorais diwajibkan membayar Iuran Tetap dan Iuran Eksplorasi menurut ketentuan yang berlaku dan harus dilunasi sebelum beraknirnya Kuasa Pertambangan. V. Jika terjadi pertindihan wilayah Kuasa Pertambangan dengan kepentingan lahan lainnya, maka pemegang Kuasa Pertambangan sebelum melaksanakan kagiatan dalam wilayah tersebut harus lebih dahulu menyelesaikannya sesuai dengan ketentuan yang berlaku. VI. a. Pemegang Kuasa Pertambangan harus memberikan laporan kegiatan 3 (tiga) bulan sekali kepada Direktur Jenderal Pertambangan Umum (1 expl.) dan tembusannya disampaikan kepada Direktur Direktorat Teknik Pertambangan Umum (3 expl.), Kepala kantor Wilayah Departemen Pertambangan dan Energi di Pekanbaru (1 expl.), Gubernur dan Bupati Kepala Daerah setempat (masing-masing 1 expl.). b. Selambat-lambatnya dalam waktu 6 (enam) bulan setelah tanggal ditetapkannya Keputusan ini, Pemegang Kuasa Pertambangan harus sudah menyampaikan laporan mengenai pematokan batas-batas wilayah Kuasa Pertambangan tersebut. VII. Dalam Bidang Pengawasan. a. Pemegang Kuasa Pertambangan harus mematuhi/mentaati peratruan yang berlaku mengenai Pengawasan Keselmatan dan Kesehatan Kerja serta Lingkungan dibidang Pertambangan umum. b. Pengawasan atas pelaksanaan Kuasa Pertambangan ini dilakukan oleh Pelaksana Inpeksi Tambang dan/atau petugas yang ditunjuk oleh Direktur Jenderal Pertambangan Umum. c. Pemegang Kuasa Pertambangan dapat/diperkenankan meminta kepada petugas tersebut untuk memperlihatkan surat-surat pengenal dan surat-surat tugasnya. VIII. a. Permohonan Perpanjangan atau permohonan Kuasa Pertambangan Eksploitasi sebegai peningkatan harus kiajukan 3 (tiga) bulan sebelum berakhirnya masa izin ini dengan desertai bukti-bukti kewajiban yang telah dipenuhi. b. Atas kelalaian tersebut pada huruf a, mengakibatkan: 1. Kuasa Pertambangan berakhir menurut hukum dan segala usaha pertambangan harus dihentikan. 2. Sealmbat-lambatnya dalam watku 6 (enam) bulan sejak tanggal berkahirnya Keputusan ini, pemegang Kuasa Pertambangan mengangkat keluar segala sesuatu yang menjadi milikanya kecuali benda-benda/ bangunan-bangunan yang dipergunakan untuk kepentingan umum. DIREKTUR JENDERAL PERTAMBANGAN UMUM [SEAL] KONTORO MANGKUSUBROTO 39 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] DIREKTORAT TEKNIK PERTAMBANGAN UMUM SUB DIT PELAYANAN USAHA PERTAMBANGAN JALAN JENDERAL GATOT SUBROTO KAV. 49 J A K A R T A ============================================================================= JAKARTA, 22 AGUSTUS 1995 KEPADA YTH. SDR. JUSRI JAMAL, SH/CV. BOLIOHUTU MINING PERKANTORAN KAYU PUTIH BOLK D NO. 11 J1. KAYU PUTIH VI JAKARTA TIMUR S U R A T P E N G A N T A R Nomor : 291 /20/SD.I/1995 - - ----------------------------------------------------------------------------- NO. PERIHAL BANKAKNYA KETERANGAN - - ----------------------------------------------------------------------------- 1 Keputusan Dirjen Pertambangan 3 buah Disampaikan kepa Umum: Saudara dengan harapan No. 226 K s/d 228 K/2012/ agar dapat diterima DDJP/1995. dan dipergunakan den- Tgl. 22 Mei 1995 gan baik serta mema- KP.Penyelidikan Umum tuhi kewajiban sesuai Du. 362 s/d 364 dengan ketentuan per- Sulut. undang-undangan yang berlaku. DIREKTUR DIREKTORAT TEKNIK PERTAMBANGAN UMUM AN. KASUBIT PELAYANAN UASAHA PERTAMBANGAN KEPALA SEKSI IURAN PERTAMBANG /s/ DITERIMA OLEH SUNARTOJO, BE NIP. 100000942 /s/ ................. CAP/NAMA TERANG Tembusan : 1. Sekretaris Direktorat Jenderal Pertambangan Umum 2. Direktur Direktorat Teknik Pertambangan Umum 40 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] DEPARTEMEN PERTAMBANGAN DAN ENERGI REPUPLIK INDONESIA DIREKTORAT JENDERAL PERTAMBANGAN UMUM KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM NOMOR : 322.K/2013/DDJP/1994 TENTANG PEMBERIAN KUASA PERTAMBANGAN EKSPLORASI ( DU. 1000/RIAU ) DIREKTUR JENDERAL PERTAMBANGAN UMUM Membaca : Surat permohonan PT. AKSARA TAMA PRAMITA tanggal 10 Mei 1993. Menimbang : bahwa permohonan yang bersangkutan telah memenuhi syarat-syarat sepbagaimana ditentukan dalam peraturan perundang-undangan yang berlaku. Mengingat : 1. Undang-undang No. 11 Tahun 1967 (LNRI Th 1967 No. 22, TLNRI No. 2831). 2. Peraturan Pemerintah No. 32 Tahun 1969 (LNRI Th 1969 No. 60, TLNRI No. 2916) jo. Peraturan Permintah No. 79 Tahun 1992 ( LNRI Th 1992 No. 130, TLNRI No. 3510 ). 3. Peraturan Pemerintah No.27 Tahun 1980 (LNRI Th 1980 No. 47, TLNRI No. 3174). 4. Keputusan Presiden R.I. No. 343/M Tahun 1993 tanggal 11 September 1993. 5. Keputusan Menteri Pertambangan dan Enegi No. 2027 K/201/M.PE/1985 tanggal 18 September 1985. 6. Keputusan Direktur Jenderal Pertambangan Umum No. 667 K/201/040000/1986 tanggal 11 Nopember 1986. Memperhatikan : Surat Direktur Direktorat Teknik Pertambangan Umum tanggal 31 Mei 1994 Nomor : 1446/2013/DPT/1994. M E M U T U S K A N Menetapkan : PERTAMA : Memberikan Kuasa Pertambangan Eksplorasi untuk jangka waktu 3 (tiga) tahun berturut-turut : Kepada : PT. AKSARA TAMA PRAMITA Alamat : J1. Cengkeh No. 21 F-G Jakarta Kota. atas suatu wilayah tertanda DU. 998/Riau terletak di : Kabupaten Indragiri Hulu, Propinsi Riau. seluas : 1.962,50 (seribu sembilan ratus enam puluh dua 50/100) hektar dengan penjelasan batas wilayah seperti tercantum dalam lampiran I yang ditanda tangani oleh Direktur Direktorat Teknik Pertambangan Umum dan peta wilayah Kuasa Pertambangan dalam lampiran II untuk mengadakan eksplorasi mencari bahan galian " emas dan mineral pengikutnya " dengan memenuhi kewajiban-kewajiban tersebut dalam lampiran III Keputusan ini serta ketentuan peraturan perundang-undangan yang berlaku. KEDUA : Kuasa Pertambangan ini dapat dibatalkan walaupun masa berlakunya belum habis, apabila Pemegang Kuasa Pertambangan tidak memenuhi kewajiban-kewajiban yang tercantum di dalam lampiran III Keputusan in dan ketentuan peraturan perundang- undangan yang berlaku. 41 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] KETIGA : Pemegang Kuasa Pertambangan yang bermaksud mengadakan kerja sama dengang pihak modal asing dalam rangka Perjanjian Karya terlebih dahulu harus memperoleh izin tertulis dari Merteri Pertambangan dan Energi cq. Direktur Jenderal Pertambangan Umum. KEEMPAT : Keputusan Direktur Jenderal ini mulai berlaku pada tanggal ditetapkan. Ditetapkan di : JAKARTA Pada Tanggal : 21 Oktober 1994 DIREKTUR JENDERAL PERTAMBANGAN UMUM [SEAL] KUNTORO MANGKUSUBROTO TEMBUSAN : 1. Menteri Pertambangan dan Energi di Jakarta (dengan peta). 2. Menteri Kehutanan di Jakarta (dengan peta). 3. Menteri Negara Penggerak Dana Investasi/Ketua Badan Koordinasi Penanaman Modal di Jakarta (tanpa peta). 4. Menteri Negara Agraria/Kepala badan Pertanahan Nasional di Jakarta (dengan peta). 5. Sekretaris Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta). 6. Inspektur jenderal Departemen Pertambangan dan Energi di Jakarta (tanpa peta). 7. Direktur Jenderal Geologi dan Sumberdaya Mineral up. Direktur Direktorat Sumberdaya Mineral, Jl.Diponegoro No.57 Bandung (dengan peta). 8. Direktur Jenderal Pemerintahan Umum dan Otonomi Daerah, Departemen Dalam Negeri di Jakarta (tanpa peta). 9. Direktur Jenderal Perlindungan Hutan dan Pelestarian Alam, Departemen Kehutanan Jl.Ir.H.Juandan No.9 Bogor (dengan peta). 10. Direktur Jenderal Inventarisasi dan Tataguna Hutan, Departemen Kehutanan di Jakarta (dengan peta). 11. Kepala Biro Hukum, Departemen Pertambangan dan Energi di Jakarta (dengan peta). 12. Kepala Biro Keuangan, Departemen Pertambangan dan Energi di Jakarta (tanpa peta). 13. Direktur Direktorat Teknik Pertambangan Umum di Jakarta (dengan peta). 14. Direktur Direktorat Pembinaan Pengusahaan Pertambangan di Jarkata (dengen peta). 15. Gubernur Kepala Dareah Tingkat I Propinsi Riau (dengan peta). 16. Kepala Kanto Wilayah Departemen Pertambangan dan Energi di Pekanbaru (dengan peta). 17. Kepala Kantor Wilayah Departemen Kehutanan di Pekanbaru (dengan peta). 18. Bupati Keplal Daerah Tingkat II Kabupaten Indragiri Hulu (dengan peta). 42 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] Lampiran I : Keputusan Direktur Jenderal Pertambangan Umum Nomor : 322.K/2013/DDJP/1994 Tanggal : 21 Oktober 1994 PENJELASAN BATAS WILAYAH KUASA PERTAMBANGAN EKSPLORASI ( D.U. 1000 / RIAU ) Sebelah Utara : garis sejajar melalui titik Triangulasi 111. Sebelah Timur : garis rembang terletak pada 12.000 meter di sebelah Timur titik tersebut di atas. Sebelah Selatan : a. garis sejajar terletak pada 4.000 meter di sebelah Selatan titik tersebut di atas. b. garis rembang terletak pada 7.500 meter di sebelah Timur titik tersebut di atas. c. garis sejajar terletak pada 3.250 meter di sebelah Selatan titik tersebut di atas. Sebelah Barat : garis rembang terletak pada 7.000 meter di sebelah Timur titik tersebut di atas. DIREKTUR DIREKTOR AT TEKNIK PERTAMBANGAN UMUM [SEAL] IR. SOELENDRO AS NIP 100002158. 43 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] [THIS IS A MAP OF LAMPLHAN II KEPUTUSAN DIRJEN PERTAMBANGAN UMUM] 44 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] Lampiran III : Keputusan Direktur Jenderal Pertambangan Umum Nomor : 322.K/2013/DDJP/1994 Tanggal : 21 Oktober 1994 KEWAJIBAN-KEWAJIBAN PEREGANG KUASA PERTAMBANGAN EKSPLORASI I. Pemegang Kuasa Pertambangan ini telah memilih tempat tinggal (domesili) pada Pengadilan Negeri yang berkedudukan di ibu kota Propinsi Riau di Pekanbaru. II. Sebelum melakukan kegiatan, pemegang Kuasa Pertambangan ini harus lebih dahulu memberitahukan kepada Pemerintah Daerah dan Kantor Wilayah Departemen Pertambangan dan Energi di Pekanbaru. III. Hubungan antara pemegang Kuasa Pertambangan dengan pemilik tanah dan pihak ketiga, diatur menurut ketentuan-ketentuan yang berlaku. IV. Pemegang Kuasa Pertambangan Eksplorais diwajibkan membayar Iuran Tetap dan Iuran Eksplorasi menurut ketentuan yang berlaku dan harus dilunasi sebelum beraknirnya Kuasa Pertambangan. V. Jika terjadi pertindihan wilayah Kuasa Pertambangan dengan kepentingan lahan lainnya, maka pemegang Kuasa Pertambangan sebelum melaksanakan kagiatan dalam wilayah tersebut harus lebih dahulu menyelesaikannya sesuai dengan ketentuan yang berlaku. VI. a. Pemegang Kuasa Pertambangan harus memberikan laporan kegiatan 3 (tiga) bulan sekali kepada Direktur Jenderal Pertambangan Umum (1 expl.) dan tembusannya disampaikan kepada Direktur Direktorat Teknik Pertambangan Umum (3 expl.), Kepala kantor Wilayah Departemen Pertambangan dan Energi di Pekanbaru (1 expl.), Gubernur dan Bupati Kepala Daerah setempat (masing-masing 1 expl.). b. Selambat-lambatnya dalam waktu 6 (enam) bulan setelah tanggal ditetapkannya Keputusan ini, Pemegang Kuasa Pertambangan harus sudah menyampaikan laporan mengenai pematokan batas-batas wilayah Kuasa Pertambangan tersebut. VII. Dalam Bidang Pengawasan. a. Pemegang Kuasa Pertambangan harus mematuhi/mentaati peratruan yang berlaku mengenai Pengawasan Keselmatan dan Kesehatan Kerja serta Lingkungan dibidang Pertambangan umum. b. Pengawasan atas pelaksanaan Kuasa Pertambangan ini dilakukan oleh Pelaksana Inpeksi Tambang dan/atau petugas yang ditunjuk oleh Direktur Jenderal Pertambangan Umum. c. Pemegang Kuasa Pertambangan dapat/diperkenankan meminta kepada petugas tersebut untuk memperlihatkan surat-surat pengenal dan surat-surat tugasnya. VIII. a. Permohonan Perpanjangan atau permohonan Kuasa Pertambangan Eksploitasi sebegai peningkatan harus kiajukan 3 (tiga) bulan sebelum berakhirnya masa izin ini dengan desertai bukti-bukti kewajiban yang telah dipenuhi. b. Atas kelalaian tersebut pada huruf a, mengakibatkan: 1. Kuasa Pertambangan berakhir menurut hukum dan segala usaha pertambangan harus dihentikan. 2. Sealmbat-lambatnya dalam watku 6 (enam) bulan sejak tanggal berkahirnya Keputusan ini, pemegang Kuasa Pertambangan mengangkat keluar segala sesuatu yang menjadi milikanya kecuali benda-benda/ bangunan-bangunan yang dipergunakan untuk kepentingan umum. DIREKTUR JENDERAL PERTAMBANGAN UMUM [SEAL] KONTORO MANGKUSUBROTO 45 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] DEPARTEMEN PERTAMBANGAN DAN ENERGI REPUPLIK INDONESIA DIREKTORAT JENDERAL PERTAMBANGAN UMUM KEPUTUSAN DIREKTUR JENDERAL PERTAMBANGAN UMUM NOMOR : 323.K/2013/DDJP/1994 TENTANG PEMBERIAN KUASA PERTAMBANGAN EKSPLORASI ( DU. 1001/RIAU ) DIREKTUR JENDERAL PERTAMBANGAN UMUM Membaca : Surat permohonan PT. AKSARA TAMA PRAMITA tanggal 10 Mei 1993. Menimbang : bahwa permohonan yang bersangkutan telah memenuhi syarat-syarat sepbagaimana ditentukan dalam peraturan perundang-undangan yang berlaku. Mengingat : 1. Undang-undang No. 11 Tahun 1967 (LNRI Th 1967 No. 22, TLNRI No. 2831). 2. Peraturan Pemerintah No. 32 Tahun 1969 (LNRI Th 1969 No. 60, TLNRI No. 2916) jo. Peraturan Permintah No. 79 Tahun 1992 ( LNRI Th 1992 No. 130, TLNRI No. 3510 ). 3. Peraturan Pemerintah No.27 Tahun 1980 (LNRI Th 1980 No. 47, TLNRI No. 3174). 4. Keputusan Presiden R.I. No. 343/M Tahun 1993 tanggal 11 September 1993. 5. Keputusan Menteri Pertambangan dan Enegi No. 2027 K/201/M.PE/1985 tanggal 18 September 1985. 6. Keputusan Direktur Jenderal Pertambangan Umum No. 667 K/201/040000/1986 tanggal 11 Nopember 1986. Memperhatikan : Surat Direktur Direktorat Teknik Pertambangan Umum tanggal 31 Mei 1994 Nomor : 1446/2013/DPT/1994. M E M U T U S K A N Menetapkan : PERTAMA : Memberikan Kuasa Pertambangan Eksplorasi untuk jangka waktu 3 (tiga) tahun berturut-turut : Kepada : PT. AKSARA TAMA PRAMITA Alamat : J1. Cengkeh No. 21 F-G Jakarta Kota. atas suatu wilayah tertanda DU. 998/Riau terletak di : Kabupaten Indragiri Hulu, Propinsi Riau. seluas : 1.962,50 (seribu sembilan ratus enam puluh dua 50/100) hektar dengan penjelasan batas wilayah seperti tercantum dalam lampiran I yang ditanda tangani oleh Direktur Direktorat Teknik Pertambangan Umum dan peta wilayah Kuasa Pertambangan dalam lampiran II untuk mengadakan eksplorasi mencari bahan galian " emas dan mineral pengikutnya " dengan memenuhi kewajiban-kewajiban tersebut dalam lampiran III Keputusan ini serta ketentuan peraturan perundang-undangan yang berlaku. KEDUA : Kuasa Pertambangan ini dapat dibatalkan walaupun masa berlakunya belum habis, apabila Pemegang Kuasa Pertambangan tidak memenuhi kewajiban-kewajiban yang tercantum di dalam lampiran III Keputusan in dan ketentuan peraturan perundang- undangan yang berlaku. 46 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] KETIGA : Pemegang Kuasa Pertambangan yang bermaksud mengadakan kerja sama dengang pihak modal asing dalam rangka Perjanjian Karya terlebih dahulu harus memperoleh izin tertulis dari Merteri Pertambangan dan Energi cq. Direktur Jenderal Pertambangan Umum. KEEMPAT : Keputusan Direktur Jenderal ini mulai berlaku pada tanggal ditetapkan. Ditetapkan di : JAKARTA Pada Tanggal : 21 Oktober 1994 DIREKTUR JENDERAL PERTAMBANGAN UMUM [SEAL] KUNTORO MANGKUSUBROTO TEMBUSAN : 1. Menteri Pertambangan dan Energi di Jakarta (dengan peta). 2. Menteri Kehutanan di Jakarta (dengan peta). 3. Menteri Negara Penggerak Dana Investasi/Ketua Badan Koordinasi Penanaman Modal di Jakarta (tanpa peta). 4. Menteri Negara Agraria/Kepala badan Pertanahan Nasional di Jakarta (dengan peta). 5. Sekretaris Jenderal Departemen Pertambangan dan Energi di Jakarta (dengan peta). 6. Inspektur jenderal Departemen Pertambangan dan Energi di Jakarta (tanpa peta). 7. Direktur Jenderal Geologi dan Sumberdaya Mineral up. Direktur Direktorat Sumberdaya Mineral, Jl.Diponegoro No.57 Bandung (dengan peta). 8. Direktur Jenderal Pemerintahan Umum dan Otonomi Daerah, Departemen Dalam Negeri di Jakarta (tanpa peta). 9. Direktur Jenderal Perlindungan Hutan dan Pelestarian Alam, Departemen Kehutanan Jl.Ir.H.Juandan No.9 Bogor (dengan peta). 10. Direktur Jenderal Inventarisasi dan Tataguna Hutan, Departemen Kehutanan di Jakarta (dengan peta). 11. Kepala Biro Hukum, Departemen Pertambangan dan Energi di Jakarta (dengan peta). 12. Kepala Biro Keuangan, Departemen Pertambangan dan Energi di Jakarta (tanpa peta). 13. Direktur Direktorat Teknik Pertambangan Umum di Jakarta (dengan peta). 14. Direktur Direktorat Pembinaan Pengusahaan Pertambangan di Jarkata (dengen peta). 15. Gubernur Kepala Dareah Tingkat I Propinsi Riau (dengan peta). 16. Kepala Kanto Wilayah Departemen Pertambangan dan Energi di Pekanbaru (dengan peta). 17. Kepala Kantor Wilayah Departemen Kehutanan di Pekanbaru (dengan peta). 18. Bupati Keplal Daerah Tingkat II Kabupaten Indragiri Hulu (dengan peta). 47 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] Lampiran I : Keputusan Direktur Jenderal Pertambangan Umum Nomor : 323.K/2013/DDJP/1994 Tanggal : 21 Oktober 1994 PENJULASAN BATAS WILAYAH KUASA PERTAMBANGAN EKSPLORASI (D.U. 1001 / RIAU) Sebelah Utara : a. garis sejajar terlatak pada 4.750 meter di sebelah Selatan titik Triangulasi 111. b. garis rembang terletak pada 7.500 meter di sebelah Timur titik tersebut di atas. c. garis sejajar terlatak pada 4.000 meter di sebelah Selatan titik tersebut di atas. Sebelah Timur : garis rembang terletak pada 12.000 meter di sebelah Timur titik tersebut di atas. Sebela Selatan : garis sejajar terlatak pada 8.000 meter di sebelah Selatan titik tersebut di atas. Sebelah Barat : garis rembang terletak pada 7.000 meter di sebelah Timur titik tersebut di atas. Direktur Directorat Teknik Pertambangan Umum [SEAL] Ir. Soelendro As NIP. 100002158. 48 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] [THIS IS A MAP OF LAMPLHAN II KEPUTUSAN DIRJEN PERTAMBANGAN UMUM] 49 [TRANSLATION NOT CURRENTLY AVAILABLE, BUT WILL BE PROVIDED BY AMENDMENT.] Lampiran III : Keputusan Direktur Jenderal Pertambangan Umum Nomor : 323.K/2013/DDJP/1994 Tanggal : 21 Oktober 1994 KEWAJIBAN-KEWAJIBAN PEREGANG KUASA PERTAMBANGAN EKSPLORASI I. Pemegang Kuasa Pertambangan ini telah memilih tempat tinggal (domesili) pada Pengadilan Negeri yang berkedudukan di ibu kota Propinsi Riau di Pekanbaru. II. Sebelum melakukan kegiatan, pemegang Kuasa Pertambangan ini harus lebih dahulu memberitahukan kepada Pemerintah Daerah dan Kantor Wilayah Departemen Pertambangan dan Energi di Pekanbaru. III. Hubungan antara pemegang Kuasa Pertambangan dengan pemilik tanah dan pihak ketiga, diatur menurut ketentuan-ketentuan yang berlaku. IV. Pemegang Kuasa Pertambangan Eksplorais diwajibkan membayar Iuran Tetap dan Iuran Eksplorasi menurut ketentuan yang berlaku dan harus dilunasi sebelum beraknirnya Kuasa Pertambangan. V. Jika terjadi pertindihan wilayah Kuasa Pertambangan dengan kepentingan lahan lainnya, maka pemegang Kuasa Pertambangan sebelum melaksanakan kagiatan dalam wilayah tersebut harus lebih dahulu menyelesaikannya sesuai dengan ketentuan yang berlaku. VI. a. Pemegang Kuasa Pertambangan harus memberikan laporan kegiatan 3 (tiga) bulan sekali kepada Direktur Jenderal Pertambangan Umum (1 expl.) dan tembusannya disampaikan kepada Direktur Direktorat Teknik Pertambangan Umum (3 expl.), Kepala kantor Wilayah Departemen Pertambangan dan Energi di Pekanbaru (1 expl.), Gubernur dan Bupati Kepala Daerah setempat (masing-masing 1 expl.). b. Selambat-lambatnya dalam waktu 6 (enam) bulan setelah tanggal ditetapkannya Keputusan ini, Pemegang Kuasa Pertambangan harus sudah menyampaikan laporan mengenai pematokan batas-batas wilayah Kuasa Pertambangan tersebut. VII. Dalam Bidang Pengawasan. a. Pemegang Kuasa Pertambangan harus mematuhi/mentaati peratruan yang berlaku mengenai Pengawasan Keselmatan dan Kesehatan Kerja serta Lingkungan dibidang Pertambangan umum. b. Pengawasan atas pelaksanaan Kuasa Pertambangan ini dilakukan oleh Pelaksana Inpeksi Tambang dan/atau petugas yang ditunjuk oleh Direktur Jenderal Pertambangan Umum. c. Pemegang Kuasa Pertambangan dapat/diperkenankan meminta kepada petugas tersebut untuk memperlihatkan surat-surat pengenal dan surat-surat tugasnya. VIII. a. Permohonan Perpanjangan atau permohonan Kuasa Pertambangan Eksploitasi sebegai peningkatan harus kiajukan 3 (tiga) bulan sebelum berakhirnya masa izin ini dengan desertai bukti-bukti kewajiban yang telah dipenuhi. b. Atas kelalaian tersebut pada huruf a, mengakibatkan: 1. Kuasa Pertambangan berakhir menurut hukum dan segala usaha pertambangan harus dihentikan. 2. Sealmbat-lambatnya dalam watku 6 (enam) bulan sejak tanggal berkahirnya Keputusan ini, pemegang Kuasa Pertambangan mengangkat keluar segala sesuatu yang menjadi milikanya kecuali benda-benda/ bangunan-bangunan yang dipergunakan untuk kepentingan umum. DIREKTUR JENDERAL PERTAMBANGAN UMUM [SEAL] KONTORO MANGKUSUBROTO 50 DEVELOPMENT AGREEMENT GOLD MINING PROJECT IN EAST KALIMANTAN THE MUNUNG GOLD MINING CONCESSION This development Agreement (AGREEMENT) is made and entered into on this ___ day of February, 1977 by and between: PT MUARA MAYANG COAL UTAMA, a limited liability company established and validly existing under Indonesian law, and having its address at Komplek Pertokoan Pulo Mas Blok VII/15-16, Jakarta Timur - Indonesia (hereinafter referred to as "MUARA MAYANG"), and is represented in this Agreement by its Direktur Utama, Mr. T. Jusri Djamal; and KALIMAS JAYA LTD., a Bahamas Corporation having its registered offices in the Bahamas and its representative offices in Singapore (hereinafter referred to as "KALIMAS"), and is represented in this Agreement by its President Director, Mr. William Chan. Muara Mayang and Kalimas are hereinafter referred to collectively as "THE PARTIES." WITNESSETH Whereas, the government of Indonesia acting through its Department of Mines and Energy and the Directorate General of General Mining (hereinafter referred to as the "DGGM") wishes to expand on its enhanced exploration and exploitation for gold and other precious metals during the next Sixth Development Plan (known as Repelita VI) and beyond, and encourages the private sector to participate in such exploration, development, exploitation and production; and Whereas KALIMAS is actively seeking to acquire gold mining concessions and to implement gold mining activities in East Kalimantan, Indonesia (hereinafter referred to as the "PROJECT"); and Whereas MUARA MAYANG currently controls a valid government license, known as Kuasa Pertambangan Penyelidikan Umum and which is listed in official government records as Number 378.K/2012/DDJP/1996, for the general survey and exploration of gold minerals on a 6,096-HECTARE Concession, known as the Munung Gold Mining Concession in East Kalimantan. Muara Mayang can successfully demonstrate that it has officially blocked this area of land at the DGGM and that it has also received a valid license from the DGGM for the general survey and exploration of gold and other metals on this Concession. Muara Mayang recognizes the importance of obtaining other government licenses associated with the exploitation of gold and other metals, for which licenses also include the refinery and production of gold and other metals as well as the transportation and sale of gold and other metals; Muara Mayang will use its expert abilities and efforts to obtain these additional licenses from the Government in order to facilitate the development, implementation, and success of the Project; and Munung Gold Mining Concession 1 51 Whereas both Parties agree to use their best efforts to complete the sale, acquisition, and development of the Munung Gold Mining Concession (hereinafter referred to as the "TRANSACTION"), which includes the rights to the government license for the general survey and exploration of gold and other metals on the Concession. The Parties also agree to jointly cooperate to successfully obtain any and all other government licenses which will be necessary for the success of the Project; and Whereas the Munung Gold Mining Concession (hereinafter referred to as the "CONCESSION") is located in East Kalimantan, Indonesia, and potentially has substantial deposits of gold and other precious metals. The Concession encompasses mining authorizations with respect to approximately 6,096 hectares of land. A geographical description of the concession is provided in EXHIBIT I which is attached to this Agreement. The Concession is located in a gold mineralization zone and, more importantly, is ___ km to the northwest of the famous Kelian Gold Mining Concession which - to date - has approximately 5 million ounces of gold and is still under further exploration. Through official filings and monetary payments made to the DGGM (which includes both filing and annual fees as well as seriousness bonds), Muara Mayang has secured the rights to the Concession as well as the government licenses for the general survey and exploration of gold on the Concession. These documents and, most importantly, a copy of the KP License obtained by Muara Mayang are shown in EXHIBIT II, which is attached to this Agreement. DESCRIPTION OF THE CONCESSION: 6096 HECTARES IN EAST KALIMANTAN The Concession consists of approximately 6096 hectares of land. An official government license has been issued in respect of the Concession and permits Muara Mayang to perform a general survey and explore the gold and other metals on the Concession. The License which was issued is delineated as follows: 1 - KUASA PERTAMBANGAN PENYELIDIKAN UMUM No. 378.K/2012/DDJP/1996 Issued on 28 August 1996 to PT Muara Mayang Mas This license is for the general survey and exploration of gold metals on the 6096-hectare concession. This official government license, which provides the rights to perform a general survey and explore for gold and other metals on the Concession, is provided in EXHIBIT II, which is attached to this Agreement. For purposes of this Transaction, MR. T. JUSRI DJAMAL, as Direktur Utama of PT Muara Mayang Mas, has been granted the complete and/or official authorization, through a General Shareholder's Meeting (subject to stated provisions in the Company's Articles of Association), to sell 80% of Muara Mayang's interest in the Concession, including the full and complete transfer of the government rights to explore for gold and other metals on the Concession. These official authorizations for Mr. Djamal are referenced in EXHIBIT III, which is attached to this Agreement. Although Muara Mayang will actively seek to obtain the additional government licenses for the commercial exploitation of gold and other metals (including the licenses for the refinery, production, transportation, Munung Gold Mining Concession 2 52 and sale of gold and other metals), Muara Mayang recognizes that these additional government licenses will also be transferred to Kalimas or to some third party which is appointed by Kalimas. To date, Muara Mayang has secured the government license for the general survey and exploration of gold and other metals on the Concession as referenced in Exhibit II. This government license is currently valid and is in the legal form of a Kuasa Pertambangan (KP). The License is valid for a period of one (1) year and is renewable before maturity. ADDITIONAL GOVERNMENT LICENSES Muara Mayang will cooperate exclusively with Kalimas and/or Kalimas' appointed third party to expand the scope of the current license to include other additional government licenses, which are as follows: 1- License (KP) for Exploitation 2- License (KP) for Refinery and Production 3- License (KP) for transportation & Sale Muara Mayang will use its expert abilities and efforts for obtaining these additional government licenses from the DGGM. The purpose of obtaining all of the necessary licenses is to make it feasible to effectively and efficiently mine the Concession and to make it into a world-class profitable operation. Whereas Kalimas has the ability to provide and/or secure financing to acquire an 80% interest in the Munung Gold Mining Concession and the related government licenses from Muara Mayang as well as the ability to develop the Concession into a world-class mining operation. Now therefore, the Parties hereto agree as follows: 1. COOPERATION In accordance with the Government Approvals which have already been granted to Muara Mayang, the Parties agree as follows: 1.1 To submit additional application(s), as necessary, to the DGGM for the licenses and/or mandates to explore for gold and other precious metals on the Concession as well as commercial licenses and/or mandates that are associated with refinery, production, transportation and sale of gold from the concession. 1.2 To complete the sale, acquisition, and development of the concession 1.3 To support, develop, and complete the mining operations Munung Gold Mining Concession 3 53 2. EXCLUSIVITY Except as otherwise provided for in this Agreement, the Parties warrant that they shall cooperate solely and exclusively with each other in connection with this Gold Mining Project and that none of them shall enter into any agreement with any other firm or group of firms with respect to any matters related to this Project without the prior written consent of the other Party and to keep this information strictly confidential. Further, Muara Mayang will grant Kalimas a first right of refusal with respect to any gold mining Concessions which it may control, influence the sale of, or be able to recommend to Kalimas. The Parties also warrant that such exclusivity will be respected by those persons or firms which they may exercise control or with their affiliate in any manner. 3. SPONSORSHIP Muara Mayang shall act as the main sponsor of this Project. In this regard, Muara Mayang has already obtained the complete and proper approvals (which are subject to legal verification) to sell an 80% interest in the concession, which includes the full and complete rights to transfer the government Licenses which Muara Mayang has received for the exploration and exploitation of gold and other precious metals on the Concession. The Licenses which have been granted to Muara Mayang as well as all geological and other significant information will be made available to the Parties on a continual basis. Further, Muara Mayang will obtain the other appropriate government licenses associated with the refinery, production, transport, and sale of gold and other metals. 4. INITIAL RESPONSIBILITIES The Parties agree that their responsibilities shall be as follows: 4.1 MUARA MAYANG has already secured the proper approvals to sell an 80% interest in the Munung Concession as well as the approvals for the full and complete transfer of its rights to the Concession which includes the Government Licenses. Upon the successful completion of the acquisition of the Munung Concession, Muara Mayang will continue to assist with the development of the Project in conjunction with the Parties as needed. In particular, Muara Mayang will take all steps necessary or deemed advisable by Kalimas to secure any and all other appropriate government licenses associated with exploration, exploitation, refinery, production, and transport & sale of gold and other metals. Muara Mayang has reviewed preliminary geological surveys on the Concession and will provide all of this information as well as all future information to the Parties on a continual basis. Munung Gold Mining Concession 4 54 Muara Mayang will give Kalimas first priority/option for any future gold mining opportunities for acquisition and/or for working together in seeking other gold mining projects. In particular, Muara Mayang must give first priority to Kalimas to acquire any additional Concession which are contiguous with the current Concession. In those instances where these contiguous Concession and/or other Concession region are owned and/or controlled by friends, families, and/or directors of other local PT Companies which are associated with Muara Mayang, Muara Mayang must give priority to Kalimas to acquire such Concession, if available. 4.2 KALIMAS will be responsible to provide and/or secure financing for the Project, provide world-class technologies and management/exploration teams and, if necessary, a strategic operator(s) to develop the Concession. Kalimas will jointly assist the Project with Muara Mayang. 4.3 KALIMAS shall appoint a qualified Indonesian party to accept the transfer of the licenses issued by the Department of Mines of the Republic of Indonesia and may at any time at its discretion cause or permit such party to transfer such Concession and licenses to any third party based on prevailing regulations and subject to Muara Mayang's continuing rights under the Agreement being respected by such transferee. 5. TERMS & CONDITIONS FOR SALE & ACQUISITION 5.1 Muara Mayang will sell an 80% interest in the Concession as well as transfer its full and complete rights to the Government License for the general survey and exploration of gold and other metals on the Concession. Furthermore, Muara Mayang's principals and/or affiliates will not compete with Kalimas. 5.2 Payment For: (a) Muara Mayang agrees to sell 80% of its interest in the Concession as well as its full and complete rights to the Government Licenses to such qualified party as indicated by Kalimas that may be appointed for the price of USD $_______________. (b) All payments hereunder shall be subject to continual fulfillment by Muara Mayang of its obligations under this Agreement. 5.3 Payment Conditions: (a) Kalimas agrees to make a down payment of USD $____________ after the signing of this Agreement. This payment, however, is subject to legal verification that the title to the Concession is acceptable and without encumbrances and that the government license issued to Muara Mayang is current and valid. Munung Gold Mining Concession 5 55 Furthermore, payment is to be made after the survey test results from the initial investigation/exploration activity is completed and any other legal verifications which may be required in respect of title to the Concession and validity of government licenses. (b) The final payment of USD $______________________ will be immediately paid to Muara Mayang upon the Gold Mine(s) being put into the production stage and is generating positive revenues. For this to occur, however, Muara Mayang must first secure the complete and proper government licenses. Specifically, Muara Mayang must secure those additional government licenses which will allow the Parties to put the Mine(s) into the production stage. Such government licenses are as follows: - KP Exploration & Exploitation - KP Refinery & Production - KP Transportation & Sale Muara Mayang recognizes that once it secures these licenses for the benefit of the Parties and, moreover, for the benefit of the Project, Muara Mayang will transfer the full and complete rights of these licenses to Kalimas or to the entity appointed by Kalimas. 5.4 Profit Sharing/Shareholding The Parties hereby agree that the Profit Sharing from the net profit (total revenue minus all expenses including taxes) to the Project shall be as follows: Kalimas 80% Muara Mayang 20% The said percentage which is entitled to Muara Mayang will be held offshore for the benefit of Muara Mayang. 5.3 Reimbursement of Expenses Kalimas agrees to relinquish to or reimburse Muara Mayang for the funds which Muara Mayang expended towards the Seriousness Bond which it paid to the DGGM for blocking the 6096-hectare Concession. These funds amount to a total of RP.___________. Receipts for these expenses are referenced in EXHIBIT IV. Terms and Conditions for the reimbursement of these expenses are to be determined by the Parties. Munung Gold Mining Concession 6 56 5.6 Exploration Program (a) Kalimas agrees to begin the Exploration Program on the Concession by March/April 1997 or at a time mutually agreed between the Parties:______________. (b) Kalimas will dig numerous test pits as part of the exploration program. (c) Shallow drilling to the depth of 50-60 meters will be carried out over the first 90-day period or at a practical time. (d) Deep drilling to the depth of 200 meters will also be carried out over the second 90-day period or at a practical time. (e) Kalimas agrees to provide and/or secure 100% finance the Exploration Program for the development and implementation of the Munung Gold Mine. In this regard, Kalimas agrees to spend a minimum of USD $100,000 in Year 1; USD $100,000 in Year 2; and USD #100,000 in Year 3. Accounting records for these expenditures will be kept by Kalimas. 6. JURISDICTION 6.1 (a) Any dispute or controversies which may arise out of this Agreement shall be amicably settled by the Parties, but in failure thereof, such disputes or controversies shall be referred to the arbitration of the Rules of Badan Arbitrasi Nasional Indonesia (BANI). The arbitration panel shall consist of three (3) arbitrators, one (1) chosen by the complainant, one (1) chosen by the respondent and a Chairman chosen by the arbitrators named by the complainant and the respondent. (b) The Parties expressly agree that (i) the arbitration tribunal shall decide the matter as expeditiously as possible, however no time limits shall be imposed, (ii) Section 631 of the R.V. (Reglement op de Rechtsvordering) shall apply, and that accordingly the arbitrators shall only reach their decision by applying strict rules of law to the facts and shall not purport to resolve any dispute ex aequo et bono, (iii) the arbitration shall be conducted in the English language, in Jakarta, Indonesia, or such other place or places in Indonesia as the Parties to the arbitration may agree, (iv) the Party in whose favor the arbitral award is rendered shall be entitled to recover costs and expenses of the arbitration tribunal including but not limited to the cost and expense of administration of the arbitration proceedings, and (v) the arbitral award shall be issued in Indonesia. Munung Gold Mining Concession 7 57 (c) The Parties expressly agree to waive Section 641 of the R.V. and any other applicable laws permitting appeal to courts of law or any other body so that accordingly there shall be no appeal to any court of law or any other body from the decision (or any interim decision) of the arbitrators and neither party shall dispute nor question such decision before any judicial authority in the Republic of Indonesia or elsewhere. (d) Pending the submission to arbitration and thereafter until the arbitration tribunal issues its decision, each Party shall, except in the event of expiration, termination or failure by the other Party to obey or comply with a specific order or decision of the arbitration tribunal, continue to perform all of its obligations under this Agreement without prejudice to a final adjustment in accordance with the said award. 6.2 This Agreement as to its interpretation and application shall be governed by the Laws of Indonesia. 6.3 The Parties hereby expressly agree to waive the provision of Article 1266 of the Indonesian Civil Code with respect to the need for a court pronouncement to terminate this Agreement. 7. TERM OF VALIDITY This Agreement shall be in effect as of February ___, 1997,l and shall be valid until the purposes and objectives of the Project have been fulfilled. If for any reason the transfer of the Concession is not approved by the Government Authorities within (6) months after the date of this Agreement Kalimas shall have the option to terminate this Agreement with no further liability hereunder. 8. OTHER MATTERS Other matters not stipulated in this Agreement shall be further discussed and decided later on through mutual discussion between the Parties on the basis of this Agreement. Munung Gold Mining Concession 8 58 In Witness Whereof, the Parties agree that this Agreement is legal and binding and have caused their duly authorized representatives to execute this Agreement on the year and date first above stated. SIGNATORIES PT MUARA MAYANG MAS KALIMAS JAYA LTD. BY: [/S/] BY: [/S/] ------------------------------- -------------------------- NAME: NAME: WILLIAM CHAN TITLE: DIREKTUR UTAMA TITLE: PRESIDENT DIRECTOR Munung Gold Mining Concession 9 59 LIST OF EXHIBITS ================================================================================ Exhibit I: Geographical Description of Property Exhibit II: Government Filings and License Exhibit III: General Shareholders' Meeting Exhibit IV: Reimbursement Expenses Munung Gold Mining Concession 10 60 DEVELOPMENT AGREEMENT GOLD MINING PROJECT IN EAST KALIMANTAN THE LONG BELEH GOLD MINING CONCESSION This Development Agreement (AGREEMENT) is made and entered into on this 14th day of February, 1997 by and between: PT MUARA KOMAN MAS, a limited liability company established and validly existing under Indonesian law, and having its address at Komplek Pertokoan Pulo Mas Blok IVV/15-16, Jakarta Timur - Indonesia (hereinafter referred to as "MUARA KOMAN)," and is represented in this Agreement by its Direktur Utama, Mr. T. Jusri Djamal; and KALIMAS JAYA LTD., a Bahamas Corporation having its registered offices in the Bahamas and its representative offices in Singapore (hereinafter referred to as "KALIMAS"), and is represented in this Agreement by its President Director, Mr. William Chan. Muara Koman and Kalimas are hereinafter referred to collectively as "THE PARTIES." WITNESSETH Whereas, the Government of Indonesia acting through its Department of Mines and Energy and the Directorate General of General Mining (hereinafter referred to as the "DGGM") wishes to expand on its enhanced exploration and exploitation for gold and other precious metals during the next Sixth Development Plan (known as Repelita VI) and beyond, and encourages the private sector to participate in such exploration, development, exploitation and production; and Whereas KALIMAS is actively seeking to acquire gold mining concessions and to implement gold mining activities in East Kalimantan, Indonesia (hereinafter referred to as the "PROJECT"); and Whereas MUARA KOMAN currently controls a valid government license, known as Kuasa Pertambangan Penyelidikan Umum and which is listed in official government records as Number 422.K/20122/DDJP/1996 for the general survey and exploration of gold and other metals on a 4,637-HECTARE Concession, known as the Long Beleh Gold Mining Concession in East Kalimantan. Muara Koman can successfully demonstrate that it has officially blocked this area of land at the DGGM and that it has also received a valid license from the DGGM for the general survey and exploration of gold and other metals on this Concession. Muara Koman recognizes the importance of obtaining other government licenses associated with the exploitation of gold and other metals, for which licenses also include the refinery and production of gold and other metals as well as the transportation and sale of gold and other metals; Muara Koman will use its expert abilities and efforts to obtain these additional licenses from the Government in order to facilitate the development, implementation, and successes of the Project; and Long Beleh Gold Mining Concession 1 61 Whereas both Parties agree to use their best efforts to complete the sale, acquisition, and development of the Long Beleh Gold Mining Concession (hereinafter referred to as the "TRANSACTION"), which includes the rights to the government license for the general survey and exploration of gold and other metals on the Concession. The Parties also agree to jointly cooperate to successfully obtain any and all other government licenses which will be necessary for the success of the Project; and Whereas the Long Beleh Gold Mining Concession (hereinafter referred to as the "CONCESSION") is located in East Kalimantan, Indonesia, and potentially has substantial deposits of gold and other precious metals. The Concession encompasses mining authorizations with respect to approximately 4,637 hectares of land. A geographical description of the Concession is provided in Exhibit I, which is attached to this Agreement. The Concession is located in a gold mineralization zone and, more importantly, is ___ km to the south of the famous Busang Gold Mining Concession which - to date - has approximately 57 million ounces of gold and is still under further exploration. Through official filings and monetary payments made to the DGGM (which includes both filing and annual fees as well as seriousness bonds), Muara Koman has secured the rights to the Concession as well as the government licenses for the general survey and exploration of gold on the concession. These documents and, most importantly, a copy of the KP License obtained by Muara Koman are shown in EXHIBIT II, which is attached to this Agreement. DESCRIPTION OF THE CONCESSION: 4,637 HECTARES IN EAST KALIMANTAN The Concession consists of approximately 4,637 hectares of land. An official government license has been issued in respect of the Concession and permits Muara Koman to perform a general survey and explore for gold and other metals on the Concession. The License which was issued is delineated as follows: 1 - KUASA PERTAMBANGAN PENYELIDIKAN UMUM No. 422.K/2012/DDJP/1996 Issued on 16 September to PT Muara Koman Mas This license is for the general survey and exploration of gold metals on the 4,637-hectare concession This official government license, which provides the rights to perform a general survey and explore for gold and other metals on the Concession is provided in EXHIBIT II, which is attached to this agreement. For purposes of this Transaction, MR. T. JUSRI DJAMAL, as Direktur Utama of PT Muara Komana Mas, has been granted the complete and/or official authorization, through a General Shareholder's Meeting (subject to stated provisions in the Company's Articles of Association), to sell 80% of Muara Koman's interest in the concession, including the full and complete transfer of the government rights to explore for gold and other metals on the concession. These official authorizations for Mr. Jamal are referenced in EXHIBIT III, which is attached to this Agreement. Although Muara Koman will actively seek to obtain the additional government licenses for the commercial exploitation of gold and other metals (including the licenses for the refinery, production, transportation and sale Long Beleh Gold Mining Concession 2 62 of gold and other metals), Muara Koman recognizes that these additional government licenses will also be transferred to Kalimas or to some third party which is appointed by Kalimas. To date, Muara Koman has secured the government license for the general survey and exploration of gold and other metals on the Concession as referenced in Exhibit II. This government license is currently valid and is in the legal form of a Kuasa Pertambangan (KP). The License is valid for a period of one (1) year and is renewable before maturity. ADDITIONAL GOVERNMENT LICENSES Muara Koman will cooperate exclusively with Kalimas and/or Kalimas' appointed third party to expand the scope of the current license to include other additional government licenses which are as follows: 1- License (KP) for Exploitation 2- License (KP) for Refinery and Production 3- License (KP) for transportation & Sale Muara Koman will use its expert abilities and efforts for obtaining these additional government licenses from the DGGM. The purpose of obtaining all of the necessary licenses is to make it feasible to effectively and efficiently mine the Concession and to make it into a world-class profitable operation. Whereas KALIMAS has the ability to provide and/or secure financing to acquire an 80% interest in the Long Beleh Gold Mining Concession and the related government licenses from Muara Koman as well as the ability to develop the Concession into a world-class mining operation. Now therefore, the Parties hereto agree as follows: 1. COOPERATION In accordance with the Government Approvals which have already been granted to Muara Koman, the Parties agree as follows: 1.1 To submit additional application(s), as necessary, to the DGGM for the licenses and/or mandates to explore for gold and other precious metals on the concession as well as commercial licenses and/or mandates that are associated with refinery, production, transportation and sale of gold from the Concession. 1.2 To complete the sale, acquisition, and development of the Concession 1.3 To support, develop, and complete the mining operations Long Beleh Gold Mining Concession 3 63 2. EXCLUSIVITY Except as otherwise provided for in this Agreement, the Parties warrant that they shall cooperate solely and exclusively with each other in connection with this Gold Mining Project and that none of them shall enter into any agreement with any other firm or group of firms with respect to any matters related to this Project without the prior written consent of the other Party and to keep this information strictly confidential. Further, Muara Koman will grant Kalimas a first right of refusal with respect to any gold mining Concessions which it may control, influence the sale of, or be able to recommend to Kalimas. The Parties also warrant that such exclusivity will be respected by those persons or firms which they may exercise control or with their affiliate in any manner. 3. SPONSORSHIP Muara Koman shall act as the main sponsor of this Project. In this regard, Muara Koman has obtained the complete and proper approvals (which are subject to legal verification) to sell an 80% interest in the Concession, which includes the full and complete rights to transfer the Government Licenses which Muara Koman has received for the exploration and exploitation of gold and other precious metals on the Concession. The Licenses which have been granted to Muara Koman as well as all geological and other significant information will be made available to the Parties on a continual basis. Furthermore, Muara Koman will obtain the other appropriate government licenses associated with the refinery and production of gold and other metals as well as the licenses for the transportation and sale of gold and other metals. 4. INITIAL RESPONSIBILITIES The Parties agree that their responsibilities shall be as follows: 4.1 MUARA KOMAN has already secured the proper approvals to sell an 80% interest in the Long Beleh Concession as well as the approvals for the full and complete transfer of its rights to the Concession, which includes the Government Licenses. Upon the successful completion of the acquisition of the Long Beleh Concession, Muara Koman will continue to assist with the development of the Project in conjunction with the Parties as needed. In particular, Muara Koman will take all steps necessary or deemed advisable by Kalimas to secure any and all other appropriate government licenses associated with exploration, exploitation, refinery, production, and transport & sale of gold and other metals. Muara Koman has reviewed preliminary geological surveys on the Concession and will provide all of this information as well as all future information to the Parties on a continual basis. Long Beleh Gold Mining Concession 4 64 Muara Koman will give Kalimas first priority/option for any future gold mining opportunities for acquisition and/or for working together in seeking other gold mining projects. In particular, Muara Koman must give first priority to Kalimas to acquire any additional Concession which are contiguous with the current Concession. In those instances where these contiguous Concession and/or other Concession region are owned and/or controlled by friends, families, and/or directors of other local PT Companies which are associated with Muara Koman, Muara Koman must give priority to Kalimas to acquire such Concession, if available. 4.2 KALIMAS will be responsible to provide and/or secure financing for the Project, provide world-class technologies and management/exploration teams and, if necessary, a strategic operator(s) to develop the Concession. Kalimas will jointly assist the Project with Muara Koman. 4.3 KALIMAS shall appoint a qualified Indonesian party to accept the transfer of the licenses issued by the Department of Mines of the Republic of Indonesia and may at any time at its discretion cause or permit such party to transfer such Concession and licenses to any third party based on prevailing regulations and subject to Muara Koman's continuing rights under the Agreement being respected by such transferee. 5. TERMS & CONDITIONS FOR SALE & ACQUISITION 5.1 Muara Koman will sell an 80% interest in the concession as well as transfer its full and complete rights to the Government License for the general survey and exploration of gold and other metals on the Concession. Furthermore, Muara Koman's principals and/or affiliates will not complete with Kalimas. 5.2 Payment For: (a) Muara Koman agrees to sell 80% of its interest in the Concession as well as transfer its full and complete rights to the Government Licenses to such qualified party as indicated by Kalimas that may be appointed for the price of USD $1,000,000. (b) All payments hereunder shall be subject to continual fulfillment by Muara Koman of its obligations under this Agreement. 5.3 Payment Conditions: (a) Kalimas agrees to make a down payment of USD $150,000 after the signing of this Agreement. This payment, however, is subject to legal verification that the title to the Concession is acceptable and without encumbrances and that the government license issued to Muara Koman is current and Long Beleh Gold Mining Concession 5 65 valid. Furthermore, payment is to be made after the survey test results from the initial investigation/exploration activity is completed and any other legal verifications which may be required in respect of title to the Concession and validity of government licenses. (b) The final payment of US $850,000 will be immediately paid to Muara Koman upon the Gold Mine(s) being put into the production stage and is generating positive revenues. For this to occur, however, Muara Koman must first secure the complete and proper government licenses. Specifically, Muara Koman must secure those additional government licenses which will allow the Parties to put the Mine(s) into the production stage. Such government licenses are as follows: - KP Exploration & Exploitation - KP Refinery & Production - KP Transportation & Sale Muara Koman recognizes that once it secures these licenses for the benefit of the Parties and, moreover, for the benefit of the Project, Muara Koman will transfer the full and complete rights of these licenses to Kalimas or to the entity appointed by Kalimas. 5.4 Profit Sharing/Shareholding The Parties hereby agree that the Profit Sharing from the net profit (total revenue minus all expenses including taxes) to the Project shall be as follows: Kalimas 80% Muara Koman 20% The said percentage which is entitled to Muara Koman will be held offshore for the benefit of Muara Koman. 5.5 Reimbursement of Expenses Kalimas agrees to relinquish to or reimburse Muara Koman for the funds which Muara Koman expended towards the Seriousness Bond which is paid to the DGGM for blocking the 4,637-hectare Concession. These funds amount to a total of Rp. to be determined. Receipts for these expenses are referenced in EXHIBIT IV. Terms and Conditions for the reimbursement of these expenses are to be determined by the Parties. Long Beleh Gold Mining Concession 6 66 5.6 Exploration Program (a) Kalimas agrees to begin the Exploration Program on the Concession by March/April 1997 or sooner, or at a time mutually agreed between the parties: 14th February. (b) Kalimas will dig numerous test pits as part of the exploration program. (c) Shallow drilling to the depth of 50-60 meters will be carried out over the first 90-day period or at a practical time. (d) Deep drilling to the depth of 200 meters will also be carried out over the second 90-day period or at a practical time. (e) Kalimas agrees to provide and/or secure 100% finance the Exploration Program for the development and implementation of the Long Beleh Gold Mine. In this regard, Kalimas agrees to spend a minimum of USD #100,000 in Year 1; USD $100,000 in Year 2; and USD $100,000 in Year 3. Accounting records for these expenditures will be kept by Kalimas 6. JURISDICTION 6.1 (a) Any dispute or controversies which may arise out of this Agreement shall be amicably settled by the Parties, but in failure thereof, such disputes or controversies shall be referred to the arbitration of the Rules of Badan Arbitrasi Nasional Indonesia (BANI). The arbitration panel shall consist of three (3) arbitrators, one (1) chosen by the complainant, one (1) chosen by the respondent and a Chairman chosen by the arbitrators named by the complainant and the respondent. (b) The Parties expressly agree that (e) the arbitration tribunal shall decide the matter as expeditiously as possible; however, no time limits shall be imposed, (ii) Section 631 of the R.V. (Reglement op de Rechtsvordering) shall apply, and that accordingly the arbitrators shall only reach their decision by applying strict rules of law to the facts and shall not purport to resolve any dispute ex aequo et bono, (iii) the arbitration shall be conducted in the English language, in Jakarta, Indonesia, or such other place or places in Indonesia as the Parties to the arbitration may agree, (iv) the Party in whose favor the arbitral award is rendered shall be entitled to recover costs and expenses of the arbitration tribunal including but not limited to the cost and expense of Long Beleh Gold Mining Concession 7 67 administration of the arbitration proceedings, and (v) the arbitral award shall be issued in Indonesia. (c) The Parties expressly agree to waive Section 641 of the R.V. and any other applicable laws permitting appeal to courts of law or any other body so that accordingly there shall be no appeal to any court of law or any other body from the decision (or any interim decision) of the arbitrators and neither party shall dispute nor question such decision before any judicial authority in the Republic of Indonesia or elsewhere. (d) Pending the submission to arbitration and thereafter until the arbitration tribunal issues its decision, each Party shall, except in the event of expiration, termination or failure by the other Party to obey or comply with a specific order or decision of the arbitration tribunal, continue to perform all of its obligations under this Agreement without prejudice to a final adjustment in accordance with the said award. 6.2 This Agreement as to its interpretation and application shall be governed by the Laws of Indonesia. 6.3 The Parties hereby expressly agree to waive the provision of Article 1266 of the Indonesian Civil Code with respect to the need for a court pronouncement to terminate this Agreement. 7. TERM OF VALIDITY This Agreement shall be in effect as of February 14th, 1997, and shall be valid until the purposes and objectives of the Project have been fulfilled. If for any reason the transfer of the Concession is not approved by the Government Authorities within (6) months after the date of this Agreement Kalimas shall have the option to terminate this Agreement with no further liability hereunder. 8. OTHER MATTERS Other matters not stipulated in this Agreement shall be further discussed and decided later on through mutual discussion between the Parties on the basis of this Agreement. Long Beleh Gold Mining Concession 8 68 In Witness Whereof, the Parties agree that this Agreement is legal and binding and have caused their duly authorized representatives to execute this Agreement on the year and date first above stated. SIGNATORIES PT MUARA KOMAN MAS KALIMAS JAYA LTD. BY: /S/ BY: /S/ ----------------------------- ------------------------- NAME: MR. T. JUSRI DJAMAL NAME: WILLIAM CHAN TITLE: DIREKTUR UTAMA TITLE: PRESIDENT DIRECTOR Long Beleh Gold Mining Concession 9 69 DEVELOPMENT AGREEMENT GOLD MINING PROJECT IN EAST KALIMANTAN THE TELEN GOLD MINING CONCESSION This Development Agreement (AGREEMENT) is made and entered into on this 14th day of February, 1997 by and between: PT WALEA BAHIMAS, a limited liability company established and validly existing under Indonesian law, and having its address at Komplek Pertokoan Pulo Mas Blok VII/15-16, Jakarta Timur - Indonesia (hereinafter referred to as "WALEA BAHIMAS"), and is represented in this Agreement by its Direktur Utama, Mr. T. Jusri Djamal; and KALIMAS JAYA LTD., a Bahamas Corporation having its registered offices in the Bahamas and its representative offices in Singapore (hereinafter referred to as "KALIMAS"), and is represented in this Agreement by its President Director, Mr. William Chan. Walea Bahimas and Kalimas are hereinafter referred to collectively as "THE PARTIES." WITNESSETH Whereas, the Government of Indonesia acting through its Department of Mines and Energy and the Directorate General of General Mining (hereinafter referred to as the "DGGM") wishes to expand on its enhanced exploration and exploitation for gold and other precious metals during the next Sixth Development Plan (known as Repelita VI) and beyond, and encourages the private sector to participate in such exploration, development, exploitation and production; and Whereas KALIMAS is actively seeking to acquire gold mining concessions and to implement gold mining activities in East Kalimantan, Indonesia (hereinafter referred to as the "PROJECT"); and Whereas WALEA BAHIMAS currently controls a valid government license, known as Kuasa Pertambangan Penyelidikan Umum and which is listed in official government records as Number 379.k/2012/DDJP/1996, for the general survey and exploration of gold and other metals on a 687-HECTARE Concession, known as the Telen Gold Mining Concession in East Kalimantan. Walea Bahimas can successfully demonstrate that it has officially blocked this area of land at the DGGM and that it has also received a valid license from the DGGM for the general survey and exploration of gold and other metals on this Concession. Walea Bahimas recognizes the importance of obtaining other government licenses associated with the exploitation of gold and other metals, for which licenses also include the refinery and production of gold and other metals as well as the transportation and sale of gold and other metals; Walea Bahimas will use its expert abilities and efforts to obtain these additional licenses from the Government in order to facilitate the development, implementation, and success of the Project; and Telen Gold Mining Concession 1 70 Whereas both Parties agree to use their best efforts to complete the sale, acquisition, and development of the Telen Gold Mining Concession (hereinafter referred to as the "TRANSACTION"), which includes the rights to the government license for the general survey and exploration of gold and other metals on the Concession. The Parties also agree to jointly cooperate to successfully obtain any and all other government licenses which will be necessary for the success of the Project; and Whereas the Telen Gold Mining Concession (hereinafter referred to as the "CONCESSION") is located in East Kalimantan, Indonesia, and potentially has substantial deposits of gold and other precious metals. The Concession encompasses mining authorizations with respect to approximately 687 hectares of land. A geographical description of the Concession is provided in EXHIBIT I, which is attached to this Agreement. The Concession is located in a gold mineralization zone and, more importantly, is ___ km to the east of the famous Busang Gold Mining Concession which - to date - has approximately 57 million ounces of gold and is still under further exploration. Through official filings and monetary payments made to the DGGM (which includes both filing and annual fees as well as seriousness bonds), Walea Bahimas has secured the rights to the Concession as well as the government licenses for the general survey and exploration of gold on the Concession. These documents and, most importantly, a copy of the KP License obtained by Walea Bahimas are shown in EXHIBIT II, which is attached to this Agreement. DESCRIPTION OF THE CONCESSION: 687 HECTARES IN EAST KALIMANTAN The Concession consists of approximately 6096 hectares of land. An official government license has been issued in respect of the Concession and permits Walea Bahimas to perform a general survey and explore for gold and other metals on the Concession. The License which was issued is delineated as follows: 1 - KUASA PERTAMBANGAN PENYELIDIKAN UMUM No. 379.K/2012/DDJP/1996 Issued on 28 August 1996 to PT Walea Bahimas Mas This license is for the general survey and exploration of gold metals on the 687-hectare concession This official government license, which provides the rights to perform a general survey and explore for gold and other metals on the Concession, is provided in EXHIBIT II which is attached to this Agreement. For purposes of this Transaction, MR. T. JUSRI DJAMAL, as Direktur Utama of PT Walea Bahimas Mas, has been granted the complete and/or official authorization, through a General Shareholder's Meeting (subject to stated provisions in the Company's Articles of Association), to sell 80% of Walea Bahimas's interest in the Concession, including the full and complete transfer of the government rights to explore for gold and other metals on the Concession. These official authorizations for Mr. Djamal are referenced in EXHIBIT III, which is attached to this Agreement. Although Walea Bahimas will actively seek to obtain the additional government licenses for the commercial exploitation of gold and other metals (including the licenses for the refinery, production, transportation, Telen Gold Mining Concession 2 71 and sale of gold), Walea Bahimas recognizes that these additional government licenses will also be transferred to Kalimas or to some third party which is appointed by Kalimas. To date, Walea Bahimas has secured the government license for the general survey and exploration of gold and other metals on the Concession as referenced in Exhibit II. This government license is currently valid and is in the legal form of a Kuasa Pertambangan (KP). The License is valid for a period of one (1) year and is renewable before maturity. ADDITIONAL GOVERNMENT LICENSES & EXPANSION OF PROPERTY Walea Bahimas will cooperate exclusively with Kalimas and/or Kalimas' appointed third party to expand the scope of the current license to include additional hectares of land as well as other additional government licenses which are as follows: 1 - License (KP) for Exploitation 2 - License (KP) for Refinery and Production 3 - License (KP) for Transportation & Sale Walea Bahimas will use its expert abilities and efforts for obtaining these additional hectares for mining development as well as additional government licenses from the DGGM. The purpose of obtaining all of the necessary licenses is to make it feasible to effectively and efficiently mine the Concession and to make it into a world-class profitable operation. Whereas KALIMAS has the ability to provide and/or secure financing to acquire an 80% interest in the Telen Gold Mining Concession and the related government licenses from Walea Bahimas as well as the ability to develop the Concession into a world-class mining operation. Now therefore, the Parties hereto agree as follows: 1. COOPERATION In accordance with the Government Approvals which have already been granted to Walea Bahimas, the Parties agree as follows: 1.1 To submit additional application(s), as necessary, to the DGGM for the licenses and/or mandates to explore for gold and other precious metals on the Concession as well as commercial licenses and/or mandates that are associated with refinery, production, transportation and sale of gold from the Concession. 1.2 To complete the sale, acquisition, and development of the Concession. 1.3 To support, develop, and complete the mining operations Telen Gold Mining Concession 3 72 2. EXCLUSIVITY Except as otherwise provided for in this Agreement, the Parties warrant that they shall cooperate solely and exclusively with each other in connection with this Gold Mining Project and that none of them shall enter into any agreement with any other firm or group of firms with respect to any matters related to this Project without the prior written consent of the other Party and to keep this information strictly confidential. Further, Walea Bahimas will grant Kalimas a first right of refusal with respect to any gold mining Concessions which it may control, influence the sale of, or be able to recommend to Kalimas. The Parties also warrant that such exclusivity will be respected by those persons or firms which they may exercise control or with their affiliate in any manner. 3. SPONSORSHIP Walea Bahimas shall act as the main sponsor of this Project. In this regard, Walea Bahimas has already obtained the complete and proper approvals (which are subject to legal verification) to sell an 80% interest in the Concession, which includes the full and complete rights to transfer the Government Licenses which Walea Bahimas has received for the exploration and exploitation of gold and other precious metals on the Concession. The Licenses which have been granted to Walea Bahimas as well as all geological and other significant information will be made available to the Parties on a continual basis. Furthermore, Walea Bahimas will obtain the other appropriate government licenses associated with the refinery and production of gold and other metals as well as the licenses for the transportation and sale of gold and other metals. 4. INITIAL RESPONSIBILITIES The Parties agree that their responsibilities shall be as follows: 4.1 WALEA BAHIMAS has already secured the proper approvals to sell an 80% interest in the Telen Concession as well as the approvals for the full and complete transfer of its rights to the Concession, which includes the Government Licenses. Upon the successful completion of the acquisition of the Telen Concession, Walea Bahimas will continue to assist with the development of the Project in conjunction with the Parties as needed. In particular, Walea Bahimas will take all steps necessary or deemed advisable by Kalimas to secure any and all additional property as well as other appropriate government licenses associated with exploration, exploitation, refinery, production, and transport & sale of gold and other metals. Walea Bahimas has reviewed preliminary geological surveys on the Concession and will provide all of this information as well as all future information to the Parties on a continual basis. Telen Gold Mining Concession 4 73 Walea Bahimas will give Kalimas first priority/option for any future gold mining opportunities for acquisition and/or for working together in seeking other gold mining projects. In particular, Walea Bahimas must give first priority to Kalimas to acquire any additional Concession which are contiguous with the current Concession. In those instances where these contiguous Concession and/or other concession region are owned and/or controlled by friends, families, and/or directors of other local PT Companies which are associated with Walea Bahimas, Walea Bahimas must give priority to Kalimas to acquire such Concession, if available. 4.2 KALIMAS will be responsible to provide and/or secure financing for the Project, provide world-class technologies and management/exploration teams and, if necessary, a strategic operator(s) to develop the Concession. Kalimas will jointly assist the Project with Walea Bahimas. 4.3 KALIMAS shall appoint a qualified Indonesian party to accept the transfer of the licenses issued by the Department of Mines of the Republic of Indonesia and may at any time at its discretion cause or permit such party to transfer such Concession and licenses to any third party based on prevailing regulations and subject to Walea Bahimas's continuing rights under the Agreement being respected by such transferee. 5. TERMS & CONDITIONS FOR SALE & ACQUISITION 5.1 Walea Bahimas will sell an 80% interest in the Concession as well as transfer its full and complete rights to the Government License for the general survey and exploration of gold and other metals on the Concession. Furthermore, Walea Bahimas's principals and/or affiliates will not compete with Kalimas. 5.2 Payment For: (a) Walea Bahimas agrees to sell 80% of its interest in the Concession as well as its full and complete rights to the Government Licenses to such qualified party as indicated by Kalimas that may be appointed for the price of USD $1,000,000. (b) All payments hereunder shall be subject to continual fulfillment by Walea Bahimas of its obligations under this Agreement. 5.3 Payment Conditions: (a) Kalimas agrees to make a down payment of USD $150,000 after the signing of this Agreement. This payment, however, is subject to legal verification that the title to the Concession is acceptable and without encumbrances and that the government license issued to Walea Bahimas is current and valid. Telen Gold Mining Concession 5 74 Furthermore, payment is to be made after the survey test results from the initial investigation/exploration activity is completed and any other legal verifications which may be required in respect of title to the Concession and validity of government licenses. (b) The final payment of USD $850,000 will be immediately paid to Walea Bahimas upon the Gold Mine(s) being put into the production stage and is generating positive revenues. For this to occur, however, Walea Bahimas must first secure the complete and proper government licenses. Specifically, Walea Bahimas must secure those additional government licenses which will allow the Parties to put the Mine(s) into the production stage. Such government licenses are as follows: - KP Exploration & Exploitation - KP Refinery & Production - KP Transportation & Sale Walea Bahimas recognizes that once it secures these licenses for the benefit of the Parties and, moreover, for the benefit of the Project, Walea Bahimas will transfer the full and complete rights of these licenses to Kalimas or to the entity appointed by Kalimas. 5.4 Profit Sharing/Shareholding The Parties hereby agree that the Profit Sharing from the net profit (total revenue minus all expenses including taxes) to the Project shall be as follows: Kalimas 80% Walea Bahimas 20% The said percentage which is entitled to Walea Bahimas will be held offshore for the benefit of Walea Bahimas. 5.5 Reimbursement of Expenses Kalimas agrees to relinquish to or reimburse Walea Bahimas for the funds which Walea Bahimas expended towards the Seriousness Bond which it paid to the DGGM for blocking the 687-hectare Concession. These funds amount to a total of Rp. to be determined. Receipts for these expenses are referenced in EXHIBIT IV. Terms and Conditions for the reimbursement of these expenses are to be determined by the Parties. Telen Gold Mining Concession 6 75 5.6 Exploration Program (a) Kalimas agrees to begin the Exploration Program on the Concession by March/April 1997 or sooner, or at a time agreed upon by the Parties:___________________________. (b) Kalimas will dig numerous test pits as part of the exploration program. (c) Shallow drilling to the depth of 50-60 meters will be carried out over the first 90-day period or at a practical time. (d) Deep drilling to the depth of 200 meters will also be carried out over the second 90-day period or at a practical time. (e) Kalimas agrees to provide and/or secure 100% finance the Exploration Program for the development and implementation of the Telen Gold Mine. In this regard, Kalimas agrees to spend a minimum of USD $100,000 in Year 1; USD $100,000 in Year 2; and USD $100,000 in Year 3. Accounting records for these expenditures will be kept by Kalimas. 6. JURISDICTION 6.1 (a) Any dispute or controversies which may arise out of this Agreement shall be amicably settled by the Parties, but in failure thereof, such disputes or controversies shall be referred to the arbitration of the Rules of Badan Arbitrasi Nasional Indonesia (BANI). The arbitration panel shall consist of three (3) arbitrators, one (1) chosen by the complainant, one (1) chosen by the respondent and a Chairman chosen by the arbitrators named by the complainant and the respondent. (b) The Parties expressly agree that (i) the arbitration tribunal shall decide the matter as expeditiously as possible, however no time limits shall be imposed, (ii) Section 631 of the R.V. (Reglement op de Rechtsvordering) shall apply, and that accordingly the arbitrators shall only reach their decision by applying strict rules of law to the facts and shall not purport to resolve any dispute ex aequo et bono, (iii) the arbitration shall be conducted in the English language, in Jakarta, Indonesia, or such other place or places in Indonesia as the Parties to the arbitration may agree, (iv) the Party in whose favor the arbitral award is rendered shall be entitled to recover costs and expenses of the arbitration tribunal including but not limited to the cost and expense of administration of the arbitration proceedings, and (v) the arbitral award shall be issued in Indonesia. Telen Gold Mining Concession 7 76 (c) The Parties expressly agree to waive Section 641 of the R.V. and any other applicable laws permitting appeal to courts of law or any other body so that accordingly there shall be no appeal to any court of law or any other body from the decision (or any interim decision) of the arbitrators and neither party shall dispute nor question such decision before any judicial authority in the Republic of Indonesia or elsewhere. (d) Pending the submission to arbitration and thereafter until the arbitration tribunal issues its decision, each Party shall, except in the event of expiration, termination or failure by the other Party to obey or comply with a specific order or decision of the arbitration tribunal, continue to perform all of its obligations under this Agreement without prejudice to a final adjustment in accordance with the said award. 6.2 This Agreement as to its interpretation and application shall be governed by the Laws of Indonesia. 6.3 The Parties hereby expressly agree to waive the provision of Article 1266 of the Indonesian Civil Code with respect to the need for a court pronouncement to terminate this Agreement. 7. TERM OF VALIDITY This Agreement shall be in effect as of February 14, 1997, and shall be valid until the purposes and objectives of the Project have been fulfilled. If for any reason the transfer of the Concession is not approved by the Government Authorities within (6) months after the date of this Agreement Kalimas shall have the option to terminate this Agreement with no further liability hereunder. 8. OTHER MATTERS Other matters not stipulated in this Agreement shall be further discussed and decided later on through mutual discussion between the Parties on the basis of this Agreement. Telen Gold Mining Concession 8 77 In Witness Whereof, the Parties agree that this Agreement is legal and binding and have caused their duly authorized representatives to execute this Agreement on the year and date first above stated. SIGNATORIES PT WALEA BAHIMAS MAS KALIMAS JAYA LTD. BY: /S/ BY: /S/ -------------------------- ---------------------------- NAME: NAME: WILLIAM CHAN TITLE: DIREKTUR UTAMA TITLE: PRESIDENT DIRECTOR Telen Gold Mining Concession 9 78 LIST OF EXHIBITS - - -------------------------------------------------------------------------------- EXHIBIT I: GEOGRAPHICAL DESCRIPTION OF PROPERTY EXHIBIT II: GOVERNMENT FILINGS AND LICENSE EXHIBIT III: GENERAL SHAREHOLDERS' MEETING EXHIBIT IV: REIMBURSEMENT EXPENSES Telen Gold Mining Concession 10 79 DEVELOPMENT AGREEMENT GOLD MINING PROJECT IN EAST KALIMANTAN THE RIAU GOLD MINING CONCESSION This Development Agreement (AGREEMENT) is made and entered into on this 14th day of February, 1977 by and between: PT AKSARA MUNA ARTHA AND PT WALEA BAHAI MAS, a limited liability company established and validly existing under Indonesian law, and having its address at __________________________________-Indonesia (hereinafter referred to as "PT COMPANY"), and is represented in this Agreement by its Direktur Utama, ___________; and KALIMAS JAYA LTD, a Bahamas Corporation having its registered offices in the Bahamas and its representative offices in Singapore (hereinafter referred to as "KALIMAS"), and is represented in this Agreement by its President Director, Mr. William Chan. PT COMPANY and Kalimas are hereinafter referred to collectively as "THE PARTIES." WITNESSETH Whereas, the Government of Indonesia acting through its Department of Mines and Energy and the Directorate General of General Mining (hereinafter referred to as the "DGGM") wishes to expand on its enhanced exploration and exploitation for gold and other precious metals during the next Sixth Development Plan (known as Repelita VI) and beyond, and encourages the private sector to participate in such exploration, development, exploitation and production; and Whereas KALIMAS is actively seeking to acquire gold mining concessions and to implement gold mining activities in East Kalimantan, Indonesia (hereinafter referred to as the "PROJECT"); and Whereas PT COMPANY currently controls a valid government license, known as Kuasa Pertambangan Penyelidikan Umum and which is listed in official government record as Number __________, for the general survey and exploration of gold and other metals on a _________-HECTARE Concession, known as the Riau Gold Mining Concession in East Kalimantan. PT Company can successfully demonstrate that it has officially blocked this area of land at the DGGM and that it has also received a valid license from the DGGM for the general survey and exploration of gold and other metals on this Concession. PT Company recognizes the importance of obtaining other government licenses associated with the exploitation of gold and other metals, for which licenses also include the refinery and production of gold and other metals as well as the transportation and sale of gold and other metals; PT Company will use its expert abilities and efforts to obtain these additional licenses from the government in order to facilitate the development, implementation, and success of the Project; and Riau Gold Mining Concession 1 80 Whereas both Parties agree to use their best efforts to complete the sale, acquisition, and development of the Riau Gold Mining Concession of two concessions: Kuantan area 4x2000 Ha. and Sengiangi 3000/Ha. (hereinafter referred to as the "TRANSACTION"), which includes the rights to the government license for the general survey and exploration of gold and other metals on the Concession. The Parties also agree to jointly cooperate to successfully obtain any and all other government licenses which will be necessary for the success of the Project; and whereas the Riau Gold Mining Concession (hereinafter referred to as the "CONCESSION") is located in Sumatera, Indonesia, and, potentially, has substantial deposits of gold and other precious metals. The Concession encompasses mining authorizations with respect to approximately _____ hectares of land. A geographical description of the Concession is provided in EXHIBIT I, which is attached to this Agreement. The Concession is located in a gold mineralization zone and, more importantly, is ____ km to the ___ of the famous ____________ Gold Mining Concession which - to date - has approximately ______ million ounces of gold and is still under further exploration. Through official filings and monetary payments made to the DGGM (which includes both filing and annual fees as well as seriousness bonds), PT Company has secured the rights to the Concession as well as the government licenses for the general survey and exploration of gold on the Concession. These documents and,most importantly, a copy of the KP License obtained by PT Company are shown and, most importantly, a copy of the KP License obtained by PT Company are shown win EXHIBIT II, which is attached to this agreement. DESCRIPTION OF THE CONCESSION ***** HECTARES IN RIAU SUMATERA The Concession consists of approximately _____ hectares of land. An official government license has been issued in respect of the Concession and permits PT Company to perform a general survey and explore for gold and other metals on the Concession. The License which was issued is delineated as follows: 1- KUASA PERTAMBANGAN EKSPLORASI/EKSPLOTIESI No. ____________________________ Issued on _________ to PT ______________ This license is for the general survey and exploration of gold metals on the ____-hectare concession This official government license, which provides the rights to perform a general survey (However, the area could be expanded up to 5000 Ha.) Riau Gold Mining Concession 2 81 transportation, and sale of gold), PT Company recognizes that these additional government licenses will also be transferred to Kalimas or to some third party which is appointed by Kalimas. To date, PT Company has secured the government license for the general survey and exploration of gold and other metals on the concession as referenced in Exhibit II. This government license is currently valid and is in the legal form of a Kuasa Pertambangan (KP). The License is valid for a period of one (1) year and is renewable before maturity. ADDITIONAL GOVERNMENT LICENSES & EXPANSION OF PROPERTY PT Company will cooperate exclusively with Kalimas and/or Kalimas' appointed third party to expand the scope of the current license to include additional hectares of land as well as other additional government licenses, which are as follows: 1- License (KP) for Exploitation 2- License (KP) for Refinery and Production 3- License (KP) for Transportation & Sale PT Company will use its expert abilities and efforts for obtaining these additional hectares for mining development as well as additional government licenses from the DGGM. The purpose of obtaining all of the necessary licenses is to make it feasible to effectively and efficiently mine the Concession and to make it into a world-class profitable operation. Whereas KALIMAS has the ability to provide and/or secure financing to acquire ______ interest in the Riau Gold Mining Concession and the related government licenses from PT Company as well as the ability to develop the Concession into a world-class mining operation. Now therefore, the Parties hereto agree as follows: 1 COOPERATION In accordance with the Government Approvals which have already been granted to PT Company, the Parties agree as follows: 1.1 To submit additional application(s), as necessary, to the DGGM for the licenses and/or mandates to explore for gold and other precious metals on the Concession as well as commercial licenses and/or mandates that are associated with refinery, production, transportation and sale of gold from the Concession. 1.2 To complete the sale, acquisition, and development of Concession 1.3 To support, develop, and complete the mining operations Riau Gold Mining Concession 3 82 2 EXCLUSIVITY Except as otherwise provided for in this Agreement, the Parties warrant that they shall cooperate solely and exclusively with each other in connection with this Gold Mining Project and that none of them shall enter into any agreement with any other firm or group of firms with respect to any matters related to this Project without the prior written consent of the other Party and to keep this information strictly confidential. Further, PT Company will grant Kalimas a first right of refusal with respect to any gold mining Concessions which it may control, influence the sale of, or be able to recommend to Kalimas. The Parties also warrant that such exclusivity will be respected by those persons or firms which they may exercise control or with their affiliate in any manner. 3 SPONSORSHIP PT Company shall act as the main sponsor of this Project. In this regard, PT Company has already obtained the complete and proper approvals (which are subject to legal verification) to sell an ___ interest in the Concession, which includes the full and complete rights to transfer the Government Licenses which PT Company has received for the exploration and exploitation of gold and other precious metals on the Concession. The Licenses which have been granted to PT Company as well as all geological and other significant information will be made available to the Parties on a continual basis. Furthermore, PT Company will obtain the other appropriate government licenses associated with the refinery and production of gold and other metals as well as the licenses for the transportation and sale of gold and other metals. 4. INITIAL RESPONSIBILITIES The Parties agree that their responsibilities shall be as follows: 4.1 PT COMPANY has already secured the proper approvals to sell an interest in the Riau Concession (1) Sengingi $ to be negotiated 20%, (2) Kuantan $250k 20%, as well as approvals for the full and complete transfer of its rights to the Concession which includes the Government Licenses. Upon the successful completion of the acquisition of the Riau Concession, PT Company will continue to assist with the development of the Project in conjunction with the Parties as needed. In particular, PT Company will take all steps necessary or deemed advisable by Kalimas to secure any and all additional property as well as other appropriate government licenses associated with exploration, exploitation, refinery, production, and transport & sale of gold and other metals. PT Company has reviewed preliminary geological surveys on the Concession and will provide all of this information as well as all future information to the Parties on a continual basis. Riau Gold Mining Concession 4 83 PT Company will give Kalimas first priority option for any future gold mining opportunities for acquisition and/or for working together in seeking other gold mining projects. In particular, PT Company must give first priority to Kalimas to acquire any additional Concession which are contiguous with the current Concession. In those instances where these contiguous Concession and/or other Concession region are owned and/or controlled by friends, families, and/or directors of other local PT Companies which are associated with PT Company, PT Company must give priority to Kalimas to acquire such Concession, if available. 4.2 KALIMAS will be responsible to provide and/or secure financing for the Project, provide world-class technologies and management exploration teams and, if necessary, a strategic operator(s) to develop the Concession. Kalimas will jointly assist the Project with PT Company. 4.3 Kalimas shall appoint a qualified Indonesian party to accept the transfer of the licenses issued by the Department of Mines of the Republic of Indonesia and may at any time at its discretion cause or permit such party to transfer such Concession and licenses to any third party based on prevailing regulations and subject to PT Company's continuing rights under the Agreement being respected by such transferee. 6. TERMS & CONDITIONS FOR SALE & ACQUISITION 5.1 PT Company will sell an 80% interest in the Concession as well as transfer its full and complete rights to the Government License for the general survey and exploration of gold and other metals on the Concession. Furthermore, PT Company's principals and/or affiliates will not compete with Kalimas. 5.2 Payment For: (a) PT Company agrees to sell 80% of its interest in the Concession as well as its full and complete rights to the Government Licenses to such qualified party as indicated by Kalimas that may be appointed for the price of USD $ To Be Negotiated 5.3 Payment Conditions: (a) Kalimas agrees to make a down payment of USD $ (a) Sengingi $ TO BE NEGOTIATED (b) Kuantang $250,000 after the signing of this Agreement. This payment, however, is subject to legal verification that the title to the Concession is acceptable and without encumbrances and that the government license issued to PT Company is current and valid. Furthermore, Riau Gold Mining Concession 5 84 payment is to be made after the survey test results from the initial investigation exploration activity is completed and any other legal verifications which may be required in respect of title to the Concession and validity of government licenses. (b) The final payment of USD $ TO BE NEGOTIATED will be immediately paid to PT Company upon the Gold Mine(s) being put into the production stage and is generating positive revenues. For this to occur, however, PT Company must first secure the complete and proper government licenses. Specifically, PT Company must secure those additional government licenses which will allow the Parties to put the Mine(s) into the production stage. Such government licenses are as follows: - KP Exploration & Exploitation - KP Refinery & Production - KP Transportation & Sale PT Company recognizes that once it secures these licenses for the benefit of the Parties and, moreover, for the benefit of the Project, PT Company will transfer the full and complete rights of these licenses to Kalimas or to the entity appointed by Kalimas. 5.4 Profit Sharing The Parties hereby agree that the Profit Sharing from the net profit (total revenue minus all expenses including taxes) to the Project shall be as follows: Kalimas 80% PT Company 20% * The said percentage which is entitled to PT Company will be held offshore for the benefit of PT Company. 5.5 Reimbursement of Expenses Kalimas agrees to relinquish to or reimburse PT Company for the funds which PT Company expended towards the Seriousness Bond which is paid to the DGGM for blocking the 68-hectare Concession. These funds amount to a total of Rp. TO BE DETERMINED Receipts for these expenses are referenced in EXHIBIT IV. Terms and Conditions for the reimbursement of these expenses are to be determined by the Parties. Riau Gold Mining Concession 6 85 5.6 Exploration Program (a) Kalimas agrees to begin the Exploration Program on the Concession by March April 1997 or sooner, or at a time agreed upon by the Parties:_______________________. (b) Kalimas will dig numerous test pits as part of the exploration program. (c) Shallow drilling to the depth of 50-60 meters will be carried out over the first 90-day period or at a practical time. (d) Deep drilling to the depth of 200 meters will also be carried out over the second 90-day period or at a practical time. (e) Kalimas agrees to provide and/or secure 100% finance the Exploration Program for the development and implementation of the Riau Gold Mine. In this regard, Kalimas agrees to spend a minimum of USD $100,000 in Year 1; USD $100,000 in Year 2; and USD $100,000 in Year 3. Accounting records for these expenditures will be kept by Kalimas. 6. JURISDICTION 6.1 (a) Any dispute or controversies which may arise out of this Agreement shall be amicably settled by the Parties, but in failure thereof, such disputes or controversies shall be referred to the arbitration of the Rules of Badan Arbitrasi Nasional Indonesia (BANI). The arbitration panel shall consist of three (3) arbitrators, one (1) chosen by the complainant, one (1) chosen by the respondent and a Chairman chosen by the arbitrators named by the complainant and the respondent. (b) The Parties expressly agree that Ii) the arbitration tribunal shall decide the matter as expeditiously as possible, however, no time limits shall be imposed, (ii) Section 631 of the R.V. (Reglement op de Rechtsvordering) shall apply, and that accordingly the arbitrators shall only reach their decision by applying strict rules of law to the facts and shall not purport to resolve any dispute ex aequo et bono, (iii) the arbitration shall be conducted in the English language, in Jakarta, Indonesia, or such other place or places in Indonesia as the Parties to the arbitration may agree, (iv) the Party in whose favor the arbitral award is rendered shall be entitled to recover costs and expenses of the arbitration tribunal including but not limited to the cost and expense of administration of the arbitration proceedings, and (v) the arbitral award shall be issued in Indonesia. Riau Gold Mining Concession 7 86 (c) The Parties expressly agree to waive Section 641 of the R.V. and any other applicable laws permitting appeal to courts of law or any other body so that accordingly there shall be no appeal to any court of law or any other body from the decision (or any interim decision) of the arbitrators and neither party shall dispute nor question such decision before any judicial authority in the Republic of Indonesia or elsewhere. (d) Pending the submission to arbitration and thereafter until the arbitration tribunal issues its decision, each Party shall, except in the event of expiration, termination or failure by the other Party to obey or comply with a specific order or decision of the arbitration tribunal, continue to perform all of its obligations under this Agreement without prejudice to a final adjustment in accordance with the said award. 6.2 This Agreement as to its interpretation and application shall be governed by the Laws of Indonesia. 6.4 The Parties hereby expressly agree to waive the provision of Article 1266 of the Indonesian Civil Code with respect to the need for a court pronouncement to terminate this Agreement. 7 TERMS OF VALIDITY This Agreement shall be in effect as of February 14th, 1997, and shall be valid until the purposes and objectives of the Project have been fulfilled. If for any reason the transfer of the Concession is not approved by the Government Authorities within (6) months after the date of this Agreement Kalimas shall have the option to terminate this Agreement with no further liability hereunder. 8 OTHER MATTERS Other matters not stipulated in this Agreement shall be further discussed and decided later on through mutual discussion between the Parties on the basis of the Agreement. Riau Gold Mining Concession 8 87 In Witness Whereof, the Parties agree that this Agreement is legal and binding and have caused their duly authorized representatives to execute this Agreement on the year and date first above stated. SIGNATORIES PT KALIMAS JAYA LTD -------------------- BY: /S/ BY: /S/ ------------ ------------ NAME: NAME: WILLIAM CHAN TITLE: DIREKTUR UTAMA TITLE: PRESIDENT DIRECTOR The final agreements will be presented to Mr. Usri on the week of 17th February '97 in Jakarta for final signature. /s/ Riau Gold Mining Concession 9 88 LIST OF EXHIBITS - - -------------------------------------------------------------------------------- EXHIBIT I: GEOGRAPHICAL DESCRIPTION OF PROPERTY EXHIBIT II: GOVERNMENT FILINGS AND LICENSE EXHIBIT III: GENERAL SHAREHOLDERS' MEETING EXHIBIT IV: REIMBURSEMENT EXPENSES Riau Gold Mining Concession 10 EX-10.(XXII) 8 EXHIBIT 10.(XXII) 1 EXHIBIT 10(XXII) November 11, 1996 MADEIRA INTEX, S.A. INT'L EXPORTS Mr. Ignatius "Eddy" Zapheirius Theodorou, Chairman of the Board 101, 3rd Septemvriou Athens, 104 34, Greece RE: EQUITORIAL RESOURCES Dear Eddy: This letter will confirm our understanding with respect to the contribution, to Equitorial Resources, a British Virgin Islands Corporation, of certain assets, materials and resources described in your Joint Venture Agreement, dated June 29, 1984 (copy attached), with Companhia Agropecuaria Do Rio Jabuti (Jonasa group) and ancillary related agreements. Equitorial Resources will be a partially-owned subsidiary of Nevada Manhattan Mining, Inc. (NVMH). It is our mutual intent to develop and exploit the timber and other concessions outlined in the above-mentioned agreement under the newly formed Equitorial Resources. We may jointly elect to contribute additional properties to Equitorial Resources which may become available. It is agreed that Messrs. Christopher Michaels ("CM"), Jeffrey Kramer ("JK") and Ignatius Z. Theodorou ("IT") will be designated "key men" to this agreement with the understanding that the conveyance of any assets under your agreement, dated June 29, 1984, as described above, to Equitorial 2 Page 2 November 9, 1996 Resources will be subject to CM, JK and IT's position with Equitorial Resources being confirmed and maintained to our mutual agreement. It is also understood that CM and JK's current position with NVMH will also be subject to this "key man" clause. Each party signing this document warrants that he has the full power and authority to execute same on behalf of his respective corporation(s). Please execute where provided below. Accepted and Agreed: /s/ /s/ Ignatius Z. Theodorou Christopher D. Michaels for Madeira Intex S.A. & for NVMH and Equitorial Resources Equitorial Resources /s/ Jeffrey S. Kramer for NVMH & Equitorial Resources 3 JOINT VENTURE This agreement is made on June 29, 1984, between the first party "MADEIRA INTEX S.A. INTERNATIONAL EXPORTS" a company duly formed legalized and constituted in accordance to the laws of the Greek Democratic Republic, having its registered Head Office in Athens, Greece at 101, 3rd Septembriou St. duly represented by Mr. Ignatius Zapheirius Theodorou, Chairman of the Board and Mr. Carlos Gomes da Rocha, Director, hereinafter called "MADEIRA INTEX", and the second party "COMPANHIA AGROPECUARIA DO RIO JABUTI" (Jonasa Group), a company duly formed legalized and constituted in accordance to the laws of the Federative Republic of Brazil registered under CGC / MF - 055.11399/0001-99, having its registered Head Office at Rua Professor Nelson Ribeiro, 161, Belem, Brazil duly represented by Mr. Francisco Joaquim Fonseca, Director President and Mr. Roberto Seixas Simoes, Administrative Director, hereinafter called "JONASA". WHEREAS the party JONASA is the legal owner of an agricultural area in the amount of 100.000 hectare in the State of Para, located in the Amazon Forest. WHEREAS the party JONASA has a legal permission to extract in his own property 13.000.000 m3 cubic meters of lumber. The said permission is issued by the Brazilian authorities and allows the exports of lumber in logs and sawn lumber of restricted species. WHEREAS the party MADEIRA INTEX has the means and ways to provide JONASA expertise know how, for extraction of forestry products, to protect, preserve, to ship, to manufacture wood products, to market, and sell the said products, as well as own ports facilities for storage abroad. WHEREAS MADEIRA INTEX will financially help JONASA to extract these species permitted, protect, preserve, inspect, and ship them, accordingly to the internationally accepted practices for logs or sawn lumber commercialization. WHEREAS both parties mutually agreed to form this Joint Venture for their common interest, under following terms and conditions: 4 ARTICLE 1 (DEFINITIONS) 1.1 The following definitions are applicable to this Agreement. Agreement - Is the set of articles of terms and conditions agreed upon with the common will between the parties. Lumber - Is the basic raw material in logs from the Amazon Forests of Brazil supplied by the Seller to be purchased by the Buyer. m3 - Is the amount of lumber as measured by the geometrical method of measuring lumber in Brazil. cm - Is centimeter. Year - Is the period of 12 months which starts in January 1st and ends December 31st. U.S.$ - Is the United States Dollars. ETA - Is the estimated time of arrival of vessel. Lay days - Is the period of time from the arrival of vessel until the completion of loading. F.O.B. - Is the term of sale of lumber and means that lumber is stowed and lushed at Sellers risk and account. Depot - Designated areas where lumber is collected in order to inspect and transport to loading ports. A.T.I.B.T.- Is the Association Technique International des Bois Tropicaux. ARTICLE 2 (PURPOSE) The purpose of this agreement is that JONASA will provide the exclusive concessions to MADEIRA INTEX for extracting and marketing the amount of m3's licensed by the Brazilian authorities for export. MADEIRA INTEX will provide finance for the management and marketing of species permitted and located on JONASA's own property. As well as assuming the responsibility for management of cutting, preserving, protect, inspect and ship according to international rules of A.T.I.B.T. ARTICLE 3 (DOCUMENTATION) All documents listed below are an integrant part of the agreement. 3.1. Annex I and II list of Species. 3.2. Annex III copy of A.T.I.B.T. rules of classification of log issued by the Association Technique des Bois Tropicaux. 3.3. Annex IV Extract of the meeting of the Board of Directors of MADEIRA INTEX S.A. authorizing the signature of the agreement with Seller. 5 3.4. Copies of authorization by the Seller for the signature of this agreement with the Buyer Annex V. 3.5. Annex VI copy of shipping and loading terms F.O.B. MADEIRA INTEX terms) 3.6. Annex VII copy of the Resolution permitting the exports of lumber in logs from CACEX - Brazil. 3.7. Annex VIII copy of the rules for the preservation of the log during transit period, under MADEIRA INTEX management and responsibility. ARTICLE 4 (DURATION) This agreement is set for the period needed to extract 13.000.000 m3 from an area of 100.000 hectares. At that time MADEIRA INTEX will provide expert know how and finance to replant the whole are which has been cut, under their management with mutual agreement. ARTICLE 5 (OBLIGATIONS OF JONASA) 5.1. The obligation of JONASA is to submit evidence of deed of property, and export license from the proper authorities for log export. 5.2. Cost estimative for extraction including, labor cost, transportation, cutting equipment, communication equipment and housing and offices for 5-10 persons. 5.3. Working permits for 5-10 expertise in forestry. 5.4. To provide labor hands, transportation, cutting equipment, offices and houses. 5.5. To obey all ecological laws of the country. 5.6. The obligation of JONASA is to assist this Joint Venture in a true commercial partnership. ARTICLE 6 (OBLIGATION OF MADEIRA INTEX) 6.1. To provide finance for labor hands, for transportation, and cutting equipment for 5-10 expertise, telecommunication equipment with the MADEIRA's expertise approval. 6.2. All equipment will be on a leasing basis. Always with the approval of MADEIRA INTEX experts. 6.3. To purchase all lumber to be cut in the amount of 13.000.000 m3 approximately. 6 6.4. Payment for purchase will be Letter of Credit payable on sight upon presentation of necessary documents and approved by MADEIRA INTEX expert, which will be expressed in the L/C. 6.5. Provide irrevocable, revolving, transferable, Letter of Credit covering the minimum amount of 60.000 m3 for the agreed U.S.$90 per cubic meter on F.O.B. basis (Incoterms 1980), and revolving automatically for each shipment MADEIRA INTEX purchased. 6.6. Letter of Credit to provide advance payment for cutting, preservation, and stevedoring costs for each shipment, payable with the approval of MADEIRA INTEX expert. 6.7. MADEIRA INTEX to be sole responsible for, quantity, quality inspection, preservation, protection and shipping under the A.T.I.B.T. rules and MADEIRA INTEX experts management. 6.8. MADEIRA INTEX is the sole responsible for supervising loading of the vessel under F.O.B. Incoterms 1980, and to ship logs to any port in the world. ARTICLE 7 (QUANTITIES) The minimum quantity to be purchased by MADEIRA INTEX is 60.000 m3 (cbm) per year. ARTICLE 8 (PRICES AND VALUE OF THE AGREEMENT) 8.1. The basic total estimated value of this agreement per year is U.S.$5,400,000.00 (Five million four hundred thousand dollars). 8.2. MADEIRA INTEX shall pay and JONASA shall accept payment for the lumber sold and purchased according to Article 6.5. herefore at the following prices: 8.2.1. A) Merchantable quality U.S. $90 per cubic meter of lumber in logs. B) Fair average quality U.S. $80 per cubic meter of lumber in logs. C) Second quality...... U.S. $67 per cubic meter of lumber in logs. Above prices applicable for the species indicated in Annex I - List A. 7 ARTICLE 9 (PRICE REVISIONS) 9.1. Applicable prices are to be revised annually for article 8.2. (Prices and value of the agreement). The revisions are calculated by JONASA and notifications is given for the revision to take place to MADEIRA INTEX at the same time as the establishment of the shipment schedules, 90 days prior to the beginning of the next year and to be in force for the duration of the next year after the approval of MADEIRA INTEX expert. 9.2. The first revision of prices will take place and will apply for the year of 1986. 9.3. The revised prices would be calculated according to the arithmetical average price increase or decrease of the usual international price variations for same or similar tropical lumber from West Africa, Central America and Far East originally taken collectively and applied uniformly. Example: a) Average annual price increase for the 5 species with largest exports (in amount of U.S.$) from West Africa say is............... +15% b) Average annual price increase for the 5 species with largest exports (in amount of U.S.$) from Central America say is........... +8% c) Average annual price increase for the 5 species with largest exports (in amount of U.S.$) from Far East say is.................. +10% ---- Total +30% We calculate 33 : 3 = 11% So the prices for each category will be increase by 11%. ARTICLE 10 (IMPOSSIBILITY OF PERFORMANCE) 10.1. In case that it becomes impossible to effect the exportation of lumber in logs in whole or for some species due to official regulations barring such exportation issued by the Government and such regulations requires and permits all lumber to be exported as sawn wood. JONASA must fulfill his obligation hereunder in sawn wood proportional to the amount of lumber in logs agreed upon hereunder and at the prices that are derived by converting logs locally to sawn wood, such prices and conditions to be agreed at the time of occurrence of such event to assure the mutual interest of the parties. 8 10.2. The new agreement that will have to be reached in this case shall conform at all respect with the present agreement taking into account the conditions that prevail at the moment regarding only prices. ARTICLE 11 (FORCE MAJEURE) 11.1. No default shall result in case the non-performance is due Force Majeure, defined as such the necessary event, the effect of which are unavoidable and unpredictable. Force Mejeure shall include natural catastrophes, wars, major strikes and riots, acts of God, etc. It also would be considered Force Majeure, to the extent in which barge or ship transportation are on strike, the events held to the Force Majeure under the pertinent charter parties. 11.2. Once a Force Majeure event occurred, the party intending to allege it must notify the other in writing, no later than two days after the moment the effect of the Force Majeure have begun to be felt. 11.3. In case a Force Majeure event lasts for more than six months, the parties shall meet to ascertain the way to solve the problem; if after sixty days from the one hundred and eightieth day of the event no new agreement is reached, either party has the right to notify the other party of the termination of this agreement, which termination shall be in force form time of the receipt of the notification. No party shall be held in default by reason of such termination. ARTICLE 12 (TERMINATION) This agreement is to be held terminated: 12.1. In whole or in part by mutual agreement. 12.2. As indicated in Article 11 (Force Majeure). 12.3. As indicated in Article 4 (Duration). 12.4. By the demand of bankruptcy or receivership of any one party or for any equivalent remedy under the pertinent law enable the other party to terminate this agreement by means of notifications stating such intent. In this case the agreement would be terminated s from the date of the receipt of the notifications. 9 12.4. The parties agreed that the termination of this agreement should be sought after as a last resort and in cases of disputes or doubts arising during the executions of this agreement they will try to resolve differences by mutual consultations and negotiations in good will and spirit. ARTICLE 13 (ASSIGNMENT) Assignment of this agreement or of any benefit issuing herefrom shall only be effected after the other party's authorization. All authorized assignees shall be held to have accepted all terms and conditions hereof, specially the assignor's obligations. Giving this Agreement in pledge or guarantee of any obligations shall be contingent to the other party's authorization, which shall not be unreasonably withheld. ARTICLE 14 (ALTERNATIONS TO AGREEMENT) All alteration to this agreement which may be necessary to be done for corrections or better functions will always be effected by additional addendums. ARTICLE 15 (ARBITRATION) 15.1 The disputes arising from defaults and non-performance of this agreement and for any other reason should be decided by arbitration under the International Chamber of the Commerce, Geneva - Switzerland Rules. 15.2. This agreement will be in force during the arbitration time span. 15.3. The cost of arbitration shall be born by the party in default or by the party that causes the arbitration proceedings. ARTICLE 16 (COURTS OF JURISDICTION) In the interpretation of this agreement the laws of the State of California, United States of America and Rio de Janeiro, Brazil shall apply. (British law is also acceptable.) 10 101, 3rd Septemvriou St., Athens - Greece - - -JOAQUIM FONSECA NAVEGACAO, INDUSTRIA E COMERCIO S.A. Rua Professor Nelson Ribeiro no 161 Belem - Brazil 17.3. The parties shall act in all circumstances in an adequate business like manner in such a way to protect the mutual interest. 17.4. The date of execution hereof is the day in which both parties sign this agreement or, in case it is signed in different days, the day of receipt of a notification stating that the signing was completed by the last signing party. 17.5. This agreement will be considered as being in force with full implementation of each and all terms and conditions described henceforth when the first shipment of logs is loaded. 17.6. The waiver of any obligations hereunder shall not be understood as extending to any other obligation or to the same obligation at any other occasion, nor shall it be interpreted as a tacit alteration hereof. 17.7. One copy of this agreement shall be notarized by each party in accordance with the law of his respective country. The notarized copies shall be exchanged between the two parties. This agreement existing in six (6) original copies in the English language is signed by the authorized representatives of each party in the presence of the witnesses this 29th day of June in the year of 1984 each party taking three (3) original copies of the Agreement. FOR COMPANHIA AGROPECUARIA DO RIO JABUTI - - ---------------------------------------- Francisco Joaquim Fonseca President Director 11 /s/ Roberto Seixas Simoes Administrative Director FOR MADEIRA INTEX S.A. INTERNATIONAL EXPORTS /s/ Ignatius Zapheirius Theodorou Chairman of the Board /s/ Carlos Gomes da Rocha Director WITNESSES: 1. /s/ 2. /s/ 12 ANNEX I SPECIES
Regional Denomination Botanic Denomination Annual % ap - - -------------------------------------------------------------------------------- ================================================================================ FAVEIRO Pterodon Pubescens 10% - - -------------------------------------------------------------------------------- MANDIOQUEIRO Qualea Albiflora 10% - - -------------------------------------------------------------------------------- ANGELIM PEDRA Hymenolobium Petraeum 9% - - -------------------------------------------------------------------------------- ANGELIM VERMELHO Dinizia Excelsa 12% - - -------------------------------------------------------------------------------- TATAJUBA Bagassa Guianensis 10% - - -------------------------------------------------------------------------------- JATOBA Hymenaea Courbaril 10% Hub. - - -------------------------------------------------------------------------------- PAU AMARELO Euxilophora Paraensis 9% - - -------------------------------------------------------------------------------- SAMAUMA Ceiba Petandra 5% Gaernt. - - -------------------------------------------------------------------------------- ASSACU Hura Crepitans L. 5% - - -------------------------------------------------------------------------------- CUMARU Dipterix Odorata 5% - - -------------------------------------------------------------------------------- QUARUBA Vochysia Spp. 3% - - -------------------------------------------------------------------------------- CEDRORANA Cedrelinga 3% Catanaeformis - - -------------------------------------------------------------------------------- MUIRACATIARA Astronium Lecointei 2% - - -------------------------------------------------------------------------------- LOURO VERMELHO Nectandra Rubra 2% - - -------------------------------------------------------------------------------- COPAIBA Copaifera Ducke 1% - - -------------------------------------------------------------------------------- AMESCLAO Protium Heptaphyllum 2% - - -------------------------------------------------------------------------------- CAJU-ASSU Anacardium Giganteum 1% - - -------------------------------------------------------------------------------- MOROTOTO Didymopanax 1% Morototoni ================================================================================
13 TO WHOM IT MAY CONCERN LETTER OF CREDENTIALS AND AUTHORIZATION It is hereby certified that the bearer of this letter Mr. Ignatius Theodorou is the Chairman of the Board of the company MADEIRA INTEX SA, a Societe Anonyme, duly incorporated under the law of Greece. Mr. Theodorou is duly authorized by decision of the Board of Directors of said company to act on behalf of the company and to come to agreements with regards to the supply and purchase of Brazilian Companies or individuals or Consortiums, as well as with any company or party acting on behalf or in relation to such above-mentioned parties. Mr. Theodorou is also authorized by the same decision of the Board of Directors to act on behalf of the company and to come to agreements with regards to joint ventures, concessions for logging and any other related business transactions. Mr. Theodorou together with Mr. Carlos Gomes da Rocha, another director of the company, are also authorized and empowered by the same decision of the Board of Directors to sign any such agreements or addendum to previous signed agreements on behalf of the company. All signed agreements are subject to ratification by the Board of Directors of the company. This letter signed by the authorized officers of MADEIRA INTEX S.A. /s/ /s/ E. Theodorou C. Martzouoos Chairman M. Director 14 ADDENDUM ONE TO THE JOINT VENTURE 1A) It is the understanding of both parties that the Concession suppliers obligation to MADEIRA INTEX is only limited to the ARTICLE 5 (OBLIGATIONS OF JONASA) of this Joint Venture. 1B) All other terms regarding shipping, inspection and classification has been added to this Agreement by MADEIRA INTEX for the International Commercialization of the Lumber to be extracted from the suppliers own property, since MADEIRA INTEX is responsible for sales and marketing of the said lumber. 1C) It is agreed by JONASA that the daily loading rate will be of 1.000 m3 and further shipping details to be agreed at a later date. 1D) The price revisions also to be adjusted in accordance to the local prevailing conditions whenever it's necessary. Otherwise clause 9.3 shall apply. 1E) JONASA hereby agrees to contract third parties in the area for supplying wood to MADEIRA INTEX in exclusive basis. Belem, June 29, 1984 FOR COMPANHIA AGROPECUARIA DO RIO JABUTI /s/ Francisco Joaquim Fonseca President Director /s/ Roberto Seixas Simoes Administrative Director FOR MADEIRA INTEX S.A. INTERNATIONAL EXPORTS /s/ Ignatius Zaheirius Theodorou Chairman of the Board /s/ Carlos Gomes da Rocha Director 15 MANAGEMENT AND MARKETING AGREEMENT It is agreed by the two (2) parties, the first being UNITED AMAZONIAN RESOURCES LIMITED, with HEAD OFFICE at GUERNSEY, 7 New Street, Lyric House, St. Peter Port, Chanel Island, with OPERATION OFFICE at 101, Septemvriou St., Athens 10434, Greece, from now on called U.A.R. and the second part JONASA - JOA - QUIM FONSECA, NAVEGACAO, INDUSTRIA E. COMERCIO S/A., with HEAD OFFICE at Rua Professor Nelson Ribeiro, 161, Belem, State of Para, Brazil, from now on called JONASA, that further to the agreement of JOINT VENTURE signed on June 29, 1984, the two parties agreed to sign a MANAGEMENT AND MARKETING AGREEMENT, in order both parties to assure one another to maintain the obligations and conditions of the JOINT VENTURE AGREEMENT dated, June 29, 1984. Since U.A.R. and their experts have the means, conditions and qualify experts on their fields of specialty, and willing to provide JONASA with the above said service free of any charges, and with JONASA's acceptance and with the following conditions: 1. U.A.R. will provide the necessary expertise to manage all the operation of JONASA, for forestry, farming, mining, live stock, and industrial manufacturing of wood products on their own land or any other land to be purchased by JONASA. U.A.R. undertakes the responsibility to provide the qualify experts for all and each of the above operations, at the same time will provide the financing for each project as deems necessary, provided the JONASA will give to U.A.R. irrevocable, none transferrable, and none conditional management without any interference upon the signature of this agreement. 2. U.A.R. with their experts know-how will undertake to meet all necessary scheduling, according to the contractual obligations for each project that JONASA will assume and U.A.R. will procure on behalf of JONASA on international basis. U.A.R. will provide the programming scheduling for production and delivery on time, according with contracts that U.A.R. will assume on behalf of JONASA. At the same time will establish the high quality name for each product that JONASA will produce and U.A.R. will sale in the international market, through their experts know-how. 3. U.A.R. will issue through their experts the necessary certificates (QUALITY, QUANTITY, and ETC.) required by the international market, the said experts already share a respectable name in the international market as well as been accepted by various governments, assuring to maintain the appropriate high standards for the Brazilian products and respect the Brazilian Laws of Commerce. U.A.R. will provide JONASA quarterly with a certify accountant statements of the quantity shipment of each product, alone with all other necessary documents, to assure JONASA of the correct movements for all products and assuring therefore JONASA's correct income. 16 4. U.A.R. with their experts will maintain accrued records for all equipments. For each operation, regarding dates of purchase, maintenance, and parts inventory. In this order will assume proper use and production for the said equipment for economy and the steady flow of production. 5. U.A.R. and their experts will assure JONASA to meet all loading, shipping, and delivery dates according to the contractual obligations, and international shipping terms and conditions. Provided, that there is none interference from government, JONASA, and force majure clause as per the JOINT VENTURE AGREEMENT signed and dated, June 29, 1984 (ARTICLE II). 6. JONASA to supply as per U.A.R. experts request, at reasonable time the required personal (say 48 hours maximum), equipments (say 20 days maximum), and other reasonable requests in order to meet all terms and conditions contained in this contract. The said personal and equipment to be always JONASA's responsibilities for payment, unless other arrangements with U.A.R. have been agreed and signed previously. 7. U.A.R. will not request any payment from JONASA for the services and expertise provided by this contract. However JONASA will provide housing, transportation, communication equipments, and all necessary documents required by Brazilian Government for alien experts to be stationed in the facilities of each project. U.A.R. to train personal to be provided by JONASA, for upgrading and management positions to be assumed by them for each project that this contract is covering. 8. This contract to be valid for the period of each JOINT VENTURE AGREEMENT, U.A.R. and JONASA will cause to sign or already sign and can only be terminated as per ARTICLE 12 / (TERMINATION) of the JOINT VENTURE AGREEMENT signed and dated, June 29, 1984. 9. U.A.R. to have first refusal form JONASA for any project to be caused in the State of Para in the scope of projects covered by this contract and JONASA to have first refusal from U.A.R. for any project stated above, for the State of Para in the Federal Republic of Brazil. It is therefore been accepted and agreed by both parties to sign this agreement here below. Belem, July 11, 1985 For JOAQUIM FONSECA, NAVEGACAO, INDUSTRIA E COMERCIO S/A. /s/ FRANCISCO JOAQUIM FONSECA PRESIDENT DIRECTOR /s/ ROBERTO SEIXAS SIMOES ADMINISTRATIVE DIRECTOR 17 ADDENDUM THREE TO THE JOINT VENTURE According to ARTICLE 13 of the JOINT VENTURE between U.A.R. - UNITED AMAZONIAN RESOURCES LIMITED, dated, June 29, 1984, and ADDENDUM dated, July 10, 1985 it is hereby mutually agreed that all terms and conditions and addendums of the said JOINT VENTURE AGREEMENT transferred and assigned, to JONASA - JOAQUIM FONSECA, NAVEGACAO, INDUSTRIA E COMERCIO S/A., with HEAD OFFICE at Rua Professor Nelson Ribeiro, 161, Belem, State of Para, Brazil. Belem, July 11, 1985. FOR JOAQUIM FONSECA, NAVEGACAO, INDUSTRIA E COMERCIO S/A. /s/ FRANCISCO JOAQUIM FONSECA PRESIDENT DIRECTOR /s/ ROBERTO SEIXAS SIMOES ADMINISTRATIVE DIRECTOR FOR UNITED AMAZONIAN RESOURCES LIMITED /s/ IGNATIUS ZAPHEIRIUS THEODOROU MANAGING DIRECTOR /s/ CARLOS GOMES DA ROCHA DIRECTOR FOR COMPANHIA AGROPECUARIA DO RIO JABUTT /s/ FRANCISCO JOAQUIM FONSECA PRESIDENT DIRECTOR /s/ ROBERTO SEIXAS SIMOES ADMINISTRATIVE DIRECTOR 18 AGREEMENT It is hereby agreed between JONASA - JOAQUIM FONSECA, NAVEGACAO, INDUSTRIA E COMERCIO S/A. with HEAD OFFICE at Rua Professor Nelson Ribeiro, 161, Belem, State of Para, Brazil, from now on called JONASA, and UNITED AMAZONIAN RESOURCES LIMITED with HEAD OFFICE at Guernsey, 7 New Street, Lyric House, St. Peter Port, Chanel Island with OPERATION OFFICE at 101, Septemvriou St. Athens 10434, Greece, from now on called U.A.R., that, the two parties will establish a JOINT VENTURE AGREEMENT with the purpose of manufacturing and packaging facilities in Belem, State of Para, Brazil. The said facilities to engage in activities according to the MANAGEMENT AGREEMENT, signed, July 11, 1985. Further terms and conditions will be added, with this agreement both parties accept the three (3) below conditions to be the foundations of this JOINT VENTURE. The company for the JOINT VENTURE to be named UNITED AMAZONIAN RESOURCES DO BRASIL. CONDITIONS: 1. JONASA and BRASAGUA - COMERCIO, EXPORTACAO E PARTICIPACOES LIMITADA, will establish a company according to the Laws of Brazil, in Belem, State of Para. This company will purchase the necessary land to built the said facilities as needed. 2. The said company will produce and purchase all raw materials to be manufactured as define in the MANAGEMENT AND MARKETING AGREEMENT signed, July 11, 1985. 3. U.A.R. will undertake the management of the said company, marketing, promotion, and sales world wide of all the products the said company will produce on exclusive basis. U.A.R. will provide all techno-economical studies for the feasibility and purchase of the necessary machinery and equipment, for the production of the said products as well as the purchase of the said equipment. With the agreement and understanding of both parties, it is hereby signed below. FOR JOAQUIM FONSECA, NAVEGACAO, INDUSTRIA E COMERCIO S/A. /s/ FRANCISCO JOAQUIM FONSECA PRESIDENT DIRECTOR /s/ ROBERTO SEIXAS SIMOES ADMINISTRATIVE DIRECTOR FOR UNITED AMAZONIAN RESOURCES LIMITED /s/ IGNATIUS ZAPHEIRIUS THEODOROU WITNESSES: MANAGING DIRECTOR 1. /s/ /s/ 2. /s/ CARLOS GOMES DA ROCHA DIRECTOR 19 ADDENDUM FIVE TO THE JOINT VENTURE Further to the Joint Venture Agreements and all Addendas dully signed, respectively on June 19, 1984, July 10 and 11, 1985, which documents are all integrate parts of the original Agreement dated June 29, 1984. According to the 13th, and 14th Articles of said Agreements, and according to paragraph 4, in order to upgrade the Ecological part of said Agreement, a necessary step for the current times, it is hereby agreed, between the parties involved in said Agreement, to assign and transfer all terms and conditions of the Agreement to the First Party: AGROPECUARIA RIO JABOTI and JONASA MADEIRAS, with office address at RUA PROFESSOR NELSON RIBEIRO, 161, in the city of Belem, State of Para, Brazil, Telephone: (091) 244-4275; THE SECOND PARTY being EQUATORIAL RESOURCES, partially owned by and a subsidiary of NEVADA MANHATTAN MINING INC., with office address at 5038 N. Parkway Calabasas, Calabasas, California, U.S.A., with the Fax number (818) 591-4411 and Phone number (818) 591-4400. THEREFORE, it is here duly signed and executed by the authorized directors of the above mentioned companies on this 12th, day of November of the year 1996. AUTHORIZED DIRECTOR OF JONASA MADEIRAS & AGROPECUARIA RIO JABOTI /s/ JOAQUIM LUIZ DA FONSECA NETO AUTHORIZED DIRECTOR OF EQUATORIAL RESOURCES /s/ IGNATIUS Z. THEODOROU WITNESSES /s/ /s/ 20 MANAGEMENT AND MARKETING AGREEMENT It is agreed by the two (2) parties, the first being UNITED AMAZONIAN RESOURCES LIMITED, with HEAD OFFICE at GUERNSEY, 7 New Street, Lyric House, St. Peter Port, Chanel Island, with OPERATION OFFICE at 101, Septemvriou St., Athens 10434, Greece, from now on called U.A.R. and the second part JONASA - JOA - QUIM FONSECA, NAVEGACAO, INDUSTRIA E. COMERCIO S/A., with HEAD OFFICE at Rua Professor Nelson Ribeiro, 161, Belem, State of Para, Brazil, from now on called JONASA, that further to the agreement of JOINT VENTURE signed on June 29, 1984, the two parties agreed to sign a MANAGEMENT AND MARKETING AGREEMENT, in order both parties to assure one another to maintain the obligations and conditions of the JOINT VENTURE AGREEMENT dated, June 29, 1984. Since U.A.R. and their experts have the means, conditions and qualify experts on their fields of specialty, and willing to provide JONASA with the above said service free of any charges, and with JONASA's acceptance and with the following conditions: 1. U.A.R. will provide the necessary expertise to manage all the operation of JONASA, for forestry, farming, mining, live stock, and industrial manufacturing of wood products on their own land or any other land to be purchased by JONASA. U.A.R. undertakes the responsibility to provide the qualify experts for all and each of the above operations, at the same time will provide the financing for each project as deems necessary, provided the JONASA will give to U.A.R. irrevocable, none transferrable, and none conditional management without any interference upon the signature of this agreement. 2. U.A.R. with their experts know-how will undertake to meet all necessary scheduling, according to the contractual obligations for each project that JONASA will assume and U.A.R. will procure on behalf of JONASA on international basis. U.A.R. will provide the programming scheduling for production and delivery on time, according with contracts that U.A.R. will assume on behalf of JONASA. At the same time will establish the high quality name for each product that JONASA will produce and U.A.R. will sale in the international market, through their experts know-how. 3. U.A.R. will issue through their experts the necessary certificates (QUALITY, QUANTITY, and ETC.) required by the international market, the said experts already share a respectable name in the international market as well as been accepted by various governments, assuring to maintain the appropriate high standards for the Brazilian products and respect the Brazilian Laws of Commerce. U.A.R. will provide JONASA quarterly with a certify accountant statements of the quantity shipment of each product, alone with all other necessary documents, to assure JONASA of the correct movements for all products and assuring therefore JONASA's correct income. 21 4. U.A.R. with their experts will maintain accrued records for all equipments. For each operation, regarding dates of purchase, maintenance, and parts inventory. In this order will assume proper use and production for the said equipment for economy and the steady flow of production. 5. U.A.R. and their experts will assure JONASA to meet all loading, shipping, and delivery dates according to the contractual obligations, and international shipping terms and conditions. Provided, that there is none interference from government, JONASA, and force majure clause as per the JOINT VENTURE AGREEMENT signed and dated, June 29, 1984 (ARTICLE II). 6. JONASA to supply as per U.A.R. experts request, at reasonable time the required personal (say 48 hours maximum), equipments (say 20 days maximum), and other reasonable requests in order to meet all terms and conditions contained in this contract. The said personal and equipment to be always JONASA's responsibilities for payment, unless other arrangements with U.A.R. have been agreed and signed previously. 7. U.A.R. will not request any payment from JONASA for the services and expertise provided by this contract. However JONASA will provide housing, transportation, communication equipments, and all necessary documents required by Brazilian Government for alien experts to be stationed in the facilities of each project. U.A.R. to train personal to be provided by JONASA, for upgrading and management positions to be assumed by them for each project that this contract is covering. 8. This contract to be valid for the period of each JOINT VENTURE AGREEMENT, U.A.R. and JONASA will cause to sign or already sign and can only be terminated as per ARTICLE 12 / (TERMINATION) of the JOINT VENTURE AGREEMENT signed and dated, June 29, 1984. 9. U.A.R. to have first refusal form JONASA for any project to be caused in the State of Para in the scope of projects covered by this contract and JONASA to have first refusal from U.A.R. for any project stated above, for the State of Para in the Federal Republic of Brazil. It is therefore been accepted and agreed by both parties to sign this agreement here below. Belem, July 11, 1985 For JOAQUIM FONSECA, NAVEGACAO, INDUSTRIA E COMERCIO S/A. /s/ FRANCISCO JOAQUIM FONSECA PRESIDENT DIRECTOR /s/ ROBERTO SEIXAS SIMOES ADMINISTRATIVE DIRECTOR 22 ADDENDUM THREE TO THE JOINT VENTURE According to ARTICLE 13 of the JOINT VENTURE between U.A.R. - UNITED AMAZONIAN RESOURCES LIMITED, dated, June 29, 1984, and ADDENDUM dated, July 10, 1985 it is hereby mutually agreed that all terms and conditions and addendums of the said JOINT VENTURE AGREEMENT transferred and assigned, to JONASA - JOAQUIM FONSECA, NAVEGACAO, INDUSTRIA E COMERCIO S/A., with HEAD OFFICE at Rua Professor Nelson Ribeiro, 161, Belem, State of Para, Brazil. Belem, July 11, 1985. FOR JOAQUIM FONSECA, NAVEGACAO, INDUSTRIA E COMERCIO S/A. /s/ FRANCISCO JOAQUIM FONSECA PRESIDENT DIRECTOR /s/ ROBERTO SEIXAS SIMOES ADMINISTRATIVE DIRECTOR FOR UNITED AMAZONIAN RESOURCES LIMITED /s/ IGNATIUS ZAPHEIRIUS THEODOROU MANAGING DIRECTOR /s/ CARLOS GOMES DA ROCHA DIRECTOR FOR COMPANHIA AGROPECUARIA DO RIO JABUTT /s/ FRANCISCO JOAQUIM FONSECA PRESIDENT DIRECTOR /s/ ROBERTO SEIXAS SIMOES ADMINISTRATIVE DIRECTOR 23 AGREEMENT It is hereby agreed between JONASA - JOAQUIM FONSECA, NAVEGACAO, INDUSTRIA E COMERCIO S/A. with HEAD OFFICE at Rua Professor Nelson Ribeiro, 161, Belem, State of Para, Brazil, from now on called JONASA, and UNITED AMAZONIAN RESOURCES LIMITED with HEAD OFFICE at Guernsey, 7 New Street, Lyric House, St. Peter Port, Chanel Island with OPERATION OFFICE at 101, Septemvriou St. Athens 10434, Greece, from now on called U.A.R., that, the two parties will establish a JOINT VENTURE AGREEMENT with the purpose of manufacturing and packaging facilities in Belem, State of Para, Brazil. The said facilities to engage in activities according to the MANAGEMENT AGREEMENT, signed, July 11, 1985. Further terms and conditions will be added, with this agreement both parties accept the three (3) below conditions to be the foundations of this JOINT VENTURE. The company for the JOINT VENTURE to be named UNITED AMAZONIAN RESOURCES DO BRASIL. CONDITIONS: 1. JONASA and BRASAGUA - COMERCIO, EXPORTACAO E PARTICIPACOES LIMITADA, will establish a company according to the Laws of Brazil, in Belem, State of Para. This company will purchase the necessary land to built the said facilities as needed. 2. The said company will produce and purchase all raw materials to be manufactured as define in the MANAGEMENT AND MARKETING AGREEMENT signed, July 11, 1985. 3. U.A.R. will undertake the management of the said company, marketing, promotion, and sales world wide of all the products the said company will produce on exclusive basis. U.A.R. will provide all techno-economical studies for the feasibility and purchase of the necessary machinery and equipment, for the production of the said products as well as the purchase of the said equipment. With the agreement and understanding of both parties, it is hereby signed below. FOR JOAQUIM FONSECA, NAVEGACAO, INDUSTRIA E COMERCIO S/A. /s/ FRANCISCO JOAQUIM FONSECA PRESIDENT DIRECTOR /s/ ROBERTO SEIXAS SIMOES ADMINISTRATIVE DIRECTOR FOR UNITED AMAZONIAN RESOURCES LIMITED /s/ IGNATIUS ZAPHEIRIUS THEODOROU WITNESSES: MANAGING DIRECTOR 1. /s/ /s/ 2. /s/ CARLOS GOMES DA ROCHA DIRECTOR 24 AGREEMENT This agreement is made on July 12, 1984, between the first party THYSSEN SUDAMERICA N.V. (hereinafter called TSA), a company duly formed, legalized and constituted in accordance with the laws of the Netherland Antilles, having its registered Head Office at Scharlooweg, 100, Willemstad, Curacau, Netherlands Antilles, and its operating Head Office at Av. Nilo Pecanha, 50 - Rio de Janeiro, Brazil, duly represented by Mr. Friedrich Wilhelm Heimes, President, and Mr. Wolf Peter Zeplin, Managing Director, and the second party, "MADEIRA INTEX S.A. INTERNATIONAL EXPORTS", a company duly formed, legalized and constituted under the laws of the Greek Democratic Republic, having its registered Head Office in Athens, Greece, at 101, 3rd Septemvriou St., duly represented by Mr. Ignatius Zapheirius Theodorou, Chairman of the Board, and Mr. Carlos Gomes da Rocha, Director, hereinafter called "MADEIRA INTEX". The parties jointly agree to the following: CLAUSE I "MADEIRA INTEX" has signed with Brazilian forest landowners exclusive forest concession rights to extract, preserve, inspect, ship and market wood in logs, sawn lumber and all byproducts derived from such wood, such as vegetal charcoal, brickets, etc. "MADEIRA INTEX" has been assured by the concessionaires of the existence of valid export permits issued by the Brazilian government authorities for wood in logs for all species within their concessions. 25 CLAUSE II TSA is interested to commercialize Brazilian wood in logs and all wood byproducts mentioned in Clause I, produced by "MADEIRA INTEX", in the Far East Region, especially in Japan, South Korean, Taiwan, Singapore, Philippines, etc. TSA will commercialize the Brazilian wood logs and byproducts in this region through offices belonging to the Thyssen Group of Companies. CLAUSE III "MADEIRA INTEX" agrees to sell exclusively through TSA all wood logs, sawn lumber and byproducts into the markets mentioned in Clause II. CLAUSE IV TSA agrees to buy exclusively from "MADEIRA INTEX" all wood logs, sawn lumber and byproducts for sale in the market areas mentioned in Clause II. CLAUSE V "MADEIRA INTEX" and TSA will market the wood in logs and the sawn lumber under A.T.I.B.T. rules, which are internationally accepted. CLAUSE VI "MADEIRA INTEX" will sell the product to TSA under the following conditions: 26 6.1. Price: To be expressed in US Dollars per CBM (m3) and to be fixed on a quarterly basis. Prices to be established on FOB or CIF, liner term basis by common agreement. 6.2. Loading/Discharge Should TSA buy on FOB basis, loading rate in Rates: port of Belem to be minimum 1.500 m3/ Discharge rate at port of destination to be minimum 1.500 m3/day. 6.3. Quality: According to A.T.I.B.T. rules, min. diameter .50 m., max. length 5. 6.4. Type of Wood: As per Annex I. 6.5. Quantity: Minimum guaranteed yearly purchase quantity to be established six months before the beginning of each calendar year. First minimum yearly quantity to be agreed upon after TSA's customers have accepted sample shipments and all other conditions of sale. Minimum shipment per vessel approx. 15.000 m3, for discharge in up to three ports of destination. Time to count from arrival at first port and completion of discharge at last port. 6.6. Measurements: In accordance with geometrical system approved by I.B.D.F. (Instituto Brasileiro de 27 Desenvolvimento Florestal). 28 6.7. Inspection: Inspection and final acceptance of product to be carried out at departing depot _____ to loading into ocean vessel. Certificate of acceptance to be signed by independent surveyors of both parties. 6.8. Payment: Payment by irrevocable L/C issued by First Class bank, payable at sight upon presentation of documents to be agreed in an _____ to this Agreement, L/A to be established within 5 working days after each order. Long term contracts L/C to be established for the minimum contracted quantity, at the beginning of each year, on a revolving basis. CLAUSE VII TSA has the right to appoint their own experts or nominees to supervise extraction, quality determination and preservation measure of logs according to "MADEIRA INTEX" contractual obligations. CLAUSE VIII Protection and preservation: "MADEIRA INTEX" to contract an internationally known company specialized in the protection and preservation of tropical wood to supervise and certify that the woo logs and/or the sawn lumbers have been protected and preserved in accordance with internationally accepted practices and respective certificate will be issued by this company to TSA, without any cost to TSA. 29 CLAUSE IX The period of this agreement is limited to the period of concessions that "MADEIRA INTEX" has with several Brazilian forest land owners and will come into force with the first shipment effected to TSA. CLAUSE X This agreement is subject to the approval of the Board of Directors of TSA. It is further subject to the acceptance of TSA's customers in the Far Eastern markets of the quality of samples shipped to them. Rio de Janeiro, 12th July 1984 /s/ /s/ THYSSEN SUDAMERICA N.V. MADEIRA INTEX S.A. EX-10.(XXIII) 9 EXHIBIT 10.(XXIII) 1 EXHIBIT 10(XXIII) JOANAYE 0 JOAO SALIM NAVEGACAO LTD. 09 Carlos Ano Bom Street - Phone: +55 91 255-2636 CEP (zip code)67033-660 - Ananindcua - Para - Brazil CGC 34.633.727/0001-28 State Inscrip. 15.148.522-4 PROPOSAL FOR SALE AND PURCHASE AND AUTHORIZATION FOR EXPLORATION OF TIMBER IN LOGS WITH FOREST MANAGEMENT JOAO SALIM, PEDRO GALLETTI, JOSE CARLOS GALETTI and others, owners of a total of 46 parcels of lands in the municipalities of BREVES, PORTEL, and BAGRE, in which various forest management projects are underway, with a total commercial exploration of approximately 500 cm3 (FIVE HUNDRED CUBIC METERS). The aforementioned parties offer to sell to the company EQUATORIAL RESOURCES (BRAZIL) LTDA, according to the conditions set for hereinafter. The owners of the aforementioned lands, having entered into complete agreement with all the involved parties, have signed this present agreement, to sell the timer withdrawn from the already liberated management projects upon receipt of RS 7.50 (SEVEN REAL AND FIFTY REALS) per cubic meter of logs of any and all species, with all extraction and transport expenses the responsibility of the Buyer under the conditions and in compliance to specifications laid out by IBAMA and upon payment by the buyer of RS 1,000,000.00 (ONE MILLION REALS), once signed, the owners of the aforesaid lands commit themselves to place all the properties with a total of approximately 300 thousand hectares at the disposal of the company EQUATORIAL RESOURCES (BRAZIL) LTDA, by means of new contracts to be drawn up in the future. The sellers hereby commit themselves to comply with this present letter of intentions of sale and purchase on or before March 30, 1997, in case this proposal is accepted by the buyer in accordance to norms of IBAMA, the forest management projects included in this contract shall enter into force upon the signature of the definitive contract. Belem, PA, February 28, 1997 ---------------------------------- JOAO SALIM and OTHERS ---------------------------------- EQUATORIAL RESOURCES (BRAZIL) LTDA EX-10.(XXIV) 10 EXHIBIT 10.(XXIV) 1 EXHIBIT 10(XXIV) ECO-RATING INTERNATIONAL STANDARD AGREEMENT This agreement is dated and executed on December 17, 1996 (the "Effective Date") between Eco-Rating International, Incorporated, a corporation and Equatorial Resources, Limited, a corporation. Equatorial Resources, Limited is a 70% owned subsidiary of Nevada Manhattan Mining, Incorporated, a Nevada corporation. RECITALS I. Eco-Rating International, Inc. (hereinafter "ERI") is a California corporation in good standing. II. Equatorial Resources, Limited (hereinafter "client") is a British Virgin Islands corporation in good standing. III. The purpose and definition of an Eco-Efficiency Model is for the client to receive a set of environmental management guidelines for their project. IV. ERI will gather the data necessary to derive this model with the full cooperation of the client. V. ERI engages and employs two methods of review. The methods are sustainability and best available techonology. 2 TERMS & CONDITIONS 1. ERI will provide the client with an Eco-Efficiency Model pertaining the client's timber production concession in the area surrounding Belem, Brazil. 2. COST AND METHOD OF PAYMENT: The cost of the study is set at $33,750. The release of funds to ERI shall be in the following order: A. Prior to arrival of the ERI inspection team at the client's location in Belem, Brazil, a check to the order of $11,250 shall be made out and sent, via Federal Express, to ERI. B. Upon presentation of the draft report by ERI to the client, a check to the order of $11,250 shall be made out and sent, via Federal Express, to ERI. 3. USE OF ERI'S SERVICE MARKS AND REPORT A. ERI grants permission for the use of its service marks and report in exchange for the valuable consideration received from the client. B. SCOPE: Any and all use of ERI's service marks and report is however limited to the scope of the report provided for this job. The client may not use the report for areas not covered by ERI and not listed in paragraph 1 of the terms and conditions herein. The client may not represent information to third parties other than the information set out in the report and the client may not represent the information outside the 3 scope of which the report was intended and agreed upon between the parties herein. C. EXCLUSIONS AND LIMITATIONS OF THE REPORT: Field visits, process analysis and other aspects of an environmental assessment of suppliers to the client will NOT be carried out (i.e. they will not be evaluated independently). Said suppliers will only be included in the study where relevant to the client's environmental performance. D. MISUSE: In the even of the client's use of the report or any representation made by the client regarding the content or conclusion of the report are reasonably believed by ERI to be outside the scope of the report as defined herein, the client agrees to discontinue such use or representation forthwith. Failure to immediately halt the use of the report shall subject the client to liability for any damages to the ERI name and/or reputation. 4. ADDITIONAL EXPENSES: The client is responsible for lodging, airfare and transportation for the ERI team. The client is responsible for making these arrangements and for the payment of these expenses in advance and separate to this agreement. These expenses are additional and separate to this agreement. These expenses are additional and are not included int he project fees. They should be sent, via Federal Express, to the ERI offices and the client should confirm the choice of airlines, transportation and lodging with ERI. If the client does not wish to make these arrangements for ERI's team, then ERI shall provide the client with an expense list prior to travel and the client shall send, via Federal Express, payment for these additional expenses. 5. CHOICE OF LAW: This contract shall be subject to and governed by the Laws of the State of California. 4 6. FORUM SELECTION CLAUSE: All parties to this agreement expressly consent to the jurisdiction of the State of California. Any action over $25,000.00 arising out of this agreement shall be maintained in the Superior Court of the State of California in the West District located at 1725 Main Street in the City of Santa Monica. Any action under $25,000.00 shall be maintained in the Los Angeles Municipal Court, West Los Angeles Branch, located at 1633 Purdue Avenue in the City of Los Angeles. 7. SERVICE OF PROCESS: The client agrees to be served with any and all process by certified mail at the offices of the client's California agent, Christopher Michaels, at 5038 N. Parkway Calabasas, Suite 100, Calabasas, California 91302. 8. ATTORNEY'S FEES: In any action arising out of this agreement, neither side is entitled to recover its attorney's fees if they are the prevailing party, with the exception of an indemnity action brought by ERI. 9. FRUSTRATION OF PERFORMANCE BY THE CLIENT: At any time during the course of the study, ERI may request the client to provide data necessary for the completion of the report. The client agrees to furnish this information in a timely manner. A timely manner is what is considered reasonable in the industry relative to the data requested by ERI. If the client fails to provide ERI with the data requested, then ERI is under no obligation to finish the report and is relieved of their duties under this agreement. The client shall supply any data requested by ERI at their own expense. A. INCOMPLETE REPORT DUE TO BREACH OF SECTION 9: In the event that ERI cannot complete the report, the client shall pay ERI a sum equivalent to the amount of hours ERI has spent 5 working on this project multiplied by an hourly rate of $100.00 per hour. 10. INDEMNITY AND HOLD HARMLESS: The client agrees to indemnify ERI and its affiliates and agents and employees in the event an action arising out of this agreement is brought against ERI as a result of this project. The client also agrees to hold harmless ERI and its agents, affiliates and employees for the data used or incorporated in the report. The client also agrees to exculpate ERI for ordinary negligence. ERI shall be entitled to recover attorney's fees if sued by a third party as a result of this agreement and ERI prevails on their indemnity claim against the client. 11. EXPERT WITNESS TESTIMONY: In the event ERI is required to, or the client requests that ERI testify in an administrative or legal proceeding for any activity under this agreement or regarding any report prepared pursuant to this agreement or make an affidavit on the client's behalf, the client shall bear all travel and lodging expenses related with such aid and shall pay the ERI witness an hourly expert witness rate in advance at the rate of $150.00 per hour. 12. CONFIDENTIALITY AND USE OF REPORT BY ERI: ERI shall not release the contents from the Eco-Efficiency Model unless it is required to do so by lawful process or it receives written permission from the client. 13. ORAL MODIFICATIONS: This agreement reflects the entire agreement between the client and ERI and/or its agents. No waiver, modification, amendment, addition or cancellation shall be effective unless in writing and signed by corporate officers of both parties. 6 Signed: Date: /s/ Marc M. Baum, Ph.D. ________________ President Eco-Rating International, Inc. Signed: Date: /s/ ________________ Jeffrey Kramer Chief Operating Officer Equatorial Resources Limited EX-10.(XXV) 11 EXHIBIT 10.25 1 EXHIBIT 10.(XXV) SALE AND PURCHASE AGREEMENT THIS SALE AND PURCHASE AGREEMENT (this "Agreement") is effective as of February 6, 1997. The parties to this Agreement who are collectively referred to below as "Sellers" are Anthony C. Selig, an individual, and Dixie Exploration Corporation, a Nevada corporation. The party to this Agreement who is referred to below as "Nevada Manhattan" is Nevada Manhattan Mining, Inc., a Nevada corporation. The address of Sellers for purposes of this Agreement is c/o Anthony C. Selig at 3430 Westwind Road, Las Vegas, Nevada 89102. The address of Nevada Manhattan for purposes of this Agreement is 5038 N. Parkway Calabasas, Suite 100, Calabasas, California 91302. 1. Definitions. For all purposes of this Agreement, the terms defined in this Section 1 shall have the following meanings: (a) "21 Encumbered Argus Claims" means the fifteen patented and six unpatented Argus Claims which are encumbered by the Deed of Trust and are described in Exhibit A to the Deed of Trust; (b) "Argus Claims" means all of the 57 (28 patented plus 29 unpatented) mining claims which are described in Schedule I to the Quitclaim Deed and all land within the exterior boundaries thereof; (c) "BLM" means the United States Bureau of Land Management; (d) "Deed of Trust" means the Deed of Trust and Assignment of Rents that was recorded in the official records of Nye County, Nevada as Document No. 242237 at 1:30 p.m. on August 24, 1989; (e) "Effective Date" means the effective date of this Agreement; (f) "Limited Consent" means the Owner's Limited Consent to Assignment executed by Anthony C. Selig and Marlowe Harvey on or about August 5, 1993; (g) "Maintenance Fee" means the $100 maintenance fee payable to the BLM on or before August 31 of each calendar year with respect to any unpatented mining claim; (h) "Marlowe Harvey" means an individual citizen of Canada whose last known address is Suite 101, 9482 William Street, Chilliwack, British Columbia, Canada U2P 5G1; 2 (i) "Promissory Note" means the Promissory Note which is referred to in Paragraph A on page 2 of the Deed of Trust; (j) "Quitclaim Deed" means the Quitclaim Deed attached to and incorporated in this Agreement as Exhibit A; (k) "Request for Reconveyance" means the Request for Full Reconveyance attached to and incorporated in this Agreement as Exhibit B; (l) "Selig/Harvey Purchase Agreement" means the Purchase Agreement between Anthony C. Selig and Marlowe Harvey that was made and entered into on March 22, 1993; (m) "South Main Claims" means the 25 unpatented mining claims which are described in Schedule II to the Quitclaim Deed and all land within the exterior boundaries thereof; (n) "Total Purchase Price" means $375,000 payable in installments as explained in Section 7 ("Sale and Purchase") of this Agreement, plus interest on the unpaid balance thereof; and (o) "WC Claims" means the 130 unpatented mining claims which are described in Schedule III to the Quitclaim Deed and all land within the exterior boundaries thereof. 2. The Argus Claims. Nevada Manhattan owns or controls interests in each of the 28 patented and 29 unpatented Argus Claims. Payment of the Promissory Note to Anthony C. Selig by Nevada Manhattan is secured by the Deed of Trust, and the Deed of Trust applies only to the 21 Encumbered Argus Claims. Therefore, Anthony C. Selig has a security interest in the 21 Encumbered Argus Claims. However, neither of the Sellers has any other interest of any kind in the Argus Claims or the land which is included within the exterior boundaries thereof and Sellers hereby disclaim and release to Nevada Manhattan any other interest. 3. The South Main and WC Claims. Sellers or one of them originally staked some of the South Main Claims and the WC Claims. After they were originally staked, some of the South Main Claims and some of the WC Claims were declared invalid by the BLM. Except for the interest which was acquired by staking some of the South Main Claims and the WC Claims, neither of the Sellers has any interest in the land which is included within the exterior boundaries of any of the South Main Claims or the WC Claims and Sellers hereby disclaim and release to Nevada Manhattan any other interest. 4. Intent of the Parties. Sellers desire to sell to Nevada Manhattan and Nevada Manhattan desires to purchase from Sellers all of the individual and collective -2- 3 interests which Sellers have or may acquire in or to the Promissory Note, the Deed of Trust, and real property located within the exterior boundaries of the Argus Claims, the South Main Claims, and the WC Claims. Therefore, for and in consideration of the following mutual promises and conditions, Sellers and Nevada Manhattan agree as set forth in Sections 1 through 25 of this Agreement. 5. Warranties by Sellers. Sellers jointly and severally represent and warrant to Nevada Manhattan that: (a) Except for the Selig/Harvey Purchase Agreement, prior to the Effective Date, neither of the Sellers has encumbered, assigned, conveyed or otherwise transferred all or any portion of his or its respective interests in the Promissory Note, the Deed of Trust, the Argus Claims, the South Main Claims, or the WC Claims; (b) Except for the Selig/Harvey Purchase Agreement, the Limited Consent and this Agreement, neither of the Sellers is a party to any oral or written contract of any kind (recorded or unrecorded) which does or could have any impact whatsoever with regard to the respective interests of Sellers in the Promissory Note, the Deed of Trust, the Argus Claims, the South Main Claims or the WC Claims; (c) Except for the Selig/Harvey Purchase Agreement and the Limited Consent, neither of the Sellers is a party to any oral or written contract of any kind (recorded or unrecorded) with Marlowe Harvey or any company or entity owned or controlled by Marlowe Harvey; (d) Sellers have disclosed to Nevada Manhattan all information concerning the Promissory Note, the Deed of Trust, the Selig/Harvey Purchase Agreement and the Limited Consent which is within the knowledge, possession or control of the Sellers; (e) For purposes of the marital and/or community property laws of the State of Nevada, the interests sold by Anthony C. Selig under this Agreement are his sole and separate property; and (f) The entity formerly known as Anthony C. Selig and Associates was a limited partnership that no longer exists and no longer has or asserts any interest whatsoever in the Promissory Note, the Deed of Trust, the Argus Claims, the South Main Claims, or the WC Claims. Each of the parties to this Agreement acknowledges that Anthony C. Selig has terminated the Selig/Harvey Purchase Agreement, and that termination thereof may result in litigation which could involve any or all of the parties to this Agreement. 6. Capacity and Authority. Each of the parties to this Agreement represents and warrants to each of the others that: -3- 4 (a) If it is a corporation, it is properly formed and in good standing in its place of formation and fully qualified to do business and in good standing in the State of Nevada; (b) He or it has the capacity to enter into and perform this Agreement and all transactions contemplated herein and that all corporate and other actions required to authorize him or it to enter into and perform this Agreement have been properly taken; (c) This Agreement has been duly executed and delivered by him or it and is valid and binding upon him or it in accordance with its terms; (d) His or its contributions to this Agreement do not and will not constitute all or substantially all of his or its corporate or other assets; and (e) Any person executing this Agreement on his or its behalf is fully authorized to do so. 7. Sale and Purchase. In exchange for payment by Nevada Manhattan of the Total Purchase Price, Sellers agree to sell to Nevada Manhattan all of the individual and collective interests which Sellers have or may acquire in or to the Promissory Note, the Deed of Trust, the Argus Claims, the South Main Claims, the WC Claims and all of the land included within the exterior boundaries of each of the Argus Claims, the South Main Claims, and the WC Claims. Seller acknowledges receipt of $100,000 from Nevada Manhattan simultaneously with execution of this Agreement as payment of the first Installment of the Total Purchase Price. Beginning on the Effective Date, the unpaid balance of the Total Purchase Price ($275,000) shall bear simple interest at the annual rate of five and one-fourth percent (5.25%) and shall be payable as follows: (a) $100,000 on or before the first anniversary of the Effective Date; and (b) $175,000 plus all accrued interest on or before the second anniversary of the Effective Date. Nevada Manhattan shall have the right, at any time and without penalty, to prepay all or any part of the unpaid balance of the Total Purchase Price. 8. Quitclaim Deed and Request for Reconveyance. Simultaneously with full payment by Nevada Manhattan of the Total Purchase Price, Sellers shall: (a) Deliver the original executed copies of the Promissory Note and Deed of Trust to Nevada Manhattan; - 4 - 5 (b) Date, execute and acknowledge the Quitclaim Deed and deliver it to Nevada Manhattan; and (c) Date, execute and acknowledge the Request for Reconveyance and deliver it to Nevada Manhattan. Immediately upon completion of the steps required by this Section 8, except as expressly provided to the contrary in Section 24 ("Survival of Warranties and Indemnifications") below, this Agreement shall terminate automatically without the need for further act by the parties or any of them. 9. The Promissory Note. The amounts payable to Anthony C. Selig under the Promissory Note (both principal and interest) are hereby replaced with the amounts of principal and interest payable to Sellers under Section 7 ("Sale and Purchase") of this Agreement. To the extent that the Promissory Note and/or the Deed of Trust are inconsistent in any way with this Agreement, the Promissory Note and the Deed of Trust are hereby modified by mutual consent of the parties thereto and this Agreement shall control in all respects. 10. Manner of Payment. Each payment due to Sellers from Nevada Manhattan under Section 7 ("Sale and Purchase") of this Agreement shall be made by a single check made payable to a single individual or entity designated by Sellers. At any time and from time to time, Sellers may change the individual or entity so designated by giving notice of the change to Nevada Manhattan. The individual so designated by Sellers on the Effective Date is Anthony C. Selig and, until Nevada Manhattan receives notice from Sellers changing that designation, all payments due to Sellers hereunder shall be made to Anthony C. Selig. Regardless of the succession by others to all or any part of the respective interests hereunder of Sellers or either of them, whether the same is effected by sale, assignment, devise, will or other voluntary act or by operation of law or otherwise, Nevada Manhattan shall not be required to divide any individual payment due to Sellers under Section 7 of this Agreement or to distribute portions thereof to multiple individuals or entities. 11. Exploration Operations. As between Sellers and Nevada Manhattan, with respect to any of the South Main Claims or the WC Claims, Nevada Manhattan shall have the sole and exclusive right to conduct mineral exploration operations or activities of any sort thereon, and may remove such bulk samples or other quantities of minerals therefrom as may be necessary or desirable for exploration purposes without the payment to Sellers of any additional cash or other consideration. Any such exploration operations or activities shall be conducted at the sole option and discretion of Nevada Manhattan and at Nevada Manhattan's sole cost and expense. 12. Liens and Indemnification. In the event that Nevada Manhattan conducts any mineral exploration operations or activities on the South Main Claims or the WC Claims, then Nevada Manhattan shall make prompt and timely payment of all debts -5- 6 incurred by Nevada Manhattan in connection therewith including, without limitation, debts for work, services, labor, materials, supplies, and equipment. Nevada Manhattan will not allow any third party to perfect any lien arising from or in connection with such a debt incurred by Nevada Manhattan against either the South Main Claims or the WC Claims. Nevada Manhattan hereby assumes all liability for and indemnifies Sellers from and against all such liens. It is expressly understood and agreed by Sellers and Nevada Manhattan that the foregoing indemnification has no application whatsoever to operations or activities within the South Main Claims or the WC Claims which are conducted by any individual or entity other than Nevada Manhattan without Nevada Manhattan's express prior written consent. 13. Insurance. Before commencing any mineral exploration operation or activity within the South Main Claims or the WC Claims, Nevada Manhattan shall (at its sole expense) provide Sellers with copies of insurance and/or insurance policies, certificates or riders with terms, coverage and minimum amounts sufficient to fully insure Nevada Manhattan consistent with good business practices against all risks related to the mineral exploration operations or activities to be undertaken by Nevada Manhattan. All liability insurance policies, certificates or riders shall name Sellers as additional insured parties and shall be maintained in force and effect by Nevada Manhattan for so long as the insured activities or operations continue. 14. Claim Maintenance. Subject to the provisions of Section 15 ("Partial Surrender") of this Agreement, on or before July 1 of every calendar year, Nevada Manhattan shall pay the Maintenance Fee for: (a) Each of the 6 unpatented Argue Claims which is subject to the Deed of Trust; and (b) Each of the South Main Claims and each of the WC Claims which was not declared invalid by the BLM before the Effective Date. For each calendar year during which Nevada Manhattan is obligated hereunder to pay the Maintenance Fee for a particular unpatented mining claim, Nevada Manhattan shall record in timely fashion any proof of payment that is required by applicable law in order to maintain the respective interests of the parties in and to the mining claim in question and shall furnish Sellers with a photocopy of each document so recorded within thirty (30) days after its recordation. 15. Partial Surrender. Subject only to the provisions of Section 14 ("Claim Maintenance") of this Agreement, at any time and from time to time Nevada Manhattan may surrender to Sellers all or any portion of the South Main Claims or the WC Claims by giving Sellers notice of Nevada Manhattan's decision to do so. From and after the date of receipt by Sellers of such a notice from Nevada Manhattan, the mining claim or claims described therein shall no longer be subject to this Agreement in any way except that Nevada Manhattan shall pay the Maintenance Fee or Fees for -6- 7 the mining claims or claims in question if it is required to do so under Subsection 14(b) hereof and the notice of surrender is received by Sellers after July 1 during the year of surrender. Subject only to the next sentence of this Section 15, within thirty days after surrendering a particular mining claim, Nevada Manhattan shall deliver to Sellers a quitclaim deed which transfers to Sellers all of Nevada Manhattan's right, title and interest therein without warranties of any sort. In its discretion, Nevada Manhattan may reserve an easement over and across the mining claim or claims so surrendered to be used by Nevada Manhattan for the purpose of its operations in the vicinity thereof. No partial surrender by Nevada Manhattan shall reduce the Total Purchase Price. 16. Amendment and Relocation. Nevada Manhattan shall have the right, but shall not be required, to amend or relocate all or any of the six unpatented Argus Claims which are subject to the Deed of Trust, the South Main Claims and the WC Claims if such amendment or relocation is necessary in order to confirm, protect or preserve the rights therein of any of the parties to this Agreement. All actions taken by Nevada Manhattan under this Section 16 shall be taken at the sole expense of Nevada Manhattan, and no such action shall constitute a breach of any of Nevada Manhattan's obligations to Sellers hereunder if the same is taken by Nevada Manhattan in the good faith belief that it is necessary in order to confirm, protect or preserve the rights of either Sellers or Nevada Manhattan in or to the Argus Claims, the South Main Claims or the WC Claims. 17. Termination by Sellers. Sellers shall give Nevada Manhattan notice specifying any alleged default by Nevada Manhattan in the terms and provisions of this Agreement. If the alleged default is the failure by Nevada Manhattan to timely make any payment required by Section 7 ("Sale and Purchase") of this Agreement, then Sellers may terminate this Agreement if Nevada Manhattan fails to make the past due payment within fifteen (15) days after Nevada Manhattan's receipt of the default notice from Sellers. If the alleged default is anything else, then Sellers may terminate this Agreement if Nevada Manhattan fails to initiate (and thereafter diligently prosecute) measures to cure the alleged default within sixty (60) days after Nevada Manhattan's receipt of the required notice thereof. This Agreement and the rights granted to Nevada Manhattan hereunder may not be terminated by Sellers, in whole or in part, unless Nevada Manhattan fails to cure any alleged default within sixty (60) days after such default has been confirmed by a final and unappealable decision of a court of competent jurisdiction in the event that Nevada Manhattan elects to contest the same. 18. Assignment/Binding Effect. No party to this Agreement shall assign all or any part of his or its respective rights or duties hereunder without the prior consent of each of the other parties to this Agreement, which consent shall not be unreasonably withheld. Any assignment made without such prior consent shall be void. The terms and provisions of this Agreement shall inure to the benefit of, be binding upon, and enforceable by Sellers and Nevada Manhattan and their respective -7- 8 successors, assigns, estates, heirs, legatees, devisees, personal representatives and executors. 19. Notice. All notices, consents, payments, or other communications required or permitted by the terms of this Agreement shall be in writing, and each such communication shall be either personally delivered or placed in the United States Certified Mail, postage prepaid, return receipt requested. Each such communication shall be either delivered or mailed to Sellers or Nevada Manhattan (as appropriate) at their respective addresses set forth in the initial paragraph of this Agreement. Communications so mailed shall be deemed to have been made, given and received on the date of receipt indicated on the return receipt therefor. Sellers or Nevada Manhattan may change their respective addresses for notice by giving notice of the change in the fashion required by this Section 19. 20. Modification. Subject only to the provisions of Sections 15 ("Partial Surrender") and 21 ("Choice of Law and Severability") hereof, this Agreement may not be modified, amended, extended, supplemented or otherwise altered in any fashion except by written instrument executed by each of the Sellers and Nevada Manhattan. 21. Choice of Law and Severability. The parties shall be subject to and the terms and provisions of this Agreement shall be construed under the laws of the State of Nevada. The individual provisions of this Agreement are severable. If any such individual provision is contrary to or in conflict with any requirement or principle of applicable statutory or common law, then that provision shall be severed herefrom but the remainder of this Agreement shall remain in force and be construed so as to give effect to the intent of the parties. 22. Interpretation. If necessary to give effect to the terms and provisions hereof, references to the neuter gender shall include the masculine and/or the feminine genders, references to the plural shall include the singular and vice-versa. 23. Further Assurances. The parties agree to execute and deliver such additional or further formal assurances or other written documents, in proper and recordable form, as may be reasonably necessary to carry out the intent, purposes and terms of this Agreement. 24. Survival of Warranties and Indemnifications. All warranties and all indemnifications contained in this Agreement shall survive any termination or expiration hereof to the extent required to give full effect thereto, and no such warranty or indemnification shall merge to or with the terms or provisions of any document delivered by one party to this Agreement to another after the Effective Date including, without limitation, the Quitclaim Deed and the Request for Reconveyance. 25. Sole Agreement. As of the Effective Date, the Promissory Note, the Deed of Trust and this Agreement shall constitute the sole and exclusive understanding between - 8 - 9 Sellers of either of them and Nevada Manhattan with respect to the subject matter hereof, all other agreements between them with respect to the subject matter hereof (if any) being expressly terminated, rescinded and replaced hereby. The respective rights and duties of the parties with regard to the subject matter hereof are strictly limited to the rights and duties expressly set forth in the Promissory Note, the Deed of Trust, and this Agreement. No implied covenants of any sort are either contained herein or intended by the parties except for the implied covenant of good faith and fair dealing. IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date. ANTHONY C. SELIG /s/ Anthony C. Selig ---------------------------------- DIXIE EXPLORATION CORPORATION By /s/ Anthony C. Selig -------------------------------- Typed Name: Anthony C. Selig ------------------------ Title: President ---------------------------- NEVADA MANHATTAN MINING, INC. By /s/ Christopher D. Michaels --------------------------------- Typed Name: Christopher D. Michaels ------------------------ Title: CEO ----------------------------- -9- 10 STATE OF NEVADA ) ) ss. COUNTY OF CLARK ) On this 21st day of March, 1997, Anthony C. Selig personally appeared before me, a notary public, who acknowledged that he executed the above instrument for the purposes therein contained. /s/ Carole Schindler ----------------------------------- Notary Public [CAROLE SCHINDLER NOTARY SEAL] My commission expires: 1-17-99 ------- STATE OF NEVADA ) ) ss. COUNTY OF CLARK ) On March 21st, 1997, Anthony C. Selig personally appeared before me, a notary public, who acknowledged that he executed the above instrument as President of Dixie Exploration Corporation, a Nevada corporation. /s/ Carole Schindler ----------------------------------- Notary Public [CAROLE SCHINDLER NOTARY SEAL] My commission expires: 1-17-99 ------- -10- 11 STATE OF CALIFORNIA ) ) SS. COUNTY OF LOS ANGELES ) On March 26, 1997, Christopher D. Michaels personally appeared before me, a notary public, who acknowledged that he executed the above instrument as CEO of Nevada Manhattan Mining, Inc., a Nevada corporation. /s/ R.M. Knippenberg ----------------------------- Notary Public [SEAL] My commission expires May 25, 1999 [R.M. Knippenberg Notary Seal] -11- 12 EXHIBIT A TO SALE AND PURCHASE AGREEMENT: THE QUITCLAIM DEED THIS QUITCLAIM DEED is executed on and effective as of_________________, 19__. It is from Anthony C. Selig, an individual ("Selig"), and Dixie Exploration Corporation, a Nevada corporation ("Dixie"), to Nevada Manhattan Mining, Inc. ("Nevada Manhattan"), a Nevada corporation. For good and valuable consideration, Selig and Dixie hereby quitclaim to Nevada Manhattan all of the right, title and interest of Selig and Dixie in and to the patented and unpatented mining claims described in Schedules I, II and III attached hereto and incorporated herein and in and to all real property within the exterior boundaries thereof. To have and to hold the same forever, in witness whereof, Selig and Dixie have executed this Quitclaim Deed effective as of the day and year indicated above. ANTHONY C. SELIG ________________________________________ DIXIE EXPLORATION CORPORATION By______________________________________ Typed Name:_____________________________ Title:__________________________________ EXHIBIT A TO SALE AND PURCHASE AGREEMENT: THE QUITCLAIM DEED Page 1 13 STATE OF__________________ ) )ss. COUNTY OF_________________ ) On this __ day of ___________, 19__, Anthony C. Selig personally appeared before me, a notary public, who acknowledged that he executed the above instrument for the purposes therein contained. _________________________________ Notary Public [SEAL] My commission expires:_________________ STATE OF_________________ ) )ss. COUNTY OF________________ ) On _______________, 19__, ________________________________ personally appeared before me, a notary public, who acknowledged that he executed the above instrument as ______________________ of Dixie Exploration Corporation, a Nevada corporation. ______________________________________ Notary Public [SEAL] My commission expires: ________________ EXHIBIT A TO SALE AND PURCHASE AGREEMENT: THE QUITCLAIM DEED Page 2 14 SCHEDULE I: THE ARGUS CLAIMS(1)
Patented Claim Name Mineral Survey Patent Number - - ------------------- -------------- ------------- Number ------ Annie Laurie 2874 441202 Dexter #7 2602 46212 Earl 2544 375993 Eva 3667 537035 Flying Cloud 3667 537035 Ivanhoe 2773 46617 Katie #1 2651 46321 Keystone 2692 555879 Morning Glory 4073 552989 Muleskinner 2882 123980 Pine Nut #2 4073 552989 Red Boy or Red Roy 2693 676958 Silver Pick #1 2528 Am. 674983 Snow Drift 2764 459615 Snowman 3667 537035 Union 2625 46616 Union #1 2625 46616 Union #2 2552 114749 Union #3 2553 32959 Union #4 2554 46332 Union #5 2555 94281 Uno 2695 98424 White Cap 2579 46176 White Cap No. 1 2579 46176 White Cap Extension or Extension No. 1 4335 734331 White Cap Extension No. 1 or No. 2 4335 734331 Whoopee Fraction 2694 46320 Dexter #8 2602 46212 SUBTOTAL: 28 PATENTED ARGUS CLAIMS
- - -------------------- (1) The "Argus" patented and unpatented claims are in the Manhattan Mining District, Sections 20, 21, 22, 27, 28 and 29, Township 8 North, Range 44 East, Mt. Diablo Meridian, Nye County, Nevada. SCHEDULE I: THE ARGUS CLAIMS Page 1 15 Unpatented Claim Name NMC No. - - --------------------- ------- Combination 93112 Lillie Fraction 93108 Little Joe #1 93115 Little Joe #2 93116 Little Joe #3 93117 Little Joe #4 93118 Little Joe #5 93119 Little Joe #6 93120 Little Joe #7 93121 Little Joe #8 93122 Little Joe #9 93123 Little Joe #10 93124 Little Joe #11 93125 Little Joe #12 93126 Little Joe #13 93127 Little Joe #14 93128 Little Joe #15 93129 Little Joe #16 93130 Little Joe #17 93131 Little Joe #18 93132 Little Joe Fraction #19 93133 Little Joe Fraction #20 93134 Little Joe Fraction #21 93135 Little Johnnie Fraction 93109 Mable A 93107 Pandora Fraction 93110 Turtle Dove Fraction 93111 Granny Fraction 93113 Yellow Horse Fraction 93114 SUBTOTAL: 29 UNPATENTED ARGUS CLAIMS TOTAL: 58 ARGUS CLAIMS SCHEDULE I: THE ARGUS CLAIMS Page 2 16 SCHEDULE II: THE SOUTH MAIN CLAIMS(1) Unpatented Claim Name Year Located/NMC Year Relocated/NMC South Main 1982/241433 1 1982/241434 2 1982/241435 3 1982/241436 4 1982/241437 5 1982/241438 6 1982/241439 7 1982/241440 8 1982/241441 9 1982/241442 10 1996/735896 12 1982/241445 14 1982/241447 15 1982/241448 16 1982/241449 17 1982/241450 18 1996/735897 19 1996/735898 20 1996/735899 21 1982/241454 22 1982/241455 23 1982/241456 24 1982/241457 25 1982/241458 26 1982/241459 1987/443759 TOTAL: 25 UNPATENTED SOUTH MAIN CLAIMS ____________________ (1) The "South Main" unpatented claims are in the Manhattan Mining District, Sections 20-21 and 28-29, Township 8 North, Range 44 East, Mt. Diablo Meridian, Nye County, Nevada. SCHEDULE II: THE SOUTH MAIN CLAIMS Page 1 17 SCHEDULE III; THE WC CLAIMS(1) UNPATENTED CLAIM NAME NMC NO. #2 260866 #4 260868 #6 735900 #8 735901 #10 443686 #12 443688 #13 443689 #14 443690 #15 260879 #16 443691 #17 260881 #18 443692 #19 260883 #20 443693 #21 735902 #22 443694 #23 735903 #24 443695 #25 735904 #26 735905 #27 443696 #28 443697 #29 443698 #30 443699 #31 443700 #32 443701 #33 443702 #34 443703 #35 735906 #36 260900 #37 260901 #38 260902 #39 260903 #40 260904 #41 260905 #42 260906 #43 260907 #44 260908 #46 260910 #48 735907 ____________________ (1) The "WC" unpatented claims are in the Manhattan Mining District, Sections 20-22 and 27-34 in Township B North and Sections 4-6 in Township 7 North, Range 44 East, Mt. Diablo Meridian, Nye County, Nevada. SCHEDULE III: THE WC CLAIMS Page 1 18 Unpatented Claim Name NMC No. - - --------------------- ------- #50 735908 #52 735909 #54 735910 #56 735911 #57 443708 #58 735912 #59 443709 #60 735913 #61 443710 #62 443711 #69 443718 #70 443719 #71 443720 #72 443721 #73 443722 #74 443723 #75 443724 #76 443725 #77 443726 #78 443727 #79 443728 #80 443729 #81 443730 #82 443731 #83 443732 #84 443733 #85 443734 #86 443735 #87 443736 #88 443737 #89 443738 #90 443739 #91 443740 #92 443741 #93 443742 #94 443743 #95 443744 #96 443745 #97 260961 #98 735914 #99 735915 #100 443747 #101 260965 #102 735916 #103 260967 #104 443749 SCHEDULE III: THE WC CLAIMS Page 2 19 Unpatented Claim Name NMC No. - - --------------------- ------- #105 260969 #106 443750 #107 260971 #108 443751 #109 260973 #110 443752 #111 260975 #112 443763 #113 260977 #114 260978 #115 260979 #116 260980 #117 260981 #118 260982 #119 260983 #120 260984 #121 260985 #122 260986 #123 260987 #124 260988 #125 735884 #126 260990 #127 735885 #128 260992 #129 735886 #130 260994 #131 735887 #132 260996 #133 735888 #134 260998 #135 735889 #136 261000 #137 735890 #138 735891 #139 735892 #140 261004 #141 261005 #142 261006 #143 261007 #144 735893 #146 735894 #147 735895 Grannie Lode 594683 Boogie Lode 569966 TOTAL: 130 UNPATENTED WC CLAIMS SCHEDULE III: THE WC CLAIMS PAGE 3 20 EXHIBIT B TO SALE AND PURCHASE AGREEMENT: THE REQUEST FOR RECONVEYANCE Request for Full Reconveyance Anthony C. Selig, an individual ("Selig"), is the Beneficiary of the Deed of Trust and Assignment of Rents dated as of August 22, 1989, and executed by Argus Resources, Inc., Argus Mines, Inc., and Nevada Manhattan Mining, Inc., three Nevada corporations, as Trustors, to First American Title Insurance Company of Nevada, as Trustee (the "Deed of Trust"). In a Substitution of Trustee dated August 8, 1991, Cow County Title Company was substituted as Trustee. Selig hereby acknowledges that the indebtedness secured by the Deed of Trust has been discharged and released; and requests that the Trustee release and reconvey to Trustors, as their respective interests appear of record, the property subject to the Deed of Trust. The Deed of Trust was recorded on August 24, 1989, as Document No. 242237, in the real estate records of Nye County, Nevada. The Substitution of Trustee was recorded therein on September 3, 1991, as Document No. 291186. Dated , 19 . ----------------- --- ANTHONY C. SELIG ------------------------------------ STATE OF ) ------------- ) ss. COUNTY OF ) ------------- On this day of , 19 , Anthony C. Selig personally ----- --------------- --- appeared before me, a notary public, who acknowledged that he executed the above instrument for the purposes therein contained. -------------------------------------- Notary Public [SEAL] My commission expires: ----------------- EXHIBIT B TO SALE AND PURCHASE AGREEMENT: THE REQUEST FOR RECONVEYANCE Page 1 21 Official Records Nye County Nevada Requested By: Nevada Manhattan Mining 03/27/97 3:06 PM Naoma Lydon Recorder Fee: $27.00 State: $ Dep: tp I HEREBY CERTIFY THAT IF WITNESSED WITH THE RAISED SEAL OF THE NYE COUNTY RECORDS THIS IS A TRUE AND CORRECT COPY OF THE ORIGINAL RECORD ON FILE IN THIS OFFICE. MAR 27 1997 /S/ Naoma Lydon NAOMA LYDON COUNTY RECORDER NYE COUNTY, NEVADA EX-21 12 EXHIBIT 21 1 EXHIBIT 21 SUBSIDIARIES OF THE COMPANY The Company has recently formed two subsidiaries, Kalimantan Resources, Ltd., and Equatorial Resources, Ltd. Both companies were organized under the laws of the British Virgin Islands. Kalimantan Resources, Ltd., is wholly owned by the Company while Equatorial Resources, Ltd., is 80% owned by the Company. EX-99.(II) 13 EXHIBIT 99.(II) 1 EXHIBIT 99(ii) Executive Report Nevada Manhattan Mining Inc. (NVMH) 5038 N. Parkway Calabasas, Suite 100 Calabasas, California 91302 1-818-591-4400 January 1997 2 EXECUTIVE REPORT NEVADA MANHATTAN MINING, INC. (NVMH) 5038 N. PARKWAY CALABASAS, SUITE 100 CALABASAS, CALIFORNIA 91302 (818) 591-4400 January 1997 PREPARED BY WILLIAM R. WILSON 1 REVIEWED BY TA M. LI 2 This Executive Report is the proprietary property of Nevada Manhattan Mining, Inc.. No reproduction of this document is permissible without prior written consent of Nevada Manhattan Mining, Inc.. 1 Wilson has a professional degree in metallurgical engineering from the Colorado School of Mines and an MBA from the University of Southern California. His more than thirty years of experience includes ten years in senior positions with engineering, construction, consulting and equipment companies and ten years as president of several mining companies operating in the United States and internationally. He is a past chairman of the Colorado Mining Association, is currently Vice President - Operations of Nevada Manhattan Mining, Inc. and serves on the boards of two publicly traded international resource companies. 2 Li has a B.S. degree in Mining Engineering from the Columbia University Henry Krumb School of Mines. His thirty years of experience include senior positions with mining consulting firms and construction companies, and he also was president of a mine development company with properties in Latin America. He is a past president of the Northwest Mining Association, a past chairman of the Colorado Mining Association and a director of the Society of Mining, Metallurgy and Exploration. Mr. Li is currently Vice President, Corporate Development, Behre Dolbear & Company, Inc., an internationally recognized mining consulting firm. 3 TABLE OF CONTENTS Description Page Chart of Company Activities .......................................... i I. Executive Summary ............................................. 1 Overview .................................................... 1 Global Developments & Activities ............................ 1 United States ...................................... 1 Indonesia .......................................... 2 Brazil ............................................. 2 Public Markets .............................................. 3 Management Expertise ........................................ 3 Technical Expertise ......................................... 3 II. Objectives .................................................... 4 Gold ........................................................ 4 Coal ........................................................ 4 Forestry & Timber ........................................... 4 Corporate Staffing & Other Expertise ........................ 4 Financing ................................................... 5 III. Resource Development and Operations Strategy .................. 5 Indonesia: Western Kalimantan Gold Project ........... 6 Sopang Gold Project ....................... 7 Cepa Coal Projects ........................ 8 Brazil: Timber Operations ......................... 8 USA: Nevada Gold Mines ......................... 11 IV. Organization and Management .................................... 11 Management .................................................. 12 Technical Team in Indonesia ................................. 13 Technical Advisors .......................................... 13 Accountants ................................................. 14 Additional Services ......................................... 14 4 Description Page V. Financial Statements & Financial Risk Protection .............. 14 VI. Attachments A. NEVADA MANHATTAN MINING, INC. - AUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDING MAY 31, 1996, & NOVEMBER 30, 1996 (Unaudited) B. SECURITIES DESIGNATION LETTER C. MANHATTAN LOCATION MAP D. INDONESIA LOCATION MAP - WESTERN KALIMANTAN GOLD PROJECT E. INDONESIA LOCATION MAP - SOPANG PROJECT F. INDONESIA LOCATION MAP - CEPA COAL PROJECT G. BRAZIL LOCATION MAP --------------------------------------------------------------------------- CONVERSION TABLE 1 HECTARE = 2.471 ACRES 1 METER = 3.281 FEET 1 KILOMETER = 0.6214 MILES 1 CUBIC METER = 1.308 CUBIC YARDS 1 GRAM = 0.03527 OUNCES 1 KILOGRAM = 2.2 POUNDS 1 KILOGRAM-CALORIE = 3.968 BTU 2,000 POUNDS = 1 ton 2,240 POUNDS = 1 metric ton 5 [CHART OF COMPANY ACTIVITIES] 6 I. EXECUTIVE SUMMARY - - - OVERVIEW Nevada Manhattan Mining, Inc.'s (NVMH) corporate mission is to build a world-class, global natural resource company by acquiring, building, and operating rich resource assets, which include precious metals and minerals as well as forestry and timber, and to develop these assets on its own or in conjunction with selected strategic partners. Not only is this strategy designed to propel the Company to a level of significant cash flow, but it is also intended provide an excellent return on investment and appreciation for the Company's shareholders. NVMH has positioned itself as a broad-based natural resource company which will aggressively compete in international markets and will gain international investment recognition. Until recently, NVMH's sole operation was the Manhattan Consolidated and White Caps gold mines in the state of Nevada. Through a series of strategic acquisitions, NVMH has vastly expanded its base of natural resources to include forestry, timber, and coal to complement its rapidly growing portfolio of gold mining properties. NVMH has already launched the development and production of its forestry and timber concession in Brazil, and will be shipping the first major production of semi-finished cut timber to North American, Asian, and European markets in the first quarter of 1997. Through aggressive exploration programs, NVMH will expand the development of its newly acquired gold and coal concessions in Indonesia and, simultaneously, will seek new opportunities primarily in East Asia. In the United States, NVMH will continue its development of its gold mining properties in Nevada and bring them to full production in 1997. The Company intends to attain NASDAQ "Small Cap" or NMS status during 1997 pending an SB-2 registration with the United States Securities and Exchange Commission. - - - GLOBAL DEVELOPMENTS & ACTIVITIES United States During 1996, NVMH initiated mining activities at its Manhattan Mine Project in Nevada. By year end, underground and surface ore was stockpiled and ready to be milled in early 1997. Through negotiations and legal actions, the Company now is the operator and controls 100% of the project. Work continues on extending the decline to the high grade White Caps Mine which is expected to be in production in 1997. NVMH expects to be producing 1,000 ounces of gold per month by the end of 1997 at the Nevada property. 1 7 Indonesia As part of NVMH's strategic effort to expand its interests in gold mining properties and other natural resources, the Company acquired two (2) gold mining concessions as well as three (3) coal concessions on the island of Kalimantan in Indonesia. As advised by Behre Dolbear & Company, the Company's internationally renowned geological and mining consultants, each of the concessions are of potential world-class stature. Much of the mining industry and international investment community are beginning to learn that Indonesia and, especially, the island of Kalimantan are becoming widely regarded as one of the world's richest areas for metals and minerals, such as gold, copper, and coal. Major international companies, including RTZ, Barrick Gold, and CRA, are already acquiring and developing gold projects in Kalimantan. Indonesia is well regarded for its giant gold deposits, most notably the Grasberg Mine operated by Freeport McMoran in Irian Jaya and, more recently, the Busang Mine discovered by BRE-X. The two (2) gold concessions acquired by NVMH are delineated as follows: 1. Western Kalimantan: a 62-hectare property (with the intent to expand to at least 2000 additional hectares and beyond) located on the Northwest coast of Kalimantan; and 2. Sopang: a 16,400-hectare property located in East Kalimantan. The acquisition of these initial properties is most strategic, because it provides NVMH with the opportunity to participate in one of the world's greatest and richest areas for gold exploration. More importantly, these concessions are NVMH's platform for acquiring additional mining projects in Indonesia and the Asian region. These first two gold concessions exhibit large amounts of visible alluvial gold, and early reconnaissance indicates the possibility of proximity to major lode deposits. Preliminary exploration work, including surface sampling and shallow trenching/bore holes, was initiated on the Western Kalimantan gold project in the fourth quarter of 1996. For Sopang, on-site reconnaissance has been initiated in early 1997. Most recently, the Company completed its acquisition of three coal mining concessions in East Kalimantan. These properties reportedly contain potential large tonnage of high calorific, low sulfur, low ash coal which is suitable for domestic and international markets. Preliminary government data indicates that the region in East Kalimantan where NVMH has obtained its concessions contains substantial deposits of coal. Plans for early stage exploration and development of the concessions are underway. Brazil As part of its goal to achieve significant cash flow, NVMH acquired a large timber operation near Belem, Brazil through its 80% owned subsidiary Equatorial Resources ("Equatorial"). During the first quarter of 1997, Equatorial will be cutting and milling 2 8 select wood products for shipment to world markets. NVMH expects to generate in 1997 a positive cash flow in excess of US$6 million from its timber operations. Production is expected to at least double by the end of 1997. - - - PUBLIC MARKETS In 1996, NVMH's Common Stock experienced a substantial price appreciation ranging from US$1.25 per share to US$10.375 per share. This represents a positive reflection on the Company's earnings potential. The Company's market capitalization is currently in excess of US$90 million, which is undervalued when compared to the Company's inventory of assets and reserves as well as earnings growth. During early 1997, the Company intends to attain NASDAQ "Small Cap" or NMS status when its SB-2 Registration Statement ("Registration") becomes effective with the United States Securities and Exchange Commission. This Registration will facilitate additional financing and increase the shareholder base. Through private and public financing as well as from internal cash flow, funds will be allocated to fully explore and exploit the Company's investments into strategic concessions. Furthermore, the Company will continue to aggressively seek and acquire new assets to fulfill its mission to become a world-class, global natural resource company. - - - MANAGEMENT EXPERTISE The Company has added two experienced engineering and technical persons to its staff in order to enhance its expertise for managing its recent acquisitions. William R. Wilson, a longtime consultant to the Company with thirty years of mining experience, was appointed Vice President of Operations. He will be responsible for all technical and engineering activities, including the Manhattan Mine Project which has been under his supervision. Mr. Wilson will assist with the Company's new developments in Indonesia and Brazil. Arthur Mendenhall was appointed Manager for the Company's North American exploration activities and will continue in his exploration efforts at the Manhattan Mine Project as well as provide expertise for the Company's other mining projects. - - - TECHNICAL EXPERTISE In addition the Company engaged the services of Behre Dolbear and Company, Inc. (Behre Dolbear) an internationally recognized geological and mining consulting firm. Behre Dolbear will function as the Company's independent, third-party technical advisor for the developments in Indonesia. Behre Dolbear represents both international banking firms and mining companies in due diligence and valuation of properties and related assets. 3 9 II. OBJECTIVES - - - GOLD NVMH will initiate major exploration programs for its Indonesian gold projects in Kalimantan in 1997. This will include continued surface exploration for highly mineralized areas and core drilling of prospect areas to establish ore reserves and subsequent feasibility studies. Drilling on at least one property is expected to begin by the second quarter of 1997. Depending on overall company financing and logistics, drilling on a second property would be initiated and possibly completed in 1997. The Company will also continue to its development of the Manhattan Consolidated and White Caps Mines in Nevada. The initial ore stockpiled from underground and surface operations is scheduled to be milled in the nearby New Concepts Mill in early 1997. The new decline connecting the Manhattan Consolidated Mine and the White Caps Mine will be completed in the first quarter of 1997, and ore production in the White Caps Mine will proceed at that time. The Company expects to produce in excess of 5,000 ounces of gold from the Manhattan Mine Project in 1997 and be at a break-even or better production level by the end of the year. - - - COAL NVMH will also initiate exploration and, then, the development of its three coal projects in Kalimantan, Indonesia. The first survey and exploration teams are expected to begin work at the properties in the first quarter of 1997. NVMH will also seek out a major coal marketing partner which may include end-users in the Pacific Rim. - - - FORESTRY & TIMBER The Company's recently acquired forestry and timber concession near Belem, Brazil is already in production. The Company anticipates completion of its modifications to the existing saw mills by the early part of the first quarter of 1997. The saw mills will cut and size raw trees for shipment to international markets. Contracts and orders are already in place for shipments. Revenues from production are expected to range from US$500 to US$900 per cubic meter. Currently, monthly production is projected at 2,800 cubic meters of semi-finished timber products per month, which will initially result in excess of US$560,000 per month net cash flow to the Company. However, revenues will increase substantially as NVMH's plans for additional saw mills are implemented. - - - CORPORATE STAFFING & OTHER EXPERTISE It is anticipated that corporate staffing will be steadily increased to manage the wide range of issues associated with exploring, developing, and the mining the portfolio of concessions which the Company has well established. As appropriate, the Company 4 10 will utilize outside consulting firms as well as independent consultants in order to achieve to achieve the highest level of expertise and maximum efficiency. - - - FINANCING Capitalization of the 1997 activities will be through a private placement of US$3,000,000 followed later in 1997 or early 1998 with a secondary offering if needed. However, the Company has other options to raise financing in joint ventures which will not require the sale of equity as contemplated. The Company's balance sheet gives it flexibility to raise money through debt markets. The objective of the Company is to achieve a market capitalization of US$500 million by the end of 1997. The Company also expects to be listed on the NASDAQ "Small Cap" or NMS in early 1997. III. RESOURCE DEVELOPMENT AND OPERATIONS STRATEGY NVMH is in the unique position to take advantage of a growing trend among most broad-based natural resources companies, which is to both increase its investments in emerging markets as well as to further develop its operations in markets such as North America. In 1997, the Company will initiate the development of world-class gold and coal projects in Indonesia as well as initiate the full production and expansion of its current capacity for its forestry and timber projects in Brazil. In the United States, NVMH will enter into full production of its gold mining projects in Nevada. Foreign investments in mining and other natural resource projects in developing countries are increasing due to support from the international lending institutions (e.g., World Bank). For Indonesia, foreign investment in mining projects is becoming an acceptable risk for several reasons: (1) improving domestic economic conditions, (2) the government's willingness to develop resources for income from foreign exchange, and (3) the arrival of a large number of international mining companies whose confidence in the Indonesian market outweighs their aversion to risk. In 1996, foreign investment in Indonesia exceeded US$70 billion. The Company founded a wholly owned subsidiary, Kalimantan Resources, in 1996 to hold and develop its Indonesian assets. NVMH's joint venture partner in Indonesia is Maxwells Energy & Metals Technology Ltd. (Maxwells). Maxwells is an investment company which is primarily involved with the acquisition and development of precious metals and minerals. In particular, Maxwells is actively pursuing these business opportunities in Indonesia as well as other certain Asian countries. Due to Maxwells' long-term presence in Indonesia, it has fostered important relationships with influential local partners from which Maxwells has been able to secure significant mining concessions. In accordance with the joint venture agreement between NVMH and Maxwells, NVMH issued 400,000 common shares of NVMH at signing of the agreement in 1996. NVMH is further obligated to transfer an additional 4 million common shares to Maxwells at such time that a valuation of properties secured and assigned to the joint venture 5 11 reaches a value in excess of US$12 million as determined by an independent consulting firm. NVMH entered the timber market through its 80% held subsidiary Equatorial Resources. Equatorial was incorporated as a British Virgin Islands company in 1996 primarily for the purpose of acquiring and developing timber and other natural resources in South and Central America. The remaining 20% of Equatorial is held by the property's developer, Ignatius "Eddy" Theodorou, a Brazilian timber and transportation executive. - - - INDONESIA Indonesia has a history of natural resource development which includes mining, timber, and oil and gas. The explosion of gold mining development, particularly in Kalimantan, has made the country one of the most sought-after locations for land acquisition in the world. NVMH was selected to participate in this remarkable opportunity because of its long history of participation in the public mining equity markets and the diligence and persistence of its management. The key to successful development in this new market is to first secure marketable title and to obtain these concessions in those areas which have high promise for exploration and discovery. NVMH's gold projects in Kalimantan meet these criteria. As the part of the Company's effort to emerge from a junior gold mining company into a broad-based natural resource company, NVMH was quick to acquire three coal mining concessions when the opportunity presented itself. The coal on these properties is of such quality, with low sulfur content and high BTU, that it is acceptable in most countries whose air quality regulations are strict. Western Kalimantan Gold Project -- See Attachment C (Location Map) The Western Kalimantan gold project is comprised of 62 hectares of land, and it is the intent of the Company to expand to 2,000 hectares and beyond. At this time, title to the property is held under the form of a "KP", which is a form of local Indonesian ownership, and for which NVMH has acquired the rights to the "KP" through its own local Indonesian nominee company known as PT Duta. The geology at the Western Kalimantan gold project is characterized by two general trends: 1. Red, green and black siltstones with quartz diorite intrusions of late triassic to the west; and 2. Granodiorite quartz felspar porphyry of Miocene to the east. Mapping indicates widespread zones of chlorite argillic and sericite, alteration and strong leaching and oxidation of original sulfides. A long history of alluvial operations in the area is a strong signature for the nearby mineralized suspected lode deposits. 6 12 For the initial field work, access to the property will be by road and motorized canoe. Helicopters will be used for advanced exploration activities. Infrastructure is very limited but because of the close proximity to the west coast of Kalimantan as well as well as low relief terrain, no unusual development problems will be encountered. Initial sampling conducted by consultants for the Company indicates large mineralized areas. Because of this prior work and advantageous logistics and support, the Company has selected Western Kalimantan to be the first of its recently acquired concessions in Indonesia to undergo more extensive exploration. An airborne geophysical program, using both magnetic and radiometric surveys will be conducted to identify mineralized areas not associated with normal outcrops or alluvial activity. Following this survey and additional ground geochemical sampling, key core drill targets will be identified. Drilling will start as early as the second quarter of 1997. Acquisitions of additional property at Western Kalimantan is an integral part of the development program. Sopang Gold Project -- See Attachment D (Location Map) The Sopang Gold Project consists of 16,480 hectares of grass roots property. Title and rights to develop this concession is also held under the "KP" form. Sopang is located on the Kendilo River is southeast Kalimantan approximately 60 kilometers in land from the Celebes Sea at an elevation ranging from 420 meters to 1,000 meters. The general coordinates are as follows: 1. 20 kilometers west of the village of Tanagrogot, 2. 10 kilometers west southwest of the village of Kauro, 3. 125 kilometers southwest of the coastal town of Balikpapan (with a small airstrip), and 4. 210 kilometers northeast of the coastal town of Bandjermasin; the nearest airstrip is 1,500 meters long. The Sopang concession can periodically be reached by dirt road and/or motorized canoe from Balikpapan and Tanagrogot; otherwise it can be reached by helicopter from the airstrip at Bandjermasin. The general geology of the area is characterized by tertiary sediments and volcanics associated with intrusive structures with gold mineralization that is typical of East Kalimantan. Alluvial operations are small but are prevalent in the area. These operations are, again, signatures for nearby lode deposits. Due to limited infrastructure in the area in and around Sopang, initial work will be limited to surface trenching and geochemical sampling. Field work at Sopang will be initiated in the first quarter of 1997 with more intensive exploration, including airborne geophysical surveys and drilling, to be initiated later in 1997. 7 13 Cepa Coal Projects -- See Attachment E (Location Map) The Cepa Coal Projects cover an area of approximately 286,000 hectares and are divided into three independent properties, all of which are held under the government format known as a Contract of Work ("COW") as opposed to a "KP." Each of the properties are described as follows: 1. Property 1: 71,420 hectares 2. Property 2: 104,700 hectares 3. Property 3: 109,900 hectares A major coal domain in Indonesia follows the coast from Bandjermasin on the south side of the inland north to the Malaysian border. Two of the concessions are located northwest of the village of Sangkulirang, and the third is located to the north or Sangkulirang. All three are within 75 kilometers of the village by motorized canoe. Sangkulirang is also accessible from either Balikpapan or Samarinda. Each of the concessions range from 25 to 75 kilometers inland from the eastern coast of Kalimantan. Coal seams in the area measure from 1 meter to 20 meters and dip at a shallow angle. Preliminary tests from outcropping samples indicate calorific values ranging from 4,700 to 6,000 kilocalories per kilogram, volatile matter from 31% to 41%, sulfur from 0.2% to 2.0%, and ash from 3% to 7%. Most of the coal mines operating in Indonesia contain sub-bituminous to bituminous coals similar to those found on the Cepa Properties as well as those found at the PT Kaltima Prima Coal Property, which is one of the largest producers of coal in Indonesia and lies to the south of the Cepa Properties. Initial work on the properties will include reasonable expansion of rights to include additional hectares containing similar high-grade coal. In the initial phases of development, the Company will conduct surface sampling and shallow drilling for characterization of coal, general market surveys, identification of potential customers, and the development of a feasibility study consistent with full development. Some of this work will be initiated in the first quarter of 1997 and will continue into 1998. - - - BRAZIL Timber Operations -- See Attachment F (Location Map) NVMH's decision to enter the timber market was strengthened by the strong performance of timber prices in 1996. With a price appreciation of 52% in 1996, timber was at or near the top of all international commodity price increases for the year. Under the terms of a joint venture agreement with Jonasa Madeiras Corporation of Brazil (the "Joint Venture Agreement"), Equatorial will control, develop and operate 8 14 276,000 hectares of virgin timberland located in the State of Para, Brazil. This concession could be considered one of the largest hardwood timber holdings in the world. The contract areas include a variety of timber species of which initially only eighteen of the most commercial of the one hundred and twenty-five available have been selected and factored in the operating forecast shown below. The other species will be forested at the appropriate time. Of the four existing saw mills acquired by Equatorial, two are operational in Phase I and in Phase II, the other two mills will be put into operation by the end of February 1997. Immediate expansion plans call for the construction of up to eight additional mills in Phase III. The purpose of several small mills as opposed to one large facility, is to accommodate different varieties of timber and minimize downtime in the event of mechanical failure or scheduled maintenance of any of the mills. All appropriate infrastructure including power, housing, roads and auxiliary equipment as well as trained labor and strong management are in place and more than adequate to accommodate the phased increase in mill capacity. All shipping and associated transportation services will be provided by the Jonasa Group, the largest shipping company in the Amazon Basin. Their expertise and political position provide invaluable support to the operation, and as a participant in the joint venture, allow for operating efficiencies that greatly enhance profitability. The joint venture also holds the lands in fee title and the existing operations have virtually no debt. Equatorial has standing orders for all of its initial start-up production in Phase I and Phase II at 200 cubic meters per day capacity. Additional orders for up to 1,000 cubic meters have been submitted to Equatorial and demonstrate the viability of the immediate expansion noted above. That expansion will commence in the first quarter 1997. A full time manager of operations for the Brazilian timber operations, Mr. Theodorou, mentioned above, is in place. With immediate production from the new timber mill near Belem, the impact of significant cash flow from the timber operations is anticipated in the first quarter of 1997. ECONOMICS Capital Requirements - US$500,000 is being provided for Phase I and Phase II by NVMH. NVMH will also provide US$1,500,000 for the Phase III. These funds will be provided through additional equity, production revenues or a combination of both. Gross Asset - 276,000 hectares. The United Nations Food and Agricultural Organization (F.A.O.), Simons Corporation (Canada) and Reid, Collins & Associates Ltd. (Canada), highly respected forestry experts, have evaluated 24,000 hectares of the total holdings and confirm that each hectare will yield approximately 200 cubic meters of raw timber. Therefore, the total potential asset value of the 276,000 hectares would be approximately 55.2 million cubic meters of raw, hard wood timber. Factoring in cost and using a conservative 9 15 profit figure of US$500 per cubic meter, the potential asset value can be stated at US$27.6 billion. The US$500 profit estimate was derived from consultation with established timber experts. Equatorial, under its joint venture agreement with Jonasa, controls one hundred percent (100%) of the timber asset and fifty percent of the profits. NVMH in turn, owns 80% of Equatorial. Joint Venture Structure - Within the total amount of the 276,000 hectares of land controlled under the Joint Venture Agreement, 53,822 hectares were purchased by the Jonasa Group in 1961. Thirty percent (30%) of this land, 16,146 hectares, was already cleared for livestock and agricultural purposes at the time of purchase. The remaining 259,854 hectares are virgin forest in which 178,000 hectares were purchased in 1987 with another 44,178 purchased at approximately the same time. In acquiring the timber property, the terms of the agreement with Mr. Theodorou included the initial US$500,000 mentioned above for the mill facility. Further, Mr. Theodorou will be granted 2 million common shares of NVMH in 1997. In order for the Joint Venture Agreement to be accurate in value in terms of dollars and cubic meters, Equatorial and Jonasa guaranteed NVMH to uphold their responsibilities by replacing the cut timber either through purchase of other properties and by replacing the missing cubic meters by purchasing timber from other approved sources as well as reforesting. Cash Flow Projections - The following cash flow projections for Phase I and Phase II are based on the production of 200 cubic meters per day scheduled to commence in February 1997 with Phase I already operational. The expansion plans for Phase III will increase the mill feed capacity to 1,000 cubic meters per day. The following computations are for Phase I (in place) and Phase II (operational in February 1997): 200 cubic meters per day X 20 days per month (at two shifts per day) = 4,000 cubic meters per month 4,000 cubic meters per month less 30% to sawn timber (conventional method of calculating profits in the timber industry) = 2,800 cubic meters per month 2,800 cubic meters per month X US$500 per cubic meter (net after costs) = US$1,400,000 per month projected cash flow US$1,400,000 with 50% or US$700,000 to Jonasa Group (as joint venture share) and US$700,000 to Equatorial US$700,000 X 80% to NVMH or US$560,000 per month Equatorial received purchase order inquiries for up to 30,000 cubic meters per month. Extrapolating from the current capacity in Phase I and Phase II of 200 cubic meters per day to include the Phase III production of 1,000 cubic meters 10 16 per day, the net cash flow of the joint venture potentially could grow to exceed US$14,000,000 per month or US$5,600,000 to NVMH. Environmental Conditions - Equatorial has contracted with Eco-Rating International for the development of a balanced ecological operating model. This study, estimated to cost $36,000, will be completed at the time of initial production from the timber properties. Management - Messrs. Theodorou, Christopher Michaels, C.E.O of NVMH, Jeffrey Kramer, President of NVMH comprise the directorship and management of Equatorial. Joaquim Luis Fonseca Neto is the president of Jonasa Madeiras and Companhia Agropecuaria Rio Jabuti comprising the Jonasa Group. - - - UNITED STATES Nevada Operations -- See Attachment C (Location Map) NVMH's focus during 1996 was to initiate operations at the Manhattan Mine Project in Nevada. Harrison Western, an internationally respected underground mining contractor was employed by NVMH to be the on-site operator. Harrison Western's work was initiated in July 1996 and included placement of mine shops and support facilities; mining in the existing workings of the Manhattan Consolidated Mine; and extension of the existing decline from its end location of 1,200 linear feet from the surface to the White Caps 565' Level. Underground flooding and caving of the existing decline required an alternate access way and a new decline was driven starting from approximately 800 feet on the existing decline. As of the end of December 1996, the new decline has been driven 350 feet with an additional 450 feet expected to be completed by the end of March 1997. At that time access to the White Caps 565 Level will be achieved. NVMH will then install a new haulage shaft and alternate man-way to the surface in and around the White Caps Mine. During the extension of the new decline, NVMH will mine higher grade areas encountered. The Company also received permission from the State of Nevada to mine surface ore from three newly developed open pits. As of December 31, 1996, NVMH has mined approximately 3,000 tons of underground and surface ore averaging approximately 0.130 ounces of gold per ton. This ore will be milled in the New Concept Mill in February 1997. As additional surface and underground ores around the Manhattan Consolidated Mine are mined, they will be milled in the New Concepts Mill. Expected tonnage during 1997 is expected to be in excess of 23,500 tons. NVMH is preparing a full operational plan to be submitted to the Nevada Environmental Protection Agency (NEPA) to include mining of up to 600,000 tons. Submittal to NEPA and approval of this plan is expected to be in the second quarter of 1997. Ongoing exploration is expected to expand ore reserves in the immediate Manhattan Consolidated and White Caps areas as well as identify further deep underground drilling targets. 11 17 IV. ORGANIZATION AND MANAGEMENT NVMH holds the majority ownership in each of the projects in Indonesia, 100% of the Manhattan Mine project in Nevada and 80% of Equatorial which in turn participates as a 50% profits partner in the timber project in Brazil which it controls. The timber project is held in Equatorial Resources, an 80% held subsidiary of NVMH. NVMH is expanding its organization to internally manage the various projects in its portfolio while at the same time using international recognized consulting and legal firms to provide special expertise, third-party opinions and general support of the NVMH staff. - - - MANAGEMENT NVMH's management team includes a unique blend of financial and marketing specialists, mining, timber and shipping executives and technical experts that bring to NVMH more than 130 years of combined experience relative to the development and operations now in place and contemplated in the future. This existing staff provides invaluable expertise in dealing with the complex financial, technical and societal aspects of its domestic and international resource assets. A summary of the team experience follows: Christopher Michaels - Chairman and Chief Executive Officer. Mr. Michaels has thirty years experience in corporate capital formation and corporate management. During his ten years with the Company, he has been primarily responsible for increasing shareholder participation to its current level and has directed the Company's commitment in international projects including activities in Brazil and Indonesia. Jeffrey S. Kramer - President, Chief Operating Officer and Chief Financial Officer. Mr. Kramer directs the day-to-day operations of NVMH. He is responsible for institutional investors and provides coordination of the company's regulatory and legal activities. For the last ten years Mr. Kramer had devoted a major portion of his time in developing the Manhattan Mine Project and positioning the Company for its recent rapid growth. William R. Wilson - Vice President - Operations. Mr. Wilson is the project manager for the Manhattan Mine project and provides technical advisement for all of the Company's mining activities and directs outside contractors. Mr. Wilson has thirty years international mining experience including the management of mining divisions of three public companies. He is a director of Banro Resource Corporation and more recently managed the technical aspects of Banro's SAKIMA gold project in Zaire. Mr. Wilson is also president of Gold King Mines Corporation, managing that company's Gold King gold mine in Colorado and chairman of Gold King Consolidated, Inc. a Dallas-based oil, gas and mining company. 12 18 Ignatius "Eddy" Theodorou - President - Equatorial Resources. Mr. Theodorou has thirty years experience in shipping and timbering operations. His expertise in the complexities of international timbering operations has allowed NVMH to enter an extremely competitive industry with a minimum of development and start-up time. Stanley J. Mohr - Vice President of Shareholder Relations. Mr. Mohr has been with NVMH since its formation in 1986 and provides day-to-day contact with a large number of NVMH shareholders. Mr. Mohr also provides general marketing consulting services to the Company. William Michaels - Vice President of Investor Relations. Mr. Michaels has been with NVMH since its formation in 1986. He assists Mr. Mohr in day-to-day contact with NVMH shareholders and advises the Company on shareholder investor related issues. Mr. Michaels is the father of Christopher Michaels, the Company's Chairman and Chief Executive Officer. Arthur Mendenhall - Manager North American Exploration. Mr. Mendenhall is responsible for all of the Company's exploration activities in North America and is the Company's on-site representative for the Manhattan Mine project maintaining grade control, developing expanded reserves and providing guidance for expanded explorations activities in Nevada and in other gold producing areas. The NVMH Board of Directors provides the strategic direction for NVMH, as well as opportunities based upon their personal contacts, valuable guidance, organizational clarity and purpose based upon their experience. Expansion of the Board is being considered to represent both ownership and technical interests. Ms. Pollock and Dr. Rude', as members of the Board listed below, represent outside shareholder interests on the Board. The NVMH Directors include: Christopher D. Michaels - Chairman Jeffrey S. Kramer - Director Stanley J. Mohr - Director Edna Pollock - Director Joe C. Rude' III, M.D. - Director - - - TECHNICAL TEAM IN INDONESIA The NVMH technical project development team in Indonesia is based in Jakarta and has responsibility for the evaluation and development of the gold and coal mining projects. The project development team will maintain very close cooperation and coordination with Behre Dolbear and NVMH's management team in the United States. 13 19 - - - TECHNICAL ADVISORS NVMH has retained Behre Dolbear as its technical advisory firm to conduct independent assessments and studies of the various projects in Indonesia. Behre Dolbear, a New York based consulting firm, has additional offices in Denver, Colorado, Sydney Australia, Santiago, Chile, and Toronto, Canada. Mr. Malcolm Hancock is the official representative from Behre Dolbear and serves as the firm's Managing Director of its office in Sydney, Australia. NVMH has also retained two local consulting geological firms in Jakarta, P. T. Snowden and Dr. Deddy and Associates, to provide local technical and logistical support. These firms have provided on-site services from the initiation of activities in Kalimantan. Their in-country expertise provides a major advantage in dealing with local activities and logistical support. - - - ACCOUNTANTS NVMH's accountants and auditors are Jackson & Rhodes of Dallas, Texas. They provide financial and auditing assistance. - - - ADDITIONAL SERVICES Although the management and staff of NVMH are very capable, a number of specific and specialized skills must be contracted to ensure adequate planning, organization, control, and leadership. Such services may include; * accounting and auditing * legal * metallurgical * geotechnical * environmental and permitting * feasibility investigations * engineering design Other services which might be required include: * human resources * temporary services * management consultant * logistic/expediting. V. FINANCIAL STATEMENTS & FINANCIAL RISK PROTECTION The audited financial statements for NVMH for the periods ending May 31, 1996, August 31, 1996, and November 30, 1996 are shown in Attachment A.1 NVMH intends to secure project and political risk guarantees either from the World Bank Group "Multilateral Investment Guarantee Agency" (MIGA) or the United States 14 20 Overseas Private Investment Corporation. Both agencies typically will insure up to 90% of the principal amount of a US$50 million investment. WITH THE EXCEPTION OF HISTORICAL MATTERS, THE MATTERS DISCUSSED IN THIS EXECUTIVE REPORT ARE FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM PROJECTIONS OR ESTIMATES CONTAINED HEREIN. SUCH FORWARD-LOOKING STATEMENTS INCLUDE STATEMENTS REGARDING PLANNED LEVELS OF EXPLORATION AND OTHER EXPENDITURES. FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY INCLUDE, AMONG OTHERS, DECISIONS AND ACTIVITIES OF OTHER PRIVATE PARTIES, UNANTICIPATED GRADE, GEOLOGICAL, METALLURGICAL, PROCESSING OR OTHER PROBLEMS, CONCLUSIONS OF FEASIBILITY STUDIES, CHANGES IN PROJECT PARAMETERS AS PLANS CONTINUE TO BE REFINED, THE TIMING OF RECEIPT OF GOVERNMENTAL PERMITS, RESULTS OF CURRENT OR PLANNED EXPLORATION ACTIVITIES, ENVIRONMENTAL COSTS AND RISKS, AND CHANGES IN THE MARKET PRICES OF ITS PRODUCTS, AS WELL AS OTHER FACTORS DESCRIBED ELSEWHERE IN THIS EXECUTIVE REPORT. MOST OF THESE FACTORS ARE BEYOND THE COMPANY'S ABILITY TO PREDICT OR CONTROL. THE COMPANY DISCLAIMS ANY OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENT MADE HEREIN. READERS ARE CAUTIONED NOT TO PUT UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS. 2/03/97 21 [REINSTEIN, PANTELL & CALKINS LETTERHEAD] January 29, 1997 Jeffrey Kramer Executive Vice President NEVADA MANHATTAN MINING 5038 Parkway Calabasas Suite 100 Calabasas, California 91302-1422 Dear Mr. Kramer: In your letter to me dated January 29, 1997, you confirm that Nevada Manhattan Mining has net tangible assets in excess of $2,000,000 as of November 30, 1996. Based on your representation that Nevada Manhattan Mining currently has net tangible assets (i.e. total assets less intangible assets and liabilities) in excess of $2,000,000, then the stock of Nevada Manhattan Mining would not be defined as "penny stock" as defined in Rule 3a51-1(g) [17 C.F.R. 240.3a51-1(g)]. Very truly yours, REINSTEIN, PANTELL & CALKINS By: /s/ Lloyd S. Pantell --------------------------- Lloyd S. Pantell LSP/mg -----END PRIVACY-ENHANCED MESSAGE-----